<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED                 JUNE 30, 2001
                               -------------------------------------------------

                                       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)


   650 FIFTH AVENUE, NEW YORK, N.Y.                            10019-6108
--------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)


                                  212-757-3300
--------------------------------------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


                                      N/A
--------------------------------------------------------------------------------
   (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
                                    REPORT)

         INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                                [X] YES  [] NO

   AS OF JUNE 30, 2001 THERE WERE 9,250,642 SHARES OF COMMON STOCK, $1.00 PAR
                              VALUE, OUTSTANDING.
<PAGE>   2
                                STERLING BANCORP


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

                    Consolidated Financial Statements                                                   3
                    Notes to Consolidated Financial Statements                                          8

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

                    Business                                                                            13
                    Results for Three Months                                                            13
                    Results for Six Months                                                              15
                    Balance Sheet Analysis                                                              17
                    Capital                                                                             21
                    Average Balance Sheets                                                              22
                    Rate/Volume Analysis                                                                24
                    Regulatory Capital and Ratios                                                       26

        Item 3.     Quantitative and Qualitative Disclosures About
                      Market Risk

                    Asset/Liability Management                                                          27
                    Interest Rate Sensitivity                                                           30

PART II OTHER INFORMATION

        Item 4.     Submission of Matters to a Vote of Security Holders                                 31

        Item 6.     Exhibits and Reports on Form 8-K                                                    32



SIGNATURES                                                                                              32


EXHIBIT INDEX                                                                                           33

        Exhibit 11 Computation of Per Share Earnings                                                    34
</TABLE>





                                        2
<PAGE>   3
                        STERLING BANCORP AND SUBSIDIARIES
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                   June 30,                 December 31,
ASSETS                                                                              2001                        2000
                                                                              ---------------            ---------------
<S>                                                                           <C>                        <C>
Cash and due from banks                                                        $   49,101,280              $  50,212,689
Interest-bearing deposits with other banks                                          3,512,688                  2,656,678

Securities available for sale                                                     121,067,400                 62,060,656
Securities available for sale - pledged                                            81,321,160                 90,138,534
Securities held to maturity                                                        95,419,519                104,585,942
Securities held to maturity - pledged                                             149,304,989                177,011,726
                                                                              ---------------            ---------------
        Total investment securities                                               447,113,068                433,796,858
                                                                              ---------------            ---------------

Loans, net of unearned discounts                                                  740,685,350                750,887,822
Less allowance for credit losses                                                   13,105,569                 12,675,052
                                                                              ---------------            ---------------
        Loans, net                                                                727,579,781                738,212,770
                                                                              ---------------            ---------------
Customers' liability under acceptances                                              1,840,911                    987,048
Excess cost over equity in net assets of the
  banking subsidiary                                                               21,158,440                 21,158,440
Premises and equipment, net                                                         6,278,899                  5,469,462
Other real estate                                                                     786,046                    647,994
Accrued interest receivable                                                         5,252,117                  5,195,956
Other assets                                                                       14,000,286                 12,410,719
                                                                              ---------------            ---------------
                                                                              $ 1,276,623,516            $ 1,270,748,614
                                                                              ===============            ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits

  Noninterest-bearing deposits                                                $   311,780,082            $   341,039,328
  Interest-bearing deposits                                                       570,376,386                525,242,856
                                                                              ---------------            ---------------
        Total deposits                                                            882,156,468                866,282,184
Federal funds purchased and securities
  sold under agreements to repurchase                                             110,065,492                162,763,009
Commercial paper                                                                   40,244,800                 25,655,020
Other short-term borrowings                                                         4,941,651                 17,733,482
Acceptances outstanding                                                             1,840,911                    987,048
Accrued expenses and other liabilities                                             71,993,569                 69,611,777
                                                                              ---------------            ---------------
                                                                                1,111,242,891              1,143,032,520
Long-term debt - FHLB                                                              40,350,000                 10,700,000
                                                                              ---------------            ---------------
        Total liabilities                                                       1,151,592,891              1,153,732,520
                                                                              ---------------            ---------------

Commitments and contingent liabilities

Shareholders' equity

  Preferred stock, $5 par value. Authorized 644,389 shares
    Series B, issued -0- and 1,199 shares,respectively                                      -                     23,980
    Series D, issued 235,778 and 237,878 shares,respectively                        2,357,780                  2,378,780
                                                                              ---------------            ---------------
                                                                                    2,357,780                  2,402,760
Common stock, $1 par value. Authorized 20,000,000 shares;
  issued 9,777,602 and 9,563,329 shares,respectively                                9,777,602                  9,563,329
Capital surplus                                                                    69,478,871                 67,450,110
Retained earnings                                                                  53,744,828                 47,466,602
Accumulated other comprehensive income(loss), net of tax                              718,605                    (22,652)
                                                                              ---------------            ---------------
                                                                                  136,077,686                126,860,149
Less

  Common shares in treasury at cost, 526,960 and
    473,125 shares, respectively                                                    9,389,221                  7,986,763
  Unearned compensation                                                             1,657,840                  1,857,292
                                                                              ---------------            ---------------
        Total shareholders' equity                                                125,030,625                117,016,094
                                                                              ---------------            ---------------
                                                                              $ 1,276,623,516            $ 1,270,748,614
                                                                              ===============            ===============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        3
<PAGE>   4
                        STERLING BANCORP AND SUBSIDIARIES
                        Consolidated Statements of Income
<TABLE>
<CAPTION>
                                                             Three Months Ended                        Six Months Ended
                                                                 June 30,                                   June 30,
                                                        2001                 2000                   2001                 2000
                                                     --------------       --------------       --------------       ---------------
<S>                                                  <C>                  <C>                  <C>                  <C>
INTEREST INCOME
  Loans                                              $   16,756,296       $   16,488,445       $   34,015,398       $   31,507,552
  Investment securities
    Available for sale                                    3,048,929            2,396,050            5,610,700            4,837,071
    Held to maturity                                      4,369,768            5,228,184            9,074,459           10,363,228
  Federal funds sold                                          5,069                9,740               24,561              179,028
  Deposits with other banks                                  21,484               23,378               57,928               58,863
                                                     --------------       --------------       --------------       ---------------
        Total interest income                            24,201,546           24,145,797           48,783,046           46,945,742
                                                     --------------       --------------       --------------       ---------------

INTEREST EXPENSE

  Deposits                                                4,891,724            5,347,931           10,239,503           11,447,629
  Federal funds purchased and
    securities sold under agreements
    to repurchase                                         1,333,599            2,465,584            3,132,964            3,618,124
  Commercial paper                                          453,759              340,502              868,350              736,632
  Other short-term borrowings                                26,066              176,545               85,416              268,795
  Long-term debt                                            466,773              107,412              761,640              302,434
                                                     --------------       --------------       --------------       ---------------
        Total interest expense                            7,171,921            8,437,974           15,087,873           16,373,614
                                                     --------------       --------------       --------------       ---------------

Net interest income                                      17,029,625           15,707,823           33,695,173           30,572,128
Provision for credit losses                               1,527,800            1,626,800            3,213,600            3,039,600
                                                     --------------       --------------       --------------       ---------------
Net interest income after provision
  for credit losses                                      15,501,825           14,081,023           30,481,573           27,532,528
                                                     --------------       --------------       --------------       ---------------

NONINTEREST INCOME
  Factoring income                                        1,314,165            1,224,570            2,715,216            2,390,617
  Mortgage banking income                                 2,133,709            1,695,273            3,423,116            2,890,137
  Service charges on deposit accounts                     1,363,578            1,197,647            2,764,797            1,996,219
  Trade finance income                                      616,920              690,613            1,297,312            1,451,531
  Trust fees                                                198,815              166,199              385,619              351,858
  Other service charges and fees                            393,541              531,888              733,421              965,273
  Other income                                               98,986               33,208              149,356               68,949
                                                     --------------       --------------       --------------       ---------------
        Total noninterest income                          6,119,714            5,539,398           11,468,837           10,114,584
                                                     --------------       --------------       --------------       ---------------

NONINTEREST EXPENSES
  Salaries and employee benefits                          6,879,321            7,172,292           13,872,339           13,711,102
  Occupancy expenses, net                                 1,071,640              976,208            2,198,605            1,948,678
  Equipment expenses                                        580,986              585,899            1,152,657            1,176,072
  Advertising and marketing                                 898,738              708,831            1,754,343            1,332,203
  Professional fees                                       1,795,820            1,370,336            2,605,452            2,304,853
  Data processing services                                  328,990              320,733              673,151              629,683
  Other expenses                                          2,364,440            1,571,361            4,279,328            3,211,686
                                                     --------------       --------------       --------------       ---------------
        Total noninterest expenses                       13,919,935           12,705,660           26,535,875           24,314,277
                                                     --------------       --------------       --------------       ---------------

Income before income taxes                                7,701,604            6,914,761           15,414,535           13,332,835
Provision for income taxes                                2,996,377            2,916,103            6,173,023            5,455,618
                                                     --------------       --------------       --------------       ---------------

Net income                                           $    4,705,227       $    3,998,658       $    9,241,512       $    7,877,217
                                                     ==============       ==============       ==============       ==============


Average number of common
 shares outstanding
  Basic                                                   9,167,817            9,116,760            9,133,104            9,152,242
  Diluted                                                 9,751,198            9,442,678            9,602,798            9,480,405
Per average common share
  Basic                                                       $0.51                $0.44                $1.01                $0.86
  Diluted                                                      0.49                 0.42                 0.96                 0.83
Dividends per common share                                     0.16                 0.14                 0.32                 0.28
</TABLE>


See Notes to Consolidated Financial Statements.


