Sterling Bancorp Reports All-Time High in Pre-Tax Income for Second Quarter 2005

NEW YORK, July 26 /PRNewswire-FirstCall/ -- Sterling Bancorp , a financial holding company and the parent company of Sterling National Bank, today reported its financial results for the quarter ended June 30, 2005.

Second Quarter 2005 Highlights: -- Pre-tax income increased 14.2% to an all-time high of $10.2 million -- Gross revenue (interest income plus non-interest income) rose 15.6% to an all-time high of $37.1 million -- Net interest income on a tax-equivalent basis rose 10.5% to $21.2 million -- Average loans and deposits increased 13.1% and 13.6%, respectively -- Mortgage banking income was up 16.4% -- Net interest margin improved to 4.84%

"We were able to deliver a solid financial performance, demonstrating the strength of our balanced business model despite the changing economic and interest rate environment," said Louis J. Cappelli, Chairman and Chief Executive Officer. "The increases in short-term interest rates have been beneficial and significantly contributed to the increase in gross revenue which more than offset the impact of a flattening yield curve."

"Business development efforts produced substantial organic growth in both loans and deposits," stated Chairman Cappelli. "Our focus on higher margin residential real estate loans held for sale produced superior profits that counterbalanced mortgage industry trends of lower volumes."

"We remained focused on enhancing value for our shareholders," continued Chairman Cappelli. "During the second quarter, the Board of Directors increased the Company's authority to repurchase Common Shares by an additional 800,000 shares, further demonstrating confidence in the Company's performance. In addition, the Board approved a dividend for the 238th consecutive quarter in May 2005, reflecting over 59 years of dedication to enhancing shareholder value."

Second Quarter and First Six Months 2005 Financial Results Net Income

Net income for the second quarter of 2005 was $6.1 million. Diluted earnings per share were $0.33 for the quarter ended June 30, 2005.

For the six months ended June 30, 2005, net income was $11.8 million. Diluted earnings per share were $0.63 for the six months ended June 30, 2005.

Net Interest Income

In the second quarter of 2005, net interest income, on a tax-equivalent basis, increased to $21.2 million compared to $19.2 million in the second quarter of 2004. Net interest income benefited from growth in average loans outstanding and the higher interest rate environment of 2005, which was partially offset by the impact of a flattening yield curve and growth of interest-bearing deposits at higher costs.

For the six months ended June 30, 2005, net interest income, on a tax- equivalent basis, rose to $41.9 million from $38.5 million in the first half of 2004.

Net interest margin for the second quarter of 2005, on a tax-equivalent basis, increased to 4.84%, compared to 4.75% for the second quarter of 2004.

For the six-month period ended June 30, 2005, net interest margin, on a tax-equivalent basis, increased to 4.94%, compared to 4.87% for the corresponding period of 2004.

Loans

Average loans held in portfolio for the second quarter 2005 grew 12.8% year-over-year to $966.6 million, with all significant segments of Sterling's loan portfolio showing an increase in average outstandings.

For the six-month period ended June 30, 2005, average loans held in portfolio rose 14.7% to $960.7 million.

Demand Deposits

For the second quarter 2005, average demand deposits increased 9.2% to $445.9 million.

Demand deposits, on average, grew by 8.9% to $441.2 million in the six- month period ended June 30, 2005.

As of June 30, 2005, demand deposits were 33.3% of total deposits, continuing Sterling's tradition of maintaining one of the highest ratios of demand to total deposits in the industry.

Cost of Funds

In the second quarter of 2005, total interest expense was $6.7 million compared to $4.5 million in the second quarter of 2004. The increase was driven by higher average interest-bearing deposits, which increased to $925.2 million for the second quarter of 2005, compared to $798.7 million in the second quarter 2004, along with the higher interest rate environment in 2005. The average rate paid on interest-bearing funds was 2.18% for the second quarter 2005, compared to 1.61% for the second quarter 2004.

