<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 SEPTEMBER 30, 1997

                                       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 SEPTEMBER 30, 1997 THERE WERE 7,890,187 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                    7

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

          Business                                                      9
          Financial Condition                                           9
          Asset/Liability Management                                   11
          Securities                                                   13
          Credit Risk                                                  13
          Results of Operations                                        14
          Average Balance Sheets                                       17
          Rate/Volume Analysis                                         19
          Interest Rate Sensitivity                                    21
          Risk-Based Capital Components and Ratios                     22


PART II OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K                         23



SIGNATURES                                                             23


EXHIBIT INDEX                                                          24

     Exhibit 11 Computation of Per Share Earnings                      25
     Exhibit 27 Financial Data Schedule                                26
</TABLE>


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

<TABLE>
<CAPTION>
                                                                  September 30,      December 31,
ASSETS                                                                1997               1996
                                                                  ------------       ------------
<S>                                                               <C>                <C>
Cash and due from banks                                           $ 31,550,103       $ 54,512,462
Interest-bearing deposits with other banks                           3,010,000          3,010,000
Federal funds sold                                                   8,000,000          3,000,000
Investment securities
  Available for sale (at estimated market value)                    54,327,824         77,597,117
  Held to maturity (estimated market value
    $248,361,954 and $223,668,650, respectively)                   249,066,216        226,733,888
                                                                  ------------       ------------
        Total investment securities                                303,394,040        304,331,005
                                                                  ------------       ------------

Loans, net of unearned discounts                                   480,175,019        465,516,556
Less allowance for possible loan losses                              9,004,891          8,003,392
                                                                  ------------       ------------
        Loans, net                                                 471,170,128        457,513,164
                                                                  ------------       ------------
Customers' liability under acceptances                               1,421,260            613,430
Excess cost over equity in net assets of the
  banking subsidiary                                                21,158,440         21,158,440
Premises and equipment, net                                          7,262,838          5,508,740
Accrued interest receivable                                          3,922,191          4,257,142
Other assets                                                         8,996,453          7,700,928
                                                                  ------------       ------------
                                                                  $859,885,453       $861,605,311
                                                                  ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
  Noninterest-bearing deposits                                    $200,380,836       $229,976,783
  Interest-bearing deposits                                        407,413,966        344,445,578
                                                                  ------------       ------------
        Total deposits                                             607,794,802        574,422,361
Federal funds purchased and securities
  sold under agreements to repurchase                               64,923,008         88,144,400
Commercial paper                                                    24,725,300         32,569,900
Other short-term borrowings                                          7,625,735         30,419,791
Acceptances outstanding                                              1,421,260            613,430
Due to factoring clients                                            36,915,711         23,140,504
Accrued expenses and other liabilities                              11,722,907         14,228,490
                                                                  ------------       ------------
                                                                   755,128,723        763,538,876
                                                                  ------------       ------------          
Long-term convertible subordinated debentures                        4,608,000          6,389,000
Other long-term debt                                                14,250,000         14,500,000
                                                                  ------------       ------------
        Total long-term debt                                        18,858,000         20,889,000
                                                                  ------------       ------------
        Total liabilities                                          773,986,723        784,427,876
                                                                  ------------       ------------

Commitments and contingent liabilities


Shareholders' equity
  Preferred stock, $5 par value. Authorized 644,389 shares           2,486,730          2,506,600
  Common stock, $1 par value. Authorized 20,000,000 shares;
    issued  7,934,780 and 7,725,533 shares, respectively             7,934,780          7,725,533
  Capital surplus                                                   41,005,980         38,619,434
  Retained earnings                                                 37,448,743         31,648,806
  Net unrealized appreciation on securities
    available for sale, net of tax                                     134,373             90,001
                                                                  ------------       ------------
                                                                    89,010,606         80,590,374
  Less
    Common shares in treasury at cost, 44,593 and
     42,343 shares, respectively                                       441,257            418,959
    Unearned compensation                                            2,670,619          2,993,980
                                                                  ------------       ------------
        Total shareholders' equity                                  85,898,730         77,177,435
                                                                  ------------       ------------
                                                                  $859,885,453       $861,605,311
                                                                  ============       ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                        3

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

<TABLE>
<CAPTION>
                                                       Three Months Ended                  Nine Months Ended
                                                          September 30,                       September 30,
                                                     1997              1996              1997              1996
                                                  -----------       -----------       -----------       -----------
<S>                                               <C>               <C>               <C>               <C>
INTEREST INCOME
  Loans                                           $11,861,135       $10,055,302       $34,351,112       $27,845,666
  Investment securities
    Available for sale                              1,038,655         1,599,990         3,439,300         4,794,597
    Held to maturity                                4,056,425         3,849,618        11,839,527        11,227,920
  Federal funds sold                                  103,259             2,153           193,000           279,586
  Deposits with other banks                            35,057            35,854           158,185           117,844
                                                  -----------       -----------       -----------       -----------
        Total interest income                      17,094,531        15,542,917        49,981,124        44,265,613
                                                  -----------       -----------       -----------       -----------


INTEREST EXPENSE
  Deposits                                          3,762,009         3,071,996        10,582,238         8,986,515
  Federal funds purchased
    and securities sold under agreements
    to repurchase                                   1,168,890         1,217,882         3,519,567         3,061,155
  Commercial paper                                    323,318           414,377           968,780         1,108,987
  Other short-term borrowings                         126,010           342,468           431,589           722,969
  Long-term debt                                      296,536           552,266           912,520         1,689,651
                                                  -----------       -----------       -----------       -----------
        Total interest expense                      5,676,763         5,598,989        16,414,694        15,569,277
                                                  -----------       -----------       -----------       -----------
Net interest income                                11,417,768         9,943,928        33,566,430        28,696,336
Provision for possible loan losses                    781,500           401,250         2,162,500         1,540,750
                                                  -----------       -----------       -----------       -----------
Net interest income after provision
 for possible loan losses                          10,636,268         9,542,678        31,403,930        27,155,586
                                                  -----------       -----------       -----------       -----------

