<PAGE>   1
                                  UNITED STATES
                       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, 1999


                                       OR

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

FOR THE TRANSITION PERIOD FROM ________________ TO _________________

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                          (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                             IDENTIFICATION)

430 PARK AVENUE, NEW YORK, N.Y.                               10022-3505
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)


                                  212-826-8000
--------------------------------------------------------------------------------
              (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  [ ] NO

        AS OF JUNE 30, 1999 THERE WERE 8,074,837 SHARES OF COMMON STOCK,
                         $1.00 PAR VALUE, OUTSTANDING.
<PAGE>   2
                                STERLING BANCORP

<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION                                                         Page
                                                                                     ----
<S>                                                                                  <C>
        Item 1.     Financial Statements (Unaudited)

                    Consolidated Financial Statements                                  3
                    Notes to Consolidated Financial Statements                         8

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

                    Business                                                          11
                    Results for Three Months                                          11
                    Results for Six Months                                            13
                    Balance Sheet Analysis                                            15
                    Capital                                                           17
                    Average Balance Sheets                                            19
                    Rate/Volume Analysis                                              21
                    Regulatory Capital and Ratios                                     23

        Item 3.     Quantitative and Qualitative Disclosures About
                      Market Risk

                    Asset/Liability Management                                        24
                    Interest Rate Sensitivity                                         27

PART II OTHER INFORMATION

        Item 4.     Submission of Matters to a Vote of Security Holders               28

        Item 6.     Exhibits and Reports on Form 8-K                                  29



SIGNATURES                                                                            29

EXHIBIT INDEX                                                                         30

        Exhibit 11 Computation of Per Share Earnings                                  31
        Exhibit 27 Financial Data Schedule                                            32
</TABLE>


                                       2
<PAGE>   3
                        STERLING BANCORP AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                        June 30,              December 31,
ASSETS                                                                    1999                    1998
                                                                    ---------------         ---------------
<S>                                                                 <C>                     <C>
Cash and due from banks                                             $    41,906,991         $    43,311,268
Interest-bearing deposits with other banks                                  515,000                 515,000
Federal funds sold                                                       10,000,000                      --
Investment securities
   Available for sale (at estimated market value)                       137,889,208             145,060,902
   Held to maturity (estimated market value
      $237,240,341 and $185,425,123, respectively)                      241,502,910             184,745,325
                                                                    ---------------         ---------------
            Total investment securities                                 379,392,118             329,806,227
                                                                    ---------------         ---------------

Loans, net of unearned discounts                                        602,955,649             640,206,308
Less allowance for credit losses                                          9,836,564              10,156,077
                                                                    ---------------         ---------------
            Loans, net                                                  593,119,085             630,050,231
                                                                    ---------------         ---------------
Customers' liability under acceptances                                      574,238                 609,431

Excess cost over equity in net assets of the
   banking subsidiary                                                    21,158,440              21,158,440
Premises and equipment, net                                               6,403,061               6,294,654
Accrued interest receivable                                               4,353,826               3,991,914
Other real estate owned                                                   1,093,033               1,044,509
Other assets                                                             10,007,389               7,663,541
                                                                    ---------------         ---------------
                                                                    $ 1,068,523,181         $ 1,044,445,215
                                                                    ===============         ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
   Noninterest-bearing deposits                                     $   262,833,533         $   329,020,287
   Interest-bearing deposits                                            421,347,170             373,782,181
                                                                    ---------------         ---------------
            Total deposits                                              684,180,703             702,802,468
Federal funds purchased and securities
   sold under agreements to repurchase                                  147,169,089              99,429,027
Commercial paper                                                         33,407,300              41,529,300
Other short-term borrowings                                              10,984,770              12,771,325
Acceptances outstanding                                                     574,238                 609,431
Due to factoring clients                                                 33,886,491              32,074,004
Accrued expenses and other liabilities                                   14,584,494              11,678,336
                                                                    ---------------         ---------------
                                                                        924,787,085             900,893,891
Long-term debt - FHLB                                                    41,050,000              41,400,000
                                                                    ---------------         ---------------
            Total liabilities                                           965,837,085             942,293,891
                                                                    ---------------         ---------------

Commitments and contingent liabilities

Shareholders' equity
   Preferred stock, $5 par value. Authorized 644,389 shares
      Series B ($20 liquidation value), issued 1,230 shares                  24,600                  24,600
      Series D ($10 liquidation value), issued 241,883 and
            243,929 shares, respectively                                  2,418,830               2,439,290
                                                                    ---------------         ---------------
                                                                          2,443,430               2,463,890

   Common stock, $1 par value. Authorized 20,000,000 shares;
      issued 8,322,830 and 8,310,284 shares, respectively                 8,322,830               8,310,284
   Capital surplus                                                       45,421,854              45,287,315
   Retained earnings                                                     53,853,779              48,817,648
   Accumulated other comprehensive (loss)income,
      net of tax                                                         (1,303,184)                538,840
                                                                    ---------------         ---------------
                                                                        108,738,709             105,417,977
   Less
      Common shares in treasury at cost, 247,993 and
        101,693 shares, respectively                                      4,539,067               1,592,690
      Unearned compensation                                               1,513,546               1,673,963
                                                                    ---------------         ---------------

            Total shareholders' equity                                  102,686,096             102,151,324
                                                                    ---------------         ---------------
                                                                    $ 1,068,523,181         $ 1,044,445,215
                                                                    ===============         ===============
</TABLE>


See Notes to Consolidated Financial Statements.


                                        3
<PAGE>   4
                        STERLING BANCORP AND SUBSIDIARIES
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                          Three Months Ended                     Six Months Ended
                                                               June 30,                              June 30,
                                                       1999               1998               1999               1998
                                                   -----------        -----------        -----------        -----------
<S>                                                <C>                <C>                <C>                <C>
INTEREST INCOME

   Loans                                           $13,436,810        $12,661,785        $26,575,285        $24,921,704
   Investment securities:
      Available for sale                             1,998,226          1,920,525          3,962,990          3,798,660
      Held to maturity                               3,404,408          3,241,675          6,025,763          7,078,801
   Federal funds sold                                   84,352            217,946            272,629            356,585
   Deposits with other banks                            50,122             30,732             74,308            105,403
                                                   -----------        -----------        -----------        -----------
            Total interest income                   18,973,918         18,072,663         36,910,975         36,261,153
                                                   -----------        -----------        -----------        -----------

INTEREST EXPENSE

   Deposits                                          3,669,573          4,166,160          6,978,173          8,570,887
   Federal funds purchased
      and securities sold under agreements
      to repurchase                                  1,055,616            869,540          2,027,958          2,086,989
   Commercial paper                                    445,200            387,785            933,472            748,816
   Other short-term borrowings                         250,139            252,646            352,919            497,078
   Long-term debt                                      519,843            525,746          1,045,126            730,010
                                                   -----------        -----------        -----------        -----------
            Total interest expense                   5,940,371          6,201,877         11,337,648         12,633,780
                                                   -----------        -----------        -----------        -----------
Net interest income                                 13,033,547         11,870,786         25,573,327         23,627,373
Provision for credit losses                          1,370,000          1,267,333          2,753,000          2,111,333
                                                   -----------        -----------        -----------        -----------
Net interest income after provision
   for credit losses                                11,663,547         10,603,453         22,820,327         21,516,040
                                                   -----------        -----------        -----------        -----------

NONINTEREST INCOME
   Factoring income                                  1,263,979          1,277,325          2,420,242          2,310,977
   Mortgage banking income                           1,473,373          1,035,506          2,681,015          1,894,551
   Service charges on deposit accounts                 747,750            750,364          1,540,345          1,424,952
   Trade finance income                                523,558            577,694          1,047,164            981,362
   Trust fees                                          205,131            237,793            401,316            427,288
   Other service charges and fees                      354,642            280,511            682,168            533,074
   Other income                                         27,562             17,108             51,633             79,422
                                                   -----------        -----------        -----------        -----------
            Total noninterest income                 4,595,995          4,176,301          8,823,883          7,651,626
                                                   -----------        -----------        -----------        -----------


NONINTEREST EXPENSES

   Salaries                                          5,014,677          4,607,415          9,654,320          9,015,079
   Employee benefits                                 1,145,049            970,318          2,156,201          1,976,663
                                                   -----------        -----------        -----------        -----------
            Total personnel expenses                 6,159,726          5,577,733         11,810,521         10,991,742
   Occupancy expense, net                              803,159            796,586          1,562,804          1,589,384
   Equipment expense                                   849,956            631,267          1,399,898          1,221,898
   Other expenses                                    2,645,571          2,428,667          5,327,471          4,750,896
                                                   -----------        -----------        -----------        -----------
            Total noninterest expenses              10,458,412          9,434,253         20,100,694         18,553,920
                                                   -----------        -----------        -----------        -----------
Income before income taxes                           5,801,130          5,345,501         11,543,516         10,613,746
Provision for income taxes                           2,249,699          2,232,029          4,527,463          4,497,309
                                                   -----------        -----------        -----------        -----------


Net income                                         $ 3,551,431        $ 3,113,472        $ 7,016,053        $ 6,116,437
                                                   ===========        ===========        ===========        ===========
Average number of common shares outstanding
   Basic                                             8,119,764          8,279,458          8,153,118          8,253,079
   Diluted                                           8,489,980          8,691,472          8,529,678          8,629,857
Per average common share
   Basic                                           $       .44        $       .37        $       .86        $       .74
   Diluted                                                 .42                .36                .82                .71
Dividends per common share                                 .12                .11                .24                .21
</TABLE>


See Notes to Consolidated Financial Statements.