For the six-month period ended June 30, 2005, the average rate paid on interest-bearing funds was 2.07%, compared to 1.64% for the corresponding period of 2004. For the six months ended June 30, 2005, total interest expense was $12.4 million, compared to $9.1 million in the corresponding period of 2004.

Noninterest Income and Noninterest Expenses

For the second quarter of 2005, noninterest income increased 9% to $9.3 million. The Company experienced solid revenue growth in mortgage banking and fees collected for deposit services, which more than offset decreases in income from sales of available for sale securities and from other service charges and fees.

Noninterest income for the six-month period ended June 30, 2005 increased to $17.3 million from $16.8 million in the corresponding period of last year. This increase was the result of improved income primarily from mortgage banking, fees collected for deposit services and bank owned life insurance, partially offset by lower income from factoring, trade finance and gains on sales of available for sale securities.

Noninterest expenses for the quarter ended June 30, 2005 were $18.2 million, compared to $16.2 million in the corresponding period of 2004. For the six-month period ended June 30, 2005, noninterest expenses were $35.2 million, compared to $32.1 million in the first half of 2004. The increases were primarily due to higher professional fees related to compliance efforts and investments in the Sterling franchise.

Provision for Income Taxes

The provision for income taxes increased to $4.1 million for the second quarter of 2005 from $2.4 million for the corresponding period of 2004. The lower provision for taxes for the second quarter of 2004 was due primarily to the resolution in that quarter of certain state tax issues for the years 1999- 2001.

Asset Quality

As of June 30, 2005, nonperforming assets were $4.6 million, representing 0.24% of total assets.

The provision for loan losses for the second quarter 2005 was $2.0 million, compared to $2.5 million for the second quarter 2004.

For the six months ended June 30, 2005, the provision for loan losses was $4.7 million, compared to $4.9 million in the corresponding period of 2004.

The allowance for loan losses as a percentage of loans held in portfolio was 1.60% as of June 30, 2005.

Dividend

On June 30, 2005, Sterling paid a cash dividend of $0.19 per common share to shareholders of record as of June 15, 2005. The Company has distributed cash dividends for 238 consecutive quarters.

Conference Call

Sterling Bancorp will host a teleconference call for the financial community on Tuesday, July 26, 2005 at 10:00 a.m. Eastern Time to discuss the second quarter 2005 financial results. The public is invited to listen to this conference call by dialing 866-244-4515 at least 10 minutes prior to the call and entering passcode 745575.

A replay of the conference call will be available at 1:00 p.m. Eastern Time on Tuesday, July 26, 2005 until 11:59 p.m. Eastern Time on Tuesday, August 2, 2005. The public is invited to listen to this conference call by dialing 888-266-2081 and entering passcode 745575.

About Sterling Bancorp

Sterling Bancorp is a financial holding company with assets of $1.9 billion, offering a broad array of banking and financial services products. Its principal banking subsidiary is Sterling National Bank, founded in 1929. Sterling provides a wide range of products and services, including business and consumer loans, commercial and residential mortgage lending and brokerage, asset-based financing, factoring, trade financing, equipment leasing, corporate and consumer deposit services, trust and estate administration, and investment management services. The Company has operations in New York, Virginia and North Carolina and conducts business throughout the U.S.

This press release may contain statements, 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 regarding matters that are not historical facts, that 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 the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside its control. Any forward-looking statements the Company may make speak only as of the date on which such statements are made. The Company's actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results and financial condition, see "Cautionary Statement Regarding Forward-Looking Statements" in Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

