Edgar Filing: STERLING BANCORP

form10q.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number:

1-5273-1

Sterling Bancorp

(Exact name of registrant as specified in its charter)

New York	13-2565216
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification)

650 Fifth Avenue, New York, N.Y.	10019-6108
(Address of principal executive offices)	(Zip Code)

212-757-3300

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(17 CFR ' 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o Accelerated Filer x Non-Accelerated Filer o Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of July 31, 2009 there were 18,106,491 shares of common stock, $1.00 par value, outstanding.

STERLING BANCORP

PART I FINANCIAL INFORMATION			Page

	Item 1.	Financial Statements

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

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

		Overview	28
		Income Statement Analysis	29
		Balance Sheet Analysis	35
		Capital	42
		Recently Issued Accounting Pronouncements	43
		Cautionary Statement Regarding Forward-Looking Statements	43
		Average Balance Sheets	44
		Rate/Volume Analysis	46
		Regulatory Capital and Ratios	48

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk

		Asset/Liability Management	49
		Interest Rate Sensitivity	53

	Item 4.	Controls and Procedures	54

PART II OTHER INFORMATION

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

	Item 4.	Submission of Matters to a Vote of Security Holders	55

	Item 6.	Exhibits	56

SIGNATURES			57

EXHIBIT INDEX

	Exhibit 11	Statement Re: Computation of Per Share Earnings	59

	Exhibit 31.1	Certification of the CEO pursuant to Exchange Act Rule 13a-14(a)	60

	Exhibit 31.2	Certification of the CFO pursuant to Exchange Act Rule 13a-14(a)	61

	Exhibit 32.1	Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code	62

	Exhibit 32.2	Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code	63

STERLING BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands)

	June 30,			December 31,
ASSETS	2009			2008
Cash and due from banks	$	34,816		$	31,832
Interest-bearing deposits with other banks		5,611			13,949

Securities available for sale (at estimated fair value; pledged: $194,004 in 2009 and $334,048 in 2008)		353,736			505,762
Securities held to maturity (pledged: $201,720 in 2009 and $206,726 in 2008) (estimated fair value: $370,844 in 2009 and $305,628 in 2008)		363,995			301,127
Total investment securities		717,731			806,889

Loans held for sale		57,385			23,403
Loans held in portfolio, net of unearned discounts		1,160,429			1,184,585
Less allowance for loan losses		18,134			16,010
Loans, net		1,142,295			1,168,575
Customers' liability under acceptances		180			95
Goodwill		22,901			22,901
Premises and equipment, net		10,041			10,668
Other real estate		1,105			1,544
Accrued interest receivable		7,772			8,917
Cash surrender value of life insurance policies		47,805			45,845
Other assets		78,064			43,122
	$	2,125,706		$	2,177,740

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand deposits	$	440,626		$	464,585
Savings, NOW and money market deposits		532,275			564,205
Time deposits		331,766			329,034
Total deposits		1,304,667			1,357,824
Securities sold under agreements to repurchase - customers		55,129			44,334
Federal funds purchased		87,000			131,000
Commercial paper		11,739			11,732
Short-term borrowings - FHLB		-			75,000
Short-term borrowings - FRB		160,000			100,000
Short-term borrowings - other		4,262			1,338
Long-term borrowings - FHLB		150,000			150,000
Long-term borrowings - subordinated debentures		25,774			25,774
Total borrowings		493,904			539,178
Acceptances outstanding		180			95
Accrued interest payable		1,874			2,046
Accrued expenses and other liabilities		167,360			118,117
Total liabilities		1,967,985			2,017,260

Shareholders' equity
Preferred stock, Series A, $5 par value; $1,000 liquidation value. Authorized 644,389 shares; issued 42,000 shares, respectively		39,869			39,440
Common stock, $1 par value. Authorized 50,000,000 shares; issued 22,226,425 and 22,202,419 shares, respectively		22,227			22,203
Warrants to purchase common stock		2,615			2,615
Capital surplus		178,668			178,417
Retained earnings		15,343			19,088
Accumulated other comprehensive loss		(15,833	)		(16,259	)
Common shares in treasury at cost, 4,119,934 and 4,107,191 shares, respectively		(85,168	)		(85,024	)
Total shareholders' equity		157,721			160,480
	$	2,125,706		$	2,177,740

See Notes to Consolidated Financial Statements.

STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(dollars in thousands, except per share)

	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
INTEREST INCOME
Loans	$	18,264	$	20,001	$	35,816	$	40,821
Investment securities
Available for sale		4,335		5,670		9,830		10,382
Held to maturity		3,594		4,034		7,128		8,259
Federal funds sold		-		1		-		1
Deposits with other banks		9		7		19		19
Total interest income		26,202		29,713		52,793		59,482

INTEREST EXPENSE
Deposits
Savings, NOW and money market		943		1,089		2,068		2,699
Time		2,049		4,034		4,215		9,372
Securities sold under agreements to repurchase
- customers		88		442		203		1,088
- dealers		-		416		-		733
Federal funds purchased		7		217		41		579
Commercial paper		17		117		40		312
Short-term borrowings - FHLB		-		311		11		526
Short-term borrowings - FRB		126		1		225		1
Short-term borrowings - other		-		5		1		19
Long-term borrowings - FHLB		1,134		1,085		2,256		1,799
Long-term borrowings - subordinated debentures		524		524		1,047		1,047
Total interest expense		4,888		8,241		10,107		18,175

Net interest income		21,314		21,472		42,686		41,307

Provision for loan losses		6,800		2,200		13,000		4,150

Net interest income after provision for loan losses		14,514		19,272		29,686		37,157

Total noninterest income		10,798		8,572		21,596		17,244

Total noninterest expenses		24,143		21,130		44,195		41,296


Income before income taxes		1,169		6,714		7,087		13,105

Provision for income taxes		394		2,544		2,700		4,933

Net income		775		4,170		4,387		8,172
Dividends on preferred shares and accretion		637		-		1,479		-
Net income available to common shareholders	$	138	$	4,170	$	2,908	$	8,172


Average number of common shares outstanding
Basic		18,100,860		17,904,100		18,099,523		17,884,662
Diluted		18,125,860		17,929,100		18,124,523		17,909,662

Net income, per average common share
Basic	$	0.04	$	0.23	$	0.24	$	0.46
Diluted		0.04		0.23		0.24		0.45

Net income available to common shareholders, per average common share
Basic		0.01		0.23		0.16		0.46
Diluted		0.01		0.23		0.16		0.45

Dividends per common share		0.19		0.19		0.38		0.38

See Notes to Consolidated Financial Statements.

STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008

Net Income	$	775		$	4,170		$	4,387		$	8,172

Other comprehensive income (loss), net of tax:
Unrealized gains on securities:
Unrealized holding gains (losses) on available for sale securities and other investments arising during the year		1,667			(5,159	)		1,688			(3,804	)
Reclassification adjustment for (gains) losses included in net income		(478	)		278			(2,152	)		278

Reclassification adjustment for amortization of:
Prior service cost		9			9			18			18
Net actuarial losses		518			230			872			461

Other comprehensive income (loss)		1,716			(4,642	)		426			(3,047	)

Comprehensive income (loss)	$	2,491		$	(472	)	$	4,813		$	5,125

See Notes to Consolidated Financial Statements.

STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders' Equity

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2009			2008
Preferred Stock
Balance at January 1,	$	39,440		$	-
Discount accretion		429			-
Balance at June 30,	$	39,869		$	-

Common Stock
Balance at January 1,	$	22,203		$	21,278
Common shares issued under stock incentive plan		24			535
Balance at June 30,	$	22,227		$	21,813

Warrants to Purchase Common Stock
Balance at January 1, and June 30,	$	2,615		$	-

Capital Surplus
Balance at January 1,	$	178,417		$	168,869
Common shares issued under stock incentive plan and related tax benefits		185			5,764
Stock option compensation expense		66			-
Balance at June 30,	$	178,668		$	174,633

Retained Earnings
Balance at January 1,	$	19,088		$	17,538
Adjustment upon adoption of EITF 06-4 effective January 1, 2008		-			(726	)
Balance at January 1, as adjusted		19,088			16,812
Net income		4,387			8,172
Cash dividends paid - preferred shares		(828	)		-
Cash dividends paid - common shares		(6,875	)		(6,824	)
Discount accretion on series A preferred stock		(429	)		-
Balance at June 30,	$	15,343		$	18,160

Accumulated Other Comprehensive Loss
Balance at January 1,	$	(16,259	)	$	(10,812	)
Other comprehensive income (loss), net of tax		426			(3,047	)
Balance at June 30,	$	(15,833	)	$	(13,859	)

Treasury Stock
Balance at January 1,	$	(85,024	)	$	(75,803	)
Surrender of shares issued under stock incentive plan		(144	)		(5,218	)
Balance at June 30,	$	(85,168	)	$	(81,021	)

Total Shareholders' Equity
Balance at January 1,	$	160,480		$	121,070
Net changes during the period		(2,759	)		(1,344	)
Balance at June 30,	$	157,721		$	119,726

See Notes to Consolidated Financial Statements.

STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2009			2008
Operating Activities
Net Income	$	4,387		$	8,172
Adjustments to reconcile net income to net cash used in operating activities:
Provision for loan losses		13,000			4,150
Depreciation and amortization of premises and equipment		1,178			1,302
Securities (gains) losses		(3,939	)		507
Income from life insurance policies, net		(682	)		(563	)
Deferred income tax benefit		(2,062	)		(1,522	)
Proceeds from sale of loans		305,687			237,014
Gains on sales of loans, net		(4,644	)		(5,201	)
Originations of loans held for sale		(335,026	)		(235,762	)
Amortization of premiums on securities		772			192
Accretion of discounts on securities		(648	)		(405	)
Decrease (Increase) in accrued interest receivable		1,408			(2,796	)
Decrease in accrued interest payable		(165	)		(810	)
Increase (Decrease) in accrued expenses and other liabilities		10,658			(408	)
Increase in other assets		(2,408	)		(5,876	)
(Gain) Loss on other real estate owned		(20	)		303
Other, net		-			284
Net cash used in operating activities		(16,891	)		(9,591	)

Investing Activities
Purchase of premises and equipment		(515	)		(991	)
Net decrease in interest-bearing deposits
with other banks		8,337			99
Net increase in Federal funds sold		-			(2,500	)
Net decease (increase) in loans held in portfolio		58,256			(12,606	)
Net (increase) decrease in short-term factored receivables		(25,252	)		2,839
Decrease in other real estate		721			885
Proceeds from prepayments, redemptions or maturities of securities - held to maturity		38,272			28,741
Purchases of securities - held to maturity		(64,878	)		-
Proceeds from calls/sale of securities - available for sale		223,019			-
Proceeds from prepayments, redemptions or maturities of securities - available for sale		70,017			164,818
Purchases of securities - available for sale		(165,154	)		(342,332	)
Cash paid in acquisition		(21,333	)		-
Net cash provided by (used in) investing activities		121,490			(161,047	)

Financing Activities
Net decrease in noninterest-bearing demand deposits		(23,959	)		(41,743	)
Net (decrease) increase in savings, NOW and money market deposits		(31,930	)		19,069
Net increase (decrease) in time deposits		2,732			(65,150	)
(Decrease) Increase in Federal funds purchased		(44,000	)		5,000
Net increase in securities sold under agreement to repurchase		10,795			67,337
Net (decrease) increase in commercial paper and other short-term borrowings		(12,068	)		48,093
Increase in long-term borrowings		-			120,000
Proceeds from exercise of stock options		131			267
Cash dividends paid on preferred stock		(828	)		-
Cash dividends paid on common stock		(6,875	)		(6,824	)
Net cash (used in) provided by financing activities		(106,002	)		146,049

Net increase (decrease) in cash and due from banks		2,984			(16,417	)
Cash and due from banks - beginning of period		31,832			66,412

Cash and due from banks - end of period	$	34,816		$	49,995

Supplemental disclosures:
Interest paid	$	10,272		$	18,985
Income taxes paid		5,746			7,969

Loans held for sale transferred to portfolio		-			2,531
Loans transferred to other real estate		262			1,770
Due from brokers on sale of securities - AFS		29,825			-
Due to brokers on purchases of securities - AFS		3,918			-
Due to brokers on purchases of securities - HTM		36,286			-

See Notes to Consolidated Financial Statements.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Significant Accounting Policies

Nature of Operations. Sterling Bancorp (the "parent company") is a financial holding company, pursuant to an election made under the Gramm-Leach-Bliley Act of 1999. Throughout the notes, the term the "Company" refers to Sterling Bancorp and its subsidiaries. The Company provides a full range of financial products and services, including business and consumer loans, commercial and residential mortgage lending and brokerage, asset-based financing, factoring/accounts receivable management services, trade financing, leasing, deposit services, trust and estate administration and investment management services. The Company has operations principally in New York and conducts business throughout the United States.

Basis of Presentation. The consolidated financial statements include the accounts of Sterling Bancorp and its subsidiaries, principally Sterling National Bank and its subsidiaries (the "bank"), after elimination of intercompany transactions. The consolidated financial statements as of and for the interim periods ended June 30, 2009 and 2008 are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of such periods have been made. Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current presentation. The interim consolidated financial statements should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 2008.

Use of Estimates. The preparation of financial statements in accordance with U.S. generally accepted accounting principles ("GAAP") requires management to make assumptions and estimates which impact the amounts reported in those statements and are, by their nature, subject to change in the future as additional information becomes available or as circumstances vary.

Fair Value Measurements. On January 1, 2008, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements (See Note 8 - Fair Value Measurements). The Company also adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 ("SFAS No. 159") on January 1, 2008 but did not elect the fair value option for any of its financial assets or financial liabilities.

