Sterling Bancorp Reports 15% Rise in E.P.S. for 2008 Second Quarter

NEW YORK, July 24, 2008 /PRNewswire-FirstCall via COMTEX/ -- SBVT | Quote | Chart | News | PowerRating -- Sterling Bancorp (NYSE: STL), the parent company of New York City-based Sterling National Bank, today reported strong results for the second quarter and six months ended June 30, 2008, highlighted by double-digit growth in net income, higher loan balances and sound credit quality.

Net income for the 2008 second quarter rose to $4.2 million or $0.23 per diluted share, an EPS increase of 15% compared with $3.9 million or $0.20 per diluted share a year ago. For the first half of this year, net income was $8.2 million or $0.45 per diluted share, versus $7.3 million or $0.39 per share for the first six months of 2007.

Sterling attributed its strong performance, despite the challenging financial markets, to a well-established focus on serving business customers in the NY-Metropolitan region and beyond, prudent underwriting practices and avoidance of high-risk asset classes.

Second Quarter Highlights:

-- Earnings Growth - Diluted EPS of $0.23 was 15% higher than the same quarter of last year and also was up from the first quarter of 2008.

-- Sound Asset Quality - The ratio of nonperforming loans to total loans at June 30, 2008 was 0.58%, compared with 0.50% at June 30, 2007.

-- Higher Net Interest Margin - The net interest margin, on a tax-equivalent basis, rose by 14 basis points to 4.49%, from 4.35% a year ago.

-- Increased Loan Volume - Loans held in portfolio averaged $1,121.9 million for the recent quarter, up approximately 7% from a year ago.

-- Strong Core Deposits - Demand deposits averaged $444.7 million for the quarter, equivalent to 31% of total deposits.

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"Our robust performance for the 2008 second quarter contrasted sharply with the difficulties faced by many financial institutions in today's economic climate," stated Louis J. Cappelli, Sterling's Chairman and Chief Executive Officer. "Earnings per share not only increased 15% compared to the second quarter a year ago, but also rose sequentially from the first quarter of 2008. The positive trend in our business through the first half of this year is encouraging, and reinforces our belief that Sterling is well-positioned to meet the challenges of the current market environment."

"We are pleased that credit quality has remained strong and compares favorably to the overall banking industry," Mr. Cappelli added. "For example, our ratio of non-accrual loans to total loans remains well below the peer group average. We believe that our dedication to responsible, prudent lending standards has enabled us to avoid many of the credit quality problems that are making headlines today. It is worth noting that our loan portfolio reflects limited exposure to construction lending, subprime and Alt-A mortgage loans, consumer debt, home equity lending products, credit card receivables, auto loans or other asset classes that have recently generated losses for some institutions. We believe our traditional emphasis on conservative lending practices will remain a source of strength and stability in a challenging business environment."

"We believe in Sterling's potential for continued strong performance this year. Our time-tested business model is based on serving solid businesses in our market while maintaining conservative credit standards and a disciplined approach to asset and liability pricing. We believe this model is particularly well-suited to the present turbulent economic situation and will continue to serve us well," Mr. Cappelli noted. "Customers have responded favorably to our combination of financial strength, sound liquidity and commitment to service. As a result, we have grown our average loans held in portfolio nearly 7% for the first half of 2008 and are continuing to experience an active pipeline. While some competing institutions have had to withdraw from providing credit due to capital constraints, insufficient liquidity or asset-quality issues, we believe Sterling has the capacity to take advantage of opportunities presented by the current market disruption."

Second Quarter 2008 Financial Results

Net income was $4.2 million or $0.23 per diluted share for the 2008 second quarter, an increase of 15% in EPS compared with $3.9 million or $0.20 per diluted share for the second quarter of 2007.

Higher net interest income was the main driver of the earnings increase, rising 18% to $21.6 million on a tax-equivalent basis for the second quarter of 2008. Higher average loan and investment securities balances, as well as the Company's strategy to employ cost-effective wholesale funding in lieu of higher-priced certificates of deposit, contributed to the growth in net interest income and more than offset the lower yields on loans due to the current interest rate environment.

