Sterling Bancorp 8-K Sterling Bancorp Reports 2010 Second Quarter Results

John Tietjen	Edward Nebb
Chief Financial Officer	Investor Relations
Sterling Bancorp	Comm-Counsellors, LLC
john.tietjen@sterlingbancorp.com	enebb@optonline.net
212.757.8035	203.972.8350

STERLING BANCORP REPORTS 2010 SECOND QUARTER RESULTS

-- Net Income Increases from Prior Year and Prior Quarter --
- -- Total Assets Reach a New Record --
- -- Strong Capital Resources Support Growth Strategies --

New York, N.Y., July 26, 2010 – Sterling Bancorp (NYSE: STL), a financial holding company headquartered in New York City and the parent company of Sterling National Bank, today reported net income available to common shareholders of $2.3 million, or $0.09 per diluted share, for the second quarter ended June 30, 2010. The Company attributed its increasing profitability to a series of recent initiatives, including the acquisition and launch of complementary products, a capital raise in March 2010 that provided additional resources for growth, a continued sharp focus on meeting the needs of customers in its marketplace, and a disciplined approach to expense control.

Financial Highlights

• Rising profitability – For the 2010 second quarter, Sterling’s net income available to common shareholders reached its highest level since the first quarter of 2009.

• Strong capital – The tangible common equity ratio rose to 7.33% from 4.47% a year earlier, and all capital ratios exceeded the regulatory “well-capitalized” requirements.

• Loans– Responding to opportunities in its marketplace, Sterling approved significant new credit facilities during the first half of this year. Total loans in portfolio rose 14.9% from a year ago, excluding lease financing receivables, which experienced a planned reduction in volume. The portfolio exceeded $1.2 billion at June 30, 2010.

• Demand deposits increase – Demand deposits rose to $525.2 million at June 30, 2010, up 19.2% from a year ago. The ratio of demand deposits to total deposits remains one of the highest in the industry, at 32.0%, and represents a stable source of low-cost funds.

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• Noninterest income growth– Noninterest income rose 5.2% to $11.4 million, primarily driven by growth in Sterling’s accounts receivable management, factoring and import trade finance fees.

• Improving credit quality –The level of nonaccrual loans decreased by $1.9 million compared with the second quarter of 2009.

Management Comments

“Our ongoing efforts to use our increased capital resources to support profitable growth resulted in higher earnings for the second quarter of 2010,” said Louis J. Cappelli, Sterling’s Chairman and Chief Executive Officer. “Net income rose to the highest level of the past four quarters. Total assets reached a record $2.28 billion and deposits also have increased substantially. We have continued to grow our lending activities in a prudent and disciplined manner, in accordance with our traditional credit standards.”

“Sterling is working diligently to build upon this solid performance, while continuing to meet the needs of our customers and prospects. Our already strong capital base has been further enhanced by our stock offering in the first quarter of this year. We have continued to expand our range of products – and our potential to create shareholder value – both through acquisitions and organic growth. Strategic initiatives have enabled us to extend our reach to new customers and markets, while adding to our revenue and earnings-generating capacity. One such recent initiative was our launch of a mortgage warehouse lending program in April 2010, which is a natural extension of our expertise in asset-based lending and mortgage finance.”

“Looking ahead, we have abundant capital and liquidity to respond to the vast opportunities we see in our marketplace, but are still in the early stages of prudently deploying that capital. As a result, our current asset mix reflects a relatively high level of short-term, lower-yielding investment securities. As we continue to respond to the needs of quality borrowers, we would expect to shift that asset mix to loans, thus achieving higher yields. The results of this and other efforts to grow our business should be reflected in Sterling’s future performance,” Mr. Cappelli noted.

Second Quarter 2010 Financial Results

Net income available to common shareholders for the second quarter of 2010 was $2.3 million, or $0.09 per diluted share, versus $0.1 million, or $0.01 per diluted share, for the same period of 2009. The significant increase in profitability reflected the Company’s recent growth initiatives, while the year-ago results included an industry-wide FDIC special assessment and other factors related to the economic downturn. Sterling’s performance in the 2010 second quarter benefitted from higher noninterest income, a lower provision for loan losses, and reduced noninterest expenses. This more than offset lower net interest income due to asset mix and prevailing interest rates. Earnings per share in the 2010 period reflected the impact of a significant increase in the average number of common shares outstanding due to Sterling’s stock offering completed on March 19, 2010.