                                      4
<PAGE>   5
                        STERLING BANCORP AND SUBSIDIARIES
                 Consolidated Statements of Comprehensive Income
<TABLE>
<CAPTION>
                                                          Three Months Ended                         Six Months Ended
                                                               June 30,                                   June 30,
                                                       2001                 2000                 2001                  2000
                                                   ------------         ------------         ------------          -----------
<S>                                                <C>                  <C>                  <C>                   <C>
Net Income                                         $  4,705,227         $  3,998,658         $  9,241,512          $ 7,877,217


Other comprehensive income, net of tax:

   Unrealized holding (losses)gains
   arising during the period                           (216,084)             284,942              741,257              289,224
                                                   ------------         ------------         ------------          -----------


Comprehensive income                               $  4,489,143         $  4,283,600         $  9,982,769          $ 8,166,441
                                                   ============         ============         ============          ===========
</TABLE>


See Notes to Consolidated Financial Statements.



                                       5
<PAGE>   6
                        STERLING BANCORP AND SUBSIDIARIES
           Consolidated Statements of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
                                                                                        Six Months Ended
                                                                                            June 30,

                                                                                  2001                       2000
                                                                              -------------              -------------
<S>                                                                           <C>                        <C>
Preferred Stock

  Balance at January 1                                                        $   2,402,760              $   2,443,430
  Conversions of Series B shares                                                       (580)                         -
  Redemption of Series B shares                                                     (23,400)                         -
  Conversions of Series D shares                                                    (21,000)                   (29,220)
                                                                              -------------              -------------
  Balance at June 30                                                          $   2,357,780              $   2,414,210
                                                                              =============              =============

Common Stock

  Balance at January 1                                                        $   9,563,329              $   8,723,051
  Conversions of preferred shares into common shares                                  2,481                      2,922
  Options exercised                                                                 211,792                      8,400
                                                                              -------------              -------------
  Balance at June 30                                                          $   9,777,602              $   8,734,373
                                                                              =============              =============

Capital Surplus

  Balance at January 1                                                        $  67,450,110              $  51,911,883
  Conversions of preferred shares into common shares                                 19,099                     26,298
  Issuance of shares under incentive compensation plan                                    -                   (214,369)
  Options exercised                                                               2,009,662                     62,517
                                                                              -------------              -------------
  Balance at June 30                                                          $  69,478,871              $  51,786,329
                                                                              =============              =============

Retained Earnings

  Balance at January 1                                                        $  47,466,602              $  52,360,024
  Net Income                                                                      9,241,512                  7,877,217
  Cash dividends paid - common shares                                            (2,913,983)                (2,308,040)
                      - preferred shares                                            (49,303)                   (41,527)
                                                                              -------------              -------------
  Balance at June 30                                                          $  53,744,828              $  57,887,674
                                                                              =============              =============

Accumulated Other Comprehensive Income(Loss), Net of Tax

  Balance at January 1                                                        $     (22,652)             $  (2,634,509)
                                                                              -------------              -------------
  Unrealized holding gains
   arising during the period

     Before tax                                                                   1,370,157                    534,615
     Tax expense                                                                   (628,900)                  (245,391)
                                                                              -------------              -------------
       Net of tax                                                                   741,257                    289,224
                                                                              -------------              -------------
  Balance at June 30                                                          $     718,605              $  (2,345,285)
                                                                              =============              =============

Treasury Stock

  Balance at January 1                                                        $  (7,986,763)             $  (6,515,522)
  Issuance of shares under incentive compensation plan                                    -                  1,537,179
  Surrender of shares issued under incentive
    compensation plan                                                            (1,402,458)                         -
  Purchase of common shares                                                               -                 (2,787,830)
                                                                              -------------              -------------
  Balance at June 30                                                          $  (9,389,221)             $  (7,766,173)
                                                                              =============              =============

Unearned Compensation

  Balance at January 1                                                        $  (1,857,292)             $  (1,048,230)
  Issuance of shares under incentive compensation plan                                    -                 (1,462,656)
  Amortization of unearned compensation                                             199,452                    166,212
                                                                              -------------              -------------
  Balance at June 30                                                          $  (1,657,840)             $  (2,344,674)
                                                                              =============              =============

Total Shareholders' Equity

  Balance at January 1                                                        $ 117,016,094              $ 105,240,127
  Net changes during period                                                       8,014,531                  3,126,327
                                                                              -------------              -------------
  Balance at June 30                                                          $ 125,030,625              $ 108,366,454
                                                                              =============              =============
</TABLE>


See Notes to Consolidated Financial Statements.


                                        6
<PAGE>   7
                        STERLING BANCORP AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                            Six Months Ended
                                                                                                June 30,
                                                                                    2001                      2000
                                                                              ---------------           ---------------
<S>                                                                           <C>                       <C>
Operating Activities
  Net Income                                                                  $     9,241,512           $     7,877,217
  Adjustments to reconcile net income to net cash (used in)
   provided by operating activities:
    Provision for credit losses                                                     3,213,600                 3,039,600
    Depreciation and amortization of premises and equipment                           802,235                   807,385
    Deferred income tax provision                                                    (119,825)                 (335,773)
    Net change in loans held for sale                                             (11,463,278)               (6,633,994)
    Amortization of unearned compensation                                             199,452                   166,212
    Amortization of premiums of securities                                            588,725                   436,043
    Accretion of discounts on securities                                             (332,052)                 (558,104)
    (Decrease)Increase in accrued interest receivable                                 (56,161)                  126,255
    Increase(Decrease) in accrued expenses and other liabilities                    2,381,792                  (961,918)
    (Decrease)Increase in other assets                                             (2,098,644)                2,359,080
    Other, net                                                                     (1,402,458)               (4,051,955)
                                                                              ---------------           ---------------

        Net cash provided by operating activities                                     954,898                 2,270,048
                                                                              ---------------           ---------------

Investing Activities

  Purchase of premises and equipment                                               (1,611,672)                 (494,027)
  Increase in interest-bearing deposits                                              (856,010)                 (676,164)
  Increase in other real estate                                                      (138,052)                 (408,903)
  Net decrease in loans                                                            18,882,667                22,544,254
  Proceeds from prepayments, redemptions or maturities
   of securities - held to maturity                                                36,642,988                17,845,771
  Purchases of securities - held to maturity                                                -               (25,217,336)
  Purchases of securities - available for sale                                    (67,733,749)              (46,813,583)
  Proceeds from prepayments, redemptions or maturities
   of securities - available for sale                                              18,888,037                59,067,636
                                                                              ---------------           ---------------

        Net cash provided by investing activities                                   4,074,209                25,847,648
                                                                              ---------------           ---------------

Financing Activities

  Decrease in noninterest-bearing deposits                                        (29,259,246)              (16,294,136)
  Increase(Decrease) in interest-bearing deposits                                  45,133,530               (57,894,676)
  (Decrease)Increase in Federal funds purchased
   and securities sold under agreements to repurchase                             (52,697,517)               72,721,086
  Increase(Decrease) in commercial paper and
   other short-term borrowings                                                      1,797,949                (2,431,028)
  Purchase of treasury stock                                                                -                (2,787,830)
  Redemption of preferred stock                                                       (23,400)                        -
  Increase(Decrease) in other long-term debt                                       29,650,000               (10,350,000)
  Proceeds from exercise of stock options                                           2,221,454                    70,917
  Cash dividends paid on common and preferred stock                                (2,963,286)               (2,349,567)
                                                                              ---------------           ---------------

        Net cash used in financing activities                                      (6,140,516)              (19,315,234)
                                                                              ---------------           ---------------

Net (decrease) increase in cash and due from banks                                 (1,111,409)                8,802,462
Cash and due from banks - beginning of period                                      50,212,689                35,505,342
                                                                              ---------------           ---------------

Cash and due from banks - end of period                                       $    49,101,280           $    44,307,804
                                                                              ===============           ===============

Supplemental schedule of non-cash financing activities:

  Issuance of treasury stock                                                  $             -           $     1,537,179
  Preferred stock conversions                                                          21,000                    29,220
  Surrender of treasury shares issued under incentive
    compensation plan                                                              (1,402,458)                        -
Supplemental disclosure of cash flow information:
  Interest paid                                                                    15,459,001                18,128,827
  Income taxes paid                                                                 6,228,875                 5,407,951
</TABLE>

See Notes to Consolidated Financial Statements.

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


1.       The consolidated financial statements include the accounts of Sterling
         Bancorp ("the parent company") and its subsidiaries, principally
         Sterling National Bank and its subsidiaries ("the bank"), after
         elimination of material intercompany transactions. The term "the
         Company" refers to Sterling Bancorp and its subsidiaries. The
         consolidated financial statements as of and for the interim periods
         ended June 30, 2001 and 2000 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 2000 consolidated
         financial statements to conform to the current presentation. The
         interim consolidated financial statements should be read in conjunction
         with the Company's annual report on Form 10-K for the year ended
         December 31, 2000. The Board announced 10% stock dividends as follows
         on November 16, 2000, payable on December 11, 2000 to shareholders of
         record on December 1, 2000. Fractional shares were cashed-out and
         payments were made to shareholders in lieu of fractional shares. The
         basic and diluted average number of shares outstanding and earnings per
         share information for all prior reporting periods have been restated to
         reflect the effect of the stock dividend.

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 -0- Series B shares
         (of 4,389 Series B shares authorized) and 238,961 Series D shares (of
         300,000 Series D shares authorized). As of June 29, 2001, all
         outstanding Series B shares were called for redemption by the Company.
         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 1.1561 Common Shares, 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.       The Financial Accounting Standards Board Statement of Financial
         Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
         an Enterprise and Related Information," established standards for the
         way that public business enterprises report and disclose selected
         information about operating segments in interim financial statements
         issued to stockholders.

