Edgar Filing: STERLING BANCORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, 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	March 31, 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.

x Yes o No

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act,

x Yes o No

As of April 30, 2004 there were 15,341,208 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 ended March 31, 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 March 31, 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 March 31, 2004.




PART I FINANCIAL INFORMATION			Page

	Item 1.	Financial Statements

		Consolidated Financial Statements (Unaudited and Restated)	3
		Notes to Consolidated Financial Statements	8

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

		Overview	14
		Income Statement Analysis	15
		Balance Sheet Analysis	17
		Capital	21
		Cautionary Statement Regarding Forward-Looking Statements	22
		Average Balance Sheets	23
		Rate/Volume Analysis	24
		Regulatory Capital and Ratios	25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk

		Asset/Liability Management	26
		Interest Rate Sensitivity	30

	Item 4.	Controls and Procedures	31

PART II OTHER INFORMATION

	Item 6.	Exhibits and Reports on Form 8-K	32

SIGNATURES			34

EXHIBIT INDEX

	Exhibit 11	Statement Re: Computation of Per Share Earnings	36

	Exhibit 31	Certifications of the CEO and CFO pursuant to Exchange Act Rule 13a-14(a)	37

	Exhibit 32	Certifications of the CEO and CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code	39

STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited & Restated)

	March 31, 2004		December 31, 2003

ASSETS
Cash and due from banks	$	45,756,741	$	63,947,722
Interest-bearing deposits with other banks		2,475,551		1,656,338

Securities available for sale		198,355,342		195,477,473
Securities available for sale - pledged		130,493,321		117,250,082
Securities held to maturity		223,257,474		203,480,172
Securities held to maturity - pledged		160,737,934		166,910,347

Total investment securities		712,844,071		683,118,074


Loans held for sale		48,426,817		40,556,380

Loans held in portfolio, net of unearned discounts		853,007,704		900,556,215
Less allowance for loan losses		14,762,771		14,458,951

Loans, net		838,244,933		886,097,264

Customers’ liability under acceptances		1,413,995		953,571
Excess cost over equity in net assets of the
banking subsidiary		21,158,440		21,158,440
Premises and equipment, net		9,704,799		9,226,183
Other real estate		1,292,078		829,856
Accrued interest receivable		5,419,115		5,069,423
Bank owned life insurance		22,105,961		21,872,266
Other assets		27,562,361		25,338,740

	$	1,736,404,862	$	1,759,824,257


LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits	$	429,296,562	$	474,091,890
Interest-bearing deposits		794,000,826		737,648,930

Total deposits		1,223,297,388		1,211,740,820
Securities sold under agreements to repurchase - customers		77,795,349		42,490,862
Securities sold under agreements to repurchase - dealers		35,392,079		51,327,944
Federal funds purchased		—		10,000,000
Commercial paper		24,401,800		28,799,055
Other short-term borrowings		15,416,233		56,871,359
Acceptances outstanding		1,413,995		953,571
Accrued expenses and other liabilities		74,646,729		78,604,639
Long-term debt		135,774,000		135,774,000

Total liabilities		1,588,137,573		1,616,562,250


Shareholders’ equity
Preferred stock, $5 par value. Authorized
644,389 shares; Series D issued 0
and 224,432 shares, respectively		—		2,244,320
Common stock, $1 par value. Authorized 20,000,000 shares; issued 19,787,969 and 19,275,964 shares, respectively		19,787,969		19,275,964
Capital surplus		144,213,560		141,179,832
Retained earnings		18,454,651		16,166,517
Accumulated other comprehensive loss, net of tax		349,746		(1,131,803	)

		182,805,926		177,734,830
Less
Common shares in treasury at cost, 1,314,895 and 1,306,587 shares, respectively		33,829,331		33,577,847
Unearned compensation		709,306		894,976

Total shareholders’ equity		148,267,289		143,262,007

	$	1,736,404,862	$	1,759,824,257


See Notes to Consolidated Financial Statements.

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

	Three Months Ended March 31,
	2004		2003

INTEREST INCOME
Loans	$	15,081,995	$	14,759,913
Investment securities
Available for sale		3,691,820		2,511,777
Held to maturity		4,706,408		5,330,999
Federal funds sold		50,342		21,976
Deposits with other banks		4,109		8,553

Total interest income		23,534,674		22,633,218

INTEREST EXPENSE
Deposits		2,473,145		2,201,635
Securities sold under agreements to repurchase		315,632		298,945
Federal funds purchased		15,890		11,472
Commercial paper		62,762		70,651
Other short-term borrowings		112,194		189,768
Long-term debt		1,559,692		1,604,318

Total interest expense		4,539,315		4,376,789

Net interest income		18,995,359		18,256,429
Provision for loan losses		2,426,500		1,791,300

Net interest income after provision for loan losses		16,568,859		16,465,129

NONINTEREST INCOME
Factoring income		1,426,869		1,352,502
Mortgage banking income		3,631,391		3,242,648
Service charges on deposit accounts		1,063,343		1,231,998
Trade finance income		492,807		573,013
Trust fees		181,697		165,397
Other service charges and fees		474,404		435,210
Bank owned life insurance income		233,695		260,830
Securities gains		536,304		95,992
Other income		183,599		113,212

Total noninterest income		8,224,109		7,470,802

NONINTEREST EXPENSES
Salaries		7,677,109		6,723,209
Employee benefits		1,926,138		1,891,034

