<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


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


For the quarterly period ended              September 30, 1999
                               -------------------------------------------------

                                       or

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


For the transition period from __________________________ to ___________________



Commission File Number:                         1-5273-1
                        --------------------------------------------------------


                                Sterling Bancorp
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         New York                                                  13-2565216
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                                   Identification)


430 Park Avenue, New York, N.Y.                                      10022-3505
--------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)



                                  212-826-8000
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



                                      N/A
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
                                    report)


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                 [X] Yes [ ] No


      As of September 30, 1999 there were 8,001,437 shares of common stock,
                          $1.00 par value, outstanding.
<PAGE>   2
                                STERLING BANCORP


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

                    Consolidated Financial Statements                                                    3
                    Notes to Consolidated Financial Statements                                           8

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

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

        Item 3.     Quantitative and Qualitative Disclosures About
                      Market Risk

                    Asset/Liability Management                                                          24
                    Interest Rate Sensitivity                                                           27
</TABLE>

<TABLE>
PART II OTHER INFORMATION

<S>                 <C>                                                                                 <C>
        Item 6.     Exhibits and Reports on Form 8-K                                                    28
</TABLE>

<TABLE>
<S>                                                                                                     <C>
SIGNATURES                                                                                              28


EXHIBIT INDEX                                                                                           29

        Exhibit 11 Computation of Per Share Earnings                                                    30

        Exhibit 27 Financial Data Schedule                                                              31
</TABLE>


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

<TABLE>
<CAPTION>
                                                                    September 30,          December 31,
ASSETS                                                                   1999                  1998
                                                                   ---------------        ---------------
<S>                                                                <C>                    <C>
Cash and due from banks                                            $    45,625,058        $    43,311,268
Interest-bearing deposits with other banks                                 515,000                515,000
Investment securities
   Available for sale (at estimated market value)                      139,177,575            145,060,902
   Held to maturity (estimated market value
      $275,591,889 and $185,425,123, respectively)                     280,519,696            184,745,325
                                                                   ---------------        ---------------
            Total investment securities                                419,697,271            329,806,227
                                                                   ---------------        ---------------

Loans, net of unearned discounts                                       647,315,448            640,206,308
Less allowance for credit losses                                        10,429,645             10,156,077
                                                                   ---------------        ---------------
            Loans, net                                                 636,885,803            630,050,231
                                                                   ---------------        ---------------
Customers' liability under acceptances                                     854,153                609,431
Excess cost over equity in net assets of the
   banking subsidiary                                                   21,158,440             21,158,440
Premises and equipment, net                                              6,244,431              6,294,654
Accrued interest receivable                                              4,762,649              3,991,914
Other real estate owned                                                    493,996              1,044,509
Other assets                                                            10,803,440              7,663,541
                                                                   ---------------        ---------------
                                                                   $ 1,147,040,241        $ 1,044,445,215
                                                                   ===============        ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
   Noninterest-bearing deposits                                    $   276,163,397        $   329,020,287
   Interest-bearing deposits                                           502,476,102            373,782,181
                                                                   ---------------        ---------------
            Total deposits                                             778,639,499            702,802,468
Federal funds purchased and securities
   sold under agreements to repurchase                                 132,506,471             99,429,027
Commercial paper                                                        34,814,100             41,529,300
Other short-term borrowings                                              5,808,044             12,771,325
Acceptances outstanding                                                    854,153                609,431
Due to factoring clients                                                42,576,578             32,074,004
Accrued expenses and other liabilities                                  17,018,700             11,678,336
                                                                   ---------------        ---------------
                                                                     1,012,217,545            900,893,891
Long-term debt - FHLB                                                   31,050,000             41,400,000
                                                                   ---------------        ---------------
            Total liabilities                                        1,043,267,545            942,293,891
                                                                   ---------------        ---------------