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Reflecting the above factors, the net interest margin rose to 4.49% for the 2008 second quarter versus 4.35% for the same period last year.

Noninterest income for the second quarter of 2008 was $8.6 million, compared to $8.9 million in the same period last year. Excluding an OTTI charge for one investment grade trust preferred security, noninterest income increased $164,000. The charge, which resulted from management's regular review of the valuation of the investment portfolio, amounted to approximately $507,000.

Noninterest expenses for the 2008 second quarter were $21.1 million, compared to $20.1 million for the same quarter last year. The increase was primarily due to initiatives to support the growth of the Company's business, particularly in the area of marketing and advertising, along with higher personnel and occupancy costs.

The provision for income taxes was $2.5 million and $2.2 million for the second quarter of 2008 and 2007, respectively.

First Half 2008 Financial Results

Net income was $8.2 million or $0.45 per diluted share for the first half of 2008, an EPS increase of 15% compared with $7.3 million or $0.39 per share for the same period of 2007.

Net interest income was $41.6 million on a tax-equivalent basis for the first half of 2008, up 16% from the same period of 2007. The increase primarily reflected higher average balances of loans and investment securities coupled with lower funding costs, which more than offset lower yields on loans. The net interest margin was 4.49% for the first six months of 2008 compared with 4.34% for the same period last year.

Noninterest income was $17.2 million for the first half of 2008, compared to $18.1 million in the same period last year. The decrease primarily reflected the OTTI charge taken in the 2008 second quarter.

Noninterest expenses for the 2008 first half were $41.3 million, compared to $39.7 million for the first half of last year. The increase was primarily due to higher personnel and occupancy costs.

The provision for income taxes was $4.9 million for the first half of 2008, compared to $4.4 million in the year-ago period.

Earning Assets and Deposits

Sterling experienced solid demand for a wide range of its lending products and services from both existing and new customers. As a result, average loans held in portfolio, net of unearned discounts, increased 6.6% from a year ago, to $1,121.9 million for the quarter ended June 30, 2008. The vast majority of the Company's loans are secured by customer assets.

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Investment securities averaged $781.2 million for the second quarter of 2008, up from $554.6 million a year ago, primarily due to the implementation of asset/liability management strategies designed to capitalize on current market conditions. The Company's investment securities portfolio does not contain any common stock, preferred shares or subordinated notes of Fannie Mae or Freddie Mac.

Demand deposits averaged $444.7 million for the 2008 second quarter, virtually even with $444.4 million a year earlier. Demand deposits represented 31% of total deposits at June 30, 2008, one of the highest ratios of demand to total deposits in the industry. The Company has no brokered certificates of deposit.

Asset Quality Highlights

The ratio of nonperforming assets to total assets was 0.43% at June 30, 2008, compared to 0.42% at June 30, 2007. Nonperforming loans represented 0.58% of total loans at June 30, 2008, compared to 0.50% a year earlier. The allowance for loan losses as a percentage of total loans held in portfolio was 1.30% at June 30, 2008, compared to 1.39% at June 30, 2007.

The adequacy of the provision and the resulting allowance for loan losses is determined based on management's continuing evaluation of the loan portfolio, including an assessment of current and expected future economic conditions, the changing mix of loans in the portfolio, and other factors.

The provision for loan losses was $2.2 million for the second quarter of 2008, compared to the $2.0 million provision recorded in the first quarter of 2008. In the 2007 second quarter, the provision was $1.1 million.

Capital Management and Dividends

The Company's capital ratios exceeded the requirements for a well-capitalized institution for regulatory purposes. Its Tier 1 risk-weighted capital ratio was 9.47% and its Tier 1 leverage ratio was 6.51% at June 30, 2008.

"We believe we have ample capital to execute our business plan and support our growth," Mr. Cappelli concluded.

Sterling paid a cash dividend of $0.19 per common share on June 30, 2008, to shareholders of record as of June 15, 2008. The Company has been distributing cash dividends for 250 consecutive quarters over more than 62 years.