Note 2. Loans

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

	June 30, 2009		December 31, 2008
	(in thousands)
Loans held for sale, net of valuation reserve
($-0- at June 30, 2009 and at December 31, 2008)
Real estate-residential mortgage	$	57,385	$	23,403
Loans held in portfolio
Commercial and industrial	$	509,327	$	533,613
Lease financing		258,713		290,656
Factored receivables		134,728		89,365
Real estate-residential mortgage		141,131		142,135
Real estate-commercial mortgage		101,282		96,883
Real estate-construction and land development		27,235		25,249
Loan to individuals		19,672		18,959
Loans to depository institutions		-		25,000

Loans held in portfolio, gross		1,192,088		1,221,860
Less unearned discounts		31,659		37,275
Loans held in portfolio, net of unearned discounts	$	1,160,429	$	1,184,585

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 3. Investment Securities

The following tables present information regarding securities available for sale:

June 30, 2009	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	2,962	$	58	$	-	$	3,020
CMO's (Federal Home Loan Mortgage Corporation)		15,993		267		-		16,260
CMO's (Government National Mortgage Association)		5,313		-		88		5,225
Federal National Mortgage Association		39,566		1,214		1		40,779
Federal Home Loan Mortgage Corporation		18,234		362		-		18,596
Government National Mortgage Association		8,943		384		1		9,326
Total mortgage-backed securities		91,011		2,285		90		93,206

Agency Notes
Federal National Mortgage Association		20,000		116		-		20,116
Federal Home Loan Bank		89,963		324		318		89,969
Federal Farm Credit Bank		30,000		-		475		29,525
Total obligations of U.S. government corporations and government sponsored enterprises		230,974		2,725		883		232,816

Obligations of state and political institutions		22,954		689		97		23,546
Single-issuer, trust preferred securities		5,602		-		1,102		4,500
Corporate debt securities		83,414		418		654		83,178
Other securities		54		9		-		63
Total marketable securities		342,998		3,841		2,736		344,103
Federal Reserve Bank stock		1,131		-		-		1,131
Federal Home Loan Bank stock		8,252		-		-		8,252
Other securities		250		-		-		250
Total	$	352,631	$	3,841	$	2,736	$	353,736

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

December 31, 2008	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	8,771	$	1	$	72	$	8,700
CMO's (Federal Home Loan Mortgage Corporation)		22,276		60		223		22,113
CMO's (Government National Mortgage Association)		6,610		-		45		6,565
Federal National Mortgage Association		100,712		2,116		40		102,788
Federal Home Loan Mortgage Corporation		37,719		832		15		38,536
Government National Mortgage Association		31,463		723		6		32,180
Total mortgage-backed securities		207,551		3,732		401		210,882

Agency Notes
Federal Home Loan Bank		153,977		1,224		526		154,675
Federal Farm Credit Bank		89,918		232		306		89,844
Total obligations of U.S. government corporations and government sponsored enterprises		451,446		5,188		1,233		455,401

Obligations of state and political institutions		23,058		567		219		23,406
Single-issuer, trust preferred securities		5,369		224		1,384		4,209
Corporate debt securities		9,962		-		238		9,724
Other securities		54		13		-		67
Total marketable securities		489,889		5,992		3,074		492,807
Federal Reserve Bank stock		1,131		-		-		1,131
Federal Home Loan Bank stock		11,574		-		-		11,574
Other securities		250		-		-		250
Total	$	502,844	$	5,992	$	3,074	$	505,762

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables present information regarding securities held to maturity:

June 30, 2009	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	11,696	$	194	$	2	$	11,888
CMO's (Federal Home Loan Mortgage Corporation)		18,736		349		22		19,063
Federal National Mortgage Association		123,187		3,851		4		127,034
Federal Home Loan Mortgage Corporation		82,230		1,975		79		84,126
Government National Mortgage Association		6,759		429		-		7,188
Total mortgage-backed securities		242,608		6,798		107		249,299

Agency Notes
Federal National Mortgage Association		39,873		455		-		40,328
Federal Home Loan Bank		30,000		47		-		30,047
Federal Home Loan Mortgage Corporation		15,000		-		117		14,883
Total obligations of U.S. government corporations and government sponsored enterprises		327,481		7,300		224		334,557
Obligations of state and political institutions		36,264		123		350		36,037
Debt securities issued by foreign governments		250		-		-		250
Total	$	363,995	$	7,423	$	574	$	370,844

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

December 31, 2008	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	12,099	$	11	$	65	$	12,045
CMO's (Federal Home Loan Mortgage Corporation)		20,181		104		189		20,096
Federal National Mortgage Association		142,312		2,929		94		145,147
Federal Home Loan Mortgage Corporation		98,901		1,299		296		99,904
Government National Mortgage Association		7,384		339		-		7,723
Total mortgage-backed securities		280,877		4,682		644		284,915

Agency Notes
Federal Home Loan Bank		20,000		463		-		20,463
Total obligations of U.S. government corporations and government sponsored enterprises		300,877		5,145		644		305,378
Debt securities issued by foreign governments		250		-		-		250
Total	$	301,127	$	5,145	$	644	$	305,628

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables present information regarding securities available for sale with temporary unrealized losses for the periods indicated:

	Less Than 12 Months				12 Months or Longer				Total
June 30, 2009	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Government National Mortgage Association)	$	-	$	-	$	5,225	$	88	$	5,225	$	88
Federal National Mortgage Association		842		1		-		-		842		1
Government National Mortgage Association		-		-		131		1		131		1
Total mortgage-backed securities		842		1		5,356		89		6,198		90

Agency Notes
Federal Home Loan Bank		24,908		92		29,766		226		54,674		318
Federal Farm Credit Bank		29,525		475		-		-		29,525		475
Total obligations of U.S. government corporations and government sponsored enterprises		55,275		568		35,122		315		90,397		883

Obligations of state and political institutions		-		-		5,517		97		5,517		97
Single-issuer, trust preferred securities		-		-		3,775		1,102		3,775		1,102
Corporate debt securities		43,740		438		4,784		216		48,524		654
Total	$	99,015	$	1,006	$	49,198	$	1,730	$	148,213	$	2,736

December 31, 2008

Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	-	$	-	$	2,890	$	72	$	2,890	$	72
CMO's (Federal Home Loan Mortgage Corporation)		5,378		40		9,125		183		14,503		223
CMO's (Government National Mortgage Association)		-		-		6,565		45		6,565		45
Federal National Mortgage Association		3,161		7		3,906		33		7,067		40
Federal Home Loan Mortgage Corporation		1,676		15		-		-		1,676		15
Government National Mortgage Association		-		-		133		6		133		6
Total mortgage-backed securities		10,215		62		22,619		339		32,834		401

Agency Notes
Federal Home Loan Bank		49,466		526		-		-		49,466		526
Federal Farm Credit Bank		9,694		306		-		-		9,694		306
Total obligations of U.S. government corporations and government sponsored enterprises		69,375		894		22,619		339		91,994		1,233

Obligations of state and political institutions		6,490		181		414		38		6,904		219
Single-issuer, trust preferred securities		2,784		1,115		709		269		3,493		1,384
Corporate debt securities		9,724		238		-		-		9,724		238
Total	$	88,373	$	2,428	$	23,742	$	646	$	112,115	$	3,074

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables present information regarding securities held to maturity with temporary unrealized losses for the periods indicated:

	Less Than 12 Months				12 Months or Longer				Total
June 30, 2009	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	703	$	2	$	-	$	-	$	703	$	2
CMO's (Federal Home Loan Mortgage Corporation)		6,060		22		-		-		6,060		22
Federal National Mortgage Association		6		-		607		4		613		4
Federal Home Loan Mortgage
Corporation		-		-		7,756		79		7,756		79
Total mortgage-backed securities		6,769		24		8,363		83		15,132		107

Agency Notes
Federal Home Loan Mortgage Corporation		15,000		117		-		-		15,000		117
Total obligations of U.S. government corporations and government sponsored enterprises		21,769		141		8,363		83		30,132		224
Obligations of state and political institutions		21,223		350		-		-		21,223		350
Total	$	42,992	$	491	$	8,363	$	83	$	51,355	$	574

December 31, 2008

Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	-	$	-	$	8,059	$	65	$	8,059	$	65
CMO's (Federal Home Loan Mortgage Corporation)		937		5		14,563		184		15,500		189
Federal National Mortgage Association		20,942		88		781		6		21,723		94
Federal Home Loan Mortgage Corporation		15,381		101		19,895		195		35,276		296
Total	$	37,260	$	194	$	43,298	$	450	$	80,558	$	644

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The Company invests principally in obligations of U.S. government corporations and government sponsored enterprises and other investment-grade securities. The fair value of these investments fluctuates based on several factors, including credit quality and general interest rate changes. The Company determined that it has the ability to hold its investments until maturity and, it is not more likely than not that the Company would be required to sell before anticipated recovery.

At June 30, 2009, approximately $72.4 million, representing approximately 10.1%, of the Company's held to maturity and available for sale securities are comprised of securities issued by financial service companies/banks including trust preferred securities (7 issuers), corporate debt (11 issuers) and equity securities (8 issuers) and FRB and FHLB stock. These investments may pose a higher risk of future impairment charges as result of a continued deterioration of the U.S. economy. The Company would be required to recognize impairment charges on these securities if they suffer a decline in value that is considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities, absence of reliable pricing information for investment securities, adverse changes in business climate, adverse actions by regulators or unanticipated changes in the competitive environment could have a negative effect on the Company’s investment portfolio and may result in other-than-temporary impairment on certain investment securities in future periods.

At June 30, 2009, the Company held 2 mortgage-backed and 3 agency debt securities, in the available for sale portfolio, that were in an unrealized loss position for more than 12 months. Both of these securities were obligations of U.S. government corporations or government sponsored enterprises which guarantee principal and interest payment. Management has concluded that the unrealized losses are due to changes in market interest rates and/or changes in securities markets which resulted from temporary illiquidity and/or uncertainty in those markets. As a result, the unrealized losses are deemed to be temporary.

At June 30, 2009, the Company held 5 security positions of issuers of obligations of state and political institutions, in the available for sale portfolio, that were in an unrealized loss position for more than 12 months. All of these securities had investment grade ratings on acquisition and many had credit enhancement. Management has concluded that the unrealized losses are due to changes in market interest rates. As a result, the unrealized losses are deemed to be temporary.

At June 30, 2009, the Company held 7 debt securities positions issued by commercial and industrial enterprises, in the available for sale portfolio, all of which are paying in accordance with their terms and have no deferrals of interest or principal. All of these debt securities mature within the next 14 months. Management performs an initial credit review prior to purchasing these securities and monitors their performance on a quarterly basis. Based upon management’s review of the issuers, their performance record for paying all principal and interest when due and the relatively short-term maturity of each issue, the unrealized losses are deemed to be temporary.

At June 30, 2009, the Company held 7 securities positions of single-issuer, trust preferred securities and 17 security positions of corporate debt securities issued by financial institutions, in the available for sale portfolio, all which are paying in accordance with their terms and have no deferrals of interest or other deferrals. In addition, management analyzes the performance of the issuers on a quarterly basis, including a review of the issuers most recent bank regulatory report to assess credit risk and the probability of impairment of the contractual cash flows of the applicable securities. Based upon management’s second quarter review, all of the issuers have maintained performance levels adequate to support the contractual cash flows of the securities.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following table presents information regarding single-issuer, trust preferred securities at June 30, 2009:

Issuer	TARP Recipient	Credit Rating	Amortized Cost		Fair Value		Unrealized Loss
	(in thousands)

Sovereign Capital Trust V, 7.75%,
due 5/15/2036,	No	BBB+	$	1,000	$	850	$	(150	)
owned by Banco Santander Central Hispano	No

Sterling Bancorp Trust I, 8.375%,
due 3/31/2032	Yes	NA		978		839		(139	)

NPB Capital Trust II, 7.85%,
due 9/30/2032	Yes	NA		127		100		(27	)

VNB Capital Trust I, 7.75%,
due 12/15/2031	Yes	BBB-		22		21		(1	)

HSBC Finance, 6.875%,
due 1/30/33,	No	A		740		642		(98	)
owned by HSBC Group, plc	No

Citigroup Capital VII, 7.125%,
due 7/31/31	Yes	CC		1,508		957		(551	)

Fleet Capital Trust VIII, 7.20%,
due 3/15/32,	No	B		1,227		1,091		(136	)
owned by Bank of America Corporation	Yes

			$	5,602	$	4,500	$	(1,102	)

At June 30, 2009, the Company held 5 mortgage-backed debt securities, in the held to maturity portfolio, that were in an unrealized loss position for more than 12 months. All of these securities were obligations of U.S. government corporations or government sponsored enterprises which guarantee principal and interest payments. Management has concluded that the unrealized losses are due to changes in market interest rates and/or changes in securities markets which resulted from temporary illiquidity and/or uncertainty in those markets. Further, management has made an evaluation that the Company has the ability to hold these investments until maturity and, it is not more likely than not that the Company would be required to sell before anticipated recovery. As a result, the unrealized losses are deemed to be temporary.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables present information regarding securities available for sale and securities held to maturity at June 30, 2009, based on contractual maturity. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalities.

