|UNITED STATES
  SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
      Amendment No. 1 on 
  FORM 10-Q/A
    (Mark One)
|-------------------------------------------------------------------------------------------------------------------------------
|x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                      
|                                                                                                                               
|For the quarterly period ended June 30, 2004                                                                                   
|or                                                                                                                             
|                                                                                                                               
|o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                     
|                                                                                                                               
|For the transition period from ______________________ to ____________________________________                                  
|                                                                                                                               
|Commission File Number: 1-5273-1                                                                                               
|                                                                                                                               
|Sterling Bancorp                                                                                                               
|                                                                                                                               
|(Exact name of registrant as specified in its charter)                                                                         

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

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

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

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

|                                                                                              
|----------------------------------------------------------------------------------------------
|As of July 31, 2004 there were 15,175,580 shares of common stock,$1.00 par value, outstanding.

|
|



|STERLING BANCORP
Explanatory Note
This Amendment No. 1 on Form 10-Q/A includes restated unaudited consolidated financial statements for
the three months and six months ended June 30, 2004 and 2003 which supersede the Companys previously
issued unaudited consolidated financial statements for those interim periods. For information regarding
the restatement, see Note 2 to our unaudited consolidated financial statements contained herein.
This Amendment No. 1 also includes related changes to the disclosures in Managements
Discussion and Analysis of Financial Condition and Results of Operations and Controls
and Procedures. Except as otherwise specifically noted, all information contained herein
is as of June 30, 2004 and does not reflect any events or changes that have occurred subsequent to
that date. For the convenience of readers, this Amendment No. 1 restates in its entirety the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 (except that certain exhibits that
were previously filed with that Form 10-Q have been incorporated herein by reference to that Form 10-Q).
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|PART 
      I   FINANCIAL INFORMATION | Page         
|------------------------------------- | -------------
|                                      |              
|                                      | Item 1.      
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      | Item
      2.
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      |              
|                                      | Item
      3.
|                                      |              
|                                      |              
|                                      |              
|                                      | Item
      4.
|                                      |              
|PART
       II   OTHER INFORMATION   
|                                      |              
|                                      | Item 4.      
|                                      | Item 6.      
|                                      |              
|SIGNATURES                            | 41           
|                                      |              

|2
|-



|EXHIBIT
      INDEX |  |        
|------------------- |  | -------
|                    |  |        
|                    |  | Exhibit
|                    |  |        
|                    |  | Exhibit
|                    |  |        
|                    |  | Exhibit

|3
|-



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

|                                                                                                                                                                     |  |  | June
      30,
      2004 |               | December
      31,
      2003 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | ------------- | ----------------------------- | -
|                                                                                                                                                                     |  |  |                           |              
|ASSETS                                                                                                                                                               |  |  |                           |               |                               |  
|Cash and
      due from banks                                                                                                                                        |  |  | $                         | 74,604,802    |                               | $
|Interest-bearing
      deposits with other banks                                                                                                                     |  |  |                           | 2,160,545     |                               |  
|                                                                                                                                                                     |  | 
|Securities
      available for sale                                                                                                                                  |  |  |                           | 160,693,254   |                               |  
|Securities
      available for sale - pledged                                                                                                                        |  |  |                           | 139,758,890   |                               |  
|Securities
      held to maturity                                                                                                                                    |  |  |                           | 234,151,954   |                               |  
|Securities
      held to maturity - pledged                                                                                                                          |  |  |                           | 161,458,400   |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Total
      investment securities                                                                                                                                    |  |  |                           | 696,062,498   |                               |  
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  | 
|Loans held
      for sale                                                                                                                                            |  |  |                           | 44,457,783    |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Loans held
      in portfolio, net of unearned discounts                                                                                                             |  |  |                           | 903,136,193   |                               |  
|Less allowance
      for loan losses                                                                                                                                 |  |  |                           | 15,027,815    |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Loans,
      net                                                                                                                                                     |  |  |                           | 888,108,378   |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Customers
      liability under acceptances                                                                                                                         |  |  |                           | 1,066,643     |                               |  
|Excess cost
      over equity in net assets of the                                                                                                                   |  | 
|banking
      subsidiary                                                                                                                                             |  |  |                           | 21,158,440    |                               |  
|Premises
      and equipment, net                                                                                                                                    |  |  |                           | 10,284,889    |                               |  
|Other real
      estate                                                                                                                                              |  |  |                           | 1,033,022     |                               |  
|Accrued interest
      receivable                                                                                                                                    |  |  |                           | 5,256,349     |                               |  
|Bank owned
      life insurance                                                                                                                                      |  |  |                           | 22,348,999    |                               |  
|Other assets                                                                                                                                                         |  |  |                           | 32,923,594    |                               |  
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  |  | $                         | 1,799,465,942 |                               | $
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  | 
|LIABILITIES
      AND SHAREHOLDERS EQUITY                                                                                                                           |  | 
|Deposits                                                                                                                                                             |  | 
|Noninterest-bearing
      deposits                                                                                                                                   |  |  | $                         | 444,343,195   |                               | $
|Interest-bearing
      deposits                                                                                                                                      |  |  |                           | 811,443,452   |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Total
      deposits                                                                                                                                                 |  |  |                           | 1,255,786,647 |                               |  
|Securities
      sold under agreements to repurchase - customers                                                                                                     |  |  |                           | 80,681,067    |                               |  
|Securities
      sold under agreements to repurchase - dealers                                                                                                       |  |  |                           | 58,616,079    |                               |  
|Federal funds
      purchased                                                                                                                                        |  |  |                           |              |                               |  
|Commercial
      paper                                                                                                                                               |  |  |                           | 36,200,700    |                               |  
|Other short-term
      borrowings                                                                                                                                    |  |  |                           | 15,524,830    |                               |  
|Acceptances
      outstanding                                                                                                                                        |  |  |                           | 1,066,643     |                               |  
|Accrued expenses
      and other liabilities                                                                                                                         |  |  |                           | 76,705,328    |                               |  
|Long-term
      debt                                                                                                                                                 |  |  |                           | 135,774,000   |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Total
      liabilities                                                                                                                                              |  |  |                           | 1,660,355,294 |                               |  
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  | 
|Shareholders
      equity                                                                                                                                           |  | 
|Preferred
      stock, $5 par value. Authorized                                                                                                                      |  | 
|644,389
      shares; Series D issued 0                                                                                                                              |  | 
|and
      224,432 shares,respectively                                                                                                                                |  |  |                           |              |                               |  
|Common stock,
      $1 par value. Authorized 50,000,000 and
        20,000,000 shares, respectively; issued 19,825,898 
         and 19,275,964 shares, respectively |  |  |                           | 19,825,898    |                               |  
|Capital surplus                                                                                                                                                      |  |  |                           | 144,769,033   |                               |  
|Retained
      earnings                                                                                                                                              |  |  |                           | 22,147,199    |                               |  
|Accumulated
      other comprehensive loss, net of tax                                                                                                               |  |  |                           | (4,810,737    | )                             |  
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  |  |                           | 181,931,393   |                               |  
|Less                                                                                                                                                                 |  | 
|Common
      shares in treasury at cost, 1,618,903
          and 1,306,587 shares, respectively                                                                      |  |  |                           | 42,297,109    |                               |  
|Unearned
      compensation                                                                                                                                          |  |  |                           | 523,636       |                               |  
|                                                                                                                                                                     |  |  |                           |              
|Total
      shareholders equity                                                                                                                                     |  |  |                           | 139,110,648   |                               |  
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  |  | $                         | 1,799,465,942 |                               | $
|                                                                                                                                                                     |  |  |                           |              
|                                                                                                                                                                     |  | 

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

|4
|-



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

|                                                      |  |  | Three Months Ended
      June 30, |            | Six Months Ended
      June 30, |  
|----------------------------------------------------- |  |  | --------------------------------- | ---------- | ------------------------------- | -
|                                                      |  |  | 2004                              |            | 2003                            |  
|                                                      |  |  |                                   |            |                                 |  
|INTEREST INCOME                                       |  |  |                                   |            |                                 |  
|Loans                                                 |  |  | $                                 | 15,412,372 |                                 | $
|Investment securities                                 |  |  |                                   |            |                                 |  
|Available for sale                                    |  |  |                                   | 3,453,895  |                                 |  
|Held to maturity                                      |  |  |                                   | 4,677,056  |                                 |  
|Federal funds sold                                    |  |  |                                   | 5,794      |                                 |  
|Deposits with other banks                             |  |  |                                   | 3,067      |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Total interest income                                 |  |  |                                   | 23,552,184 |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|INTEREST EXPENSE                                      |  |  |                                   |            |                                 |  
|Deposits                                              |  |  |                                   | 2,373,990  |                                 |  
|Securities sold under agreements
    to repurchase    |  |  |                                   | 365,728    |                                 |  
|Federal funds purchased                               |  |  |                                   | 47,553     |                                 |  
|Commercial paper                                      |  |  |                                   | 78,597     |                                 |  
|Other short-term borrowings                           |  |  |                                   | 93,377     |                                 |  
|Long-term debt                                        |  |  |                                   | 1,559,683  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Total interest expense                                |  |  |                                   | 4,518,928  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Net interest income                                   |  |  |                                   | 19,033,256 |                                 |  
|Provision for loan losses                             |  |  |                                   | 2,470,500  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Net interest income after provision
  for loan losses |  |  |                                   | 16,562,756 |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|NONINTEREST INCOME                                    |  |  |                                   |            |                                 |  
|Factoring income                                      |  |  |                                   | 1,767,472  |                                 |  
|Mortgage banking income                               |  |  |                                   | 3,914,419  |                                 |  
|Service charges on deposit accounts                   |  |  |                                   | 1,159,177  |                                 |  
|Trade finance income                                  |  |  |                                   | 518,000    |                                 |  
|Trust fees                                            |  |  |                                   | 166,038    |                                 |  
|Other service charges and fees                        |  |  |                                   | 480,825    |                                 |  
|Bank owned life insurance income                      |  |  |                                   | 243,039    |                                 |  
|Securities gains                                      |  |  |                                   | 148,500    |                                 |  
|Other income                                          |  |  |                                   | 149,136    |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Total noninterest income                              |  |  |                                   | 8,546,606  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|NONINTEREST EXPENSES                                  |  |  |                                   |            |                                 |  
|Salaries                                              |  |  |                                   | 7,384,743  |                                 |  
|Employee benefits                                     |  |  |                                   | 2,329,505  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Total personnel expense                               |  |  |                                   | 9,714,248  |                                 |  
|Occupancy expenses, net                               |  |  |                                   | 1,234,072  |                                 |  
|Equipment expenses                                    |  |  |                                   | 658,105    |                                 |  
|Advertising and marketing                             |  |  |                                   | 924,463    |                                 |  
|Professional fees                                     |  |  |                                   | 1,073,961  |                                 |  
|Data processing fees                                  |  |  |                                   | 300,483    |                                 |  
|Stationery and printing                               |  |  |                                   | 194,434    |                                 |  
|Communications                                        |  |  |                                   | 391,466    |                                 |  
|Other expenses                                        |  |  |                                   | 1,700,005  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Total noninterest expenses                            |  |  |                                   | 16,191,237 |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Income before income taxes                            |  |  |                                   | 8,918,125  |                                 |  
|Provision for income taxes                            |  |  |                                   | 2,353,524  |                                 |  
|                                                      |  |  |                                   |            |                                 |  
|Net income                                            |  |  | $                                 | 6,564,601  |                                 | $
|                                                      |  |  |                                   |            |                                 |  
|Average number of common
 shares outstanding          |  |  |                                   |            |                                 |  
|Basic                                                 |  |  |                                   | 18,364,046 |                                 |  
|Diluted                                               |  |  |                                   | 19,182,695 |                                 |  
|Earnings per average common share                     |  | 
|Basic                                                 |  |  | $                                 | 0.35       |                                 | $
|Diluted                                               |  |  |                                   | 0.34       |                                 |  
|Dividends per common share                            |  |  |                                   | 0.16       |                                 |  

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

|5
|-



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

|                                                                            |  |  | Three
      Months Ended
      June 30, |            | Six
      Months Ended
      June 30, |  
|--------------------------------------------------------------------------- |  |  | --------------------------------------- | ---------- | ------------------------------------- | -
|                                                                            |  |  | 2004                                    |            | 2003                                  |  
|                                                                            |  |  |                                         |            |                                       |  
|                                                                            |  |  |                                         |            |                                       |  
|Net Income                                                                  |  |  | $                                       | 6,564,601  |                                       | $
|                                                                            |  |  |                                         |            |                                       |  
|Other comprehensive
      income,                                           |  | 
|net
      of tax:                                                           |  | 
|Unrealized
      holding (losses) gains 
         arising during the period |  |  |                                         | (4,981,422 | )                                     |  
|                                                                            |  | 
|Reclassification
      adjustment for                                       |  | 
|gains
      included in net income                                          |  |  |                                         | (80,338    | )                                     |  
|                                                                            |  |  |                                         |            |                                       |  
|Unrealized
      (losses) gains
         on supplemental pension            |  |  |                                         | (98,723    | )                                     |  
|                                                                            |  |  |                                         |            |                                       |  
|Other
      comprehensive (loss) income                                     |  |  |                                         | (5,160,483 | )                                     |  
|                                                                            |  |  |                                         |            |                                       |  
|                                                                            |  |  |                                         |            |                                       |  
|Comprehensive
      income                                                  |  |  | $                                       | 1,404,118  |                                       | $
|                                                                            |  |  |                                         |            |                                       |  

