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	September 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.

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 October 31, 2004 there were 15,177,080 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 nine months ended September 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 September 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 September 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.	Financial Statements

	Consolidated Financial Statements (Unaudited & Restated)	4
	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial
	Condition and Results of Operations
	Overview	16
	Income Statement Analysis	17
	Balance Sheet Analysis	21
	Capital	25
	Cautionary Statement Regarding Forward-Looking Statements	26
	Average Balance Sheets	27
	Rate/Volume Analysis	29
	Regulatory Capital and Ratios	31

Item 3.	Quantitative and Qualitative Disclosures About
	Market Risk

	Asset/Liability Management	32
	Interest Rate Sensitivity	36

Item 4.	Controls and Procedures	37

PART II OTHER INFORMATION

Item 6.	Exhibits and Reports on Form 8-K	38

SIGNATURES		40

EXHIBIT INDEX

Exhibit	11	Statement Re: Computation of Per Share Earnings.	42

Exhibit	31	Certifications of the CEO and CFO pursuant to Exchange Act Rule 13a-14(a).	43

Exhibit	32	Certifications of the CEO and CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code.	45

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

ASSETS	September 30, 2004			December 31, 2003

Cash and due from banks	$	53,264,489		$	63,947,722
Interest-bearing deposits with other banks		2,669,514			1,656,338

Securities available for sale		160,946,796			195,477,473
Securities available for sale - pledged		121,490,565			117,250,082
Securities held to maturity		258,309,947			203,480,172
Securities held to maturity - pledged		129,372,694			166,910,347

Total investment securities		670,120,002			683,118,074


Loans held for sale		38,810,366			40,556,380

Loans held in portfolio, net of unearned discounts		968,073,110			900,556,215
Less allowance for loan losses		15,602,478			14,458,951

Loans, net		952,470,632			886,097,264

Customers’ liability under acceptances		902,538			953,571
Excess cost over equity in net assets of the banking subsidiary		21,158,440			21,158,440
Premises and equipment, net		9,987,174			9,226,183
Other real estate		1,019,095			829,856
Accrued interest receivable		5,140,340			5,069,423
Bank owned life insurance		22,302,781			21,872,266
Other assets		32,462,795			25,338,740

	$	1,810,308,166		$	1,759,824,257


LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits	$	424,534,758		$	474,091,890
Interest-bearing deposits		874,834,879			737,648,930

Total deposits		1,299,369,637			1,211,740,820
Securities sold under agreements to repurchase - customers		103,595,822			42,490,862
Securities sold under agreements to repurchase - dealers		—			51,327,944
Federal funds purchased		—			10,000,000
Commercial paper		34,953,800			28,799,055
Other short-term borrowings		1,107,981			56,871,359
Acceptances outstanding		902,538			953,571
Accrued expenses and other liabilities		89,539,468			78,604,639
Long-term debt		135,774,000			135,774,000

Total liabilities		1,665,243,246			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 50,000,000 and 20,000,000 shares, respectively; issued 19,827,398 and 19,275,964 shares, respectively		19,827,398			19,275,964
Capital surplus		144,725,821			141,179,832
Retained earnings		25,829,798			16,166,517
Accumulated other comprehensive loss, net of tax		(2,648,293	)		(1,131,803	)

		187,734,724			177,734,830

Less
Common shares in treasury at cost, 1,618,903 and 1,306,587 shares, respectively		42,297,109			33,577,847
Unearned compensation		372,695			894,976

Total shareholders’ equity		145,064,920			143,262,007

	$	1,810,308,166		$	1,759,824,257

See Notes to Consolidated Financial Statements.


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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2004		2003		2004		2003

INTEREST INCOME
Loans	$	16,897,670	$	15,877,296	$	47,392,037	$	46,018,048
Investment securities
Available for sale		3,211,403		2,260,320		10,357,118		7,166,906
Held to maturity		4,624,665		4,201,130		14,008,129		14,830,069
Federal funds sold		72,779		5,282		128,915		45,184
Deposits with other banks		5,902		8,516		13,078		21,010

Total interest income		24,812,419		22,352,544		71,899,277		68,081,217

INTEREST EXPENSE
Deposits		3,015,262		2,168,483		7,862,397		6,679,403
Securities sold under agreements to repurchase		325,203		339,686		1,006,563		1,022,538
Federal funds purchased		9,041		20,687		72,484		56,451
Commercial paper		106,502		65,653		247,861		191,722
Other short-term borrowings		33,970		85,754		239,541		416,363
Long-term debt		1,559,688		1,605,309		4,679,063		4,814,441

Total interest expense		5,049,666		4,285,572		14,107,909		13,180,918

Net interest income		19,762,753		18,066,972		57,791,368		54,900,299
Provision for loan losses		2,338,500		2,172,500		7,235,500		6,136,300

Net interest income after provision for loan losses		17,424,253		15,894,472		50,555,868		48,763,999

NONINTEREST INCOME
Factoring income		1,915,761		1,630,993		5,110,102		4,394,174
Mortgage banking income		3,846,269		3,974,329		11,392,079		10,907,866
Service charges on deposit accounts		1,258,129		1,192,668		3,480,649		3,694,448
Trade finance income		688,276		631,816		1,699,083		1,793,460
Trust fees		160,311		138,891		508,046		469,339
Other service charges and fees		394,754		512,484		1,349,983		1,479,198
Bank owned life insurance income		498,530		252,241		975,264		790,221
Securities gains		285,918		101,225		970,722		297,583
Other income		126,880		327,352		459,615		550,194

Total noninterest income		9,174,828		8,761,999		25,945,543		24,376,483

NONINTEREST EXPENSES
Salaries		7,787,817		6,771,758		22,849,669		20,250,497
Employee benefits		2,464,874		2,180,770		6,720,517		5,945,253