NONINTEREST INCOME
  Service charges on deposit accounts                 504,575           516,603         1,489,289         1,334,488
  Factoring commissions                             1,101,413           949,364         3,029,874         2,322,883
  Mortgage banking income                             916,576           672,340         2,445,265           741,448
  Letter of credit commissions                        244,118           198,495           678,234           614,523
  Gain on sale of securities                               --                --                --            22,161
  Other income                                        692,143           766,377         1,951,399         1,711,320
                                                  -----------       -----------       -----------       -----------
        Total noninterest income                    3,458,825         3,103,179         9,594,061         6,746,823
                                                  -----------       -----------       -----------       -----------


NONINTEREST EXPENSES
  Salaries                                          4,268,039         4,033,350        12,556,154        10,524,295
  Employee benefits                                   840,120           813,315         2,654,452         2,327,486
                                                  -----------       -----------       -----------       -----------
        Total personnel expenses                    5,108,159         4,846,665        15,210,606        12,851,781
  Occupancy expense, net                              817,312           654,983         2,292,955         1,837,171
  Equipment expense                                   604,461           466,353         1,705,554         1,209,401
  Other expenses                                    2,473,656         2,542,058         7,377,468         6,701,260
                                                  -----------       -----------       -----------       -----------
        Total noninterest expenses                  9,003,588         8,510,059        26,586,583        22,599,613
                                                  -----------       -----------       -----------       -----------
Income before income taxes                          5,091,505         4,135,798        14,411,408        11,302,796
Provision for income taxes                          2,273,788         1,974,438         6,498,099         5,396,605
                                                  -----------       -----------       -----------       -----------


Net income                                        $ 2,817,717       $ 2,161,360       $ 7,913,309       $ 5,906,191
                                                  ===========       ===========       ===========       ===========


Average number of common shares outstanding
  Primary                                           8,094,419         7,415,904         7,984,405         6,969,510
  Fully diluted                                     8,822,568         8,763,215         8,671,088         8,325,791
Per average common share
  Primary                                         $       .35       $       .30       $       .99       $       .85
  Fully diluted                                           .33               .27               .93               .77
Dividends per common share                                .09               .08               .27               .23
</TABLE>


See Notes to Consolidated Financial Statements.


                                        4
<PAGE>   5
                        STERLING BANCORP AND SUBSIDIARIES
           Consolidated Statements of Changes in Shareholders' Equity

<TABLE>
<CAPTION>
                                                           Nine Months Ended
                                                            September 30,
                                                      1997                1996
                                                  ------------        ------------
<S>                                               <C>                 <C>
Shareholders' equity at beginning of period       $ 77,177,435        $ 59,657,224
                                                  ------------        ------------

Net income                                           7,913,309           5,906,191
Dividends paid
  Common stock- $.27  and $.23 per share,
    respectively                                    (2,086,653)         (1,623,111)
  Preferred stock - at prescribed rates                (26,508)            (10,672)
Conversions of subordinated debentures
  into common stock                                  2,396,789           6,953,485
Options exercised                                      184,750              10,875
Issuance of common stock for acquisition                    --             262,995
Amortization of unearned compensation                  295,236             161,147
Change in valuation account for securities
  available for sale, net of tax                        44,372            (616,652)
                                                  ------------        ------------
Net change in shareholders' equity                   8,721,295          11,044,258
                                                  ------------        ------------
Shareholders' equity at end of period             $ 85,898,730        $ 70,701,482
                                                  ============        ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                        5
<PAGE>   6
                        STERLING BANCORP AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                          Nine Months Ended
                                                                             September 30,
                                                                        1997                1996
                                                                    ------------        ------------
<S>                                                                 <C>                 <C>
OPERATING ACTIVITIES
  Net income                                                        $  7,913,309        $  5,906,191
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Provision for possible loan losses                               2,162,500           1,540,750
      Depreciation and amortization of premises and equipment          1,063,196             650,927
      Deferred income tax benefit                                       (312,821)           (877,131)
      Gain on sale of securities                                              --             (22,161)
      Net change in loans held for sale                               (3,837,764)            (69,108)
      Amortization of unearned compensation                              295,236             161,147
      Amortization of premiums of securities                             983,823           1,311,474
      Accretion of discounts on securities                              (113,031)           (119,583)
      Decrease in accrued interest receivable                            334,951            (731,737)
      Increase in due to factored clients                             13,775,207           2,443,664
      Decrease in other liabilities                                   (2,505,583)           (342,737)
      Other, net                                                      (1,565,220)         (1,840,868)
                                                                    ------------        ------------

          Net cash provided by operating activities                   18,193,803           8,010,828
                                                                    ------------        ------------

INVESTING ACTIVITIES
  Purchase of premises and equipment                                  (2,817,294)         (2,188,235)
  Net increase in interest-bearing deposits
    with other banks                                                          --             (10,000)
  Net (increase)decrease in Federal funds sold                        (5,000,000)          5,000,000
  Net increase in loans                                              (10,820,699)        (30,406,615)
  Proceeds from prepayments, redemptions or maturities
    of securities - held to maturity                                  26,972,962          28,067,802
  Purchases of securities - held to maturity                         (50,034,272)        (59,323,005)
  Proceeds from sale of securities-available for sale                         --           5,017,969
  Purchases of securities - available for sale                        (6,011,743)         (6,083,164)
  Proceeds from prepayments, redemptions or maturities
    of securities - available for sale                                29,220,902           7,083,790
                                                                    ------------        ------------
          Net cash used in investing activities                      (18,490,144)        (52,841,458)
                                                                    ------------        ------------