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

|6
|-



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

|                                                                                          |                          |  | Six
      Months Ended
      June 30, |            
|----------------------------------------------------------------------------------------- | ------------------------ |  | ------------------------------------- | -----------
|                                                                                          |                          |  | 2004                                  |            
|                                                                                          |                          |  |                                       |            
|Preferred
      Stock                                                                     |                          |  |                                       |            
|Balance
      at January 1                                                                |                          |  | $                                     | 2,244,320  
|Conversions
      of Series D shares                                                      |                          |  |                                       | (2,244,320 
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     |           
|                                                                                          |                          |  |                                       |            
|Common
      Stock                                                                        |                          | 
|Balance
      at January 1                                                                |                          |  | $                                     | 19,275,964 
|Conversions
      of preferred shares into common shares                                  |                          |  |                                       | 428,304    
|Options
      exercised                                                                   |                          |  |                                       | 121,630    
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | 19,825,898 
|                                                                                          |                          |  |                                       |            
|Capital
      Surplus                                                                     |                          | 
|Balance
      at January 1                                                                |                          |  | $                                     | 141,179,832
|Conversions
      of preferred shares into common shares                                  |                          |  |                                       | 1,816,016  
|Common
      shares issued under stock incentive plan and 
          related tax benefits |                          |  |                                       | 1,773,185  
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | 144,769,033
|                                                                                          |                          |  |                                       |            
|Retained
      Earnings                                                                   |                          | 
|Balance
      at January 1                                                                |                          |  | $                                     | 16,166,517 
|Net
      Income                                                                          |                          |  |                                       | 11,771,535 
|Cash
      dividends paid                                                                 | - common
      shares    |  |                                       |            
|                                                                                          | - preferred
      shares |  |                                       |            
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | 22,147,199 
|                                                                                          |                          |  |                                       |            
|Accumulated
      Other Comprehensive Income                                              |                          |  |                                       |            
|Balance
      at January 1                                                                |                          |  | $                                     | (1,131,803 
|                                                                                          |                          |  |                                       |            
|Unrealized
      holding gains (losses)                                                   |                          |  |                                       |            
|arising
      during the period:                                                          |                          |  |                                       |            
|Before
      tax                                                                          |                          |  |                                       | (6,569,026 
|Tax
      effect                                                                          |                          |  |                                       | 3,015,184  
|                                                                                          |                          |  |                                       |            
|Net
      of tax                                                                          |                          |  |                                       | (3,553,842 
|                                                                                          |                          |  |                                       |            
|Reclassification
      adjustment for gain                                                |                          |  |                                       |            
|included
      in net income:                                                             |                          |  |                                       |            
|Before
      tax                                                                          |                          |  |                                       | (684,804   
|Tax
      effect                                                                          |                          |  |                                       | 314,325    
|                                                                                          |                          |  |                                       |            
|Net
      of tax                                                                          |                          |  |                                       | (370,479   
|                                                                                          |                          |  |                                       |            
|Unrealized
      gains on supplemental pension:                                           |                          |  |                                       |            
|Before
      tax                                                                          |                          |  |                                       | 453,580    
|Tax
      effect                                                                          |                          |  |                                       | (208,193   
|                                                                                          |                          |  |                                       |            
|Net
      of tax                                                                          |                          |  |                                       | 245,387    
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | (4,810,737 
|                                                                                          |                          |  |                                       |            
|Treasury
      Stock                                                                      |                          |  |                                       |            
|Balance
      at January 1                                                                |                          |  | $                                     | (33,577,847
|Purchase
      of common shares                                                           |                          |  |                                       | (8,310,004 
|Surrender
      of shares issued under
          incentive compensation plan              |                          |  |                                       | (409,258   
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | (42,297,109
|                                                                                          |                          |  |                                       |            
|Unearned
      Compensation                                                               |                          |  |                                       |            
|Balance
      at January 1                                                                |                          |  | $                                     | (894,976   
|Amortization
      of unearned compensation                                               |                          |  |                                       | 371,340    
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | (523,636   
|                                                                                          |                          |  |                                       |            
|Total
      Shareholders Equity                                                          |                          |  |                                       |            
|Balance
      at January 1                                                                |                          |  | $                                     | 143,262,007
|Net
      changes during the period                                                       |                          |  |                                       | (4,151,359 
|                                                                                          |                          |  |                                       |            
|Balance
      at June 30                                                                  |                          |  | $                                     | 139,110,648
|                                                                                          |                          |  |                                       |            

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

|7
|-



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

|                                                                                                           |  |  | Six
      Months Ended
      June 30, |             
|---------------------------------------------------------------------------------------------------------- |  |  | ------------------------------------- | ------------
|                                                                                                           |  |  | 2004                                  |             
|                                                                                                           |  |  |                                       |             
|Operating
      Activities                                                                                 |  |  |                                       |             
|Net
      Income                                                                                           |  |  | $                                     | 11,771,535  
|Adjustments
      to reconcile net income to net cash provided
         by (used in) operating activities: |  |  |                                       |             
|Provision
      for loan losses                                                                            |  |  |                                       | 4,897,000   
|Depreciation
      and amortization of premises and equipment                                              |  |  |                                       | 865,456     
|Securities
      gains                                                                                     |  |  |                                       | (684,804    
|Income
      from bank owned life insurance                                                                |  |  |                                       | (476,734    
|Deferred
      income tax benefit                                                                          |  |  |                                       | (848,954    
|Net
      change in loans held for sale                                                                    |  |  |                                       | (3,901,403  
|Amortization
      of unearned compensation                                                                |  |  |                                       | 371,340     
|Amortization
      of premiums on securities                                                               |  |  |                                       | 834,498     
|Accretion
      of discounts on securities                                                                 |  |  |                                       | (238,570    
|Increase
      in accrued interest receivable                                                              |  |  |                                       | (186,926    
|Decrease
      in accrued expenses and
           other liabilities                                        |  |  |                                       | (1,899,311  
|Increase
      in other assets                                                                             |  |  |                                       | (3,406,393  
|Other,
      net                                                                                           |  |  |                                       | 416,446     
|                                                                                                           |  |  |                                       |             
|Net
      cash provided by (used in) operating activities                                                  |  |  |                                       | 7,513,180   
|                                                                                                           |  |  |                                       |             
|Investing
      Activities                                                                                 |  |  |                                       |             
|Purchase
      of premises and equipment                                                                   |  |  |                                       | (1,924,162  
|(Increase)
      Decrease in interest-bearing deposits                                                     |  | 
|with
      other banks                                                                                     |  |  |                                       | (504,207    
|Decrease
      in Federal funds sold                                                                       |  |  |                                       |            
|Net
      increase in loans held in portfolio                                                              |  |  |                                       | (6,908,114  
|Increase
      in other real estate                                                                        |  |  |                                       | (203,166    
|Proceeds
      from prepayments, redemptions or maturities                                                 |  | 
|of
      securities - held to maturity                                                                     |  |  |                                       | 77,816,013  
|Purchases
      of securities - held to maturity                                                           |  |  |                                       | (103,447,707
|Proceeds
      from sales of securities - available for sale                                               |  |  |                                       | 47,105,146  
|Proceeds
        from prepayments, redemptions or maturitiesof
        securities - available for sale     |  |  |                                       | 49,902,606  
|Purchases
      of securities - available for sale                                                         |  |  |                                       | (91,485,434 
|                                                                                                           |  |  |                                       |             
|Net
      cash used in investing activities                                                                |  |  |                                       | (29,649,025 
|                                                                                                           |  |  |                                       |             
|Financing
      Activities                                                                                 |  |  |                                       |             
|Decrease
      in noninterest-bearing deposits                                                             |  |  |                                       | (29,748,695 
|Increase
      in interest-bearing deposits                                                                |  |  |                                       | 73,794,522  
|Decrease
      in Federal funds purchased                                                                  |  |  |                                       | (10,000,000 
|Net
      increase in securities sold under agreements                                                     |  | 
|to
      repurchase                                                                                        |  |  |                                       | 45,478,340  
|Decrease
      in commercial paper and
         other short-term borrowings                                |  |  |                                       | (33,944,884 
|Purchase
      of treasury stock                                                                           |  |  |                                       | (8,310,004  
|Proceeds
      from exercise of stock options                                                              |  |  |                                       | 1,314,499   
|Cash
      dividends paid on common and preferred stock                                                    |  |  |                                       | (5,790,853  
|                                                                                                           |  |  |                                       |             
|Net
      cash provided by financing activities                                                            |  |  |                                       | 32,792,925  
|                                                                                                           |  |  |                                       |             
|Net increase
      (decrease) in cash and due from banks                                                   |  |  |                                       | 10,657,080  
|Cash and
      due from banks - beginning of period                                                        |  |  |                                       | 63,947,722  
|                                                                                                           |  |  |                                       |             
|Cash and
      due from banks - end of period                                                              |  |  | $                                     | 74,604,802  
|                                                                                                           |  |  |                                       |             
|Supplemental
      disclosures:                                                                            |  |  |                                       |             
|Interest
      paid                                                                                        |  |  | $                                     | 8,945,095   
|Income
      taxes paid                                                                                    |  |  |                                       | 10,614,100  

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

|8
|-



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

|1. | The consolidated financial statements include the accounts of Sterling Bancorp (the parent company)
  and its subsidiaries, principally Sterling National Bank and its subsidiaries (the bank),
  after elimination of material intercompany transactions. The term the Company refers
  to Sterling Bancorp and its subsidiaries. The consolidated financial statements as of and for the
  interim periods ended June 30, 2004 and 2003 are unaudited; however, in the opinion of management,
  all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of such
  periods have been made. Certain reclassifications have been made to prior period amounts to conform
  to the current presentation. The interim consolidated financial statements should be read in conjunction
  with the Companys annual report on Form 10-K for the year ended December 31, 2004. The Company
  effected a six-for-five stock split on December 8, 2004, a five-for-four stock split on September
  10,2003 and paid stock dividends as follows: 20% on December 9, 2002; 10% on December 10, 2001; 10%
  on December 11, 2000; and 5% on December 14, 1999. Fractional shares were cashed-out and payments
  were made to shareholders in lieu of fractional shares. All capital and share amounts as well as
  basic and diluted average number of shares outstanding and earnings per average common share information
  for all reporting periods have been restated to reflect the effect of the stock splits and stock dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | The consolidated financial statements for the three and six months periods ended June 30, 2004 and
  2003 have been restated to correct the accounting for employee benefits expense so as to comply with
  Accounting Principles Board (APB)Opinion No. 12, as amended by Financial Accounting Standards
  Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions, and FASB Technical Bulletin 85-4, Accounting for Purchases of Life Insurance, and, accordingly, these consolidated financial statements supersede the Companys previously
  issued unaudited consolidated financial statements for the three and six months ended June 30, 2004 and
  2003. The adjustment to the accounting for employee benefits expense involved (a) the expensing of
  premiums paid for split-dollar life insurance policies on the lives of certain executive officers
  of the Company, (b) the expensing of the Companys obligations to pay future premiums on split-dollar
  life insurance policies issued as part of a transaction in which an executive officer relinquishes
  his right to receive pension payments in exchange for the insurance policy, and (c) the crediting
  of increases in the cash surrender values of these various policies. These changes comprise the restatement
  adjustments for employee benefits expense set forth below. The Company also restated certain
other less significant items. Accordingly, the restated consolidated financial statements
for the three and six months ended June 30, 2004 and 2003 also correct the accounting for (i)
other income and unrealized holding (losses) gains (and thus other comprehensive (loss)
income) so as to comply with SFAS No. 115, Accounting for Certain Investments in Debt
and Equity Securities(changes to other income relate to the recognition of earnings
on assets held in a trust established by the Company and changes to unrealized holding
(losses) gains relate to the inclusion of unrealized holding (losses) gains on assets held
in the trust), (ii) occupancy expense so as to comply with SFAS No. 13, Accounting for
Leases(changes required to properly straight-line rent incentives), (iii) income tax
benefit arising from the exercise of non qualified stock options and the vesting of
restricted stock so as to comply with SFAS No. 109, Accounting for Income Taxes(changes relate to the amounts credited directly to capital surplus), and (iv) minimum
pension liability adjustment (and thus other comprehensive (loss) income) so as to comply
with SFAS No. 87, Employers Accounting for Pensions(changes relate to the
timing of adjustments).