Available for sale	Amortized Cost		Fair Value
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	2,962	$	3,020
CMO's (Federal Home Loan Mortgage Corporation)		15,993		16,260
CMO's (Government National Mortgage Association)		5,313		5,225
Federal National Mortgage Association		39,566		40,779
Federal Home Loan Mortgage Corporation		18,234		18,596
Government National Mortgage Association		8,943		9,326
Total mortgage-backed securities		91,011		93,206

Agency Notes
Federal National Mortgage Association		20,000		20,116
Federal Home Loan Bank
Due within 1 year		5,000		5,021
Due after 5 years		84,963		84,948
Federal Farm Credit Bank
Due after 5 years		30,000		29,525
Total obligations of U.S. government corporations and government sponsored enterprises		230,974		232,816

Obligations of state and political institutions
Due within 1 year		115		116
Due after 1 year but within 5 years		9,896		10,300
Due after 5 years		12,943		13,130
Total obligations of state and political institutions		22,954		23,546

Single-issuer, trust preferred securities
Due after 5 years		5,602		4,500

Corporate debt securities
Due within 1 year		4,237		4,242
Due after 1 year but within 5 years		74,177		74,152
Due after 5 years		5,000		4,784
Total corporate debt securities		83,414		83,178

Other securities		54		63
Total marketable securities		342,998		344,103
Federal Reserve Bank stock		1,131		1,131
Federal Home Loan Bank stock		8,252		8,252
Other securities		250		250
Total	$	352,631	$	353,736

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Held to maturity	Carrying Value		Fair Value
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	11,696	$	11,888
CMO's (Federal Home Loan Mortgage Corporation)		18,736		19,063
Federal National Mortgage Association		123,187		127,034
Federal Home Loan Mortgage Corporation		82,230		84,126
Government National Mortgage Association		6,759		7,188
Total mortgage-backed securities		242,608		249,299

Agency Notes
Federal National Mortgage Association		39,873		40,328
Due after 5 years
Federal Home Loan Bank
Due after 5 years		30,000		30,047
Federal Home Loan Mortgage Corporation
Due after 5 years		15,000		14,883
Total obligations of U.S. government corporations and government sponsored enterprises		327,481		334,557
Obligations of state and political institutions
Due after 5 years		36,264		36,037
Total obligations of state and political institutions		36,264		36,037
Debt securities issued by foreign governments
Due after 1 year but within 5 years		250		250
Total	$	363,995	$	370,844

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Information regarding sales and/or calls of the available for sale securities is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
	(in thousands)

Proceeds	$	48,871	$	-	$	252,844	$	-
Gross gains		874		-		3,939		-
Gross losses		-		-		-		-

There were no sales and/or calls of held to maturity securities in 2009 or 2008.

During the three and six months ended June 30, 2008, the Company incurred an other-than-temporary charge of approximately $507 thousand against a single-issuer, investment grade trust preferred security that was recorded in securities losses. The charge resulted from management's regular review of the valuation of the investment portfolio and reduced the carrying amount of the security to approximately $493 thousand.

Investment securities are pledged to secure trust and public deposits, securities sold under agreements to repurchase, borrowings from the Federal Home Loan Bank of New York, and/or the Federal Reserve Bank of New York, and/or other purposes required or permitted by law.

Note 4. Noninterest income and expenses

The following tables set forth the significant components of noninterest income and noninterest expenses:

	Three Months Ended June 30,					Six Months Ended June 30,
	2009		2008			2009		2008
	(in thousands)
NONINTEREST INCOME
Accounts receivable management/factoring commissions and other fees	$	4,858	$	3,799		$	8,101	$	7,364
Service charges on deposit accounts		1,360		1,331			2,743		2,683
Other customer related service charges and fees		639		737			1,319		1,412
Mortgage banking income		2,541		2,702			4,647		5,201
Trust fees		117		124			256		259
Income from life insurance policies		290		294			548		563
Securities gains (losses)		874		(507	)		3,939		(507	)
Gain (Loss) on other real estate owned		22		(75	)		20		(303	)
Other income		97		167			23		572
Total noninterest income	$	10,798	$	8,572		$	21,596	$	17,244

NONINTEREST EXPENSES
Salaries	$	9,985	$	9,491		$	19,974	$	18,839
Employee benefits		3,268		2,252			5,945		5,088
Total personnel expense		13,253		11,743			25,919		23,927
Occupancy and equipment expenses, net		2,903		2,774			5,575		5,783
Advertising and marketing		1,026		1,353			1,680		1,988
Professional fees		1,900		1,874			3,023		3,238
Communications		435		405			866		861
Deposit insurance		1,513		185			1,864		269
Other expenses		3,113		2,796			5,268		5,230
Total noninterest expenses	$	24,143	$	21,130		$	44,195	$	41,296

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 5. Employee Benefit Plans

The following table sets forth the components of net periodic benefit cost for the Company's noncontributory defined benefit pension plan and unfunded supplemental retirement plan.

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
	(in thousands)

Service cost	$	615		$	497		$	1,006		$	993
Interest cost		928			752			1,508			1,504
Expected return on plan assets		(700	)		(648	)		(1,146	)		(1,295	)
Amortization of prior service cost		16			16			33			33
Recognized actuarial loss		948			420			1,596			840
Net periodic benefit cost	$	$ 1,807		$	1,037		$	2,997		$	2,075

The Company previously disclosed in its financial statements for the year ended December 31, 2008, that it expected to contribute approximately $2.0 million to the defined benefit pension plan in 2009. No contribution has been made as of June 30, 2009.

Note 6. Income Taxes

The Internal Revenue Service ("IRS") has completed its examination of the Company's federal tax returns for the years 2002 through 2004 and has issued a report disallowing certain bad debt deductions arising from the worthlessness of loans made to customers. The Company, assisted by outside counsel, is preparing a written protest which will vigorously challenge all of the IRS findings and the Company will exercise its right to a conference with the Appeals Office of the IRS to discuss the issues and arguments raised in the Company's protest. The Company and its outside counsel believe that the bad debt deductions were proper and that the position of the IRS is unsupportable as a matter of fact and law.

Note 7. Segment Reporting

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, established standards for the way that public business enterprises report and disclose selected information about operating segments in interim financial statements provided to stockholders.

The Company provides a broad range of financial products and services, including commercial loans, asset-based financing, factoring and accounts receivable management services, trade financing, equipment leasing, corporate and consumer deposit services, commercial and residential mortgage lending and brokerage, trust and estate administration and investment management services. The Company's primary source of earnings is net interest income, which represents the difference between interest earned on interest-earning assets and the interest incurred on interest-bearing liabilities. The Company's 2009 year-to-date average interest-earning assets were 61.7% loans (corporate lending was 67.3% and real estate lending was 27.8% of total loans, respectively) and 38.3% investment securities and money market investments. There are no industry concentrations exceeding 10% of loans, gross, in the corporate lending segment. Approximately 78% of loans are to borrowers located in the metropolitan New York area. In order to comply with the provisions of SFAS No. 131, the Company has determined that it has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The following tables provide certain information regarding the Company's operating segments:

	Corporate		Real Estate		Company-wide
	Lending		Lending		Treasury			Totals
	(in thousands)
Three Months Ended June 30,2009
Net interest income	$	9,685	$	5,070	$	6,366		$	21,121
Noninterest income		6,587		2,614		1,189			10,390
Depreciation and amortization		178		38		1			217
Segment income before income taxes		6,564		4,612		7,256			18,432
Segment assets		806,080		430,784		857,307			2,094,171

Three Months Ended June 30,2008
Net interest income	$	9,299	$	5,183	$	6,781		$	21,263
Noninterest income		5,532		2,786		(137	)		8,181
Depreciation and amortization		213		91		1			305
Segment income before income taxes		6,355		3,798		6,500			16,653
Segment assets		788,593		402,638		906,626			2,097,857

Six Months Ended June 30,2009
Net interest income	$	18,678	$	9,918	$	13,723		$	42,319
Noninterest income		11,681		4,738		4,369			20,788
Depreciation and amortization		354		77		1			432
Segment income before income taxes		12,108		8,766		17,502			38,376
Segment assets		806,080		430,784		857,307			2,094,171

Six Months Ended June 30,2008
Net interest income	$	17,363	$	10,529	$	12,954		$	40,846
Noninterest income		10,779		5,141		424			16,344
Depreciation and amortization		405		181		2			588
Segment income before income taxes		14,535		6,507		12,855			33,897
Segment assets		788,593		402,638		906,626			2,097,857

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(in thousands)
Net interest income:
Total for reportable operating segments	$	21,121		$	21,263		$	42,319		$	40,846
Other [1]		193			209			367			461
Consolidated net interest income	$	21,314		$	21,472		$	42,686		$	41,307

Noninterest income:
Total for reportable operating segments	$	10,390		$	8,181		$	20,788		$	16,344
Other [1]		408			391			808			900
Consolidated noninterest income	$	10,798		$	8,572		$	21,596		$	17,244

Income before taxes:
Total for reportable operating segments	$	18,432		$	16,653		$	38,376		$	33,897
Other [1]		(17,263	)		(9,939	)		(31,289	)		(20,792	)
Consolidated income before income taxes	$	1,169		$	6,714		$	7,087		$	13,105

Assets:
Total for reportable operating segments	$	2,094,171		$	2,097,857		$	2,094,171		$	2,097,857
Other [1]		31,535			30,633			31,535			30,633
Consolidated assets	$	2,125,706		$	2,128,490		$	2,125,706		$	2,128,490

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

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 8. Accumlated Other Comprehensive Income (Loss)

Information related to the components of accumlated other comprehensive income (loss) is as follows with related tax effects:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(in thousands)
Other Comprehensive Income (Loss)
Unrealized holding gains (losses) on securities, arising during the period:
Before tax	$	3,051		$	(9,410	)	$	3,090		$	(6,939	)
Tax effect		(1,384	)		4,251			(1,402	)		3,135
Net of tax		1,667			(5,159	)		1,688			(3,804	)

Reclassification adjustment for securities (gains) losses included in net income:
Before tax		(874	)		507			(3,939	)		507
Tax effect		396			(229	)		1,787			(229	)
Net of tax		(478	)		278			(2,152	)		278

Reclassification adjustment for amortization of prior service cost:
Before tax		16			16			33			33
Tax effect		(7	)		(7	)		(15	)		(15	)
Net of tax		9			9			18			18

Reclassification adjustment for amortization of net actuarial losses:
Before tax		948			420			1,596			840
Tax effect		(430	)		(190	)		(724	)		(379	)
Net of tax		518			230			872			461


Other comprehensive income (loss)	$	1,716		$	(4,642	)	$	426		$	(3,047	)

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 9. Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, able to transact and willing to transact.

SFAS No. 157, "Fair Value Measurements", establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair values hierarchy is as follows:

—

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Examples of financial instruments generally included in this level are U.S. Treasury securities, equity and trust preferred securities that trade in active markets and listed derivative instruments.

—

Level 2 Inputs - Inputs other than quoted prices included in Level I that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. Examples of financial instruments generally included in this level are corporate debt, mortgage-backed certificates issued by U.S. government corporations and government sponsored enterprises, equity securities that trade in less active markets and certain derivative instruments.

—

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own judgments about the assumptions that market participants would use in pricing the assets or liabilities. Examples of financial instruments generally included in this level are private equities, certain loans held for sale and other alternative investments.

In general, fair value of securities is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon market prices determined by an outside, independent entity that primarily use as inputs, observable market-based parameters. Fair value of loans held for sale is based upon internally developed models that primarily use as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Company's creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company=s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value is set forth in the 2008 Form 10-K.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Financial Assets and Financial Liabilities: The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

June 30, 2009 (in thousands)	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Securities available for sale:
Obligations of U.S. government corporations and government sponsored enterprises Mortgage-backed securities	$	-	$	93,206	$	-	$	93,206
Agency Notes		-		139,610				139,610
Total obligations of U.S. government corporations and government sponsored enterprises		-		232,816		-		232,816
Obligations of state and political institutions		-		23,546		-		23,546
Single-issuer, trust preferred securities		4,500		-		-		4,500
Corporate debt securities		-		83,178		-		83,178
Equity and other securities		53		10		-		63
Total marketable securities	$	4,553	$	339,550		-	$	344,103

Other investments	$	7,907	$	3,267	$	-	$	11,174

December 31, 2009 (in thousands)

Securities available for sale:
Obligations of U.S. government corporations and government sponsored enterprises Mortgage-backed securities	$	-	$	210,882	$	-	$	210,882
Agency Notes		-		244,519		-	$	244,519
Total obligations of U.S. government corporations and government sponsored enterprises		-		455,401		-		455,401
Obligations of state and political institutions		-		23,406		-		23,406
Single-issuer, trust preferred securities		4,209		-		-		4,209
Corporate debt securities		-		9,724		-		9,724
Equity and other securities		57		10		-		67
Total marketable securities	$	4,266	$	488,541	$	-	$	492,807

Other investments	$	7,266	$	3,116	$	-	$	10,382

Certain financial assets and financial liabilities, including impaired loans, are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table summarizes the period end fair value of financial assets, based on significant unobservable (Level 3) inputs, measured on a non-recurring basis:

	June 30,		December 31,
	2009		2008
	(in thousands)
Impaired loans	$	1,657	$	4,203

Non-Financial Assets and Non-Financial Liabilities: Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

During the second quarter of 2009, certain foreclosed assets, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses based upon the fair value of the foreclosed asset. The fair value of a foreclosed asset, upon initial recognition, is estimated using level 2 inputs based on observable market data or level 3 inputs based on customized discount criteria. Foreclosed assets measured at fair value upon initial recognition totaled $1.1 million (utilizing level 2 valuation inputs) during the three months ended June 30, 2009. In connection with the measurement and initial recognition of the foregoing foreclosed assets, the Company recognized charge-offs in the allowance for loan losses totaling $189 thousand. Other than foreclosed assets measured at fair value upon initial recognition, one foreclosed property was remeasured at fair value during the three months ended June 30, 2009 resulting in a $56 thousand charge to noninterest expense.

Financial Accounting Standards Board ("FASB") Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, amends Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value financial instruments for interim reporting periods as well as in annual financial statements. For those financial instruments that are not recorded at fair value in the Consolidated Balance Sheets, but are measured at fair value for disclosure purposes, management follows the same fair value measurement principles and guidance as for instruments recorded at fair value.

Much of the information used to arrive at "fair value" is highly subjective and judgmental in nature and therefore the results may not be precise. The subjective factors include, among other things, estimated cash flows, risk characteristics, credit quality and interest rates, all of which are subject to change. With the exception of investment securities and long-term debt, the Company's financial instruments are not readily marketable and market prices do not exist. Since negotiated prices for the instruments that are not readily marketable depend greatly on the motivation of the buyer and seller, the amounts that will actually be realized or paid per settlement or maturity of the instruments could be significantly different.

A more detailed description of the methods, factors and significant assumptions utilized in estimating the fair values for significant categories of financial instruments is set forth in the 2008 Form 10-K.