Commitments and contingent liabilities


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


   Common stock, $1 par value. Authorized 20,000,000 shares;
      issued 8,324,830 and 8,310,284 shares, respectively                8,324,830              8,310,284
   Capital surplus                                                      45,440,792             45,287,315
   Retained earnings                                                    56,562,947             48,817,648
   Accumulated other comprehensive (loss)income,
      net of tax                                                        (1,648,635)               538,840
                                                                   ---------------        ---------------
                                                                       111,123,364            105,417,977
   Less
      Common shares in treasury at cost, 323,393 and
        101,693 shares, respectively                                     5,917,330              1,592,690
      Unearned compensation                                              1,433,338              1,673,963
                                                                   ---------------        ---------------
            Total shareholders' equity                                 103,772,696            102,151,324
                                                                   ---------------        ---------------
                                                                   $ 1,147,040,241        $ 1,044,445,215
                                                                   ===============        ===============
</TABLE>

See Notes to Consolidated Financial Statements.


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


<TABLE>
<CAPTION>
                                                  Three Months Ended             Nine Months Ended
                                                     September 30,                 September 30,
                                                  1999           1998           1999           1998
                                               -----------    -----------    -----------   ------------
<S>                                            <C>            <C>            <C>            <C>
INTEREST INCOME
   Loans                                       $14,140,542    $13,481,415    $40,715,827    $38,403,119
   Investment securities:
      Available for sale                         2,077,844      1,871,349      6,040,834      5,670,009
      Held to maturity                           4,182,405      3,267,157     10,208,168     10,345,958
   Federal funds sold                               23,158        121,882        295,787        478,467
   Deposits with other banks                        75,707         14,652        150,015        120,055
                                               -----------    -----------    -----------    -----------
            Total interest income               20,499,656     18,756,455     57,410,631     55,017,608
                                               -----------    -----------    -----------    -----------


INTEREST EXPENSE
   Deposits                                      4,322,777      3,895,247     11,300,950     12,466,134
   Federal funds purchased
      and securities sold under agreements
      to repurchase                              1,432,218        919,158      3,460,176      3,006,147
   Commercial paper                                422,781        474,678      1,356,253      1,223,494
   Other short-term borrowings                     219,768        259,513        572,687        756,591
   Long-term debt                                  481,674        523,277      1,526,800      1,253,287
                                               -----------    -----------    -----------    -----------
            Total interest expense               6,879,218      6,071,873     18,216,866     18,705,653
                                               -----------    -----------    -----------    -----------
Net interest income                             13,620,438     12,684,582     39,193,765     36,311,955
Provision for credit losses                      1,365,000      1,069,000      4,118,000      3,180,333
                                               -----------    -----------    -----------    -----------
Net interest income after provision
   for credit losses                            12,255,438     11,615,582     35,075,765     33,131,622
                                               -----------    -----------    -----------    -----------

NONINTEREST INCOME
   Factoring income                              1,219,583      1,210,115      3,639,825      3,521,092
   Mortgage banking income                       1,557,141        996,245      4,238,156      2,890,796
   Service charges on deposit accounts             769,303        839,445      2,309,648      2,264,397
   Trade finance income                            597,928        482,670      1,645,092      1,464,032
   Trust fees                                      181,150        249,499        582,466        676,787
   Other service charges and fees                  309,479        189,232        991,647        722,306
   Other income                                     23,678         56,283         75,311        135,705
                                               -----------    -----------    -----------    -----------
            Total noninterest income             4,658,262      4,023,489     13,482,145     11,675,115
                                               -----------    -----------    -----------    -----------


NONINTEREST EXPENSES
   Salaries                                      5,151,303      4,617,831     14,805,623     13,632,910
   Employee benefits                               951,990        620,360      3,108,191      2,597,023
                                               -----------    -----------    -----------    -----------
            Total personnel expenses             6,103,293      5,238,191     17,913,814     16,229,933
   Occupancy expense, net                          969,856        854,712      2,532,660      2,444,096
   Equipment expense                               627,552        596,157      2,027,450      1,818,055
   Other expenses                                2,981,080      2,928,064      8,308,551      7,678,960
                                               -----------    -----------    -----------    -----------
            Total noninterest expenses          10,681,781      9,617,124     30,782,475     28,171,044
                                               -----------    -----------    -----------    -----------
Income before income taxes                       6,231,919      6,021,947     17,775,435     16,635,693
Provision for income taxes                       2,547,111      2,767,542      7,074,574      7,264,851
                                               -----------    -----------    -----------    -----------