|9
|-



|STERLING BANCORP AND SUBSIDIARIESNotes to Consolidated Financial Statements(Unaudited)
The table below shows the impact of these restatements on the bank and the parent company for
other income, employee benefits expense, occupancy expense, net income and basic and diluted
earnings per share and on other comprehensive (loss) income:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                              

|                                                                  | Three
      Months Ended June 30, |           | Six Months
      Ended June 30, |  
|----------------------------------------------------------------- | --------------------------------- | --------- | ------------------------------- | -
|
|                                                                  |                                  
|                                                                  |                                   |           |                                 |  
|Other
      Income:                                               |                                   |           |                                 |  
|Other
      income as previously reported                         | $                                 | 327,830   |                                 | $
|Restatement
      adjustment (bank)                               |                                   | (178,694  | )                               |  
|                                                                  |                                   |           |                                 |  
|                                                                  |                                   |           |                                 |  
|Other
      income as restated                                    | $                                 | 149,136   |                                 | $
|                                                                  |                                   |           |                                 |  
|Employee
      benefits expense:                                  |                                   |           |                                 |  
|Employee
      benefits expense as previously 
          reported | $                                 | 2,350,786 |                                 | $
|                                                                  |                                   |           |                                 |  
|                                                                  |                                   |           |                                 |  
|Restatement
      adjustment:                                     |                                   |           |                                 |  
|Impact
      on bank                                              |                                   | (29,977   | )                               |  
|Impact
      on parent company                                    |                                   | 8,696     |                                 |  
|                                                                  |                                   |           |                                 |  
|Total                                                             |                                   | (21,281   | )                               |  
|                                                                  |                                   |           |                                 |  
|                                                                 
|Employee
      benefits expense as restated                       | $                                 | 2,329,505 |                                 | $
|                                                                  |                                   |           |                                 |  
|                                                                  |                                   |           |                                 |  
|Occupancy
      expense, net:                                     |                                   |           |                                 |  
|Occupancy
      expense, net as previously reported               | $                                 | 1,085,164 |                                 | $
|Restatement
      adjustment (bank)                               |                                   | 148,908   |                                 |  
|                                                                  |                                   |           |                                 |  
|                                                                 
|Occupancy
      expense, net as restated                          | $                                 | 1,234,072 |                                 | $
|                                                                  |                                   |           |                                 |  
|                                                                  |                                   |           |                                 |  
|Net Income:                                                       |                                   |           |                                 |  
|Net
      income as previously reported                           | $                                 | 6,719,599 |                                 | $
|                                                                  |                                   |           |                                 |  
|                                                                 
|Restatement
      adjustment:                                     |                                   |           |                                 |  
|Impact
      on bank                                              |                                   | (146,302  | )                               |  
|Impact
      on parent company                                    |                                   | (8,696    | )                               |  
|                                                                  |                                   |           |                                 |  
|Total                                                             |                                   | (154,998  | )                               |  
|                                                                  |                                   |           |                                 |  
|                                                                 
|Net
      income as restated                                      | $                                 | 6,564,601 |                                 | $
|                                                                  |                                   |           |                                 |  
|                                                                 
|Basic
      earnings per share:                                  
|Net
      income attributable to common stock as                  |                                   |           |                                 |  
|previously
      reported [1]                                     | $                                 | 0.37      |                                 | $
|Restatement
      adjustment                                      |                                   | (0.02     | )                               |  
|                                                                  |                                   |           |                                 |  
|                                                                 
|Net
      income attributable to common stock                     |                                   |           |                                 |  
|as
      restated                                                 | $                                 | 0. 35     |                                 | $
|                                                                  |                                   |           |                                 |  
|                                                                 
|                                                                 
|Diluted
      earnings per share:                                
|Net
      income attributable to common stock                     |                                   |           |                                 |  
|as
      previously reported [1]                                  | $                                 | 0.35      |                                 | $
|Restatement
      adjustment                                      |                                   | (0.01     | )                               |  
|                                                                  |                                   |           |                                 |  
|                                                                 
|Net
      income attributable to common stock                     |                                   |           |                                 |  
|as
      restated                                                 | $                                 | 0.34      |                                 | $
|                                                                  |                                   |           |                                 |  

|10
|--



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

| |                                                                                                                                                                        |  | Three
      Months Ended June 30, |            | Six Months
      Ended June 30, |  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ---------- | ------------------------------- | -
|
| |                                                                                                                                                                        |  |                                   |           
| |                                                                                                                                                                        |  |                                   |           
| | Other
      comprehensive (loss) income net of tax:                                                                                                                    |  |                                   |            |                                 |  
| | Other
      comprehensive (loss) income as
          previously reported                                                                                               |  | $                                 | (5,061,760 | )                               | $
| |                                                                                                                                                                        |  |                                   |            |                                 |  
| | Restatement
      adjustment:                                                                                                                                          |  |                                   |            |                                 |  
| | Minimum
      pension liability adjustment, net  
            of tax effect of $309,165 (parent company)                                                               |  |                                   |           |                                 |  
| | Unrealized
      (losses) gains on supplemental
            pension net of tax effect of $46,566, $(55,310)
            $(245,387) and $(138,582), respectively (bank) |  |                                   | (98,723    | )                               |  
| |                                                                                                                                                                        |  |                                   |            |                                 |  
| |                                                                                                                                                                        |  |                                   |            |                                 |  
| | Total                                                                                                                                                                  |  |                                   | (98,723    | )                               |  
| |                                                                                                                                                                        |  |                                   |            |                                 |  
| |                                                                                                                                                                        |  |                                   |            |                                 |  
| | Other
      comprehensive (loss) income as restated                                                                                                                    |  | $                                 | (5,160,483 | )                               | $
| |                                                                                                                                                                        |  |                                   |            |                                 |  

|   
|---
|[1]
|   

| | At December 31, 2003, other assets increased $1,079,000, accrued expenses and other liabilities increased
  $1,002,000, capital surplus decreased $1,214,000 (which includes a reduction of $3,031,000 for the
  effect of the six-for-five stock split), retained earnings decreased $1,585,000, and accumulated
  other comprehensive loss increased $155,000. At June 30, 2004, other assets increased $847,000,
  accrued expenses and other liabilities increased $988,000, capital surplus decreased $634,000
  (which includes a reduction of $3,031,000 for the effect of the of six-for-five stock split), retained
  earnings decreased $2,994,000, and accumulated other comprehensive loss increased $455,000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|3. | At June 30, 2004, the Company has a stock-based employee compensation plan, which is described more
  fully in Note 1 and Note 15 of the Companys annual report on Form 10-K for the year ended December
  31, 2004. The Company accounts for this plan under the recognition and measurement principles of
  APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income,
  as all options granted under those plans had an exercise price equal to the market value of the underlying
  common stock on the date of grant. In accordance with SFAS No. 148, the following table illustrates
  the effect on net income and earnings per average common share if the Company had applied the fair
  value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to the stock-based employee compensation plans.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | Three Months
      Ended June 30,             | 2004 [1] |           | 2003 [1] |  
| | --------------------------------------------- | -------- | --------- | -------- | -
| |                                               |          |           |          |  
| | Net income
      available for                |          |           |          |  
| | common
      shareholders                     | $        | 6,564,601 |          | $
| | Deduct: Total
      stock-based employee      |          |           |          |  
| | compensation
      expense determined under   |          |           |          |  
| | fair
      value based method for all awards, |          |           |          |  
| | net
      of related tax effects              |          | (55,938   | )        |  
| |                                               |          |           |          |  
|
| | Pro forma,
      net income                   | $        | 6,508,663 |          | $
| |                                               |          |           |          |  
|
| | Earnings
      per average common share:      |          |           |          |  
| | Basic-
      as reported                      | $        | 0.35      |          | $
| | Basic-
      pro forma                        |          | 0.35      |          |  
| | Diluted-
      as reported                    |          | 0.34      |          |  
| | Diluted-
      pro forma                      |          | 0.34      |          |  

|11
|--



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

| | Six Months Ended June 30,               | 2004 [1] |            | 2003 [1] |  
| | --------------------------------------- | -------- | ---------- | -------- | -
| |                                         |          |            |          |  
| | Net income available for                |          |            |          |  
| | common shareholders                     | $        | 11,771,535 |          | $
| | Deduct: Total stock-based employee     
| | compensation expense determined under  
| | fair value based method for all awards,
| | net of related tax effects              |          | (115,426   | )        |  
| |                                         |          |            |          |  
| |                                         |          |            |          |  
| | Pro forma, net income                   | $        | 11,656,109 |          | $
| |                                         |          |            |          |  
| |                                        
| | Earnings per average common share:     
| | Basic- as reported                      | $        | 0.64       |          | $
| | Basic- pro forma                        |          | 0.63       |          |  
| | Diluted- as reported                    |          | 0.61       |          |  
| | Diluted- pro forma                      |          | 0.61       |          |  

|   |                                                                                                 
|-- | ------------------------------------------------------------------------------------------------
|   | [1] Restated; see Notes 1 and 2 above.                                                          
|   |                                                                                                 
|4. | The major components of domestic loans held for sale and loans held in portfolio are as follows:
|   |                                                                                                 

| |                                  | June 30, |            
| | -------------------------------- | -------- | -----------
|
|
| |                                  |          |            
| | Loans held for sale              |          |            
| | Real estate-mortgage             | $        | 44,457,783 
| |                                  |          |            
| | Loans held in portfolio         
| | Commercial and industrial        | $        | 560,670,257
| | Lease financing                  |          | 180,223,253
| | Real estate-mortgage             |          | 167,778,306
| | Real estate-construction         |          | 2,341,340  
| | Installment                      |          | 14,734,012 
| | Loans to depository institutions |          |           
| |                                  |          |            
| |                                  |          |            
| | Loans, gross                     |          | 925,747,168
| | Less unearned discounts          |          | 22,610,975 
| |                                  |          |            
| |                                  |          |            
| | Loans, net of unearned discounts | $        | 903,136,193
| |                                  |          |            

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

| | The Company provides a broad range of financial products and services, including commercial loans,
  asset-based financing, factoring and accounts receivable management services, trade financing, equipment
  leasing, corporate and consumer deposit services, commercial and residential mortgage lending and
  brokerage, trust and estate administration and investment management services. The Companys
  primary source of
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
|--



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

| | earnings is net interest income, which represents the difference between interest earned on interest-earning
  assets and the interest incurred on interest-bearing liabilities. The Companys 2004 year-to-date
  average interest-earning assets were 55.0% loans (corporate lending was 72.9% and real estate lending
  was 24.2% of total loans, respectively) and 44.1% investment securities and money market investments.
  There are no industry concentrations exceeding 10% of loans, gross, in the corporate loan portfolio.
  Approximately 68% of loans are to borrowers located in the metropolitan New York area. In order to
  comply with the provisions of SFAS No. 131, the Company has determined that it has three reportable
  operating segments: corporate lending, real estate lending and company-wide treasury.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------
|The following tables provide certain information regarding the Companys operating segments for
the three-and six-month periods ended June 30, 2004 and 2003:
|                                                                                                                                                             

|                                       | Corporate
      Lending |             | Real Estate
      Lending |   | Company-wide
      Treasury |  | Totals |            
|-------------------------------------- | ----------------------- | ----------- | ------------------------- | - | --------------------------- |  | ------ | -----------
|                                       |                         |             |                           |   |                             |  |        |            
|Three
      Months Ended June 30, 2004 |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 8,692,580   |                           | $ | 3,856,463                   |  | $      | 6,049,927  
|Noninterest
      income               |                         | 3,249,504   |                           |   | 3,973,944                   |  |        | 360,348    
|Depreciation
      and amortization    |                         | 80,383      |                           |   | 99,944                      |  |        |           
|Segment income
      before taxes      |                         | 4,115,925   | [1]                       |   | 4,023,196                   |  |        | 7,338,517  
|Segment assets                         |                         | 696,664,861 |                           |   | 255,535,670                 |  |        | 810,066,256
|                                      
|Three
      Months Ended June 30, 2003 |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 8,441,398   |                           | $ | 4,175,562                   |  | $      | 5,550,286  
|Noninterest
      income               |                         | 3,023,464   |                           |   | 3,762,007                   |  |        | 402,537    
|Depreciation
      and amortization    |                         | 38,472      |                           |   | 78,136                      |  |        |           
|Segment income
      before taxes      |                         | 4,928,012   | [1]                       |   | 3,995,067                   |  |        | 6,413,440  
|Segment assets                         |                         | 641,338,480 |                           |   | 217,811,425                 |  |        | 693,585,948
|                                      
|Six Months
      Ended June 30, 2004   |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 17,035,596  |                           | $ | 7,662,696                   |  | $      | 12,450,158 
|Noninterest
      income               |                         | 6,174,555   |                           |   | 7,677,372                   |  |        | 1,209,721  
|Depreciation
      and amortization    |                         | 141,164     |                           |   | 199,715                     |  |        |           
|Segment income
      before taxes      |                         | 6,739,170   | [1]                       |   | 8,091,804                   |  |        | 15,244,746 
|Segment
      assets                   |                         | 696,664,861 |                           |   | 255,535,670                 |  |        | 810,066,256
|                                      
|Six Months
      Ended June 30, 2003   |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 16,764,934  |                           | $ | 7,927,652                   |  | $      | 11,320,679 
|Noninterest
      income               |                         | 6,028,036   |                           |   | 7,067,164                   |  |        | 779,670    
|Depreciation
      and amortization    |                         | 88,637      |                           |   | 154,392                     |  |        |           
|Segment income
      before taxes      |                         | 8,679,720   | [1]                       |   | 7,316,417                   |  |        | 12,949,568 
|Segment assets                         |                         | 641,338,480 |                           |   | 217,811,425                 |  |        | 693,585,948
|                                       |                         |             |                           |   |                             |  |        |            
|[1] Restated;
      see Note 2 above   |                         |             |                           |   |                             |  |        |            