STERLING BANCORP Consolidated Financial Highlights (Unaudited) (dollars and shares in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 OPERATING HIGHLIGHTS Interest income $27,806 $23,553 $54,010 $47,087 Interest expense 6,741 4,519 12,443 9,058 Provision for loan losses 2,006 2,471 4,654 4,897 Noninterest income 9,314 8,547 17,310 16,771 Noninterest expenses 18,191 16,192 35,167 32,141 Net income 6,056 6,565 11,823 11,772 Earnings per common share: Basic 0.33 0.35 0.65 0.64 Diluted 0.33 0.34 0.63 0.61 Cash dividends declared 0.19 0.16 0.38 0.32 Common shares outstanding: Period end 18,369 18,207 18,369 18,207 Average Basic 18,344 18,364 18,303 18,266 Average Diluted 19,003 19,183 18,914 19,164 Return on average assets 1.27% 1.50% 1.26% 1.36% Return on average tangible equity (1) 18.79% 21.86% 18.65% 19.45% Return on average stated equity (2) 16.14% 18.60% 16.00% 16.57% Net interest spread, tax-equivalent basis 4.24% 4.30% 4.36% 4.40% Net interest margin, tax-equivalent basis 4.84% 4.75% 4.94% 4.87% ASSET QUALITY HIGHLIGHTS Period End Net charge-offs $2,632 $2,205 $4,827 $4,328 Nonperforming loans 4,345 2,756 4,345 2,756 Other real estate owned 295 1,033 295 1,033 Nonperforming assets 4,640 3,789 4,640 3,789 Nonperforming loans/loans (3) 0.42% 0.29% 0.42% 0.29% Nonperforming assets/assets 0.24% 0.21% 0.24% 0.21% Allowance for loan losses/ loans (4) 1.60% 1.66% 1.60% 1.66% Allowance for loan losses/ nonperforming loans 371.83% 545.28% 371.83% 545.28% (1) Average tangible equity represents average shareholders' equity less average goodwill. (2) Average stated equity is equal to average shareholders' equity. (3) The term "loans" includes loans held for sale and loans held in portfolio. (4) The term "loans" includes loans held in portfolio only. STERLING BANCORP Consolidated Financial Highlights (Unaudited) (dollars in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 BALANCE SHEET HIGHLIGHTS Period End Balances Security investments $725,246 $696,062 $725,246 $696,062 Loans held for sale 36,767 44,458 36,767 44,458 Loans held in portfolio, net of unearned discount 1,008,195 903,136 1,008,195 903,136 Total earning assets 1,771,247 1,645,817 1,771,247 1,645,817 Allowance for loan losses 16,156 15,028 16,156 15,028 Total assets 1,908,811 1,799,466 1,908,811 1,799,466 Noninterest-bearing deposits 457,565 444,343 457,565 444,343 Interest-bearing deposits 917,073 811,443 917,073 811,443 Customer repurchase agreements 63,502 80,681 63,502 80,681 Shareholders' equity 154,806 139,111 154,806 139,111 Average Balances Security investments $733,753 $717,169 $713,308 $706,153 Loans held for sale 52,609 44,429 45,340 44,122 Loans held in portfolio, net of unearned discount 966,636 856,727 960,724 837,756 Total earning assets 1,772,219 1,623,695 1,739,446 1,602,884 Allowance for loan losses 17,652 15,597 17,450 15,460 Total assets 1,915,967 1,760,091 1,885,338 1,741,300 Noninterest-bearing deposits 445,933 408,520 441,247 405,315 Interest-bearing deposits 925,244 798,716 909,821 796,157 Customer repurchase agreements 86,793 78,753 86,281 77,061 Shareholders' equity 150,464 141,961 149,012 142,894 Capital Ratios Tier 1 risk based 13.89% 13.41% 13.89% 13.41% Total risk based 15.15% 14.66% 15.15% 14.66% Leverage 8.53% 8.50% 8.53% 8.50% Book value per common share $8.43 $7.64 $8.43 $7.64 STERLING BANCORP Consolidated Balance Sheets (Unaudited) (in thousands, except number of shares) June 30, 2005 2004 ASSETS Cash and due from banks $51,544 $74,605 Interest-bearing deposits with other banks 1,039 2,161 Federal Funds