Sterling Bancorp Reports Record Gross Revenue for Third Quarter 2005

NEW YORK, Oct. 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 September 30, 2005.

Third Quarter 2005 Highlights: -- Gross revenue (interest and noninterest income) rose 13.5% year-over-year to a record $38.6 million -- Noninterest income increased to an unprecedented $9.4 million -- Net interest income on a tax-equivalent basis rose to $21.5 million -- Average loans and deposits increased 14.2% and 10.7%, respectively, year-over-year -- Assets at period end increased 12.4% from September 30, 2004 and reached an all-time high, exceeding $2.0 billion -- Company repurchased 127,000 common shares - approximately 790,000 shares remain available for repurchase

"The strength of Sterling's business platform produced solid revenue growth and double-digit increases in loans and deposits," said Louis J. Cappelli, Chairman and Chief Executive Officer. "We continued to expand our business development efforts, and recently announced the opening of a regional office in New Jersey to provide our tailored products and personalized customer service to a heavily populated market of small and mid-sized businesses. Through strong organic growth, we achieved an all-time high in total assets, which now exceed $2 billion."

Third Quarter and First Nine Months 2005 Financial Results Net Income

Net income for the third quarter of 2005 was $6.3 million. Diluted earnings per share were $0.33 for the quarter ended September 30, 2005.

For the nine months ended September 30, 2005, net income was $18.1 million, and diluted earnings per share were $0.96.

Net Interest Income

In the third quarter of 2005, net interest income, on a tax-equivalent basis, increased 7.5% to $21.5 million from $20.0 million in the third quarter of 2004. Net interest income benefited from growth in average loans and the higher interest rate environment in 2005, which was partially offset by the impact of a flattening yield curve and growth of interest-bearing deposits at higher costs.

For the nine months ended September 30, 2005, net interest income, on a tax-equivalent basis, rose 8.6% to $63.4 million from $58.4 million in the first nine months of 2004.

Net interest margin for the third quarter of 2005, on a tax-equivalent basis, was 4.76% compared to 4.84% in the third quarter of 2004.

For the nine-month period ended September 30, 2005, net interest margin, on a tax-equivalent basis, was 4.92%, unchanged from the corresponding period of 2004. "This is a testament to the strength of Sterling's business model as the Company sustained the net interest margin even with the increased negative pressure of a flattening yield curve. Sterling's margins rank among the highest of banks in the Company's peer group," said Chairman Cappelli.

Loans

Average loans for the third quarter of 2005 grew 14.2% year-over-year to $1.1 billion.

For the nine-month period ended September 30, 2005, average loans rose 14.1% to $1.0 billion.

Demand Deposits

For the third quarter 2005, average demand deposits increased 8.6% year-over-year to $461.4 million.

Demand deposits, on average, grew by 8.8% to $448.0 million for the nine-month period ended September 30, 2005.

As of September 30, 2005, demand deposits were $540.0 million, 36.6% of total deposits, continuing Sterling's disciplined approach of maintaining one of the highest ratios of demand to total deposits in the industry. Growth of demand deposits is a significant factor in building strong customer relationships and continues to be an important component of Sterling's business model.

Cost of Funds

In the third quarter of 2005, total interest expense was $7.9 million compared to $5.1 million in the third quarter of 2004. The increase occurred as a result of higher average interest-bearing deposits, which increased 11.7% to $953.1 million for the third quarter of 2005, compared to $853.3 million in the third quarter of 2004, along with the higher interest rate environment in 2005. The average rate paid on interest-bearing funds was 2.47% for the third quarter of 2005, compared to 1.77% for the third quarter of 2004, despite Sterling's strong focus on controlling interest costs.

For the nine-month period ended September 30, 2005, the average rate paid on interest-bearing funds was 2.21%, compared to 1.68% for the corresponding period of 2004. For the nine months ended September 30, 2005, total interest expense was $20.3 million, compared to $14.1 million in the corresponding period of 2004.

Noninterest Income and Noninterest Expenses

For the third quarter of 2005, noninterest income increased to $9.4 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, factoring income and other service charges and fees.