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Conference Call

Sterling Bancorp will host a teleconference call for the financial community on July 24, 2008 at 10:00 a.m. Eastern Time to discuss the 2008 second quarter financial results. The public is invited to listen to this conference call by dialing 800-288-8968 at least 10 minutes prior to the call.

A replay of the conference call will be available beginning at approximately 1:00 p.m. Eastern Time on July 24, 2008 until 11:59 p.m. Eastern Time on August 7, 2008. To access the replay by telephone, interested parties may dial 800-475-6701 and enter the access code 954381.

About Sterling Bancorp

Sterling Bancorp (NYSE: STL | Quote | Chart | News | PowerRating) is a New York-based banking and financial services company that serves the needs of businesses, professionals and individuals. With assets exceeding $2.1 billion, Sterling offers a broad array of products and services, combined with a unique high-touch approach to customer service. The Company's principal banking subsidiary, Sterling National Bank, with offices in New York City and Queens, Nassau and Westchester counties, was founded in 1929.

Known for its focus on business customers, Sterling offers such services as working capital lines, asset-based financing, factoring and accounts receivable management, payroll funding and processing, equipment leasing and financing, commercial and residential mortgages, international trade financing, cash management, a wide array of deposit products, trust and estate administration, and investment management services.

Certain statements in this press release, including but not limited to, statements as to future liquidity, future interest rate risk and operating expenses, statements concerning future results of operations, financial position or dividends, and plans and objectives for future operations, statements concerning the Company's active loan pipeline and potential for continued strong performance this year and the Company's belief that it is well-positioned to meet the challenges of the current market environment, that its traditional emphasis on conservative lending practices will remain a source of strength and stability in a challenging business environment, that its business model is particularly well-suited to the present turbulent economic situation and will continue to serve the Company well, that it has the capacity to take advantage of opportunities presented by the current market disruption and that it has ample capital to execute on its business plan and support its growth, and other statements regarding matters that are not historical facts, are "forward-looking statements" as defined in the Securities Exchange Act of 1934. These statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties, and represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside its control. Any forward- looking statements the Company may make speak only as of the date on which such statements are made. The Company's actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results and financial condition, see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements and Factors that Could Affect Future Results" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Page 5 of 15 STERLING BANCORP Consolidated Financial Highlights (Unaudited) (dollars and shares in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 OPERATING HIGHLIGHTS(1) Interest income $29,713 $29,928 $59,482 $59,035 Interest expense 8,241 11,720 18,175 23,324 Provision for loan losses 2,200 1,078 4,150 2,328 Noninterest income 8,572 8,915 17,244 18,098 Noninterest expenses 21,130 20,094 41,296 39,732 Income from continuing operations, before income taxes 6,714 5,951 13,105 11,749 Provision for income taxes 2,544 2,160 4,933 4,386 Income from continuing operations 