|13
|--



|STERLING BANCORP AND SUBSIDIARIESNotes to Consolidated Financial Statements(Unaudited)
    The following table sets forth reconciliations of net interest income, noninterest income, profits and assets of reportable operating segments to the Companys consolidated totals:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                               

|                                              | Three
      Months Ended June 30, |               | Six Months
      Ended June 30, |  
|--------------------------------------------- | --------------------------------- | ------------- | ------------------------------- | -
|
|
|                                              |                                   |               |                                 |  
|Net interest
      income:                    |                                   |               |                                 |  
|Total
      for reportable operating segments | $                                 | 18,598,970    |                                 | $
|Other
      [1]                               |                                   | 434,286       |                                 |  
|                                              |                                   |               |                                 |  
|Consolidated
      net interest income        | $                                 | 19,033,256    |                                 | $
|                                              |                                   |               |                                 |  
|Noninterest
      income:                     |                                   |               |                                 |  
|Total
      for reportable operating segments | $                                 | 7,583,796     |                                 | $
|Other
      [1] [2]                           |                                   | 962,810       |                                 |  
|                                              |                                   |               |                                 |  
|Consolidated
      noninterest income [2]     | $                                 | 8,546,606     |                                 | $
|                                              |                                   |               |                                 |  
|                                              |                                   |               |                                 |  
|Income before
      taxes:[2]                 |                                   |               |                                 |  
|Total
      for reportable operating segments | $                                 | 15,477,638    |                                 | $
|Other
      [1]                               |                                   | (6,559,513    | )                               |  
|                                              |                                   |               |                                 |  
|Consolidated
      income before income taxes | $                                 | 8,918,125     |                                 | $
|                                              |                                   |               |                                 |  
|                                              |                                   |               |                                 |  
|Assets:[2]                                    |                                   |               |                                 |  
|Total
      for reportable operating segments | $                                 | 1,762,266,787 |                                 | $
|Other
      [1]                               |                                   | 37,199,155    |                                 |  
|                                              |                                   |               |                                 |  
|                                              |                                   |               |                                 |  
|Consolidated
      assets                     | $                                 | 1,799,465,942 |                                 | $
|                                              |                                   |               |                                 |  

|   
|---
|[1]
|   
|[2]
|   

|6. | On December 31, 2003, the Company adopted FASB Interpretation No. 46R (FIN 46R), Consolidation of Variable Interest Entities, which clarified certain provisions of a previously released interpretation. Under the provisions
  of FIN 46R, Sterling deconsolidated the issuer trust and accounts for its investment in the trust
  as an asset, its junior subordinated debentures as long-term debt and the interest paid on those
  debentures as interest expense. As a result of the adoption of FIN 46R, the Companys prior period presentations have been restated to conform to the current presentation.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14
|--



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

|7. | The following information is provided in connection with the sales of available for sale securities:
|-- | ----------------------------------------------------------------------------------------------------
|   |                                                                                                     

| | Three Months Ended June 30, |   | 2004       |  |   | 2003      | 
| | --------------------------- | - | ---------- |  | - | --------- | 
| |                             |   |            |  |  
| | Proceeds                    | $ | 10,073,504 |  | $ | 3,281,747 | 
| |                             |   |            |  |   |           | 
| | Gross Gains                 |   | 148,500    |  |   | 100,366   | 
| |                             |   |            |  |   |           | 
| | Gross Losses                |   |           |  |   |          | 
| |                             |   |            |  |   |           | 

| | Six Months Ended June 30, |   | 2004       |  |   | 2003      | 
| | ------------------------- | - | ---------- |  | - | --------- | 
| |                           |   |            |  |  
| | Proceeds                  | $ | 47,105,146 |  | $ | 5,846,762 | 
| |                           |   |            |  |   |           | 
| | Gross Gains               |   | 684,804    |  |   | 196,358   | 
| |                           |   |            |  |   |           | 
| | Gross Losses              |   |           |  |   |          | 

|   |                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------
|8. | In February 2004, 224,432 Series D preferred shares were converted into 428,304 common shares.             
|   |                                                                                                            
|9. | The following tables set forth the disclosures required for net periodic benefit cost and net benefit
cost:
|   |                                                                                                            

|                                   | Three Months Ended June 30, |          | Six Months Ended June 30, |  
|---------------------------------- | --------------------------- | -------- | ------------------------- | -
|                                   |                             |          |                           |  
|                                   | 2004                        |          | 2003                      |  
|                                   |                             |          |                           |  
|COMPONENTS OF NET PERIODIC COST    |                             |          |                           |  
|Service Cost                       | $                           | 392,495  |                           | $
|Interest Cost                      |                             | 497,743  |                           |  
|Expected return on plan assets     |                             | (423,490 | )                         |  
|Amortization of prior service cost |                             | 19,331   |                           |  
|Recognized actuarial loss          |                             | 217,970  |                           |  
|                                   |                             |          |                           |  
|                                   |                             |          |                           |  
|Net periodic benefit cost          |                             | 704,049  |                           |  
|                                   |                             |          |                           |  
|Settlement gain                    |                             |         |                           |  
|                                   |                             |          |                           |  
|                                   |                             |          |                           |  
|Net benefit cost                   | $                           | 704,049  |                           | $
|                                   |                             |          |                           |  

|                                                                                                                                                                                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company previously disclosed in its financial statements for the quarter ended March 31,2004, that it expected to contribute approximately $1,000,000 to the defined benefit pension plan in 2004. As of June 30, 2004, the expected contribution remained $1,000,000. No contribution has been made as of June 30, 2004.

|15
|--



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------
|        |                                                                                      

|The following commentary presents managements discussion and analysis of the financial condition
and results of operations of Sterling Bancorp (the parent company), a financial holding
company under the Gramm-Leach-Bliley Act of 1999, and its subsidiaries, principally Sterling National
Bank (the bank). Throughout this discussion and analysis, the term the Company
refers to Sterling Bancorp and its subsidiaries. This discussion and analysis should be read in conjunction
with the consolidated financial statements and supplemental data contained elsewhere in this quarterly
report and the Companys annual report on Form 10-K for the year ended December 31, 2004.
As described in Note 2 to the consolidated financial statements, the financial statements have been restated.
Certain reclassifications have been made to prior years financial data to conform to current financial
statement presentations. All capital and share amounts as well as basic and diluted average number
of shares outstanding and earnings per average common share information for all periods have been
restated to reflect the effect of the six-for-five stock split effected on December 8, 2004
and all prior stock splits and stock dividends.
  OVERVIEW
The Company provides a broad range of financial products and services, including business and consumer
loans, commercial and residential mortgage lending and brokerage, asset-based financing, factoring/accounts
receivable management services, deposit services, trade financing, equipment leasing, trust
and estate administration, and investment management services. The Company has operations in New
York, Virginia and North Carolina and conducts business throughout the United States. The general
state of the U.S. economy and, in particular, economic and market conditions in the metropolitan
New York area have a significant impact on loan demand, the ability of borrowers to repay these loans
and the value of any collateral securing these loans and may also affect deposit levels. Accordingly,
future general economic conditions are a key uncertainty that management expects will materially
affect the Companys results of operations.
For the three months ended June 30, 2004, the banks average earning assets represented approximately
97.5% of the Companys average earning assets. Loans represented 54.3% and investment securities
represented 45.3% of the banks average earning assets for the second quarter of 2004.
For the six  months ended June 30, 2004, the banks average earning assets represented
approximately 97.5% of the Companys average earning assets. Loans represented 53.9% and investment
securities represented 45.2% of the banks average earning assets for the first six months of
2004.
The Companys primary source of earnings is net interest income, and its principal market risk
exposure is interest rate risk. The Company is not able to predict market interest rate fluctuations,
and its asset-liability management strategy may not prevent interest rate changes from having a material
adverse effect on the Companys results of operations and financial condition.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|16
|--



|Although management endeavors to minimize the credit risk inherent in the Companys loan portfolio,
it must necessarily make various assumptions and judgments about the collectibility of the loan portfolio
based on its experience and evaluation of economic conditions. If such assumptions or judgments prove to be incorrect,
the current allowance for loan losses may not be sufficient to cover loan losses and additions to
the allowance may be necessary, which would have a negative impact on net income.
There is intense competition in all areas in which the Company conducts its business. The Company competes
with banks and other financial institutions, including savings and loan associations, savings banks,
finance companies and credit unions. Many of these competitors have substantially greater resources
and lending limits and provide a wider array of banking services. To a limited extent, the Company
also competes with other providers of financial services, such as money market mutual funds, brokerage
firms, consumer finance companies and insurance companies. Competition is based on a number of factors,
including prices, interest rates, service, availability of products, and geographic location.
The Company regularly evaluates acquisition opportunities and conducts due diligence activities in
connection with possible acquisitions. As a result, acquisition discussions, and in some cases negotiations,
regularly take place and future acquisitions could occur.
INCOME STATEMENT ANALYSIS
Net interest income, which represents the difference between interest earned on interest-earning assets
and interest incurred on interest-bearing liabilities, is the Companys primary source of earnings.
Net interest income can be affected by changes in market interest rates as well as the level and
composition of assets, liabilities and shareholders equity. Net interest spread is the difference
between the average rate earned, on a tax-equivalent basis, on interest-earning assets and the average
rate paid on interest-bearing liabilities. The net yield on interest-earning assets (net interest
margin) is calculated by dividing tax equivalent net interest income by average interest-earnings
assets. Generally, the net interest margin will exceed the net interest spread because a portion
of interest-earning assets are funded by various noninterest-bearing sources, principally noninterest-bearing
deposits and shareholders equity. The increases (decreases) in the components of interest income
and interest expense, expressed in terms of fluctuation in average volume and rate, are provided
in the Rate/Volume Analysis shown on pages 29 and 30. Information as to the components of interest
income and interest expense and average rates is provided in the Average Balance Sheets shown on pages 27 and 28.
Comparisons of the Three Months Ended June 30, 2004 and 2003
The Company reported net income for the three months ended June 30, 2004 of $6.6 million, representing
$0.34 per share, calculated on a diluted basis, compared to $5.8 million, or $0.31 per share calculated
on a diluted basis, for the second
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|17
|--



|quarter of 2003.  This increase reflects continued growth in both net interest income and noninterest
income and a lower provision for income taxes, which more than offset increases in the provision
for loan losses and noninterest expenses.
Net Interest Income
Net interest income on a tax equivalent basis, increased to $19.2 million for the second quarter of
2004 from $18.8 million for the 2003 period, due to higher average earning assets outstanding coupled
with lower average cost of funding partially offset by a lower yield on earning assets and higher
average interest-bearing deposit balances. The net interest margin, on a tax equivalent basis, was
4.75% for the second quarter of 2004 compared to 5.31% for 2003. The decrease in the net interest
margin was primarily the result of the impact of the lower interest rate environment in 2004, partially
offset by the impact of an increase in average investment securities and loan outstandings.
Total interest income, on a tax-equivalent basis, aggregated $23.7 million for the second quarter of
2004, up from $23.3 million for the 2003 period. The tax-equivalent yield on interest-earning assets
was 5.91% for the second quarter of 2004 compared to 6.62% for the 2003 period.
Interest earned on the loan portfolio amounted to $15.4 million for the second quarter of 2004, unchanged
from a year ago. Average loan balances amounted to $901.2 million, an increase of $67.0 million from
an average of $834.2 million in the prior year period. The increase in the average loans (across
virtually all segments of the Companys loan portfolio), primarily due to the Companys
business development activities and the ongoing consolidation of banks in the Companys marketing
area, accounted for the increase in interest earned on loans. The decrease in the yield on the loan
portfolio to 7.02% for the second quarter of 2004 from 7.64% for 2003 was primarily attributable
to the mix of outstanding balances on average among the components of the loan portfolio and the
lower interest rate environment in 2004.
Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $8.3 million for
the second quarter of 2004 from $7.9 million in the prior year period. Average outstandings
increased to $717.2 million from $593.7 million in the prior year period. The average life of the securities
portfolio was approximately 3.9 years at June 30, 2004 compared to 2.9 years at June 30, 2003, reflecting
the impact of purchases made in the third and fourth quarters of 2003 and the first quarter of 2004.
The decrease in yields on the securities portfolio reflects the impact of purchases made during the
lower rate environment on average in the 2004 period and of the principal prepayments primarily in
the third and fourth quarters of 2003.
Total interest expense was $4.5 million for the second quarter of 2004, unchanged from the 2003 period.
An increase in average balances for interest-bearing deposits was partially offset by lower rates
paid for those balances.
Interest expense on deposits increased to $2.4 million for the second quarter of 2004 from $2.3 million
for the 2003 period due to an increase in average balance
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--