Total personnel expense		10,252,691		8,952,528		29,570,186		26,195,750
Occupancy expenses, net		1,315,456		1,083,771		3,779,166		3,580,315
Equipment expenses		755,738		680,052		2,169,997		2,046,141
Advertising and marketing		974,755		864,385		2,992,678		2,514,768
Professional fees		952,253		837,434		2,939,885		2,463,423
Data processing fees		272,292		255,157		860,235		780,211
Stationery and printing		141,816		230,368		602,821		675,483
Communications		363,698		381,503		1,161,891		1,230,182
Other expenses		1,464,884		1,600,036		4,557,191		4,975,166

Total noninterest expenses		16,493,583		14,885,234		48,634,050		44,461,439

Income before income taxes		10,105,498		9,771,237		27,867,361		28,679,043
Provision for income taxes		3,555,324		3,714,696		9,545,652		11,070,770

Net income	$	6,550,174	$	6,056,541	$	18,321,709	$	17,608,273

Average number of common shares outstanding
Basic		18,207,370		17,940,149		18,248,585		17,898,977
Diluted		19,025,500		18,945,555		19,113,791		18,887,201
Earnings per average common share
Basic	$	0.36	$	0.34	$	1.00	$	0.98
Diluted		0.35		0.32		0.96		0.93
Dividends per common share		0.16		0.16		0.48		0.41

See Notes to Consolidated Financial Statements.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003


Net Income	$	6,550,174		$	6,056,541		$	18,321,709		$	17,608,273


Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising during the period		2,347,046			(19,418	)		(1,206,796	)		(430,643	)

Reclassification adjustment for gains included in net income		(154,681	)		(54,762	)		(525,160	)		(160,992	)

Unrealized (losses) gains on supplemental pension		(29,921	)		100,693			215,466			264,031


Other comprehensive income (loss)		2,162,444			26,513			(1,516,490	)		(327,604	)


Comprehensive income	$	8,712,618		$	6,083,054		$	16,805,219		$	17,280,669

See Notes to Consolidated Financial Statements.


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

		Nine Months Ended September 30,
		2004			2003

Preferred Stock
Balance at January 1		$	2,244,320		$	2,322,060
Conversions of Series D shares			(2,244,320	)		(61,800	)

Balance at September 30		$	—		$	2,260,260


Common Stock
Balance at January 1		$	19,275,964		$	19,138,420
Conversions of preferred shares into common shares			428,304			9,759
Options exercised			123,130			124,745

Balance at September 30		$	19,827,398		$	19,272,924


Capital Surplus
Balance at January 1		$	141,179,832		$	138,872,374
Conversions of preferred shares into common shares			1,816,016			52,041
Common shares issued under stock incentive plan and related tax benefits			1,729,973			2,360,098
Stock split paid - cash in lieu			—			(32,358	)

Balance at September 30		$	144,725,821		$	141,252,155


Retained Earnings

Balance at January 1		$	16,166,517		$	2,498,606
Net Income			18,321,709			17,608,273
Cash dividends paid – common shares			(8,658,428	)		(7,291,756	)
	– preferred shares		—			(94,271	)

Balance at September 30		$	25,829,798		$	12,720,852



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

Unrealized holding gains/(losses) arising during the period:
Before tax			(2,230,677	)		(796,012	)
Tax effect			1,023,881			365,369

Net of tax			(1,206,796	)		(430,643	)

Reclassification adjustment for gains included in net income:
Before tax			(970,722	)		(297,583	)
Tax effect			445,562			136,591

Net of tax			(525,160	)		(160,992	)

Unrealized gains/(losses) in supplemental pension:
Before tax			398,273			488,043
Tax effect			(182,807	)		(224,012	)

Net of tax			215,466			264,031


Balance at September 30		$	(2,648,293	)	$	335,326


Treasury Stock

Balance at January 1		$	(33,577,847	)	$	(32,400,952	)
Purchase of common shares			(8,310,004	)		(256,007	)
Surrender of shares issued under incentive compensation plan			(409,258	)		(920,888	)

Balance at September 30		$	(42,297,109	)	$	(33,577,847	)


Unearned Compensation

Balance at January 1		$	(894,976	)	$	(1,873,926	)
Amortization of unearned compensation			522,281			557,010

Balance at September 30		$	(372,695	)		(1,316,916	)


Total Shareholders’ Equity
Balance at January 1		$	143,262,007		$	129,219,512
Net changes during the period			1,802,913			11,727,242

Balance at September 30		$	145,064,920		$	140,946,754

See Notes to Consolidated Financial Statements.


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

	Nine Months Ended September 30,
	2004			2003

Operating Activities
Net Income	$	18,321,709		$	17,608,273
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		7,235,500			6,136,300
Depreciation and amortization of premises and equipment		1,318,157			1,272,483
Securities gains		(970,722	)		(297,583	)
Income from bank owned life insurance		(975,264	)		(790,221	)
Deferred income tax benefit		(300,878	)		(605,044	)
Net change in loans held for sale		1,746,014			(24,662,600	)
Amortization of unearned compensation		522,281			557,010
Amortization of premiums on securities		1,198,486			1,905,331
Accretion of discounts on securities		(394,808	)		(968,109	)
Increase in accrued interest receivable		(70,917	)		(701,001	)
Increase in accrued expenses and other liabilities		10,934,829			1,456,711
Increase in other assets		(5,353,733	)		(4,446,479	)
Other, net		861,992			(145,776	)

Net cash provided by (used in) operating activities		34,072,646			(3,680,705	)

Investing Activities

Purchase of premises and equipment		(2,079,148	)		(1,120,058	)
(Increase) Decrease in interest-bearing deposits with other banks		(1,013,176	)		425,800
Decrease in Federal funds sold		—			5,000,000
Net increase in loans held in portfolio		(73,608,868	)		(90,713,494	)
Increase in other real estate		(189,239	)		(200,917	)
Proceeds from prepayments, redemptions or maturities of securities - held to maturity		105,510,986			214,664,362
Purchases of securities - held to maturity		(123,394,828	)		(155,024,448	)
Proceeds from sales of securities - available for sale		73,254,718			9,767,421
Proceeds from prepayments, redemptions or maturities of securities - available for sale		84,957,982			308,043,037
Purchases of securities - available for sale		(130,365,143	)		(373,835,784	)

Net cash used in investing activities		(66,926,716	)		(82,994,081	)