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



         The Company provides a full range of financial products and services,
including commercial loans, asset-based financing, accounts receivable
management services, trade financing, equipment leasing, corporate and consumer
deposit services, commercial and residential mortgage lending and brokerage,
trust and estate administration and investment management services. The
Company's primary source of earnings is net interest income, which represents
the difference between interest earned on interest-earning assets and the
interest incurred on interest-bearing liabilities. The Company's 2001
year-to-date average interest-earning assets were 60.6% loans (corporate lending
was 77.1% and real estate lending was 19.8% of total loans, respectively) and
39.4% investment securities and money market investments. There are no industry
concentrations exceeding 10% of loans, gross, in the corporate loan portfolio.
Approximately 75% of loans are to borrowers located in the metropolitan New York
area. The Company has determined that it has three reportable operating
segments: corporate lending, real estate lending and company-wide treasury.

         The following tables provide certain information regarding the
Company's operating segments for the three and six month periods ended June 30,
2001 and 2000:

<TABLE>
<CAPTION>
                                              Corporate           Real Estate          Company-wide
                                               Lending              Lending              Treasury                 Totals
                                            -------------        -------------        -------------          ---------------
<S>                                         <C>                  <C>                  <C>                    <C>
Three Months Ended June 30, 2001
-------------------------------
Net interest income                         $   7,760,864        $   3,596,938        $   5,190,397          $    16,548,199
Noninterest income                              3,094,816            2,246,356               30,557                5,371,729
Depreciation and amortization                      45,742               52,198                   86                   98,026
Segment profit                                  4,855,752            2,957,078            6,074,439               13,887,269
Segment assets                                564,957,554          152,399,842          516,524,187            1,233,881,583


Three Months Ended June 30, 2000
-------------------------------
Net interest income                         $   8,932,589        $   2,657,235        $   3,379,524          $    14,969,348
Noninterest income                              2,978,498            1,747,675               30,275                4,756,448
Depreciation and amortization                      46,559               54,234                  170                  100,963
Segment profit                                  4,650,488            2,393,846            5,591,899               12,636,233
Segment assets                                528,307,089          109,116,551          525,970,164            1,163,393,804


Six Months Ended June 30, 2001
-----------------------------
Net interest income                         $  15,712,651        $   6,947,168        $   9,997,726          $    32,657,545
Noninterest income                              6,382,005            3,567,894               72,288               10,022,187
Depreciation and amortization                      86,487               98,583                  170                  185,240
Segment profit                                  9,514,112            5,554,694           11,793,572               26,862,378
Segment assets                                564,957,554          152,399,842          516,524,187            1,233,881,583


Six Months Ended June 30, 2000
-----------------------------
Net interest income                         $  14,873,362        $   4,923,907        $   9,191,108          $    28,988,377
Noninterest income                              5,625,505            3,102,363               76,825                8,804,693
Depreciation and amortization                      89,408               97,819                  340                  187,567
Segment profit                                  8,181,135            4,316,246           11,660,299               24,157,680
Segment assets                                528,307,089          109,116,551          525,970,164            1,163,393,804
</TABLE>




                                        9
<PAGE>   10
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements



         The following table sets forth reconciliations of net interest income,
noninterest income, profits and assets of reportable operating segments to the
Company's consolidated totals:
<TABLE>
<CAPTION>
                                                       Three Months Ended                          Six Months Ended
                                                            June 30,                                   June 30,
                                                     2001                 2000                   2001                2000
                                                --------------       --------------       --------------        -------------
<S>                                             <C>                 <C>                  <C>                 <C>
Net interest income:
  Total for reportable operating segments       $   16,548,199       $   14,969,348       $   32,657,545      $    28,988,377
  Other [1]                                            481,426              741,475            1,037,628            1,583,751
                                                --------------       --------------       --------------      ---------------

Consolidated net interest income                $   17,029,625       $   15,710,823       $   33,695,173      $    30,572,128
                                                ==============       ==============       ==============      ===============


Noninterest income:
  Total for reportable operating segments       $    5,371,729       $    4,756,448       $   10,022,187      $     8,804,693
  Other [1]                                            747,985              782,950            1,446,650            1,309,891
                                                --------------       --------------       --------------      ---------------

Consolidated noninterest income                 $    6,119,714       $    5,539,398       $   11,468,837      $    10,114,584
                                                ==============       ==============       ==============      ===============


Profit:
  Total for reportable operating segments       $   13,887,269       $   12,636,233       $   26,862,378      $    24,157,680
  Other [1]                                         (6,185,665)          (5,721,472)         (11,447,843)         (10,824,845)
                                                --------------       --------------       --------------      ---------------

Consolidated income before income taxes         $    7,701,604       $    6,914,761       $   15,414,535      $    13,332,835
                                                ==============       ==============       ==============      ===============



Assets:
  Total for reportable operating segments       $1,233,881,583       $1,163,393,804      $ 1,233,881,583      $ 1,163,393,804
  Other [1]                                         42,741,933           44,242,605           42,741,933           44,242,605
                                                --------------       --------------      ---------------      ---------------

Consolidated assets                             $1,276,623,516       $1,207,636,409      $ 1,276,623,516      $ 1,207,636,409
                                                ==============       ==============      ===============      ===============
</TABLE>


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

5.       On September 29, 2000, the Financial Accounting Standards Board issued
         SFAS No. 140, "Accounting for Transfers and Servicing of Financial
         Assets and Extinguishments of Liabilities." SFAS No. 140 replaces SFAS
         No. 125 and addresses implementation issues that were identified in
         applying SFAS No. 125. SFAS No. 140 is effective for transfers of
         financial assets (including securitizations) occurring after June 30,
         2001. However, the provisions of SFAS No. 140 related to the
         recognition and reclassification of collateral in financial statements
         and disclosures related to securitization transactions and collateral
         are effective for fiscal years ending after December 15, 2000.

                  In accordance with SFAS No. 140, the Company reports
         securities pledged as collateral separately in the consolidated balance
         sheets if the secured party has the right by contract or custom to sell
         or repledge the collateral. Securities are pledged by the Company to
         secure trust and public deposits, securities sold under agreements to
         repurchase, advances from the Federal Home Loan Bank of New York and
         for other purposes required or permitted by law.

                                       10
<PAGE>   11
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements




6.       SFAS No. 133, "Accounting for Derivative Instruments and Hedging
         Activities," as amended, is effective January 1, 2001 for the Company,
         and requires the recognition of all derivatives as either assets or
         liabilities measured at fair value. The accounting for derivative
         instruments depends on the intended use of the derivative and its
         classification as a fair value hedge, cash flow hedge, or a hedge of
         foreign currency exposure.

                  Special hedge accounting treatment is permitted only if
         specific criteria are met. One requirement is that the hedging
         relationship be highly effective both at inception and on an ongoing
         basis. Hedge accounting is determined based on the type of hedge-fair
         value, cash flow or foreign currency hedge of a net investment in a
         foreign operation. Effective hedge results are recognized in current
         earnings for fair value hedges, in other comprehensive income for cash
         flow hedges and as part of the cumulative translation adjustment in
         other comprehensive income for foreign currency net investment hedges.
         Ineffective portions of hedges are recognized immediately in current
         earnings.

                  The Company adopted the provisions of SFAS No. 133 effective
         January 1, 2001. At adoption, the Company recorded an insignificant
         loss and believes that SFAS No. 133 will not have a material impact on
         the Company's 2001 consolidated financial statements since the only
         derivatives that the Company has are interest rate floor contracts with
         a notional amount of $75 million.


7.       In July 2001, the Financial Accounting Standards Board issued SFAS No.
         141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
         Intangible Assets." These Statements will change the accounting for
         business combinations and goodwill in two ways. First, SFAS No. 141
         requires that the purchase method of accounting be used for all
         business combinations initiated after June 30, 2001. Second, SFAS
         No. 142 changes the accounting for goodwill, including goodwill
         recorded in past business combinations. The previous accounting
         principles governing goodwill generated from a business combination
         will cease upon adoption of SFAS No. 142. The effect of adopting these
         standards is not expected to have a material impact on the Company's
         statements of financial condition and results of operations. These
         standards will become effective for the Company on January 1, 2002.

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

The following commentary presents management's discussion and analysis of the
consolidated results of operations and financial condition of Sterling Bancorp
(the "parent company"), a bank holding company and a financial holding company
as defined by the Bank Holding Company Act of 1956, as amended, and its wholly-
owned subsidiaries Sterling Banking Corporation and Sterling National Bank.
Sterling National Bank, which is the principal subsidiary, owns all of the
outstanding shares of Sterling Factors Corporation ("Factors"), Sterling
National Mortgage Company, Inc.("SNMC"), Sterling National Servicing, Inc.
("SNS-Virginia") and Sterling Holding Company of Virginia, Inc. Sterling
Holding Company of Virginia, Inc. owns all of the outstanding shares of Sterling
Real Estate Holding Company, Inc. ("SREHC"). Throughout this discussion and
analysis, the term "the Company" refers to Sterling Bancorp and its subsidiaries
and the term "the bank" refers to Sterling National Bank and its subsidiaries.
This discussion and analysis should be read in conjunction with the Company's
annual report on Form 10-K for the year ended December 31, 2000.

FORWARD-LOOKING STATEMENTS

The Company may from time to time make written or oral statements that are
considered "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may
include, but are not limited to, financial projections, statements of plans and
objectives for future operations, estimates of future economic performance and
assumptions relating thereto.

         The Company may include forward-looking statements in its filings with
the Securities and Exchange Commission, including this 10-Q, in reports to
stockholders, in other written materials, and in statements made by officers and
representatives of the Company to analysts, rating agencies, institutional
investors, representatives of the media and others.

         These statements are not historical facts but instead are subject to
numerous assumptions, risks and uncertainties and represent only our belief
regarding future events, many of which, by their nature, are inherently
uncertain and outside of our control. Any forward-looking statements we may make
speak only as of the date on which such statements are made. It is possible that
our actual results and financial position may differ, possibly materially, from
the anticipated results and financial condition indicated in or implied by these
forward-looking statements.

