STERLING BANCORP - 10-K Annual Report

Back to GetFilings.com

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
COMMISSION FILE NO. 1-5273-1
---------------------

STERLING BANCORP
(Exact Name of Registrant as specified in charter)

NEW YORK 13-2565216
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
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)
---------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS
- --------------------------------------------------- NAME OF EACH EXCHANGE ON WHICH REGISTERED
---------------------------------------------------
Common Shares, $1 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Cumulative Trust Preferred
Securities 8.375% (Liquidation Amount
$10 per Preferred Security) of Sterling
Bancorp Trust I and Guarantee of Sterling
Bancorp with respect thereto New York Stock Exchange

---------------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

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. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (sec.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

On March 9, 2002 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $283,499,777.

Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date:

THE REGISTRANT HAS ONE CLASS OF COMMON STOCK OF WHICH 10,122,312 SHARES
WERE OUTSTANDING AT MARCH 9, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

(1) Specified portions of Sterling Bancorp's Annual Report to security holders
for the fiscal year ended December 31, 2001 are incorporated by reference in
Parts I and II.

(2) Specified portions of the Sterling Bancorp definitive Proxy Statement dated
March 12, 2002 are incorporated by reference in Part III.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

STERLING BANCORP

FORM 10-K

TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS

GENERAL

Sterling Bancorp ("the parent company" or "the Registrant") is a bank
holding company and a financial holding company as defined by the Bank Holding
Company Act of 1956 (the "BHCA"), as amended, which was organized in 1966.
Throughout the report, the terms "the Company" or "Sterling" refer to Sterling
Bancorp and its subsidiaries. Sterling provides a full range of financial
products and services, including business and consumer loans, commercial and
residential mortgage lending and brokerage, asset-based financing, accounts
receivable management services, trade financing, equipment leasing, corporate
and consumer deposit services, trust and estate administration and investment
management services. The Company has operations in the metropolitan New York
area, as well as Virginia and other mid-Atlantic territories, and conducts
business throughout the United States. The parent company owns all of the
outstanding shares of Sterling National Bank ("the bank") -- its principal
subsidiary, and all of the outstanding shares of Sterling Banking Corporation
and Sterling Financial Services Company, Inc. ("finance subsidiaries"). Sterling
National Mortgage Company, Inc. ("SNMC"), Sterling National Servicing, Inc.
("SNS-Virginia"), Sterling Factors Corporation ("Factors"), Sterling Trade
Services, Inc. ("Trade Services"), and Sterling Holding Company of Virginia,
Inc. are wholly owned subsidiaries of the bank. Until 1998, Factors was a
finance subsidiary of the Registrant. Sterling Trade Services, Inc. was formed
on April 23, 2001 and owns all of the outstanding common shares of Sterling
National Asia Limited, Hong Kong, which was also formed on that date. Sterling
Holding Company of Virginia, Inc. was formed as of December 21, 1998 and owns
all of the outstanding common shares of Sterling Real Estate Holding Company,
Inc., which was formed as of March 1, 1997. Segment information appearing in
Note 20 beginning on page 39 of the Company's Annual Report to security holders
for the fiscal year ended December 31, 2001 ("the 2001 Annual Report") is
incorporated by reference herein.

GOVERNMENT MONETARY POLICY

The Company is affected by the credit policies of monetary authorities,
including the Board of Governors of the Federal Reserve System. An important
element of the Federal Reserve System is to regulate the national supply of bank
credit. Among the instruments of monetary policy used by the Federal Reserve are
open market operations in U.S. Government securities, changes in the discount
rate, reserve requirements on member bank deposits, and funds availability
regulations. The monetary policies of the Federal Reserve have in the past had a
significant effect on operations of financial institutions, including the bank,
and will continue to do so in the future. Changing conditions in the national
economy and in the money markets make it difficult to predict future changes in
interest rates, deposit levels, loan demand or their effects on the business and
earnings of the Company. Foreign activities of the Company are not considered to
be material.