Sold 0 0 Investment securities Available for sale (at estimated market value) 213,946 300,452 Held to maturity (at cost) 511,300 395,610 Total investment securities 725,246 696,062 Loans held for sale 36,767 44,458 Loans held in portfolio, net of unearned discounts 1,008,195 903,136 Less allowance for loan losses 16,156 15,028 Loans, net 992,039 888,108 Customers' liability under acceptances 467 1,067 Goodwill 21,158 21,158 Premises and equipment, net 10,915 10,285 Other real estate 295 1,033 Accrued interest receivable 5,650 5,256 Bank owned life insurance 26,766 22,349 Other assets 36,925 32,924 $1,908,811 $1,799,466 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest-bearing $457,565 $444,343 Interest-bearing 917,073 811,443 Total deposits 1,374,638 1,255,786 Federal funds purchased 20,000 0 Securities sold under agreements to repurchase - customers 63,502 80,681 Securities sold under agreements to repurchase - dealers 74,728 58,616 Commercial paper 36,533 36,201 Other short-term borrowings 1,448 15,525 Acceptances outstanding 467 1,067 Accrued expenses and other liabilities 76,915 76,705 Long-term debt 105,774 135,774 Total liabilities 1,754,005 1,660,355 Shareholders' equity 154,806 139,111 $1,908,811 $1,799,466 MEMORANDA Available for sale securities - amortized cost $214,578 $303,868 Held to maturity securities - estimated market value 511,541 391,756 Shares outstanding Common issued 20,055,849 19,825,898 Common in treasury 1,686,555 1,618,903 STERLING BANCORP Consolidated Statements of Income (Unaudited) (dollars in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 INTEREST INCOME Loans $19,478 $15,412 $37,854 $30,494 Investment securities - available for sale 2,467 3,454 4,969 7,146 Investment securities - held to maturity 5,733 4,678 10,943 9,384 Federal funds sold 112 6 222 56 Deposits with other banks 16 3 22 7 Total interest income 27,806 23,553 54,010 47,087 INTEREST EXPENSE Deposits 4,086 2,374 7,538 4,847 Securities sold under agreements to repurchase 837 365 1,423 681 Federal funds purchased 157 47 178 63 Commercial paper 223 78 383 141 Other short-term borrowings 61 94 66 206 Long-term debt 1,377 1,561 2,855 3,120 Total interest expense 6,741 4,519 12,443 9,058 Net interest income 21,065 19,034 41,567 38,029 Provision for loan losses 2,006 2,471 4,654 4,897 Net interest income after provision for loan losses 19,059 16,563 36,913 33,132 NONINTEREST INCOME Factoring income 1,637 1,767 3,054 3,194 Mortgage banking income 4,558 3,915 8,434 7,546 Service charges on deposit accounts 1,258 1,159 2,455 2,222 Trade finance income 541 518 962 1,011 Trust fees 152 166 324 348 Other service charges and fees 381 480 683 955 Bank owned life insurance income 437 243 687 477 Securities gains 0 149 197 685 Other income 350 150 514 333 Total noninterest income 9,314 8,547 17,310 16,771 NONINTEREST EXPENSES Salaries 8,198 7,385 16,355 15,062 Employee benefits 2,345 2,330 4,095 4,256 Total personnel expense 10,543 9,715 20,450 19,318 Occupancy expenses, net 1,348 1,234 2,663 2,464 Equipment expenses 831 658 1,595 1,414 Advertising and marketing 1,014 925 2,130 2,018 Professional fees 1,435 1,074 2,966 1,988 Data processing fees 325 301 583 588 Stationery and printing 238 194 432 461 Communications 485 391 868 798 Other expenses 1,972 1,700 3,480 3,092 Total noninterest expenses 18,191 16,192 35,167 32,141 Income before income taxes 10,182 8,918 19,056 17,762 Provision for income taxes 4,126 2,353 7,233 5,990 Net income $6,056 $6,565 $11,823 $11,772 Average number of common shares outstanding