Financing Activities
Decrease in noninterest-bearing deposits		(49,557,132	)		(1,634,452	)
Increase in interest-bearing deposits		137,185,949			49,791,047
Decrease in Federal funds purchased		(10,000,000	)		—
Net increase in securities sold under agreements to repurchase		9,777,016			42,700,897
Decrease in commercial paper and other short-term borrowings		(49,608,633	)		(10,448,290	)
Purchase of treasury stock		(8,310,004	)		(256,007	)
Proceeds from exercise of stock options		1,342,069			1,973,762
Cash dividends paid on common and preferred stock		(8,658,428	)		(7,386,027	)
Cash paid in lieu of fractional shares in connection with stock split		—			(32,358	)

Net cash provided by financing activities		22,170,837			74,708,572


Net increase (decrease) in cash and due from banks		(10,683,233	)		(11,966,214	)
Cash and due from banks - beginning of period		63,947,722			58,173,569

Cash and due from banks - end of period	$	53,264,489		$	46,207,355

Supplemental disclosures:
Interest paid	$	13,800,992		$	12,080,996
Income taxes paid		10,869,100			9,886,194

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 September 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, 2003. 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 nine month periods ended September 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 nine months ended September 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 nine months ended September 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).

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:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003

Other Income:
Other income as previously reported	$	126,880		$	300,626		$	638,309		$	478,581
Restatement adjustment (bank)		—			26,726			(178,694	)		71,613


Other income as restated	$	126,880		$	327,352		$	459,615		$	550,194


Employee benefits expense:
Employee benefits expense as previously reported	$	2,265,765		$	2,099,148		$	5,291,217		$	5,666,647


Restatement adjustment:
Impact on bank:		199,578			72,957			1,430,331			244,186
Impact on parent company		(469	)		8,665			(1,031	)		34,420

Total		199,109			81,622			1,429,300			278,606


Employee benefits expense as restated	$	2,464,874		$	2,180,770		$	6,720,517		$	5,945,253


Occupancy expense, net:
Occupancy expense, net as previously reported	$	1,336,548		$	1,100,625		$	3,647,442		$	3,630,877
Restatement adjustment (bank)		(21,092	)		(16,854	)		131,724			(50,562	)


Occupancy expense, net as restated	$	1,315,456		$	1,083,771		$	3,779,166		$	3,580,315


Net Income:
Net income as previously reported	$	6,737,934		$	6,114,713		$	19,918,042		$	17,821,138


Restatement adjustment:
Impact on bank		(188,229	)		(49,507	)		(1,597,364	)		(178,445	)
Impact on parent company		469			(8,665	)		1,031			(34,420	)

Total		(187,760	)		(58,172	)		(1,596,333	)		(212,865	)


Net income as restated	$	6,550,174		$	6,056,541		$	18,321,709		$	17,608,273


Basic earnings per share:
Net income attributable to common stock as previously reported [1]	$	0.37		$	0.34		$	1.09		$	0.99
Restatement adjustment		(0.01	)		—			(0.09	)		(0.01	)


Net income attributable to common stock as restated	$	0.36		$	0.34		$	1.00		$	0.98


Diluted earnings per share:
Net income attributable to common stock as previously reported [1]	$	0.35		$	0.32		$	1.04		$	0.94

Restatement adjustment		—			—			(0.08	)		(0.01	)

Net income attributable to common stock as restated	$	0.35		$	0.32		$	0.96		$	0.93

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003

Other comprehensive income (loss) net of tax:

Other comprehensive income (loss) as previously reported	$	2,444,715		$	(74,180	)	$	(1,844,004	)	$	(591,635	)

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

Unrealized (losses) gains on supplemental pension, net of tax effect of $188,715, $(85,430), $ 31,294 and $(224,012), respectively (bank)		(282,271	)		100,693			(36,884	)		264,031


Total		(282,271	)		100,693			327,514			264,031


Other comprehensive (loss) income as restated	$	2,162,444		$	26,513		$	(1,516,490	)	$	(327,604	)

	[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.

	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 September 30, 2004, other assets increased $429,000, accrued expenses and other liabilities increased $1,110,000, capital surplus decreased $703,000 (which includes a reduction of $3,031,000 for the effect of the six-for-five stock split), retained earnings decreased $3,182,000 and accumulated other comprehensive loss increased $172,000.

3.	At September 30, 2004, the Company has a stock-based employee compensation plan, which is described more fully in Note 1 and Note 15 to the consolidated financial statements in 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 September 30,	2004 [1]			2003 [1]

Net income available for common shareholders	$	6,550,174		$	6,025,414
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(59,528	)		(71,910	)


Pro forma, net income	$	6,490,646		$	5,953,504

Earnings per average common share:
Basic- as reported	$	0.36		$	0.34
Basic- pro forma		0.36			0.33
Diluted- as reported		0.35			0.32
Diluted- pro forma		0.34			0.31

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

Nine Months Ended September 30,	2004 [1]			2003 [1]


Net income available for common shareholders	$	18,321,709		$	17,514,002
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(174,954	)		(281,636	)


Pro forma, net income	$	18,146,755		$	17,232,366


Earnings per average common share:
Basic- as reported	$	1.00		$	0.98
Basic- pro forma		0.99			0.96
Diluted- as reported		0.96			0.93
Diluted- pro forma		0.95			0.91

[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:

	September 30,

	2004		2003

Loans held for sale
Real estate-mortgage	$	38,810,366	$	79,347,587

Loans held in portfolio
Commercial and industrial	$	585,288,435	$	545,054,019
Lease financing		181,671,932		161,508,913
Real estate-mortgage		206,546,866		153,802,839
Real estate-construction		2,329,491		2,380,603
Installment		15,270,005		13,977,231
Loans to depository institutions		—		20,000,000


Loans, gross		991,106,729		896,723,605
Less unearned discounts		23,033,619		19,944,510



Loans, net of unearned discounts	$	968,073,110	$	876,779,095


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. In order to comply with SFAS No. 131, the Company has determined that it has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.