         Factors that could cause our actual results to differ, possibly
materially, from those in the forward-looking statements include, but are not
limited to, the following: inflation, interest rates, market and monetary
fluctuations; the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest rate policies of the Board of Governors of
the Federal Reserve; changes, particularly declines, in general economic
conditions and in the local economies in which we operate; competitive pressures
on loan and deposit pricing and demand; changes in technology and their impact
on the marketing of products and services; the timely development and effective
marketing of competitive new products and services and the acceptance of these
products and services by new and existing customers; the willingness of
customers to substitute competitors' products and services for our products and
services; the impact of changes in financial services' laws and regulations
(including laws concerning taxes, banking, securities and insurance); changes in
accounting principles, policies and guidelines; the success of the Company at
managing the risks involved in the foregoing as well as other risks and
uncertainties detailed

                                       12
<PAGE>   13
from time to time in press releases and other public filings. The foregoing list
of important factors is not exclusive, and we will not update any forwarding-
looking statement, whether written or oral, that may be made from time to time.

BUSINESS

The Company provides a wide range of financial products and services, including
business and consumer loans, commercial and residential mortgage lending and
brokerage, asset-based financing, accounts receivable management services, trade
financing, equipment leasing, corporate and consumer deposits services, trust
and estate administration, and investment management services. The Company has
operations in metropolitan New York area, as well as Virginia and other mid-
Atlantic states and conducts business throughout the United States.

         There is intense competition in all areas in which the Company conducts
its business. In addition to competing with other banks, the Company competes in
most areas of its business with other financial institutions. At June 30, 2001,
the bank's year-to-date average earning assets (of which loans were 59% and
investment securities were 40%) represented approximately 97% of the Company's
year-to-date average earning assets.

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

            Results for the Three Months Ended June 30, 2001 and 2000
            ---------------------------------------------------------


OVERVIEW

The Company reported net income for the three months ended June 30, 2001 of $4.7
million, representing $0.49 per share, calculated on a diluted basis, compared
to $4.0 million, or $0.42 per share, calculated on a diluted basis, for the like
period in 2000. This increase reflects higher net interest income and continued
growth in noninterest income.

         Net interest income, on a tax equivalent basis, increased to $17.3
million for the second quarter of 2001 compared with $16.0 million for the same
period in 2000, due to higher average earning assets outstanding coupled with
lower average cost of funding. The net interest margin, on a tax equivalent
basis, was 6.12% for the second quarter of 2001 compared to 6.03% for the like
2000 period. The net interest margin benefitted from a decrease of 80 basis
points in the average cost of funds partially offset by a decrease of 59 basis
points in the average yield on earning assets.

         Noninterest income rose to $6.1 million for the three months ended June
30, 2001 compared to $5.5 million for the like 2000 period principally due to
continued growth in fees from mortgage banking, deposit services and factoring.

                                       13
<PAGE>   14
INCOME STATEMENT ANALYSIS

Net Interest Income

Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
assets, liabilities and shareholders' equity. The increases (decreases) in the
components of interest income and interest expense, expressed in terms of
fluctuation in average volume and rate are shown on page 24. Information as to
the components of interest income and interest expense and average rates is
provided in the Average Balance Sheets shown on page 22.

         Net interest income, on a tax equivalent basis, for the three months
ended June 30, 2001 increased to $17,286,000 from $15,952,000 for the comparable
period in 2000.

         Total interest income, on a tax equivalent basis, aggregated
$24,458,000 for the second quarter of 2001 up from $24,390,000 for the same
period of 2000. The tax equivalent yield on interest earning assets was 8.73%
for the three months ended June 30, 2001 compared with 9.32% for the comparable
period in 2000. The increase in interest income was due to an increase in income
earned on the Company's loan portfolio. Loan balances increased as the result of
the continued implementation of business plans designed to increase funds
employed in this asset category. The decrease in yield on earning assets was
primarily due to lower yields on loans primarily attributable to a lower
interest rate environment on average in the 2001 period.

         Interest earned on the loan portfolio amounted to $16,756,000 which was
up $267,000 when compared to a year ago. Average loan balances amounted to
$704,022,000 which were up $82,485,000 from the prior year period. The increase
in the average loans was primarily in the commercial and industrial, leasing and
real estate loan segments. The decrease in the yield on the domestic loan
portfolio to 10.13% for the three months ended June 30, 2001 from 11.36% for the
comparable 2000 period was primarily attributable to a lower interest rate
environment on average in the 2001 period.

         Interest expense on deposits decreased $456,000 for the three months
ended June 30, 2001 to $4,892,000 from $5,348,000 for the comparable 2000 period
principally due to lower rates paid. Average rate paid on interest-bearing
deposits was 3.54% which was 59 basis points lower than the prior year period.
The decrease in average cost of deposits reflects the lower interest rate
environment during the 2001 period.

                                       14


<PAGE>   15
         Interest expense associated with borrowed funds decreased to $2,280,000
for the second quarter of 2001 from $3,090,000 in the comparable 2000 period as
the result of lower average balances and lower funding costs. Average amounts of
borrowed funds outstanding decreased $18,284,000 to $200,722,000 for the three
months ended June 30, 2001. The average rate paid decreased to 4.55% from 5.73%
in the prior year period reflecting the lower interest rate environment during
the 2001 period.

Noninterest Income

Noninterest income increased $580,000 for the second quarter of 2001 from
$5,539,000 in the like 2000 period primarily as a result of increased fees from
mortgage banking, deposit services and factoring.

Noninterest Expenses

Noninterest expenses were $13,920,000 for the second quarter of 2001, an
increase of $1,214,000 when compared with the like 2000 period primarily due to
increased professional fees, advertising and marketing, occupancy and various
other expenses incurred to support growing levels of business activity and
continued investment in the business franchise.

             Results for the Six Months Ended June 30, 2001 and 2000
             -------------------------------------------------------


OVERVIEW

The Company reported net income for the six months ended June 30,2001 of $9.2
million, representing $0.96 per share, calculated on a diluted basis, compared
to $7.9 million, or $0.83 per share calculated on a diluted basis, for the like
period in 2000. This increase reflects continued growth in both net interest
income and noninterest income as explained below.

     Net interest income, on a tax equivalent basis, increased to $34.2 million
for the first six months of 2001 compared with $31.0 million for the same period
in 2000, due to higher average earning assets outstanding coupled with lower
average cost of funding. The net interest margin, on a tax equivalent basis, was
6.24% for the first six months of 2001 compared to 5.92% for the like 2000
period. The net interest margin benefitted from a decrease of 41 basis points in
the average costs of funds partially offset by a 6 basis point decrease in the
average yield on earning assets.

         Noninterest income rose to $11.5 million for the six months ended June
30,2001 compared to $10.1 million for the like 2000 period principally due to
continued growth in fees from deposit services, mortgage banking and factoring.

                                       15
<PAGE>   16
INCOME STATEMENT ANALYSIS

Net Interest Income

Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
assets, liabilities and shareholders' equity. The increases (decreases) in the
components of interest income and interest expense for the first six months,
expressed in terms of fluctuation in average volume and rate are shown on page
25. Information as to the components of interest income and interest expense and
average rates for the first six months is provided in the Average Balance Sheets
shown on page 23.

         Net interest income, on a tax equivalent basis, for the six months
ended June 30,2001 increased $3,167,000 to $34,202,000 from $31,035,000 for the
comparable period in 2000.

         Total interest income, on a tax equivalent basis, aggregated
$49,290,000 up $1,881,000 for the first half of 2001 as compared to $47,409,000
for the same period of 2000. The tax equivalent yield on interest-earning assets
was 9.06% for the first six months of 2001 compared with 9.12% for the
comparable period in 2000. The increase in interest income was due to increases
in income earned on the Company's loan portfolio as a result of the continuation
of management's strategy to increase funds employed in this asset category. The
decrease in yield on earning assets was due to lower yields on loans primarily
attributable to a lower interest rate environment on average in the 2000 period.

         Interest earned on the loan portfolio amounted to $34,015,000 up
$2,507,000 when compared to a year ago. Average loan balances amounted to
$691,206,000 up $80,767,000 from an average of $610,439,000 in the prior year
period. The increase in the average loans, primarily in the leasing, real estate
and commercial and industrial loan segments, accounted for the increase in
interest earned on loans. The decrease in the yield on the domestic loan
portfolio to 10.67% for the six months ended June 30,2001 from 11.11% for the
comparable 2000 period was primarily attributable to the lower interest rate
environment in the 2001 period.

         Total interest expense decreased $1,286,000 to $15,088,000 for the
first six months of 2001 from $16,374,000 for the comparable period in 2000. The
decrease in interest expense was primarily due to lower average rates paid for
interest-bearing deposits.

         Interest expense on deposits decreased $1,208,000 for the six months
ended June 30,2001 to $10,240,000 from $11,448,000 for the comparable 2000
period due to decreases in average outstandings and the cost of funds. Average
outstandings decreased $4,679,000 to $545,879,000 in 2001 from $550,558,000 in
2000. The average rate paid on interest-bearing deposits decreased to 3.78% in
2001 compared to 4.18% in the comparable year ago period reflecting the lower
rate environment during the 2001 period.

         Interest expense associated with borrowed funds decreased to $4,848,000
for the first six months of 2001 from $4,926,000 in the comparable 2000 period
as the result of lower rates paid for borrowed funds rates paid partially offset
by higher average outstandings. The average rate paid decreased to 4.99% from
5.51% for the six months ended June 30, 2001 reflecting the lower rate
environment during the 2001 period. The average amounts outstanding increased
$13,766,000 to $195,784,000 for the prior year period.

                                       16
<PAGE>   17
Noninterest Income

Noninterest income increased $1,354,000 for the first six months of 2001 from
$10,115,000 in the like 2000 period primarily as a result of increased fees from
deposit services, mortgage banking and factoring.