Net income                                     $ 3,684,808    $ 3,254,405    $10,700,861    $ 9,370,842
                                               ===========    ===========    ===========    ===========

Average number of common shares outstanding
   Basic                                         8,040,787      8,261,166      8,116,514      8,244,125
   Diluted                                       8,398,867      8,723,354      8,483,065      8,583,900
Per average common share
   Basic                                       $       .45    $       .39    $      1.31    $      1.13
   Diluted                                             .44            .38           1.26           1.09
Dividends per common share                             .12            .11            .36            .32
</TABLE>


See Notes to Consolidated Financial Statements.

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

<TABLE>
<CAPTION>
                                                 Three Months Ended                   Nine Months Ended
                                                    September 30,                       September 30,
                                                1999              1998             1999                1998
                                            ------------      ------------     ------------      ------------
<S>                                         <C>               <C>              <C>               <C>
Net income                                  $  3,684,808      $  3,254,405     $ 10,700,861      $  9,370,842


Other comprehensive income, net of tax:
      Unrealized holding (losses)gains
       arising during the period                (345,451)          772,206       (2,187,475)          820,983
                                            ------------      ------------     ------------      ------------


Comprehensive income                        $  3,339,357      $  4,026,611     $  8,513,386      $ 10,191,825
                                            ============      ============     ============      ============
</TABLE>


See Notes to Consolidated Financial Statements.


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


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

COMMON STOCK
   Balance at January 1                                $  8,310,284      $  8,262,500
   Conversions of preferred shares
      into common shares                                      2,046             2,284
   Options exercised                                         12,500            45,500
                                                       ------------      ------------
   Balance at September 30                             $  8,324,830      $  8,310,284
                                                       ============      ============

CAPITAL SURPLUS
   Balance at January 1                                $ 45,287,315      $ 44,775,759
   Conversions of preferred shares
      into common shares                                     18,414            20,556
   Options exercised                                        135,063           491,000
                                                       ------------      ------------
   Balance at September 30                             $ 45,440,792      $ 45,287,315
                                                       ============      ============

RETAINED EARNINGS
   Balance at January 1                                $ 48,817,648      $ 39,590,806
   Net income                                            10,700,861         9,370,842
   Cash dividends paid - common shares                   (2,906,230)       (2,618,547)
                       - preferred shares                   (49,332)          (40,496)
                                                       ------------      ------------
   Balance at September 30                             $ 56,562,947      $ 46,302,605
                                                       ============      ============

ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
   Balance at January 1                                $    538,840      $    197,374
                                                       ------------      ------------
   Unrealized holding (losses)gains arising during
      the period:
        Before tax                                       (4,043,394)        1,517,529
        Tax (benefit) expense                            (1,855,919)          696,546
                                                       ------------      ------------
           Net of tax                                    (2,187,475)          820,983
                                                       ------------      ------------
   Balance at September 30                             $ (1,648,635)     $  1,018,357
                                                       ============      ============

TREASURY STOCK
   Balance at January 1                                $ (1,592,690)     $   (441,257)
   Purchase of common shares                             (4,324,640)         (756,925)
                                                       ------------      ------------
   Balance at September 30                             $ (5,917,330)     $ (1,198,182)
                                                       ============      ============

UNEARNED COMPENSATION
   Balance at January 1                                $ (1,673,963)     $ (2,249,346)
   Amortization of unearned compensation                    240,625           240,625
                                                       ------------      ------------
   Balance at September 30                             $ (1,433,338)     $ (2,008,721)
                                                       ============      ============

TOTAL SHAREHOLDERS' EQUITY
   Balance at January 1                                $102,151,324      $ 92,622,566
   Net changes during the period                          1,621,372         7,552,982
                                                       ------------      ------------
   Balance at September 30                             $103,772,696      $100,175,548
                                                       ============      ============
</TABLE>

See Notes to Consolidated Financial Statements.