|partially offset by a decrease in the cost of those funds. Average interest- bearing deposit balances
increased to $798.3 million for the second quarter of 2004 from $676.2 million in the 2003 period primarily
as a result of branching initiatives and other business development activities. Average rate paid
on interest-bearing deposits was 1.20%, 17 basis points lower than the prior year period. The decrease
in average cost of deposits reflects the lower interest rate environment during 2004.
Provision for Loan Losses
Based on managements continuing evaluation of the loan portfolio (discussed under Asset
Quality below), the provision for loan losses for the second quarter of 2004 increased to $2.5
million from $2.2 million for the prior year period. Factors affecting the level of provision
for loan losses included the growth in the loan portfolios, changes in general economic conditions
and the amount of nonaccrual loans.
Noninterest Income
Noninterest income increased to $8.5 million for the second quarter of 2004 from $8.1 million in the
2003 period, primarily due to increased income from mortgage banking, principally the result of a
change in the mix of loans sold due to a broader array of loan products and an increased focus on
higher margin mortgage loans, and from factoring activities. Partially offsetting these increases
were lower revenues from fees for deposit and various other services and from bank-owned life insurance
programs.
Noninterest Expenses
Noninterest expenses increased $1.2 million for the second quarter of 2004 when compared to the 2003
period. The increase was primarily due to investments in the Sterling franchise, including the new
branches, with higher expenses related to salaries and employee benefits and professional fees.
Provision for Income Taxes
The provision for income taxes decreased to $2.4 million for the second quarter of 2004 from $3.7 million
in the 2003 period. The lower provision for taxes in the second quarter of 2004 was due to the resolution
of certain state tax issues for tax years 1999-2001.
Comparisons of the Six Months Ended June 30, 2004 and 2003
The Company reported net income for the six months ended June 30, 2004 of $11.8 million, representing
$0.61 per share, calculated on a diluted basis, compared to $11.6 million, or $0.61 per share calculated
on a diluted basis, for the first six months of 2003. This increase reflects continued growth in
both net interest income and noninterest income and a lower provision for income taxes, which more
than offset increases in the provision for loan losses and noninterest expenses.
Net Interest Income
Net interest income on a tax equivalent basis, increased to $38.5 million for the first six months
of 2004 from $37.3 million for the 2003 period, due to higher average
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19
|--



|earning assets outstanding coupled with lower average cost of funding partially offset by a lower yield
on earning assets and higher average interest-bearing deposit balances. The net interest margin,
on a tax equivalent basis, was 4.87% for the first six months of 2004 compared to 5.43% for
2003. The decrease in the net interest margin was primarily the result of the impact of the
lower interest rate environment in 2004, partially offset by the impact of an increase in average
investment securities and loan outstandings.
Total interest income, on a tax-equivalent basis, aggregated $47.5 million for the first six months
of 2004, up from $46.2 million for the 2003 period. The tax-equivalent yield on interest-earning
assets was 6.04% for the first six months of 2004 compared to 6.76% for the 2003 period.
Interest earned on the loan portfolio amounted to $30.5 million for the first six months of 2004, up
$0.4 million from a year ago. Average loan balances amounted to $881.9 million, an increase
of $63.3 million from an average of $818.6 million in the prior year period. The increase in the
average loans (across virtually all segments of the Companys loan portfolio), primarily due
to the Companys business development activities and the ongoing consolidation of banks in the
Companys marketing area, accounted for the increase in interest earned on loans. The decrease
in the yield on the loan portfolio to 7.22% for the first six months of 2004 from 7.77% for 2003
was primarily attributable to the mix of outstanding balances on average among the components of
the loan portfolio and the lower interest rate environment in 2004.
Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $16.9 million
for the first six months of 2004 from $16.0 million in the prior year period. Average outstandings
increased to $706.2 million from $580.9 million in the prior year period. The average life of the securities
portfolio was approximately 3.9 years at June 30, 2004 compared to 2.9 years at June 30, 2003, reflecting
the impact of purchases made in the third and fourth quarters of 2003 and the first quarter of 2004.
The decrease in yields on the securities portfolio reflects the impact of purchases made during the
lower rate environment on average in the 2004 period and of the principal prepayments primarily in
the third and fourth quarters of 2003.
Total interest expense increased to $9.1 million for the first six months of 2004 from $8.9 million for
the 2003 period, primarily due to higher average balancesfor interest-bearing deposits partially offset by lower rates paid for those balances and for borrowed
funds.
Interest expense on deposits increased to $4.8 million for the first six months of 2004 from $4.5
million for the 2003 period due to an increase in average balance partially offset by a decrease
in the cost of those funds. Average interest-bearing deposit balances increased to $796.2 million
for the first six months of 2004 from $665.8 million in the 2003 period primarily as a result of branching
initiatives and other business development activities. Average rate paid on interest-bearing deposits
was 1.22% which was 15 basis points lower than the prior year period. The decrease in average cost
of deposits reflects the lower interest rate environment during 2004.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|20
|--



|Provision for Loan Losses
Based on managements continuing evaluation of the loan portfolio (discussed under Asset
Quality below), the provision for loan losses for the first six months of 2004 increased to
$4.9 million from $4.0 million for the prior year period. Factors affecting the level of provision
for loan losses included the growth in the loan portfolios, changes in general economic conditions
and the amount of nonaccrual loans.
Noninterest Income
Noninterest income increased to $16.8 million for the first six months of 2004 from $15.6 million in
the 2003 period, primarily due to increased income from mortgage banking, principally the result
of a change in the mix of loans sold due to a broader array of loan products and an increased focus
on higher margin mortgage loans, and from factoring activities, and gains on sales of available for
sale securities. Partially offsetting these increases were lower revenues from fees for deposit and
various other services and from bank-owned life insurance programs.
Noninterest Expenses
Noninterest expenses increased $2.6 million for the first six months of 2004 when compared to the 2003
period. The increase was primarily due to investments in the Sterling franchise, including the new
branches, with higher expenses related to salaries and employee benefits, advertising and marketing,
and professional fees.
Provision for Income Taxes
The provision for income taxes decreased to $6.0 million for the first six months of 2004 from $ 7.4
million in the 2003 period. The lower provision for taxes in the 2004 period was due to the
resolution, during the second quarter of 2004, of certain state tax issues for tax years 1999-2001.
BALANCE SHEET ANALYSIS
Securities
The Companys securities portfolios are comprised of principally U.S. government and U.S. government
corporation and agency guaranteed mortgage-backed securities along with other debt and equity securities.
At June 30, 2004, the Companys portfolio of securities totaled $696.1 million, of which U.S.
government corporation and agency guaranteed mortgage-backed securities and collateralized mortgage
obligations having an average life of approximately 3.9 years amounted to $625.1 million. The Company
has the intent and ability to hold to maturity securities classified as held to maturity. These
securities are carried at cost, adjusted for amortization of premiums and accretion of discounts.
The gross unrealized gains and losses on held to maturity securities were $3.6 million
and $7.4 million, respectively. Securities classified as available for sale may be sold
in the future, prior to maturity. These securities are carried at market value. Net aggregate unrealized
gains or losses on these securities are included in a valuation allowance account and are shown net
of taxes, as a component of shareholders equity. Available for sale securities
included gross unrealized gains of $2.5 million and gross unrealized losses of $5.9 million. Given
the generally high credit quality of the portfolio, management expects to realize all of its investment
upon the maturity of such instruments and thus believes that any market value impairment is temporary.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21
|--



|The following table presents information regarding securities available for sale:
|---------------------------------------------------------------------------------
|                                                                                 

|June 30, 2004               | Gross
      Amortized
      Cost |             | Gross
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Market
      Value |           
|--------------------------- | -------------------------------- | ----------- | ---------------------------------- | - | ----------------------------------- |  | ------------------ | ----------
|                            |                                  |             |                                    |   |                                     |  |                    |           
|U.S. Treasury securities    | $                                | 2,499,735   |                                    | $ |                                    |  | $                  | (204      
|Obligations of U.S. govern- |                                  |             |                                    |   |                                     |  |                    |           
|ment corporations and       |                                  |             |                                    |   |                                     |  |                    |           
|agenciesmortgage-backed    |                                  |             |                                    |   |                                     |  |                    |           
|securities                  |                                  | 177,858,734 |                                    |   | 919,515                             |  |                    | (2,515,914
|Obligations of U.S. govern- |                                  |             |                                    |   |                                     |  |                    |           
|ment corporations and       |                                  |             |                                    |   |                                     |  |                    |           
|agenciescollateralized     |                                  |             |                                    |   |                                     |  |                    |           
|mortgage obligations        |                                  | 57,570,726  |                                    |   |                                    |  |                    | (3,071,481
|Obligations of state and    |                                  |             |                                    |   |                                     |  |                    |           
|political institutions      |                                  | 29,289,067  |                                    |   | 1,255,317                           |  |                    |          
|Trust preferred securities  |                                  | 3,220,969   |                                    |   | 318,090                             |  |                    |          
|Other debt securities       |                                  | 24,993,872  |                                    |   |                                    |  |                    | (340,747  
|Federal Reserve Bank and    |                                  |             |                                    |   |                                     |  |                    |           
|other equity securities     |                                  | 8,435,142   |                                    |   | 19,323                              |  |                    |          
|                            |                                  |             |                                    |   |                                     |  |                    |           
|                            |                                  |             |                                    |   |                                     |  |                    |           
|Total                       | $                                | 303,868,245 |                                    | $ | 2,512,245                           |  | $                  | (5,928,346
|                            |                                  |             |                                    |   |                                     |  |                    |           

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

|June 30, 2004               | Carrying
      Value |             | Gross
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Estimated
      Market
      Value |           
|--------------------------- | -------------------- | ----------- | ---------------------------------- | - | ----------------------------------- |  | ---------------------------------- | ----------
|                            |                      |             |                                    |   |                                     |  |                                    |           
|Obligations of U.S. govern- |                      |             |                                    |   |                                     |  |                                    |           
|ment corporations and       |                      |             |                                    |   |                                     |  |                                    |           
|agencies  mortgage-backed  |                      |             |                                    |   |                                     |  |                                    |           
|securities                  | $                    | 314,724,447 |                                    | $ | 3,518,689                           |  | $                                  | (3,603,150
|Obligations of U.S. govern- |                      |             |                                    |   |                                     |  |                                    |           
|ment corporations and       |                      |             |                                    |   |                                     |  |                                    |           
|agenciescollateralized     |                      |             |                                    |   |                                     |  |                                    |           
|mortgage obligations        |                      | 79,635,907  |                                    |   | 51,712                              |  |                                    | (3,821,720
|Debt securities issued by   |                      |             |                                    |   |                                     |  |                                    |           
|Foreign governments         |                      | 1,250,000   |                                    |   |                                    |  |                                    |          
|                            |                      |             |                                    |   |                                     |  |                                    |           
|                            |                      |             |                                    |   |                                     |  |                                    |           
|Total                       | $                    | 395,610,354 |                                    | $ | 3,570,401                           |  | $                                  | (7,424,870
|                            |                      |             |                                    |   |                                     |  |                                    |           

|22
|--



|Loan Portfolio
      A management objective is to maintain the quality of the loan portfolio. The Company seeks to achieve this objective by maintaining rigorous underwriting standards coupled with regular evaluation of the creditworthiness of and the designation of lending limits for each borrower. The portfolio strategies include seeking industry and loan size diversification in order to minimize credit exposure and the origination of loans in markets with which the Company is familiar.
      The Companys commercial and industrial loan portfolio represents approximately 59% of all loans. Loans in this category are typically made to small and medium-sized businesses and range between $25,000 and $10 million. Sources of repayment are from the borrowers operating profits, cash flows and liquidation of pledged collateral. Based on underwriting standards, loans may be secured in whole or in part by collateral such as liquid assets, accounts receivable, equipment, inventory, and real property. The Companys real estate loan portfolio, which represents approximately 22% of all loans, is secured by mortgages on real property located principally in the states of New York and Virginia. The Companys leasing portfolio, which consists of finance leases for various types of business equipment, represents approximately 17% of all loans. The collateral securing any loan may vary in value based on market
conditions.
    The following table sets forth the composition of the Companys loans held for sale and loans held in portfolio:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                 | June 30,         |        
|-------------------------------- | ---------------- | -------
|
|
|
|                                 | ($ in thousands) |        
|                                 |                  |        
|
|                                 |                  |        
|                                 |                  |        
|Domestic                         |                  |        
|Commercial and industrial        | $                | 560,257
|Equipment lease financing        |                  | 158,033
|Real estate - mortgage           |                  | 212,234
|Real estate - construction       |                  | 2,341  
|Installment - individuals        |                  | 14,729 
|Loans to depository institutions |                  |       
|                                 |                  |        
|                                 |                  |        
|Loans, net of unearned discounts | $                | 947,594
|                                 |                  |        