FINANCING ACTIVITIES
  Net decrease in noninterest-bearing deposits                       (29,595,947)        (45,811,725)
  Net increase in interest-bearing deposits                           62,968,388           7,882,048
  Net (decrease)increase in Federal funds purchased and
    securities sold under agreements to repurchase                   (23,221,392)         56,965,409
  Net (decrease)increase in commercial paper
    and other short-term borrowings                                  (30,638,656)         34,291,432
  Prepayments of debentures                                                   --             (66,515)
  Decrease in other long-term debt                                      (250,000)           (250,000)
  Issuance of common stock                                                   --             262,995
  Proceeds from exercise of stock options                                184,750              10,875
  Cash dividends paid on common and preferred stock                   (2,113,161)         (1,633,783)
                                                                    ------------        ------------
          Net cash (used in) provided by financing activities        (22,666,018)         51,650,736
                                                                    ------------        ------------
Net (decrease)increase in cash and due from banks                    (22,962,359)          6,820,106
Cash and due from banks - beginning of period                         54,512,462          40,720,401
                                                                    ------------        ------------
Cash and due from banks - end of period                             $ 31,550,103        $ 47,540,507
                                                                    ============        ============

Supplemental schedule of non-cash financing activities:
  Debenture and preferred stock conversions                         $  2,396,789        $  6,953,485
  Issuance of treasury shares                                                 --           1,381,250
  Forfeiture of shares issued under incentive
    compensation plan                                                     28,125                  --
Supplemental disclosure of cash flow information:
  Interest paid                                                     $ 17,936,398        $ 17,190,180
  Income taxes paid                                                    6,507,233           6,078,493
</TABLE>

See Notes to Consolidated Financial Statements


                                        6
<PAGE>   7
                        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 September 30, 1997 and
      1996 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 1996 financial statements to conform to 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, 1996.

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 authorized) and 246,213 Series D shares (of 300,000 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.    In February 1997, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 128, "Earnings per Share"
      ("SFAS 128"). SFAS 128, which supersedes Accounting Principles Board
      Opinion No. 15, "Earnings per Share," establishes standards for computing,
      presenting and disclosing earnings per share.

      SFAS 128 requires the presentation of basic earnings per share and, for
      entities with complex, capital structures, diluted earnings per share.
      Basic earnings per share is computed by dividing income available to
      common stockholders by the weighted average number of common shares
      outstanding for the period. Diluted earnings per share reflects the
      potential dilution that could occur if securities or other contracts to
      issue common stock were exercised or converted into common stock or
      resulted in the issuance of common stock that then shared in the earnings
      of the entity.

      SFAS 128 is effective for financial statements issued for periods ending
      after December 15, 1997. Earlier application of SFAS 128 is not permitted
      and all prior period earnings per share data must be restated upon its
      adoption.


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


5.    In February 1997, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 129, "Disclosure of
      Information about Capital Structure" ("SFAS 129"). SFAS 129 supersedes
      specific disclosure requirements of Accounting Principles Board Opinions
      No. 10, "Omnibus Opinion - 1966," and No. 15, "Earnings Per Share," and
      Statement of Financial Accounting Standards No. 47, "Disclosure of Long-
      Term Obligations," and consolidates them in SFAS 129 for ease of retrieval
      and for greater visibility to non-public entities. SFAS 129 is effective
      for financial statements issued for periods ending after December 15,
      1997.

6.    In June 1997, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
      ("SFAS 130"). SFAS 130 establishes standards for reporting and display of
      comprehensive income and its components (revenues, expenses, gains and
      losses) in a full set of general-purpose financial statements. It does not
      address issues of recognition or measurement of comprehensive income and
      its components. SFAS 130 requires that all items that are required to be
      recognized under accounting standards as components of comprehensive
      income be reported in a financial statement that is displayed with the
      same prominence as other financial statements. Under the requirements of
      SFAS 130, an enterprise must classify items of other comprehensive income
      by their nature in a financial statement and display the accumulated
      balance of other comprehensive income separately from retained earnings
      and additional paid-in capital in the equity section of a balance sheet.
      SFAS 130 is effective for fiscal years beginning after December 15, 1997
      and requires reclassification of financial statements for earlier periods
      provided for comparative purposes.

7.    In June 1997, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 131, "Disclosure about Segments of an
      Enterprise and Related Information" ("SFAS 131"). SFAS 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 shareholders, and establishes standards for
      related disclosures about an enterprise's products and services,
      geographic areas and major customers. As defined in SFAS 131, operating
      segments are components of an enterprise about which separate financial
      information is available that is evaluated regularly by the enterprise's
      chief operating decision maker in deciding how to allocate resources and
      in assessing performance. SFAS 131 supersedes "Statement of Financial
      Accounting Standards No. 14, "Financial Reporting for Segments of a
      Business," and amends Statement of Financial Accounting Standards No. 94,
      "Consolidation of All Majority-Owned Subsidiaries." SFAS 131 is effective
      for financial statements for periods beginning after December 15, 1997.
      SFAS 131 need not be applied to interim financial statements in the
      initial year of its application, but comparative information for interim
      periods in the initial year of application is to be reported in financial
      statements for interim periods in the second year of application.