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

<TABLE>
<CAPTION>
                                                                               Nine Months Ended
                                                                                 September 30,
                                                                            1999               1998
                                                                       -------------      -------------
<S>                                                                    <C>                <C>
OPERATING ACTIVITIES
  Net income                                                           $  10,700,861      $   9,370,842
  Adjustments to reconcile net income to net cash
      provided by operating activities:
        Provision for credit losses                                        4,118,000          3,180,333
        Depreciation and amortization of premises and equipment            1,420,816          1,220,434
        Deferred income tax benefit                                         (140,054)          (297,021)
        Net change in loans held for sale                                  9,307,975         (9,544,740)
        Amortization of unearned compensation                                240,625            240,625
        Amortization of premiums of securities                             1,561,063          1,677,036
        Accretion of discounts on securities                                (634,843)          (441,652)
        (Increase)Decrease in accrued interest receivable                   (770,735)            48,702
        Increase in due to factored clients                               10,502,574          6,781,365
        Increase(Decrease) in other liabilities                            5,340,364           (431,634)
        Other, net                                                        (4,988,359)        (1,715,677)
                                                                       -------------      -------------

              Net cash provided by operating activities                   36,658,287         10,088,613
                                                                       -------------      -------------

INVESTING ACTIVITIES
  Purchase of premises and equipment                                      (1,370,593)          (486,552)
  Net decrease in interest-bearing deposits
    with other banks                                                              --          2,695,000
  Net increase in Federal funds sold                                              --         (4,000,000)
  Decrease(Increase) in other real estate owned                              550,513           (401,654)
  Net decrease in loans                                                  (16,417,115)       (18,403,807)
  Proceeds from prepayments, redemptions or maturities
    of securities - held to maturity                                      49,954,562         52,762,664
  Purchases of securities - held to maturity                            (146,943,929)       (19,853,914)
  Purchases of securities - available for sale                          (117,486,978)      (293,774,130)
  Proceeds from prepayments, redemptions or maturities
    of securities - available for sale                                   119,615,688        323,921,417
                                                                       -------------      -------------

              Net cash (used in) provided by investing activities       (112,097,852)        42,459,024
                                                                       -------------      -------------
FINANCING ACTIVITIES
  Net decrease in noninterest-bearing deposits                           (52,856,890)       (55,491,818)
  Net increase(decrease)in interest-bearing deposits                     128,693,921        (30,605,684)
  Net increase(decrease) in funds purchased and
    securities sold under agreements to repurchase                        33,077,444        (12,077,429)
  Net (decrease)increase in commercial paper
    and other short-term borrowings                                      (13,678,481)         9,976,124
  Purchase of Treasury stock                                              (4,324,640)          (756,925)
  (Decrease)Increase in other long-term debt                             (10,350,000)        39,650,000
  Proceeds from exercise of stock options                                    147,563            536,500
  Cash dividends paid on common and preferred stock                       (2,955,562)        (2,659,043)
                                                                       -------------      -------------
            Net cash provided by (used in) in financing activities        77,753,355        (51,428,275)
                                                                       -------------      -------------
Net increase in cash and due from banks                                    2,313,790          1,119,362
Cash and due from banks - beginning of period                             43,311,268         40,065,863
                                                                       -------------      -------------
Cash and due from banks  - end of period                               $  45,625,058      $  41,185,225
                                                                       =============      =============
Supplemental schedule of non-cash financing activities:
   Preferred stock conversions                                         $      20,460      $      22,840
Supplemental disclosure of cash flow information:
   Interest paid                                                       $  18,420,455      $  18,739,828
   Income taxes paid                                                       6,251,902          6,483,332
</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 September 30, 1999 and 1998 are unaudited; however, in the
         opinion of management, all adjustments, consisting of normal recurring
         accruals, necessary for a fair presentation of such periods have been
         made. Certain reclassifications have been made to the 1998 financial
         statements to conform to the current presentation. The interim
         financial statements should be read in conjunction with the Company's
         annual report on Form 10-K for the year ended December 31, 1998.

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

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

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

5.       In June 1997, the Financial Accounting Standards Board issued SFAS No.
         131, "Disclosures about Segments of an Enterprise and Related
         Information." SFAS No. 131 establishes standards for the way that
         public business enterprises report information about operating segments
         in annual financial statements, requires that selected information
         about operating segments be reported in interim financial statements
         issued to stockholders and establishes standards for related
         disclosures about an enterprise's products and services, geographic
         areas, and major customers.