Basic 18,344,269 18,364,046 18,302,824 18,266,196 Diluted 19,002,691 19,182,695 18,913,957 19,164,235 Earnings per average common share Basic $0.33 $0.35 $0.65 $0.64 Diluted 0.33 0.34 0.63 0.61 Dividends per common share 0.19 0.16 0.38 0.32 STERLING BANCORP Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Net income $6,056 $6,565 $11,823 $11,772 Other comprehensive income, net of tax: Unrealized holding (losses)/ gains arising during the period 1,495 (4,981) (354) (3,554) Less: Reclassification adjustment for gains included in net income 0 (80) (106) (370) Change in unrealized (losses)/gains on supplemental pension (166) (99) (554) 245 Comprehensive income $7,385 $1,405 $10,809 $8,093 STERLING BANCORP Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Balance, at beginning of period $149,508 $148,267 $148,704 $143,262 Net income for period 6,056 6,565 11,823 11,772 Common shares issued under stock incentive plan and related tax benefits 2,094 436 3,111 1,737 Purchase of common shares for treasury (547) (8,310) (547) (8,310) Cash dividends-Common shares (3,504) (2,872) (6,963) (5,791) Surrender of shares issued under incentive compensation plan (196) 0 (445) (251) Amortization of unearned compensation 66 185 137 371 Change in net unrealized holding (losses)/gains on available for sale securities 1,495 (4,981) (354) (3,554) Reclassification adjustment for gains included in net income 0 (80) (106) (370) Change in unrealized (losses)/ gains on supplemental pension (166) (99) (554) 245 Balance, at end of period $154,806 $139,111 $154,806 $139,111 STERLING BANCORP Average Balance Sheets (1) (Unaudited) (dollars in thousands) Three Months Ended June 30, 2005 AVERAGE AVERAGE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $3,155 $16 2.02% Investment securities - available for sale 197,236 2,185 4.43 Investment securities - held to maturity 511,387 5,733 4.48 Investment securities - tax exempt (2) 25,130 459 7.33 Total investment securities 733,753 8,377 4.57 Federal funds sold 16,066 112 2.77 Loans, net of unearned discount (3) 1,019,245 19,478 7.92 Total Interest-Earning Assets (2) 1,772,219 27,983 6.42% Cash and due from banks 61,229 Allowance for loan losses (17,652) Goodwill 21,158 Other 79,013 Total Assets $1,915,967 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $28,577 28 0.40% NOW 155,218 269 0.69 Money market 214,740 469 0.88 Time 523,697 3,312 2.54 Foreign Time 3,012 8 1.09 Total Interest-Bearing Deposits 925,244 4,086 1.77 Borrowings Securities sold under agreements to repurchase - customers 86,793 417 1.93 Securities sold under agreements to repurchase - dealers 54,284 420 3.11 Federal funds purchased 20,223 157 3.12 Commercial paper 37,211 223 2.40 Other short-term debt 7,760 61 3.17 Long-term debt 108,082 1,377 5.09 Total Borrowings 314,353 2,655 3.38 Total Interest-Bearing Liabilities 1,239,597 6,741 2.18% Noninterest-bearing demand deposits 445,933 Other liabilities 79,973 Total Liabilities 1,765,503 Shareholders' equity 150,464 Total Liabilities and Shareholders' Equity $1,915,967 Net interest income/spread (2) 21,242 4.24% Net yield on interest-earning assets 4.84% Less: Tax-equivalent adjustment 177 Net interest income $21,065 Three Months Ended June 30, 2004 AVERAGE AVERAGE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $2,952 $3 0.58% Investment securities - available for sale 291,038 3,126 4.30 Investment securities - held to maturity 395,637 4,678 4.73 Investment securities - tax exempt (2) 30,494 516 6.81 Total investment securities 717,169 8,320 4.64 Federal funds