Total personnel expense		9,603,247		8,614,243
Occupancy expenses, net		1,229,638		1,278,867
Equipment expenses		756,154		646,514
Advertising and marketing		1,093,460		790,818
Professional fees		913,671		726,632
Data processing fees		287,460		265,032
Stationery and printing		266,571		208,318
Communications		406,727		442,690
Other expenses		1,392,302		1,532,838

Total noninterest expenses		15,949,230		14,505,952


Income before income taxes		8,843,738		9,429,979
Provision for income taxes		3,636,804		3,696,194

Net income	$	5,206,934	$	5,733,785

Average number of common shares outstanding
Basic		18,220,065		17,870,743
Diluted		19,210,918		18,785,686
Earnings per average common share
Basic	$	0.29	$	0.32
Diluted		0.27		0.30
Dividends per common share		0.16		0.12

See Notes to Consolidated Financial Statements.

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

	Three Months Ended March 31,
	2004			2003


Net Income	$	5,206,934		$	5,733,785


Other comprehensive income,
net of tax:
Unrealized holding gains (losses) arising during the period		1,427,580			(519,808	)

Reclassification adjustment for gains included in net income		(290,141	)		(51,932	)


Unrealized gains on supplemental pension		344,110			98,149

Other comprehensive income (loss)		1,481,549			(473,591	)




Comprehensive income	$	6,688,483		$	5,260,194


See Notes to Consolidated Financial Statements.

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

	Three Months Ended March 31,
	2004			2003

Preferred Stock
Balance at January 1	$	2,244,320		$	2,322,060
Conversions of Series D shares		(2,244,320	)		(9,510	)

Balance at March 31	$	—		$	2,312,550

Common Stock
Balance at January 1	$	19,275,964		$	19,138,420
Conversions of preferred shares into common shares		428,304			1,450
Options exercised		83,701			11,207

Balance at March 31	$	19,787,969		$	19,151,077

Capital Surplus
Balance at January 1	$	141,179,832		$	138,872,374
Conversions of preferred shares into common shares		1,816,016			8,060
Common shares issued under stock incentive plan and related tax benefits		1,217,712			697,798

Balance at March 31	$	144,213,560		$	139,578,232

Retained Earnings
Balance at January 1	$	16,166,517		$	2,498,606
Net Income		5,206,934			5,733,785
Cash dividends paid - common shares		(2,918,800	)		(2,231,362	)
- preferred shares		—			(31,793	)

Balance at March 31	$	18,454,651		$	5,969,236

Accumulated Other Comprehensive Income
Balance at January 1	$	(1,131,803	)	$	662,930

Unrealized holding gains (losses) arising during the period:
Before tax		2,638,779			(960,829	)
Tax effect		(1,211,199	)		441,021

Net of tax		1,427,580			(519,808	)

Reclassification adjustment for gains
included in net income:
Before tax		(536,304	)		(95,992	)
Tax effect		246,163			44,060

Net of tax		(290,141	)		(51,932	)

Unrealized gains on supplemental pension:
Before tax		636,063			181,421
Tax effect		(291,953	)		(83,272	)

Net of tax		344,110			98,149

Balance at March 31	$	349,746		$	189,339

Treasury Stock
Balance at January 1	$	(33,577,847	)	$	(32,400,952	)
Purchase of common shares		—			(117,798	)
Issuance of shares under incentive compensation plan		—			(493,654	)
Surrender of shares issued under
incentive compensation plan		(251,484	)		—

Balance at March 31	$	(33,829,331	)	$	(33,012,404	)

Unearned Compensation
Balance at January 1	$	(894,976	)	$	(1,873,926	)
Amortization of unearned compensation		185,670			185,670

Balance at March 31	$	(709,306	)	$	(1,688,256	)

Total Shareholders’ Equity
Balance at January 1	$	143,262,007		$	129,219,512
Net changes during the period		5,005,282			3,280,262

Balance at March 31	$	148,267,289		$	132,499,774


See Notes to Consolidated Financial Statements.

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

	Three Months Ended March 31,
	2004			2003

Operating Activities
Net Income	$	5,206,934		$	5,733,785
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		2,426,500			1,791,300
Depreciation and amortization of premises and equipment		419,137			420,313
Securities gains		(536,304	)		(95,992	)
Income from bank owned life insurance		(233,695	)		(260,830	)
Deferred income tax provision (benefit)		142,388			(121,687	)
Net change in loans held for sale		(7,870,437	)		(2,206,850	)
Amortization of unearned compensation		185,670			185,670
Amortization of premiums on securities		333,904			487,138
Accretion of discounts on securities		(97,977	)		(393,779	)
Increase in accrued interest receivable		(349,692	)		(413,416	)
(Decrease) Increase in accrued expenses and
other liabilities		(3,957,910	)		845,595
Increase in other assets		(3,331,044	)		(2,367,958	)
Other, net		454,342			129,989

Net cash (used in) provided by operating activities		(7,208,184	)		3,733,278

Investing Activities
Purchase of premises and equipment		(897,753	)		(671,798	)
(Increase) Decrease in interest-bearing deposits
with other banks		(819,213	)		735,761
Decrease in Federal funds sold		—			5,000,000
Net decrease in loans held in portfolio		45,425,831			10,041,658
Increase in other real estate		(462,222	)		(123,346	)
Proceeds from prepayments, redemptions or maturities
of securities - held to maturity		29,621,561			46,132,302
Purchases of securities - held to maturity		(43,387,576	)		(85,864,790	)
Proceeds from sales of securities - available for sale		37,031,642			3,707,515
Proceeds from prepayments, redemptions or maturities of securities - available for sale		12,592,171			117,120,717
Purchases of securities - available for sale		(63,180,944	)		(94,236,576	)