Noninterest Expense

Noninterest expenses were $26,536,000 for the first six months of 2001, an
increase of $2,222,000 when compared with the like 2000 period primarily due to
increased advertising and marketing, professional fees, occupancy, salaries and
employee benefits and various other expenses incurred to support growing levels
of business activity and continued investments in the business franchise.

BALANCE SHEET ANALYSIS

Securities

The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency guaranteed mortgage-backed securities
along with other debt and equity securities. At June 30, 2001, the Company's
portfolio of securities totalled $447,113,000 of which U.S. Government and U.S.
Government corporations and agencies guaranteed mortgage-backed securities
having an average life of approximately 3.9 years amounted to $402,314,000.

         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. The following table presents information regarding
securities available for sale:
<TABLE>
<CAPTION>
                                                               GROSS              GROSS              ESTIMATED
                                          AMORTIZED          UNREALIZED         UNREALIZED            MARKET
JUNE 30, 2001                               COST               GAINS              LOSSES               VALUE
-------------                           ------------        ------------       -----------         ------------
<S>                                     <C>                 <C>                <C>                 <C>
U.S. Treasury securities                $  2,461,218        $      9,273       $       491         $  2,470,000
Obligations of U.S. govern-
  ment corporations and
  agencies--mortgage-backed
  securities                             153,977,243           1,016,601           654,416          154,339,428
Obligations of state and
  political institutions                  34,554,027             912,304             4,596           35,461,735
Other debt securities                      2,995,642              34,358            --                3,030,000
Federal Reserve Bank and
  other equity securities                  7,072,142              15,255            --                7,087,397
                                        ------------        ------------       -----------         ------------

        Total                           $201,060,272        $  1,987,791       $   659,503         $202,388,560
                                        ============        ============       ===========         ============
</TABLE>


Given the generally high credit quality of the portfolio, management expects to
realize all of its investment upon the maturity of such instruments, and thus
believes that any market value impairment is temporary in nature.

                                       17
<PAGE>   18
         The Company has the intent and ability to hold to maturity securities
classified as "held to maturity." These securities are carried at cost, adjusted
for amortization of premiums and accretion of discounts. The following table
presents information regarding securities held to maturity:
<TABLE>
<CAPTION>
                                                                         GROSS              GROSS              ESTIMATED
                                                    CARRYING           UNREALIZED          UNREALIZED           MARKET
JUNE 30, 2001                                        VALUE               GAINS              LOSSES               VALUE
-------------                                     ------------        ------------        -----------        ------------
<S>                                               <C>                 <C>                 <C>                <C>
Obligations of U.S. government
 corporations and agencies--
 mortgage-backed securities                       $242,474,508        $  3,404,959        $   867,959        $245,011,508
Debt securities issued by
  Foreign governments                                2,250,000              --                --                2,250,000
                                                  ------------        ------------        -----------        ------------

        Total                                     $244,724,508        $  3,404,959        $   867,959        $247,261,508
                                                  ============        ============        ===========        ============
</TABLE>



Loan Portfolio

A key management objective is to maintain the quality of the loan portfolio. The
Company seeks to achieve this objective by maintaining rigorous underwriting
standards coupled with regular evaluation of the creditworthiness and the
designation of lending limits for each borrower. The portfolio strategies seek
to avoid concentrations by industry or loan size in order to minimize credit
exposure and to originate loans in markets with which it is familiar.

         The Company's commercial and industrial loan portfolio represents
approximately 63% of gross loans. Loans in this category are typically made to
small and medium sized businesses and range between $250,000 and $10 million.
The primary source of repayment is from the borrower's operating profits and
cash flows. Based on underwriting standards, loans may be secured in whole or in
part by collateral such as liquid assets, accounts receivable, equipment,
inventory or real property. The Company's real estate loan portfolio, which
represents approximately 20% of gross loans, is secured by mortgages on real
property located principally in the State of New York and the Commonwealth of
Virginia.

                                       18
<PAGE>   19
The Company's leasing portfolio, which consists of finance leases for various
types of business equipment, represents approximately 15% of gross loans. The
collateral securing any loan may vary in value based on market conditions.

         The following table sets forth the composition of the Company's loan
portfolio:
<TABLE>
<CAPTION>
                                                                    June 30,
                                             ----------------------------------------------------
                                                     2001                            2000
                                             --------------------          ----------------------
                                                            ($ in thousands)
                                                             % of                            % of
                                             Balances       Gross          Balances         Gross
                                             --------       -----          --------         -----
<S>                                          <C>            <C>            <C>              <C>
Domestic
  Commercial and industrial                  $472,941        62.5%         $442,195          64.6%
  Equipment lease financing                   110,939        14.7           101,134          14.8
  Real estate                                 150,871        19.9           113,058          16.5
  Installment - individuals                     8,764         1.2             7,783           1.1
  Loans to depository institutions             12,000         1.6            20,000           2.9
Foreign

  Government and official institutions            777         0.1               777           0.1
                                             --------       -----          --------         -----
Gross loan                                    756,292       100.0%          684,947         100.0%
                                                            ======                          =====
  Unearned discounts                           15,607                        13,994
                                             --------                      --------

Loans, net of unearned discounts             $740,685                      $670,953
                                             ========                      ========
</TABLE>

Asset Quality

Intrinsic to the lending process is the possibility of loss. In times of
economic slowdown, the risk inherent in the Company's portfolio of loans may be
increased. While management endeavors to minimize this risk, it recognizes that
loan losses will occur and that the amount of these losses will fluctuate
depending on the risk characteristics of the loan portfolio which in turn
depends on current and expected economic conditions, the financial condition of
borrowers and the credit management process.

         The allowance for credit losses is maintained through the provision for
credit losses, which is a charge to operating earnings. The adequacy of the
provision and the resulting allowance for credit losses is determined by
management's continuing review of the loan portfolio, including identification
and review of individual problem situations that may affect the borrower's
ability to repay, review of overall portfolio quality through an analysis of
current charge-offs, delinquency and nonperforming loan data, estimates of the
value of any underlying collateral, review of regulatory examinations, an
assessment of current and expected economic conditions and changes in the size
and character of the loan portfolio. The allowance reflects management's
evaluation of both loans presenting identified loss potential and of the risk
inherent in various components of the portfolio, including loans identified as
impaired as required by SFAS No. 114. Thus, an increase in the size of the
portfolio or in any of its components could necessitate an increase in the
allowance even though there may not be a decline in credit quality or an
increase in potential problem loans. A significant change in any of the
evaluation factors described above could result in future additions to the
allowance. At June 30, 2001, the ratio of the allowance to loans, net of
unearned discounts, was 1.77% and the allowance was $13,106,000. At such date,
the Company's non- accrual loans amounted to $1,551,000; $315,000 of such loans
were judged to be impaired within the scope of SFAS No. 114 and required
valuation allowances of $ 80,000. Based on the foregoing, as well as
management's judgment as to the current risks inherent in the loan portfolio,
the Company's allowance for credit

                                       19
<PAGE>   20
losses was deemed adequate to absorb all estimable losses on specifically known
and other possible credit risks associated with the portfolio as of June 30,
2001. 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 $676,000 at June 30, 2001.

Deposits

A significant source of funds for the Company continues to be deposits,
consisting of demand (noninterest-bearing), NOW, savings, money market and time
deposits (principally certificates of deposit).

         The following table provides certain information with respect to the
Company's deposits:
<TABLE>
<CAPTION>
                                                                June 30,
                                       ---------------------------------------------------------
                                                2001                               2000
                                       ----------------------             ----------------------
                                                           ($ in thousands)
                                                         % of                               % of
                                       Balances         Total             Balances         Total
                                       --------         -----             --------         -----
<S>                                    <C>              <C>               <C>              <C>
Domestic

  Demand                               $311,780          35.4%            $275,514          35.0%
  NOW                                    86,826           9.8               69,710           8.8
  Savings                                28,556           3.2               25,590           3.2
  Money market                          181,535          20.6              144,305          18.3
  Time deposits                         270,484          30.7              270,382          34.3
                                       --------         -----             --------         -----

      Total domestic deposits           879,181          99.7              785,501          99.6
Foreign
  Time deposits                           2,975           0.3                2,830           0.4
                                       --------         -----             --------         -----

      Total deposits                   $882,156         100.0%            $788,331         100.0%
                                       ========         =====             ========         =====
</TABLE>


Fluctuations of balances in total or among categories at any date may occur
based on the Company's mix of assets and liabilities as well as on customer's
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on pages 22 and 23.

                                       20


<PAGE>   21
CAPITAL

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against
risk-weighted assets, including off-balance sheet items. These regulations
define the elements of total capital into Tier 1 and Tier 2 components and
establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for
capital adequacy purposes. Supplementing these regulations is a leverage
requirement. This requirement establishes a minimum leverage ratio (at least 3%
to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly
average assets (after deducting goodwill). Information regarding the Company's
and the bank's risk-based capital is presented on page 26. In addition, the
Company and the bank are subject to the provisions of the Federal Deposit
Insurance Corporation Improvement Act of 1981 ("FDICIA") which imposes a number
of mandatory supervisory measures. Among other matters, FDICIA established five
capital categories ranging from "well capitalized" to "critically under
capitalized." Such classifications are used by regulatory agencies to determine
a bank's deposit insurance premium, approval of applications authorizing
institutions to increase their asset size or otherwise expand business
activities or acquire other institutions. Under the provisions of FDICIA a "well
capitalized" institution must maintain minimum leverage, Tier 1 and Total
Capital ratios of 5%, 6% and 10%, respectively. At June 30, 2001, the Company
and the bank exceeded the requirements for "well capitalized" institutions.
Under the provisions of the Gramm-Leach-Bliley Act of 1999, in order for the
parent company to maintain its status as a financial holding company, the bank
must remain "well capitalized."