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

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

liabilities. The Company’s 2004 year-to-date average interest-earning assets were 55.8% loans (corporate lending was 72.5% and real estate lending was 24.6% of total loans, respectively) and 43.1% investment securities and money market investments. There are no industry concentrations exceeding 10% of loans, gross, in the corporate loan portfolio. Approximately 66% of loans are to borrowers located in the metropolitan New York area.

	The following tables provide certain information regarding the Company’s operating segments for the three-and nine-month periods ended September 30, 2004 and 2003:

	Corporate Lending			Real Estate Lending		Company-wide Treasury			Totals

Three Months Ended September 30, 2004
Net interest income	$	9,186,653		$	4,125,387	$	5,958,732		$	19,270,772
Noninterest income		3,587,898			3,929,044		821,997			8,338,939
Depreciation and amortization		80,415			102,964		920			184,299
Segment income before taxes		4,544,561	[1]		4,109,381		7,550,219			16,204,161	[1]
Segment assets		703,541,000			286,075,699		778,890,835	[1]		1,768,507,534	[1]

Three Months Ended September 30, 2003
Net interest income	$	8,678,941		$	4,574,622	$	4,381,618		$	17,635,181
Noninterest income		3,285,616			4,038,713		428,095			7,752,424
Depreciation and amortization		65,875			81,167		—			147,042
Segment income before taxes		4,457,269	[1]		3,446,438		5,446,923			13,350,630	[1]
Segment assets		703,324,770			240,461,682		681,931,122	[1]		1,625,717,574	[1]

Nine Months Ended September 30, 2004
Net interest income	$	26,222,249		$	11,788,083	$	18,408,890		$	56,419,222
Noninterest income		9,762,453			11,606,416		2,031,718			23,400,587
Depreciation and amortization		221,579			302,679		920			525,178
Segment income before taxes		11,283,731	[1]		12,201,185		22,794,965			46,279,881	[1]
Segment assets		703,541,000			286,075,699		778,890,835	[1]		1,768,507,534	[1]

Nine Months Ended September 30, 2003
Net interest income	$	25,443,875		$	12,502,274	$	15,702,297		$	53,648,446
Noninterest income		9,313,652			11,105,877		1,207,765			21,627,294
Depreciation and amortization		154,512			235,559		—			390,071
Segment income before taxes		13,136,989	[1]		10,762,855		18,396,491			42,296,335	[1]
Segment assets		703,324,770			240,461,682		681,931,122	[1]		1,625,717,574	[1]

[1] Restated; see Note 2 above

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,

	2004			2003			2004			2003

Net interest income:
Total for reportable operating segments	$	19,270,772		$	17,635,181		$	56,419,222		$	53,648,446
Other ^[1]		491,981			431,791			1,372,146			1,251,853


Consolidated net interest income	$	19,762,753		$	18,066,972		$	57,791,368		$	54,900,299


Noninterest income:
Total for reportable operating segments	$	8,338,939		$	7,752,424		$	23,400,587		$	21,627,294
Other ^{[1] [2]}		835,889			1,009,575			2,544,956			2,749,189


Consolidated noninterest income ^[2]	$	9,174,828		$	8,761,999		$	25,945,543		$	24,376,483


Income before taxes:^[2]
Total for reportable operating segments	$	16,204,161		$	13,350,630		$	46,279,881		$	42,296,335
Other ^[1]		(6,098,663	)		(3,579,393	)		(18,412,520	)		(13,617,292	)


Consolidated income before income taxes	$	10,105,498		$	9,771,237		$	27,867,361		$	28,679,043


Assets:^[2]
Total for reportable operating segments	$	1,768,507,534		$	1,625,717,574		$	1,768,507,534		$	1,625,717,574
Other ^[1]		41,800,632			32,487,026			41,800,632			32,487,026


Consolidated assets	$	1,810,308,166		$	1,658,204,600		$	1,810,308,166		$	1,658,204,600


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

[2]	Restated see Note 2 above.

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. Based on proposed Federal Reserve guidance, the Company does not expect the change in accounting treatment to affect the Tier I regulatory classification of the Company’s outstanding trust preferred securities.

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

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

Three Months Ended September 30,	2004		2003

Proceeds	$	26,149,573	$	1,297,334

Gross Gains		285,918		101,225

Gross Losses		—		—

Nine Months Ended September 30,		2004		2003

Proceeds	$	73,254,718	$	9,767,421

Gross Gains		970,722		297,583

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 September 30,						Nine Months Ended September 30,

	2004			2003			2004			2003

COMPONENTS OF NET PERIODIC COST
Service Cost	$	388,090		$	356,971		$	1,191,131		$	955,536
Interest Cost		492,931			566,594			1,507,418			1,491,497
Expected return on plan assets		(417,379	)		(419,825	)		(1,292,898	)		(1,157,473	)
Amortization of prior service cost		19,331			19,331			57,993			57,993
Recognized actuarial loss		216,556			261,705			643,647			664,961


Net periodic benefit cost		699,529			784,776			2,107,291			2,012,514

Settlement gain		—			—			(1,331,190	)		—


Net benefit cost	$	699,529		$	784,776		$	776,101		$	2,012,514

The Company contributed $1,322,088 as of September 30, 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 September 30, 2004, the bank’s average earning assets represented approximately 96.7% of the Company’s average earning assets. Loans represented 56.0% and investment securities represented 42.6% of the bank’s average earning assets for the third quarter of 2004.

For the nine months ended September 30, 2004, the bank’s average earning assets represented approximately 97.2% of the Company’s average earning assets. Loans represented 54.6% and investment securities represented 44.3% of the bank’s average earning assets for the first nine 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.

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 28 and 29. Information as to the components of interest income and interest expense and average rates is provided in the Average Balance Sheets shown on pages 26 and 27.

Comparisons of the Three Months Ended September 30, 2004 and 2003

The Company reported net income for the three months ended September 30, 2004 of $6.6 million, representing $0.35 per share, calculated on a diluted basis, compared to $6.1 million, or $0.32 per share calculated on a diluted basis, for the third 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 $20.0 million for the third quarter of 2004 from $18.3 million for the corresponding 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 4.84% for the third quarter of 2004 compared to 5.02% for 2003. The decrease in the net interest margin was primarily the result of the impact of changes in the mix of earning assets, partially offset by the impact of the higher interest rate environment in the third quarter of 2004.

