Sterling Bancorp to Divest Sterling Financial Services

Sterling Bancorp, a financial holding company and the parent of Sterling National Bank, today announced that it has entered into agreements to sell for cash the business conducted by Sterling Financial Services Company, Inc., which includes a loan portfolio of approximately $132 million. The divestiture, which is subject to the satisfaction of closing conditions, is anticipated to be completed by year-end. The Company expects to record a one-time charge relating to the transaction against income in the third quarter of 2006. The Company estimates that the net after-tax effect of the one-time charge relating to the sale will amount to approximately $8.5 million and will be partially offset by the after-tax income from continuing operations, thereby resulting in a net loss for the third quarter of 2006.

“Over the past several years, we have pursued a number of strategic initiatives to build on our core banking franchise and to simplify and align our business model within an evolving business environment,” said Louis J. Cappelli, Chairman and Chief Executive Officer of Sterling Bancorp. “We believe this transaction will allow us to increase liquidity and redeploy resources into businesses with greater opportunities for growth, lower the cost of funds, continue share repurchases and reduce operating expenses. A changing, increasingly competitive marketplace and increased compliance and regulatory requirements make this the right decision for the Company and our shareholders. We believe this divesture will have a positive impact on future earnings, profitability, asset quality and capital ratios. Moreover, we expect that the benefits of this transaction will fully offset the charge to be recognized in the current quarter within a reasonable timeframe.”