                                       21
<PAGE>   22
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                           Three Months Ended June 30,

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                          2001                                          2000
                                          ------------------------------------         ------------------------------------------
                                            Average                   Average          Average                            Average
ASSETS                                      Balance       Interest     Rate            Balance            Interest         Rate
                                          -----------    ----------  ---------        ---------           --------        -------
<S>                                     <C>             <C>          <C>             <C>                  <C>             <C>
Interest-bearing deposits
  with other banks                       $     2,880      $    22       3.32%        $    1,868            $    23           5.29%
Investment securities:
  Available for sale                         162,259        2,681       6.61            124,048              2,046           6.60
  Held to maturity                           257,103        4,369       6.80            304,323              5,228           6.87
  Tax-exempt  [2]                             33,825          625       7.41             32,283                594           7.40
Federal funds sold                               473            5       4.24                604                 10           6.38
Loans, net of unearned discounts
  Domestic  [3]                              703,245       16,744      10.13            620,755             16,475          11.36
  Foreign                                        777           12       6.17                782                 14           7.42
                                          -----------      -------                    ----------            -------

TOTAL INTEREST-EARNING ASSETS              1,160,562       24,458       8.73%         1,084,663             24,390           9.32%
                                                           -------     ======                               -------         ======

Cash and due from banks                       43,211                                     39,426
Allowance for credit losses                  (13,423)                                   (12,051)
Goodwill                                      21,158                                     21,158
Other assets                                  27,430                                     22,013
                                          -----------                                 ----------

                  TOTAL ASSETS            $1,238,938                                 $1,155,209
                                          ===========                                ===========

LIABILITIES AND SHAREHOLDERS'
  EQUITY

Interest-bearing deposits
  Domestic

   Savings                                $   27,217          164       2.42%        $   24,254                143           2.37%
   NOW                                        75,514          400       2.12             69,337                430           2.50
   Money market                              189,030        1,108       2.35            158,586              1,238           3.14
   Time                                      259,260        3,185       4.93            265,674              3,505           5.31
  Foreign

   Time                                        2,975           35       4.77              2,830                 32           4.54
                                          -----------      -------                    ----------            -------
        Total interest-bearing deposits      553,996        4,892       3.54            520,681              5,348           4.13
                                          -----------      -------                    ----------            -------

Borrowings
  Federal funds purchased and
   securities sold under
   agreements to repurchase                  118,299        1,334       4.52            169,115              2,465           5.86
  Commercial paper                            39,718          453       4.58             26,463                341           5.18
  Other short-term debt                        2,355           26       4.44             12,728                177           5.58
  Long-term debt                              40,350          467       4.63             10,700                107           5.22
                                          -----------      -------                    ----------            -------
                Total borrowings             200,722        2,280       4.55            219,006              3,090           5.73
                                          -----------      -------                    ----------            -------

TOTAL INTEREST-BEARING LIABILITIES           754,718        7,172       3.81%           739,687              8,438           4.61%
                                                           -------     ======                               -------         ======

Noninterest-bearing deposits                 290,139                                    251,972
Other liabilities                             72,372                                     58,317
                                          -----------                                 ----------
               Total liabilities           1,117,229                                  1,049,976

Shareholders' equity                         121,709                                    105,233
                                          -----------                                 ----------
             TOTAL LIABILITIES AND
              SHAREHOLDERS' EQUITY        $1,238,938                                 $1,155,209
                                          ===========                                ===========

Net interest income/spread                                 17,286       4.92%                               15,952           4.71%
                                                                       ======                                               ======

Net yield on interest-earning
  assets (margin)                                                       6.12%                                                6.03%
                                                                       ======                                               ======

Less: Tax equivalent adjustment                               257                                              244
                                                           -------                                          -------

Net interest income                                       $17,029                                          $15,708
                                                           =======                                          =======
</TABLE>

[1]      The average balances of assets, liabilities and shareholders' equity
         are computed on the basis of daily averages. Average rates are
         presented on a tax equivalent basis. Certain reclassifications have
         been made to 2000 amounts to conform to the current presentation.
[2]      Interest on tax-exempt securities is presented on a tax equivalent
         basis.
[3]      Nonaccrual loans are included in amounts outstanding and income has
         been included to the extent earned.


                                       22
<PAGE>   23
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                            Six Months Ended June 30,

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                           2001                                            2000
                                      -----------------------------------------------   ------------------------------------------
                                          Average                          Average          Average                       Average
ASSETS                                    Balance          Interest         Rate            Balance         Interest       Rate
                                      ----------------   --------------  ------------   ----------------  --------------  --------
<S>                                 <C>                <C>               <C>            <C>               <C>             <C>
Interest-bearing deposits
  with other banks                     $        2,901  $            58          4.03%     $       2,479      $       59      4.98%
Investment securities:
  Available for sale                          145,299            4,885          6.72            126,952           4,175      6.58
  Held to maturity                            266,286            9,074          6.82            302,333          10,363      6.86
  Tax-exempt  [2]                              33,378            1,233          7.45             30,770           1,125      7.35
Federal funds sold                                928               25          5.26              6,418             179      5.52
Loans, net of unearned discounts
  Domestic  [3]                               690,429           33,988         10.67            609,657          31,480     11.11
  Foreign                                         777               27          6.89                782              28      7.22
                                      ----------------   --------------                 ----------------     -----------

TOTAL INTEREST-EARNING ASSETS               1,139,998           49,290          9.06%         1,079,391          47,409      9.12%
                                                         --------------  ============                        -----------  ========

Cash and due from banks                        44,539                                            37,184
Allowance for credit losses                   (13,317)                                          (11,801)
Goodwill                                       21,158                                            21,158
Other assets                                   26,571                                            22,386
                                      ----------------                                  ----------------

                  TOTAL ASSETS         $    1,218,949                                     $   1,148,318
                                      ================                                  ================

LIABILITIES AND SHAREHOLDERS'
  EQUITY

Interest-bearing deposits
  Domestic

   Savings                             $       26,081              311          2.40%     $      24,242             285      2.37%
   NOW                                         73,888              835          2.28             70,802             875      2.49
   Money market                               185,370            2,419          2.63            161,014           2,537      3.17
   Time                                       257,565            6,603          5.17            291,670           7,689      5.30
  Foreign

   Time                                         2,975               72          4.91              2,830              62      4.44
                                      ----------------   --------------                 ----------------     -----------
Total interest-bearing deposits               545,879           10,240          3.78            550,558          11,448      4.18
                                      ----------------   --------------                 ----------------     -----------

Borrowings
  Federal funds purchased and
   securities sold under
   agreements to repurchase                   123,898            3,133          5.10            129,600           3,618      5.61
  Commercial paper                             35,717              868          4.90             29,247             737      5.06
  Other short-term debt                         3,209               85          5.37              9,764             269      5.54
  Long-term debt                               32,960              762          4.62             13,407             302      5.47
                                      ----------------   --------------                 ----------------     -----------
                Total borrowings              195,784            4,848          4.99            182,018           4,926      5.51
                                      ----------------   --------------                 ----------------     -----------

TOTAL INTEREST-BEARING LIABILITIES            741,663           15,088          4.10%           732,576          16,374      4.51%
                                                         --------------  ============                        -----------  ========

Noninterest-bearing deposits                  287,665                                           252,157
Other liabilities                              70,391                                            59,022
                                      ----------------                                  ----------------
               Total liabilities            1,099,719                                         1,043,755

Shareholders' equity                          119,230                                           104,563
                                      ----------------                                  ----------------
             TOTAL LIABILITIES AND
              SHAREHOLDERS' EQUITY     $    1,218,949                                     $   1,148,318
                                      ================                                  ================
Net interest income/spread                                      34,202          4.96%                            31,035      4.61%
                                                                         ============                                     ========

Net yield on interest-earning
  assets (margin)                                                               6.24%                                        5.92%
                                                                         ============                                     ========

Less: Tax equivalent adjustment                                    507                                              463
                                                         --------------                                      -----------

Net interest income                                    $        33,695                                       $   30,572
                                                         ==============                                      ===========
</TABLE>

[1]      The average balances of assets, liabilities and shareholders' equity
         are computed on the basis of daily averages. Average rates are
         presented on a tax equivalent basis. Certain reclassifications have
         been made to 2000 amounts to conform to current presentation.
[2]      Interest on tax-exempt securities is presented on a tax equivalent
         basis.
[3]      Nonaccrual loans are included in amounts outstanding and income has
         been included to the extent earned.