Total interest income, on a tax-equivalent basis, aggregated $25.0 million for the third quarter of 2004, up from $22.6 million for the corresponding 2003 period. The tax-equivalent yield on interest-earning assets was 6.11% for the third quarter of 2004 compared to 6.22% for the 2003 period.

Interest earned on the loan portfolio increased to $16.9 million for the third quarter of 2004, from $15.9 million for the third quarter of 2003. Average loan balances, which represented 57.4% of average earning assets for the third quarter of 2004, amounted to $951.9 million, an increase of $56.9 million from an average of $895.0 million (61.3% of average earning assets) in the corresponding 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 increase in the yield on the loan portfolio to 7.31% for the third quarter of 2004 from 7.18% for the third quarter of 2003 was primarily attributable to the mix of outstanding balances on average among the components of the loan portfolio and the higher interest rate environment in 2004.

Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $8.0 million for the third quarter of 2004 from $6.7 million in the prior year period. Average outstandings increased to $682.7 million (41.2% of average earning assets for the third quarter of 2004) from $558.6 million (38.3% of average earning assets) in the prior year period. The average life of the securities portfolio was approximately 4.2 years at September 30, 2004 compared to 2.8 years at September 30, 2003, reflecting the impact of purchases made primarily in the fourth quarter of 2003 and the first and second quarters 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 first and second quarters of 2004 and of the principal prepayments primarily in the fourth quarter of 2003 and the second quarter of 2004.

Total interest expense increased to $5.1 million for the third quarter of 2004, from $4.3 million in the prior year period. The increase was primarily due to

higher average balances for interest-bearing deposits coupled with higher rates paid for those balances.

Interest expense on deposits increased to $3.0 million for the third quarter of 2004 from $2.2 million for the 2003 period due to an increase in average balance coupled with an increase in the cost of those funds. Average interest- bearing deposit balances increased to $853.3 million for the third quarter of 2004 from $681.6 million in the corresponding 2003 period primarily as a result of branching initiatives and other business development activities. Average rate paid on interest-bearing deposits was 1.41%, 15 basis points higher than the prior year period. The increase in average cost of deposits reflects the higher 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 third quarter of 2004 was $2.3 million compared to $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 $9.2 million for the third quarter of 2004 from $8.8 million in the third quarter of 2003, primarily due to increased income from factoring activities, from bank owned life insurance and from gains on sales of available for sale securities. Partially offsetting these increases were lower revenues from fees various other services.

Noninterest Expenses

Noninterest expenses increased $1.6 million for the third quarter of 2004 when compared to the third quarter of 2003. The increase was primarily due to investments in the Sterling franchise, including the new branches, with higher expenses related to salaries and employee benefits, occupancy and professional fees.

Provision for Income Taxes

The provision for income taxes was $3.6 million for the third quarter of 2004, virtually unchanged from $3.7 million in the corresponding 2003 period.

Comparisons of the Nine Months Ended September 30, 2004 and 2003

The Company reported net income for the nine months ended September 30, 2004 of $18.3 million, representing $0.96 per share, calculated on a diluted basis, compared to $17.6 million, or $0.93 per share calculated on a diluted basis, for the first nine 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 $58.4 million for the first nine months of 2004 from $55.6 million for the corresponding 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 4.92% for the first nine months of 2004 compared to 5.36% for 2003. The decrease in the net interest margin was primarily the result of changes in the mix of earning assets.

Total interest income, on a tax-equivalent basis, aggregated $72.5 million for the first nine months of 2004, up from $68.8 million for the 2003 period. The tax-equivalent yield on interest-earning assets was 6.13% for the first nine months of 2004 compared to 6.64% for the corresponding 2003 period.

Interest earned on the loan portfolio amounted to $47.4 million for the first nine months of 2004, up $1.4 million from a year ago. Average loan balances amounted to $905.4 million, an increase of $61.1 million from an average of $844.3 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 7.38% for the first nine months of 2004 from 7.68% for the first nine months of 2003 was primarily attributable to changes in the mix of outstanding balances on average among the components of the loan portfolio.

Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $25.0 million for the first nine months of 2004 from $22.7 million in the corresponding prior year period. Average outstandings increased to $698.3 million from $573.4 million in the prior year period. The average life of the securities portfolio was approximately 4.2 years at September 30, 2004 compared to 2.8 years at September 30, 2003, reflecting the impact of purchases made primarily in the fourth quarter of 2003 and the first and second quarters 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 first and second quarters of the 2004 period and of the principal prepayments primarily in the fourth quarter of 2003 and the second quarter of 2004.

Total interest expense increased to $14.1 million for the first nine months of 2004 from $13.2 million for the corresponding 2003 period, primarily due to higher average balances for interest-bearing deposits.

Interest expense on deposits increased to $7.9 million for the first nine months of 2004 from $6.7 million for the 2003 period primarily, due to an increase in average balances. Average interest-bearing deposit balances increased to $815.3 million for the first nine months of 2004 from $671.2 in the first nine months of 2003 period, primarily as a result of branching initiatives and other business development activities. Average rate paid on interest-bearing deposits was 1.29%, which was 4 basis points lower than the prior year period.

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 nine months of 2004 increased to $7.2 million from $6.1 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 $25.9 million for the first nine months of 2004 from $24.4 million in the corresponding 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, from bank owned life insurance and from gains on sales of available for sale securities. Partially offsetting these increases were lower revenues from fees for deposit and various other services.