BUSINESS OPERATIONS

The bank

Sterling National Bank was organized in 1929 under the National Bank Act
and commenced operations in New York City. The bank maintains six offices in New
York City (three branches and an International Banking Facility in Manhattan and
two branches in Queens) and one branch in Nassau County in Great Neck, New York.
The executive office is located at 650 Fifth Avenue, New York, New York. There
are regional representatives located in Richmond, Virginia.

I-1

The bank provides a full range of banking services to businesses and
individuals, including checking, savings and money market accounts, certificates
of deposit, business loans, personal and installment loans, VISA/MASTERCARD,
safe deposit and night depository facilities. Business lending, depository and
related financial services are furnished to a wide range of customers in diverse
industries, including commercial, industrial and financial companies, as well as
government and non-profit agencies. Loan facilities available to these customers
include short-term revolving credit arrangements, term loans, letters of credit,
accountsreceivable management services, asset-based financing, equipment
financing, real estate and mortgage loans, leasing and lock box services.

Through its international division and International Banking Facility, the
bank offers financial services to its customers and correspondents in the
world's major financial centers. These services consist of financing import and
export transactions, issuance of letters of credit and creation of bankers
acceptances. In addition to its direct worldwide correspondent banking
relationships, active bank account relationships are maintained with leading
foreign banking institutions in major financial centers.

The bank's trust division provides a variety of fiduciary, investment
management, advisory and corporate agency services to individuals, corporations
and foundations. The bank acts as trustee for pension, profit-sharing and other
employee benefit plans and personal trusts and estates. For corporations, the
bank acts as trustee, transfer agent, registrar and in other corporate agency
capacities.

Factors provides accounts receivable management services. Factors purchases
clients' accounts receivable, assumes credit risk on approved orders and handles
credit and collection details and bookkeeping requirements. Income for these
services is derived from commissions charged for receivables serviced and
interest charged on advances to the client. For these services, Factors receives
a portion of factoring commissions paid by the clients plus a portion of
interest charged on advances. The accounts receivable factored are for clients
primarily engaged in the apparel and textile industries.

Sterling's mortgage banking and brokerage business is conducted through
SNMC offices located principally in New York and Virginia. SNMC originates
conforming residential mortgage loans, for resale, throughout the tri-state
metropolitan area as well as in Virginia and other mid-Atlantic states. SNMC
also originates non-conforming residential mortgage loans, for its own portfolio
and for resale, principally in Virginia.

There are no industry concentrations exceeding 10% of loans, gross in the
commercial and industrial loan portfolio. Approximately 76% of the bank's loans
are to borrowers located in the metropolitan New York area.

The composition of income from the operations of the bank and its
subsidiaries for the years ended: [1] December 31, 2001 included interest and
fees on commercial and other loans (53%), interest and dividends on investment
securities (27%) and other (20%); [2] December 31, 2000 included interest and
fees on commercial and other loans (54%), interest and dividends on investment
securities (27%), and other (19%); [3] December 31, 1999 included interest and
fees on commercial and other loans (53%), interest and dividends on investment
securities (26%), and other (21%).

At December 31, 2001, the bank and its subsidiaries had 362 employees,
consisting of 142 officers and 220 supervisory and clerical employees. The bank
considers its relations with its employees to be satisfactory.

I-2

PARENT COMPANY AND FINANCE SUBSIDIARIES
---------------------------------------

The parent company, through its finance subsidiary -- Sterling Financial
Services Company ("Sterling Financial"), makes loans that are secured by
personal property, accounts receivable or other collateral; occasionally
unsecured advances are provided to its customers.

Sterling Financial engages in asset-based lending with independent dealers
who market products, such as housewares, appliances, automobiles, and
educational material, to consumers on an installment basis with repayment terms
between 12 and 48 months. Sterling Financial administers these installment
contracts for the dealer, providing billing, payment processing and other
bookkeeping services. Advances are made to each dealer of generally up to 80% of
the discounted aggregate value of the dealer's installment contracts.