Noninterest income for the nine-month period ended September 30, 2005 increased to $26.7 million from $25.9 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 increased $1.6 million and $4.6 million for the third quarter and the first nine months of 2005, respectively, primarily due to higher salaries and professional fees related to compliance efforts and investments in the Sterling franchise, including new branches, with higher expenses related to salaries, equipment and occupancy costs. These increases were partially offset by a reversal during the third quarter of 2005 of $1.0 million of litigation settlement costs originally charged to noninterest expenses in 2001. The increase in other expenses was principally due to higher costs for appraisals, credit reports, mortgage taxes, insurance and interest on potential tax liability.

Provision for Income Taxes

The provision for income taxes increased to $3.9 million for the third quarter of 2005 from $3.6 million for the corresponding period of 2004. For the nine-month period ended September 30, 2005, the provision for income taxes was $11.1 million, compared to $9.5 million in the first nine months of 2004. The lower provision for taxes in the first nine months of 2004 was due primarily to the resolution of certain state tax issues for the years 1999-2001.

Asset Quality

As of September 30, 2005, nonperforming assets were $4.3 million, representing 0.21% of total assets.

The provision for loan losses for the third quarter of 2005 was $2.5 million, compared to $2.3 million for the third quarter of 2004.

For the nine months ended September 30, 2005, the provision for loan losses was $7.2 million, virtually unchanged from the corresponding period of 2004.

The allowance for loan losses as a percentage of loans held in portfolio was 1.47% as of September 30, 2005.

Dividends and Capital Management

On September 30, 2005, Sterling paid a cash dividend of $0.19 per common share to shareholders of record as of September 15, 2005. The Company has distributed cash dividends for 239 consecutive quarters.

During the third quarter of 2005, Sterling repurchased 127,000 shares of common stock as part of its authorized share repurchase plan, bringing the total common stock repurchased during the nine-month period ended September 30, 2005 to 152,100 shares. "For 60 years, our capital management initiatives have focused on returning value to shareholders through consistent and increasing dividends and stock repurchases," stated Chairman Cappelli.

Conference Call

Sterling Bancorp will host a teleconference call for the financial community on Wednesday, October 26, 2005 at 9:00 a.m. Eastern Time to discuss the third quarter 2005 financial results. The public is invited to listen to this conference call by dialing 866-814-1919 at least 10 minutes prior to the call.

A replay of the conference call will be available at 1:00 p.m. Eastern Time on Wednesday, October 26, 2005 until 11:59 p.m. Eastern Time on Wednesday, November 2, 2005. The public is invited to listen to this conference call by dialing 888-266-2081 and entering passcode 796746.