	June 30, 2009
	Carrying Amount		Fair Value
	(in thousands)
FINANCIAL ASSETS
Cash and due from banks	$	34,816	$	34,816
Interest-bearing deposits with other banks		5,611		5,609
Investment securities		717,731		724,580
Loans held for sale		57,385		57,385
Loans held in portfolio, net		1,142,295		1,138,254
Customers' liability under acceptances		180		180
Accrued interest receivable		7,772		7,772
FINANCIAL LIABILITIES
Demand, NOW, savings and money market deposits		972,901		972,901
Time deposits		331,766		333,809
Securities sold under agreements to repurchase		55,129		55,129
Federal funds purchased		87,000		87,000
Commercial paper		11,739		11,739
Short-term borrowings-FRB		160,000		160,000
Other short-term borrowings		4,262		4,262
Acceptances outstanding		180		180
Accrued interest payable		1,874		1,874
Long-term borrowings		175,774		180,999

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 10. New Accounting Standards

SFAS No. 161. Disclosures About Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133, amends and expands the disclosure requirements of SFAS No. 133 to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under SFAS No. 133 and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No.161 was adopted by the Company on January 1, 2009 and did not have a significant impact on the Company’s financial statements.

SFAS No. 165, Subsequent Events, establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. SFAS No. 165 establishes (i) the period after the balance sheet date during which a reporting entity's management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (iii)disclosures an entity should make about events or transactions that occurred after the balance sheet date. The Company evaluates subsequent events through the date that the financial statements are issued. SFAS No. 165 became effective for the Company's financial statements for periods ending after June 15, 2009 and did not have a significant impact on the Company's financial statements.

SFAS No. 166, Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140, amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferor's continuing involvement, if any, in transferred financial assets. SFAS No. 166 also eliminates the concept of a "qualifying special-purpose entity", changes the requirements for derecognizing financial assets and requires additional disclosures about all continuing involvements with transferred financial information about gains and losses (resulting from transfers) during the period. SFAS No. 166 will be effective January 1, 2010 and is not expected to have a significant impact on the Company's financial statements.

SFAS No. 167, Amendments to FASB Interpretation No. 46(R), amends FIN 46 (Revised December 2003), Consolidation of Variable Interest Entities, to change how a company determines when a entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. SFAS No. 167 requires additional disclosures about the reporting entity's involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its effect on the entity's financial statements. SFAS No. 167 will be effective January 1, 2010 and is not expected to have a significant impact on the Company's financial statements.

SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a Replacement of FASB Statement No. 162, replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes the FASB Accounting Standards Codification (the "Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative guidance for SEC registrants. All guidance contained in the Codification carries an equal level of authority. All nongrandfathered, non-SEC accounting literature not included in the Codification is superceded and deemed nonauthoritative. SFAS No. 168 will be effective for the Company's financial statements for periods ending after September 15, 2009. SFAS No. 168 is not expected to have a significant impact on the Company's financial statements.

STERLING BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

In April 2009, FASB issued the following Staff Positions:

FSP SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have decreased significantly. FSP SFAS 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. The provisions of this FSP are effective for the Company=s interim period ending on June 30, 2009. The adoption of FSP SFAS 157-4 did not have a material impact on the Company's financial statements.

FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, requires disclosures about fair value of financial instruments in interim reporting periods of publicly traded companies that were previously only required to be disclosed in annual financial statements. The provisions of this FSP are effective for the Company's interim period ending on June 30, 2009. As this FSP amends only the disclosure requirements about fair value of financial instruments in interim periods, the adoption of this FSP did not have a material impact on the Company's financial statements.

FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-than-Temporary Impairments, amends current other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The provisions of this FSP are effective for the Company's interim period ending on June 30, 2009. The adoption of FSP SFAS 115-2 and SFAS 124-2 did not have a material impact on the Company's financial statements,

FSP SFAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, amends the guidance in SFAS No. 141R to require that assets acquired and liabilities assumed in a business combination that arise from contingencies be recognized at fair value if fair value can be reasonably estimated. If fair value of such an asset or liability cannot be reasonably estimated, the asset or liability would generally be recognized in accordance with SFAS No. 5, Accounting for Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable Estimation of the Amount of Loss. FSP SFAS 141R-1 removes subsequent accounting guidance for assets and liabilities arising from contingencies from SFAS No. 141R and requires entities to develop a systematic and rational basis for subsequently measuring and accounting for assets and liabilities arising from contingencies. FSP SFAS 141R-1 eliminates the requirement to disclose and estimate the range of outcomes of recognized contingencies at the acquisition date. For unrecognized contingencies, entities are required to include only the disclosures required by SFAS No. 5. FSP SFAS 141R-1 also requires that contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination be treated as contingent consideration of the acquirer and should be initially and subsequently measured at fair value in accordance with SFAS No. 141R. FSP SFAS 141R-1 is effective for assets or liabilities arising from contingencies the Company acquires in business combinations occurring after January 1, 2009.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following commentary presents management’s discussion and analysis of the financial condition and results of operations of Sterling Bancorp (the “parent company”), a financial holding company under the Gramm-Leach-Bliley Act of 1999, and its subsidiaries, principally Sterling National Bank (the “bank”). Throughout this discussion and analysis, the term the “Company” refers to Sterling Bancorp and its subsidiaries. This discussion and analysis should be read in conjunction with the consolidated financial statements and supplemental data contained elsewhere in this quarterly report and the Company’s annual report on Form 10-K for the year ended December 31, 2008. Certain reclassifications have been made to prior years’ financial data to conform to current financial statement presentations.

OVERVIEW

The Company provides a broad range of financial products and services, including business and consumer loans, commercial and residential mortgage lending and brokerage, asset-based financing, factoring/accounts receivable management services, deposit services, trade financing, equipment leasing, trust and estate administration and investment management services. The Company has operations in the New York metropolitan area and conducts business throughout the United States. The general state of the U.S. economy and, in particular, economic and market conditions in the metropolitan New York area have a significant impact on loan demand, the ability of borrowers to repay these loans and the value of any collateral securing these loans and may also affect deposit levels. Accordingly, future general economic conditions are a key uncertainty that management expects will materially affect the Company’s results of operations.

For the six months ended June 30, 2009, the bank’s average earning assets represented approximately 99.8% of the Company’s average earning assets. Loans represented 61.7% and investment securities represented 37.3% of the bank’s average earning assets for the first six months of 2009.

The Company’s primary source of earnings is net interest income, and its principal market risk exposure is interest rate risk. The Company is not able to predict market interest rate fluctuations, and its asset-liability management strategy may not prevent interest rate changes from having a material adverse effect on the Company’s results of operations and financial condition.

Although management endeavors to minimize the credit risk inherent in the Company’s loan portfolio, it must necessarily make various assumptions and judgments about the collectibility of the loan portfolio based on its experience and evaluation of economic conditions. If such assumptions or judgments prove to be incorrect, the current allowance for loan losses may not be sufficient to cover loan losses and additions to the allowance may be necessary, which would have a negative impact on net income.

There is intense competition in all areas in which the Company conducts its business. The Company competes with banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions. Many of these competitors have substantially greater resources and lending limits and provide a wider array of banking services. To a limited extent, the Company also competes with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance companies. Competition is based on a number of factors, including prices, interest rates, service, availability of products and geographic location.

The Company regularly evaluates acquisition opportunities and conducts due diligence activities in connection with possible acquisitions. As a result, acquisition discussions, and in some cases negotiations, regularly take place and future acquisitions could occur.

INCOME STATEMENT ANALYSIS

Net interest income, which represents the difference between interest earned on interest-earning assets and interest incurred on interest-bearing liabilities, is the Company’s primary source of earnings. Net interest income can be affected by changes in market interest rates as well as the level and composition of assets, liabilities and shareholders’ equity. Net interest spread is the difference between the average rate earned, on a tax-equivalent basis, on interest-earning assets and the average rate paid on interest-bearing liabilities. The net yield on interest-earning assets (“net interest margin”) is calculated by dividing tax-equivalent net interest income by average interest-earning assets. Generally, the net interest margin will exceed the net interest spread because a portion of interest-earning assets are funded by various noninterest-bearing sources, principally noninterest-bearing deposits and shareholders’ equity. The increases (decreases) in the components of interest income and interest expense, expressed in terms of fluctuation in average volume and rate, are provided in the Rate/Volume Analysis shown on pages 46 and 47. Information as to the components of interest income and interest expense and average rates is provided in the Average Balance Sheets shown on pages 44 and 45.

Comparison of the Three Months Ended June 30, 2009 and 2008

The Company reported net income for the three months ended June 30, 2009 of $775 thousand, representing $0.04 per share calculated on a diluted basis, compared to $4.2 million, or $0.23 per share calculated on a diluted basis, for the second quarter of 2008. This decrease reflects increases in the provision for loan losses and noninterest expenses and lower net interest income partially offset by an increase in noninterest income and lower provision for income taxes. After dividends on preferred shares and accretion, net income available to common shareholders for the second quarter of 2009 was $138 thousand, representing $0.01 per share calculated on a diluted basis.

Net Interest Income

Net interest income, on a tax-equivalent basis, was $21.5 million for the second quarter of 2009 compared to $21.6 million for the 2008 period. Net interest income benefitted from higher average loan balances, lower interest-bearing deposit balances and lower cost of funding. Partially offsetting those benefits was the impact of lower yield on loans and investment securities, lower investment securities outstanding and higher borrowed funds balances. The net interest margin, on a tax-equivalent basis, was 4.53% for the second quarter of 2009 compared to 4.49% for the 2008 period. The net interest margin was impacted by the lower interest rate environment in 2009, the lower level of noninterest-bearing demand deposits and the effect of higher average loans outstanding.

Total interest income, on a tax-equivalent basis, aggregated $26.4 million for the second quarter of 2009, down $3.4 million from the 2008 period. The tax-equivalent yield on interest-earning assets was 5.59% for the second quarter of 2009 compared to 6.26% for the 2008 period.

Interest earned on the loan portfolio decreased to $18.3 million for the second quarter of 2009 from $20.0 million the prior year period. Average loan balances amounted to $1,204.6 million, an increase of $71.6 million from an average of $1,133.0 million in the prior year period. The increase in average loans, primarily due to the Company’s business development activities, accounted for a $1.2 million increase in interest earned on loans. The decrease in the yield on the loan portfolio to 6.19% for the second quarter of 2009 from 7.16% for the 2008 period was primarily attributable to the lower interest rate environment in 2009 and the mix of average outstanding balances among the components of the loan portfolio.

Interest earned on the securities portfolio, on a tax-equivalent basis, decreased to $8.1 million for the second quarter of 2009 from $9.8 million in the prior year period. Average outstandings decreased to $679.2 million (35.6% of average earning assets) for the second quarter of 2009 from $781.2 million (40.8% of average earning assets) in the prior year period. The decrease reflects the impact of the Company’s asset/liability management strategy designed to shorten the average life of the portfolio. The average life of the securities portfolio was approximately 4.4 years at June 30, 2009 compared to 7.2 years at June 30, 2008. The average yield in the investment securities portfolio decreased to 4.79% from 5.04% reflecting the impact of the above referenced asset/liability management strategy coupled with calls of higher yielding securities.

Total interest expense decreased by $3.4 million for the second quarter of 2009 from $8.2 million for the 2008 period, primarily due to the impact of lower rates paid for interest-bearing deposits and borrowings and lower interest-bearing deposits.

Interest expense on deposits decreased to $3.0 million for the second quarter of 2009 from $5.1 million for the 2008 period, due to decreases in the cost of those funds and lower balances. The average rate paid on interest-bearing deposits was 1.35%, which was 75 basis points lower than the prior year period. The decrease in average cost of deposits reflects the lower interest rate environment during 2009. Average interest-bearing deposits were $891.7 million for the second quarter of 2009 compared to $979.6 million for the prior year period, reflecting the Company’s strategy to reduce reliance on higher-priced certificates of deposit.

Interest expense on borrowings decreased to $1.9 million for the second quarter of 2009 from $3.1 million for the 2008 period, primarily due to lower rates paid for borrowed funds coupled with the benefit (reflected in the volume change) derived from the elimination of funding through dealer repurchase agreements and short-term Federal Home Loan Bank borrowings partially offset by short-term borrowings from the Federal Reserve Bank (reflected in the volume change). The average rate paid for borrowed funds was 1.58%, which was 119 basis points lower than the prior year period. The decrease in the average cost of borrowings reflects the lower interest rate environment in 2009. Average borrowings increased to $481.1 million for the second quarter of 2009 from $452.0 million in the prior year period, reflecting greater reliance by the Company on wholesale funding.

Provision for Loan Losses

Based on management’s continuing evaluation of the loan portfolio (discussed under “Asset Quality” on page 37), the provision for loan losses for the second quarter of 2009 was $6.8 million, compared to $2.2 million for the prior year period. Factors affecting the larger provision for the second quarter of 2009 included further deterioration of economic conditions during the quarter, a $4.0 million increase in net charge-offs, a $13.6 million increase in nonaccrual loans and growth in the loan portfolio.

Noninterest Income

Noninterest income increased to $10.8 million for the second quarter of 2009 from $8.6 million in the 2008 period. The increase principally resulted from higher income related to accounts receivable management and factoring services and an increase in securities gains. Commissions and other fees earned from accounts receivable management and factoring services were higher primarily due to the impact of the acquisition of the business of DCD Finance Inc. on April 6, 2009. Partially offsetting that benefit was the impact of reduced volume of billing by clients providing temporary staffing. In connection with an asset liability management program designed to reduce the average life of the investment securities portfolio, the Company sold approximately $31 million of securities with a weighted average life of approximately 2.6 years. The Company expects to reinvest a significant portion of the proceeds in securities with an average life of less than two years. In the second quarter of 2008, the Company recorded an other-than-temporary impairment charge for a single-issuer, investment grade trust preferred security. The charge, which resulted from management’s regular review of the valuation of the investment portfolio, amounted to approximately $507,000 and reduced the carrying amount of the security to $493,000.