The composition of income (excluding equity in undistributed net income of
the bank) of the parent company and its finance subsidiaries for the years
ended: [1] December 31, 2001 included interest and fees on loans (32%),
dividends, interest and service fees (66%) and other (2%); [2] December 31, 2000
included interest and fees on loans (42%), dividends, interest and service fees
(55%), and other (3%); [3] December 31, 1999 included interest and fees on loans
(47%), dividends, interest and service fees (52%), and other (1%). As of January
1, 2001, Sterling Financial became a subsidiary of the parent company. Prior to
that date, Sterling Financial was a division of the parent company. For the year
ended December 31, 1999, Factors was a finance subsidiary, and the results of
its operations were included in the foregoing and in all financial statements
relating to that year.

At December 31, 2001, the parent company and its finance subsidiaries
employed 36 persons consisting of 8 officers with the balance of the employees
performing supervisory and clerical functions. The parent company and its
finance subsidiaries consider employee relations to be satisfactory.

COMPETITION

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 loans associations, savings bonds, finance companies, and
credit unions. 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, and
availability of products.

The Gramm-Leach-Bliley Act of 1999 (the "Gramm-Leach-Bliley Act") has
expanded the permissible activities of a bank holding company. The
Gramm-Leach-Bliley Act allows qualifying bank holding companies to elect to be
treated as financial holding companies. A financial holding company may engage
in activities that are financial in nature or are incidental or complementary to
financial activities. The Gramm-Leach-Bliley Act also eliminated restrictions
imposed by the Glass-Steagall Financial Services Law, adopted in the 1930's,
which prevented banking insurance and securities firms from fully entering each
other's business. While it is uncertain what the full impact of legislation will
be, it is likely to result in further consolidation in the financial services
industry. In addition, removal of these restrictions will likely increase the
number of entries providing banking services and thereby create additional
competition. However, the Company's management cannot currently predict the full
impact of the Gramm-Leach-Bliley Act on the Company. For more information
regarding the Gramm-Leach-Bliley Act see "Supervision and Regulation --
Financial Services Modernization Legislation" below.

I-3

SUPERVISION AND REGULATION

General
- -------

The banking industry is highly regulated. Statutory and regulatory controls
are designed primarily for the protection of depositors and the banking system,
as opposed to the shareholders of the parent company. The following discussion
is not intended to be a complete list of all the activities regulated by the
banking laws or of the impact of such laws and regulations on the bank. It is
intended only to briefly summarize some material provisions.

Bank Holding Company Regulation
-------------------------------

Sterling Bancorp is a bank holding company and a financial holding company
under the BHCA, as amended, and is subject to supervision, examination and
reporting requirements of the Board of Governors of The Federal Reserve System
("FRB").

The BHCA requires the prior approval of the Federal Reserve Board for the
acquisition by a bank holding company of more than 5% of the voting stock or
substantially all of the assets of any bank or bank holding company. Also, under
the BHCA, bank holding companies are prohibited, with certain exceptions, from
engaging in, or from acquiring more than 5% of the voting stock of any company
engaging in, activities other than banking or managing or controlling banks or
furnishing services to or performing services for their subsidiaries. The BHCA
also authorizes the Federal Reserve Board to permit bank holding companies to
engage in, and to acquire or retain shares of companies that engage in,
activities which the Federal Reserve Board determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.

The Federal Reserve Board has ruled that a number of activities come within
this standard while finding that several activities do not. As discussed below
under "Financial Services Modernization Legislation", the BHCA was amended by
the Gramm-Leach- Bliley Act of 1999 to permit a broader range of activities for
bank holding companies that qualify as "financial holding companies".

As a national bank, the bank is principally subject to supervision,
examination and reporting requirements of the Office of the Comptroller of the
Currency ("OCC"), as well as the Federal Deposit Insurance Corporation ("FDIC").
Insured banks, including the bank, are subject to extensive regulation of many
aspects of their business. These regulations, among other things, relate to: (a)
the nature and amount of loans that may be made by the bank and the rates of
interest that may be charged; (b) types and amounts of other investments; (c)
branching; (d) permissible activities; and (e) reserve requirements.