                                        4
<PAGE>   5
                        STERLING BANCORP AND SUBSIDIARIES
                 Consolidated Statements of Comprehensive Income

<TABLE>
<CAPTION>
                                                      Three Months Ended                   Six Months Ended
                                                           June 30,                             June 30,
                                                   1999               1998               1999               1998
                                               -----------         ----------        -----------         ----------
<S>                                            <C>                 <C>               <C>                 <C>
Net income                                     $ 3,551,431         $3,113,472        $ 7,016,053         $6,116,437

Other comprehensive income, net of tax:
      Unrealized holding (losses)gains
       arising during the period                (1,380,138)           124,704         (1,842,024)            48,777
                                               -----------         ----------        -----------         ----------

Comprehensive income                           $ 2,171,293         $3,238,176        $ 5,174,029         $6,165,214
                                               ===========         ==========        ===========         ==========
</TABLE>


See Notes to Consolidated Financial Statements.


                                       5
<PAGE>   6
                        STERLING BANCORP AND SUBSIDIARIES
           Consolidated Statements of Changes in Shareholders' Equity

<TABLE>
<CAPTION>
                                                                  Six Months Ended
                                                                       June 30,
                                                               1999                 1998
                                                          -------------         ------------
<S>                                                       <C>                   <C>
PREFERRED STOCK
   Balance at January 1                                   $   2,463,890         $  2,486,730
   Conversions of Series D shares                               (20,460)             (22,840)
                                                          -------------         ------------
   Balance at June 30                                     $   2,443,430         $  2,463,890
                                                          =============         ============

COMMON STOCK
   Balance at January 1                                   $   8,310,284         $  8,262,500
   Conversions of preferred shares
      into common shares                                          2,046                2,284
   Options exercised                                             10,500               39,000
                                                          -------------         ------------
   Balance at June 30                                     $   8,322,830         $  8,303,784
                                                          =============         ============

CAPITAL SURPLUS
   Balance at January 1                                   $  45,287,315         $ 44,775,759
   Conversions of preferred shares
      into common shares                                         18,414               20,556
   Options exercised                                            116,125              446,625
                                                          -------------         ------------
   Balance at June 30,                                    $  45,421,854         $ 45,242,940
                                                          =============         ============

RETAINED EARNINGS
   Balance at January 1                                   $  48,817,648         $ 39,590,806
   Net income                                                 7,016,053            6,116,437
   Cash dividends paid - common shares                       (1,946,909)          (1,718,753)
                       - preferred shares                       (33,013)             (27,046)
                                                          -------------         ------------
   Balance at June 30                                     $  53,853,779         $ 43,961,444
                                                          =============         ============

ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
   Balance at January 1                                   $     538,840         $    197,374
                                                          -------------         ------------
   Unrealized holding (losses)gains arising during
      the period:

        Before tax                                           (3,404,853)              90,161
        Tax benefit                                          (1,562,829)              41,384
                                                          -------------         ------------
           Net of tax                                        (1,842,024)              48,777
                                                          -------------         ------------
   Balance at June 30                                     $  (1,303,184)        $    246,151
                                                          =============         ============

TREASURY STOCK
   Balance at January 1                                   $  (1,592,690)        $   (441,257)
   Purchase of common shares                                 (2,946,377)                  --
                                                          -------------         ------------
   Balance at June 30                                     $  (4,539,067)        $   (441,257)
                                                          =============         ============


UNEARNED COMPENSATION
   Balance at January 1                                   $  (1,673,963)        $ (2,249,346)
   Amortization of unearned compensation                        160,417              160,416
                                                          -------------         ------------
   Balance at June 30                                     $  (1,513,546)        $ (2,088,930)
                                                          =============         ============

TOTAL SHAREHOLDERS' EQUITY
   Balance at January 1                                   $ 102,151,324         $ 92,622,566
   Net changes during the period                                534,772            5,065,456
                                                          -------------         ------------
   Balance at June 30                                     $ 102,686,096         $ 97,688,022
                                                          =============         ============
</TABLE>


See Notes to Consolidated Financial Statements.


                                       6
<PAGE>   7
                        STERLING BANCORP AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                                      June 30,
                                                                              1999                  1998
                                                                         -------------         -------------
<S>                                                                      <C>                   <C>
OPERATING ACTIVITIES
  Net income                                                             $   7,016,053         $   6,116,437
  Adjustments to reconcile net income to net cash
      provided by operating activities:
        Provision for credit losses                                          2,753,000             2,111,333
        Depreciation and amortization of premises and equipment                921,452               737,378
        Deferred income tax provision (benefit)                                 32,048              (127,946)
        Net change in loans held for sale                                    9,150,353            (3,862,571)
        Amortization of unearned compensation                                  160,417               160,416
        Amortization of premiums of securities                               1,165,089             1,075,253
        Accretion of discounts on securities                                  (422,276)             (290,324)
        (Increase)Decrease in accrued interest receivable                     (361,912)              409,316
        Increase(Decrease)in due to factored clients                         1,812,487              (770,958)
        Increase(Decrease) in other liabilities                              2,906,158            (2,627,564)
        Other, net                                                          (3,885,580)           (1,590,142)
                                                                         -------------         -------------
              Net cash provided by operating activities                     21,247,289             1,340,628
                                                                         -------------         -------------

INVESTING ACTIVITIES
  Purchase of premises and equipment                                        (1,029,859)             (305,908)
   Net decrease in interest-bearing deposits
      with other banks                                                              --             2,695,000
   Net increase in Federal funds sold                                      (10,000,000)                   --
   Increase in other real estate owned                                         (48,524)             (265,857)
   Net decrease in loans                                                    28,100,306            16,014,084
   Proceeds from prepayments, redemptions or maturities
      of securities - held to maturity                                      36,205,621            35,015,256
   Purchases of securities - held to maturity                              (93,889,533)           (9,794,814)
   Purchases of securities - available for sale                           (105,988,302)         (214,745,892)
   Proceeds from prepayments, redemptions or maturities
      of securities - available for sale                                   109,938,657           244,280,446
                                                                         -------------         -------------
              Net cash (used in) provided by investing activities          (36,711,634)           72,892,315
                                                                         -------------         -------------

FINANCING ACTIVITIES
   Net decrease in noninterest-bearing deposits                            (66,186,754)          (58,988,785)
   Net increase(decrease)in interest-bearing deposits                       47,564,989           (16,486,653)
   Net increase(decrease) in Federal funds purchased and
      securities sold under agreements to repurchase                        47,740,062           (38,368,431)
   Net (decrease)increase in commercial paper
      and other short-term borrowings                                       (9,908,555)           13,237,316
   Purchase of Treasury stock                                               (2,946,377)                   --
   (Decrease)Increase in other long-term debt                                 (350,000)           39,650,000
   Proceeds from exercise of stock options                                     126,625               485,625
   Cash dividends paid on common and preferred stock                        (1,979,922)           (1,745,799)
                                                                         -------------         -------------
              Net cash provided by (used in)financing activities            14,060,068           (62,216,727)
                                                                         -------------         -------------
Net (decrease)increase in cash and due from banks                           (1,404,277)           12,016,216
Cash and due from banks - beginning of period                               43,311,268            40,065,863
                                                                         -------------         -------------
Cash and due from banks - end of period                                  $  41,906,991         $  52,082,079
                                                                         =============         =============

Supplemental schedule of non-cash financing activities:
   Debenture and preferred stock conversions                             $      20,460         $      22,840
Supplemental disclosure of cash flow information:
   Interest paid                                                         $  12,111,553         $  12,992,642
   Income taxes paid                                                         4,301,231             3,868,832
</TABLE>


See Notes to Consolidated Financial Statements.