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Net interest income, on a tax-equivalent basis, was $21.1 million for the 2010 second quarter, compared to $21.5 million for the 2009 period. This change primarily reflected higher average loan and investment securities balances, reduced borrowings and lower funding costs, offset by the impact of lower yields on loans and securities, and higher interest-bearing deposit balances. Net interest margin was 4.12% for the 2010 second quarter, on a tax-equivalent basis, compared to 4.37% for the 2010 first quarter and 4.53% for the second quarter of 2009, primarily due to Sterling’s deployment of the proceeds of its March 2010 stock offering in short-term, lower yielding investment securities.

Noninterest income rose 5.2% to $11.4 million for the 2010 second quarter from $10.8 million a year earlier. This increase primarily reflected higher accounts receivable management, factoring and import trade finance fees, due to Sterling’s expansion of that business through an acquisition as well as organic growth. Service charges on deposit accounts also contributed to the rise in noninterest income. These factors were partially offset by lower mortgage banking income.

Noninterest expenses fell 8.3% to $22.1 million for the 2010 second quarter, from $24.1 million a year ago, primarily as the result of lower advertising, professional fee and deposit insurance expenses. Included in the results for the year-ago period was the impact of the industry-wide FDIC special assessment.

First Half 2010 Financial Results

Net income available to common shareholders for the first half of 2010 was $4.3 million, or $0.19 per diluted share, up from $2.9 million, or $0.16 per diluted share, for the same period of 2009. Earnings per share in the 2010 period reflected the impact of a significant increase in the average number of common shares outstanding due to Sterling’s stock offering completed on March 19, 2010.

Net interest income, on a tax-equivalent basis, was $41.5 million for the first half of 2010, compared to $43.0 million for the same 2009 period. The decrease primarily reflected higher average loan and investment securities balances, reduced borrowings and lower funding costs, offset by the impact of lower yields on loans and securities, and higher interest-bearing deposit balances. Net interest margin was 4.27% for the first six months of 2010, on a tax-equivalent basis, compared to 4.55% for the same period of 2009, primarily due to Sterling’s deployment of the proceeds of its March 2010 stock offering in short-term, lower yielding investment securities.

Noninterest income rose to $22.5 million for the first half of 2010, compared to $21.6 million a year ago. This increase primarily reflected Sterling’s expansion of its accounts receivable management, factoring and import trade finance business through acquisition and organic growth. This was partially offset by lower mortgage banking income and securities gains.

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Noninterest expenses were $43.5 million for the first half of 2010, down from $44.2 million in 2009, primarily as a result of lower professional fee and deposit insurance expenses. Included in the results for the year-ago period was the impact of the industry-wide FDIC special assessment.

Loans and Deposits

Total loans held in portfolio were $1.24 billion at June 30, 2010, rising from $1.16 billion a year earlier. Excluding lease financing receivables, which had a planned reduction in volume, loans held in portfolio increased 14.9% from a year ago. Sterling extended a significant level of new credit facilities during the first six months of 2010, while maintaining its traditional disciplined credit standards.

Noninterest-bearing demand deposits totaled $525.2 million at June 30, 2010, a 19.2% increase from a year ago, and represented 32.0% of total deposits, one of the highest ratios of demand to total deposits in the industry. Total deposits were $1.64 billion at June 30, 2010, up from $1.30 billion a year earlier.

Asset Quality

The Company has continued to experience an improvement in credit quality. The provision for loan losses declined to the lowest level of the past six quarters, at $5.5 million for the 2010 second quarter. Net charge-offs were $5.0 million for the 2010 second quarter, compared to $5.6 million a year ago. The allowance for loan losses as a percent of nonaccrual loans was 109.8% at June 30, 2010, an improvement in coverage from 88.0% at June 30, 2009.

The level of nonaccrual loans was $18.7 million at June 30, 2010, compared to $20.6 million a year earlier. The ratio of nonaccrual loans to total loans was 1.46% at June 30, 2010, versus 1.69% at June 30, 2009.