Noninterest Expenses

Noninterest expenses for the second quarter of 2009 increased $3.0 million when compared to the 2008 period. The increase was primarily due the impact of the acquisition of the business of DCD Finance Inc. on April 6, 2009 and higher deposit insurance and pension costs. The increase in deposit insurance cost was primarily due to a special assessment levied by the Federal Deposit Insurance Corporation (“FDIC”) on all insured depository institutions totaling 5 basis points of each institution’s total assets less Tier 1 capital as of June 30, 2009, not to exceed 10 basis points of domestic deposits. The special assessment is part of the FDIC’s effort to rebuild the Deposit Insurance Fund (“DIF”). Deposit insurance expense during the three and six months ended June 30, 2009 included a $1.0 million accrual related to the special assessment. The final rule also allows the FDIC to impose additional special assessments of 5 basis points for the third and fourth quarters of 2009, if the FDIC estimates that the DIF reserve ratio will fall to a level that would adversely affect public confidence in federal deposit insurance or to a level that would be close to or below zero. Any additional special assessment would also be capped at 10 basis points of domestic deposits. The Company cannot provide any assurance as to the ultimate amount or timing of any such special assessments, should such special assessments occur, as such special assessments depend upon a variety of factors

which are beyond the Company’s control. The increase in pension expense was primarily the result of a weaker return on plan assets during 2008. The Company’s defined benefit retirement plan was closed to new members effective as of January 3, 2007. There have been no new participants in the Company’s Supplemental Executive Retirement Plan (“SERP”). The defined benefit plan was replaced by an enhanced 401(k) contribution for new employees. The Company still has funding obligations related to the defined benefit retirement and SERP plans and will recognize retirement expense related to these plans in future years, which will be dependent on the return earned on plan assets, the level of interest rates, salary increases, employee turnover and other factors.

Provision for Income Taxes

The provision for income taxes for the second quarter of 2009 decreased to $0.4 million from $2.5 million for the first quarter of 2008. The decrease was primarily due to the lower level of pre-tax income in the 2009 period.

Comparison of the Six Months Ended June 30, 2009 and 2008

The Company reported net income for the six months ended June 30, 2009 of $4.4 million, representing $0.24 per share calculated on a diluted basis, compared to $8.2 million, or $0.45 per share calculated on a diluted basis, for the first six months of 2008. This decrease reflects a higher provision for loan losses and noninterest expenses partially offset by increases in net interest income and noninterest income and lower provision for income taxes. After dividends on preferred shares and accretion, net income available to common shareholders for the first six months of 2009 was $2.9 million, representing $.16 per share calculated on a diluted basis.

Net Interest Income

Net interest income, on a tax-equivalent basis, was $43.0 million for the first six months of 2009 compared to $41.6 million for the 2008 period. Net interest income benefitted from higher average loan balances, lower interest-bearing deposit balances and lower cost of funding. Partially offsetting those benefits was the impact of lower yield on loans and investment securities, lower investment securities balances and higher borrowed funds balances. The net interest margin, on a tax-equivalent basis, was 4.55% for the first six months of 2009 compared to 4.49% for the 2008 period. The net interest margin was impacted by the lower interest rate environment in 2009, the lower level of noninterest-bearing demand deposits and the effect of higher average loans outstanding.

Total interest income, on a tax-equivalent basis, aggregated $53.1 million for the first six months of 2009, down $6.6 million from the 2008 period. The tax-equivalent yield on interest-earning assets was 5.64% for the first six months of 2009 compared to 6.50% for the 2008 period.

Interest earned on the loan portfolio decreased to $35.8 million for the first six months of 2009 from $40.8 million for the prior year period. Average loan balances amounted to $1,183.0 million, an increase of $74.2 million from an average of $1,108.8 million in the prior year period. The increase in average loans, primarily due to the Company’s business development activities, accounted for a $2.4 million increase in interest earned on loans. The yield on the loan portfolio decreased to 6.24% for the first six months of 2009 from 7.55% for the 2008 period, which was primarily attributable to the lower interest rate environment in 2009 and the mix of average outstanding balances among the components of the loan portfolio.

Interest earned on the securities portfolio, on a tax-equivalent basis, decreased to $17.3 million for the first six months of 2009 from $18.9 million in the prior year period. Average outstandings decreased to $714.6 million (37.3% of average earning assets) for the first six months of 2009 from $750.9 million (40.3% of average earning assets) in the prior year period. The decrease reflects the impact of the Company’s asset/liability management strategy designed to shorten the average life of the portfolio. The average life of the securities portfolio was approximately 4.4 years at June 30, 2009 compared to 7.2 years at June 30, 2008. The average yield on the investment securities portfolio decreased to 4.84% from 5.03%, reflecting the impact of the above referenced asset/liability management strategy coupled with calls of higher yielding securities.

Total interest expense decreased by $8.1 million for the first six months of 2009 from $18.2 million for the 2008 period, primarily due to the impact of lower rates paid for interest-bearing deposits and borrowings and lower interest-bearing deposit balances.

Interest expense on deposits decreased to $6.3 million for the first six months of 2009 from $12.1 million for the 2008 period, primarily due to a decrease in the cost of those funds. The average rate paid on interest-bearing deposits was 1.41%, which was 102 basis points lower than the prior year period. The decrease in average cost of deposits reflects the lower interest rate environment during 2009. Average interest-bearing deposits were $901.7 million for the first six months of 2009 compared to $997.9 million for the prior year period, reflecting the Company’s strategy to reduce reliance on higher-priced certificates of deposit.

Interest expense on borrowings decreased to $3.8 million for the first six months of 2009 from $6.1 million for the 2008 period, primarily due to lower rates paid for borrowed funds coupled with the benefit (reflected in the volume change) derived from the elimination of funding through dealer repurchase agreements partially offset by short-term borrowings from the Federal Reserve Bank (reflected in the volume change). The average rate paid for borrowed funds was 1.61%, which was 152 basis points lower than the prior year period. The decrease in the average cost of borrowings reflects the lower interest rate environment in 2009. Average borrowings increased to $478.9 million for the first six months of 2009 from $391.3 million in the prior year period, reflecting greater reliance by the Company on wholesale funding.

Provision for Loan Losses

Based on management’s continuing evaluation of the loan portfolio (discussed under “Asset Quality” on page 37), the provision for loan losses for the first six months of 2009 was $13.0 million, compared to $4.2 million for the prior year period. Factors affecting the larger provision for the first six months of 2009 included further deterioration of economic conditions during that period, a $7.5 million increase in net charge-offs, a $13.6 million increase in nonaccrual loans and growth in the loan portfolio.

Noninterest Income

Noninterest income increased to $21.6 million for the first six months of 2009 from $17.2 million in the 2008 period. The increase principally resulted from higher income related to accounts receivable management and factoring services, and an increase in securities gains. Commissions and other fees earned from accounts receivable management and factoring services were higher primarily due to the impact of the acquisition of the business of DCD Finance Inc. on April 6, 2009. Partially offsetting that benefit was the impact of reduced volume of billing by clients providing temporary staffing. In connection with an asset liability management program designed to reduce the average life of the investment securities portfolio, the Company sold approximately $123 million of securities with a weighted average life of approximately 4 years. The Company expects to reinvest a significant portion of the proceeds in securities with an average life of less than two years. In the second quarter of 2008, the Company recorded an other-than-temporary impairment charge for a single-issuer, investment grade trust preferred security. The charge, which resulted from management’s regular review of the valuation of the investment portfolio, amounted to approximately $507,000 and reduced the carrying amount of the security to $493,000.

Noninterest Expenses

Noninterest expenses for the first six months of 2009 increased $2.9 million when compared to the 2008 period. The increase was primarily due to the impact of the acquisition of the business of DCD Finance Inc. on April 6, 2009 and higher deposit insurance and pension costs. The increase in deposit insurance cost was primarily due to a special assessment levied by the FDIC on all insured depository institutions totaling 5 basis points of each institution’s total assets less Tier 1 capital as of June 30, 2009, not to exceed 10 basis points of domestic deposits. The special assessment is part of the FDIC’s effort to rebuild the DIF. Deposit insurance expense during the three and six months ended June 30, 2009 included a $1.0 million accrual related to the special assessment. The final rule also allows the FDIC to impose additional special assessments of 5 basis points for the third and fourth quarters of 2009, if the FDIC estimates that the DIF reserve ratio will fall to a level that would adversely affect public confidence in federal deposit insurance or to a level that would be close to or below zero. Any additional special assessment would also be capped at 10 basis points of domestic deposits. The Company cannot provide any assurance as to the ultimate amount or timing of any such special assessments, should such special assessments occur, as such special assessments depend upon a variety of factors which are beyond the Company’s control. The increase in pension expense was primarily the result of weaker return on plan assets during 2008. The Company’s defined benefit retirement plan was closed to new members effective as of January 3, 2007. There have been no new participants in the Company’s SERP. The defined benefit plan was replaced by an enhanced 401(k) contribution for new employees. The Company still has funding obligations related to the defined benefit retirement and SERP plans and will recognize retirement expense related to these plans in future years, which will be dependent on the return earned on plan assets, the level of interest rates, salary increases, employee turnover and other factors.

Provision for Income Taxes

The provision for income taxes for the first six months of 2009 decreased to $2.7 million from $4.9 million for the first six months of 2008. The decrease was primarily due to the lower level of pre-tax income in the 2009 period.

BALANCE SHEET ANALYSIS

Securities

At June 30, 2009, the Company’s portfolio of securities totaled $717.7 million, of which obligations of U.S. government corporations and government-sponsored enterprises amounted to $560.3 million, which is approximately 78.1% of the total. The Company has the intent and ability to hold to maturity securities classified as “held to maturity”. These securities are carried at cost, adjusted for amortization of premiums and accretion of discounts. The gross unrealized gains and losses on “held to maturity” securities were $7.4 million and $0.6 million, respectively. Securities classified as “available for sale” may be sold in the future, prior to maturity. These securities are carried at estimated fair value. Net aggregate unrealized gains or losses on these securities are included in a valuation allowance account and are shown net of taxes, as a component of shareholders’ equity. Given the generally high credit quality of the portfolio, management expects to realize all of its investment upon market recovery or the maturity of such instruments and thus believes that any impairment in value is interest rate related and therefore temporary. “Available for sale” securities included gross unrealized gains of $3.8 million and gross unrealized losses of $2.7 million. After reviewing all investment securities the Company holds in order to determine if the decline in the fair value of any security appears to be other-than-temporary, management expects to realize all of its investment upon the maturity of such instruments and, thus, believes that any fair value impairment is temporary. Management has made an evaluation that the Company has the ability to hold securities with unrealized losses until maturity and, given its current intention to do so, anticipates that it will realize the full carrying value of its investment.

In connection with an asset liability management program designed to reduce the average life of the investment securities portfolio, the Company sold approximately $123 million of securities with a weighted average life of approximately 4 years during the first six months of 2009. The Company expects to reinvest a significant portion of the proceeds in securities with an average life of less than two years.

The following table presents information regarding the average life and yields of certain available for sale (“AFS”) and held to maturity (“HTM”) securities:

Weighted Average Life

Weighted Average Yield

June 30, 2009

AFS

HTM

AFS

HTM

Mortgage-backed securities

2.8 Years

2.7 Years

4.40%

4.32%

Agency notes (with original call dates ranging between 3 and 36 months)

8.9 Years

1.9 Years

4.79%

5.16%

Obligations of state and political subdivisions

6.3 Years

12.9 Years

5.98%

[1]

6.43%

[1]

[1] tax equivalent

The following table sets forth the composition of the Company's investment securities by type, with related values

	June 30, 2009					December 31, 2008
	Balances		% of Total			Balances		% of Total
	(in thousands)
Obligations of U.S. government corporations and government sponsored enterprises
Mortgage-backed securities
CMO's (Federal National Mortgage Association)	$	14,716		2.05	%	$	20,799		2.58	%
CMO's (Federal Home Loan Mortgage Corporation)		34,996		4.88			42,294		5.24
CMO's (Government National Mortgage Association)		5,225		0.73			6,565		0.81
Federal National Mortgage Association		163,966		22.84			245,100		30.38
Federal Home Loan Mortgage Corporation		100,826		14.05			137,437		17.04
Government National Mortgage Association		16,085		2.24			39,564		4.90
Total mortgage-backed securities		335,814		46.79			491,759		60.95

Agency Notes
Federal National Mortgage Association		59,989		8.36			-		-
Federal Home Loan Bank		119,969		16.72			174,675		21.65
Federal Home Loan Mortgage Corporation		15,000		2.09			-		-
Federal Farm Credit Bank		29,525		4.11			89,844		11.13
Total obligations of U.S. government corporations and government sponsored enterprises		560,297		78.07			756,278		93.73

Obligations of state and political institutions		59,810		8.33			23,406		2.90
Single-issuer, trust preferred securities		4,500		0.63			4,209		0.52
Corporate debt securities		83,178		11.59			9,724		1.21
Other securities		63		0.01			67		0.01
Total marketable securities		707,848		98.63			793,684		98.37
Federal Reserve Bank stock		1,131		0.16			1,131		0.14
Federal Home Loan Bank stock		8,252		1.15			11,574		1.43
Other securities		250		0.03			250		0.03
Debt securities issued by foreign governments		250		0.03			250		0.03
Total	$	717,731		100.00	%	$	806,889		100.00	%

Loan Portfolio

One of management’s objectives is to maintain the quality of the loan portfolio. The Company seeks to achieve this objective by maintaining rigorous underwriting standards coupled with regular evaluation of the creditworthiness of, and the designation of lending limits for, each borrower. The portfolio strategies include seeking industry and loan size diversification in order to minimize credit exposure and originating loans in markets with which the Company is familiar.

The Company’s commercial and industrial loan and factored receivables portfolios represent approximately 53% of all loans. Loans in this category are typically made to small- and medium-sized businesses and range between $25,000 and $10 million. The Company’s real estate mortgage portfolio, which represents approximately 25% of all loans, is comprised of mortgages secured by real property located principally in the states of New York, New Jersey, Virginia and North Carolina. The Company’s leasing portfolio, which consists of finance leases for various types of business equipment, represents approximately 19% of all loans. Sources of repayment are the borrower’s operating profits, cash flows and liquidation of pledged collateral. Based on underwriting standards, loans may be secured in whole or in part by collateral such as liquid assets, accounts receivable, equipment, inventory and real property. The collateral securing any loan or lease may depend on the type of loan or lease and may vary in value based on market conditions.