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

|23
|--



|provision for loan losses, which is a charge to operating earnings. The adequacy of the provision and
the resulting allowance for loan losses is determined by a management evaluation process of the loan
portfolio, including identification and review of individual problem situations that may affect the
borrowers ability to repay, review of overall portfolio quality through an analysis of current
charge-offs, delinquency and nonperforming loan data, estimates of the value of any underlying
collateral, an assessment of current and expected economic conditions and changes in the size and
character of the loan portfolio. Other data utilized by management in determining the adequacy of
the allowance for loan losses includes, but is not limited to, the results of regulatory reviews,
the amount of, trend of and/or borrower characteristics on loans that are identified as requiring
special attention as part of the credit review process, and peer group comparisons. The impact of
this other data might result in an allowance which will be greater than that indicated by the evaluation
process previously described. The allowance reflects managements evaluation both of loans presenting
identified loss potential and of the risk inherent in various components of the loan portfolio, including
loans identified as impaired as required by SFAS No. 114. Thus, an increase in the size of the portfolio
or in any of its components could necessitate an increase in the allowance even though there may
not be a decline in credit quality or an increase in potential problem loans. A significant change
in any of the evaluation factors described above could result in future additions to the allowance.
At June 30, 2004, the ratio of the allowance to loans held in portfolio, net of unearned discounts,
was 1.66% and the allowance was $15.0 million. At such date, the Companys nonaccrual loans
amounted to $2.8 million; $848 thousand of such loans was judged to be impaired within the scope
of SFAS No. 114. Based on the foregoing, as well as managements judgment as to the current
risks inherent in loans held in portfolio, the Companys allowance for loan losses was deemed
adequate to absorb all reasonably anticipated losses on specifically known and other possible credit
risks associated with the portfolio as of June 30, 2004. Net losses within loans held in portfolio
are not statistically predictable and changes in conditions in the next twelve months could result
in future provisions for loan losses varying from the level taken in the first six months of 2004.
Potential problem loans, which are loans that are currently performing under present loan repayment
terms but where known information about possible credit problems of borrowers causes management to
have serious doubts as to the ability of the borrowers to continue to comply with the present repayment
terms, aggregated $1.1 million at June 30, 2004.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|24
|--



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

|                              | June
      30, |          
|----------------------------- | -------------- | ---------
|
|
|
|
|
|
|                              |                |          
|Domestic                      |                |          
|Demand                        | $              | 444, 343 
|NOW                           |                | 134,964  
|Savings                       |                | 31,672   
|Money
      market            |                | 204,868  
|Time
      deposits           |                | 436,939  
|                              |                |          
|                              |                |          
|Total
      domestic deposits |                | 1,252,786
|Foreign                       |                |          
|Time
      deposits           |                | 3,000    
|                              |                |          
|                              |                |          
|Total
      deposits          | $              | 1,255,786
|                              |                |          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Fluctuations of balances in total or among categories at any date may occur based on the Companys
mix of assets and liabilities as well as on customers balance sheet strategies. Historically,
however, average balances for deposits have been relatively stable. Information regarding these average
balances is presented on pages 27 and 28.
The Company does not have any off-balance sheet arrangements that are reasonably likely to have a material
current or future effect on the Companys financial condition, revenues, expenses, results of
operations, liquidity or regulatory capital.
CAPITAL
The Company and the bank are subject to risk-based capital regulations which quantitatively measure
capital against risk-weighted assets, including certain off-balance sheet items. These regulations
define the elements of the Tier 1 and Tier 2 components of Total Capital and establish minimum ratios
of 4% for Tier 1 capital and 8% for Total Capital for capital adequacy purposes. Supplementing these
regulations is a leverage requirement. This requirement establishes a minimum leverage ratio (at
least 3% to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly average assets
(after deducting goodwill). Information regarding the Companys and the banks risk-based
capital is presented on page 28. In addition, the bank is subject to the Federal Deposit Insurance
Corporation Improvement Act of 1981 (FDICIA) which imposes a number of mandatory supervisory
measures. Among other matters, five capital categories, ranging from well capitalized
to critically under capitalized, are used by regulatory agencies

|25
|--



|to determine a banks deposit insurance premium, approval of applications authorizing institutions
to increase their asset size or otherwise expand business activities or acquire other institutions.
Under FDICIA, a well capitalized bank must maintain minimum leverage, Tier 1 and Total
Capital ratios of 5%, 6% and 10%, respectively. The Federal Reserve Board applies comparable tests
for holding companies such as the Company. At June 30, 2004, the Company and the bank exceeded the requirements
for well capitalized institutions.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report, including but not limited to, statements concerning
future results of operations or financial position, borrowing capacity and future liquidity, future
investment results, future credit exposure, future loan losses and plans and objectives for future
operations, and other statements contained herein regarding matters that are not historical facts,
are forward-looking statements as defined in the Securities Exchange Act of 1934. These
statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties,
and represent only our belief regarding future events, many of which, by their nature, are inherently
uncertain and outside our control. Any forward-looking statements we may make speak only as of the
date on which such statements are made. Our actual results and financial position may differ materially
from the anticipated results and financial condition indicated in or implied by these forward-looking
statements.
Factors that could cause our actual results to differ materially from those in the forward-looking
statements include, but are not limited to, the following: inflation, interest rates, market and
monetary fluctuations; geopolitical development including acts of war and terrorism and their impact
on economic conditions; the effects of, and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the Federal Reserve System; changes
particularly declines, in general economic conditions and in the local economies in which the Company
operates; the financial condition of the Companys borrowers; competitive pressures on loan
and deposit pricing and demand; changes in technology and their impact on the marketing of new products
and services and the acceptance of these products and services by new and existing customers; the
willingness of customers to substitute competitors products and services for the Companys
product and services; the impact of changes in the financial services laws and regulations
(including laws concerning taxes, banking, securities and insurance); changes in accounting principles,
policies and guidelines; the success of the Company at managing the risks involved in the foregoing
as well as other risks and uncertainties detailed from time to time in press releases and other public
filings. The foregoing list of important factors is not exclusive, and we will not update any forward-looking
statement, whether written or oral, that may be made from time to time.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|26
|--



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

|                                     |  | 2004                  |           | 2003     |  
|------------------------------------ |  | --------------------- | --------- | -------- | -
|                                     |  |                       |           |          |  
|ASSETS                               |  | Average
      Balance |           | Interest |  
|                                     |  |                       |           |          |  
|Interest-bearing deposits            |  |                       |           |          |  
|with other banks                     |  | $                     | 2,952     |          | $
|Securities available for sale        |  |                       | 291,038   |          |  
|Securities held to maturity          |  |                       | 395,637   |          |  
|Securities tax-exempt [2]            |  |                       | 30,494    |          |  
|Federal funds sold                   |  |                       | 2,418     |          |  
|Loans, net of unearned discounts [3] |  |                       | 901,156   |          |  
|                                     |  |                       |           |          |  
|TOTAL INTEREST-EARNING ASSETS        |  |                       | 1,623,695 |          |  
|                                     |  |                       |           |          |  
|Cash and due from banks              |  |                       | 58,365    |          |  
|Allowance for loan losses            |  |                       | (15,597   | )        |  
|Goodwill                             |  |                       | 21,158    |          |  
|Other assets                         |  |                       | 72,470    |          |  
|                                     |  |                       |           |          |  
|TOTAL ASSETS                         |  | $                     | 1,760,091 |          |  
|                                     |  |                       |           |          |  
|LIABILITIES AND SHAREHOLDERS        |  |                       |           |          |  
|EQUITY                               |  |                       |           |          |  
|Interest-bearing deposits            |  |                       |           |          |  
|Domestic                             |  |                       |           |          |  
|Savings                              |  | $                     | 32,636    |          |  
|NOW                                  |  |                       | 135,345   |          |  
|Money market                         |  |                       | 203,133   |          |  
|Time                                 |  |                       | 424,602   |          |  
|Foreign                              |  |                       |           |          |  
|Time                                 |  |                       | 3,000     |          |  
|                                     |  |                       |           |          |  
|Total interest-bearing deposits      |  |                       | 798,716   |          |  
|                                     |  |                       |           |          |  
|Borrowings                           |  |                       |           |          |  
|Securities sold under agreements     |  |                       |           |          |  
|to repurchase - customers            |  |                       | 78,753    |          |  
|Securities sold under agreements     |  |                       |           |          |  
|to repurchase - dealers              |  |                       | 50,730    |          |  
|Federal funds purchased              |  |                       | 17,399    |          |  
|Commercial paper                     |  |                       | 28,323    |          |  
|Other short-term debt                |  |                       | 18,886    |          |  
|Long-term debt                       |  |                       | 135,774   |          |  
|                                     |  |                       |           |          |  
|Total borrowings                     |  |                       | 329,865   |          |  
|                                     |  |                       |           |          |  
|TOTAL INTEREST-BEARING LIABILITIES   |  |                       | 1,128,581 |          |  
|                                     |  |                       |           |          |  
|Noninterest-bearing deposits         |  |                       | 408,520   |          |  
|Other liabilities                    |  |                       | 81,029    |          |  
|                                     |  |                       |           |          |  
|Total liabilities                    |  |                       | 1,618,130 |          |  
|                                     |  |                       |           |          |  
|                                     |  |                       |           |          |  
|Shareholders equity                 |  |                       | 141,961   |          |  
|                                     |  |                       |           |          |  
|TOTAL LIABILITIES AND                |  |                       |           |          |  
|SHAREHOLDERS EQUITY                 |  | $                     | 1,760,091 |          |  
|                                     |  |                       |           |          |  
|Net interest income/spread           |  |                       |           |          |  
|                                     |  |                       |           |          |  
|Net yield on interest-earning        |  |                       |           |          |  
|assets (margin)                      |  |                       |           |          |  
|                                     |  |                       |           |          |  
|Less: Tax equivalent adjustment      |  |                       |           |          |  
|                                     |  |                       |           |          |  
|Net interest income                  |  |                       |           |          | $
|                                     |  |                       |           |          |  

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

|27
|--



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

|                                                               |  | 2004                  |           | 2003     |  
|-------------------------------------------------------------- |  | --------------------- | --------- | -------- | -
|                                                               |  |                       |           |          |  
|ASSETS                                                         |  | Average
      Balance |           | Interest |  
|                                                               |  |                       |           |          |  
|Interest-bearing deposits
  with other banks                   |  | $                     | 3,150     |          | $
|Securities available for sale                                  |  |                       | 290,568   |          |  
|Securities held to maturity                                    |  |                       | 384,888   |          |  
|Securities tax-exempt [2]                                      |  |                       | 30,697    |          |  
|Federal funds sold                                             |  |                       | 11,703    |          |  
|Loans, net of unearned discounts [3]                           |  |                       | 881,878   |          |  
|                                                               |  |                       |           |          |  
|TOTAL INTEREST-EARNING ASSETS                                  |  |                       | 1,602,884 |          |  
|                                                               |  |                       |           |          |  
|Cash and due from banks                                        |  |                       | 62,511    |          |  
|Allowance for loan losses                                      |  |                       | (15,460   | )        |  
|Goodwill                                                       |  |                       | 21,158    |          |  
|Other assets                                                   |  |                       | 70,207    |          |  
|                                                               |  |                       |           |          |  
|TOTAL ASSETS                                                   |  | $                     | 1,741,300 |          |  
|                                                               |  |                       |           |          |  
|LIABILITIES AND SHAREHOLDERS                                  |  |                       |           |          |  
|EQUITY                                                         |  |                       |           |          |  
|Interest-bearing deposits                                      |  |                       |           |          |  
|Domestic                                                       |  |                       |           |          |  
|Savings                                                        |  | $                     | 32,791    |          |  
|NOW                                                            |  |                       | 134,683   |          |  
|Money market                                                   |  |                       | 206,540   |          |  
|Time                                                           |  |                       | 419,143   |          |  
|Foreign                                                        |  |                       |           |          |  
|Time                                                           |  |                       | 3,000     |          |  
|                                                               |  |                       |           |          |  
|Total interest-bearing deposits                                |  |                       | 796,157   |          |  
|                                                               |  |                       |           |          |  
|Borrowings                                                     |  |                       |           |          |  
|Securities sold under agreements                               |  |                       |           |          |  
|to repurchase - customers                                      |  |                       | 77,061    |          |  
|Securities sold under agreements                               | 
|to repurchase - dealers                                        |  |                       | 43,677    |          |  
|Federal funds purchased                                        |  |                       | 11,653    |          |  
|Commercial paper                                               |  |                       | 25,871    |          |  
|Other short-term debt                                          |  |                       | 21,816    |          |  
|Long-term debt                                                 |  |                       | 135,774   |          |  
|                                                               |  |                       |           |          |  
|Total borrowings                                               |  |                       | 315,852   |          |  
|                                                               |  |                       |           |          |  
|TOTAL INTEREST-BEARING LIABILITIES                             |  |                       | 1,112,009 |          |  
|                                                               |  |                       |           |          |  
|Noninterest-bearing deposits                                   |  |                       | 405,315   |          |  
|Other liabilities                                              |  |                       | 81,082    |          |  
|                                                               |  |                       |           |          |  
|Total liabilities                                              |  |                       | 1,598,406 |          |  
|                                                               |  |                       |           |          |  
|                                                               |  |                       |           |          |  
|Shareholders equity                                           |  |                       | 142,894   |          |  
|                                                               |  |                       |           |          |  
|TOTAL LIABILITIES AND
                    SHAREHOLDERS EQUITY |  | $                     | 1,741,300 |          |  
|                                                               |  |                       |           |          |  
|Net interest income/spread                                     |  |                       |           |          |  
|                                                               |  |                       |           |          |  
|Net yield on interest-earning
  assets (margin)                |  |                       |           |          |  
|                                                               |  |                       |           |          |  
|Less: Tax equivalent adjustment                                |  |                       |           |          |  
|                                                               |  |                       |           |          |  
|Net interest income                                            |  |                       |           |          | $
|                                                               |  |                       |           |          |  