Capital

Sterling’s capital base, which previously exceeded all regulatory requirements for well-capitalized institutions, was further strengthened by the capital raise completed on March 19, 2010. The tangible common equity ratio rose to 7.33% at June 30, 2010 from 4.54% at December 31, 2009 and 4.47% at June 30, 2009. Book value per common share increased to $7.04 at June 30, 2010 from $6.73 at December 31, 2009 and $6.51 at June 30, 2009.

At June 30, 2010, Sterling’s Tier 1 risk-based capital ratio was 14.32% (compared to a requirement of 6.00%), total risk-based capital was 15.55% (requirement of 10.00%), and the Tier 1 leverage ratio was 10.76% (requirement of 5.00%).

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Conference Call

Sterling Bancorp will host a teleconference call for the financial community on July 26, 2010, at 10:00 a.m. Eastern Daylight Time to discuss the second quarter 2010 financial results. To access the conference call live, interested parties may dial 800-230-1093 at least 10 minutes prior to the call.

A replay of the conference call will be available beginning at approximately 1:00 p.m. Eastern Daylight Time on July 26, 2010, until 11:59 p.m. Eastern Daylight Time on August 9, 2010. To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 164601.

About Sterling Bancorp

Sterling Bancorp (NYSE: STL) is a New York City-based financial corporation with assets exceeding $2 billion. Since 1929, Sterling National Bank, the company’s principal banking subsidiary, has successfully served the needs of businesses, professionals and individuals in the NY metropolitan area and beyond. Sterling is well-known for its high-touch, hands-on approach to customer service and a special focus on serving the business community.

Sterling offers clients a full range of depository and cash management services plus a broad portfolio of financing solutions – including working capital lines, accounts receivable and inventory financing, factoring, international trade financing, payroll funding and processing, equipment leasing and financing, commercial and residential mortgages and trust and custodial account services.

Certain statements in this press release, including but not limited to, statements as to future events, future liquidity, future interest rate risk and operating expenses, statements concerning future results of operations, financial position or dividends, and plans and objectives for future operations, future capital, future liquidity and future growth, statements concerning the economic environment and credit quality, and the Company’s position for future growth and ability to benefit from an economic recovery, 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 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, and the Company makes no commitment to update or revise forward-looking statements to reflect new information or subsequent events or changes in expectations. For a discussion of some of the risks and important factors that could affect the Company’s future results and financial condition, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements and Factors that Could Affect Future Results” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