                                       23
<PAGE>   24
                        STERLING BANCORP AND SUBSIDIARIES
                            Rate/Volume Analysis [1]

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Increase/(Decrease)
                                                                                     Three Months Ended
                                                                               June 30, 2001 to June 30, 2000
                                                               --------------------------------------------------------------
                                                                  Volume                    Rate                   Net [2]
                                                               ------------             ------------             ------------
<S>                                                            <C>                      <C>                      <C>
INTEREST INCOME
Interest-bearing deposits with other banks                     $         10             $        (11)            $         (1)
                                                               ------------             ------------             ------------
Investment securities

  Available for sale                                                    632                        3                      635
  Held to maturity                                                     (806)                     (53)                    (859)
  Tax-exempt                                                             30                        1                       31
                                                               ------------             ------------             ------------
      Total investment securities                                      (144)                     (49)                    (193)
                                                               ------------             ------------             ------------

Federal funds sold                                                       (2)                      (3)                      (5)
                                                               ------------             ------------             ------------

Loans, net of unearned discounts
  Domestic [3]                                                        2,246                   (1,977)                     269
  Foreign                                                                --                       (2)                      (2)
                                                               ------------             ------------             ------------
      Total loans, net of unearned discount                           2,246                   (1,979)                     267
                                                               ------------             ------------             ------------

TOTAL INTEREST INCOME                                          $      2,110             $     (2,042)            $         68
                                                               ============             ============             ============


INTEREST EXPENSE
Interest-bearing deposits
  Domestic

    Savings                                                    $         18             $          3             $         21
    NOW                                                                  38                      (68)                     (30)
    Money market                                                        214                     (344)                    (130)
    Time                                                                (81)                    (239)                    (320)
  Foreign

    Time                                                                  1                        2                        3
                                                               ------------             ------------             ------------
      Total interest-bearing deposits                                   190                     (646)                    (456)
                                                               ------------             ------------             ------------

Borrowings

  Federal funds purchased and securities sold
    under agreements to repurchase                                     (642)                    (489)                  (1,131)
  Commercial paper                                                      156                      (44)                     112
  Other short-term debt                                                (121)                     (30)                    (151)
  Long-term debt                                                        376                      (16)                     360
                                                               ------------             ------------             ------------
      Total borrowings                                                 (231)                    (579)                    (810)
                                                               ------------             ------------             ------------

TOTAL INTEREST EXPENSE                                         $        (41)            $     (1,225)            $     (1,266)
                                                               ============             ============             ============

NET INTEREST INCOME                                            $      2,151             $       (817)            $      1,334
                                                               ============             ============             ============
</TABLE>

[1]      The above table is presented on a tax equivalent basis.
[2]      The change in interest income and interest expense due to both rate and
         volume has been allocated to the change due to rate and the change due
         to volume in proportion to the relationship of the absolute dollar
         amounts of the changes in each. The effect of one extra day in 2000 has
         been included in the change in volume.
[3]      Nonaccrual loans have been included in the amounts outstanding and
         income has been included to the extent accrued.

                                       24
<PAGE>   25
                        STERLING BANCORP AND SUBSIDIARIES
                            Rate/Volume Analysis [1]

                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                Increase/(Decrease)
                                                                                 Six Months Ended
                                                                          June 30, 2001 to June 30, 2000
                                                         --------------------------------------------------------------
                                                           Volume                    Rate                    Net [2]
                                                         ------------             ------------             ------------
<S>                                                      <C>                      <C>                      <C>
INTEREST INCOME
Interest-bearing deposits with other banks               $         10             $        (11)            $         (1)
                                                         ------------             ------------             ------------
Investment securities

  Available for sale                                              614                       96                      710
  Held to maturity                                             (1,234)                     (55)                  (1,289)
  Tax-exempt                                                       93                       15                      108
                                                         ------------             ------------             ------------
      Total investment securities                                (527)                      56                     (471)
                                                         ------------             ------------             ------------

Federal funds sold                                               (146)                      (8)                    (154)
                                                         ------------             ------------             ------------

Loans, net of unearned discounts
  Domestic [3]                                                  3,896                   (1,388)                   2,508
  Foreign                                                          --                       (1)                      (1)
                                                         ------------             ------------             ------------
      Total loans, net of unearned discount                     3,896                   (1,389)                   2,507
                                                         ------------             ------------             ------------

TOTAL INTEREST INCOME                                    $      3,233             $     (1,352)            $      1,881
                                                         ============             ============             ============


INTEREST EXPENSE
Interest-bearing deposits
  Domestic

    Savings                                              $         22             $          4             $         26
    NOW                                                            30                      (70)                     (40)
    Money market                                                  334                     (452)                    (118)
    Time                                                         (911)                    (175)                  (1,086)
  Foreign

    Time                                                            2                        8                       10
                                                         ------------             ------------             ------------
      Total interest-bearing deposits                            (523)                    (685)                  (1,208)
                                                         ------------             ------------             ------------

Borrowings

  Federal funds purchased and securities sold
    under agreements to repurchase                               (183)                    (302)                    (485)
  Commercial paper                                                154                      (23)                     131
  Other short-term debt                                          (176)                      (8)                    (184)
  Long-term debt                                                  518                      (58)                     460
                                                         ------------             ------------             ------------
      Total borrowings                                            313                     (391)                     (78)
                                                         ------------             ------------             ------------

TOTAL INTEREST EXPENSE                                   $       (210)            $     (1,076)            $     (1,286)
                                                         ============             ============             ============

NET INTEREST INCOME                                      $      3,443             $       (276)            $      3,167
                                                         ============             ============             ============
</TABLE>

[1]      The above table is presented on a tax equivalent basis.
[2]      The change in interest income and interest expense due to both rate and
         volume has been allocated to the change due to rate and the change due
         to volume in proportion to the relationship of the absolute dollar
         amounts of the changes in each. The effect of one extra day in 2000 has
         been included in the change in volume.
[3]      Nonaccrual loans have been included in the amounts outstanding and
         income has been included to the extent accrued.

                                       25
<PAGE>   26
                        STERLING BANCORP AND SUBSIDIARIES

                          REGULATORY CAPITAL AND RATIOS

RATIOS AND MINIMUMS

(dollars in thousands)

<TABLE>
<CAPTION>
                                                                                      FOR CAPITAL                 TO BE WELL
                                                                ACTUAL             ADEQUACY MINIMUM              CAPITALIZED
                                                  --------------------------    ----------------------    -------------------------
AS OF JUNE 30, 2001                                  AMOUNT         RATIO         AMOUNT       RATIO        AMOUNT        RATIO
--------------------------------------------      --------------  ----------    ------------  --------    ------------  -----------
<S>                                               <C>             <C>           <C>           <C>         <C>           <C>
Total Capital (to Risk Weighted Assets):

  The Company                                          $112,912       14.53%         62,182      8.00%        $77,727        10.00%
  The bank                                               95,365       12.94          58,941      8.00          73,677        10.00

Tier 1 Capital (to Risk Weighted Assets):

  The Company                                           103,154       13.27          31,091      4.00          46,636         6.00
  The bank                                               86,128       11.69          29,471      4.00          44,206         6.00

Tier 1 Leverage Capital (to Average Assets):

  The Company                                           103,154        8.47          48,711      4.00          60,889         5.00
  The bank                                               86,128        7.32          47,077      4.00          58,846         5.00



AS OF DECEMBER 31, 2000
--------------------------------------------
Total Capital (to Risk Weighted Assets):

  The Company                                          $105,503       13.35%        $63,205      8.00%        $79,006        10.00%
  The bank                                               86,877       11.44          60,746      8.00          75,933        10.00

Tier 1 Capital (to Risk Weighted Assets):

  The Company                                            95,593       12.10          31,602      4.00          47,404         6.00
  The bank                                               77,367       10.19          30,373      4.00          45,560         6.00

Tier 1 Leverage Capital (to Average Assets):

  The Company                                            95,593        8.11          47,141      4.00          58,926         5.00
  The bank                                               77,367        6.73          46,015      4.00          57,519         5.00
</TABLE>

                                       26
<PAGE>   27
                          QUANTITATIVE AND QUALITATIVE
                         DISCLOSURES ABOUT MARKET RISK

ASSET/LIABILITY MANAGEMENT

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

         The Company takes a coordinated approach to the management of market
risk, liquidity and capital. This risk management process is governed by
policies and limits established by senior management which are reviewed and
approved by the Asset/Liability Committee ("ALCO"). ALCO, which is comprised of
members of senior management and the Board, meets to review among other things,
economic conditions, interest rates, yield curve, cash flow projections,
expected customer actions, liquidity levels, capital ratios and repricing
characteristics of assets, liabilities and off-balance sheet financial
instruments.

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse
changes in market indices such as interest rates, foreign exchange rates and
equity prices. The Company's principal market risk exposure is interest rate
risk, with no material impact on earnings from changes in foreign exchange rates
or equity prices.

         Interest rate risk is the exposure to changes in market interest rates.
Interest rate sensitivity is the relationship between market interest rates and
net interest income due to the repricing characteristics of assets and
liabilities. The Company monitors the interest rate sensitivity of its on- and
off-balance sheet positions by examining its near-term sensitivity and its
longer term gap position. In its management of interest rate risk, the Company
utilizes several tools including traditional gap analysis and sophisticated
income simulation models.

         A traditional gap analysis is prepared based on the maturity and
repricing characteristics of interest-earning assets and interest-bearing
liabilities for selected time bands. The mismatch between repricings or
maturities within a time band is commonly referred to as the "gap" for that
period. A positive gap (asset sensitive) where interest-rate sensitive assets
exceed interest-rate sensitive liabilities generally will result in an
institution's net interest margin increasing in a rising rate environment and
decreasing in a falling rate environment. A negative gap (liability sensitive)
will generally have the opposite result on an institution's net interest margin.
However, the traditional gap analysis does not assess the relative sensitivity
of assets and liabilities to changes in interest rates. The Company utilizes the
gap analysis to complement its income simulations modeling.

         The Company's balance sheet structure is primarily short-term in nature
with a substantial portion of assets and liabilities repricing or maturing
within one year. The Company's gap analysis at June 30, 2001, is presented on
page 30. The results of both the income simulation analysis and the gap
analysis, reveal that net interest income would increase during periods of
rising interest rates and decrease during periods of falling interest rates.

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

                                       27
<PAGE>   28
internal control procedures. The credit risk of derivatives arises principally
from the potential for a counterparty to fail to meet its obligation to settle a
contract on a timely basis.

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

         At June 30, 2001, the Company utilized three interest rate floor
contracts having a notional amount totaling $75 million consisting of a contract
with a notional amount of $25 million and a final maturity of November 15, 2001
and two contracts with a notional amount of $25 million each and a final
maturity of November 15, 2002. These financial instruments are being used as
part of the Company's interest rate risk management and not for trading
purposes. At June 30, 2001, all counterparties have investment grade credit
ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.