                                        7
<PAGE>   8
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

1.    The consolidated financial statements include the accounts of Sterling
      Bancorp ("the parent company") and its subsidiaries, principally Sterling
      National Bank and its subsidiaries ("the bank"), after elimination of
      material intercompany transactions. The term "the Company" refers to
      Sterling Bancorp and its subsidiaries. The consolidated financial
      statements as of and for the interim periods ended June 30, 1999 and 1998
      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 1998 financial statements to conform to the current presentation.
      The interim financial statements should be read in conjunction with the
      Company's annual report on Form 10-K for the year ended December 31, 1998.

2.    For purposes of reporting cash flows, cash and cash equivalents include
      cash and due from banks.

3.    The Company's outstanding Preferred Shares comprise 1,230 Series B
      shares (of 4,389 Series B shares authorized) and 241,883 Series D shares
      (of 300,000 Series D shares authorized). Each Series B share is entitled
      to cumulative dividends at the rate of $0.10 per year, to one vote per
      share and upon liquidation or redemption to an amount equal to accrued
      and unpaid dividends to the date of redemption or liquidation plus an
      amount which is $20 in the case of involuntary liquidation and $28
      otherwise; each Series D share (all of such shares are owned by the
      Company's Employee Stock Ownership Trust) is entitled to dividends at the
      rate of $0.6125 per year, is convertible into one Common Share, and is
      entitled to a liquidation preference of $10 (together with accrued
      dividends). All preferred shares are entitled to one vote per share
      (voting with the Common Shares except as otherwise required by law).

4.    Effective January 1, 1999, the Company adopted Statement of Financial
      Accounting Standards ("SFAS") No. 134, "Accounting for Mortgage-Backed
      Securities Retained After the Securitization of Mortgage Loans Held for
      Sale by a Mortgage Banking Enterprise." SFAS No. 134, which amends SFAS
      No. 65, "Accounting for Certain Mortgage Banking Activities," requires
      that, after the securitization of a mortgage loans held for sale, any
      retained mortgage-backed security ("MBS") should be classified in
      accordance with the provisions of SFAS 115, "Accounting for Certain
      Investments In Debt and Equity Securities." However, SFAS No. 134 required
      that a mortgage banking enterprise classify as trading any retained MBS
      that it commits to sell before or during the securitization process. The
      adoption of SFAS No. 134 did not materially impact the Company's financial
      condition or results of operations.

5.    In June 1997, the Financial Accounting Standards Board issued SFAS
      No. 131, "Disclosures about Segments of an Enterprise and Related
      Information." SFAS No. 131 establishes standards for the way that public
      business enterprises report information about operating segments in annual
      financial statements, requires that selected information about operating
      segments be reported in interim financial statements issued to
      stockholders and establishes standards for related disclosures about an
      enterprise's products and services, geographic areas, and major customers.
           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, accounts receivable
      management services, trade financing, equipment leasing, corporate and
      consumer deposit services, 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 1999 year-to-date average interest-earning
      assets were 60.3% loans (corporate lending was 77.2% and real estate
      lending was 19.7% of total loans, respectively) and 39.7% investment
      securities and money market investments. There are no industry
      concentrations exceeding 10% of loans, gross, in the corporate loan
      portfolio. Approximately 70% 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.


                                        8
<PAGE>   9
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

      The following tables provide certain information regarding the Company's
operating segments for the three and six month periods ended June 30, 1999 and
1998:

<TABLE>
<CAPTION>
                                         Corporate          Real Estate        Company-wide
                                          Lending             Lending            Treasury              Totals
                                        ------------        -----------        ------------        --------------
<S>                                     <C>                 <C>                <C>                 <C>
Three months ended June 30, 1999
Net interest income                     $  6,846,298        $ 2,084,666        $  3,278,171        $   12,209,135
Noninterest income                         2,116,442          1,472,458              36,476             3,625,376
Depreciation and amortization                 39,381             52,548                 172                92,101
Segment profit                             4,211,429          2,118,600           4,555,600            10,885,629
Segment assets                           497,681,191         95,099,347         437,691,934         1,030,472,472

Three months ended June 30, 1998
Net interest income                     $  5,602,533        $ 1,980,200        $  3,388,326        $   10,971,059
Noninterest income                         2,183,097          1,007,920              15,403             3,206,420
Depreciation and amortization                 26,079             48,917                  86                75,082
Segment profit                             3,616,103          1,694,800           4,634,800             9,945,703
Segment assets                           438,710,664         96,322,327         385,972,415           921,005,406
</TABLE>


<TABLE>
<CAPTION>
                                          Corporate         Real Estate        Company-wide
                                           Lending            Lending            Treasury               Totals
                                        ------------        -----------        ------------        --------------
<S>                                     <C>                 <C>                <C>                 <C>
Six months ended June 30, 1999
Net interest income                     $ 13,445,463        $ 4,385,882        $  6,000,110        $   23,831,455
Noninterest income                         4,051,285          2,663,347              78,079             6,792,711
Depreciation and amortization                 77,424             95,697                 343               173,464
Segment profit                             6,967,262          4,143,700           9,728,700            20,839,662
Segment assets                           497,681,191         95,099,347         437,691,934         1,030,472,472

Six months ended June 30, 1998
Net interest income                     $ 10,880,891        $ 3,968,340        $  7,303,090        $   22,152,321
Noninterest income                         4,021,022          1,834,832              31,471             5,887,325
Depreciation and amortization                 45,453             88,095                 172               133,720
Segment profit                             5,602,489          3,292,100           9,734,200            18,628,789
Segment assets                           438,710,664         96,322,327         385,972,415           921,005,406
</TABLE>


                                       9
<PAGE>   10
      The following table sets forth reconciliations of reportable operating
segments net interest income, noninterest income, profits and assets to the
Company's consolidated totals:

<TABLE>
<CAPTION>
                                                       Three Months ended June 30,                     Six  Months ended June 30,
                                                  -----------------------------------         ------------------------------------
                                                        1999                1998                    1999                 1998
                                                  ---------------       -------------         ---------------        -------------
<S>                                               <C>                   <C>                   <C>                    <C>
Net interest income:
   Total for reportable operating segments        $    12,209,135       $  10,971,059         $    23,831,455        $  22,152,321
   Other [1]                                              824,412             899,727               1,741,872            1,475,052
                                                  ---------------       -------------         ---------------        -------------

Consolidated net interest income                  $    13,033,547       $  11,870,786         $    25,573,327        $  23,627,373
                                                  ===============       =============         ===============        =============

Noninterest income:
   Total for reportable operating segments        $     3,625,376       $   3,206,420         $     6,792,711        $   5,887,325
   Other [1]                                              970,619             969,880               2,031,172            1,764,301
                                                  ---------------       -------------         ---------------        -------------

Consolidated noninterest income                   $     4,595,995       $   4,176,300         $     8,823,883        $   7,651,626
                                                  ===============       =============         ===============        =============

Profit:
   Total for reportable operating segments        $    10,885,629       $   9,945,703         $    20,839,662        $  18,628,789
   Other [1]                                           (5,084,499)         (4,600,202)             (9,296,146)          (8,015,043)
                                                  ---------------       -------------         ---------------        -------------

Consolidated income before income taxes           $     5,801,130       $   5,345,501         $    11,543,516        $  10,613,746
                                                  ===============       =============         ===============        =============

Assets:
   Total for reportable operating segments        $ 1,030,472,472       $ 921,005,406         $ 1,030,472,472        $ 921,005,406
   Other [1]                                           38,050,709          39,924,780              38,050,709           39,924,780
                                                  ---------------       -------------         ---------------        -------------

Consolidated assets                               $ 1,068,523,181       $ 960,930,186         $ 1,068,523,181        $ 960,930,186
                                                  ===============       =============         ===============        =============
</TABLE>


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


6.    In June 1998, the Financial Accounting Standard Board issued SFAS No. 133,
      "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
      133 establishes accounting and reporting standards for derivative
      instruments and for hedging activities. It requires that an entity
      recognize all derivatives as either assets or liabilities in the
      statements of financial condition and measure those instruments at fair
      value. The accounting for changes in the fair value of a derivative (that
      is, unrealized gains and losses) depends on the intended use of the
      derivative and the resulting designation. SFAS No. 133 as amended by SFAS
      No. 137, "Accounting for Derivative Instruments and Hedging Activities -
      Deferral of the Effective Date of FASB Statement 133," is effective for
      fiscal quarters of fiscal years beginning after June 15, 2000 and does not
      require restatement of prior periods. Management of the Company believes
      the implementation of SFAS No. 133 will not have a material impact on the
      Company's financial condition or results of operations.