Noninterest Expenses

Noninterest expenses increased $4.2 million for the first nine months of 2004 when compared to the corresponding 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 $9.5 million for the first nine months of 2004 from $ 11.1 million in the first nine months of 2003. 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 September 30, 2004, the Company’s portfolio of securities totaled $670.1 million, of which U.S. government corporation and agency guaranteed mortgage-backed securities and collateralized mortgage obligations having an average life of approximately 4.4 years amounted to $575.0 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 $5.2 million and $2.4 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 $3.3 million and gross unrealized losses of $2.7 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:

September 30, 2004	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value

U.S. Treasury securities	$	2,488,090	$	—	$	(1,059	)	$	2,487,031
Obligations of U.S. govern-
ment corporations and
agencies—mortgage-backed
securities		149,099,649		1,499,379		(605,420	)		149,993,608
Obligations of U.S. govern-
ment corporations and
agencies—collateralized
mortgage obligations		50,300,775		—		(1,906,729	)		48,394,046
Obligations of state and
political institutions		29,074,083		1,331,349		—			30,405,432
Trust preferred securities		3,220,732		442,315		—			3,663,047
Other debt securities		39,994,461		—		(141,336	)		39,853,125
Federal Reserve Bank and
other equity securities		7,623,241		17,831		—			7,641,072


Total	$	281,801,031	$	3,290,874	$	(2,654,544	)	$	282,437,361

The following table presents information regarding securities held to maturity:

September 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	$	306,779,884	$	5,066,482	$	(905,293	)	$	310,941,073
Obligations of U.S. govern-
ment corporations and
agencies—collateralized
mortgage obligations		69,641,819		138,245		(1,507,360	)		68,272,704
Debt securities issued by
Foreign governments		1,250,000		—		—			1,250,000
Other debt securities		10,010,938		—		(12,500	)		9,998,438


Total	$	387,682,641	$	5,204,727	$	(2,425,153	)	$	390,462,215

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 58% of all loans. Loans in this category are typically made to small and medium-sized businesses and range between $100,000 and $15 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, North Carolina, Georgia and Virginia. The Company’s leasing portfolio, which consists of finance leases for various types of business equipment, represents approximately 16% 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:

	September 30,

	2004				2003

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

Domestic
Commercial and industrial	$	584,754	58.1	%	$	544,409	56.9	%
Equipment lease financing		159,175	15.8			142,223	14.9
Real estate - mortgage		245,357	24.4			235,526	24.6
Real estate - construction		2,329	0.2			—	—
Installment - individuals		15,268	1.5			13,969	1.5
Loans to depository institutions		—	—			20,000	2.1


Loans, net of unearned discounts	$	1,006,883	100.0	%	$	956,127	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 September 30, 2004, the ratio of the allowance to loans held in portfolio, net of unearned discounts, was 1.61% and the allowance was $15.6 million. At such date, the Company’s nonaccrual loans amounted to $3.0 million; $921 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 September 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 nine 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 $0.6 million at September 30, 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:

	September 30,

	2004				2003

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

Domestic
Demand	$	424,534	32.6	%	$	399,975	36.5	%
NOW		111,868	8.6			116,601	10.6
Savings		29,488	2.3			27,264	2.5
Money market		226,655	17.4			175,345	16.0
Time deposits		503,824	38.8			373,121	34.1


Total domestic deposits		1,296,369	99.7			1,092,306	99.7
Foreign
Time deposits		3,000	0.3			3,000	0.3


Total deposits	$	1,299,369	100.0	%	$	1,095,306	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 pages 26 and 27.

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 31. In addition, the bank is subject to the Federal Deposit Insurance Corporation Improvement Act of 1991 (“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 September 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 products 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 September 30,
(Unaudited)

(dollars in thousands)

	2004								2003
ASSETS	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate

Interest-bearing deposits with other banks	$	3,799		$	6		0.62	%	$	4,244		$	9		0.98	%
Securities available for sale		266,551			2,886		4.33			171,712			1,917		4.58
Securities held to maturity		386,851			4,625		4.78			355,463			4,201		4.73
Securities tax-exempt [2]		29,267			528		7.18			31,404			583		7.37
Federal funds sold		19,620			73		1.45			2,065			5		1.00
Loans, net of unearned discounts [3]		951,941			16,898		7.31			895,036			15,877		7.18

TOTAL INTEREST-EARNING ASSETS		1,658,029			25,016		6.11	%		1,459,924			22,592		6.22	%

Cash and due from banks		53,476								60,229
Allowance for loan losses		(16,158	)							(15,004	)
Goodwill		21,158								21,158
Other assets		70,050								63,256

TOTAL ASSETS	$	1,786,555							$	1,589,563

LIABILITIES AND SHAREHOLDERS’
EQUITY
Interest-bearing deposits
Domestic
Savings	$	29,991			28		0.37	%	$	27,561			24		0.34	%
NOW		133,357			162		0.48			125,470			141		0.45
Money market		217,612			348		0.64			169,220			189		0.44
Time		469,319			2,469		2.09			356,358			1,803		2.01
Foreign
Time		3,000			8		1.10			3,000			11		1.30

Total interest-bearing deposits		853,279			3,015		1.41			681,609			2,168		1.26

Borrowings
Securities sold under agreements to repurchase - customers		90,654			272		1.19			77,980			235		1.20
Securities sold under agreements to repurchase - dealers		14,910			54		1.43			35,266			104		1.17
Federal funds purchased		2,500			9		1.44			7,228			21		1.14
Commercial paper		34,394			107		1.23			24,285			66		1.07
Other short-term debt		6,293			34		2.15			31,114			85		1.09
Long-term debt		135,774			1,559		4.59			140,774			1,605		4.56

Total borrowings		284,525			2,035		2.86			316,647			2,116		2.67

TOTAL INTEREST-BEARING LIABILITIES		1,137,804			5,050		1.77	%		998,256			4,284		1.71	%

Noninterest-bearing deposits		424,974								377,624
Other liabilities		83,603								77,606

Total liabilities		1,646,381								1,453,486


Shareholders’ equity		140,174								136,077

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,786,555							$	1,589,563

Net interest income/spread					19,966		4.34	%					18,308		4.51	%

Net yield on interest-earning assets (margin)							4.84	%							5.02	%

Less: Tax equivalent adjustment					202								240

Net interest income				$	19,764							$	18,068

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

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

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

STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Nine Months Ended September 30,
(Unaudited)

(dollars in thousands)