         The Company utilizes income simulation models to complement its
traditional gap analysis. While ALCO routinely monitors simulated net interest
income sensitivity over a rolling two-year horizon, it also utilizes additional
tools to monitor potential longer-term interest rate risk. The income simulation
models measure the Company's net interest income sensitivity or volatility to
interest rate changes utilizing statistical techniques that allow the Company to
consider various factors which impact net interest income. These factors include
actual maturities, estimated cash flows, repricing characteristics, deposits
growth/retention and, most importantly, the relative sensitivity of the
Company's assets and liabilities to changes in market interest rates. This
relative sensitivity is important to consider as the Company's core deposit base
is not subject to the same degree of interest rate sensitivity as its assets.
The core deposit costs are internally managed and tend to exhibit less
sensitivity to changes in interest rates than the Company's adjustable rate
assets whose yields are based on external indices and change in concert with
market interest rates.

         The Company's interest rate sensitivity is determined by identifying
the probable impact of changes in market interest rates on the yields on the
Company's assets and the rates which would be paid on its liabilities. This
modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management
can project the impact of changes in interest rates on net interest margin. The
estimated effects of the Company's interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain limits
for the potential volatility of its net interest margin assuming certain levels
of changes in market interest rates with the objective of maintaining a stable
net interest margin under various probable rate scenarios. Management generally
has maintained a risk position well within the policy limits. As of June 30,
2001, the model indicated the impact of a 200 basis point parallel and pro rata
rise in rates over twelve months would approximate a 2.48% ($1,635,000) increase
in net interest income, while the impact of a 200 basis point decline in rates
over the same period would approximate a 2.06% ($1,357,000) decline from an
unchanged rate environment.

                                       28
<PAGE>   29
         The preceding sensitivity analysis does not represent a Company
forecast and should not be relied upon as being indicative of expected operating
results. These hypothetical estimates are based upon numerous assumptions
including: the nature and timing of interest rate levels including yield curve
shape, prepayments on loans and securities, deposit decay rates, pricing
decisions on loans and deposits, reinvestment/replacement of asset and liability
cash flows, and others. While assumptions are developed based upon current
economic and local market conditions, the Company cannot make any assurances as
to the predictive nature of these assumptions including how customer preferences
or competitor influences might change.

         Also, as market conditions vary from those assumed in the sensitivity
analysis, actual results will also differ due to: prepayment/refinancing levels
likely deviating from those assumed, the varying impact of interest rate change
"caps" or "floors" on adjustable rate assets, the potential effect of changing
debt service levels on customers with adjustable rate loans, depositor early
withdrawals and product preference changes, and other internal/external
variables. Furthermore, the sensitivity analysis does not reflect actions that
the Asset/Liability Committee might take in responding to or anticipating
changes in interest rates.

Liquidity Risk

Liquidity is the ability to meet cash needs arising from changes in various
categories of assets and liabilities. Liquidity is constantly monitored and
managed throughout the Company. Liquid assets consist of cash and due from
banks, interest-bearing deposits in banks and Federal funds sold and securities
available for sale. Primary funding sources include core deposits, capital
markets funds and other money market sources. Core deposits include domestic
noninterest-bearing and interest-bearing retail deposits, which historically
have been relatively stable. The parent company and the bank have significant
unused borrowing capacity. Contingency plans exist and could be implemented on a
timely basis to minimize the impact of any dramatic change in market conditions.

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

         The bank can supply funds to the parent company and its nonbank
subsidiaries subject to various legal restrictions. All national banks are
limited in the payment of dividends without the approval of the Comptroller of
the Currency to an amount not to exceed the net profits as defined, for that
year to date combined with its retained net profits for the preceding two
calendar years.

         At June 30, 2001, the parent company's short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $40,595,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$43,439,000 and back-up credit lines with banks of $19,000,000. Since 1979, the
parent company has had no need to use available back-up lines of credit.

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

                                       29
<PAGE>   30
                        STERLING BANCORP AND SUBSIDIARIES
                            Interest Rate Sensitivity

To mitigate the vulnerability of earnings to changes in interest rates, the
Company manages the repricing characteristics of assets and liabilities in an
attempt to control net interest rate sensitivity. Management attempts to
confine significant rate sensitivity gaps predominantly to repricing intervals
of a year or less so that adjustments can be made quickly. Assets and
liabilities with predetermined repricing dates are placed in a time of the
earliest repricing period. Amounts are presented in thousands.

<TABLE>
<CAPTION>
                                                                               Repricing Date
                                       ---------------------------------------------------------------------------------------------
                                                        More than       More than                           Non-
                                        3 months        3 months        1 year to          Over             Rate
                                        or less         to 1 year        5 years          5 years        Sensitive           Total
                                       ----------      ----------       ----------       ----------      ----------       ----------
<S>                                    <C>             <C>              <C>              <C>             <C>              <C>
ASSETS
  Interest-bearing deposits
    with other banks                   $    3,513      $       --       $       --       $       --      $       --       $    3,513
  Investment securities                     3,394           2,960           40,698          392,974           7,088          447,114
  Loans, net of unearned
    discounts                                  --
      Commercial and industrial           470,971           2,570            2,266              132            (537)         475,402
      Loans to depository
       institutions                        12,000              --               --               --              --           12,000
      Lease financing                      33,966           3,373           64,750            8,851         (14,969)          95,971
      Real estate                          76,502           5,791           29,231           36,349             (51)         147,822
      Installment                           5,285              96            2,709              674             (50)           8,714
      Foreign government and
       official institutions                   --             777               --               --              --              777
  Noninterest-earning
    assets and allowance
    for credit losses                          --              --               --               --          85,311           85,311
                                       ----------      ----------       ----------       ----------      ----------       ----------
      Total Assets                        605,631          15,567          139,654          438,980          76,792        1,276,624
                                       ----------      ----------       ----------       ----------      ----------       ----------
LIABILITIES AND
SHAREHOLDERS' EQUITY
  Interest-bearing deposits
    Savings [1]                                --              --           28,556               --              --           28,556
    NOW [1]                                    --              --           86,826               --              --           86,826
    Money market [1]                      146,664              --           34,871               --              --          181,535
    Time - domestic                       163,922          73,886           32,676               --              --          270,484
         - foreign                          1,795           1,180               --               --              --            2,975
  Federal funds purchased &
    securities sold u/a/r                 109,552             514               --               --              --          110,066
  Commercial paper                         40,245              --               --               --              --           40,245
  Other short-term borrowings               4,592             350               --               --              --            4,942
  Long-term borrowings - FHLB              10,000          20,000           10,350               --              --           40,350
  Noninterest-bearing liabilities
   and shareholders' equity                    --              --               --               --         510,645          510,645
                                       ----------      ----------       ----------       ----------      ----------       ----------
      Total Liabilities and
        Shareholders' Equity              476,770          95,930          193,279               --         510,645        1,276,624
                                       ----------      ----------       ----------       ----------      ----------       ----------
  Net Interest Rate
    Sensitivity Gap                    $  128,861      $  (80,363)      $  (53,625)      $  438,980      $ (433,853)      $       --
                                       ==========      ==========       ==========       ==========      ==========       ==========
  Cumulative Gap
    June 30, 2001                      $  128,861      $   48,498       $   (5,127)      $  433,853      $       --       $       --
                                       ==========      ==========       ==========       ==========      ==========       ==========
  Cumulative Gap
    June 30, 2000                      $   47,967      $  (56,055)      $ (102,206)      $  368,200      $       --       $       --
                                       ==========      ==========       ==========       ==========      ==========       ==========
  Cumulative Gap
    December 31, 2000                  $  101,033      $   24,199       $   (9,231)      $  455,154      $       --       $       --
                                       ==========      ==========       ==========       ==========      ==========       ==========
</TABLE>

[1]      Historically, balances in non-maturity deposit accounts have remained
         relatively stable despite changes in levels of interest rates. Balances
         are shown in repricing periods based on management's historical
         repricing practices and runoff experience.

                                       30
<PAGE>   31
                        STERLING BANCORP AND SUBSIDIARIES



                           PART II - OTHER INFORMATION



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

         (a) The Annual Meeting of Shareholders of the Company was held on April
19, 2001.

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

                  (1) Election of Directors

<TABLE>
<CAPTION>
                            Nominee                        Total Votes For                Total Votes Against
                            -------                        ---------------                -------------------
<S>                                                        <C>                            <C>
                        Robert Abrams                           8,081,366                      741,480
                        Joseph M. Adamko                        8,084,140                      738,706
                        Lillian Berkman                         8,141,514                      681,332
                        Louis J. Cappelli                       8,118,617                      704,229
                        Walter Feldesman                        7,977,924                      844,922
                        Allan F. Hershfield                     8,088,277                      734,569
                        Henry J. Humphreys                      8,084,581                      738,265
                        John C. Millman                         8,118,197                      704,649
                        Maxwell M. Rabb                         8,021,030                      801,816
                        Eugene T. Rossides                      8,045,280                      777,566
</TABLE>

                        There were no abstentions or broker nonvotes.

                  (2)   Amendment of Stock Incentive Plan

<TABLE>
<S>                                                                    <C>
                        Total Votes For                                5,921,985
                        Total Votes Against                            2,872,445
                        Total Abstentions                                 28,416
                        Total Broker Nonvotes                             -0-
</TABLE>


                  (3)   Adoption of Key Executive Incentive Bonus Plan

<TABLE>
<S>                                                                    <C>
                        Total Votes For                                8,378,441
                        Total Votes Against                              405,249
                        Total Abstentions                                 39,156
                        Total Broker Nonvotes                             -0-
</TABLE>

                                       31
<PAGE>   32
                        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

         (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    08/13/01               /s/  Louis J. Cappelli
                                             -----------------------------------
                                             Louis J. Cappelli
                                             Chairman and
                                             Chief Executive Officer

         Date    08/13/01               /s/  John W. Tietjen
                                             -----------------------------------
                                             John W. Tietjen
                                             Executive Vice President, Treasurer
                                             and Chief Financial Officer

                                       32
<PAGE>   33
                        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
                                     Per Share Earnings
</TABLE>

                                       33