                                       10
<PAGE>   11
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


The following commentary presents management's discussion and analyses of the
consolidated results of operations and financial condition of Sterling Bancorp
(the "parent company"), a bank holding company as defined by the Bank Holding
Company Act of 1956, as amended, and its wholly-owned subsidiaries Sterling
Banking Corporation, Sterling Industrial Loan Association, and Sterling National
Bank. Sterling National Bank, which is the principal subsidiary, owns all of
the outstanding shares of Sterling Factors Corporation ("Factors"), Sterling
National Mortgage Company, Inc.("SNMC-New York"), Sterling National Mortgage
Corp. ("SNMC-Virginia") and Sterling Holding Company of Virginia, Inc. Sterling
Holding Company of Virginia, Inc. owns all of the outstanding shares of Sterling
Real Estate Holding Company, Inc. ("SREHC"). Throughout this discussion and
analysis, the term "the Company" refers to Sterling Bancorp and its
subsidiaries and the term "the bank" refers to Sterling National Bank and its
subsidiaries. This discussion and analysis should be read in conjunction with
the Company's annual report on form 10-K for the year ended December 31, 1998.
This report contains statements that may constitute forward-looking statements
and are subject to certain risks and uncertainties that could cause actual
facts to differ materially from those presented in this report. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date of this report.


BUSINESS

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, accounts receivable management services, trade
financing, equipment leasing, corporate and consumer deposits services, trust
and estate administration, and investment management services. The Company has
operations in metropolitan New York and Washington, DC areas, as well as
Virginia and other mid-Atlantic territories and conducts business throughout
the United States.

         There is intense competition in all areas in which the Company conducts
its business. In addition to competing with other banks, the Company competes in
certain areas of its business with other financial institutions. At June 30,
1999, the Bank's year-to-date average earning assets (of which loans were 58%
and investment securities were 40%) represented approximately 95% of the
Company's year-to-date average earning assets.

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


            Results for the three months ended June 30, 1999 and 1998

OVERVIEW

The Company reported net income for the three months ended June 30, 1999 of $3.6
million, representing $0.42 per share, calculated on a diluted basis, compared
to $3.1 million, or $0.36 per share calculated on a diluted basis, for the like
period in 1998. This increase reflects higher net interest income and continued
growth in noninterest income.

         Net interest income increased to $13.0 million for the second quarter
of 1999 compared with $11.9 million for the same period in 1998, principally due
to higher average earning assets outstanding. The net interest margin, on a tax


                                       11
<PAGE>   12
equivalent basis, was 6.12% for the second three months of 1999 compared to
5.86% for the like 1998 period. This increase was due to a decrease in average
cost of funds of 47 basis points partially offset by a 10 basis point decrease
in the average yield on earning assets.

         Noninterest income rose to $4.6 million for the three months ended June
30, 1999 compared to $4.2 million for the like 1998 period principally due to
continued growth in fees from mortgage banking.



INCOME STATEMENT ANALYSIS

Net Interest Income

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. The increases (decreases) in the
components of interest income and interest expense, expressed in terms of
fluctuation in average volume and rate are shown on page 21. Information as to
the components of interest income and interest expense and average rates is
provided in the Average Balance Sheets shown on page 19.

         Net interest income for the three months ended June 30, 1999 increased
$1,163,000 to $13,034,000 from $11,871,000 for the comparable period in 1998.

         Total interest income aggregated $18,974,000 up $901,000 for the second
quarter of 1999 as compared to $18,073,000 for the same period of 1998. The tax
equivalent yield on interest earning assets was 8.81% for the second three
months of 1999 compared with 8.91% for the comparable period in 1998. The
increase in interest income was principally due to an increase in income earned
on the Company's loan portfolio as a result of management's strategy of
increasing loan outstandings as a percentage of total assets. The decrease in
yield on earning assets was due to lower yields on loans and investment
securities.

         Interest earned on the loan portfolio amounted to $13,437,000 up
$775,000 when compared to a year ago. Average loan balances amounted to
$533,118,000 up $37,505,000 from an average of $495,613,000 in the prior year
period. The increase in the average loans, primarily in the leasing, mortgage
and commercial and industrial loan segments of the Company's loan portfolio,
accounted for the increase in interest earned on loans. The decrease in the
yield on the domestic loan portfolio to 10.73% for the three months ended June
30, 1999 from 11.08% for the comparable 1998 period was primarily attributable
to a lower rate environment.

         Tax equivalent interest earned on investment securities increased
$331,000 to $5,569,000 in 1999 due to higher average outstandings partially
offset by lower yields due to a flattening of the U.S. Treasury yield curve.

         Interest expense decreased $261,000 to $5,941,000 for the second three
months of 1999 from $6,202,000 for the comparable period in 1998. The decrease
in interest expense was due to the lower average rates paid for deposits and
borrowed funds partially offset by higher average funds employed.

         Interest expense on deposits decreased $496,000 for the three months
ended June 30, 1999 to $3,670,000 from $4,166,000 for the comparable 1998 period
principally due to decreases in average outstandings and the cost of funds. The
average rate paid on interest-bearing deposits was reduced to 3.45% in 1999
compared to 4.00% in the comparable year-ago period.


                                       12
<PAGE>   13
Noninterest Income

Noninterest income increased $420,000 for the second quarter of 1999 when
compared with the like 1998 period primarily as a result of increased fees from
mortgage banking.

Noninterest Expense

Noninterest expenses increased $1,024,000 for the second three months of 1999
when compared with the like 1998 period primarily due to increased personnel and
equipment expenses incurred to support growing levels of business activity and
continued investment in the business franchise.


             Results for the six months ended June 30, 1999 and 1998

OVERVIEW

The Company reported net income for the six months ended June 30,1999 of $7.0
million, representing $0.82 per share, calculated on a diluted basis, compared
to $6.1 million, or $0.71 per share calculated on a diluted basis, for the like
period in 1998. This increase reflects continued growth in both net interest
income and noninterest income as explained below.

         Net interest income increased to $25.6 million for the first six months
of 1999 compared with $23.6 million for the same period in 1998, principally due
to higher average earning asset outstandings. The net interest margin, on a tax
equivalent basis, was 6.17% for the first six months of 1999 compared to 5.86%
for the like 1998 period. This increase was due to a 51 basis point decrease in
the average cost of funds partially offset by a 15 basis point decrease in
average yield on earning assets.

         Noninterest income rose to $8.8 million for the six months ended June
30,1999 compared to $7.7 million for the like 1998 period principally due to
continued growth in fees from mortgage banking, factoring, trade finance and
deposit services.


INCOME STATEMENT ANALYSIS

Net Interest Income

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. The increases (decreases) for the
components of interest income and interest expense for the first six months,
expressed in terms of fluctuation in average volume and rate are shown on page
22. Information as to the components of interest income and interest expense and
average rates for the first six months is provided in the Average Balance Sheets
shown on page 20.

         Net interest income for the six months ended June 30,1999 increased
$1,946,000 to $25,573,000 from $23,627,000 for the comparable period in 1998.

         Total interest income aggregated $36,911,000 up $650,000 for the first
half of 1999 as compared to $36,261,000 for the same period of 1998. The tax
equivalent yield on interest-earning assets was 8.83% for the first six months
of 1999 compared with 8.98% for the comparable period in 1998. The increase in
interest income was principally due to an increase in income earned on the
Company's loan portfolio as a result of management's strategy of increasing loan
outstandings as a percentage of total assets. The decrease in yield on earning
assets was due to lower yields on loans and investment securities.


                                       13
<PAGE>   14
         Interest earned on the loan portfolio amounted to $26,575,000 up
$1,653,000 when compared to a year ago. Average loan balances amounted to
$530,840,000 up $40,503,000 from an average of $490,337,000 in the prior year
period. The increase in the average loans, primarily in the Company's leasing,
mortgage and commercial and industrial loan portfolio, accounted for the
increase in interest earned on loans. The decrease in the yield on the domestic
loan portfolio to 10.80% for the six months ended June 30,1999 from 11.15% for
the comparable 1998 period was primarily attributable to a lower prime rate in
the 1999 period.

         Tax equivalent interest earned on investment securities decreased
$683,000 to $10,307,000 in 1999 due to lower average outstandings and lower
yields due to a flattening of the U.S. Treasury yield curve.