About Sterling Bancorp

Sterling Bancorp is a financial holding company with assets of $2.0 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, New Jersey, 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 Nine Months Ended September 30, September 30, 2005 2004 2005 2004 OPERATING HIGHLIGHTS Interest income $29,234 $24,812 $83,244 $71,899 Interest expense 7,881 5,050 20,324 14,108 Provision for loan losses 2,508 2,338 7,162 7,235 Noninterest income 9,353 9,175 26,663 25,946 Noninterest expenses 18,065 16,493 53,232 48,634 Net income 6,274 6,550 18,097 18,322 Earnings per common share: Basic 0.34 0.36 0.99 1.00 Diluted 0.33 0.35 0.96 0.96 Cash dividends declared 0.19 0.16 0.57 0.48 Common shares outstanding: Period end 18,277 18,208 18,277 18,208 Average Basic 18,325 18,207 18,305 18,249 Average Diluted 18,917 19,026 18,878 19,114 Return on average assets 1.27% 1.46% 1.27% 1.39% Return on average tangible equity (1) 18.90% 21.89% 18.74% 20.26% Return on average stated equity (2) 16.29% 18.59% 16.10% 17.24% Net interest spread, tax- equivalent basis 4.07% 4.34% 4.31% 4.45% Net interest margin, tax- equivalent basis 4.76% 4.84% 4.92% 4.92% ASSET QUALITY HIGHLIGHTS Period End Net charge-offs $2,429 $1,764 $7,256 $6,092 Nonperforming loans 3,958 2,993 3,958 2,993 Other real estate owned 327 1,019 327 1,019 Nonperforming assets 4,285 4,012 4,285 4,012 Nonperforming loans/loans (3) 0.34% 0.30% 0.34% 0.30% Nonperforming assets/assets 0.21% 0.22% 0.21% 0.22% Allowance for loan losses/loans(4) 1.47% 1.61% 1.47% 1.61% Allowance for loan losses/ nonperforming loans 410.16% 521.28% 410.16% 521.28% (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 Nine Months Ended September 30, September 30, 2005 2004 2005 2004 BALANCE SHEET HIGHLIGHTS Period End Balances Security investments $707,011 $670,120 $707,011 $670,120 Loans held for sale 50,137 38,810 50,137 38,810 Loans held in portfolio, net of unearned discount 1,100,749 968,073 1,100,749 968,073 Total earning assets 1,860,983 1,679,673 1,860,983 1,679,673 Allowance for loan losses 16,234 15,602 16,234 15,602 Total assets 2,035,131 1,810,308 2,035,131 1,810,308 Noninterest-bearing deposits 540,030 424,534 540,030 424,534 Interest-bearing deposits 937,462 874,835 937,462 874,835 Customer repurchase agreements 57,920 103,596 57,920 103,596 Shareholders' equity 153,451 145,065 153,451 145,065 Average Balances Security investments $719,760 $682,669 $715,482 $698,269 Loans held for sale 68,492 37,378 53,142 41,858 Loans held in portfolio, net of unearned discount 1,018,790 914,563 980,293 863,544 Total earning assets 1,817,432 1,658,029 1,765,727 1,621,183 Allowance for loan losses 17,100 16,158 17,332 15,694 Total assets 1,964,117 1,786,555 1,911,881 1,756,494 Noninterest-bearing deposits 461,418 424,974 448,038 411,916 Interest-bearing deposits 953,112 853,279 924,411 815,336 Customer repurchase agreements 87,049 90,654 86,540 81,625 Shareholders' equity 152,843 140,174 150,303 141,981 Capital Ratios Tier 1 risk based 12.55% 13.05% 12.55% 13.05% Total risk based 13.80% 14.31% 13.80% 14.31% Leverage 8.31% 8.58% 8.31% 8.58% Book value per common share $8.40 $7.97 $8.40 $7.97 STERLING BANCORP Consolidated Balance Sheets (Unaudited) (in thousands, except number of shares) September 30, 2005 2004 ASSETS Cash and due from banks $83,504 $53,264 Interest-bearing deposits with other banks 3,086 2,670 Investment securities Available for sale (at estimated market value) 210,903 282,437 Held to maturity (at cost) 496,108 387,683 Total investment securities 707,011 670,120 Loans held for sale 50,137 38,810 Loans held in portfolio, net of unearned discounts 1,100,749 968,073 Less allowance for loan losses 16,234 15,602 Loans, net 1,084,515 952,471 Customers' liability under acceptances 1,936 