Sterling Banking Corporation is subject to supervision and regulation by
the Banking Department of the State of New York.

Financial Services Modernization Legislation
--------------------------------------------

On November 12, 1999, the President signed the Gramm-Leach-Bliley Act into
law. Effective as of March 11, 2000, the Gramm-Leach-Bliley Act:

- allows bank holding companies, the depository institution subsidiaries of
which meet management, capital and CRA standards, to engage in a
substantially broader range of nonbanking financial activities than was
previously permissible, including insurance underwriting and making
merchant banking investments in commercial companies;

- allows insurers and other financial services companies to acquire banks;

- removes various restrictions that previously applied to bank holding
company ownership of securities firms and mutual fund advisory companies;
and

- establishes the overall regulatory structure applicable to bank holding
companies that also engage in insurance and securities operations.

I-4

In order for a bank holding company to engage in the broader range of
activities that are permitted by the Gramm-Leach-Bliley Act, (1) all of its
depository subsidiaries must be and remain well-capitalized and well-managed and
have received at least a satisfactory CRA rating and (2) it must file a
declaration with the Board of Governors of the Federal Reserve System that it
elects to be a "financial holding company".

Pursuant to an election made under the Gramm-Leach-Bliley Act, the parent
company has been designated as a financial holding company.

Payment Of Dividends And Transactions With Affiliates
- -----------------------------------------------------

Various legal restrictions limit the extent to which the bank can fund its
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 that year to date
combined with its retained net profits for the preceding two calendar years. In
addition, there are restrictions on the amount of loans that the bank can make
to each of its non-bank affiliates and to all of its non-bank affiliates in the
aggregate, a requirement that such loans be collateralized, and a requirement
that transactions between a bank and its non-bank affiliates be on an arm's
length basis.

Capital Adequacy
- ----------------

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against
risk-weighted assets, including off-balance sheet items. These regulations
define the elements of total capital into Tier 1 and Tier 2 components 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%
to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly
average assets (after deducting goodwill). In addition, the Company and the bank
are subject to the provisions of the Federal Deposit Insurance Corporation
Improvement Act of 1981 ("FDICIA") which imposes a number of mandatory
supervisory measures and establishes a system of prompt corrective action to
resolve the problems of undercapitalized institutions. Among other matters,
FDICIA establishes five capital categories of "well capitalized", "adequately
capitalized", "undercapitalized", "significantly undercapitalized", and
"critically undercapitalized". Such classifications are used by regulatory
agencies to determine, in part, a bank's deposit insurance premium, and to
consider applications authorizing institutions to increase their asset size or
otherwise expand business activities or acquire other institutions. Banks that
are not adequately capitalized are subject to significant restrictions and
requirements that increase as capital levels deteriorate and may not accept
brokered deposits.

Under the provisions of FDICIA, a "well capitalized" institution must
maintain minimum leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%,
respectively. At December 31, 2001, the capital ratios for the Company and the
bank exceeded the requirements for "well capitalized" institutions.

The table presenting capital and ratios for the Company and the bank as of
December 31, 2001 and 2000 appears in Note 19 beginning on page 39 of the
Company's 2001 Annual Report and is incorporated by reference herein.

I-5

Merchant Banking
- ----------------

In January, the federal bank regulators adopted rules, effective April 1,
2002, governing the regulatory capital treatment of equity investments in
nonfinancial companies. The federal rules require a series of marginal capital
charges on covered equity investments that increase with the level of those
investments as a percentage of the Company's and the bank's Tier 1 capital. With
certain exceptions, the rules require that the Company and the bank deduct from
Tier 1 capital the appropriate percentage set out below:

The Company and the bank do not expect the rule will have a material effect
on their capital requirements or strategic plans.