         Total interest expense decreased $1,296,000 to $11,338,000 for the
first six months of 1999 from $12,634,000 for the comparable period in 1998. The
decrease in interest expense was primarily due to lower average rates paid for
interest-bearing deposits.

         Interest expense on deposits decreased $1,592,000 for the six months
ended June 30,1999 to $6,979,000 from $8,571,000 for the comparable 1998 period
due to decreases in average outstandings and the cost of funds. Average
outstandings decreased $17,915,000 to $405,421,000 in 1999 from $423,336,000 in
1998. The average rate paid on interest-bearing deposits decreased 3.47% in 1999
compared to 4.08% in the comparable year ago period.

Provision for Credit Losses

Based on management's continuing evaluation of the loan portfolio (discussed
under "Asset Quality" below), and principally as the result of the growth in the
loan portfolios, the provision for credit losses increased to $2,753,000 up
$642,000 when compared to the same period last year.

Noninterest Income

Noninterest income increased $1,172,000 for the first six months of 1999 when
compared with the like 1998 period primarily as a result of increased fees from
mortgage banking, factoring, trade finance and deposit services.

Noninterest Expense

Noninterest expenses increased $1,547,000 for the second quarter of 1999 when
compared with the like 1998 period primarily due to increased personnel and
equipment expenses incurred to support growing levels of business activity and
continued investments in the business franchise.


                                       14
<PAGE>   15
BALANCE SHEET ANALYSIS

Securities

The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency guaranteed mortgage backed securities
along with other debt and equity securities. At June 30, 1999, the Company's
portfolio of securities totalled $379,392,000 of which U.S. Government and U.S.
Government corporation and agency guaranteed mortgage-backed securities having
an average life of approximately 4.6 years amounted to $347,734,000. 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 $526,000 and $4,789,000, respectively.
Securities classified as "available for sale" may be sold in the future, prior
to maturity. These securities are carried at market 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. "Available for sale" securities included gross unrealized gains of
$164,000 and gross unrealized losses of $2,585,000. Given the generally high
credit quality of the portfolio, management expects to realize all of its
investment upon the maturity of such instruments, and thus believes that any
market value impairment is temporary in nature.


Loan Portfolio

A key management objective 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 seek to avoid concentrations by industry or loan size in order to
minimize credit exposure and to originate loans in markets with which it is
familiar.

         The Company's commercial and industrial loan portfolio represents
approximately 69% of gross loans. Loans in this category are typically made to
small and medium sized businesses and range between $250,000 and $10 million.
The primary source of repayment is from the borrower's operating profits and
cash flows. Based on underwriting standards, loans may be secured in whole or in
part by collateral such as liquid assets, accounts receivable, equipment,
inventory or real property. The Company's real estate loan portfolio, which
represents


                                       15
<PAGE>   16
approximately 16% of gross loans, is secured by mortgages on real property
located principally in the State of New York and the State of Virginia. The
Company's leasing portfolio, which consists of finance leases for various types
of business equipment, represents approximately 13% of gross loans. The
collateral securing any loan may vary in value based on market conditions.

         The following table sets forth the composition of the Company's loan
portfolio.



<TABLE>
<CAPTION>
                                                                         June 30,
                                              -------------------------------------------------------------
                                                         1999                              1998
                                              --------------------------         --------------------------
                                                                    ($ in thousands)
                                                                  % of                              % of
                                             Balances            Gross          Balances            Gross
<S>                                          <C>              <C>              <C>               <C>
Domestic
  Commercial and industrial                   $425,100              69.2%        $397,404              71.6%
  Equipment lease financing                     79,417              12.9           54,110               9.8
  Real estate                                   94,838              15.5           85,703              15.4
  Installment - individuals                     14,037               2.3           17,060               3.1
Foreign
  Government and official institutions             785               0.1              788               0.1
                                              --------        ----------         --------        ----------
Gross loan                                     614,177             100.0%         555,065             100.0%
                                                              ==========                         ==========
  Unearned discounts                            11,221                              8,735
                                              --------                           --------

Loans, net of unearned discounts              $602,956                           $546,330
                                              ========                           ========
</TABLE>

Asset Quality

Intrinsic to the lending process is the possibility of loss. In times of
economic slowdown, the risk inherent in the Company's portfolio of loans may be
increased. 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
depends on current and expected economic conditions, the financial condition of
borrowers and the credit management process.

        The allowance for credit losses is maintained through the provision for
credit losses, which is a charge to operating earnings. The adequacy of the
provision and the resulting allowance for credit losses is determined by
management's continuing review 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, review of regulatory examinations, an
assessment of current and expected economic conditions and changes in the size
and character of the loan portfolio. The allowance reflects management's
evaluation of both loans presenting identified loss potential and of the risk
inherent in various components of the 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, 1999, the ratio of the allowance to loans, net of
unearned discounts, was 1.63% and the allowance was $9,837,000. At such date,
the Company's non-accrual loans amounted to $1,750,000; $1,106,000 of such loans
were judged to be impaired within the scope of SFAS No. 114 and required
valuation allowances of $300,000. Based on the foregoing, as well as
management's judgement as to the current risks inherent in the loan portfolio,
the Company's allowance for credit losses was deemed adequate to absorb all
reasonably anticipated losses on specifically known and other possible credit
risks associated with the portfolio as of June 30, 1999. 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 cause management to have serious doubts as to the ability of the
borrowers to continue to comply with the present repayment terms, aggregated
$2,630,000 at June 30, 1999.


                                       16
<PAGE>   17
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:


<TABLE>
<CAPTION>
                                                          June 30,
                                     ---------------------------------------------------
                                             1999                           1998
                                     ---------------------        ----------------------
                                                      ($ in thousands)
                                                     % of                          % of
                                     Balances        Gross         Balances        Gross
                                     --------        -----         --------        -----
<S>                                 <C>              <C>              <C>               <C>
Domestic
  Demand                             $262,834         38.4%        $253,473         38.6%
  NOW                                  65,601          9.6           69,085         10.5
  Savings                              24,105          3.5           23,480          3.6
  Money Market                        138,172         20.2          134,100         20.4
  Time deposits                       190,689         27.9          173,065         26.5
                                     --------        -----         --------        -----

      Total domestic deposits         681,401         99.6          653,203         99.6
Foreign
  Time deposits                         2,780          0.4            2,730          0.4
                                     --------        -----         --------        -----

      Total deposits                 $684,181        100.0%        $655,933        100.0%
                                     ========        =====         ========        =====
</TABLE>


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 customer's
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on pages 19 and 20.


CAPITAL

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). Information regarding the Company's
and the bank's risk-based capital is presented on page 19. 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. Among other matters, FDICIA established five
capital categories ranging from "well capitalized" to "critically under
capitalized." Such classifications 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 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 June 30, 1999, the Company
and the bank exceeded the requirements for "well capitalized" institutions.


                                       17
<PAGE>   18
YEAR 2000 PROJECT

Management has initiated a company-wide program to prepare the Company's
computer hardware and software for the year 2000. In this connection, the
Company has established a Year 2000 ("Y2K") Compliance Committee ("the
Committee") to coordinate all work on this important issue -- with special
emphasis being placed on mission critical systems. The work was divided into the
following phases: awareness, assessment, renovation, validation, and
implementation. The Company continues to take this project very seriously, with
senior management and the board of directors regularly reviewing the entire
process.

      As of June 30, 1999, the Company has completed all phases for all of its
mission critical systems. That is, the Committee has completed all phases of the
company-wide program, and has prepared the Company's computer hardware and
software for the Year 2000.

      The Company has established a Customer Awareness Program, where
information on consumer related Y2K issues and updates on the Company's Y2K
program have been and will continue to be posted on Sterling Bancorp's website,
enclosed in account statements, and made available at the Company's branch
locations. The Company also has established a Customer Risk Assessment Program
to assess the level of awareness of and compliance with Y2K issues by the
Company's substantial business customers and its significant funding sources.
Questionnaires were sent to such funds takers and funds providers, followed by
personal contact by Company officers. The Committee has reviewed all responses
and assessed the risks associated with any non-compliance. To date, no
mitigating actions have been warranted. The Company will continue to monitor the
progress of its larger customers, funding sources, and vendors and to assess the
potential impact of any non-compliance on the Company.

      The Committee has estimated that the cost of the Y2K project will be
approximately $350,000; to date $324,000 has been expensed. Many of the
expenditures relate to microcomputer hardware and software that would have been
upgraded in the normal course of the Company's operations through December 31,
1999.