903 Goodwill 21,158 21,158 Premises and equipment, net 11,190 9,987 Other real estate 327 1,019 Accrued interest receivable 5,774 5,140 Bank owned life insurance 26,759 22,303 Other assets 39,734 32,463 $2,035,131 $1,810,308 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest-bearing $540,030 $424,534 Interest-bearing 937,462 874,835 Total deposits 1,477,492 1,299,369 Federal funds purchased 29,100 0 Securities sold under agreements to repurchase - customers 57,920 103,596 Securities sold under agreements to repurchase - dealers 59,894 0 Commercial paper 39,402 34,954 Other short-term borrowings 21,169 1,108 Acceptances outstanding 1,936 903 Accrued expenses and other liabilities 88,993 89,539 Long-term debt 105,774 135,774 Total liabilities 1,881,680 1,665,243 Shareholders' equity 153,451 145,065 $2,035,131 $1,810,308 MEMORANDA Available for sale securities - amortized cost $213,867 $281,801 Held to maturity securities - estimated market value 490,104 390,462 Shares outstanding Common issued 20,143,131 19,827,398 Common in treasury 1,866,042 1,618,903 STERLING BANCORP Consolidated Statements of Income (Unaudited) (dollars in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 INTEREST INCOME Loans $21,222 $16,898 $59,076 $47,392 Investment securities - available for sale 2,309 3,211 7,278 10,357 Investment securities - held to maturity 5,626 4,624 16,569 14,008 Federal funds sold 61 73 283 129 Deposits with other banks 16 6 38 13 Total interest income 29,234 24,812 83,244 71,899 INTEREST EXPENSE Deposits 4,953 3,015 12,491 7,862 Securities sold under agreements to repurchase 1,066 326 2,489 1,007 Federal funds purchased 210 9 388 72 Commercial paper 237 107 620 248 Other short-term borrowings 58 34 124 240 Long-term debt 1,357 1,559 4,212 4,679 Total interest expense 7,881 5,050 20,324 14,108 Net interest income 21,353 19,762 62,920 57,791 Provision for loan losses 2,508 2,338 7,162 7,235 Net interest income after provision for loan losses 18,845 17,424 55,758 50,556 NONINTEREST INCOME Factoring income 1,561 1,916 4,615 5,110 Mortgage banking income 4,601 3,846 13,035 11,392 Service charges on deposit accounts 1,487 1,259 3,942 3,481 Trade finance income 597 688 1,559 1,699 Trust fees 149 160 473 508 Other service charges and fees 323 395 1,006 1,350 Bank owned life insurance income 461 498 1,148 975 Securities gains 0 286 197 971 Other income 174 127 688 460 Total noninterest income 9,353 9,175 26,663 25,946 NONINTEREST EXPENSES Salaries 8,465 7,788 24,820 22,850 Employee benefits 2,483 2,464 6,578 6,720 Total personnel expense 10,948 10,252 31,398 29,570 Occupancy expenses, net 1,463 1,315 4,126 3,779 Equipment expenses 867 756 2,462 2,170 Advertising and marketing 937 975 3,067 2,993 Professional fees 737 952 3,703 2,940 Data processing fees 311 272 894 860 Stationery and printing 224 142 656 603 Communications 393 364 1,261 1,162 Other expenses 2,185 1,465 5,665 4,557 Total noninterest expenses 18,065 16,493 53,232 48,634 Income before income taxes 10,133 10,106 29,189 27,868 Provision for income taxes 3,859 3,556 11,092 9,546 Net income $6,274 $6,550 $18,097 $18,322 Average number of common shares outstanding Basic 18,324,683 18,207,370 18,304,920 18,248,585 Diluted 18,917,332 19,025,500 18,877,569 19,113,791 Earnings per average common share Basic $0.34 $0.36 $0.99 $1.00 Diluted 0.33 0.35 0.96 0.96 Dividends per common share 0.19 0.16 0.57 0.48 STERLING BANCORP Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Net income $6,274 $6,550 $18,097 $18,322 Other comprehensive income, net of tax: Unrealized holding (losses)/gains arising during the period (1,255) 2,347 (1,608) (1,207) Less: Reclassification adjustment for gains included in net income 0 (155) (107) (525) Change in unrealized (losses)/gains on