                                        8
<PAGE>   9
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


BUSINESS

Sterling Bancorp ("the parent company") is a bank holding company, as defined by
the Bank Holding Company Act of 1956("the BHCA"), as amended. Throughout the
report, the term "the Company" refers to Sterling Bancorp and its subsidiaries.
The Sterling companies provide a full range of products and services, including
business and consumer loans, commercial and residential mortgage lending and
brokerage, asset-based financing, factoring, trade financing, equipment 
leasing, trust and estate administration and investment management services. 
Sterling has operations in New York and Virginia and conducts business 
throughout the United States. The parent company owns all of the outstanding 
shares of Sterling National Bank ("the bank"), its principal subsidiary, and 
all of the outstanding shares of Universal Finance Corporation, Sterling 
Industrial Loan Association and Sterling Banking Corporation ("finance 
subsidiaries"). On January 1, 1997, a new subsidiary - Sterling National 
Mortgage Corp. ("SNMC - Virginia") - was formed. On March 1, 1997, a wholly-
owned subsidiary of the bank- Sterling Real Estate Holding Company Inc. - was 
formed. Sterling National Mortgage Company, Inc. ("SNMC-New York"), Sterling 
National Mortgage Corp. ("SNMC-Virginia") and Sterling Factors Corporation 
("Factors") are wholly owned subsidiaries of the bank. Until 1997, Factors was 
a finance subsidiary of the parent company.

There is intense competition in all areas in which the Company conducts its
business, including deposits, loans, domestic and international financing and
trust services. In addition to competing with other banks, the Company also
competes in certain areas of its business with other financial institutions. At
September 30, 1997, the bank's year-to-date average earning assets (of which
loans were 56% and securities were 42%) represented approximately 96% of the
Company's year-to-date average earning assets. See pages 17 and 18 for the
composition of the Company's average balance sheets for the three and nine
months ended September 30, 1997 and September 30, 1996.

FINANCIAL CONDITION

Liquidity is the ability to meet cash needs arising from changes in various
categories of assets and liabilities. Liquidity is constantly monitored and
managed at both the parent company and the bank levels. Liquid assets consist of
cash and due from banks, interest-bearing deposits in banks and Federal funds
sold and securities available for sale. Primary funding sources include core
deposits, capital market 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.

While the parent company generates income from its own operations, it also
depends for its cash requirements on funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet the
parent company's cash requirements throughout its history. At September 30,
1997, the parent company had on hand approximately $11,496,000 in cash.


                                        9
<PAGE>   10
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Various legal restrictions limit the extent to which the bank can supply funds
to the parent company and its nonbank subsidiaries. All national banks are
limited in the payment of dividends without the approval of the Comptroller of
the Currency to an amount not to exceed the net profits (as defined) for that
year to date combined with its retained net profits for the preceding two
calendar years. In addition, from time to time dividends are paid to the parent
company by the finance subsidiaries from their retained earnings without
regulatory restrictions.

At September 30, 1997, the parent company's outstanding long-term debt,
consisting principally of convertible subordinated debentures (originally issued
pursuant to rights offerings to shareholders of the Company), aggregated
$4,608,000. On September 18, 1997, all of the remaining debentures were called
for redemption as of November 7, 1997. Holders of the debentures were entitled
under the termsof the Indenture governing such debentures, to convert the
debentures into common shares of the parent company, at a conversion ratio of
$12.50, up to the close of business on the redemption date.

At September 30, 1997, the parent company's short-term debt, consisting
principally of commercial paper, was approximately $ 24,975,000. The parent
company had cash, interest-bearing deposits with banks and other current assets
aggregating $47,730,000 and back-up credit lines with banks of $24,000,000.  
Since 1979, the parent company has had no need to use available back-up lines 
of credit.

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to 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. Supplementing these regulations,
is a leverage requirement. This requirement establishes a minimum leverage
ratio, (at least 4%) which is calculated by dividing Tier 1 capital by adjusted
quarterly average assets (after deducting goodwill). In addition the Company and
the bank are subject to the provisions of the Federal Deposit Insurance
Corporation Improvement Act of 1981 ("FDICIA") which imposes a number of
mandatory supervisory measures. 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 September 30, 1997, the
Company and the bank exceeded the requirements for "well capitalized"
institutions. Information regarding the Company's and the bank's risk-based
capital, at September 30, 1997 and December 31, 1996, is presented on page 22.


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


While 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.

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


ASSET/LIABILITY MANAGEMENT

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

The Company takes a coordinated approach to the management of its liquidity,
capital and interest rate risk. This risk management process is governed by
policies and limits established by senior management which are reviewed and
approved by the Asset/Liability Committee of the Board of Directors ("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.

The Company's balance sheet structure is primarily short-term in nature with
most assets and liabilities repricing or maturing in less than five years. 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 (as
defined below) position. The Company utilizes various tools in its management of
interest rate risk, primarily utilizing a sophisticated income simulation model
and complementing this with a traditional gap analysis.

The income simulation model measures 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 deposits 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
tandem with market interest rates.


                                       11
<PAGE>   12
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


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
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. The Company can also utilize this technique to stress
test its portfolio to determine the impact of various interest rate scenarios on
the Company's net interest income.

The 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 results 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.

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 and the Asset/Liability
Committee, governing the use of off-balance sheet financial instruments,
including approved counterparties, risk limits and appropriate internal control
procedures. The credit risk of derivatives arises principally from the potential
for a counterparty to fail to meet its obligation to settle a contract on a
timely basis. At September 30, 1997, all counterparties have investment grade
credit ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.

At September 30, 1997, the Company's off-balance sheet financial instruments
consisted of four interest rate floor contracts having a notional amount
totaling $125 million; one contract with a notional amount of $50 million has a
final maturity of February 27, 2000, another contract with a notional amount of
$25 million has a final maturity of October 10, 1999, another contract with a
notional amount of $25 million has a final maturity of May 1, 2001 and another
contract with a notional amount of $25 million has a final maturity of March 17,
1998. These financial instruments are being used as part of the Company's
interest rate risk management and not for trading purposes.

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. The interest rate floor contracts require the Company to pay a fee
for the right to receive a fixed interest payment.


                                       12
<PAGE>   13
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


The Company purchased interest rate floor contracts to reduce the impact of
falling rates on its floating rate commercial loans. The Company paid up-front
premiums of $939,000 for the interest rate floor contracts which are amortized
monthly against interest income from the designated assets. At September 30,
1997, the unamortized premiums on these contracts totaled $474,000 and are
included in other assets. At September 30, 1997, $16,000 was receivable under
the contracts.