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STERLING BANCORP
Consolidated Financial Highlights
(Unaudited)
(dollars in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
BALANCE SHEET HIGHLIGHTS
Period End Balances
Investment securities	$	819,079		$	708,089		$	819,079		$	708,089
Loans held for sale		41,053			57,385			41,053			57,385
Loans held in portfolio, net of unearned discount		1,237,270			1,160,429			1,237,270			1,160,429
Federal Reserve Bank and Federal Home Loan Bank stock, at cost		8,497			9,382			8,497			9,382
Total earning assets		2,118,327			1,940,896			2,118,327			1,940,896
Allowance for loan losses		20,512			18,134			20,512			18,134
Total assets		2,284,308			2,127,567			2,284,308			2,127,567
Demand deposits		525,242			440,626			525,242			440,626
Savings, NOW and money market deposits		526,701			532,275			526,701			532,275
Time deposits		589,531			331,766			589,531			331,766
Customer repurchase agreements		21,071			55,129			21,071			55,129
Other short-term borrowings		107,733			263,001			107,733			263,001
Long-term borrowings		150,656			175,774			150,656			175,774
Shareholders’ equity		229,275			157,721			229,275			157,721
Average Balances
Investment securities	$	836,270		$	669,581		$	766,621		$	704,645
Loans held for sale		25,676			52,653			26,257			43,101
Loans held in portfolio, net of unearned discount		1,194,574			1,151,915			1,163,587			1,139,887
Federal Reserve Bank and Federal Home Loan Bank stock		7,808			9,382			8,136			9,665
Total earning assets		2,088,834			1,910,029			1,998,485			1,916,576
Total assets		2,258,219			2,059,981			2,164,853			2,067,560
Demand deposits		466,017			417,509			467,337			416,847
Savings, NOW and money market deposits		558,506			556,407			575,451			569,818
Time deposits		593,243			335,258			523,333			331,844
Customer repurchase agreements		54,829			77,261			52,689			75,987
Other short-term borrowings		61,494			228,019			53,212			227,156
Long-term borrowings		150,131			175,774			152,778			175,774
Shareholders’ equity		227,102			158,907			199,330			158,224
ASSET QUALITY HIGHLIGHTS
Period End
Net charge-offs	$	4,951		$	5,635		$	10,821		$	10,632
Nonaccrual loans		18,688			20,607			18,688			20,607
Other real estate owned		761			1,105			761			1,105
Nonperforming assets		19,449			21,712			19,449			21,712
Nonaccrual loans/loans (1)		1.46	%		1.69	%		1.46	%		1.69	%
Nonperforming assets/assets		0.85	%		1.02	%		0.85	%		1.02	%
Allowance for loan losses/loans (2)		1.66	%		1.56	%		1.66	%		1.56	%
Allowance for loan losses/nonaccrual loans		109.76	%		88.00	%		109.76	%		88.00	%
CAPITAL RATIOS
Period End
Tier 1 risk based		14.32	%		11.65	%		14.32	%		11.65	%
Total risk based		15.55	%		12.87	%		15.55	%		12.87	%
Leverage		10.76	%		8.53	%		10.76	%		8.53	%
Tangible common equity		7.33	%		4.47	%		7.33	%		4.47	%
Book value per common share	$	7.04		$	6.51		$	7.04		$	6.51

(1)	The term “loans” includes loans held for sale and loans held in portfolio.
(2)	The term “loans” includes loans held in portfolio only.

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STERLING BANCORP
Consolidated Balance Sheets
(Unaudited)
(in thousands, except number of shares)

	June 30,
	2010		2009
ASSETS
Cash and due from banks	$	32,511	$	34,816
Interest-bearing deposits with other banks		12,428		5,611
Investment securities
Available for sale (at estimated fair value)		478,647		344,094
Held to maturity (at amortized cost)		340,432		363,995
Total investment securities		819,079		708,089
Loans held for sale		41,053		57,385
Loans held in portfolio, net of unearned discounts		1,237,270		1,160,429
Less allowance for loan losses		20,512		18,134
Loans held in portfolio, net		1,216,758		1,142,295
Federal Reserve Bank and Federal Home Loan Bank stock, at cost		8,497		9,382
Customers’ liability under acceptances		0		180
Goodwill		22,901		22,901
Premises and equipment, net		14,451		10,041
Other real estate		761		1,105
Accrued interest receivable		10,110		7,772
Cash surrender value of life insurance policies		50,166		47,631
Other assets		55,593		80,359
	$	2,284,308	$	2,127,567
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Demand	$	525,242	$	440,626
Savings, NOW and money market		526,701		532,275
Time		589,531		331,766
Total deposits		1,641,474		1,304,667
Securities sold under agreements to repurchase - customers		21,071		55,129
Securities sold under agreements to repurchase - dealers		39,893		0
Federal funds purchased		10,000		87,000
Commercial paper		11,061		11,739
Short-term borrowings - FRB		0		160,000
Short-term borrowings - other		46,779		4,262
Long-term borrowings - FHLB		124,882		150,000
Long-term borrowings - subordinated debentures		25,774		25,774
Acceptances outstanding		0		180
Accrued interest payable		1,622		1,874
Due to factored clients		77,918		65,535
Accrued expenses and other liabilities		54,559		103,686
Total liabilities		2,055,033		1,969,846
Shareholders’ equity		229,275		157,721
	$	2,284,308	$	2,127,567
MEMORANDA
Available for sale securities - amortized cost	$	476,013	$	342,988
Held to maturity securities - estimated fair value		351,007		370,844
Shares outstanding
Common issued		31,138,545		22,226,425
Common in treasury		4,297,782		4,119,934

NOTE: Certain reclassifications have been made to prior period’s financial data to conform to current financial statement presentations.