sold 2,418 6 0.95 Loans, net of unearned discount (3) 901,156 15,412 7.02 Total Interest-Earning Assets (2) 1,623,695 23,741 5.91% Cash and due from banks 58,365 Allowance for loan losses (15,597) Goodwill 21,158 Other 72,470 Total Assets $1,760,091 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $32,636 33 0.41% NOW 135,345 147 0.44 Money market 203,133 191 0.38 Time 424,602 1,995 1.89 Foreign Time 3,000 8 1.10 Total Interest-Bearing Deposits 798,716 2,374 1.20 Borrowings Securities sold under agreements to repurchase - customers 78,753 219 1.12 Securities sold under agreements to repurchase - dealers 50,730 146 1.16 Federal funds purchased 17,399 47 1.10 Commercial paper 28,323 78 1.12 Other short-term debt 18,886 94 1.99 Long-term debt 135,774 1,561 4.59 Total Borrowings 329,865 2,145 2.60 Total Interest-Bearing Liabilities 1,128,581 4,519 1.61% Noninterest-bearing demand deposits 408,520 Other liabilities 81,029 Total Liabilities 1,618,130 Shareholders' equity 141,961 Total Liabilities and Shareholders' Equity $1,760,091 Net interest income/spread (2) 19,222 4.30% Net yield on interest-earning assets 4.75% Less: Tax-equivalent adjustment 188 Net interest income $19,034 (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 prior period amounts to conform to current presentation. (2) Interest and/or average rates are 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 Average Balance Sheets (1) (Unaudited) (dollars in thousands) Six Months Ended June 30, 2005 AVERAGE AVERAGE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $2,770 $22 1.61% Investment securities - available for sale 200,717 4,399 4.38 Investment securities - held to maturity 486,814 10,943 4.50 Investment securities - tax exempt (2) 25,777 930 7.28 Total investment securities 713,308 16,272 4.56 Federal funds sold 17,304 222 2.56 Loans, net of unearned discount (3) 1,006,064 37,854 7.94 Total Interest-Earning Assets (2) 1,739,446 54,370 6.43% Cash and due from banks 62,625 Allowance for loan losses (17,450) Goodwill 21,158 Other 79,559 Total Assets $1,885,338 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $28,804 54 0.38% NOW 148,748 463 0.63 Money market 220,595 879 0.80 Time 508,667 6,126 2.43 Foreign Time 3,007 16 1.09 Total Interest-Bearing Deposits 909,821 7,538 1.67 Borrowings Securities sold under agreements to repurchase - customers 86,281 754 1.76 Securities sold under agreements to repurchase - dealers 46,416 669 2.91 Federal funds purchased 11,826 178 2.99 Commercial paper 36,412 383 2.12 Other short-term debt 4,287 66 3.12 Long-term debt 115,276 2,855 4.95 Total Borrowings 300,498 4,905 3.27 Total Interest-Bearing Liabilities 1,210,319 12,443 2.07% Noninterest-bearing demand deposits 441,247 Other liabilities 84,760 Total Liabilities 1,736,326 Shareholders' equity 149,012 Total Liabilities and Shareholders' Equity $1,885,338 Net interest income/spread (2) 41,927 4.36% Net yield on interest-earning assets 4.94% Less: Tax-equivalent adjustment 360 Net interest income $41,567 Six Months Ended June 30, 2004 AVERAGE AVERAGE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $3,150 $7 0.82% Investment securities - available for sale 290,568 6,479 4.42 Investment securities - held to maturity 384,888 9,384 4.88 Investment securities - tax exempt (2) 30,697 1,091 7.15 Total investment securities 706,153 16,954 4.79 Federal funds sold 11,703 56 0.95 Loans, net of unearned discount (3) 881,878 30,494 7.22 Total Interest-Earning Assets (2) 1,602,884 47,511 6.04% Cash and due from banks 62,511 Allowance for loan losses (15,460) Goodwill 21,158 Other 70,207 Total Assets $1,741,300 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $32,791 65 0.40% NOW 134,683 301 0.45 Money market 206,540 561 0.55 Time 419,143 3,904 1.87 Foreign Time 3,000 16 1.08 Total Interest-Bearing Deposits 796,157 4,847 1.22 Borrowings Securities sold under agreements to repurchase - customers 77,061 430 1.12 Securities sold under agreements to repurchase - dealers 43,677 251 1.16 Federal funds purchased 11,653 63 1.08 Commercial paper 25,871 141 1.10 Other short-term debt 21,816 206 1.89 Long-term debt 135,774 3,120 4.59 Total Borrowings 315,852 4,211 2.67 Total Interest-Bearing Liabilities 1,112,009 9,058 1.64% Noninterest-bearing demand deposits 405,315 Other liabilities 81,082 Total Liabilities 1,598,406 Shareholders' equity 142,894 Total Liabilities and Shareholders' Equity $1,741,300 Net interest income/spread (2) 38,453 4.40% Net yield on interest-earning assets 4.87% Less: Tax-equivalent adjustment 424 Net interest income $38,029 (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 prior period amounts to conform to current presentation. (2) Interest and/or average rates are 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 June 30, 2005 to June 30, 2004 Volume Rate Net (2) INTEREST INCOME Interest-bearing deposits with other banks $0 $13 $13 Investment securities - available for sale (1,033) 92 (941) Investment securities - held to maturity 1,312 (257) 1,055 Investment securities - tax exempt (95) 38 (57) Total investment securities 184 (127) 57 Federal funds sold 79 27 106 Loans, net of unearned discounts (3) 2,055 2,011 4,066 TOTAL INTEREST INCOME $2,318 $1,924 $4,242 INTEREST EXPENSE Interest-bearing deposits Domestic Savings $(4) $(1) $(5) NOW 25 97 122 Money market 12 266 278 Time 532 785 1,317 Foreign Time 0 0 0 Total interest-bearing deposits 565 1,147 1,712 Borrowings Securities sold under agreements to repurchase - customers 24 174 198 Securities sold under agreements to repurchase - dealers 11 263 274 Federal funds purchased 9 101 110 Commercial paper 32 113 145 Other short-term debt (72) 39 (33) Long-term debt (340) 156 (184) Total borrowings (336) 846 510 TOTAL INTEREST EXPENSE $229 $1,993 $2,222 NET INTEREST INCOME $2,089 $(69) $2,020 (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 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) Six Months Ended June 30, 2005 to June 30, 2004 Volume Rate Net (2) INTEREST INCOME Interest-bearing deposits with other banks $(1) $16 $15 Investment securities - available for sale (2,022) (58) (2,080) Investment securities - held to maturity 2,313 (754) 1,559 Investment securities - tax exempt (164) 3 (161) Total investment securities 127 (809) (682) Federal funds sold 36 130 166 Loans, net of unearned discounts (3) 4,238 3,122 7,360 TOTAL INTEREST INCOME $4,400 $2,459 $6,859 INTEREST EXPENSE Interest-bearing deposits Domestic Savings $(8) $(3) $(11) NOW 32 130 162 Money market 39 279 318 Time 914 1,308 2,222 Foreign Time 0 0 0 Total interest-bearing deposits 977 1,714 2,691 Borrowings Securities sold under agreements to repurchase - customers 54 270 324 Securities sold under agreements to repurchase - dealers 16 402 418 Federal funds purchased 1 114 115 Commercial paper 73 169 242 Other short-term debt (225) 85 (140) Long-term debt (499) 234 (265) Total borrowings (580) 1,274 694 TOTAL INTEREST EXPENSE $397 $2,988 $3,385 NET INTEREST INCOME $4,003 $(529) $3,474 (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 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.