SECURITIES

The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency mortgage-backed securities along with
other debt and equity securities. At September 30, 1997, the Company's portfolio
of securities totalled $303,394,000, of which U.S. Government and U.S.
Government corporation and agency guaranteed mortgage-backed securities having
an average life of approximately 2.5 years amounted to $293,517,000. The Company
has the intent and ability to hold to maturity securities classified "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 $1,448,000 and $2,152,000, 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
$393,000 and gross unrealized losses of $147,000. Given the relatively
short-term nature of the portfolio and its generally high credit quality,
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.


CREDIT RISK

A key management objective is to maintain the quality of the loan portfolio.
This objective is achieved by maintaining high 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 composition of the
Company's and the bank's loan portfolio at September 30, 1997 were as follows:

<TABLE>
<CAPTION>
                                             Company          Bank
                                             --------       --------
                                               (in thousands)
<S>                                          <C>            <C>
Domestic
  Commercial and industrial                  $350,172       $316,048
  Real estate - mortgage                       71,559         71,559
  Real estate - construction                    1,117          1,117
  Installment - individuals                    16,828         16,828
  Lease financing                              48,236         48,236
Foreign
  Government and official institutions            789            789
                                             --------       --------
  Loans, gross                                488,701        454,577
  Less unearned discounts                       8,526          8,345
                                             --------       --------
Loans, net of unearned discounts             $480,175       $446,232
                                             ========       ========
</TABLE>


                                       13
<PAGE>   14
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


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 is
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 possible loan losses is maintained through the provision for
possible loan losses, which is a charge to operating earnings. The adequacy of
the provision and the resulting allowance for possible loan 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 and No. 118. 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 September 30, 1997, the Company's allowance was $9,005,000;
the ratio of the allowance to loans, net of unearned discount, was 1.9%. At
September 30, 1997, $761,000 of loans were impaired within the scope of SFAS No.
114 and required a valuation allowance of $225,000. The average recorded
investment in impaired loans during the nine months ended September 30, 1997 was
approximately $504,000. 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 $1,730,000 at September 30, 1997. At
September 30, 1997, non-accrual loans amounted to $1,218,000. 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 possible loan losses was deemed
adequate to absorb all reasonably anticipated losses on specifically known and
other possible credit risks associated with the portfolio as of September 30,
1997.


RESULTS OF OPERATIONS

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
interest-earning assets and interest-bearing liabilities. An analysis of the
Company's interest rate sensitivity is presented on page 21. The increases
(decreases) for the components of interest income and interest expense,
expressed in terms of fluctuation in average volume and rate are shown on pages
19 and 20. Information as to the components of interest income and interest
expense and average rates is provided in the Average Balance Sheets shown on
pages 17 and 18.


                                       14
<PAGE>   15
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Comparison of three months ended September 30, 1997 and September 30, 1996
Total interest income increased $1,551,000 for the three months ended September
30, 1997 when compared with the same period last year principally due to higher
average outstandings. Interest and fees on loans increased $1,806,000
principally due to higher average outstandings. A decrease in average investment
securities outstandings produced a decrease in related income of $355,000.

Total interest expense for the three months ended September 30, 1997 increased
$78,000 when compared with the same period in 1996 principally due to higher
rates paid for interest-bearing deposits funds. Interest expense on
interest-bearing deposits rose $690,000 as a result of increased rates coupled
with an increase in average outstandings. Interest expense on borrowed funds
decreased $612,000 primarily due to a decrease in average outstandings.

Based on management's continuing evaluation of the loan portfolio (discussed
under "CREDIT RISK" above), and principally as the result of the growth in the
loan portfolios, $782,000 was provided for possible loan losses for the three
months ended September 30, 1997.

Noninterest income increased $356,000 for the third quarter of 1997 when
compared with the same period in 1996 due primarily to increased factoring
commissions and mortgage banking income.

Noninterest expenses increased $494,000 for the three months ended September 30,
1997 versus the same period last year reflecting higher personnel and general
business costs associated with the Company's higher levels of business
activities.

The provision for income taxes increased $299,000 for the third quarter of 1997
when compared with the same period last year principally based on the level of
pre-tax profitability.

As a result of the above factors, net income increased $656,000 for the three
months ended September 30, 1997 when compared with the same period in 1996.


                                       15

<PAGE>   16
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Comparison of nine months ended September 30, 1997 and September 30, 1996
Total interest income increased $5,716,000 for the nine months ended September
30, 1997 when compared with the same period last year principally due to higher
average outstandings. Interest and fees on loans increased $6,505,000
principally due to higher average outstandings. A decrease in average investment
securities outstanding partially offset by higher yields, resulted in a decrease
in related income of $743,000.

Total interest expense for the nine months ended September 30, 1997 increased
$846,000 when compared with the same period in 1996 principally due to higher
rates paid for those funds. Interest expense on interest-bearing deposits rose
$1,596,000 as a result of increased rates coupled with an increase in average
outstandings. Interest expense on borrowings decreased $750,000 for the nine
months ended September 30, 1997 versus the like period a year ago primarily due
to a decrease in average outstandings.

Based on management's continuing evaluation of the loan portfolio (discussed
under "CREDIT RISK" above), and principally as the result of the growth in the
loan portfolios, $2,162,000 was provided for possible loan losses for the nine
months ended September 30, 1997.

Noninterest income increased $2,847,000 for the first nine months of 1997 when
compared with the same period in 1996 due primarily to increased factoring
commissions and mortgage banking income.

Noninterest expenses increased $3,987,000 for the nine months ended September
30, 1997 versus the same period last year reflecting higher personnel and
general business costs associated with the Company's higher levels of business
activities.