Net cash provided by investing activities		15,923,497			1,841,443

Financing Activities
Decrease in noninterest-bearing deposits		(44,795,328	)		(47,409,517	)
Increase in interest-bearing deposits		56,351,896			41,276,312
Net proceeds from issuance of Corporation Obligated Decrease in Federal funds purchased		(10,000,000	)		—
Net increase in securities sold under agreements
to repurchase		19,368,622			18,596,874
Decrease in commercial paper and other short-term borrowings		(45,852,381	)		(17,738,302	)
Purchase of treasury stock		—			(117,798	)
Proceeds from exercise of stock options		939,697			183,510
Cash dividends paid on common and preferred stock		(2,918,800	)		(2,263,155	)

Net cash used in financing activities		(26,906,294	)		(7,472,076	)

Net decrease in cash and due from banks		(18,190,981	)		(1,897,355	)
Cash and due from banks - beginning of period		63,947,722			58,173,569

Cash and due from banks - end of period	$	45,756,741		$	56,276,214

Supplemental disclosures:
Interest paid	$	4,479,390		$	3,846,231
Income taxes paid		5,942,600			2,346,594

See Notes to Consolidated Financial Statements.

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

1.	The consolidated financial statements include the accounts of Sterling Bancorp (“the parent company”) and its subsidiaries, principally Sterling National Bank and its subsidiaries (“the bank”), after elimination of material intercompany transactions. The term “the Company” refers to Sterling Bancorp and its subsidiaries. The consolidated financial statements as of and for the interim periods ended March 31, 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 the 2003 consolidated financial statements to conform to the current presentation. The interim consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2004. The Company effected a six-for-five stock split on December 8, 2004, a five-for-four stock split on September 10,2003 and paid stock dividends as follows: 20% on December 9, 2002; 10% on December 10, 2001; 10% on December 11, 2000; and 5% on December 14, 1999. Fractional shares were cashed-out and payments were made to shareholders in lieu of fractional shares. All capital and share amounts as well as basic and diluted average number of shares outstanding and earnings per average common share information for all reporting periods have been restated to reflect the effect of the stock splits and stock dividends.

2.	The consolidated financial statements for the three months ended March 31, 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 months ended March 31, 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 months ended March 31, 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 nonqualified 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).

STERLING BANCORP AND SUBSIDIARIES
Notes 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 income (loss):

Three Months Ended March 31,	2004			2003


Other Income:
Other income as previously reported	$	129,145		$	96,707
Restatement adjustment (bank)		—			16,505
Reclassification adjustment from interest income (bank)		54,454			—

Other income as restated	$	183,599		$	113,212



Employee benefits expense:
Employee benefits expense as previously reported	$	674,666		$	1,760,446



Restatement adjustment:
Impact on bank		1,260,730			112,106
Impact on parent company		(9,258	)		18,482

Total		1,251,472			130,588



Employee benefits expense as restated	$	1,926,138		$	1,891,034



Occupancy expense, net:
Occupancy expense, net as previously reported	$	1,225,730		$	1,295,721
Restatement adjustment (bank)		3,908			(16,854	)



Occupancy expense, net as restated	$	1,229,638		$	1,278,867



Net Income:
Net income as previously reported	$	6,460,509		$	5,846,423



Restatement adjustment:
Impact on bank		(1,262,833	)		(94,156	)
Impact on parent company		9,258			(18,482	)

Total		(1,253,575	)		(112,638	)



Net income as restated	$	5,206,934		$	5,733,785



Basic earnings per share:
Net income attributable to common stock as previously reported [1]	$	0.35		$	0.32
Restatement adjustment		(0.06	)		—



Net income attributable to common stock as restated	$	0. 29		$	0.32




Diluted earnings per share:
Net income attributable to common stock as previously reported [1]	$	0.34		$	0.31
Restatement adjustment		(0.07	)		(0.01	)



Net income attributable to common stock as restated	$	0.27		$	0.30

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

Three Months Ended March 31,	2004		2003


Other comprehensive (loss) income net of tax:
Other comprehensive income (loss) as previously reported	$	773,041	$	(571,740	)

Restatement adjustment:
Minimum pension liability adjustment, net of tax effect of $309,165 (parent company)		364,398		—

Unrealized gains on supplemental pension, net of tax effect of $291,953 and $83,272, respectively (bank)		344,110		98,149



Total		708,508		98,149



Other comprehensive income (loss) as restated	$	1,481,549	$	(473,591	)


	[1] Restated to reflect the effect of the six-for-five stock split in the form of a stock dividend effected on December 8, 2004; see Note 1 above.

	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 March 31, 2004, other assets increased $1,039,000, accrued expenses and other liabilities increased $1,146,000 , capital surplus decreased $852,000 (which includes a reduction of $3,031,000 for the effect of the six-for-five stock split), retained earnings decreased $2,839,000 and accumulated other comprehensive loss increased $553,000.