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STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
INTEREST INCOME
Loans	$	17,121	$	18,264	$	33,632	$	35,816
Investment securities - available for sale		3,377		4,159		6,330		9,629
Investment securities - held to maturity		3,890		3,594		8,302		7,128
FRB and FHLB stock		63		177		184		196
Deposits with other banks		24		9		43		19
Total interest income		24,475		26,203		48,491		52,788
INTEREST EXPENSE
Savings, NOW and money market deposits		825		943		1,790		2,068
Time deposits		1,637		2,049		3,312		4,215
Securities sold u/a/r - customers		65		88		126		203
Securities sold u/a/r - dealers		5		0		5		0
Federal funds purchased		19		7		23		41
Commercial paper		9		17		22		40
Short-term borrowings - FHLB		0		0		0		11
Short-term borrowings - FRB		0		126		9		225
Short-term borrowings - other		4		0		4		1
Long-term borrowings - FHLB		849		1,134		1,720		2,256
Long-term subordinated debentures		524		524		1,047		1,047
Total interest expense		3,937		4,888		8,058		10,107
Net interest income		20,538		21,315		40,433		42,681
Provision for loan losses		5,500		6,800		11,500		13,000
Net interest income after provision for loan losses		15,038		14,515		28,933		29,681
NONINTEREST INCOME
Accounts receivable management/factoring commissions and other fees		5,946		4,858		11,073		8,101
Service charges on deposit accounts		1,548		1,360		3,021		2,743
Trade finance income		501		437		993		842
Other customer related service charges and fees		171		202		326		476
Mortgage banking income		1,496		2,541		3,173		4,647
Trust fees		82		117		166		256
Income from life insurance policies		296		289		560		548
Securities gains		746		874		2,248		3,939
Gain on sale of OREO		15		22		28		20
Other income		560		97		875		29
Total noninterest income		11,361		10,797		22,463		21,601
NONINTEREST EXPENSES
Salaries		10,462		9,985		20,120		19,974
Employee benefits		3,199		3,268		6,703		5,945
Total personnel expense		13,661		13,253		26,823		25,919
Occupancy and equipment expenses, net		3,052		2,903		5,592		5,575
Advertising and marketing		678		1,026		1,684		1,680
Professional fees		1,020		1,900		2,373		3,023
Communications		562		435		910		866
Deposit insurance		770		1,513		1,524		1,864
Other expenses		2,396		3,113		4,569		5,268
Total noninterest expenses		22,139		24,143		43,475		44,195
Income before income taxes		4,260		1,169		7,921		7,087
Provision for income taxes		1,278		394		2,376		2,700
Net income		2,982		775		5,545		4,387
Dividends on preferred shares and accretion		644		637		1,280		1,479
Net income available to common shareholders	$	2,338	$	138	$	4,265	$	2,908

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STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)

(continued)

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Average number of common shares outstanding
Basic		25,752,172		18,106,491		22,479,292		18,103,014
Diluted		25,752,172		18,150,721		22,484,177		18,222,941
Net income available to common shareholders per average common share
Basic	$	0.09	$	0.01	$	0.19	$	0.16
Diluted		0.09		0.01		0.19		0.16
Dividends per common share		0.09		0.19		0.18		0.38

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STERLING BANCORP
Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Net income	$	2,982		$	775		$	5,545		$	4,387
Other comprehensive income, net of tax:
Unrealized holding gains on securities arising during the period		946			1,667			2,160			1,688
Reclassification adjustment for securities gains included in net income		(408	)		(478	)		(1,228	)		(2,152	)
Amortization of:
Prior service cost		9			9			18			18
Net actuarial losses		424			518			837			872
Comprehensive income	$	3,953		$	2,491		$	7,332		$	4,813