The provision for income taxes increased $1,101,000 for the first nine months of
1997 when compared with the same period last year principally based on the level
of pre-tax profitability.

As a result of the above factors, net income increased $2,007,000 for the nine
months ended September 30, 1997 when compared with the same period in 1996.


                                       16

<PAGE>   17
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                        Three Months Ended September 30,

<TABLE>
<CAPTION>
                                                   1997                                          1996
                                    ------------------------------------        ------------------------------------
                                     Average                     Average        Average                       Average
ASSETS                               Balance         Interest      Rate         Balance         Interest       Rate
                                    ---------        -------       -----        ---------        -------       -----
<S>                                 <C>              <C>            <C>         <C>              <C>          <C>
Interest-bearing deposits
  with other banks                  $   3,054        $    35        5.58%       $   3,010        $    36        5.03%
Investment securities
  Available for sale [2]               58,280          1,038        6.53           95,148          1,600        6.71
  Held to maturity                    240,451          4,057        6.75          233,375          3,850        6.60

Federal funds sold                      7,478            103        5.40              152              2        5.52
Loans, net of unearned
  discounts [3]                       452,122         11,861       11.30          379,385         10,055       11.06
                                    ---------        -------                    ---------        -------
      TOTAL INTEREST-EARNING
         ASSETS                       761,385         17,094        9.31          711,070         15,543        8.90
                                                     -------       -----                         -------       -----

Cash and due from banks                42,784                                      40,153
Allowance for possible
  loan losses                          (8,670)                                     (6,450)
Goodwill                               21,158                                      21,158
Other assets                           21,501                                      15,499
                                    ---------                                   ---------

      TOTAL ASSETS                  $ 838,158                                   $ 781,430
                                    =========                                   =========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
  Savings                           $ 183,128          1,213        2.63        $ 168,182          1,036        2.45
  Other time                          193,407          2,549        5.15          159,226          2,036        5.09
                                    ---------        -------                    ---------        -------
      Total interest-bearing
        deposits                      376,535          3,762        3.96          327,408          3,072        3.73
                                    ---------        -------                    ---------        -------

Borrowings
  Federal funds purchased and
    securities sold under
    agreements to repurchase           85,133          1,169        5.45           89,455          1,218        5.42
  Commercial paper                     24,257            324        5.29           31,169            414        5.29
  Other short-term debt                 5,850            125        5.01           21,737            343        5.02
  Long-term debt                       19,388            297        6.07           32,076            552        6.85
                                    ---------        -------                    ---------        -------
      Total borrowings                134,628          1,915        5.49          174,437          2,527        5.61
                                    ---------        -------                    ---------        -------
      TOTAL INTEREST-BEARING
        LIABILITIES                   511,163          5,677        4.37          501,845          5,599        4.38
                                                     -------       -----                         -------       -----

Noninterest-bearing deposits          196,337                                     173,964
Other liabilities                      47,592                                      36,895
                                    ---------                                   ---------
      Total liabilities               755,092                                     712,704

Shareholders' equity                   83,066                                      68,726
                                    ---------                                   ---------
      TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY        $ 838,158                                   $ 781,430
                                    =========                                   =========

Net interest income/spread                           $11,417        4.94%                        $ 9,944        4.52%
                                                     =======       =====                         =======       =====

Net yield on interest-earning
  assets (margin)                                                   6.20%                                       5.67%
                                                                   =====                                       =====
</TABLE>

[1]      The average balances of assets, liabilities and shareholders' equity
           are computed on the basis of daily averages for the bank and monthly
           averages for the parent company and its finance subsidiaries. Dollars
           are presented in thousands.

[2]      Interest on tax-exempt securities included herein is immaterial and is
           not presented on a tax equivalent basis.

[3]      Non-accrual loans are included in the average balance, which reduces
           the average yields.


                                       17

<PAGE>   18
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                         Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                     1997                                          1996
                                    ------------------------------------------    ---------------------------------------
                                     Average                        Average       Average                         Average
ASSETS                               Balance        Interest          Rate        Balance         Interest         Rate
                                    ---------       --------       -----------    ---------       --------        -------
<S>                                 <C>              <C>              <C>         <C>              <C>             <C>
Interest-bearing deposits

  with other banks                  $   3,381        $   158          5.48%       $   2,995        $   118         5.26%
Investment securities
  Available for sale [2]               68,609          3,439          6.68           95,304          4,794         6.71
  Held to maturity                    234,439         11,840          6.73          228,836         11,228         6.54

Federal funds sold                      4,725            193          5.39            6,653            279         5.52
Loans, net of unearned
  discounts [3]                       434,983         34,351         11.48          356,209         27,846        11.14
                                    ---------        -------                      ---------        -------
      TOTAL INTEREST-EARNING
         ASSETS                       746,137         49,981          9.37          689,997         44,265         8.82
                                                     -------         -----                         -------        -----

Cash and due from banks                46,046                                        38,840
Allowance for possible
  loan losses                          (8,383)                                       (5,930)
Goodwill                               21,158                                        21,158
Other assets                           19,636                                        15,408
                                    ---------                                     ---------

      TOTAL ASSETS                  $ 824,594                                     $ 759,473
                                    =========                                     =========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
  Savings                           $ 185,342          3,685          2.66        $ 173,729          3,115         2.40
  Other time                          177,149          6,897          5.11          156,179          5,871         5.02
                                    ---------        -------                      ---------        -------
      Total interest-bearing
        deposits                      362,491         10,582          3.90          329,908          8,986         3.64
                                    ---------        -------                      ---------        -------