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

|28
|--



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

|                                                               |  |  | Increase/(Decrease) 
      Three Months Ended 
      June 30, 2004 to June 30, 2003 |      
|-------------------------------------------------------------- |  |  | ----------------------------------------------------------------------------------- | -----
|                                                               |  | 
|                                                               |  |  | Volume                                                                              |      
|                                                               |  |  |                                                                                     |      
|INTEREST INCOME                                                |  |  |                                                                                     |      
|Interest-bearing deposits with other banks                     |  |  | $                                                                                   |     
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|Securities available for sale                                  |  |  |                                                                                     | 1,452
|Securities held to maturity                                    |  |  |                                                                                     | (76  
|Securities tax-exempt                                          |  |  |                                                                                     | (39  
|                                                               |  |  |                                                                                     |      
|Total investment securities                                    |  |  |                                                                                     | 1,337
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|Federal funds sold                                             |  |  |                                                                                     | (8   
|                                                               |  |  |                                                                                    
|Loans, net of unearned discounts [3]                           |  |  |                                                                                     | 1,298
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|TOTAL INTEREST INCOME                                          |  |  | $                                                                                   | 2,627
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|INTEREST EXPENSE                                               |  |  |                                                                                     |      
|Interest-bearing deposits                                      |  |  |                                                                                     |      
|Domestic                                                       |  |  |                                                                                     |      
|Savings                                                        |  |  | $                                                                                   | 4    
|NOW                                                            |  |  |                                                                                     | 23   
|Money market                                                   |  |  |                                                                                     | 45   
|Time                                                           |  |  |                                                                                     | 276  
|Foreign                                                        |  | 
|Time                                                           |  |  |                                                                                     |     
|                                                               |  |  |                                                                                     |      
|Total interest-bearing deposits                                |  |  |                                                                                     | 348  
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|Borrowings                                                     |  |  |                                                                                     |      
|Securities sold under agreements
    to repurchase - customers |  |  |                                                                                     | 22   
|Securities sold under agreements                               |  | 
|to repurchase - dealers                                        |  |  |                                                                                     | 6    
|Federal funds purchased                                        |  |  |                                                                                     | 27   
|Commercial paper                                               |  |  |                                                                                     | 22   
|Other short-term debt                                          |  |  |                                                                                     | (49  
|Long-term debt                                                 |  |  |                                                                                     | (55  
|                                                               |  |  |                                                                                     |      
|Total borrowings                                               |  |  |                                                                                     | (27  
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|TOTAL INTEREST EXPENSE                                         |  |  | $                                                                                   | 321  
|                                                               |  |  |                                                                                     |      
|                                                               |  |  |                                                                                    
|NET INTEREST INCOME                                            |  |  | $                                                                                   | 2,306
|                                                               |  |  |                                                                                     |      

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

|29
|--



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

|                                                               |  |  | Increase/(Decrease) 
      Six Months Ended 
      June 30, 2004 to June 30, 2003 |      
|-------------------------------------------------------------- |  |  | --------------------------------------------------------------------------------- | -----
|                                                               |  | 
|                                                               |  |  | Volume                                                                            |      
|                                                               |  |  |                                                                                   |      
|INTEREST INCOME                                                |  |  |                                                                                   |      
|Interest-bearing deposits with other banks                     |  |  | $                                                                                 | (5   
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|Securities available for sale                                  |  |  |                                                                                   | 3,094
|Securities held to maturity                                    |  |  |                                                                                   | (110 
|Securities tax-exempt                                          |  |  |                                                                                   | (68  
|                                                               |  |  |                                                                                   |      
|Total investment securities                                    |  |  |                                                                                   | 2,916
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|Federal funds sold                                             |  |  |                                                                                   | 26   
|                                                               |  |  |                                                                                  
|Loans, net of unearned discounts [3]                           |  |  |                                                                                   | 2,608
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|TOTAL INTEREST INCOME                                          |  |  | $                                                                                 | 5,545
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|INTEREST EXPENSE                                               |  |  |                                                                                   |      
|Interest-bearing deposits                                      |  |  |                                                                                   |      
|Domestic                                                       |  |  |                                                                                   |      
|Savings                                                        |  |  | $                                                                                 | 12   
|NOW                                                            |  |  |                                                                                   | 47   
|Money market                                                   |  |  |                                                                                   | 128  
|Time                                                           |  |  |                                                                                   | 560  
|Foreign                                                        |  | 
|Time                                                           |  |  |                                                                                   |     
|                                                               |  |  |                                                                                   |      
|Total interest-bearing deposits                                |  |  |                                                                                   | 747  
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|Borrowings                                                     |  |  |                                                                                   |      
|Securities sold under agreements
    to repurchase - customers |  |  |                                                                                   | 75   
|Securities sold under agreements                               |  | 
|to repurchase - dealers                                        |  |  |                                                                                   | 8    
|Federal funds purchased                                        |  |  |                                                                                   | 33   
|Commercial paper                                               |  |  |                                                                                   | 22   
|Other short-term debt                                          |  |  |                                                                                   | (83  
|Long-term debt                                                 |  |  |                                                                                   | (108 
|                                                               |  |  |                                                                                   |      
|Total borrowings                                               |  |  |                                                                                   | (53  
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|TOTAL INTEREST EXPENSE                                         |  |  | $                                                                                 | 694  
|                                                               |  |  |                                                                                   |      
|                                                               |  |  |                                                                                  
|NET INTEREST INCOME                                            |  |  | $                                                                                 | 4,851
|                                                               |  |  |                                                                                   |      

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

|30
|--



|STERLING BANCORP AND SUBSIDIARIESRegulatory Capital and Ratios 
      (Unaudited & Restated)
|--------------------------------------------------------------------------------------------

|Ratios and Minimums 
      (dollars in thousands)
|-------------------------------------------------

|                                                  |  |  | Actual |         | For
      Capital 
      Adequacy Minimum |  | To
      Be Well
      Capitalized |  
|------------------------------------------------- |  |  | ------ | ------- | ----------------------------------------- |  | ---------------------------------- | -
|                                                  |  |  |        |         |                                           |  |                                    |  
|As
      of June 30, 2004 [1]                     |  |  | Amount |         | Ratio                                     |  | Amount                             |  
|                                                  |  |  |        |         |                                           |  |                                    |  
|Total
      Capital(to Risk Weighted Assets):     |  |  |        |         |                                           |  |                                    |  
|The
      Company                                 |  |  | $      | 161,557 |                                           |  | 14.66                              | %
|The
      bank                                    |  |  |        | 123,909 |                                           |  | 11.86                              |  
|                                                  |  | 
|Tier
      1 Capital(to Risk Weighted Assets):    |  |  |        |         |                                           |  |                                    |  
|The
      Company                                 |  |  |        | 147,763 |                                           |  | 13.41                              |  
|The
      bank                                    |  |  |        | 110,829 |                                           |  | 10.61                              |  
|                                                  |  |  |        |         |                                           |  |                                    |  
|Tier
      1 Leverage Capital(to Average Assets): |  |  |        |         |                                           |  |                                    |  
|The
      Company                                 |  |  |        | 147,763 |                                           |  | 8.50                               |  
|The
      bank                                    |  |  |        | 110,829 |                                           |  | 6.57                               |  
|                                                  |  | 
|As
      of December 31, 2003 [1]                 |  | 
|                                                  |  | 
|Total
      Capital(to Risk Weighted Assets):     |  |  |        |         |                                           |  |                                    |  
|The
      Company                                 |  |  | $      | 161,837 |                                           |  | 14.88                              | %
|The
      bank                                    |  |  |        | 121,439 |                                           |  | 11.68                              |  
|                                                  |  | 
|Tier
      1 Capital(to Risk Weighted Assets):    |  |  |        |         |                                           |  |                                    |  
|The
      Company                                 |  |  |        | 148,235 |                                           |  | 13.63                              |  
|The
      bank                                    |  |  |        | 108,426 |                                           |  | 10.43                              |  
|                                                  |  | 
|Tier
      1 Leverage Capital(to Average Assets): |  |  |        |         |                                           |  |                                    |  
|The
      Company                                 |  |  |        | 148,235 |                                           |  | 8.88                               |  
|The
      bank                                    |  |  |        | 108,426 |                                           |  | 6.76                               |  

|[1] | Restated; see Note 2 on page 9.
|--- | -------------------------------

|31
|--



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

|32
|--



|The Companys balance sheet structure is primarily short-term in nature with a substantial portion
of assets and liabilities repricing or maturing within one year. The Companys gap analysis
at June 30, 2004, presented on page 28, indicates that net interest income would increase during
periods of rising interest rates and decrease during periods of falling interest rates, but, as mentioned
above, gap analysis may not be an accurate predictor of net interest income.
As part of its interest rate risk strategy, the Company may use financial instrument derivatives to
hedge the interest rate sensitivity of assets with the corresponding amortization reflected in the
yield of the related balance sheet assets being hedged. The Company has written policy guidelines,
approved by the Board of Directors, governing the use of financial instruments, including approved
counterparties, risk limits and appropriate internal control procedures. The credit risk of derivatives
arises principally from the potential for a counterparty to fail to meet its obligation to settle
a contract on a timely basis.
The Company utilizes income simulation models to complement its traditional gap analysis. While the
Asset/Liability Committee routinely monitors simulated net interest income sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor
potential longer-term interest rate risk.
The income simulation models measure the Companys net interest income volatility or sensitivity
to interest rate changes utilizing statistical techniques that allow the Company to consider various
factors which impact net interest income. These factors include actual maturities, estimated cash
flows, repricing characteristics, deposits growth/retention and, most importantly, the relative sensitivity
of the Companys assets and liabilities to changes in market interest rates. This relative sensitivity
is important to consider as the Companys core deposit base has not been subject to the same
degree of interest rate sensitivity as its assets. The core deposit costs are internally managed
and tend to exhibit less sensitivity to changes in interest rates than the Companys adjustable
rate assets whose yields are based on external indices and generally change in concert with market
interest rates.
The Companys interest rate sensitivity is determined by identifying the probable impact of changes
in market interest rates on the yields on the Companys assets and the rates that would be paid
on its liabilities. This modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management projects the impact
of changes in interest rates on net interest margin. The Company has established certain policy limits
for the potential volatility of its net interest margin assuming certain levels of changes in market
interest rates with the objective of maintaining a stable net interest margin under various probable
rate scenarios. Management generally has maintained a risk position well within the policy limits.
As of June 30, 2004, the model indicated the impact of a 200 basis point parallel and pro rata rise
in rates over 12 months would approximate a 2.9% ($2.2 million) increase in net interest income,
while the impact of a 200 basis point decline in rates over the same period would approximate a 5.0%
($3.8 million) decline from an unchanged rate environment.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|33
|--



|The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon
as being indicative of expected operating results. These hypothetical estimates are based upon numerous
assumptions including: the nature and timing of interest rate levels including yield curve shape,
pre-payments on loans and securities, deposit decay rates, pricing decisions on loans and deposits,
reinvestment/replacement of asset and liability cash flows, and others. While assumptions are developed
based upon current economic and local market conditions, the Company cannot provide any assurances
as to the predictive nature of these assumptions, including how customers preferences or competitor
influences might change.
Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will
also differ due to: pre-payment/refinancing levels likely deviating from those assumed, the varying
impact of interest rate change caps or floors on adjustable rate assets, the potential effect of
changing debt service levels on customers with adjustable rate loans, depositor early withdrawals
and product preference changes, and other variables. Furthermore, the sensitivity analysis does not
reflect actions that the Asset/Liability Committee might take in responding to or anticipating changes
in interest rates.
Liquidity Risk
Liquidity is the ability to meet cash needs arising from changes in various categories of assets and liabilities.
Liquidity is constantly monitored and managed at both the parent company and the bank levels. Liquid
Assets consist of cash and due from banks, interest-bearing deposits in banks and Federal funds sold
and securities available for sale. Primary funding sources include core deposits, capital market funds and other money market sources. Core deposits include domestic noninterest-bearing
and interest-bearing retail deposits, which historically have been relatively stable. The parent
company and the bank believe that they have significant unused borrowing capacity. Contingency plans
exist which we believe could be implemented on a timely basis to mitigate the impact of any dramatic
change in market conditions.
While the parent company generates income from its own operations, it also depends for its cash requirements
on funds maintained or generated by its subsidiaries, principally the bank. Such sources have been
adequate to meet the parent companys cash requirements throughout its history.
Various legal restrictions limit the extent to which the bank can supply funds to the parent company
and its nonbank subsidiaries. All national banks are limited in the payment of dividends without
the approval of the Comptroller of the Currency to an amount not to exceed the net profits as defined,
for the year to date combined with its retained net profits for the preceding two calendar years.
At June 30, 2004, the parent companys short-term debt, consisting principally of commercial paper
used to finance ongoing current business activities, was approximately $36.2 million. The parent
company had cash, interest-bearing deposits with banks and other current assets aggregating $39.6
million. The parent company also has back-up credit lines with banks of $24.0 million. Since 1979,
the parent company has had no need to use the available back-up lines of credit.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|34
|--



|The following table sets forth information regarding the Companys obligations and commitments to make future payments under contract as of June 30, 2004:
|----------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                          

|                                   | Payments Due by Period | 
|---------------------------------- | ---------------------- | 
|
|
|
|
|
|Long-Term Debt                     |                        | 
|Operating Leases                   |                        | 
|                                   |                        | 
|                                   |                        | 
|Total Contractual Cash Obligations |                        | 
|                                   |                        | 
|                                   |                        | 

|                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------
|The following table sets forth information regarding the Companys obligations under other commercial commitments as of June 30, 2004 :
|                                                                                                                                       

|                             | Amount of Commitment Expiration Per Period | 
|---------------------------- | ------------------------------------------ | 
|
|
|
|
|
|Residential loans            |                                            | 
|Standby Letters of Credit    |                                            | 
|Other Commercial Commitments |                                            | 
|                             |                                            | 
|                             |                                            | 
|                             |                                            | 
|Total Commercial Commitments |                                            | 
|                             |                                            | 
|                             |                                            | 