3.	At March 31, 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 March 31,		2004 [1]			2003 [1]

Net income available for common shareholders	$	5,206,934		$	5,701,992
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(59,488	)		(149,824	)



Pro forma, net income	$	5,147,446		$	5,552,168



Earnings per average common share:
Basic- as reported	$	0.29		$	0.32
Basic- pro forma		0.28			0.31
Diluted- as reported		0.27			0.30
Diluted- pro forma		0.27			0.30

[1] Restated; see Notes 1 and 2 above.

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

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

	March 31,

	2004		2003


Loans held for sale Real estate-mortgage	$	48,426,817	$	56,891,837

Loans held in portfolio Commercial and industrial	$	509,376,472	$	481,855,068
Lease financing		173,423,983		150,516,210
Real estate-mortgage		163,288,645		133,891,771
Real estate-construction		2,354,375		2,400,000
Installment		16,012,469		9,582,449
Loans to depository institutions		10,000,000		20,000,000



Loans, gross		874,455,944		798,245,498
Less unearned discounts		21,448,240		18,493,727



Loans, net of unearned discounts	$	853,007,704	$	779,751,771


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 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 54.5% loans (corporate lending was 73.0% and real estate lending was 24.0% of total loans, respectively) and 43.9% investment securities and money market investments. There are no industry concentrations exceeding 10% of loans, gross, in the corporate loan portfolio. Approximately 67% of loans are to borrowers located in the metropolitan New York area. In order to comply with the provisions of SFAS No. 131, the Company has determined that it has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.

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

The following tables provide certain information regarding the Company’s operating segments for the three-month periods ended March 31, 2004 and 2003:

	Corporate Lending			Real Estate Lending		Company-wide Treasury			Totals

Three Months Ended March 31, 2004
Net interest income	$	8,343,016		$	3,806,233	$	6,400,231	[1]	$	18,549,480	[1]
Noninterest income		2,925,051			3,703,428		849,373	[1]		7,477,852
Depreciation and amortization		60,781			99,771		—			160,552
Segment income before taxes		2,623,245	[1]		4,068,608		7,906,229			14,598,082	[1]
Segment assets		677,522,971			221,637,058		801,324,440	[1]		1,700,484,469	[1]

Three Months Ended March 31, 2003
Net interest income	$	8,323,536		$	3,752,090	$	5,770,393		$	17,846,019
Noninterest income		3,004,572			3,305,157		377,133			6,686,862
Depreciation and amortization		50,165			76,256		—			126,421
Segment income before taxes		3,751,708	[1]		3,321,350		6,536,128			13,609,186	[1]
Segment assets		631,517,965			196,423,973		708,775,654	[1]		1,536,717,592	[1]

[1] Restated; see Note 2 above.

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

	Three Months Ended March 31,

	2004			2003


Net interest income:
Total for reportable operating segments	$	18,549,480	[2]	$	17,846,019
Other ^[1]		445,879			410,410


Consolidated net interest income	$	18,995,359	[2]	$	18,256,429


Noninterest income:
Total for reportable operating segments	$	7,477,852		$	6,686,862
Other ^[1]^[2]		746,257			783,940


Consolidated noninterest income ^[2]	$	8,224,109		$	7,470,802


Income before taxes:^[2]
Total for reportable operating segments	$	14,598,082		$	13,609,186
Other ^[1]		(5,754,344	)		(4,179,207	)


Consolidated income before income taxes	$	8,843,738		$	9,429,979


Assets:^[2]
Total for reportable operating segments	$	1,700,484,469		$	1,536,717,592
Other ^[1]		35,920,393			27,520,896


Consolidated assets	$	1,736,404,862		$	1,564,238,488


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

	[2]	Restated; see Note 2 above.

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

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

Three Months Ended March 31,	2004		2003

Proceeds	$	37,031,642	$	3,707,515

Gross Gains		536,304		95,992

Gross Losses		—		—


7.	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.

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 March 31,	2004			2003

COMPONENTS OF NET PERIODIC COST
Service Cost	$	410,546		$	271,815
Interest Cost		516,744			414,305
Expected return on plan assets		(452,029	)		(342,613	)
Amortization of prior service cost		19,331			19,331
Recognized actuarial loss		209,121			175,058



Net periodic benefit cost		703,713			537,896

Settlement gain		(1,331,190	)		—

Net benefit cost	$	(627,477	)	$	537,896


	The Company previously disclosed in its financial statements for the year ended December 31,2003, that it expected to contribute approximately $2,000,000 to the defined benefit pension plan in 2004. As of March 31, 2004, the expected contribution has decreased to $1,000,000. No contribution has been made as of March 31, 2004.

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 March 31, 2004, the bank’s average earning assets represented approximately 97.5% of the Company’s average earning assets. Loans represented 53.4% and investment securities represented 45.1% of the bank’s average earning assets for the first quarter 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.

Although management endeavors to minimize the credit risk inherent in the Company’s loan portfolio, it must necessarily make various assumptions and judgements about the collectibility of the loan portfolio based on its experience and evaluation of economic conditions. If such assumptions or judgements 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 Page 24. Information as to the components of interest income and interest expense and average rates is provided in the Average Balance Sheets shown on page 23.

Comparisons of the Three Months Ended March 31, 2004 and 2003

The Company reported net income for the three months ended March 31, 2004 of $5.2 million, representing $0.27 per share, calculated on a diluted basis, compared to $5.7 million, or $0.30 per share calculated on a diluted basis, for the first quarter of 2003. This decrease reflects increases in the provision for loan losses and noninterest expenses, which were partially offset by continued growth in both net interest income and noninterest income.