supplemental pension 43 (30) (511) 215 Comprehensive income $5,062 $8,712 $15,871 $16,805 STERLING BANCORP Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Balance, at beginning of period $154,806 $139,111 $148,704 $143,262 Net income for period 6,274 6,550 18,097 18,322 Common shares issued under stock incentive plan and related tax benefits 935 (42) 4,046 1,853 Purchase of common shares for treasury (2,776) 0 (3,323) (8,310) Cash dividends-Common shares (3,481) (2,867) (10,444) (8,658) Surrender of shares issued under incentive compensation plan (1,161) 0 (1,606) (409) Amortization of unearned compensation 66 151 203 522 Change in net unrealized holding (losses)/gains on available for sale securities (1,255) 2,347 (1,608) (1,207) Reclassification adjustment for gains included in net income 0 (155) (107) (525) Change in unrealized (losses)/gains on supplemental pension 43 (30) (511) 215 Balance, at end of period $153,451 $145,065 $153,451 $145,065 STERLING BANCORP Average Balance Sheets [1] (Unaudited) (dollars in thousands) Three Months Ended September 30, 2005 September 30, 2004 AVERAGE AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $3,455 $16 1.45% $3,799 $6 0.62% Investment securities - available for sale 190,371 2,055 4.32 266,551 2,885 4.33 Investment securities - held to maturity 504,688 5,626 4.46 386,851 4,624 4.78 Investment securities - tax exempt [2] 24,701 416 6.68 29,267 528 7.18 Total investment securities 719,760 8,097 4.50 682,669 8,037 4.71 Federal funds sold 6,935 61 3.43 19,620 73 1.45 Loans, net of unearned discount [3] 1,087,282 21,222 8.02 951,941 16,898 7.31 Total Interest- Earning Assets [2] 1,817,432 29,396 6.54% 1,658,029 25,014 6.11% Cash and due from banks 60,457 53,476 Allowance for loan losses (17,100) (16,158) Goodwill 21,158 21,158 Other 82,170 70,050 Total Assets $1,964,117 $1,786,555 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $28,148 31 0.44% $29,991 28 0.37% NOW 143,101 278 0.77 133,357 162 0.48 Money market 247,613 873 1.40 217,612 348 0.64 Time 531,234 3,763 2.81 469,319 2,469 2.09 Foreign Time 3,016 8 1.42 3,000 8 1.10 Total Interest- Bearing Deposits 953,112 4,953 2.06 853,279 3,015 1.41 Borrowings Securities sold under agreements to repurchase - customers 87,049 548 2.50 90,654 272 1.19 Securities sold under agreements to repurchase - dealers 57,755 518 3.56 14,910 54 1.43 Federal funds purchased 23,438 210 3.55 2,500 9 1.44 Commercial paper 34,341 237 2.74 34,394 107 1.23 Other short-term debt 6,109 58 3.75 6,293 34 2.15 Long-term debt 105,774 1,357 5.13 135,774 1,559 4.59 Total Borrowings 314,466 2,928 3.71 284,525 2,035 2.86 Total Interest- Bearing Liabil- ities 1,267,578 7,881 2.47% 1,137,804 5,050 1.77% Noninterest- bearing demand deposits 461,418 424,974 Other liabilities 82,278 83,603 Total Liabil- ities 1,811,274 1,646,381 Shareholders' equity 152,843 140,174 Total Liabilities and Shareholders' Equity $1,964,117 $1,786,555 Net interest income/spread [2] 21,515 4.07% 19,964 4.34% Net yield on interest-earning assets 4.76% 4.84% Less: Tax-equivalent adjustment 162 202 Net interest income $21,353 $19,762 [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) Nine Months Ended September 30, 2005 September 30, 2004 AVERAGE AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $3,000 $38 1.71% $3,151 $13 0.55% Investment securities - available for sale 197,229 6,454 4.36 282,504 9,364 4.37 Investment securities - held to maturity 492,838 16,569 4.48 385,548 14,008 4.84 Investment securities - tax exempt[2] 25,415 1,350 7.10 30,217 1,619 7.16 Total investment securities 715,482 24,373 4.54 698,269 24,991 4.75 Federal funds sold 13,810 283 2.71 14,361 129 1.18 Loans, net of unearned discount [3] 1,033,435 59,076 8.04 905,402 47,392 7.38 Total Interest- Earning