      The Company, as part of its normal business proactive, has business
resumption and disaster recovery plans to facilitate timely restoration on
services and processes in the event of a business disruption. In addition, the
Company has developed Year 2000 business resumption contingency plans to define
the actions that will be taken to insure that critical business functions can
continue to operate in the unlikely event that a system or supplier failure
occurs due to the millennium change. The development of these plans includes the
identification of core business processes, critical to the Company's business
and operations, and assessment of failure scenarios.

      Despite the best efforts of the Committee, there can be no complete
assurance that the Company will not be adversely affected by unforeseen problems
in its own computer systems or in systems provided by third parties and by other
entities not associated with the Company that are unsuccessful in properly
addressing this issue. While the dollar impact of any unforseen problems cannot
be accurately quantified at this time because of the uncertainties involved,
such problems could have a material adverse effect on the Company.


                                       18
<PAGE>   19
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                           Three Months Ended June 30,
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                              1999                                       1998
                                            --------------------------------------      --------------------------------------
                                            Average                        Average      Average                        Average
ASSETS                                      Balance        Interest         Rate        Balance        Interest         Rate
                                            --------       --------       --------      --------       --------       --------
<S>                                         <C>            <C>            <C>           <C>            <C>            <C>
Interest-bearing deposits
   with other banks                         $    515       $     50          4.24%      $    830       $     31          5.17%
Investment securities
   Available for sale [2]                    137,883          2,165          6.28        122,954          1,996          6.50
   Held to maturity                          219,696          3,404          6.20        221,078          3,242          6.08
Federal funds sold                             7,275             84          4.59         15,786            218          5.46
Loans, net of unearned discounts
   Domestic [3]                              532,325         13,426         10.73        494,825         12,648         11.08
   Foreign                                       786             12          6.05            788             13          6.70
                                            --------       --------                     --------       --------
         TOTAL INTEREST-EARNING
            ASSETS                           898,480         19,141          8.81%       856,261         18,148          8.91%
                                                           --------       ========                     --------       ========
Cash and due from banks                       47,322                                      43,699
Allowance for credit losses                  (10,651)                                     (8,754)
Goodwill                                      21,158                                      21,158
Other assets                                  19,213                                      22,206
                                            --------                                    --------
         TOTAL ASSETS                       $975,522                                    $934,570
                                            ========                                    ========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
 Domestic
  Savings                                   $ 23,875            139          2.34%      $ 23,684            132          2.24%
  NOW                                         69,901            431          2.47         65,534            472          2.89
  Money Market                               144,961            984          2.72        140,129          1,130          3.23
  Time                                       184,609          2,086          4.53        185,180          2,395          5.19
 Foreign
  Time                                         2,753             30          4.34          2,730             37          5.43
                                            --------       --------                     --------       --------
      Total interest-bearing
          deposits                           426,099          3,670          3.45        417,257          4,166          4.00
                                            --------       --------                     --------       --------
Borrowings
  Federal funds purchased and
    securities sold under
    agreements to repurchase                  90,580          1,056          4.67         67,597            869          5.14
  Commercial paper                            37,913            445          4.71         30,269            388          5.14
  Other short-term debt                        3,760            250          5.06         15,836            253          5.25
  Long-term debt                              41,050            520          5.07         41,512            526          5.08
                                            --------       --------                     --------       --------
      Total borrowings                       173,303          2,271          4.78        155,214          2,036          5.14
                                            --------       --------                     --------       --------
      TOTAL INTEREST-BEARING
          LIABILITIES                        599,402          5,941          3.84%       572,471          6,202          4.31%
                                                           --------       ========                     --------       ========

Noninterest-bearing deposits                 231,188                                     222,841
Other liabilities                             42,723                                      43,785
                                            --------                                    --------
      Total liabilities                      873,313                                     839,097

Shareholders' equity                         102,209                                      95,473
                                            --------                                    --------
      TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY                  $975,522                                    $934,570
                                            ========                                    ========

Net interest income/spread                                   13,200          4.97%                       11,946          4.60%
                                                                          ========                                    ========


Net yield on interest-earning
  assets (margin)                                                            6.12%                                       5.86%
                                                                          ========                                    ========

Less: Tax equivalent adjustment                                 166                                          76
                                                           --------                                    --------
Net interest income                                        $ 13,034                                    $ 11,870
                                                           ========                                    ========
</TABLE>


[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.

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

[3] Nonaccrual loans are included in amounts outstanding and income has been
    included to the extent earned.


                                       19
<PAGE>   20
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                            Six Months Ended June 30,
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                              1999                                       1998
                                            --------------------------------------      --------------------------------------
                                            Average                        Average      Average                        Average
ASSETS                                      Balance        Interest         Rate        Balance        Interest         Rate
                                            --------       --------       --------      --------       --------       --------
<S>                                         <C>            <C>            <C>           <C>            <C>            <C>
Interest-bearing deposits
   with other banks                         $    515       $     74          4.20%      $ 1,742        $    105          5.13%
Investment securities
   Available for sale [2]                    136,831          4,281          6.27        122,522          3,911          6.41
   Held to maturity                          200,438          6,026          6.01        227,577          7,079          6.33
Federal funds sold                            11,696            273          4.64         12,994            357          5.46
Loans, net of unearned discounts
   Domestic [3]                              530,053         26,551         10.80        489,548         24,895         11.15
   Foreign                                       787             24          6.12            789             27          6.78
                                            --------       --------                     --------       --------
         TOTAL INTEREST-EARNING

            ASSETS                           880,320         37,229          8.83%       855,172         36,374          8.98%
                                                           --------       ========                     --------       ========

Cash and due from banks                       45,670                                      42,508
Allowance for credit losses                  (10,563)                                     (8,876)
Goodwill                                      21,158                                      21,158
Other assets                                  19,603                                      21,597
                                            --------                                    --------
         TOTAL ASSETS                       $956,188                                    $931,559
                                            ========                                    ========

LIABILITIES AND SHAREHOLDERS'
   EQUITY
Interest-bearing deposits
   Domestic
      Savings                               $ 24,427            284          2.34%      $ 23,617            262          2.24%
      NOW                                     66,081            809          2.47         59,581            847          2.87
      Money Market                           135,211          1,827          2.72        137,642          2,152          3.15
      Time                                   176,960          3,996          4.55        199,768          5,237          5.29
   Foreign
      Time                                     2,742             63          4.63          2,728             73          5.39
                                            --------       --------                     --------       --------
      Total interest-bearing
           deposits                          405,421          6,979          3.47        423,336          8,571          4.08
                                            --------       --------                     --------       --------

Borrowings
   Federal funds purchased and
     securities sold under
      agreements to repurchase                85,671          2,028          4.77         79,329          2,087          5.30
   Commercial paper                           39,897            933          4.72         29,213            749          5.17
   Other short-term debt                       3,691            353          5.07         15,179            497          5.22
   Long-term debt                             41,172          1,045          5.08         28,978            730          5.08
                                            --------       --------                     --------       --------
      Total borrowings                       170,431          4,359          4.84        152,699          4,063          5.22
                                            --------       --------                     --------       --------

         TOTAL INTEREST-BEARING
           LIABILITIES                       575,852         11,338          3.88%       576,035         12,634          4.39%
                                                           --------       ========                     --------       ========
Noninterest-bearing deposits                 236,107                                     218,368
Other liabilities                             42,013                                      42,981
                                            --------                                    --------
       Total liabilities                     853,972                                     837,384
Shareholders' equity                         102,216                                      94,175
                                            --------                                    --------
         TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY             $956,188                                    $931,559
                                            ========                                    ========

Net interest income/spread                                   25,891          4.95%                       23,740          4.59%
                                                                          ========                                    ========
Net yield on interest-earning
   assets (margin)                                                           6.17%                                       5.86%
                                                                          ========                                    ========

Less: Tax equivalent adjustment                                 318                                         113
                                                           --------                                    --------

Net interest income                                        $ 25,573                                    $ 23,627
                                                           ========                                    ========
</TABLE>


[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.

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

[3]   Nonaccrual loans are included in amounts outstanding and income has been
      included to the extent earned.