	2004								2003
ASSETS	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate

Interest-bearing deposits with other banks	$	3,151		$	13		0.55	%	$	3,679		$	21		0.76	%
Securities available for sale		282,504			9,364		4.37			162,294			6,110		5.02
Securities held to maturity		385,548			14,008		4.84			378,874			14,830		5.22
Securities tax-exempt [2]		30,217			1,619		7.16			32,222			1,794		7.44
Federal funds sold		14,361			129		1.18			5,044			45		1.18
Loans, net of unearned discounts [3]		905,402			47,392		7.38			844,335			46,018		7.68

TOTAL INTEREST-EARNING ASSETS		1,621,183			72,525		6.13	%		1,426,448			68,818		6.64	%

Cash and due from banks		59,477								57,391
Allowance for loan losses		(15,694	)							(14,579	)
Goodwill		21,158								21,158
Other assets		70,370								63,630

TOTAL ASSETS	$	1,756,494							$	1,554,048

LIABILITIES AND SHAREHOLDERS’
EQUITY
Interest-bearing deposits
Domestic
Savings	$	31,851			93		0.39	%	$	27,065			72		0.36	%
NOW		134,237			463		0.46			118,907			438		0.49
Money market		210,257			909		0.58			160,835			565		0.47
Time		435,991			6,373		1.95			361,343			5,571		2.06
Foreign
Time		3,000			24		1.09			3,000			33		1.48

Total interest-bearing deposits		815,336			7,862		1.29			671,150			6,679		1.33

Borrowings
Securities sold under agreements to repurchase - customers		81,625			702		1.15			69,057			639		1.24
Securities sold under agreements to repurchase - dealers		34,018			305		1.20			40,198			384		1.28
Federal funds purchased		8,580			72		1.11			6,154			56		1.21
Commercial paper		28,733			248		1.15			22,758			192		1.13
Other short-term debt		16,603			240		1.93			30,959			416		1.80
Long-term debt		135,774			4,679		4.59			140,774			4,815		4.56

Total borrowings		305,333			6,246		2.73			309,900			6,502		2.80

TOTAL INTEREST-BEARING LIABILITIES		1,120,669			14,108		1.68	%		981,050			13,181		1.80	%

Noninterest-bearing deposits		411,916								360,793
Other liabilities		81,928								78,893

Total liabilities		1,614,513								1,420,736


Shareholders’ equity		141,981								133,312

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,756,494							$	1,554,048

Net interest income/spread					58,417		4.45	%					55,637		4.84	%

Net yield on interest-earning assets (margin)							4.92	%							5.36	%

Less: Tax equivalent adjustment					626								737

Net interest income				$	57,791							$	54,900


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

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

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

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

(in thousands)

	Increase/(Decrease) Three Months Ended September 30, 2004 to September 30, 2003

	Volume			Rate			Net [2]

INTEREST INCOME
Interest-bearing deposits with other banks	$	(1	)	$	(2	)	$	(3	)




Securities available for sale		1,079			(110	)		969
Securities held to maturity		378			46			424
Securities tax-exempt		(40	)		(15	)		(55	)


Total investment securities		1,417			(79	)		1,338




Federal funds sold		65			3			68


Loans, net of unearned discounts [3]		795			226			1,021




TOTAL INTEREST INCOME	$	2,276		$	148		$	2,424






INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	2		$	2		$	4
NOW		10			11			21
Money market		62			97			159
Time		592			74			666
Foreign
Time		—			(3	)		(3	)


Total interest-bearing deposits		666			181			847




Borrowings
Securities sold under agreements
to repurchase - customers		39			(2	)		37
Securities sold under agreements
to repurchase - dealers		(69	)		19			(50	)
Federal funds purchased		(16	)		4			(12	)
Commercial paper		30			11			41
Other short-term debt		(98	)		47			(51	)
Long-term debt		(57	)		11			(46	)


Total borrowings		(171	)		90			(81	)




TOTAL INTEREST EXPENSE	$	495		$	271		$	766




NET INTEREST INCOME	$	1,781		$	(123	)	$	1,658


[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.

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

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

(in thousands)

	Increase/(Decrease) Nine Months Ended September 30, 2004 to September 30, 2003

	Volume			Rate			Net [2]

INTEREST INCOME
Interest-bearing deposits with other banks	$	(3	)	$	(5	)	$	(8	)




Securities available for sale		4,121			(867	)		3,254
Securities held to maturity		303			(1,125	)		(822	)
Securities tax-exempt		(111	)		(64	)		(175	)


Total investment securities		4,313			(2,056	)		2,257




Federal funds sold		84			—			84


Loans, net of unearned discounts [3]		3,416			(2,042	)		1,374




TOTAL INTEREST INCOME	$	7,810		$	(4,103	)	$	3,707






INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	14		$	7		$	21
NOW		54			(29	)		25
Money market		196			148			344
Time		1,115			(313	)		802
Foreign
Time		—			(9	)		(9	)


Total interest-bearing deposits		1,379			(196	)		1,183




Borrowings
Securities sold under agreements
to repurchase - customers		113			(50	)		63
Securities sold under agreements
to repurchase - dealers		(56	)		(23	)		(79	)
Federal funds purchased		21			(5	)		16
Commercial paper		53			3			56
Other short-term debt		(204	)		28			(176	)
Long-term debt		(166	)		30			(136	)


Total borrowings		(239	)		(17	)		(256	)




TOTAL INTEREST EXPENSE	$	1,140		$	(213	)	$	927




NET INTEREST INCOME	$	6,670		$	(3,890	)	$	2,780


[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 earned.

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 September 30, 2004 [1]	Amount		Ratio			Amount		Ratio			Amount		Ratio

Total Capital(to Risk Weighted Assets):
The Company	$	166,075		14.31	%	$	92,874		8.00	%	$	116,093		10.00	%
The bank		132,072		12.02			87,919		8.00			109,898		10.00

Tier 1 Capital(to Risk Weighted Assets):
The Company		151,550		13.05			46,437		4.00			69,656		6.00
The bank		118,314		10.77			43,959		4.00			65,939		6.00

Tier 1 Leverage Capital(to Average Assets):
The Company		151,550		8.58			70,616		4.00			88,270		5.00
The bank		118,314		6.94			68,167		4.00			85,208		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 9.