4,170 3,791 8,172 7,363 Income/(Loss) from discontinued operations, net of income taxes 0 71 0 (21) Net income 4,170 3,862 8,172 7,342 Net income per average common share: Basic 0.23 0.21 0.46 0.40 Diluted 0.23 0.20 0.45 0.39 Income from continuing operations per average common share: Basic 0.23 0.21 0.46 0.40 Diluted 0.23 0.20 0.45 0.39 Cash dividends declared 0.19 0.19 0.38 0.38 Common shares outstanding: Period end 17,989 18,018 17,989 18,018 Average Basic 17,989 18,439 17,950 18,525 Average Diluted 18,122 18,857 18,239 18,995 Return on average assets(2) 0.80% 0.82% 0.80% 0.80% Return on average tangible equity(3) 17.14% 14.44% 16.84% 13.95% Return on average stated equity (4) 13.89% 11.87% 13.64% 11.48% Net interest spread, tax-equivalent basis 3.95% 3.30% 3.87% 3.29% Net interest margin, tax-equivalent basis 4.49% 4.35% 4.49% 4.34% (1) Unless otherwise indicated, all amounts and ratios are presented based on continuing operations. (2) Calculated by dividing income from continuing operations by average assets from continuing operations. (3) Average tangible equity represents average shareholders' equity less average goodwill. Calculated by dividing income from continuing operations by average tangible equity. (4) Average stated equity is equal to average shareholders' equity. Calculated by dividing income from continuing operations by average stated equity. Page 6 of 15 STERLING BANCORP Consolidated Financial Highlights (Unaudited) (dollars in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 BALANCE SHEET HIGHLIGHTS(1) Period End Balances Investment securities $767,806 $532,307 $767,806 $532,307 Loans held for sale 24,410 46,357 24,410 46,357 Loans held in portfolio, net of unearned discount 1,193,983 1,121,944 1,193,983 1,121,944 Total earning assets 1,989,580 1,711,785 1,989,580 1,711,785 Allowance for loan losses 15,480 15,582 15,480 15,582 Total assets from continuing operations 2,162,140 1,885,752 2,162,140 1,885,752 Total assets 2,162,140 1,886,978 2,162,140 1,886,978 Demand deposits 492,928 520,433 492,928 520,433 Savings, NOW and money market deposits 486,516 476,879 486,516 476,879 Time deposits 459,039 536,516 459,039 536,516 Customer repurchase agreements 64,758 76,530 64,758 76,530 Other short-term borrowings 261,090 29,162 261,090 29,162 Long-term borrowings 185,774 35,774 185,774 35,774 Shareholders' equity(2) 119,725 121,913 119,725 121,913 Average Balances Investment securities $781,249 $554,643 $750,868 $566,806 Loans held for sale 31,193 52,281 27,291 45,790 Loans held in portfolio, net of unearned discount 1,121,929 1,052,427 1,101,506 1,033,359 Total earning assets 1,937,202 1,690,199 1,882,812 1,686,601 Total assets from continuing operations 2,097,198 1,852,205 2,051,618 1,847,917 Total assets 2,097,198 1,853,533 2,051,618 1,849,132 Demand deposits 444,744 444,369 442,800 439,609 Savings, NOW and money market deposits 471,182 487,966 468,027 469,080 Time deposits 508,415 562,417 529,903 564,572 Customer repurchase agreements 89,187 76,091 85,824 85,517 Other short-term borrowings 180,870 30,843 157,355 30,298 Long-term borrowings 181,928 37,422 148,082 41,575 Shareholders' equity(2) 120,744 128,150 120,512 129,293 ASSET QUALITY HIGHLIGHTS(1) Period End Net charge-offs $1,611 $990 $3,109 $2,481 Nonperforming loans 7,051 5,854 7,051 5,854 Other real estate owned 2,252 2,057 2,252 2,057 Nonperforming assets 9,303 7,911 9,303 7,911 Nonperforming loans/loans(3) 0.58% 0.50% 0.58% 0.50% Nonperforming assets/assets 0.43% 0.42% 0.43% 0.42% Allowance for loan losses/loans (4) 1.30% 1.39% 1.30% 1.39% Allowance for loan losses/ nonperforming loans 219.54% 266.18% 219.54% 266.18% Capital Ratios (2) Tier 1 risk based 9.47% 10.63% 9.47% 10.63% Total risk based 10.57% 11.84% 10.57% 11.84% Leverage 6.51% 7.45% 6.51% 7.45% Book value per common share(2) $6.66 $6.77 $6.66 $6.77 (1) Unless otherwise indicated, all amounts and ratios are presented based on continuing operations. (2) Includes the effects of discontinued operations. (3) The term "loans" includes loans held for sale and loans held in portfolio. (4) The term "loans" includes loans held in portfolio only. Page 7 of 15 STERLING BANCORP Consolidated Balance Sheets (Unaudited) (in thousands, except number of shares) June 30, 2008 2007 ASSETS Cash and due from banks $49,995 $70,030 Interest-bearing deposits with other banks 881 1,177 Federal Funds Sold 2,500 10,000 Investment securities Available for sale (at estimated market value) 434,700 145,900 Held to maturity (at amortized cost) 333,106 386,407 Total investment securities 767,806 532,307 Loans held for sale 24,410 46,357 Loans held in portfolio, net of unearned discounts 1,193,983 1,121,944 Less allowance for loan losses 15,480 15,582 Loans held in portfolio, net 1,178,503 1,106,362 Customers' liability under acceptances 328 34 Goodwill 22,901 22,901 Premises and equipment, net 10,869 11,510 Other real estate 2,252 2,057 Accrued interest receivable 9,877 4,894 Bank owned life insurance 29,603 28,488 Other assets 62,215 50,861 $2,162,140 $1,886,978 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Demand $492,928 $520,433 Savings, NOW and money market 486,516 476,879 Time 459,039 536,516 Total deposits 1,438,483 1,533,828 Securities sold under agreements to repurchase - customers 64,758 76,530 Securities sold under agreements to repurchase - dealers 72,833 0 Federal funds purchased 70,000 0 Commercial paper 20,544 27,444 Short-term borrowings - FHLB 77,000 0 Short-term borrowings - other 20,713 1,718 Long-term borrowings - FHLB 160,000 10,000 Long-term borrowings - subordinated debentures 25,774 25,774 Acceptances outstanding 328 34 Accrued expenses and other liabilities 91,982 89,737 Total liabilities 2,042,415 1,765,065 Shareholders' equity 119,725 121,913 $2,162,140 $1,886,978 MEMORANDA Available for sale securities - amortized cost $443,171 $151,462 Held to maturity securities - estimated market value 331,037 375,158 Shares outstanding Common issued 21,813,131 21,262,170 Common in treasury 3,824,161 3,244,502 Page 8 of 15 STERLING BANCORP Consolidated Statements of Income (Unaudited) (dollars in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 INTEREST INCOME Loans $20,001 $23,124 $40,821 $44,851 Investment securities - available for sale 5,670 1,701 10,382 3,546 Investment securities - held to maturity 4,034 4,699 8,259 9,568 Federal funds sold 1 368 1 1,003 Deposits with other banks 7 36 19 67 Total interest income 29,713 29,928 59,482 59,035 INTEREST EXPENSE Savings, NOW and money market deposits 1,089 3,280 2,699 6,139 Time deposits 4,034 6,581 9,372 13,129 Securities sold u/a/r - customers 442 805 1,088 1,880 Securities sold u/a/r - dealers 416 0 733 0 Federal funds purchased 217 24 579 36 Commercial paper 117 355 312 705 Short-term borrowings - FHLB 311 0 526 0 Short-term borrowings - other 6 15 20 27 Long-term borrowings - FHLB 1,085 136 1,799 361 Long-term subordinated debentures 524 524 1,047 1,047 Total interest expense 8,241 11,720 18,175 23,324 Net interest income 21,472 18,208 41,307 35,711 Provision for loan losses 2,200 1,078 4,150 2,328 Net interest income after provision for loan losses 19,272 17,130 37,157 33,383 NONINTEREST INCOME Accounts receivable management/ factoring commissions and other fees 3,799 3,821 7,364 7,489 Service charges on deposit accounts 1,331 1,424 2,683 2,906 Other customer related service charges and fees 737 743 1,412 1,433 Mortgage banking income 2,702 2,544 5,201 5,376 Trust fees 124 125 259 266 Bank owned life insurance income 294 287 563 539 Loss on sale of OREO (75) (134) (303) (180) Securities losses (507) (2) (507) (2) Other income 167 107 572 271 Total noninterest income 8,572 8,915 