STERLING BANCORP
Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Balance, at beginning of period	$	228,164		$	159,160		$	161,950		$	160,480
Net income for period		2,982			775			5,545			4,387
Common shares issued		16			0			64,881			0
Common shares issued under stock incentive plan and related tax benefits		0			0			1,477			209
Stock option and restricted stock compensation expense		81			33			118			66
Cash dividends-Common shares		(2,414	)		(3,438	)		(4,045	)		(6,875	)
Cash dividends-Preferred shares		(525	)		(525	)		(1,050	)		(828	)
Surrender of shares issued under incentive compensation plan		0			0			(1,388	)		(144	)
Change in net unrealized holding gains on securities		946			1,667			2,160			1,688
Reclassification adjustment for securities gains included in net income		(408	)		(478	)		(1,228	)		(2,152	)
Amortization of:
Prior service cost		9			9			18			18
Net actuarial losses		424			518			837			872
Balance, at end of period	$	229,275		$	157,721		$	229,275		$	157,721

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STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)

	Three Months Ended
	June 30, 2010								June 30, 2009
	AVERAGE BALANCE			INTEREST		AVERAGE RATE			AVERAGE BALANCE			INTEREST		AVERAGE RATE
Assets
Interest-bearing deposits with other banks	$	24,506		$	24		0.41	%	$	26,498		$	9		0.14	%
Investment securities - available for sale		472,897			3,169		2.68			341,849			3,944		4.62
Investment securities - held to maturity		252,550			2,987		4.73			292,956			3,476		4.75
Investment securities - tax exempt [2]		110,823			1,709		6.17			34,776			510		5.87
Total investment securities		836,270			7,865		3.76			669,581			7,930		4.74
FRB and FHLB stock [2]		7,808			64		3.28			9,382			178		7.57
Loans, net of unearned discount [3]		1,220,250			17,121		5.87			1,204,568			18,264		6.19
Total Interest-Earning Assets [2]		2,088,834			25,074		4.91	%		1,910,029			26,381		5.58	%
Cash and due from banks		36,009								29,623
Allowance for loan losses		(22,104	)							(17,994	)
Goodwill		22,901								22,901
Other		132,579								115,422
Total Assets	$	2,258,219							$	2,059,981
Liabilities and Shareholders’ Equity
Interest-bearing deposits
Domestic
Savings	$	18,014			3		0.07	%	$	18,080			6		0.13	%
NOW		203,307			106		0.21			196,441			126		0.26
Money market		337,185			716		0.85			341,886			811		0.95
Time		592,665			1,635		1.11			334,680			2,047		2.45
Foreign
Time		578			2		1.08			578			2		1.09
Total Interest-Bearing Deposits		1,151,749			2,462		0.86			891,665			2,992		1.35
Borrowings
Securities sold u/a/r - customers		54,829			65		0.48			77,261			88		0.45
Securities sold u/a/r - dealers		4,243			5		0.47			0			0		0.00
Federal funds purchased		35,545			19		0.21			12,309			7		0.22
Commercial paper		13,006			9		0.31			11,101			17		0.62
Short-term borrowings - FRB		0			0		0.00			202,857			126		0.25
Short-term borrowings - other		8,700			4		0.17			1,752			0		0.00
Long-term borrowings - FHLB		124,357			849		2.74			150,000			1,134		3.03
Long-term borrowings - sub debt		25,774			524		8.38			25,774			524		8.37
Total Borrowings		266,454			1,475		2.22			481,054			1,896		1.58
Total Interest-Bearing Liabilities		1,418,203			3,937		1.11	%		1,372,719			4,888		1.43	%
Noninterest-bearing demand deposits		466,017								417,509
Other liabilities		146,897								110,846
Total Liabilities		2,031,117								1,901,074
Shareholders’ equity		227,102								158,907
Total Liabilities and Shareholders’ Equity	$	2,258,219							$	2,059,981
Net interest income/spread [2]					21,137		3.80	%					21,493		4.15	%
Net yield on interest-earning assets [2]							4.12	%							4.53	%
Less: Tax-equivalent adjustment					599								179
Net interest income				$	20,538							$	21,314

[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.