Net Interest Income

Net interest income on a tax equivalent basis, increased to $19.2 million for the first quarter of 2004 from $18.5 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 4.90% for the first three months of 2004 compared to 5.47% 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 $23.8 million for the first three months of 2004, up from $22.9 million for the 2003 period. The tax-equivalent yield on interest-earning assets was 6.09% for the first quarter of 2004 compared to 6.80% for the 2003 period.

Interest earned on the loan portfolio amounted to $15.1 million for the first three months of 2004, up $0.3 million from a year ago. Average loan balances amounted to $862.6 million an increase of $59.8 million from an average of $802.8 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 domestic loan portfolio to 7.22% for the first quarter of 2004 from 7.73% for 2003 was primarily attributable to the mix of outstanding balances on average among the components of the loan portfolio and lower interest rate environment in 2004.

Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $8.6 million for the first three months of 2004 from $8.1 million in the prior year period. Average outstandings increased to $695.1 million from $568.0 million in the prior year period. The average life of the securities portfolio was approximately 3.4 years at March 31, 2004 compared to 2.7 years at March 31, 2003, reflecting the impact of purchases made in the second, third and fourth quarters of 2003 and the first quarter of 2004. The decrease in yields on most of 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 second, third and fourth quarters of 2003.

Total interest expense increased to $4.5 million for the first three months of 2004 from $4.4 million for the 2003 period, primarily due to higher average balances for interest-bearing deposits partially offset by lower rates paid for those balances and for borrowed funds.

Interest expense on deposits increased to $2.5 million for the first quarter of 2004 from $2.2 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 $793.7 million for the first quarter of 2004 from $655.3 million in the 2003 period primarily the result of the Company’s branching initiatives and other business development activities. Average rate paid on interest-bearing deposits was 1.25% which was 11 basis points lower than

the prior year period. The decrease in average cost of deposits reflects the lower interest rate environment in 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 first three months of 2004 increased to $2.4 million from $1.8 million for the prior year period. Factors affecting the level of provision included the growth in the loan portfolios, changes in general economic conditions and the amount of nonaccrual loans.

Noninterest Income

Noninterest income increased to $8.2 million for the first quarter of 2004 from $7.5 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 loans, 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 $1.4 million for the first 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, advertising, professional fees and equipment.

BALANCE SHEET ANALYSIS

Securities

The Company’s securities portfolios are comprised of principally U.S. government and U.S. government corporation and agency guaranteed mortgage-backed securities along with other debt and equity securities. At March 31, 2004, the Company’s portfolio of securities totaled $712.8 million, of which U.S. government corporation and agency guaranteed mortgage-backed securities and collateralized mortgage obligations having an average life of approximately 3.4 years amounted to $630.1 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 $7.8 million and $1.4 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 $6.8 million and gross unrealized losses of $0.9 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.

The following table presents information regarding securities available for sale:

March 31, 2004	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value

U.S. Treasury securities	$	2,497,497	$	3	$	—	$	2,497,500
Obligations of U.S. govern-
ment corporations and
agencies—mortgage-backed
securities		183,670,329		4,302,020		79,276		187,893,073
Obligations of U.S. govern-
ment corporations and
agencies—collateralized
mortgage obligations		60,240,209		56,029		821,600		59,474,638
Obligations of state and
political institutions		30,599,793		1,801,578		—		32,401,371
Trust preferred securities		3,221,206		557,526		—		3,778,732
Other debt securities		34,994,283		103,592		—		35,097,875
Federal Reserve Bank and
other equity securities		7,685,142		20,531		199		7,705,474


Total	$	322,908,459	$	6,841,279	$	901,075	$	328,848,663

The following table presents information regarding securities held to maturity:

March 31, 2004	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value

Obligations of U.S. govern-
ment corporations and
agencies — mortgage-backed
securities	$	300,156,326	$	7,739,964	$	86,796	$	307,809,494
Obligations of U.S. govern-
ment corporations and
agencies—collateralized
mortgage obligations		82,589,082		105,273		1,349,894		81,344,461
Debt securities issued by
Foreign governments		1,250,000		—		—		1,250,000


Total	$	383,995,408	$	7,845,237	$	1,436,690	$	390,403,955

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 57% 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 24% 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:

	March 31,

	2004				2003

	($ in thousands)
	Balances		% of Gross		Balances		% of Gross


Domestic
Commercial and industrial	$	508,879	56.4	%	$	481,183	57.5	%
Equipment lease financing		152,483	16.9			132,720	15.9
Real estate - mortgage		211,712	23.5			190,774	22.8
Real estate - construction		2,354	0.3			2,400	0.3
Installment - individuals		16,007	1.8			9,567	1.1
Loans to depository institutions		10,000	1.1			20,000	2.4