BIS Guidelines
- --------------

The U.S. federal bank regulatory agencies' risk-capital guidelines are
based upon the 1988 capital accord of the Basel Committee on Banking Supervision
(the "BIS"). The BIS is a committee of central banks and bank
supervisors/regulators from the major industrialized countries that develops
broad policy guidelines that each country's supervisors can use to determine the
supervisory policies they apply. In January 2001 the BIS released a proposal to
replace the 1988 capital accord with a new capital accord that would set capital
requirements for operational risk and refine the existing capital requirements
for credit risk and market risk exposures. Operational risk is defined to mean
the risk of direct or indirect loss resulting from inadequate or failed internal
processes, people and systems or from external events. The 1988 capital accord
does not include separate capital requirements for operational risk. The events
of September 11, 2001 demonstrate the importance for financial institutions of
managing operational risks. The BIS proposal outlines several alternatives for
capital assessment of operational risks, including two standardized approaches
and an "internal measurement approach" tailored to individual institutions'
circumstances. The BIS has stated that its objective is to finalize a new
capital accord in 2002 and for member countries to implement the new accord in
2005. The ultimate timing for new accord, and the specifics of capital
assessments for addressing operational risk, are uncertain. However, the Company
expects that a new capital accord addressing operational risk will
eventually be adopted by the BIS and implemented by the U.S. federal bank
regulatory agencies. The Company cannot determine whether new capital
requirements that may arise out of a new BIS capital accord will increase or
decrease minimum capital requirements applicable to it and its subsidiaries.

I-6

Support of the bank
- -------------------

The Federal Reserve Board has stated that a bank holding company should
serve as a source of financial and managerial strength to its subsidiary banks.
As a result, the Federal Reserve Board may require the parent company to stand
ready to use its resources to provide adequate capital funds to its banking
subsidiaries during periods of financial stress or adversity. This support may
be required at times when, absent such regulations, the bank holding company
might not otherwise provide such support.

FDIC Insurance
- --------------

Under the FDIC's risk related insurance assessment system, insured
depository institutions may be required to pay annual assessments to the FDIC
with the level of assessment being based on the institution's risk
classification. An institution's risk classification is based on assignment of
the institution by the FDIC to one of three capital groups and to one of three
supervisory groups. The three supervisory groups are Group "A" -- financially
solid institutions with only a few minor weaknesses, Group "B" -- institutions
with weaknesses which, if uncorrected, could cause substantial deterioration of
the institution and increased risk to the insurance fund and Group
"C" -- institutions with a substantial probability of loss to the fund absent
effective corrective action. The three capital categories are well capitalized;
adequately capitalized; and undercapitalized. These three categories are
substantially the same as the prompt corrective action categories previously
described, with the undercapitalized category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. In addition, the bank
will be required to make payments for the servicing of obligations of the
Financing Corporation (FICO) issued in connection with the resolution of savings
and loan associations, so long as such obligations remain outstanding.

Under the Federal Deposit Insurance Act, insurance of deposits may be
terminated by the FDIC upon a finding that the institution has engaged in unsafe
and unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule, order, or
condition imposed by the FDIC.

In addition, the Federal Deposit Insurance Act provides that a depository
institution insured by the FDIC can be held liable by the FDIC for any loss
incurred or reasonably expected to be incurred in connection with the default of
a commonly controlled FDIC insured depository institution or in connection with
any assistance provided by the FDIC to a commonly controlled institution "in
danger of default" (as defined).

In its resolution of the problems of an insured depository institution in
default or in danger of default, the FDIC is generally required to satisfy its
obligations to insured depositors at the least possible cost to the deposit
insurance fund. In addition, the FDIC may not take any action that would have
the effect of increasing the losses to the deposit insurance fund by protecting
depositors for more than the insured portion of deposits (generally $100,000) or
creditors other than depositors. The Omnibus Budget Reconciliation Act of 1993
provided for a domestic depositor preference upon liquidation or dissolution of
an insured bank.

Because of favorable loss experience and a healthy reserve ratio in the
Bank Insurance Fund of the FDIC, well capitalized and well managed banks,
including the bank, have in recent years paid no premiums for FDIC insurance. A
number of factors suggest that as early as the second half of 2002, even well
capitalized and well managed banks will be required to pay premiums on deposit
insurance. The amount of any such premiums will depend on the outcome of
legislative and regulatory initiatives as well as the BIF loss experience and
other factors, none of which the Company is in a position to predict at this
time.