Page 11 of 15

STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)

	Six Months Ended
	June 30, 2010								June 30, 2009
	AVERAGE BALANCE			INTEREST		AVERAGE RATE			AVERAGE BALANCE			INTEREST		AVERAGE RATE
Assets
Interest-bearing deposits with other banks	$	33,884		$	43		0.26	%	$	19,278		$	19		0.21	%
Investment securities - available for sale		383,120			5,903		3.08			379,903			9,201		4.84
Investment securities - held to maturity		282,209			6,702		4.75			295,245			6,999		4.74
Investment securities - tax exempt [2]		101,292			3,118		6.16			29,497			857		5.81
Total investment securities		766,621			15,723		4.10			704,645			17,057		4.84
FRB and FHLB stock [2]		8,136			186		4.56			9,665			198		4.10
Loans, net of unearned discount [3]		1,189,844			33,632		5.98			1,182,988			35,816		6.24
Total Interest-Earning Assets [2]		1,998,485			49,584		5.12	%		1,916,576			53,090		5.64	%
Cash and due from banks		35,798								31,017
Allowance for loan losses		(22,131	)							(17,445	)
Goodwill		22,901								22,901
Other		129,800								114,511
Total Assets	$	2,164,853							$	2,067,560
Liabilities and Shareholders’ Equity
Interest-bearing deposits
Domestic
Savings	$	18,233			6		0.07	%	$	18,148			12		0.14	%
NOW		226,361			331		0.29			211,650			294		0.28
Money market		330,857			1,453		0.89			340,020			1,762		1.04
Time		522,754			3,309		1.28			331,266			4,212		2.56
Foreign
Time		579			3		1.09			578			3		1.09
Total Interest-Bearing Deposits		1,098,784			5,102		0.94			901,662			6,283		1.41
Borrowings
Securities sold u/a/r - customers		52,689			126		0.48			75,987			203		0.54
Securities sold u/a/r - dealers		2,133			5		0.47			0			0		0.00
Federal funds purchased		23,440			23		0.20			34,783			41		0.23
Commercial paper		14,696			22		0.31			11,487			40		0.70
Short-term borrowings - FHLB		0			0		0.00			6,878			11		0.31
Short-term borrowings - FRB		7,459			9		0.25			172,405			225		0.26
Short-term borrowings - other		5,484			4		0.13			1,603			1		0.07
Long-term borrowings - FHLB		127,004			1,720		2.73			150,000			2,256		3.03
Long-term borrowings - sub debt		25,774			1,047		8.38			25,774			1,047		8.38
Total Borrowings		258,679			2,956		2.30			478,917			3,824		1.61
Total Interest-Bearing Liabilities		1,357,463			8,058		1.20	%		1,380,579			10,107		1.48	%
Noninterest-bearing demand deposits		467,337								416,847
Other liabilities		140,723								111,910
Total Liabilities		1,965,523								1,909,336
Shareholders’ equity		199,330								158,224
Total Liabilities and Shareholders’ Equity	$	2,164,853							$	2,067,560
Net interest income/spread [2]					41,526		3.92	%					42,983		4.16	%
Net yield on interest-earning assets [2]							4.27	%							4.55	%
Less: Tax-equivalent adjustment					1,093								302
Net interest income				$	40,433							$	42,681

[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.

Page 12 of 15

STERLING BANCORP
Rate/Volume Analysis [1]
(Unaudited)
(in thousands)

	Increase/(Decrease) Three Months Ended June 30, 2010
	Volume			Rate			Net [2]
INTEREST INCOME
Interest-bearing deposits with other banks	$	(1	)	$	16		$	15
Investment securities - available for sale		1,208			(1,983	)		(775	)
Investment securities - held to maturity		(474	)		(15	)		(489	)
Investment securities - tax exempt		1,172			27			1,199
Total investment securities		1,906			(1,971	)		(65	)
FRB and FHLB stock		(26	)		(88	)		(114	)
Loans, net of unearned discounts [3]		157			(1,300	)		(1,143	)
TOTAL INTEREST INCOME	$	2,036		$	(3,343	)	$	(1,307	)
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	0		$	(3	)	$	(3	)
NOW		4			(24	)		(20	)
Money market		(11	)		(84	)		(95	)
Time		1,067			(1,479	)		(412	)
Foreign
Time		0			0			0
Total interest-bearing deposits		1,060			(1,590	)		(530	)
Borrowings
Securities sold under agreements to repurchase - customers		(28	)		5			(23	)
Securities sold under agreements to repurchase - dealers		5			0			5
Federal funds purchased		12			0			12
Commercial paper		3			(11	)		(8	)
Short-term borrowings - FRB		(126	)		0			(126	)
Short-term borrowings - other		0			4			4
Long-term borrowings - FHLB		(183	)		(102	)		(285	)
Long-term borrowings - subordinated debentures		0			0			0
Total borrowings		(317	)		(104	)		(421	)
TOTAL INTEREST EXPENSE	$	743		$	(1,694	)	$	(951	)
NET INTEREST INCOME	$	1,293		$	(1,649	)	$	(356	)

[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 change in interest expense for short-term borrowings-FHLB has been allocated entirely to the volume variance.
[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.