Loans, net of unearned discounts	$	901,435	100.0	%	$	836,644	100.0	%

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

provision for loan losses, which is a charge to operating earnings. The adequacy of the provision and the resulting allowance for loan losses is determined by a management evaluation process of the loan portfolio, including identification and review of individual problem situations that may affect the borrower’s ability to repay, review of overall portfolio quality through an analysis of current charge-offs, delinquency and nonperforming loan data, estimates of the value of any underlying collateral, an assessment of current and expected economic conditions and changes in the size and character of the loan portfolio. Other data utilized by management in determining the adequacy of the allowance for loan losses includes, but is not limited to, the results of regulatory reviews, the amount of, trend of and/or borrower characteristics on loans that are identified as requiring special attention as part of the credit review process, and peer group comparisons. The impact of this other data might result in an allowance which will be greater than that indicated by the evaluation process previously described. The allowance reflects management’s evaluation both of loans presenting identified loss potential and of the risk inherent in various components of the loan portfolio, including loans identified as impaired as required by SFAS No. 114. Thus, an increase in the size of the portfolio or in any of its components could necessitate an increase in the allowance even though there may not be a decline in credit quality or an increase in potential problem loans. A significant change in any of the evaluation factors described above could result in future additions to the allowance. At March 31, 2004, the ratio of the allowance to loans held in portfolio, net of unearned discounts, was 1.73% and the allowance was $14.8 million. At such date, the Company’s nonaccrual loans amounted to $2.7 million; $1.4 million of such loans was judged to be impaired within the scope of SFAS No. 114. Nonaccrual and impaired loans at March 31, 2004 include one commercial loan in the amount of $0.6 million. Based on the foregoing, as well as management’s judgment as to the current risks inherent in loans held in portfolio, the Company’s allowance for loan losses was deemed adequate to absorb all reasonably anticipated losses on specifically known and other possible credit risks associated with the portfolio as of March 31, 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 quarter 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 $1.0 million at March 31, 2004.

Deposits

A significant source of funds for the Company continues to be deposits, consisting of demand (noninterest-bearing), NOW, savings, money market and time deposits (principally certificates of deposit).

The following table provides certain information with respect to the Company’s deposits:

	March 31,

	2004				2003

	($ in thousands)
	Balances		% of Total		Balances		% of Total

Domestic
Demand	$	429,297	35.1	%	$	354,159	34.0	%
NOW		133,189	10.9			114,971	11.0
Savings		34,216	2.8			26,959	2.6
Money market		199,206	16.3			173,851	16.7
Time deposits		424,389	34.7			368,035	35.4



Total domestic deposits		1,220,297	99.8			1,037,975	99.7
Foreign
Time deposits		3,000	0.2			3,000	0.3



Total deposits	$	1,223,297	100.0	%	$	1,040,975	100.0	%

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

CAPITAL

The Company and the bank are subject to risk-based capital regulations which quantitatively measure capital against risk-weighted assets, including certain off-balance sheet items. These regulations define the elements of the Tier 1 and Tier 2 components of Total Capital and establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for capital adequacy purposes. Supplementing these regulations is a leverage requirement. This requirement establishes a minimum leverage ratio (at least 3% to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly average assets (after deducting goodwill). Information regarding the Company’s and the bank’s risk-based capital is presented on page 23. In addition, the bank is subject to the Federal Deposit Insurance Corporation Improvement Act of 1981 (“FDICIA”) which imposes a number of mandatory supervisory measures. Among other matters, five capital categories, ranging from “well capitalized” to “critically under capitalized”, are used by regulatory agencies to determine a bank’s deposit insurance premium, approval of applications authorizing institutions to increase their asset size or otherwise expand business activities or acquire other institutions. Under FDICIA, a “well capitalized” bank must maintain minimum leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%, respectively. The Federal Reserve Board applies comparable tests for holding companies such as the Company. At March 31, 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.

STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Three Months Ended March 31,
(Unaudited & Restated)
(dollars in thousands)

	2004									2003

	Average Balance			Interest			Average Rate			Average Balance			Interest		Average Rate

ASSETS
Interest-bearing deposits with other banks	$	3,429		$	4	[2]		0.94	%	$	3,700		$	8		0.94	%
Securities available for sale		290,099			3,353			4.55			155,407			2,155		5.55
Securities held to maturity		374,141			4,706			5.09			379,948			5,331		5.61
Securities tax-exempt [3]		30,901			575			7.48			32,655			606		7.52
Federal funds sold		20,989			50			0.95			7,244			22		1.21
Loans, net of unearned discounts [4]		862,599			15,082			7.22			802,795			14,760		7.73

TOTAL INTEREST-EARNING ASSETS		1,582,158			23,770	[2]		6.09	%		1,381,749			22,882		6.80	%

Cash and due from banks		66,657									53,842
Allowance for loan losses		(15,322	)								(14,244	)
Goodwill		21,158									21,158
Other assets		67,859									63,527

TOTAL ASSETS	$	1,722,510								$	1,506,032

LIABILITIES AND SHAREHOLDERS’
EQUITY
Interest-bearing deposits
Domestic
Savings	$	32,947			32			0.39	%	$	26,211			26		0.40	%
NOW		134,021			154			0.46			114,727			137		0.48
Money market		209,946			370			0.71			151,143			175		0.47
Time		413,758			1,909			1.86			360,263			1,852		2.08
Foreign
Time		3,000			8			1.07			3,000			12		1.66

Total interest-bearing deposits		793,672			2,473			1.25			655,344			2,202		1.36

Borrowings
Securities sold under agreements to repurchase - customers		75,369			211			1.13			57,517			180		1.27
Securities sold under agreements to repurchase - dealers		36,550			105			1.15			36,307			119		1.34
Federal funds purchased		5,906			16			1.08			3,667			11		1.27
Commercial paper		23,419			63			1.08			24,005			70		1.19
Other short-term debt		24,746			112			1.82			31,357			190		2.45
Long-term debt		135,774			1,559			4.59			140,774			1,604		4.56