The following table sets forth the composition of the Company's loans held for sale and loans held in portfolio:

	June 30,
	2009					2008
	(dollars in thousands)
			% of					% of
	Balances		Total			Balances		Total
Domestic
Commercial and industrial	$	507,635		41.68	%	$	513,363		43.33	%
Lease financing receivables		229,024		18.81			261,628		22.08
Factored receivables		134,450		11.04			77,169		6.52
Real estate - residential mortgage		198,516		16.30			169,774		14.33
Real estate - commercial mortgage		101,282		8.32			95,155		8.03
Real estate - construction and land development		27,235		2.24			30,212		2.55
Loans to individuals		19,672		1.61			17,443		1.47
Loans to depository institutions		-		-			20,000		1.69


Loans, net of unearned discounts	$	1,217,814		100.00	%	$	1,184,744		100.00	%

Asset Quality

Intrinsic to the lending process is the possibility of loss. In times of economic slowdown, the risk of loss inherent in the Company’s portfolio of loans may increase. While management endeavors to minimize this risk, it recognizes that loan losses will occur and that the amount of these losses will fluctuate depending on the risk characteristics of the loan portfolio which in turn depend on current and expected economic conditions, the financial condition of borrowers, the realization of collateral and the credit management process.

During the first six months of 2009, conditions across many segments of the economy continued to deteriorate, adversely affecting the financial condition of our small business borrowers as well as the value of our collateral. The Company also experienced a disruption in our collection efforts due to resignations, during the first quarter of 2009, of our collection manager and other members of the collection staff which resulted in increases in charge-offs and nonaccruals during the quarter. We have since upgraded our collection staff, intensified our collection activities, tightened our credit standards and enhanced other credit evaluation criteria. A continuation and/or worsening of existing economic conditions will likely result in a level of charge-offs and nonaccrual loans that will be higher than those in prior periods.

The following table sets forth the amount of non-performing assets (nonaccrual loans and other real estate owned). Also shown are loans that are past due more than 90 days and are still accruing because they are both well secured or guaranteed by financially responsible third parties and are in the process of collection.

	June 30,
	2009		2008
	(in thousands)
Gross Loans	$	1,249,473	$	1,222,866
Nonaccrual loans
Commercial and industrial	$	2,835	$	836
Lease financing		14,256		2,600
Factored receivables		-		-
Real estate-residential mortgage		3,380		3,487
Real estate-commercial mortgage		-		-
Real estate-construction and land development		-		-
Loans to individuals		136		47

Total nonaccrual loans		20,607		6,970

Other real estate owned		1,105		2,252
Total non-performing assets	$	21,712	$	9,222

Loans past due 90 days or more and still accruing	$	1,683	$	224

At June 30, 2009, commercial and industrial nonaccruals represented 0.56% of commercial and industrial loans. There were 32 loans made to small business borrowers located in 4 states with balances ranging between approximately $7,200 and $151,500.

At June 30, 2009, lease financing nonaccruals represent 6.22% of lease financing receivables. The lessees of the equipment are located in 35 states. There were 281 leases ranging between approximately $300 and $238,000, 253 of which were under $100,000. The value of the underlying collateral related to lease financing nonaccruals varies depending on the type and condition of equipment. While most leases are written on a recourse basis, with personal guarantees of the principals, the current value of the collateral is often less than the lease financing balance.

At June 30, 2009, residential real estate nonaccruals represent 1.7% of residential real estate loans held in portfolio. There were 20 loans ranging between approximately $10,000 and $620,000 secured by properties located in 8 states.

At June 30, 2009, other real estate owned consisted of 10 properties with values between approximately $22,000 and $585,000 located in 7 states.

Management views the allowance for loan losses as a critical accounting policy due to its subjectivity. The allowance for loan losses is maintained through the provision for loan losses, which is a charge to operating earnings. The adequacy of the provision and the resulting allowance for loan losses is determined by a management evaluation process of the loan portfolio, including identification and review of individual problem situations that may affect the borrower’s ability to repay, review of overall portfolio quality through an analysis of current charge-offs, delinquency and nonperforming loan data, estimates of the value of any underlying collateral, an assessment of current and expected economic conditions and changes in the size and character of the loan portfolio. Other data utilized by management in determining the adequacy of the allowance for loan losses include, but are not limited to, the results of regulatory reviews; the amount of, trend of and/or borrower characteristics on loans that are identified as requiring special attention as part of the credit review process and peer group comparisons. The impact of this other data might result in an allowance greater than that indicated by the evaluation process previously described. The allowance reflects management’s evaluation both of loans presenting identified loss potential and of the risk inherent in various components of the loan portfolio, including loans identified as impaired as required by SFAS No. 114. Thus, an increase in the size of the portfolio or in any of its components could necessitate an increase in the allowance even though there may not be a decline in credit quality or an increase in potential problem loans. A significant change in any of the evaluation factors described above could result in future additions to the allowance. At June 30, 2009, the ratio of the allowance to loans held in portfolio, net of unearned discounts, was 1.56% and the allowance was $18.1 million. At such date, the Company’s nonaccrual loans amounted to $20.6 million. Loans 90 days past due and still accruing amounted to $1.7 million. At June 30, 2009, loans judged to be impaired within the scope of SFAS No. 114, amounted to $1.7 million and had a valuation allowance totaling $270 thousand, which is included within the overall allowance for loan losses. Included in the impaired loans are $1.4 million in accruing impaired restructured loans as defined by SFAS No. 114, with allowances for loan impairment of $184 thousand. Based on the foregoing, as well as management’s judgment as to the current risk in loans held in portfolio, the Company’s allowance for loan losses was deemed adequate to absorb all probable losses on specifically known and other credit risks associated with the portfolio as of June 30, 2009. Net losses within loans held in portfolio are not statistically predictable and changes in conditions in the next twelve months could result in future provisions for loan losses varying from the provision recognized in the first six months of 2009. Potential problem loans, which are loans that are currently performing under present loan repayment terms but where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of the borrowers to continue to comply with the present repayment terms, aggregated $2.4 million and $-0- million at June 30, 2009 and June 30, 2008, respectively.

The following table sets forth certain information with respect to the Company's loan loss experience:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(dollars in thousands)

Average loans held in portfolio, net of unearned discounts, during period	$	1,910,289		$	1,917,116		$	1,916,836		$	1,862,826

Allowance for loan losses:
Balance at beginning of period	$	17,158		$	15,162		$	16,010		$	15,085

Charge-offs:
Commercial and industrial		518			454			877			1,288
Lease financing		5,083			1,216			9,627			1,967
Factored receivables		142			110			309			195
Real estate - residential mortgage		-			15			-			15
Real estate - commercial mortgage		-			-			-			-
Real estate - construction and land development		-			-			-			-
Loans to individuals		-			-			-			-
Total charge-offs		5,743			1,795			10,813			3,465

Recoveries:
Commercial and industrial		5			108			16			111
Lease financing		98			64			142			161
Factored receivables		5			10			23			15
Real estate - residential mortgage		-			-			-			-
Real estate - commercial mortgage		-			-			-			-
Real estate - construction and land development		-			-			-			-
Loans to individuals		-			2			-			69
Total recoveries		108			184			181			356

Subtract:
Net charge-offs		5,635			1,611			10,632			3,109

Provision for loan losses		6,800			2,200			13,000			4,150

Less losses on transfers to other real estate owned		189			271			244			646

Balance at end of period	$	18,134		$	15,480		$	18,134		$	15,480

Ratio of annualized net charge-offs to average loans held in portfolio, net of unearned discounts		1.18	%		0.34	%		1.11	%		0.33	%

The following table presents the Company's allocation of the allowance for loan losses. This allocation is based on estimates by management and may vary from period to period based on management's evaluation of the risk characteristics of the loan portfolio. The amount allocated to a particular loan category of the Company's loans held in portfolio may not necessarily be indicative of actual future charge-offs in that loan category.

June 30,	2009					2008
	Amount		% of Loans in each category to total loans held in portfolio			Amount		% of Loans in each category to total loans held in portfolio
	(dollars in thousands)

Domestic

Commercial and industrial	$	4,554		43.74	%	$	5,495		44.25	%
Loans to depository institutions		-		-			40		1.72
Lease financing		10,014		19.74			5,674		22.56
Factored receivables		1,007		11.59			916		6.64
Real estate - residential mortgage		1,419		12.16			2,380		12.53
Real estate - commercial mortgage		699		8.73			607		8.20
Real estate - construction and land development		191		2.35			196		2.60
Loans to individuals		138		1.69			113		1.50
Unallocated		112		-			59		-
Total	$	18,134		100.00	%	$	15,480		100.00	%

During 2009, the allowance for loan losses increased $2.1 million from $16.0 million at December 31, 2008 primarily due to an increase of $4.0 million in the allowance allocated to lease financing partially offset by a reduction of $1.0 million and $0.9 million in the allowance allocated to commercial and industrial and residential mortgage components respectively. The allowance allocated to lease financing increased primarily as a result of increased losses and nonaccrued levels experienced in that category in 2009. The reduction in the allowance allocated to commercial and industrial losses was primarily the result of lower losses experienced in that component of the portfolio in 2009. The reduction in the allowance allocated to residential mortgage loans was primarily the result of lower anticipated losses in the portfolio based on the improved quality of loans in the portfolio.

Deposits

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

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

	June 30,
	2009					2008
	(dollars in thousands)
			% of					% of
	Balances		Total			Balances		Total
Domestic
Demand	$	440,626		33.77	%	$	459,279		32.69	%
NOW		186,958		14.33			254,418		18.11
Savings		17,991		1.38			18,364		1.31
Money market		327,326		25.10			213,734		15.21
Time deposits		331,187		25.38			458,462		32.64

Total domestic deposits		1,304,088		99.96			1,404,257		99.96
Foreign
Time deposits		579		0.04			577		0.04

Total deposits	$	1,304,667		100.00	% $		1,404,834		100.00	%

Fluctuations of balances in total or among categories at any date may occur based on the Company's mix of assets and liabilities as well as on customers’ balance sheet strategies. Historically, however, average balances for deposits have been relatively stable. Information regarding these average balances is presented on pages 44 and 45.

CAPITAL

The Company and the bank are subject to risk-based capital regulations which quantitatively measure capital against risk-weighted assets, including certain off-balance sheet items. These regulations define the elements of the Tier 1 and Tier 2 components of Total Capital and establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for capital adequacy purposes. Supplementing these regulations is a leverage requirement. This requirement establishes a minimum leverage ratio (at least 3% or 4%, depending upon an institution’s regulatory status) which is calculated by dividing Tier 1 capital by adjusted quarterly average assets (after deducting goodwill). Information regarding the Company's and the bank's risk-based capital is presented on page 48. In addition, the bank is subject to the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) which imposes a number of mandatory supervisory measures. Among other matters, FDICIA established five capital categories, ranging from “well capitalized” to “critically under capitalized”, which are used by regulatory agencies to determine a bank's deposit insurance premium, approval of applications authorizing institutions to increase their asset size or otherwise expand business activities or acquire other institutions. Under FDICIA, a “well capitalized” bank must maintain minimum leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%, respectively. The Federal Reserve Board applies comparable tests for holding companies such as the Company. At June 30, 2009, the Company and the bank exceeded the requirements for “well capitalized” institutions.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

For information regarding recently issued accounting pronouncement and its expected impact on the Company’s consolidated financial statements, see Note 10 of the Company’s unaudited consolidated financial statements in this quarterly report on Form 10-Q.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained or incorporated by reference in this quarterly report on Form 10-Q, including but not limited to, statements concerning future results of operations or financial position, borrowing capacity and future liquidity, future investment results, future credit exposure, future loan losses and plans and objectives for future operations and other statements contained herein regarding matters that are not historical facts, are “forward-looking statements” as defined in the Securities Exchange Act of 1934. These statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties, and represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Any forward-looking statements we may make speak only as of the date on which such statements are made. Our actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements.

Factors that could cause our actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following: inflation, interest rates, market and monetary fluctuations; geopolitical developments, including acts of war and terrorism and their impact on economic conditions; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes, particularly declines, in general economic conditions and in the local economies in which the Company operates; the financial condition of the Company’s borrowers; competitive pressures on loan and deposit pricing and demand; changes in technology and their impact on the marketing of new products and services and the acceptance of these products and services by new and existing customers; the willingness of customers to substitute competitors’ products and services for the Company’s products and services; the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); changes in accounting principles, policies and guidelines; the risks and uncertainties described in “Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2008; and other risks and uncertainties detailed from time to time in press releases and other public filings; and the Company’s performance in managing the risks involved in any of the foregoing. The foregoing list of important factors is not exclusive, and we will not update any forward-looking statement, whether written or oral, that may be made from time to time.