17,244 18,098 NONINTEREST EXPENSES Salaries 9,491 8,711 18,839 17,920 Employee benefits 2,252 2,475 5,088 4,753 Total personnel expense 11,743 11,186 23,927 22,673 Occupancy and equipment expenses, net 2,774 2,639 5,783 5,347 Advertising and marketing 1,353 1,122 1,988 2,086 Professional fees 1,874 1,951 3,238 3,291 Communications 405 454 861 970 Other expenses 2,981 2,742 5,499 5,365 Total noninterest expenses 21,130 20,094 41,296 39,732 Income from continuing operations before income taxes 6,714 5,951 13,105 11,749 Provision for income taxes 2,544 2,160 4,933 4,386 Income from continuing operations 4,170 3,791 8,172 7,363 Discontinued operations: Income/(Loss), net of income taxes 0 71 0 (21) Net income $4,170 $3,862 $8,172 $7,342 Page 9 of 15 STERLING BANCORP Consolidated Statements of Income (Unaudited) (dollars in thousands, except per share data) (continued) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Average number of common shares outstanding Basic 17,988,970 18,439,318 17,950,095 18,524,871 Diluted 18,122,247 18,856,903 18,238,860 18,994,625 Income from continuing operations, per average common share Basic $0.23 $0.21 $0.46 $0.40 Diluted 0.23 0.20 0.45 0.39 Net income per average common share Basic 0.23 0.21 0.46 0.40 Diluted 0.23 0.20 0.45 0.39 Dividends per common share 0.19 0.19 0.38 0.38 Page 10 of 15 STERLING BANCORP Consolidated Statements of Comprehensive (Loss)/Income (Unaudited) (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Net income $4,170 $3,862 $8,172 $7,342 Other comprehensive (loss)/income, net of tax: Unrealized holding losses arising during the period (5,159) (1,233) (3,804) (897) Reclassification adjustment for losses included in net income 278 1 278 1 Amortization of: Prior service cost 9 14 18 27 Net actuarial losses 230 182 461 365 Comprehensive (loss)/income $(472) $2,826 $5,125 $6,838 STERLING BANCORP Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Balance, at beginning of period $123,579 $133,017 $121,070 $132,263 Net income for period 4,170 3,862 8,172 7,342 Common shares issued under stock incentive plan and related tax benefits 33 36 6,298 776 Cash dividends-Common shares (3,415) (3,451) (6,824) (6,993) Surrender of shares issued under incentive compensation plan 0 0 (5,218) (456) Purchase of common shares for treasury 0 (10,515) 0 (10,515) Change in net unrealized holding losses on available for sale securities (5,159) (1,233) (3,804) (897) Reclassification adjustment for losses included in net income 278 1 278 1 Adjustment to retained earnings upon adoption of EITF Issue 06-4 effective January 1, 2008 0 0 (726) 0 Amortization of: Prior service cost 9 14 18 27 Net actuarial losses 230 182 461 365 Balance, at end of period $119,725 $121,913 $119,725 $121,913 Page 11 of 15 STERLING BANCORP Average Balance Sheets[1] (Unaudited) (dollars in thousands) Three Months Ended June 30, 2008 June 30, 2007 AVERAGE AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $2,474 $7 1.14% $2,881 $36 5.11% Investment securities - available for sale 417,409 5,462 5.23 127,616 1,510 4.73 Investment securities - held to maturity 341,662 4,034 4.72 407,034 4,699 4.62 Investment securities - tax exempt [2] 22,178 340 6.13 19,993 314 6.30 Total investment securities 781,249 9,836 5.04 554,643 6,523 4.71 Federal funds sold 357 1 1.79 27,967 368 5.20 Loans, net of unearned discount [3] 1,153,122 20,001 7.16 1,104,708 23,124 8.66 Total Interest-Earning Assets [2] 1,937,202 29,845 6.26% 1,690,199 30,051 7.24% Cash and due from banks 47,695 63,451 Allowance for loan losses (15,948) (16,320) Goodwill 22,901 22,875 Other 105,348 92,000 Assets - discontinued operations 0 1,328 Total Assets $2,097,198 $1,853,533 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $19,735 17 0.36% $21,149 27 0.51% NOW 256,316 542 0.85 245,682 1,572 2.57 Money market 195,131 530 1.09 