Total borrowings		301,764			2,066			2.74			293,627			2,174		2.97

TOTAL INTEREST-BEARING LIABILITIES		1,095,436			4,539			1.67	%		948,971			4,376		1.87	%

Noninterest-bearing deposits		402,110									345,519
Other liabilities		81,137									81,098

Total liabilities		1,578,683									1,375,588

Shareholders’ equity		143,827									130,444

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,722,510								$	1,506,032

Net interest income/spread					19,231	[2]		4.42	%					18,506		4.93	%

Net yield on interest-earning assets (margin)								4.90	%							5.47	%

Less: Tax equivalent adjustment					236									249

Net interest income				$	18,995	[2]							$	18,257


[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 2003 amounts to conform to the current presentation.

[2]	Restated; see Note 2 on page 8.

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

[4]	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.

STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]
(Unaudited & Restated)

(in thousands)

	Increase/(Decrease) Three Months Ended March 31, 2004 to March 31, 2003

	Volume				Rate			Net [2]

INTEREST INCOME
Interest-bearing deposits with other banks	$	(4	) [3]	$	—		$	(4	) [3]

Securities available for sale		1,637			(439	)		1,198
Securities held to maturity		(46	)		(579	)		(625	)
Securities tax-exempt		(28	)		(3	)		(31	)

Total investment securities		1,563			(1,021	)		542


Federal funds sold		34			(6	)		28

Loans, net of unearned discounts [4]		1,332			(1,010	)		322


TOTAL INTEREST INCOME	$	2,925	[3]	$	(2,037	)	$	888	[3]


INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	7		$	(1	)	$	6
NOW		23			(6	)		17
Money market		86			109			195
Time		272			(215	)		57
Foreign
Time		—			(4	)		(4	)

Total interest-bearing deposits		388			(117	)		271

Borrowings
Securities sold under agreements
to repurchase - customers		53			(22	)		31
Securities sold under agreements
to repurchase - dealers		2			(16	)		(14	)
Federal funds purchased		7			(2	)		5
Commercial paper		(1	)		(6	)		(7	)
Other short-term debt		(34	)		(44	)		(78	)
Long-term debt		(54	)		9			(45	)

Total borrowings		(27	)		(81	)		(108	)


TOTAL INTEREST EXPENSE	$	361		$	(198	)	$	163


NET INTEREST INCOME	$	2,564	[3]	$	(1,839	)	$	725	[3]


[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]	Restated; see Note 2 on page 8.

[4]	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.

STERLING BANCORP AND SUBSIDIARIES
Regulatory Capital and Ratios
(Unaudited & Restated)

Ratios and Minimums
(dollars in thousands)

	Actual				For Capital Adequacy Minimum				To Be Well Capitalized

As of March 31, 2004 [1]	Amount		Ratio		Amount		Ratio		Amount		Ratio

Total Capital (to Risk Weighted Assets):
The Company	$	164,887	15.72	%	$	83,888	8.00	%	$	104,860	10.00	%
The bank		125,713	12.54			80,203	8.00			100,254	10.00

Tier 1 Capital (to Risk Weighted Assets):
The Company		151,759	14.47			41,944	4.00			62,916	6.00
The bank		113,155	11.29			40,101	4.00			60,152	6.00

Tier 1 Leverage Capital (to Average Assets):
The Company		151,759	8.92			68,054	4.00			85,068	5.00
The bank		113,155	6.83			66,229	4.00			82,786	5.00

As of December 31, 2003 [1]

Total Capital (to Risk Weighted Assets):
The Company	$	161,837	14.88	%	$	86,986	8.00	%	$	108,732	10.00	%
The bank		121,439	11.68			83,177	8.00			103,971	10.00

Tier 1 Capital (to Risk Weighted Assets):
The Company		148,235	13.63			43,493	4.00			65,239	6.00
The bank		108,426	10.43			41,588	4.00			62,383	6.00

Tier 1 Leverage Capital (to Average Assets):
The Company		148,235	8.88			66,741	4.00			83,426	5.00
The bank		108,426	6.76			65,010	4.00			81,262	5.00

[1] Restated; see Note 2 on page 8.

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.

The Company’s balance sheet structure is primarily short-term in nature with a substantial portion of assets and liabilities repricing or maturing within one year. The Company’s gap analysis at March 31, 2004, presented on page 30, 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 March 31, 2004, the model indicated the impact of a 200 basis point parallel and pro rata rise in rates over 12 months would approximate a 3.50% ($2.5 million) increase in net interest income, while the impact of a 200 basis point decline in rates over the same period would approximate a 6.80% ($4.9 million) decline from an unchanged rate environment.

The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels including yield curve shape, 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 March 31, 2004, the parent company’s short-term debt, consisting principally of commercial paper used to finance ongoing current business activities, was approximately $24.4 million. The parent company had cash, interest-bearing deposits with banks and other current assets aggregating $43.8 million. The parent company also has back-up credit lines with banks of $19.0 million. Since 1979, the parent company has had no need to use the available back-up lines of credit.