STERLING BANCORP AND SUBSIDIARIES

Average Balance Sheets [1]

Three Months Ended June 30,

(Unaudited)

(dollars in thousands)

	2009								2008
	Average					Average			Average					Average
ASSETS	Balance			Interest		Rate			Balance			Interest		Rate

Interest-bearing deposits with other banks	$	26,498		$	9		0.14	%	$	2,474		$	7		1.14	%
Securities available for sale		351,378			4,119		4.69			417,409			5,462		5.23
Securities held to maturity		292,956			3,477		4.75			341,662			4,034		4.72
Securities tax-exempt [2]		34,889			536		6.15			22,178			340		6.13
Total investment securities		679,223			8,132		4.79			781,249			9,836		5.04
Federal funds sold		-			-		-			357			1		1.79
Loans, net of unearned discounts [3]		1,204,568			18,264		6.19			1,133,036			20,001		7.16
TOTAL INTEREST-EARNING ASSETS		1,910,289			26,405		5.59	%		1,917,116			29,845		6.26	%
Cash and due from banks		29,623								47,695
Allowance for loan losses		(17,994	)							(15,948	)
Goodwill		22,901								22,901
Other assets		114,112								105,348
TOTAL ASSETS	$	2,058,931							$	2,077,112


LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Domestic
Savings	$	18,080			6		0.13	%	$	19,735			17		0.36	%
NOW		196,441			126		0.26			256,316			542		0.85
Money market		341,886			811		0.95			195,131			530		1.09
Time		334,680			2,047		2.45			507,839			4,032		3.19
Foreign
Time		578			2		1.09			576			2		1.09
Total interest-bearing deposits		891,665			2,992		1.35			979,597			5,123		2.10
Borrowings
Securities sold under agreements to repurchase - customers		77,261			88		0.45			89,187			442		1.99
Securities sold under agreements to repurchase - dealers		-			-		-			66,527			416		2.52
Federal funds purchased		12,309			7		0.22			39,302			217		2.19
Commercial paper		11,101			17		0.62			19,547			117		2.42
Short-term borrowings - FHLB		-			-		-			53,758			311		2.32
Short-term borrowings - FRB		202,857			126		0.25			264			1		1.29
Short-term borrowings - other		1,752			-		-			1,472			5		2.27
Long-term borrowings - FHLB		150,000			1,134		3.03			156,154			1,085		2.78
Long-term borrowings - sub debt		25,774			524		8.37			25,774			524		8.37
Total borrowings		481,054			1,896		1.58			451,985			3,118		2.77
TOTAL INTEREST-BEARING LIABILITIES		1,372,719			4,888		1.43	%		1,431,582			8,241		2.31	%
Noninterest-bearing deposits		417,509								424,658
Other liabilities		109,796								100,128
Total liabilities		1,900,024								1,956,368
Shareholders' equity		158,907								120,744
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,058,931							$	2,077,112
Net interest income/spread					21,517		4.16	%					21,604		3.95	%
Net yield on interest-earning assets (margin)							4.53	%							4.49	%
Less: Tax equivalent adjustment					203								132
Net interest income				$	21,314							$	21,472

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

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

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

STERLING BANCORP AND SUBSIDIARIES

Average Balance Sheets [1]

Six Months Ended June 30,

(Unaudited)

(dollars in thousands)


	2009								2008
	Average					Average			Average					Average
ASSETS	Balance			Interest		Rate			Balance			Interest		Rate

Interest-bearing deposits with other banks	$	19,278		$	19		0.21	%	$	2,968		$	19		1.26	%
Securities available for sale		389,715			9,398		4.82			381,222			9,996		5.24
Securities held to maturity		295,245			6,999		4.74			348,991			8,259		4.73
Securities tax-exempt [2]		29,610			902		6.09			20,655			633		6.13
Total investment securities		714,570			17,299		4.84			750,868			18,888		5.03
Federal funds sold		-			-		-			179			1		1.78
Loans, net of unearned discounts [3]		1,182,988			35,816		6.24			1,108,811			40,821		7.55
TOTAL INTEREST-EARNING ASSETS		1,916,836			53,134		5.64	%		1,862,826			59,729		6.50	%
Cash and due from banks		31,017								57,594
Allowance for loan losses		(17,445	)							(15,759	)
Goodwill		22,901								22,901
Other assets		113,069								104,070
TOTAL ASSETS	$	2,066,378							$	2,031,632

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Domestic
Savings	$	18,148			12		0.14	%	$	19,192			33		0.35	%
NOW		211,650			294		0.28			246,514			1,368		1.12
Money market		340,020			1,762		1.04			202,321			1,298		1.29
Time		331,266			4,212		2.56			529,327			9,369		3.56
Foreign
Time		578			3		1.09			576			3		1.09
Total interest-bearing deposits		901,662			6,283		1.41			997,930			12,071		2.43
Borrowings
Securities sold under agreements to repurchase - customers		75,987			203		0.54			85,824			1,088		2.55
Securities sold under agreements to repurchase - dealers		-			-		-			51,277			733		2.88
Federal funds purchased		34,783			41		0.23			44,129			579		2.60
Commercial paper		11,487			40		0.70			20,349			312		3.09
Short-term borrowings - FHLB		6,878			11		0.31			39,813			526		2.65
Short-term borrowings - FRB		172,405			225		0.26			132			1		2.27
Short-term borrowings - other		1,603			1		0.07			1,655			19		2.29
Long-term borrowings - FHLB		150,000			2,256		3.03			122,308			1,799		2.94
Long-term borrowings - sub debt		25,774			1,047		8.38			25,774			1,047		8.38
Total borrowings		478,917			3,824		1.61			391,261			6,104		3.13
TOTAL INTEREST-BEARING LIABILITIES		1,380,579			10,107		1.48	%		1,389,191			18,175		2.63	%
Noninterest-bearing deposits		416,847								422,814
Other liabilities		110,728								99,115
Total liabilities		1,908,154								1,911,120
Shareholders' equity		158,224								120,512
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,066,378							$	2,031,632
Net interest income/spread					43,027		4.16	%					41,554		3.87	%
Net yield on interest-earning assets (margin)							4.55	%							4.49	%
Less: Tax equivalent adjustment					341								247
Net interest income				$	42,686							$	41,307

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

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

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

STERLING BANCORP AND SUBSIDIARIES

Rate/Volume Analysis [1]

(Unaudited)

(in thousands)

	Increase/(Decrease)
	Three Months Ended
	June 30, 2009 to June 30, 2008

	Volume			Rate			Net [2]
INTEREST INCOME
Interest-bearing deposits with other banks	$	13		$	(11	)	$	2

Securities available for sale		(813	)		(530	)		(1,343	)
Securities held to maturity		(583	)		26			(557	)
Securities tax-exempt		195			1			196
Total investment securities		(1,201	)		(503	)		(1,704	)

Federal funds sold		(1	)		-			(1	)

Loans, net of unearned discounts [3]		1,190			(2,927	)		(1,737	)

TOTAL INTEREST INCOME	$	1		$	(3,441	)	$	(3,440	)

INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	(1	)	$	(10	)	$	(11	)
NOW		(105	)		(311	)		(416	)
Money market		356			(75	)		281
Time		(1,181	)		(804	)		(1,985	)
Foreign
Time		-			-			-
Total interest-bearing deposits		(931	)		(1,200	)		(2,131	)

Borrowings
Securities sold under agreements to repurchase - customers		(52	)		(302	)		(354	)
Securities sold under agreements to repurchase - dealers		(416	)		-			(416	)
Federal funds purchased		(91	)		(119	)		(210	)
Commercial paper		(37	)		(63	)		(100	)
Short-term borrowings - FHLB		(311	)		-			(311	)
Short-term borrowings - FRB		127			(2	)		125
Short-term borrowings - other		2			(7	)		(5	)
Long-term borrowings - FHLB		(45	)		94			49
Long-term borrowings - sub debt		-			-			-
Total borrowings		(823	)		(399	)		(1,222	)


TOTAL INTEREST EXPENSE	$	(1,754	)	$	(1,599	)	$	(3,353	)

NET INTEREST INCOME	$	1,755		$	(1,842	)	$	(87	)

[1]	This table is presented on a tax-equivalent basis.

[2]

Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of the change due solely to each. The change in interest income for Federal funds sold and in interest expense for securities sold under agreements to repurchase-dealers, short-term borrowings-FRB and 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.

STERLING BANCORP AND SUBSIDIARIES

Rate/Volume Analysis [1]

(Unaudited)

(in thousands)

	Increase/(Decrease)
	Six Months Ended
	June 30, 2009 to June 30, 2008

	Volume			Rate			Net [2]
INTEREST INCOME
Interest-bearing deposits with other banks	$	26		$	(26	)	$	-

Securities available for sale		174			(772	)		(598	)
Securities held to maturity		(1,277	)		17			(1,260	)
Securities tax-exempt		273			(4	)		269
Total investment securities		(830	)		(759	)		(1,589	)

Federal funds sold		(1	)		-			(1	)

Loans, net of unearned discounts [3]		2,449			(7,454	)		(5,005	)

TOTAL INTEREST INCOME	$	1,644		$	(8,239	)	$	(6,595	)

INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings	$	(2	)	$	(19	)	$	(21	)
NOW		(177	)		(897	)		(1,074	)
Money market		750			(286	)		464
Time		(2,964	)		(2,193	)		(5,157	)
Foreign
Time		-			-			-
Total interest-bearing deposits		(2,393	)		(3,395	)		(5,788	)

Borrowings
Securities sold under agreements to repurchase - customers		(117	)		(768	)		(885	)
Securities sold under agreements to repurchase - dealers		(733	)		-			(733	)
Federal funds purchased		(103	)		(435	)		(538	)
Commercial paper		(99	)		(173	)		(272	)
Short-term borrowings - FHLB		(250	)		(265	)		(515	)
Short-term borrowings - FRB		226			(2	)		224
Short-term borrowings - other		1			(19	)		(18	)
Long-term borrowings - FHLB		401			56			457
Long-term borrowings - sub debt		-			-			-
Total borrowings		(674	)		(1,606	)		(2,280	)


TOTAL INTEREST EXPENSE	$	(3,067	)	$	(5,001	)	$	(8,068	)

NET INTEREST INCOME	$	4,711		$	(3,238	)	$	1,473

[1]	This table is presented on a tax-equivalent basis.

[2]

Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of the change due solely to each. The change in interest income for Federal funds sold and in interest expense for securities sold under agreements to repurchase-dealers and short-term borrowings-FRB has been allocated entirely to the volume variance. The effect of the extra day in 2008 has also 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.

STERLING BANCORP AND SUBSIDIARIES

Regulatory Capital and Ratios

Ratios and Minimums
(dollars in thousands)


						For Capital					To Be Well
	Actual					Adequacy Minimum					Capitalized
As of June 30, 2009	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital(to Risk-Weighted Assets):
The Company	$	191,905		12.89	%	$	119,098		8.00	%	$	148,872		10.00	%
The bank		161,579		10.88			118,784		8.00			148,480		10.00

Tier 1 Capital(to Risk-Weighted Assets):
The Company		173,677		11.67			59,549		4.00			89,323		6.00
The bank		143,351		9.65			59,392		4.00			89,088		6.00

Tier 1 Leverage Capital(to Average Assets):
The Company		173,677		8.53			81,403		4.00			101,753		5.00
The bank		143,351		7.06			81,227		4.00			101,534		5.00


As of December 31, 2008
Total Capital(to Risk-Weighted Assets):
The Company	$	193,991		13.90	%	$	111,614		8.00	%	$	139,518		10.00	%
The bank		154,619		11.05			111,924		8.00			139,905		10.00

Tier 1 Capital(to Risk-Weighted Assets):
The Company		177,825		12.75			55,807		4.00			83,711		6.00
The bank		138,453		9.90			55,962		4.00			83,943		6.00

Tier 1 Leverage Capital(to Average Assets):
The Company		177,825		8.60			82,663		4.00			103,328		5.00
The bank		138,453		6.69			82,779		4.00			103,474		5.00

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET/LIABILITY MANAGEMENT

The Company’s primary earnings source is its net interest income; therefore, the Company devotes significant time and has invested in resources to assist in the management of interest rate risk and asset quality. The Company’s net interest income is affected by changes in market interest rates, and by the level and composition of interest-earning assets and interest-bearing liabilities. The Company’s objectives in its asset/liability management are to utilize its capital effectively, to provide adequate liquidity and to enhance net interest income, without taking undue risks or subjecting the Company unduly to interest rate fluctuations.

The Company takes a coordinated approach to the management of its liquidity, capital and interest rate risk. This risk management process is governed by policies and limits established by senior management which are reviewed and approved by the Asset/Liability Committee. This committee, which is comprised of members of senior management, meets to review, among other things, economic conditions, interest rates, yield curve, cash flow projections, expected customer actions, liquidity levels, capital ratios and repricing characteristics of assets, liabilities and financial instruments.

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market indices such as interest rates, foreign exchange rates and equity prices. The Company’s principal market risk exposure is interest rate risk, with no material impact on earnings from changes in foreign exchange rates or equity prices.

Interest rate risk is the exposure to changes in market interest rates. Interest rate sensitivity is the relationship between market interest rates and net interest income due to the repricing characteristics of assets and liabilities. The Company monitors the interest rate sensitivity of its balance sheet positions by examining its near-term sensitivity and its longer-term gap position. In its management of interest rate risk, the Company utilizes several financial and statistical tools, including traditional gap analysis and sophisticated income simulation models.

A traditional gap analysis is prepared based on the maturity and repricing characteristics of interest-earning assets and interest-bearing liabilities for selected time bands. The mismatch between repricings or maturities within a time band is commonly referred to as the “gap” for that period. A positive gap (asset sensitive) where interest rate sensitive assets exceed interest rate sensitive liabilities generally will result in the net interest margin increasing in a rising rate environment and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite result on the net interest margin. However, the traditional gap analysis does not assess the relative sensitivity of assets and liabilities to changes in interest rates and other factors that could have an impact on interest rate sensitivity or net interest income. The Company utilizes the gap analysis to complement its income simulations modeling, primarily focusing on the longer-term structure of the balance sheet.

The Company’s balance sheet structure is primarily short-term in nature with a substantial portion of assets and liabilities repricing or maturing within one year. The Company’s gap analysis at June 30, 2009, presented on page 53, indicates that net interest income would increase during periods of rising interest rates and decrease during periods of falling interest rates, but, as mentioned above, gap analysis may not be an accurate predictor of net interest income.

As part of its interest rate risk strategy, the Company may use financial instrument derivatives to hedge the interest rate sensitivity of assets. The Company has written policy guidelines, approved by the Board of Directors, governing the use of financial instruments, including approved counterparties, risk limits and appropriate internal control procedures. The credit risk of derivatives arises principally from the potential for a counterparty to fail to meet its obligation to settle a contract on a timely basis.

As of June 30, 2009, the Company was not a party to any financial instrument derivative agreement.