I-7

Safety And Soundness Standards
- ------------------------------

Federal banking agencies promulgate safety and soundness standards relating
to, among other things, internal controls, information systems and internal
audit systems, loan documentation, credit underwriting, interest rate exposure,
asset growth, compensation, fees, and benefits. With respect to internal
controls, information systems and internal audit systems, the standards describe
the functions that adequate internal controls and information systems must be
able to perform, including: (i) monitoring adherence to prescribed policies;
(ii) effective risk management; (iii) timely and accurate financial, operations,
and regulatory reporting; (iv) safeguarding and managing assets; and (v)
compliance with applicable laws and regulations. The standards also include
requirements that: (i) those performing internal audits be qualified and
independent; (ii) internal controls and information systems be tested and
reviewed; (iii) corrective actions be adequately documented; and (iv) that
results of an audit be made available for review of management actions.

USA Patriot Act
- ---------------

On October 26, 2001, the President signed into law comprehensive
anti-terrorism legislation known as the USA Patriot Act. Title III of the USA
Patriot Act requires financial institutions, including the bank, to help
prevent, detect and prosecute international money laundering and the financing
of terrorism. The bank has augmented its systems and procedures to accomplish
this. The Secretary of the Treasury has proposed additional regulations to
further implement Title III. Although the Company cannot predict when and in
what form these regulations will be adopted, it believes that the cost of
compliance with Title III of the USA Patriot is not likely to be material to it.

SELECTED CONSOLIDATED STATISTICAL INFORMATION

I. Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates
and Interest Differential.

The information appearing on pages 59, 60, and 61 of the 2001 Annual Report
is incorporated by reference herein.

II. Investment Portfolio

A summary of the Company's investment securities by type with related
carrying values at the end of each of the most recent three fiscal years appears
on page 49 of the 2001 Annual Report and is incorporated herein by reference.
Information regarding book values and range of maturities by type of security
and weighted average yields for totals of each category is presented in the 2001
Annual Report on pages 25 and 26 and is incorporated by reference herein. The
average yield by maturity range is not available.

III. Loan Portfolio

A table setting forth the composition of the Company's loan portfolio, net
of unearned discounts, at the end of each of the most recent five fiscal years
appears on page 50 of the 2001 Annual Report and is incorporated herein by
reference.

A table setting forth the maturities and sensitivity to changes in interest
rates of the Company's commercial and industrial loans at December 31, 2001
appears on page 50 of the 2001 Annual Report and is incorporated herein by
reference.

I-8

It is the policy of the Company to consider all customer requests for
extensions of original maturity dates (rollovers), whether in whole or in part,
as though each was an application for a new loan subject to standard approval
criteria, including credit evaluation. The information appearing in the 2001
Annual Report beginning on page 49 under the caption "Loan Portfolio", page 27
in Note 5 and on page 22 in Note 1 under the caption "Loans" is incorporated by
reference herein.

A table setting forth the aggregate amount of domestic non-accrual, past
due and restructured loans of the Company at the end of each of the most recent
five fiscal years appears on page 51 of the 2001 Annual Report and is
incorporated herein by reference; there were no foreign loans accounted for on a
nonaccrual basis and there were no troubled debt restructurings for any types of
loans. Loans contractually past due 90 days or more as to principal or interest
and still accruing are loans which are both well-secured or guaranteed by
financially responsible third parties and are in the process of collection.

IV. Summary of Loan Loss Experience

The information appearing in the 2001 Annual Report beginning on page 27 in
Note 6 and beginning on page 50 under the caption "Asset Quality" is
incorporated by reference herein. A table setting forth certain information with
respect to the Company's loan loss experience for each of the most recent five
fiscal years appears on page 52 of the 2001 Annual Report and is incorporated
herein by reference.