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

|35
|--



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

|                                                                                 | Repricing
      Date | 
|-------------------------------------------------------------------------------- | -------------------- | 
|
|
|
|ASSETS                                                                           |                      | 
|Interest-bearing
      deposits
          with other banks                       |                      | 
|Investment
      securities                                                      |                      | 
|Loans,
      net of unearned
          discounts                                 |                      | 
|Commercial
      and industrial                                                  |                      | 
|Loans
      to depository
             institutions                              |                      | 
|Lease
      financing                                                            |                      | 
|Real
      estate                                                                |                      | 
|Installment                                                                      |                      | 
|Noninterest-earning
          assets and allowance
          for loan losses [2] |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 
|Total
      Assets                                                               |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 
|LIABILITIES
      AND SHAREHOLDERS EQUITY                                       |                      | 
|Interest-bearing
      deposits                                                  |                      | 
|Savings
      [1]                                                                |                      | 
|NOW
      [1]                                                                    |                      | 
|Money
      market [1]                                                           |                      | 
|Time
      - domestic                                                            |                      | 
|-
      foreign                                                                  |                      | 
|Securities
      sold u/a/r - cust                                               |                      | 
|Securities
      sold u/a/r - deal                                               |                      | 
|Federal
      funds purchased                                                    |                      | 
|Commercial
      paper                                                           |                      | 
|Other
      short-term borrowings                                                |                      | 
|Long-term
      borrowings - FHLB                                                |                      | 
|Noninterest-bearing
      liabilities
         and shareholders equity [2]      |                      | 
|                                                                                 |                      | 
|Total
      Liabilities and
              Shareholders Equity                   |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 
|Net
      Interest Rate
          Sensitivity Gap                                |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 
|Cumulative
      Gap
          June 30, 2004                                     |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 
|Cumulative
      Gap
          June 30, 2003                                     |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 
|Cumulative
      Gap
          December 31, 2003                                 |                      | 
|                                                                                 |                      | 
|                                                                                 |                      | 

|[1] | Historically, balances in non-maturity deposit accounts have remained relatively stable despite changes in levels of interest rates. Balances are shown in repricing periods based on managements historical repricing practices and run-off experience.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                          
|[2] | Restated; see Note 2 on page 9.                                                                                                                                                                                                                          

|36
|--



|ITEM 4.  CONTROLS AND PROCEDURES
  An evaluation was carried out under the supervision and with the participation of the Companys
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)
or 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this
quarterly report. Based upon that evaluation, the Companys management, including the Chief
Executive Officer and Chief Financial Officer, had concluded that the design and operation of these
disclosure controls and procedures were effective as of the end of the period covered by this report.
However, based on a subsequent evaluation as of December 31, 2004 and the identification of a material
weakness in the Companys internal control over financial reporting (relating to inadequate resources for
controls over the accounting for Company-owned split-dollar life insurance policies on the
lives of certain officers of the Company) described in Item 9A of
the Companys annual report on Form 10-K for the fiscal year ended December 31, 2004, the Companys
management, including the Chief Executive Officer and Chief Financial Officer, have concluded that,
as of the end of the period covered by this quarterly report, the Companys disclosure controls
and procedures were not effective to ensure that information required to be disclosed by the Company
in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms. For a discussion
of the reasons and matters on which this conclusion was based, see Item 9A of the Companys
annual report on Form 10-K for the fiscal year ended December 31, 2004. No changes in our internal
control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities
Exchange Act of 1934) occurred during our last fiscal quarter covered by this quarterly report that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|37
|--



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

|Item 4. | Submission of Matters to a Vote of Security Holders                                   
|------- | --------------------------------------------------------------------------------------
|        |                                                                                       
|        | (a) The Annual Meeting of Shareholders of the Company was held on April 15, 2004.     
|        |                                                                                       
|        | (b) The following matters were submitted to a vote of the Shareholders of the Company:
|        |                                                                                       
|        |                                                                                       

| |                                               |  |            |  | 
| | --------------------------------------------- |  | ---------- |  | 
|
| |                                               |  |            |  | 
| |                                               |  |            |  | 
| | Robert Abrams                                 |  | 13,796,404 |  | 
| | Joseph M. Adamko                              |  | 13,695,145 |  | 
| | Louis J. Cappelli                             |  | 13,786,357 |  | 
| | Walter Feldesman                              |  | 11,241,528 |  | 
| | Fernando Ferrer                               |  | 13,789,952 |  | 
| | Allan F. Hershfield                           |  | 13,795,817 |  | 
| | Henry J. Humphreys                            |  | 13,747,524 |  | 
| | John C. Millman                               |  | 13,797,592 |  | 
| | Eugene T. Rossides                            |  | 13,640,863 |  | 
| |                                               |  |            |  | 
| | There were no abstentions or broker nonvotes.
| |                                              

| | (2) | Amendment of the Certificate of Incorporation of Sterling Bancorp
to (a) increase the number of authorized common shares of Sterling Bancorp to 50,000,000 shares
from 20,000,000 shares and (b) delete Section Three of Article Fifth of the Certificate of
Incorporation.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    

| | Total Votes For     |  | 12,096,249 |  |  |  | 
| | ------------------- |  | ---------- |  |  |  | 
| | Total Votes Against |  | 2,119,790  |  |  |  | 
| | Total Absentions    |  | 27,090     |  |  |  | 

|                                                                                                     
|-----------------------------------------------------------------------------------------------------
|Item 6. Exhibits and Reports on Form 8-K
(a)
The following exhibits are filed as part of this report:
|                                                                                                     

|3.
(i) (A) | Amended and Restated Certificate of Incorporation filed with the State of New York Department of State,
  August 14, 1986 (Filed as Exhibit 3.3 to Registrants Form 10-K for the fiscal year ended December
  31, 1986 and incorporated by reference herein).         
|---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |                                                                                                                                                                                                                                                                        
|(i) (B)    | Certificate of Amendment of the Certificate of Incorporation filed with the State of New York Department
  of State, June 13, 1988 (Filed as Exhibit 3.5 to Registrants Form 10-K for the fiscal year
  ended December 31, 1988 and incorporated by reference herein).

|38
|--



|(i) (C)  | Certificate
        of Amendment of the Certificate of Incorporation filed with the State
        of New York Department of State, March 3, 1989 (Filed as Exhibit A to
        the Registrants Form 8-A dated March 6, 1989 and incorporated by
        reference herein).                                                        
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                     
|(i) (D)  | Certificate
        of Amendment of the Certificate of Incorporation filed with the State of New
        York Department of State, March 5, 1993 (Filed as Exhibit 4.1
        to Registrants Form 8-K dated March 5, 1993 and incorporated by
        reference herein).                                                          
|         |                                                                                                                                                                                                                                                                                                                                     
|(i) (E)  | Certificate
        of Amendment of the Certificate of Incorporation filed with the State
        of New York Department of State, February 26, 2004 (Filed as Exhibit 3(i)(E)
        to Registrants Form 10-K for the fiscal year ended December
        31, 2003 and incorporated by reference herein).                         
|         |                                                                                                                                                                                                                                                                                                                                     
|(i) (F)  | The
        Certificate of Amendment of the Certificate of Incorporation of Sterling
        Bancorp filed with the State of New York Department of State, June 1,
        2004. (Filed as Exhibit 3(i)(F) to the Registrants original Form 10-Q
        for the quarter ended June 30, 2004 and incorporated herein by reference).
|         |                                                                                                                                                                                                                                                                                                                                     
|(ii) (A) | The By-Laws,
      as in effect on August 5, 2004.(Filed as Exhibit 3(ii)(A) to the Registrants original Form 10-Q for
      the quarter ended June 30, 2004 and incorporated herein by reference).                                                                                                                                
|         |                                                                                                                                                                                                                                                                                                                                     
|10.(i)   | Form
        of Change in Control Severance Agreement dated June  8, 2004 entered
        into Between the Registrant and one Executive.(Filed as Exhibit 10(i) to the Registrants original Form 10-Q for
        the quarter ended June 30, 2004 and incorporated herein by reference).                                           
|         |                                                                                                                                                                                                                                                                                                                                     
|11.      | Statement
      Re: Computation of Per Share Earnings.                                                                                                                                                                                                                                                                              
|         |                                                                                                                                                                                                                                                                                                                                     
|31.      | Certifications
        of the CEO and CFO pursuant to Exchange Act Rule 13a-14(a).                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                     
|32.      | Certifications
        of the CEO and CFO required by Section 1350 of Chapter 63 of Title 18
        of the U.S. Code.                                                                                                                                                                                                              

|                        
|------------------------
|(b) Reports on Form 8-K:
|                        

| | In a report on Form 8-K dated April 12,2004 and filed on April 13, 2004, the Company reported
  under Items 9 and 12 Results of Operations and Financial Condition and Regulation FD Disclosure, the press release announcing a conference call on April 16, 2004 to discuss the results of operations
  for the quarter ended March 31, 2004.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                 
| | In a report on Form 8-K dated April 15, 2004 and filed on April 16, 2004, the Company reported, under
  Items 9 and 12 Results of Operations and Financial Condition and Regulation FD Disclosure,
  the press release announcing the results of operations for the quarter ended March 31, 2004.                                             

|39
|--



| | In a report on Form 8-K dated June 8, 2004 and filed on June 9, 2004, the Company reported, under Item
  5. Other Events, the press release announcing the appointment of Anthony E. Burke to
  the Board of Directors of both Sterling Bancorp and Sterling National Bank.                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                          
| | In a report on Form 8-K dated May 20, 2004 and filed on May 21, 2004, the Company reported under
  Item 5.Other Events and under Item 7. Financial Statements, Pro Forma Financial
  Information and Exhibits, the press release announcing the declaration of a quarterly cash
  dividend of $0.19 payable June 30, 2004 to shareholders of record on June 15, 2004.

|40
|--



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

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

| |                 
| | ----------------
| | STERLING BANCORP
| |                 
| |                 
| | (Registrant)    

| |      |                |     |  |                                                                                         | 
| | ---- | -------------- | --- |  | --------------------------------------------------------------------------------------- | 
| | Date | April 28, 2005 | /s/ |  | Louis J. Cappelli                                                                       | 
| |      |     |     |  |                                                                         | 
| |      |                |     |  | Louis J. Cappelli
    Chairman and    
    Chief Executive Officer                      | 
| |      |                |     |  |                                                                                         | 
| | Date | April 28, 2005 | /s/ |  | John W. Tietjen                                                                         | 
| |      |     |     |  |                                                                         | 
| |      |                |     |  | John W. Tietjen
    Executive Vice President, Treasurer
    and Chief Financial Officer | 

|41
|--



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

|Exhibit
        Number |  | Description                                                                                                            |  | Sequential
      
      Page 
      No. | 
|---------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | 
|                       |  |                                                                                                                        |  |                                         | 
|                       |  |                                                                                                                        |  |                                         | 
|11                     |  | Statement re: Computation
      of Per Share Earnings.                                                                 |  | 43                                      | 
|                       |  |                                                                                                                        |  |                                         | 
|31                     |  | Certifications
        of the CEO and CFO pursuant to Exchange Act Rule 13a-14(a).                                     |  | 44                                      | 
|                       |  |                                                                                                                        |  |                                         | 
|32                     |  | Certifications
        of the CEO and CFO required by Section 1350 of Chapter 63 of Title 18
        of the U.S. Code. |  | 46                                      | 

|42
|--