                                       20
<PAGE>   21
                        STERLING BANCORP AND SUBSIDIARIES
                            Rate/Volume Analysis [1]
                           Three Months Ended June 30,
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                    Increase/(Decrease)
                                                                    Three Months Ended
                                                                   June 30, 1999 and 1998
                                                      ---------------------------------------------
                                                      Volume               Rate              Net[2]
                                                      -------             -----             -------
<S>                                                   <C>                 <C>               <C>
INTEREST INCOME
Interest-bearing deposits with other banks            $    13             $   6             $    19
                                                      -------             -----             -------
Investment securities
   Available for sale                                     237               (68)                169
   Held to maturity                                         7               155                 162
                                                      -------             -----             -------
      Total                                               244                87                 331
                                                      -------             -----             -------
Federal funds sold                                       (104)              (30)               (134)
                                                      -------             -----             -------
Loans, net of unearned discounts [3]
   Domestic                                             1,159              (381)                778
   Foreign                                                 --                (1)                 (1)
                                                      -------             -----             -------
      Total                                             1,159              (382)                777
                                                      -------             -----             -------
TOTAL INTEREST INCOME                                 $ 1,312             $(319)            $   993
                                                      =======             =====             =======

INTEREST EXPENSE
Interest-bearing deposits
 Domestic
   Savings                                            $     1             $   6             $     7
   NOW                                                     30               (71)                (41)
   Money Market                                            38              (184)               (146)
   Time                                                    (7)             (302)               (309)
 Foreign
   Time                                                    --                (7)                 (7)
                                                      -------             -----             -------
      Total                                                62              (558)               (496)
                                                      -------             -----             -------

Borrowings
   Federal funds purchased and securities
     sold under agreements to repurchase                  272               (85)                187
   Commercial paper                                        91               (34)                 57
   Other short-term debt                                   (3)               --                  (3)
   Long-term debt                                          (5)               (1)                 (6)
                                                      -------             -----             -------
      Total                                               355              (120)                235
                                                      -------             -----             -------

TOTAL INTEREST EXPENSE                                $   417             $(678)            $  (261)
                                                      =======             =====             =======

NET INTEREST INCOME                                   $   895             $ 359             $ 1,254
                                                      =======             =====             =======
</TABLE>


[1] The above table is presented on tax equivalent basis.

[2] The change in interest income and interest expense due to both rate and
    volume has been allocated to change due to rate and the change due to volume
    in proportion to the relationship of the absolute dollar amounts of the
    changes in each.

[3] Nonaccrual loans have been included in the amounts outstanding and income
    has been included to the extent accrued.


                                       21
<PAGE>   22
                              STERLING BANCORP AND
                            SUBSIDIARIES Rate/Volume
                             Analysis [1] Six Months
                                 Ended June 30,
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                     Increase/(Decrease)
                                                                     Six Months Ended
                                                                   June 30, 1999 and 1998
                                                      -----------------------------------------------
                                                      Volume                Rate               Net[2]
                                                      -------             -------             -------
<S>                                                   <C>                 <C>                 <C>
INTEREST INCOME
Interest-bearing deposits with other banks            $   (25)            $    (6)            $   (31)
                                                      -------             -------             -------
Investment securities
   Available for sale                                     455                 (85)                370
   Held to maturity                                      (740)               (313)             (1,053)
                                                      -------             -------             -------
      Total                                              (285)               (398)               (683)
                                                      -------             -------             -------

Federal funds sold                                        (33)                (51)                (84)
                                                      -------             -------             -------

Loans, net of unearned discounts [3]
   Domestic                                             2,433                (777)              1,656
   Foreign                                                 --                  (3)                 (3)
                                                      -------             -------             -------
      Total                                             2,433                (780)              1,653
                                                      -------             -------             -------
TOTAL INTEREST INCOME                                 $ 2,090             $(1,235)            $   855
                                                      =======             =======             =======

INTEREST EXPENSE
Interest-bearing deposits
 Domestic
   Savings                                            $     9             $    13             $    22
   NOW                                                     87                (125)                (38)
   Money Market                                           (37)               (288)               (325)
   Time                                                  (558)               (683)             (1,241)
 Foreign
   Time                                                    --                 (10)                (10)
                                                      -------             -------             -------
      Total                                              (499)             (1,093)             (1,592)
                                                      -------             -------             -------

Borrowings
   Federal funds purchased and securities
      sold under agreements to repurchase                 159                (218)                (59)
   Commercial paper                                       254                 (70)                184
   Other short-term debt                                 (139)                 (5)               (144)
   Long-term debt                                         315                  --                 315
                                                      -------             -------             -------
      Total                                               589                (293)                296
                                                      -------             -------             -------

TOTAL INTEREST EXPENSE                                $    90             $(1,386)            $(1,296)
                                                      =======             =======             =======

NET INTEREST INCOME                                   $ 2,000             $   151             $ 2,151
                                                      =======             =======             =======
</TABLE>


[1] The above table is presented on tax equivalent basis.

[2] The change in interest income and interest expense due to both rate and
    volume has been allocated to change due to rate and the change due to volume
    in proportion to the relationship of the absolute dollar amounts of the
    changes in each.

[3] Nonaccrual loans have been included in the amounts outstanding and income
    has been included to the extent accrued.


                                       22
<PAGE>   23
                        STERLING BANCORP AND SUBSIDIARIES
                          Regulatory Capital and Ratios

RATIOS AND MINIMUMS

(dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 For Capital                  To Be Well
                                                          Actual               Adequacy Minimum              Capitalized
                                                   -------------------        -------------------        -------------------
AS OF JUNE 30, 1999                                 Amount       Ratio        Amount        Ratio        Amount        Ratio
-------------------                                -------       -----        -------        ----        -------       -----
<S>                                                <C>           <C>          <C>            <C>         <C>           <C>
Total Capital (to Risk Weighted Assets):
  The Company                                      $91,128       13.76%       $52,978        8.00%       $66,223       10.00%
  The bank                                          70,318       11.41         49,318        8.00         61,647       10.00

Tier 1 Capital (to Risk Weighted Assets):
  The Company                                       82,831       12.51         26,489        4.00         39,734        6.00
  The bank                                          62,776       10.18         24,659        4.00         36,988        6.00

Tier 1 Leverage Capital (to Average Assets):
  The Company                                       82,831        8.68         38,175        4.00         47,718        5.00
  The bank                                          62,776        6.91         36,322        4.00         45,403        5.00


AS OF DECEMBER 31, 1998
-----------------------
Total Capital (to Risk Weighted Assets):
  The Company                                      $89,307       12.63%       $56,552        8.00%       $70,690       10.00%
  The bank                                          71,998       10.93         52,675        8.00         65,844       10.00

Tier 1 Capital (to Risk Weighted Assets):
  The Company                                       80,454       11.38         28,276        4.00         42,414        6.00
  The bank                                          64,117        9.74         26,337        4.00         39,506        6.00

Tier 1 Leverage Capital (to Average Assets):
  The Company                                       80,454        8.67         37,109        4.00         46,387        5.00
  The bank                                          64,117        7.20         35,624        4.00         44,530        5.00
</TABLE>


                                       23
<PAGE>   24
                          QUANTITATIVE AND QUALITATIVE
                            DISCLOSURES ABOUT MARKET


ASSET/LIABILITY MANAGEMENT

The Company's primary earnings source is net interest income; therefore, the
Company devotes significant time and has invested in resources to assist in the
management of market risk, liquidity risk, capital 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 market risk,
liquidity and capital. This risk management process is governed by policies and
limits established by senior management which are reviewed and approved by the
Asset/Liability Committee ("ALCO"). ALCO, which is comprised of members of
senior management and the Board, 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 off-balance sheet 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 on- and
off-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 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 an institution's 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 an institution's net interest margin. However, the
traditional gap analysis does not assess the relative sensitivity of assets and
liabilities to changes in interest rates. 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, 1999, is presented on
page 27. The results of both the income simulation analysis and the gap
analysis, reveal that net interest income would increase during periods of
rising interest rates and decrease during periods of falling interest rates.

      As part of its interest rate risk strategy, the Company uses off-balance
sheet financial instruments (derivatives) to hedge the interest rate sensitivity
of assets with the corresponding amortization reflected in the yield of the
related on-balance sheet assets being hedged. The Company has written policy
guidelines, which have been approved by the Board of Directors based on
recommendations of the Asset/Liability Committee, governing the use of
off-balance sheet financial instruments, including approved counterparties, risk


                                       24
<PAGE>   25
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.

       The Company purchased interest rate floor contracts to reduce the impact
of falling rates on its floating rate commercial loans. Interest rate floor
contracts require the counterparty to pay the Company at specified future dates
the amount, if any, by which the specified interest rate (3 month LIBOR) falls
below the fixed floor rates, applied to the notional amounts. The Company
utilizes these financial instruments to adjust its interest rate risk position
without exposing itself to principal risk and funding requirements.