The Company considers its allowance for loan losses to be adequate based
upon the size and risk characteristics of the outstanding loan portfolio at
December 31, 2001. Net losses within the loan portfolio are not, however,
statistically predictable and are subject to various external factors that are
beyond the control of the Company. Consequently, changes in conditions in the
next twelve months could result in future provisions for loan losses varying
from the level taken in 2001.

To comply with a regulatory requirement to provide an allocation of the
allowance for possible loan losses, a table presenting the Company's allocation
of the allowance appears on page 52 of the 2001 Annual Report and is
incorporated herein by reference. This allocation is based on estimates by
management that may vary based on management's evaluation of the risk
characteristics of the loan portfolio. The information appearing in the 2001
Annual Report beginning on page 50 under the caption "Asset Quality" is
incorporated by reference herein. The amount allocated to a particular loan
category may not necessarily be indicative of actual future charge-offs in a
loan category.

V. Deposits

Average deposits and average rates paid for each of the most recent three
years is presented in the 2001 Annual Report on page 59 and is incorporated by
reference herein.

Outstanding time certificates of deposit issued from domestic offices in
amounts of $100,000 or more and interest expense on domestic and foreign
deposits are presented in the 2001 Annual Report on page 28 in Note 7 and is
incorporated by reference herein.

The table providing selected information with respect to the Company's
deposits for each of the most recent three fiscal years appears on page 53 of
the Company's 2001 Annual Report and is incorporated by reference herein.

Interest expense for the most recent three fiscal years is presented in
Note 7 on page 28 of the 2001 Annual Report and is incorporated by reference
herein.

I-9

VI. Return on Assets and Equity

The Company's returns on average total assets and average shareholders'
equity, dividend payout ratio and average shareholders' equity to average total
assets for each of the most recent three years is presented in the 2001 Annual
Report on page 49 under the caption "Selected Financial Data" and is
incorporated by reference herein.

VII. Short-Term Borrowings

Balance and rate data for significant categories of the Company's
Short-Term Borrowings, for each of the most recent three years is presented in
the 2001 Annual Report on page 29 in Note 8 and is incorporated by reference
herein.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein, 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" within the meaning of the
Private Securities Litigation Reform Act of 1995. 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 out control. Any
forward-looking statements we may make, speak only as of the date on which such
statements are made. It is possible that our actual results and financial
position may differ, possibly 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, possibly 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 the impact of September 11, 2001 and any
future acts or threats of war or terrorism; the effects of, and changes in,
trade, monetary and fiscal policies and laws, including interest policies of the
Board of Governors of the Federal Reserve Systems; a decline in general economic
conditions and the strength of the local economies in which we operate; the
financial condition of our borrowers; competitive pressures on loan and deposit
pricing and demand; change in technology and their impact on the marketing of
products and service; the timely development and effective marketing of
competitive new products and services and the acceptance of these products and
services by new and existing customers; the willingness of customers to
substitute competitor's products and services for our products and services; the
impact of changes in financial service laws and regulations (including laws
concerning taxes, banking, securities and insurance); changes in accounting
principles, policies, and guidelines; our success at managing the risks involved
in the foregoing as well as other risks and uncertainties detailed from time to
time in press releases and other public filings. The foregoing list of 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.

I-10

ITEM 2. PROPERTIES

The principal offices of the Company occupy one floor at 650 Fifth Avenue,
New York, N.Y. consisting of approximately 14,400 square feet. The lease for
these premises expires April 30, 2016. Rental commitments to the expiration date
approximate $12,536,000. Certain finance subsidiaries maintain offices in Great
Neck, New York and Richmond, Virginia.

In addition to the principal offices, the bank maintains operating leases
for four branch offices, the International Banking Facility, an Operations
Center, and additional office space in New York City, Nassau and Suffolk
counties (New York), in Mercer County (New Jersey) and in Richmond (Virginia)
with an aggregate of approximately 111,574 square feet. The annual office rental
commitments for these premises approximates $2,216,000. The leases have
expiration dates ranging from 2002 through 2015 with varying renewal options.
The bank owns (not subject to a mortgage) a building in which it maintains a
branch located in Forest Hills, Queens.