Assets [2] 1,765,727 83,770 6.52% 1,621,183 72,525 6.13% Cash and due from banks 61,895 59,477 Allowance for loan losses (17,332) (15,694) Goodwill 21,158 21,158 Other 80,433 70,370 Total Assets $1,911,881 $1,756,494 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $28,583 85 0.40% $31,851 93 0.39% NOW 146,845 740 0.67 134,237 463 0.46 Money market 229,700 1,752 1.02 210,257 909 0.58 Time 516,273 9,889 2.56 435,991 6,373 1.95 Foreign Time 3,010 25 1.09 3,000 24 1.09 Total Interest- Bearing Deposits 924,411 12,491 1.81 815,336 7,862 1.29 Borrowings Securities sold under agreements to repurchase - customers 86,540 1,302 2.01 81,625 702 1.15 Securities sold under agreements to repurchase - dealers 50,237 1,187 3.16 34,018 305 1.20 Federal funds purchased 15,739 388 3.25 8,580 72 1.11 Commercial paper 35,714 620 2.32 28,733 248 1.15 Other short-term debt 4,901 124 3.38 16,603 240 1.93 Long-term debt 112,074 4,212 5.01 135,774 4,679 4.59 Total Borrowings 305,205 7,833 3.42 305,333 6,246 2.73 Total Interest- Bearing Liabil- ities 1,229,616 20,324 2.21% 1,120,669 14,108 1.68% Noninterest- bearing demand deposits 448,038 411,916 Other liabilities 83,924 81,928 Total Liabil- ities 1,761,578 1,614,513 Shareholders' equity 150,303 141,981 Total Liabilities and Shareholders' Equity $1,911,881 $1,756,494 Net interest income/ spread [2] 63,446 4.31% 58,417 4.45% Net yield on interest-earning assets 4.92% 4.92% Less: Tax-equivalent adjustment 526 626 Net interest income $62,920 $57,791 [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 September 30, 2005 Volume Rate Net [2] INTEREST INCOME Interest-bearing deposits with other banks $(1) $11 $10 Investment securities - available for sale (823) (7) (830) Investment securities - held to maturity 1,333 (331) 1,002 Investment securities - tax exempt (77) (35) (112) Total investment securities 433 (373) 60 Federal funds sold (66) 54 (12) Loans, net of unearned discounts [3] 2,569 1,755 4,324 TOTAL INTEREST INCOME $2,935 $1,447 $4,382 INTEREST EXPENSE Interest-bearing deposits Domestic Savings $(2) $5 $3 NOW 13 103 116 Money market 54 471 525 Time 358 936 1,294 Foreign Time 0 0 0 Total interest-bearing deposits 423 1,515 1,938 Borrowings Securities sold under agreements to repurchase - customers (11) 287 276 Securities sold under agreements to repurchase - dealers 305 159 464 Federal funds purchased 172 29 201 Commercial paper 0 130 130 Other short-term debt (1) 25 24 Long-term debt (373) 171 (202) Total borrowings 92 801 893 TOTAL INTEREST EXPENSE $515 $2,316 $2,831 NET INTEREST INCOME $2,420 $(869) $1,551 [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) Nine Months Ended September 30, 2005 Volume Rate Net [2] INTEREST INCOME Interest-bearing deposits with other banks $(1) $26 $25 Investment securities - available for sale (2,888) (22) (2,910) Investment securities - held to maturity 3,648 (1,087) 2,561 Investment securities - tax exempt (255) (14) (269) Total investment securities 505 (1,123) (618) Federal funds sold (5) 159 154 Loans, net of unearned discounts [3] 7,092 4,592 11,684 TOTAL INTEREST INCOME $7,591 $3,654 $11,245 INTEREST EXPENSE Interest-bearing deposits Domestic Savings $(10) $2 $(8) NOW 45 232 277 Money market 89 754 843 Time 1,290 2,226 3,516 Foreign Time 1 0 1 Total interest-bearing deposits 1,415 3,214 4,629 Borrowings Securities sold under agreements to repurchase - customers 42 558 600 Securities sold under agreements to repurchase - dealers 199 683 882 Federal funds purchased 95 221 316 Commercial paper 71 301 372 Other short-term debt (231) 115 (116) Long-term debt (873) 406 (467) Total borrowings (697) 2,284 1,587 TOTAL INTEREST EXPENSE $718 $5,498 $6,216 NET INTEREST INCOME $6,873 $(1,844) $5,029 [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.