The Company utilizes income simulation models to complement its traditional gap analysis. While the Asset/Liability Committee routinely monitors simulated net interest income sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor potential longer-term interest rate risk. The income simulation models measure the Company’s net interest income volatility or sensitivity to interest rate changes utilizing statistical techniques that allow the Company to consider various factors which impact net interest income. These factors include actual maturities, estimated cash flows, repricing characteristics, deposits growth/retention and, most importantly, the relative sensitivity of the Company’s assets and liabilities to changes in market interest rates. This relative sensitivity is important to consider as the Company’s core deposit base has not been subject to the same degree of interest rate sensitivity as its assets. The core deposit costs are internally managed and tend to exhibit less sensitivity to changes in interest rates than the Company’s adjustable rate assets whose yields are based on external indices and generally change in concert with market interest rates.

The Company’s interest rate sensitivity is determined by identifying the probable impact of changes in market interest rates on the yields on the Company’s assets and the rates that would be paid on its liabilities. This modeling technique involves a degree of estimation based on certain assumptions that management believes to be reasonable. Utilizing this process, management projects the impact of changes in interest rates on net interest margin. The Company has established certain policy limits for the potential volatility of its net interest margin assuming certain levels of changes in market interest rates with the objective of maintaining a stable net interest margin under various probable rate scenarios. Management generally has maintained a risk position well within the policy limits. As of December 31, 2008, the model indicated the impact of 100 and 200 basis point parallel and pro rata rise in rates over 12 months would approximate a 1.2% ($1.2 million) and a 2.1% ($2.0 million) increase in net interest income, respectively, while the impact of a 25 basis point decline in rates over the same period would approximate a 0.4% ($0.4 million) decline from an unchanged rate environment. The likelihood of a decrease in interest rates beyond 25 basis points as of December 31, 2008 was considered to be remote given then-current interest rate levels. As of June 30, 2009, the model indicated the impact of a 100 and 200 basis point parallel and pro rata rise in rates over 12 months would approximate a 1.1% ($1.0 million ) and a 2.0% ($1.9 million) increase in net interest income, respectively, while the impact of a 25 basis point decline in rates over the same period would approximate a 0.7% ($0.7 million) decline from an unchanged rate environment. The likelihood of a decrease in interest rates beyond 25 basis points as of June 30, 2009 was considered to be remote given then-current interest rate levels.

The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels including yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows and others. While assumptions are developed based upon current economic and local market conditions, the Company cannot provide any assurances as to the predictive nature of these assumptions, including how customer’s preferences or competitor influences might change.

Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to: prepayment/refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes and other variables. Furthermore, the sensitivity analysis does not reflect actions that the Asset/Liability Committee might take in responding to or anticipating changes in interest rates.

The shape of the yield curve can also impact the bank’s interest rate sensitivity. In general, a steeper yield curve (i.e., the differences between interest rates for different maturities are relatively greater) is better for the bank than a flatter curve. Accordingly, the bank’s exposure to declining interest rates would be lessened if the yield curve steepened more than anticipated as rates declined. Conversely, the expected benefit to net interest income in a rising rate environment would likely be dampened to the extent that the yield curve flattened more than anticipated as rates increased. To the extent that further Federal Reserve interest rate cuts do not materialize, and to the extent that the current relatively steep yield curve prevails, the bank’s margin will benefit in 2009.

Liquidity Risk

Liquidity is the ability to meet cash needs arising from changes in various categories of assets and liabilities. Liquidity is constantly monitored and managed at both the parent company and the bank levels. Liquid assets consist of cash and due from banks, interest-bearing deposits in banks and Federal funds sold and securities available for sale. Primary funding sources include core deposits, capital markets funds and other money market sources. Core deposits include domestic noninterest-bearing and interest-bearing retail deposits, which historically have been relatively stable. The parent company and the bank believe that they have significant unused borrowing capacity. Contingency plans exist which we believe could be implemented on a timely basis to mitigate the impact of any dramatic change in market conditions.

While the parent company generates income from its own operations, it also depends for its cash requirements on funds maintained or generated by its subsidiaries, principally the bank. Such sources have been adequate to meet the parent company’s cash requirements throughout its history.

Various legal restrictions limit the extent to which the bank can supply funds to the parent company and its nonbank subsidiaries. All national banks are limited in the payment of dividends without the approval of the Comptroller of the Currency to an amount not to exceed the net profits as defined, for the year to date combined with its retained net profits for the preceding two calendar years.

At June 30, 2009, the parent company’s short-term debt, consisting principally of commercial paper used to finance ongoing current business activities, was approximately $11.7 million. The parent company had cash, interest-bearing deposits with banks and other current assets aggregating $50.4 million. The parent company also has back-up credit lines with banks of $19.0 million. Since 1979, the parent company has had no need to use the available back-up lines of credit.

The following table sets forth information regarding the Company’s obligations and commitments to make future payments under contract as of June 30, 2009:

	Payments Due by Period
Contractual			Less than		1-3		4-5		After 5
Obligations (1)	Total		1 Year		Years		Years		Years
	(in thousands)


Long-Term Debt	$	175,774	$	40,000	$	70,000	$	20,000	$	45,774
Operating Leases		19,253		5,599		4,832		4,368		4,454

Total Contractual Cash Obligations	$	195,027	$	45,599	$	74,832	$	24,368	$	50,228

(1) Based on contractual maturity dates

The following table sets forth information regarding the Company’s obligations under other commercial commitments as of June 30, 2009:

	Amount of Commitment Expiration Per Period
Other Commercial	Total Amount		Less than		1-3		4-5		After 5
Commitments	Committed		1 Year		Years		Years		Years
	(in thousands)

Residential Loans	$	29,450	$	29,450	$	-	$	-	$	-
Commercial Loans		11,190		984		3,272		-		6,934
Total Loans		40,640		30,434		3,272		-		6,934
Standby Letters of Credit		24,606		23,473		1,133		-		-
Other Commercial Commitments		39,665		39,292		-		-		373

Total Commercial Commitments	$	104,911	$	93,199	$	4,405	$	-	$	7,307

INFORMATION AVAILABLE ON OUR WEB SITE

Our Internet address is www.sterlingbancorp.com and the investor relations section of our web site is located at www.sterlingbancorp.com/ir/investor.cfm. We make available free of charge, on or through the investor relations section of our web site, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

Also posted on our web site, and available in print upon request of any shareholder to our Investor Relations Department, are the charters for our Board of Directors’ Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee, our Corporate Governance Guidelines, our Method for Interested Persons to Communicate with Non-Management Directors and a Code of Business Conduct and Ethics governing our directors, officers and employees. Within the time period required by the Securities and Exchange Commission and the New York Stock Exchange, we will post on our web site any amendment to the Code of Business Conduct and Ethics and any waiver applicable to our senior financial officers, as defined in the Code, or our executive officers or directors. In addition, information concerning purchases and sales of our equity securities by our executive officers and directors is posted on our web site.

The contents of our website are not incorporated by reference into this quarterly report on Form 10-Q.

STERLING BANCORP AND SUBSIDIARIES

Interest Rate Sensitivity

To mitigate the vulnerability of earnings to changes in interest rates, the Company manages the repricing characteristics of assets and liabilities in an attempt to control net interest rate sensitivity. Management attempts to confine significant rate sensitivity gaps predominantly to repricing intervals of a year or less so that adjustments can be made quickly. Assets and liabilities with predetermined repricing dates are classified based on the earliest repricing period. Based on the interest rate sensitivity analysis shown below, the Company's net interest income would decrease during periods of rising interest rates and increase during periods of falling interest rates. Amounts are presented in thousands.

	Repricing Date
	3 Months or Less			More than 3 Months to 1 Year			More than 1 Year to 5 Years			More than 5 Years to 10 Years		Over 10 Years			Nonrate Sensitive			Total

ASSETS
Interest-bearing deposits with other banks	$	5,611		$	-		$	-		$	-	$	-		$	-		$	5,611
Investment securities		76,101			58,944			107,080			113,312		352,652			9,642			717,731
Commercial and industrial loans		438,565			14,568			56,194			-		-			(1,692	)		507,635
Equipment lease financing		1,295			12,608			238,883			5,927		-			(29,689	)		229,024
Factored receivables		134,728			-			-			-		-			(278	)		134,450
Real estate-residential mortgage		51,570			26,640			24,537			7,800		87,969			-			198,516
Real estate-commercial mortgage		36,166			36,817			8,825			18,935		539			-			101,282
Real estate-construction and land development		-			-			27,235			-		-			-			27,235
Loans to individuals		19,672			-			-			-		-			-			19,672
Loans to depository institutions		-			-			-			-		-			-			-
Noninterest-earning assets & allowance for loan losses		-			-			-			-		-			184,550			184,550
Total Assets		763,708			149,577			462,754			145,974		441,160			162,533			2,125,706

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings [1]		-			-			17,991			-		-			-			17,991
NOW [1]		-			-			186,958			-		-			-			186,958
Money market [1]		283,307			-			44,019			-		-			-			327,326
Time - domestic		147,457			165,026			18,704			-		-			-			331,187
- foreign		184			395			-			-		-			-			579
Securities sold under agreement to repurchase - customer		55,129			-			-			-		-			-			55,129
Federal funds purchased		87,000			-			-			-		-			-			87,000
Commercial paper		11,739			-			-			-		-			-			11,739
Short-term borrowings - FHLB		-			-			-			-		-			-			-
Short-term borrowings - FRB		160,000			-			-			-		-			-			160,000
Short-term borrowings - other		4,262			-			-			-		-			-			4,262
Long-term borrowings - FHLB		-			40,000			90,000			20,000		-			-			150,000
Long-term borrowings -subordinated debentures		-			-			-			-		25,774			-			25,774
Noninterest-bearing liabilities & shareholders' equity		-			-			-			-		-			767,761			767,761

Total Liabilities and Shareholders' Equity		749,078			205,421			357,672			20,000		25,774			767,761			2,125,706

Net Interest Rate Sensitivity Gap	$	14,630		$	(55,844	)	$	105,082		$	125,974	$	415,386		$	(605,228	)	$	-

Cumulative Gap June 30, 2009	$	14,630		$	(41,214	)	$	63,868		$	189,842	$	605,228		$	-		$	-

Cumulative Gap June 30, 2008[3]	$	(79,768	)	$	(211,902	)	$	(139,736	)	$	N/A	$	523,371	[2]	$	-		$	-

Cumulative Gap December 31, 2008[3]	$	(1,506	)	$	(119,864	)	$	(67,838	)	$	121,095	$	620,719		$	-		$	-

[1] Historically, balances in non-maturity deposit accounts have remained relatively stable despite changes in levels of interest rates. Balances are shown in repricing periods based on management's historical repricing practices and run-off experience.

[2] Represents amounts due after 5 years.

[3] Certain reclassifications have been made to conform to the current presentation.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s principal executive and principal financial officers, evaluated the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Under its share repurchase program, the Company buys back common shares from time to time. The Company did not repurchase any of its common shares during the second quarter of 2009. At June 30, 2009, the maximum number of shares that may yet be purchased under the share repurchase program was 870,963.

The Board of Directors initially authorized the repurchase of common shares in 1997 and since then has approved increases in the number of common shares that the Company is authorized to repurchase. The latest increase was announced on August 16, 2007, when the Board of Directors increased the Company’s authority to repurchase common shares by an additional 800,000 shares.

Item 4.

Submission of Matters to a Vote of Security Holders

(a)

The following sets forth the voting results as to each matter voted upon at the Annual Meeting of shareholders of the Company held on May 7, 2009:

(1)

Election of Directors

Nominee	Total Votes for		Total Votes Withheld

Robert Abrams		15,874,580		398,150
Joseph Adamko		15,665,678		607,052
Louis J. Cappelli		15,658,186		614,544
Fernando Ferrer		15,495,673		777,057
Allan F. Hershfield		15,348,412		924,318
Henry J. Humphreys		15,290,938		981,792
Robert Lazar		15,807,957		464,773
John C. Millman		15,721,508		551,222
Eugene T. Rossides		15,465,551		816,179

There were no abstentions or broker nonvotes.

(2)

Advisory approval of the compensation of the Company’s named executive officers.

Total Votes for			14,866,277
Total Votes Against			1,204,391
Total Absentions			202,061

(3)

Ratification of the appointment by the Audit Committee of the Board of Directors of Crowe Horwath LLP as the Company’s independent public accounts for fiscal year 2009.

Total Votes For			15,580,801
Total Votes Against			612,049
Total Absentions			79,880

Item 6.

Exhibits

The following exhibits are filed as part of this report:

(i)

Restated Certificate of Incorporation filed with the State of New York Department of State, October 28, 2004 (Filed as Exhibit 3(i)to the Registrant’s Form 10-K for the year ended December 31, 2008 and incorporated here in by reference).

(ii)

Certificate of Amendment of Certificate of Incorporation filed with the State of New York Department of State on December 18, 2008 (Filed as Exhibit 3(ii) to the Registrant’s Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).

(iii)

By-Laws as in effect on November 15, 2007 (Filed as Exhibit 3(ii)(A) to the Registrant’s Form 8-K dated November 15, 2007 and filed on November 19, 2007 and incorporated herein by reference).

11.

Statement Re: Computation of Per Share Earnings.

31.1

Certification of the CEO pursuant to Exchange Act Rule 13a-14(a).

31.2

Certification of the CFO pursuant to Exchange Act Rule 13a-14(a).

32.1

Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code.

32.2

Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			STERLING BANCORP

			(Registrant)


Date:	August 7, 2009	/s/	Louis J. Cappelli
			Louis J. Cappelli
			Chairman and Chief Executive Officer


Date:	August 7, 2009	/s/	John W. Tietjen
			John W. Tietjen
			Executive Vice President and Chief Financial Officer

STERLING BANCORP AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit Number	Description	Sequential Page No.

11	Statement re: Computation of Per Share Earnings.	59

31.1	Certification of the CEO pursuant to Exchange Act Rule 13a-14(a).	60

31.2	Certification of the CFO pursuant to Exchange Act Rule 13a-14(a).	61

32.1	Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code.	62

32.2	Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code.	63