ITEM 3. LEGAL PROCEEDINGS

Neither Registrant nor any of its subsidiaries is party to any material
legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders in the fourth quarter
of the fiscal year covered by this report.

The information beginning on page 12 of the Sterling Bancorp Proxy
Statement dated March 9, 2002 under the captions "APPROVAL OF STOCK INCENTIVE
PLAN AMENDMENT" is incorporated by reference herein.

EXECUTIVE OFFICERS OF THE REGISTRANT

This information is included pursuant to Instruction 3 to Item 401 (b) and
(c) of Regulation S-K:

All executive officers are elected annually by the Board of Directors and
serve at the pleasure of the Board. There are no arrangements or understandings
between any of the foregoing officers and any other person or persons pursuant
to which he was selected as an executive officer.

I-11

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The information appearing on page 57 of the 2001 Annual Report under the
caption "MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS" is incorporated by reference herein.

ITEM 6. SELECTED FINANCIAL DATA

The information appearing on page 47 of the 2001 Annual Report under the
caption "SELECTED FINANCIAL DATA" is incorporated by reference herein.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information appearing on pages 47-61 of the 2001 Annual Report under
the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" is incorporated by reference herein. Supplementary data
appearing on page 45 in Note 23 of the 2001 Annual Report is also incorporated
by reference herein.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information appearing on pages 53-56 of the 2001 Annual Report under
the caption "ASSET/ LIABILITY MANAGEMENT" is incorporated by reference herein.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's consolidated financial statements as of December 31, 2001 and
2000 and for each of the years in the three-year period ended December 31, 2001
and the statements of condition of Sterling National Bank as of December 31,
2001 and 2000, notes thereto and Independent Auditors' Report thereon appearing
on pages 16-46 of the 2001 Annual Report are incorporated by reference herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

II-1

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure at the end of Part I of this report
since the registrant did not furnish such information in its definitive proxy
statement prepared in accordance with Schedule 14A. The information beginning on
page 1 of the Sterling Bancorp Proxy Statement dated March 9, 2002 under the
caption "ELECTION OF DIRECTORS", beginning on page 10 of the same proxy
statement under the caption "Security Ownership of Directors and Executive
Officers and Certain Beneficial Owners" and beginning on page 12 of the same
proxy statement under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" are incorporated by reference herein.

ITEM 11. EXECUTIVE COMPENSATION

The information beginning on page 3 of the Sterling Bancorp Proxy Statement
dated March 9, 2002 under the caption "Executive Compensation and Related
Matters" and on page 10 of the same Proxy Statement under the caption
"Transactions with the Company and Other Matters" are incorporated by reference
herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information beginning on page 10 of the Sterling Bancorp Proxy
Statement dated March 9, 2002 under the caption "Security Ownership of Directors
and Executive Officers and Certain Beneficial Owners" is incorporated by
reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information appearing on page 10 of the Sterling Bancorp Proxy
Statement dated March 9, 2002 under the caption "Transactions with the Company
and Other Matters" is incorporated by reference herein.

III-1

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The documents filed as a part of this report are listed below:

1. Financial Statements

Annual Report to security holders for the fiscal year ended December 31,
2001 (This document is filed only to the extent of pages 16 through 61 which are
incorporated by reference herein).

2. Financial Statement Schedules

None

3. Exhibits

IV-1

(b) Reports on Form 8-K:

There were no reports on Form 8-K filed during the last quarter of the
period covered by this report.

IV-2

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

/s/ Louis J. Cappelli
--------------------------------------
Louis J. Cappelli, Chairman
(Principal Executive Officer)

Date: March 29, 2002

/s/ John W. Tietjen
--------------------------------------
John W. Tietjen, Treasurer
(Principal Financial and Accounting Officer)

Date: March 29, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

IV-3

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

DOCUMENTS FILED
AS A PART
OF THIS REPORT
ON
FORM 10-K
ANNUAL REPORT -- 2001

---------------------

STERLING BANCORP

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

EXHIBIT INDEX