Borrowings
  Federal funds purchased and
    securities sold under
    agreements to repurchase           87,641          3,520          5.37           78,192          3,061         5.23
  Commercial paper                     24,783            969          5.23           28,536          1,109         5.19
  Other short-term debt                 6,705            431          5.15           13,998            723         5.08
  Long-term debt                       20,026            913          6.09           35,736          1,690         6.84
                                    ---------        -------                      ---------        -------
      Total borrowings                139,155          5,833          5.44          156,462          6,583         5.55
                                    ---------        -------                      ---------        -------
      TOTAL INTEREST-BEARING
        LIABILITIES                   501,646         16,415          4.33          486,370         15,569         4.21
                                                     -------         -----                         -------        -----

Noninterest-bearing deposits          197,559                                       170,397
Other liabilities                      45,150                                        38,580
                                    ---------                                     ---------
      Total liabilities               744,355                                        695,347

Shareholders' equity                   80,239                                        64,126
                                    ---------                                     ---------
      TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY        $ 824,594                                     $ 759,473
                                    =========                                     =========

Net interest income/spread                           $33,566          5.04%                        $28,696         4.61%
                                                     =======         =====                         =======        =====

Net yield on interest-earning
  assets (margin)                                                     6.30%                                        5.72%
                                                                     =====                                        =====
</TABLE>

[1]      The average balances of assets, liabilities and shareholders' equity
         are computed on the basis of daily averages for the bank and monthly
         averages for the parent company and its finance subsidiaries. Dollars
         are presented in thousands.

[2]      Interest on tax-exempt securities included herein is immaterial and is
         not presented on a tax equivalent basis.

[3]      Non-accrual loans are included in the average balance, which reduces
         the average yields.


                                       18

<PAGE>   19
                        STERLING BANCORP AND SUBSIDIARIES
                              Rate/Volume Analysis
                        Three Months Ended September 30,
                                  (000 omitted)


<TABLE>
<CAPTION>
                                                        Increase/(Decrease)
                                                        Three Months Ended
                                                     September 30, 1997 and 1996
                                                 -----------------------------------
                                                 Volume         Rate        Total[1]
                                                 -------        -----        -------
<S>                                              <C>            <C>          <C>
INTEREST INCOME
Interest-bearing deposits with other banks       $    (2)       $   1        $    (1)
                                                 -------        -----        -------

Investment securities
  Available for sale [2]                            (571)           9           (562)
  Held to maturity                                   118           89            207
                                                 -------        -----        -------
    Total                                           (453)          98           (355)
                                                 -------        -----        -------

Federal funds sold                                   101           --            101
                                                 -------        -----        -------
Loans, net of unearned discounts [3]               1,802            4          1,806
                                                 -------        -----        -------
TOTAL INTEREST INCOME                            $ 1,448        $ 103        $ 1,551
                                                 =======        =====        =======

INTEREST EXPENSE
Interest-bearing deposits
  Savings                                        $    96        $  81        $   177
  Other time                                         464           49            513
                                                 -------        -----        -------
      Total                                          560          130            690
                                                 -------        -----        -------

Borrowings
  Federal funds purchased and securities
    sold under agreements to repurchase              (57)           8            (49)
  Commercial paper                                   (91)           1            (90)
  Other short-term debt                             (209)          (9)          (218)
  Long-term debt                                    (206)         (49)          (255)
                                                 -------        -----        -------
    Total                                           (563)         (49)          (612)
                                                 -------        -----        -------

TOTAL INTEREST EXPENSE                           $    (3)       $  81        $    78
                                                 =======        =====        =======

NET INTEREST INCOME                              $ 1,451        $  22        $ 1,473
                                                 =======        =====        =======
</TABLE>


[1]      The rate/volume variance is allocated equally between changes in volume
         and rate.

[2]      Includes Federal Reserve Bank and other stock investments.


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


                                       19
<PAGE>   20
                        STERLING BANCORP AND SUBSIDIARIES
                              Rate/Volume Analysis
                         Nine Months Ended September 30,
                                  (000 omitted)

<TABLE>
<CAPTION>
                                                       Increase/(Decrease)
                                                         Nine Months Ended
                                                     September 30, 1997 and 1996
                                                 -----------------------------------
                                                  Volume        Rate        Total[1]
                                                 -------        -----        -------
<S>                                              <C>            <C>          <C>
INTEREST INCOME
Interest-bearing deposits with other banks       $    25        $  15        $    40
                                                 -------        -----        -------

Investment securities
  Available for sale [2]                          (1,345)         (10)        (1,355)
  Held to maturity                                   260          352            612
                                                 -------        -----        -------
    Total                                         (1,085)         342           (743)
                                                 -------        -----        -------


Federal funds sold                                   (80)          (6)           (86)
                                                 -------        -----        -------

Loans, net of unearned discounts [3]               6,031          474          6,505
                                                 -------        -----        -------
TOTAL INTEREST INCOME                            $ 4,891        $ 825        $ 5,716
                                                 =======        =====        =======

INTEREST EXPENSE
Interest-bearing deposits
  Savings                                        $   215          355        $   570
  Other time                                         843          183          1,026
                                                 -------        -----        -------
      Total                                        1,058          538          1,596
                                                 -------        -----        -------

Borrowings
  Federal funds purchased and securities
    sold under agreements to repurchase              368           91            459
  Commercial paper                                  (149)           9           (140)
  Other short-term debt                             (290)          (2)          (292)
  Long-term debt                                    (693)         (84)          (777)
                                                 -------        -----        -------
    Total                                           (764)          14           (750)
                                                 -------        -----        -------

TOTAL INTEREST EXPENSE                           $   294        $ 552        $   846
                                                 =======        =====        =======

NET INTEREST INCOME                              $ 4,597        $ 273        $ 4,870
                                                 =======        =====        =======
</TABLE>

[1]      The rate/volume variance is allocated equally between changes in volume
         and rate. The variance due to one less day in 1997 has been included in
         the change due to volume.

[2]      Includes Federal Reserve Bank and other stock investments.