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 to excessive 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 periods. The mismatch between repricings or maturities within a time period 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 September 30, 2004, presented on page 36, 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 September 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 3.0% ($2.4 million) increase in net interest income, while the impact of a 200 basis point decline in rates over the same period would approximate a 5.2% ($4.2 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 September 30, 2004, the parent company’s short-term debt, consisting principally of commercial paper used to finance ongoing current business activities, was approximately $35.0 million. The parent company had cash, interest-bearing deposits with banks and other current assets aggregating $34.8 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.

The following table sets forth information regarding the Company’s obligations and commitments to make future payments under contract as of September 30, 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	$	110,000	$	—	$	—	$	10,000	$	100,000
Operating Leases		30,242		3,522		6,670		6,515		13,535

Total Contractual Cash Obligations	$	140,242	$	3,522	$	6,670	$	16,515	$	113,535

The following table sets forth information regarding the Company’s obligations under other commercial commitments as of September 30, 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	$	69,175	$	69,175	$	—	$	—	$	—
Standby Letters of Credit		31,483		29,520		1,963		—		—
Other Commercial Commitments		46,610		32,325		11,484		2,725		76


Total Commercial Commitments	$	147,268	$	131,020	$	13,447	$	2,725	$	76

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		$	2,670	$	—		$	—	$	—	$	—		$	2,670
Investment securities			16,500		7,582			82,098		556,299		7,641			670,120
Loans, net of unearned discounts
Commercial and industrial			577,019		1,088			7,173		8		(535	)		584,753
Loans to depository institutions			—		—			—		—		—			—
Lease financing			1,212		16,289			154,045		10,126		(22,496	)		159,176
Real estate			98,694		9,966			105,857		33,170		(1	)		247,686
Installment			13,108		82			2,052		28		(2	)		15,268
Noninterest-earning assets and allowance for loan losses [2]			—		—			—		—		130,635			130,635

Total Assets			709,203		35,007			351,225		599,631		115,242			1,810,308

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Savings [1]			—		—			29,488		—		—			29,488
NOW [1]			—		—			111,868		—		—			111,868
Money market [1]			185,045		—			41,610		—		—			226,655
Time	- domestic		194,096		170,298			139,320		110		—			503,824
	- foreign		1,355		1,645			—		—		—			3,000
Securities sold u/a/r - cust			98,483		5,113			—		—		—			103,596
Securities sold u/a/r - deal			—		—			—		—		—			—
Federal funds purchased			—		—			—		—		—			—
Commercial paper			34,954		—			—		—		—			34,954
Other short-term borrowings			1,108		—			—		—		—			1,108
Long-term borrowings - FHLB			—		—			10,000		100,000		25,774			135,774
Noninterest-bearing liabilities and shareholders’ equity [2]			—		—			—		—		660,041			660,041

Total Liabilities and Shareholders’ Equity			515,041		177,056			332,286		100,110		685,815			1,810,308

Net Interest Rate Sensitivity Gap		$	194,162	$	(142,049	)	$	18,939	$	499,521	$	(570,573	)	$	—

Cumulative Gap September 30, 2004		$	194,162	$	52,113		$	71,052	$	570,573	$	—		$	—

Cumulative Gap September 30, 2003		$	259,449	$	129,985		$	107,689	$	543,384	$	—		$	—

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 9.

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)	Restated Certificate of Incorporation filed with the State of New York Department of State, October 28, 2004. (Filed as Exhibit 3(i) to the Registrant’s original Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by reference).

		3.	(ii)	The By-Laws as in effect on August 5, 2004 (Filed as Exhibit 3(ii) (A) to the Registrant’s Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).

		10.	(i)(A)	Sterling Bancorp Stock Incentive Plan (Amended and Restated as of May 20, 2004) (Filed as Exhibit 10 to the Registrant’s original Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by reference).

			(i)(B)	Form of Award Letter for Non-Employee Directors (Filed as Exhibit 10 to the Registrant’s original Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by reference).

			(i)(C)	Form of Award Letter for Officers (Filed as Exhibit 10 to the Registrant’s original Form 10-Q for the quarter ended September 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 July 16,2004 and filed on July 19, 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 July 20, 2004 to discuss the results of operations for the second quarter ended June 30, 2004.

			In a report on Form 8-K dated July 20, 2004 and filed on July 21, 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 and six months ended June 30,2004.

	In a report on Form 8-K dated July 21, 2004 and filed on July 22, 2004, the Company reported, under Item 7 “Financial Statements, Pro Forma Information and Exhibits” and under Item 9 “Regulation FD Disclosure”, the press release announcing a presentation on July 27, 2004 by John C. Millman, President of Sterling Bancorp, as part of the Keefe, Bruyette & Woods, Inc. Fifth Annual Investor Conference.

	In a report on Form 8-K dated August 19, 2004 and filed on August 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 September 30, 2004 to shareholders of record on September 15, 2004.

	In a report on Form 8-K dated September 20, 2004 and filed on September 21, 2004, the Company reported, under Item 7 “Financial Statements, Pro Forma Information and Exhibits” and under Item 9 “Regulation FD Disclosure”, the press release announcing a presentation on September 23, 2004 by John C. Millman, President of Sterling Bancorp and Michael Bizenov, President of Sterling National Mortgage Company Inc., as part of the LI Invest First Annual Investor Conference.

	In a report on Form 8-K/A dated September 20, 2004 and filed on September 21, 2004, the Company reported, under Item 7.01 “Regulation FD Disclosure” and Item 9.01 “Financial Statements, Pro Forma Information and Exhibits”, the press release announcing a presentation on September 23, 2004 by John C. Millman, President of Sterling Bancorp and Michael Bizenov, President of Sterling National Mortgage Company Inc., as part of the LI Invest First Annual Investor Conference.

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.	42

31	Certifications of the CEO and CFO pursuant to
	Exchange Act Rule 13a-14(a).	43

32	Certifications of the CEO and CFO required by
	Section 1350 of Chapter 63 of Title 18 of the U.S. Code.	45