221,135 1,681 3.05 Time 507,839 4,032 3.19 561,843 6,579 4.70 Foreign Time 576 2 1.09 574 2 1.09 Total Interest-Bearing Deposits 979,597 5,123 2.10 1,050,383 9,861 3.77 Borrowings Securities sold u/a/r - customers 89,187 442 1.99 76,091 805 4.24 Securities sold u/a/r - dealers 66,527 416 2.52 0 0 0.00 Federal funds purchased 39,302 217 2.19 1,758 24 5.26 Commercial paper 19,547 117 2.42 27,906 355 5.11 Short-term borrowings - FHLB 53,758 311 2.32 0 0 0.00 Short-term borrowings - other 1,736 6 3.56 1,179 15 5.34 Long-term borrowings - FHLB 156,154 1,085 2.78 11,648 136 4.69 Long-term borrowings - sub debt 25,774 524 8.37 25,774 524 8.38 Total Borrowings 451,985 3,118 2.77 144,356 1,859 5.19 Total Interest-Bearing Liabilities 1,431,582 8,241 2.31% 1,194,739 11,720 3.94% Noninterest-bearing demand deposits 444,744 444,369 Other liabilities 100,128 86,095 Liabilities - discontinued operations 0 180 Total Liabilities 1,976,454 1,725,383 Shareholders' equity 120,744 128,150 Total Liabilities and Shareholders' Equity $2,097,198 $1,853,533 Net interest income/spread [2] 21,604 3.95% 18,331 3.30% Net yield on interest-earning assets 4.49% 4.35% Less: Tax-equivalent adjustment 132 123 Net interest income $21,472 $18,208 [1] The average balances of assets, liabilities and shareholders' equity are computed on the basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain reclassifications have been made to prior period amounts to conform to current presentation. [2] Interest and/or average rates are presented on a tax-equivalent basis. [3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned. Page 12 of 15 STERLING BANCORP Average Balance Sheets[1] (Unaudited) (dollars in thousands) Six Months Ended June 30, 2008 June 30, 2007 AVERAGE AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE Assets Interest-bearing deposits with other banks $2,968 19 1.26% 2,856 67 4.76% Investment securities - available for sale 381,222 9,996 5.24 131,105 3,149 4.80 Investment securities - held to maturity 348,991 8,259 4.73 415,032 9,568 4.61 Investment securities - tax exempt [2] 20,655 633 6.13 20,669 653 6.37 Total investment securities 750,868 18,888 5.03 566,806 13,370 4.72 Federal funds sold 179 1 1.78 37,790 1,003 5.28 Loans, net of unearned discount[3] 1,128,797 40,821 7.55 1,079,149 44,851 8.74 Total Interest- Earning Assets [2] 1,882,812 59,729 6.50% 1,686,601 59,291 7.24 Cash and due from banks 57,594 65,493 Allowance for loan losses (15,759) (16,596) Goodwill 22,901 22,868 Other 104,070 89,551 Assets - discontinued operations 0 1,215 Total Assets $2,051,618 1,849,132 Liabilities and Shareholders' Equity Interest-bearing deposits Domestic Savings $19,192 33 0.35% 21,026 52 0.50 NOW 246,514 1,368 1.12 233,916 2,970 2.56 Money market 202,321 1,298 1.29 214,138 3,117 2.94 Time 529,327 9,369 3.56 563,998 13,126 4.69 Foreign Time 576 3 1.09 574 3 1.09 Total Interest- Bearing Deposits 997,930 12,071 2.43 1,033,652 19,268 3.76 Borrowings Securities sold u/a/r - customers 85,824 1,088 2.55 85,517 1,880 4.43 Securities sold u/a/r - dealers 51,277 733 2.88 0 0 0.00 Federal funds purchased 44,129 579 2.60 1,354 36 5.25 Commercial paper 20,349 312 3.09 27,904 705 5.10 Short-term borrowings - FHLB 39,813 526 2.65 0 0 0.00 Short-term borrowings - other 1,787 20 4.56 1,040 27 5.34 Long-term borrowings - FHLB 122,308 1,799 2.94 15,801 361 4.57 Long-term borrowings - sub debt 25,774 1,047 8.38 25,774 1,047 8.38 Total Borrowings 391,261 6,104 3.13 157,390 4,056 5.21 Total Interest-Bearing Liabilities 1,389,191 18,175 2.63% 1,191,042 23,324 3.95 Noninterest-bearing demand deposits 442,800 439,609 Other liabilities 99,115 88,880 Liabilities - discontinued operations 0 308 Total Liabilities 1,931,106 1,719,839 Shareholders' equity 120,512 129,293 Total Liabilities and Shareholders' Equity $2,051,618 1,849,132 Net interest