The following table sets forth information regarding the Company’s obligations and commitments to make future payments under contract as of March 31, 2004:

	Payments Due by Period

Contractual Obligations	Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years

	(in thousands)

Long-Term Debt	$	135,774	$	—	$	25,774	$	10,000	$	100,000
Operating Leases		27,876		3,319		6,166		6,192		12,199


Total Contractual Cash Obligations	$	163,650	$	3,319	$	31,940	$	16,192	$	112,199

The following table sets forth information regarding the Company’s obligations under other commercial commitments as of March 31, 2004:

	Amount of Commitment Expiration Per Period

Other Commercial Commitments	Total Amount Committed		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years

	(in thousands)

Residential loans	$	56,513	$	56,513	$	—	$	—	$	—
Standby Letters of Credit		31,647		30,711		936		—		—
Other Commercial Commitments		29,722		20,942		6,444		2,336		—


Total Commercial Commitments	$	117,882	$	108,166	$	7,380	$	2,336	$	—

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.

STERLING BANCORP AND SUBSIDIARIES
Interest 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

	3 Months or Less		More than 3 Months to 1 Year			More than 1 Year to 5 Years		Over 5 Years		Nonrate Sensitive				Total

ASSETS
Interest-bearing deposits with other banks	$	2,476	$	—		$	—	$	—	$	—			$	2,476
Investment securities		1,500		2,872			81,979		618,787		7,706				712,844
Loans, net of unearned discounts Commercial and industrial		501,359		1,501			6,510		8		(498	)			508,880
Loans to depository institutions		10,000		—			—		—		—				10,000
Lease financing		1,405		13,931			149,814		8,274		(20,942	)			152,482
Real estate		119,661		8,425			68,427		17,556		(3	)			214,066
Installment		14,784		45			1,119		64		(5	)			16,007
Noninterest-earning assets and allowance for loan losses		—		—			—		—		119,650		[2]		119,650	[2]


Total Assets		651,185		26,774			307,849		644,689		105,908		[2]		1,736,405	[2]


LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing deposits
Savings [1]		—		—			34,217		—		—				34,217
NOW [1]		—		—			133,189		—		—				133,189
Money market [1]		161,190		—			38,016		—		—				199,206
Time - domestic		189,253		155,097			79,889		150		—				424,389
- foreign		1,355		1,645			—		—		—				3,000
Securities sold u/a/r - cust		35,392		—			—		—		—				35,392
Securities sold u/a/r - deal		77,795		—			—		—		—				77,795
Federal funds purchased		—		—			—		—		—				—
Commercial paper		24,402		—			—		—		—				24,402
Other short-term borrowings		10,416		5,000			—		—		—				15,416
Long-term borrowings - FHLB		—		—			10,000		100,000		25,774				135,774
Noninterest-bearing liabilities and shareholders’ equity		—		—			—		—		653,625		[2]		653,625	[2]

Total Liabilities and Shareholders’ Equity		499,803		161,742			295,311		100,150		679,399		[2]		1,736,405	[2]

Net Interest Rate Sensitivity Gap	$	151,382	$	(134,968	)	$	12,538	$	544,539	$	(573,491	)		$	—


Cumulative Gap March 31, 2004	$	151,382	$	16,414		$	28,952	$	573,491	$	—			$	—


Cumulative Gap March 31, 2003	$	129,736	$	35,084		$	24,421	$	478,106	$	—			$	—


Cumulative Gap December 31, 2003	$	230,662	$	77,756		$	46,397	$	595,450	$	—			$	—


[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 8.

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.

PART II - OTHER INFORMATION

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).

	(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).

	(ii) (A)	By-Laws as in effect on March 15, 1993 (Filed as Exhibit 3.3 to the Registrant’s Form 10-K for the fiscal year ended December 31, 1992 and incorporated by reference herein).

	(ii) (B)	Amendments to By-Laws adopted May 21, 1998 (Filed as Exhibit 3 to the Registrant’s Form 10-Q for the quarter ended June 30, 1998 and incorporated by reference herein).

	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 January 21, 2004 and filed on January 22, 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 a conference call on January 22, 2004 to discuss the results of operations for the quarter and fiscal year ended December 31, 2003.

	In a report on Form 8-K dated January 22, 2004 and filed on January 23, 2004, the Company reported, under Item 7. “Financial Statements, Pro Forma Financial Information and Exhibits”, and under Item 12. “Results of Operations and Financial Condition”, the press release announcing the results of operations for the quarter and year ended December 31, 2003.

	In a report on Form 8-K dated February 10, 2004 and filed on February 11, 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 grand opening of its Regional Banking Center in Long Island City, Queens.

	In a report on Form 8-K dated February 19, 2004 and filed on February 20, 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 March 31, 2004 to shareholders of record on March 15, 2004.

	In a report on Form 8-K dated March 1, 2004 and filed on March 2, 2004 the Company reported under Item 7. “Financial Statements, Pro Forma Financial Information and Exhibits” and under Item 9. “Regulation FD Disclosure”, the press release announcing a presentation on March 3, 2004 by John C. Millman, President of Sterling Bancorp, as part of the Keefe, Bruyette & Woods, Inc. Eastern Regional Bank Symposium.

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

STERLING BANCORP AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit Number	Description	Sequential Page No.


11	Statement re: Computation of Per Share Earnings	36



31	Certifications of the CEO and CFO pursuant to Exchange Act Rule 13a-14(a)	37



32	Certifications of the CEO and CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code	39