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


                                       20
<PAGE>   21
                        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. Based on the interest rate sensitivity analysis shown below, the
Company's net interest income would increase during periods of rising interest
rates and decrease during periods of falling interest rates. Amounts are
presented in thousands.

<TABLE>
<CAPTION>
                                                                         Repricing Date
                                     ----------------------------------------------------------------------------------------
                                                    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                $  1,300       $  1,710        $      --        $     --       $      --        $  3,010
  Investment securities                 5,785         11,273           28,853         251,390           6,093         303,394
  Federal funds sold                    8,000             --               --              --              --           8,000
  Loans, net of unearned
    discounts                         356,624         26,452           62,152          43,473          (8,526)        480,175
  Noninterest-earning assets
    and allowance for possible
    loan losses                            --             --               --              --          65,306          65,306
                                     --------       --------        ---------        --------       ---------        --------

      Total Assets                    371,709         39,435           91,005         294,863          62,873         859,885
                                     --------       --------        ---------        --------       ---------        --------

LIABILITIES AND SHAREHOLDERS'
EQUITY
  Interest-bearing deposits           221,223         76,388          109,803              --              --         407,414
  Securities sold under
    agreements to repurchase           51,873         13,050               --              --              --          64,923
  Commercial paper                     24,725             --               --              --              --          24,725
  Other short-term borrowings           7,376            250               --              --              --           7,626
  Long-term debt                        4,608             --           13,900             350              --          18,858
  Noninterest-bearing
    liabilities and share-
    holders' equity                        --             --               --              --         336,339         336,339
                                     --------       --------        ---------        --------       ---------        --------

      Total Liabilities and
        Shareholders' Equity         $309,805       $ 89,688        $ 123,703        $    350       $ 336,339        $859,885
                                     ========       ========        =========        ========       =========        ========

Net Interest Rate
    Sensitivity Gap                  $ 61,904       $(50,253)       $ (32,698)       $294,513       $(273,466)       $     --
                                     ========       ========        =========        ========       =========        ========

Cumulative Gap at
    September 30, 1997               $ 61,904       $ 11,651        $ (21,047)       $273,466       $      --        $     --
                                     ========       ========        =========        ========       =========        ========

Cumulative Gap at
    September 30, 1996               $ 33,475       $ (8,885)       $ (65,663)       $213,513       $      --        $     --
                                     ========       ========        =========        ========       =========        ========

Cumulative Gap at
    December 31, 1996                $ 67,266       $ 20,475        $ (11,245)       $261,380       $      --        $     --
                                     ========       ========        =========        ========       =========        ========
</TABLE>


                                       21
<PAGE>   22
                        STERLING BANCORP AND SUBSIDIARIES
                    Risk-Based Capital Components and Ratios


<TABLE>
<CAPTION>
                                                     The Company                      The bank
                                              ------------------------        ------------------------
                                               9/30/97        12/31/96        9/30/97         12/31/96
                                              --------        --------        --------        --------
                                                                  ($ in thousands)
<S>                                           <C>             <C>             <C>             <C>
COMPONENTS
  Stockholders' equity                        $ 85,899        $ 77,177        $ 52,751        $ 46,503
  Add/(Subtract):
    Goodwill                                   (21,158)        (21,158)             --              --
    Net unrealized appreciation
      on securities available for sale,
        net of tax effect (1)                     (134)            (90)           (133)            (89)
                                              --------        --------        --------        --------

    Tier 1 Capital                              64,607          55,929          52,618          46,414
                                              --------        --------        --------        --------

  Allowance for possible loan losses
    (limited to 1.25% of total risk-
      weighted assets)                           6,836           6,580           6,407           5,014
  Subordinated debt (limited to 50%
    of Tier 1 Capital)                             922           1,278              --              --
                                              --------        --------        --------        --------

    Tier 2 Capital                               7,758           7,858           6,407           5,014
                                              --------        --------        --------        --------

    Total Risk-based Capital                  $ 72,365        $ 63,787        $ 59,025        $ 51,428
                                              ========        ========        ========        ========
</TABLE>



RATIOS AND MINIMUMS

<TABLE>
<CAPTION>
                                                                Capital          Well             Capital           Well
                                 As of           As of         Adequacy       Capitalized         Adequacy       Capitalized
                             September 30,    December 31,      Minimum         Minimum           Minimum          Minimum
                                 1997            1996          Requirement    Requirement         Capital          Capital
---------------------------------------------------------------------------------------------------------------------------
                                                                                                     ($ in thousands)
<S>                          <C>              <C>               <C>           <C>                 <C>            <C>
Tier 1 Leverage

   The Company                   7.91%            6.89%                                           $32,680           $40,850
                                                       )          4.00%           5.00%
   The bank                      6.71             6.13                                             31,373            39,216
                                                                                       
Tier 1 Risk-based Capital                                                              
   The Company                  11.86%           10.65%                                           $21,788           $32,682
                                                        )         4.00%           6.00%
   The bank                     10.28             9.63                                             20,482            30,723
                                                                                       
Total Risk-based Capital                                                               
   The Company                  13.29%           12.15%                                           $43,576           $54,471
                                                        )         8.00%          10.00%
   The bank                     11.53            10.67                                             40,963            51,204

</TABLE>



(1)      As directed by regulatory agencies this amount must be excluded from
         the computation of Tier 1 Capital.


                                       22

<PAGE>   23
                       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     11/13/97               /s/  Louis J. Cappelli
    ---------------------            ------------------------------------
                                     Louis J. Cappelli
                                     Chairman and
                                     Chief Executive Officer



Date     11/13/97               /s/  John W. Tietjen
    ---------------------            ------------------------------------
                                     John W. Tietjen
                                     Senior Vice President, Treasurer
                                     and Chief Financial Officer


                                       23
<PAGE>   24
                        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           25
                  Per Share Earnings

    27            Financial Data                                   X           26
                  Schedule
</TABLE>


                                       24