income/ spread [2] 41,554 3.87% 35,967 3.29% Net yield on interest-earning assets 4.49% 4.34% Less: Tax-equivalent adjustment 247 256 Net interest income $41,307 $35,711 [1] The average balances of assets, liabilities and shareholders' equity are computed on the basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain reclassifications have been made to prior period amounts to conform to current presentation. [2] Interest and/or average rates are presented on a tax-equivalent basis. [3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned. Page 13 of 15 STERLING BANCORP Rate/Volume Analysis [1] (Unaudited) (in thousands) Increase/(Decrease) Three Months Ended June 30, 2008 Volume Rate Net [2] INTEREST INCOME Interest-bearing deposits with other banks $(4) $(25) $(29) Investment securities - available for sale 3,776 176 3,952 Investment securities - held to maturity (764) 99 (665) Investment securities - tax exempt 34 (8) 26 Total investment securities 3,046 267 3,313 Federal funds sold (220) (147) (367) Loans, net of unearned discounts [3] 1,038 (4,161) (3,123) TOTAL INTEREST INCOME $3,860 $(4,066) $(206) INTEREST EXPENSE Interest-bearing deposits Domestic Savings $(2) $(8) $(10) NOW 65 (1,095) (1,030) Money market (178) (973) (1,151) Time (587) (1,960) (2,547) Foreign Time 0 0 0 Total interest-bearing deposits (702) (4,036) (4,738) Borrowings Securities sold under agreements to repurchase - customers 120 (483) (363) Securities sold under agreements to repurchase - dealers 416 0 416 Federal funds purchased 213 (20) 193 Commercial paper (86) (152) (238) Short-term borrowings - FHLB 311 0 311 Short-term borrowings - other 1 (10) (9) Long-term borrowings - FHLB 1,026 (77) 949 Long-term borrowings - subordinated debentures 0 0 0 Total borrowings 2,001 (742) 1,259 TOTAL INTEREST EXPENSE $1,299 $(4,778) $(3,479) NET INTEREST INCOME $2,561 $712 $3,273 [1] This table is presented on a tax-equivalent basis. [2] Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of change due solely to each. [3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding, and income has been included to the extent earned. Page 14 of 15 STERLING BANCORP Rate/Volume Analysis [1] (Unaudited) (in thousands) Increase/(Decrease) Six Months Ended June 30, 2008 Volume Rate Net [2] INTEREST INCOME Interest-bearing deposits with other banks $3 $(51) $(48) Investment securities - available for sale 6,534 313 6,847 Investment securities - held to maturity (1,544) 235 (1,309) Investment securities - tax exempt 1 (21) (20) Total investment securities 4,991 527 5,518 Federal funds sold (598) (404) (1,002) Loans, net of unearned discounts [3] 2,401 (6,431) (4,030) TOTAL INTEREST INCOME $6,797 $(6,359) $438 INTEREST EXPENSE Interest-bearing deposits Domestic Savings $(5) $(14) $(19) NOW 168 (1,770) (1,602) Money market (146) (1,673) (1,819) Time (703) (3,054) (3,757) Foreign Time 0 0 0 Total interest-bearing deposits (686) (6,511) (7,197) Borrowings Securities sold under agreements to repurchase - customers 17 (809) (792) Securities sold under agreements to repurchase - dealers 733 0 733 Federal funds purchased 570 (27) 543 Commercial paper (157) (236) (393) Short-term borrowings - FHLB 526 0 526 Short-term borrowings - other 1 (8) (7) Long-term borrowings - FHLB 1,609 (171) 1,438 Long-term borrowings - subordinated debentures 0 0 0 Total borrowings 3,299 (1,251) 2,048 TOTAL INTEREST EXPENSE $2,613 $(7,762) $(5,149) NET INTEREST INCOME $4,184 $1,403 $5,587 [1] This table is presented on a tax-equivalent basis. [2] Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of change due solely to each. [3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding, and income has been included to the extent earned. Page 15 of 15

SOURCE Sterling Bancorp

http://www.sterlingbancorp.com

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