      At June 30, 1999, the Company's off-balance sheet financial instruments
consisted of four interest rate floor contracts having a notional amount
totaling $125 million consisting of a contract with a notional amount of $25
million and a final maturity of October 10, 1999, another contract with a
notional amount of $50 million and a final maturity of February 27, 2000,
another contract with a notional amount of $25 million and a final maturity
February 9, 2001 and another contract with a notional amount of $25 million and
a final maturity of May 1, 2001. These financial instruments are being used as
part of the Company's interest rate risk management and not for trading
purposes. At June 30, 1999, all counterparties have investment grade credit
ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.

      The interest rate floor contracts require the Company to pay a fee for the
right to receive a fixed interest payment. The Company paid up-front premiums of
$879,000 which are amortized monthly against interest income from the designated
assets. At June 30, 1999, the unamortized premiums on these contracts totaled
$202,000 and are included in other assets. At June 30, 1999, $68,000 was
receivable under these contracts.

      The Company utilizes income simulation models to complement its
traditional gap analysis. While ALCO 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 sensitivity or volatility 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
is not 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 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 which 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
can project the impact of changes in interest rates on net interest margin. The
estimated effects of the Company's interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain 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 June 30,
1999, the model indicated the impact of a 200 basis point parallel and pro rata
rise in rates over twelve months would approximate a 1.69% ($913,000) increase
in net interest income, while the impact of a 200 basis point decline in rates
over the same period would approximate a 0.68% ($369,000) decline from an
unchanged rate environment.


                                       25
<PAGE>   26
      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 make any assurances as to the
predictive nature of these assumptions including how customer 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 internal/external
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.


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 throughout the Company. 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 have significant
unused borrowing capacity. Contingency plans exist and could be implemented on
a timely basis to minimize the impact of any dramatic change in market
conditions.

      The parent company generates income from its own operations. Its cash
requirements are supplemented from funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet the
parent company's cash requirement.

      The bank can supply funds to the parent company and its nonbank
subsidiaries subject to various legal restrictions. 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.

      At June 30, 1999, the parent company's short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $33,757,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$59,696,000 and back-up credit lines with banks of $19,000,000. Since 1979, the
parent company has had no need to use available back-up lines of credit.

      While the past performance is no guarantee of the future, management
believes that the Company's funding sources (including dividends from all its
subsidiaries) and the bank's funding sources will be adequate to meet their
liquidity and capital requirements in the future.


                                       26
<PAGE>   27
                        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 placed in a time of the earliest repricing
period. Amounts are presented in thousands.

<TABLE>
<CAPTION>
                                                                           Repricing Date
                                       ------------------------------------------------------------------------------------------
                                                     More than        More than                         Non
                                       3 months       3 months        1 year to         Over            Rate
                                       or less       to 1 year         5 years         5 years        sensitive          Total
                                      --------       ---------        ---------        --------       ---------        ----------
<S>                                   <C>            <C>              <C>              <C>            <C>              <C>
ASSETS
   Interest-bearing deposits
       with other banks               $ 10,515       $      --        $      --        $     --       $      --        $   10,515
   Investment securities                 4,969          13,846           16,290         337,453           6,834           379,392
   Loans, net of unearned
    discounts
      Commercial and Industrial        418,994             417            3,676           3,009            (561)          425,535
      Lease financing                      730           3,256           74,618             815         (10,287)           69,132
      Real estate                       21,841           2,465           19,216          50,316            (194)           93,644
      Installment                        9,426             933            2,077           1,601            (176)           13,861
      Foreign government and
        official institutions               --             785               --              --              --               785
   Noninterest-earning assets
    and allowance for
     credit losses                          --              --               --              --          75,659            75,659
                                      --------       ---------        ---------        --------       ---------        ----------
      Total Assets                     466,475          21,702          115,877         393,194          71,275         1,068,523
                                      --------       ---------        ---------        --------       ---------        ----------

LIABILITIES AND SHAREHOLDERS'
EQUITY
   Interest-bearing deposits
      Savings [1]                           --              --           24,105              --              --            24,105
      NOW [1]                               --              --           65,601              --              --            65,601
      Money Market [1]                 111,860              --           26,312              --              --           138,172
      Time - domestic                   92,742          79,132           18,815              --              --           190,689
           - foreign                       150           2,630               --              --              --             2,780
  Federal funds purchased &
      securities sold u/a/r            144,269           2,900               --              --              --           147,169

  Commercial paper                      33,407              --               --              --              --            33,407
  Other short-term borrowings           10,635             350               --              --              --            10,985
   Long-term borrowings - FHLB          20,000          10,000           11,050              --              --            41,050
   Noninterest-bearing
    liabilities and share-
     holders' equity                        --              --               --              --         414,565           414,565
                                      --------       ---------        ---------        --------       ---------        ----------

       Total Liabilities and
          Shareholders' Equity         413,063          95,012          145,883              --         414,565         1,068,523
                                      --------       ---------        ---------        --------       ---------        ----------

Net Interest Rate
      Sensitivity Gap                 $ 53,412       $ (73,310)       $ (30,006)       $393,194       $(343,290)       $       --
                                      ========       =========        =========        ========       =========        ==========

Cumulative Gap at
      June 30, 1999                   $ 53,412       $ (19,898)       $ (49,904)       $343,290       $      --        $       --
                                      ========       =========        =========        ========       =========        ==========

Cumulative Gap at
      June 30, 1998                   $125,524       $  42,048        $ (25,912)       $308,640       $      --        $       --
                                      ========       =========        =========        ========       =========        ==========

Cumulative Gap at
      December 31, 1998               $149,850       $ 113,187        $  65,434        $404,571       $      --        $       --
                                      ========       =========        =========        ========       =========        ==========
</TABLE>


[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 runoff experience.


                                       27
<PAGE>   28
                        STERLING BANCORP AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


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

            (a)   The Annual Meeting of Shareholders of the Company was held on
                  April 15, 1999.

            (b)   The following matters were submitted to a vote of the
                  Shareholders of the Company:

                  (1)   Election of Directors *

<TABLE>
<CAPTION>
                             Nominee                        Total Votes For                Total Votes Withheld
                             -------                        ---------------                --------------------
<S>                                                         <C>                            <C>
                         Robert Abrams                           6,489,510                        960,420
                         Joseph M. Adamko                        6,495,089                        954,841
                         Lillian Berkman                         6,489,119                        960,811
                         Louis J. Cappelli                       6,494,877                        955,053
                         Walter Feldesman                        6,427,611                      1,022,319
                         Allan F. Hershfield                     6,340,745                      1,109,185
                         Henry J. Humphreys                      6,491,685                        958,245
                         John C. Millman                         6,494,003                        955,927
                         Maxwell M. Rabb                         6,274,038                      1,175,892
                         Eugene T. Rossides                      6,490,729                        959,201
                         William C. Warren                       6,273,175                      1,176,755
</TABLE>

                        * All nominees, except for Mr. Abrams, were incumbents
                        at the time of the Annual Meeting of Shareholders and
                        all nominees were re-elected.

                  (2)   Amendment of Stock Incentive Plan

<TABLE>
<S>                                                          <C>
                       Total Votes For                       5,269,242
                       Total Votes Against                   2,146,940
                       Total Abstentions                        33,748
                       Total Broker Nonvotes                       -0-
</TABLE>


                                       28
<PAGE>   29
                        STERLING BANCORP AND SUBSIDIARIES

Item 6.  Exhibits and Reports on Form 8-K

      (a)   The following exhibits are filed as part of this report:

            (11)  Statement Re: Computation of Per Share Earnings

            (27)  Financial Data Schedule

      (b)   No reports on Form 8-K have been filed during the quarter.



                                   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      8/12/99                   /s/     Louis J. Cappelli
    --------------------------      -------------------------------------------
                                            Louis J. Cappelli
                                            Chairman and
                                            Chief Executive Officer

Date      8/12/99                   /s/     John W. Tietjen
    --------------------------      -------------------------------------------
                                            John W. Tietjen
                                            Executive Vice President, Treasurer
                                            and Chief Financial Officer


                                       29
<PAGE>   30
                        STERLING BANCORP AND SUBSIDIARIES

                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
                                                                  Incorporated                                Sequential
   Exhibit                                                          Herein By                  Filed             Page
    Number                           Description                  Reference To                Herewith            No.
    ------                           -----------                  ------------                --------            ---
<S>                                  <C>                          <C>                         <C>             <C>
      11                             Computation of                                              X                31
                                     Per Share Earnings

      27                             Financial Data                                              X                32
                                     Schedule
</TABLE>


                                       30