Page 13 of 15

STERLING BANCORP

Rate/Volume Analysis [1]

(Unaudited)

(in thousands)

	Increase/(Decrease)
	Six Months Ended
	June 30, 2010
	Volume			Rate			Net [2]
INTEREST INCOME
Interest-bearing deposits with other banks	$	18		$	6		$	24
Investment securities - available for sale		76			(3,374	)		(3,298	)
Investment securities - held to maturity		(312	)		15			(297	)
Investment securities - tax exempt		2,207			54			2,261
Total investment securities		1,971			(3,305	)		(1,334	)
FRB and FHLB stock		(33	)		21			(12	)
Loans, net of unearned discounts [3]		106			(2,290	)		(2,184	)
TOTAL INTEREST INCOME	$	2,062		$	(5,568	)	$	(3,506	)
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	0		$	(6	)	$	(6	)
NOW		25			12			37
Money market		(48	)		(261	)		(309	)
Time		1,771			(2,674	)		(903	)
Foreign
Time		0			0			0
Total interest-bearing deposits		1,748			(2,929	)		(1,181	)
Borrowings
Securities sold under agreements to repurchase - customers		(56	)		(21	)		(77	)
Securities sold under agreements to repurchase - dealers		5			0			5
Federal funds purchased		(13	)		(5	)		(18	)
Commercial paper		9			(27	)		(18	)
Short-term borrowings - FHLB		(11	)		0			(11	)
Short-term borrowings - FRB		(207	)		(9	)		(216	)
Short-term borrowings - other		3			0			3
Long-term borrowings - FHLB		(326	)		(210	)		(536	)
Long-term borrowings - subordinated debentures		0			0			0
Total borrowings		(596	)		(272	)		(868	)
TOTAL INTEREST EXPENSE	$	1,152		$	(3,201	)	$	(2,049	)
NET INTEREST INCOME	$	910		$	(2,367	)	$	(1,457	)

[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 change in interest income for Federal funds sold and in interest expense for securities sold under agreements to repurchase-dealers, and short-term borrowings- other has been allocated entirely to the volume variance.
[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.

Page 14 of 15

STERLING BANCORP

Reconciliation of Tangible Assets and
Tangible Common Equity

(Unaudited)

(dollars in thousands)

This press release contains certain supplemental financial information, described in the following table, which has been determined by methods other than U. S. generally accepted accounting principles (“GAAP”). This non-GAAP financial measure provides useful supplemental information to both management and investors in evaluating Sterling’s capital position. Tangible common equity represents shareholders’ equity less preferred equity, goodwill and other intangibles. Tangible assets are equal to total assets less goodwill and other intangibles. Tangible common equity ratio is calculated by dividing tangible common equity by tangible assets. This non-GAAP measure should not be considered a substitute for GAAP basis measures and results, and Sterling strongly encourages investors to review its consolidated statements in their entirety and not to rely on any single financial measure. Non-GAAP financial measures are not standardized, and, therefore, it may not be possible to compare this financial measure with other companies’ non-GAAP financial measures that may have the same or similar names.

	June 30,
	2010			2009
Tangible common equity
Total shareholders’ equity	$	229,275		$	157,721
Less:
Preferred equity		40,343			39,869
Goodwill and other intangible assets		23,314			23,864
Total tangible common equity	$	165,618		$	93,988
Tangible assets
Total assets	$	2,284,308		$	2,127,567
Less:
Goodwill and other intangible assets		23,314			23,864
Total tangible assets	$	2,260,994		$	2,103,703
Tangible common equity ratio		7.33	%		4.47	%

Page 15 of 15