             The Company provides a full range of financial products and
         services, including business and consumer loans, 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


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


primary source of earnings is net interest income, which represents the
difference between interest earned on interest-earning assets and the interest
incurred on interest-bearing liabilities. The Company's 1999 year-to-date
average interest-earning assets were 59.6% loans (corporate lending was 77.3%
and real estate lending was 18.9% 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 70% of loans are to borrowers located in the metropolitan New York
area. In order to comply with the provisions of SFAS No. 131, the Company has
determined that it has three reportable operating segments: corporate lending,
real estate lending and company-wide treasury.

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


<TABLE>
<CAPTION>
                                               Corporate            Real Estate         Company-wide
                                                Lending               Lending             Treasury             Totals
                                            --------------       --------------       --------------       --------------
<S>                                         <C>                  <C>                  <C>                  <C>
Three Months Ended September 30, 1999
-------------------------------------
Net interest income                         $    6,756,367       $    2,254,289       $    3,814,475       $   12,825,131
Noninterest income                               2,296,193            1,513,506               30,074            3,839,773
Depreciation and amortization                       45,235               54,121                  175               99,531
Segment profit                                   3,527,646            2,197,500            5,425,200           11,150,346
Segment assets                                 537,173,996           98,944,050          472,263,765        1,108,381,811

<CAPTION>
<S>                                         <C>                  <C>                  <C>                  <C>
Three Months Ended September 30, 1998
-------------------------------------
Net interest income                         $    6,541,760       $    2,143,564       $    3,111,630       $   11,796,954
Noninterest income                               2,325,106              904,018               21,319            3,250,443
Depreciation and amortization                       29,537               46,395                   87               76,019
Segment profit                                   4,567,226            1,902,300            4,444,100           10,913,626
Segment assets                                 482,490,558           94,093,120          371,336,802          947,920,480

<CAPTION>
                                               Corporate            Real Estate         Company-wide
                                                Lending               Lending              Treasury            Totals
                                            --------------       --------------       --------------       --------------

<S>                                        <C>                  <C>                  <C>                  <C>
Nine Months Ended September 30, 1999
------------------------------------
Net interest income                         $   20,201,830       $    6,640,171       $    9,814,585       $   36,656,586
Noninterest income                               6,347,478            4,176,853              108,152           10,632,483
Depreciation and amortization                      122,659              149,818                  518              272,995
Segment profit                                  10,494,908            6,341,200           15,153,900           31,990,008
Segment assets                                 537,173,996           98,944,050          472,263,765        1,108,381,811

<CAPTION>
<S>                                         <C>                  <C>                  <C>                  <C>
Nine Months Ended September 30, 1998
------------------------------------
Net interest income                         $   17,422,651       $    6,111,904       $   10,414,720       $   33,949,275
Noninterest income                               6,346,128            2,738,850               52,790            9,137,768
Depreciation and amortization                       74,990              134,490                  259              209,739
Segment profit                                  10,169,715            5,194,400           14,178,300           29,542,415
Segment assets                                 482,490,558           94,093,120          371,336,802          947,920,480
</TABLE>


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


<TABLE>
<CAPTION>
                                                 Three Months Ended September 30,          Nine Months Ended September 30,
                                                     1999                1998                 1999                  1998
                                               ---------------      ---------------      ---------------      ---------------
<S>                                            <C>                  <C>                  <C>                  <C>
Net interest income:
   Total for reportable operating segments     $    12,825,131      $    11,796,954      $    36,656,586      $    33,949,275
   Other [1]                                           795,307              887,628            2,537,179            2,362,680
                                               ---------------      ---------------      ---------------      ---------------
Consolidated net interest income               $    13,620,438      $    12,684,582      $    39,193,765      $    36,311,955
                                               ===============      ===============      ===============      ===============
Noninterest income:
   Total for reportable operating segments     $     3,839,773      $     3,250,443      $    10,632,483      $     9,137,768
   Other [1]                                           818,489              773,046            2,849,662            2,537,347
                                               ---------------      ---------------      ---------------      ---------------
Consolidated noninterest income                $     4,658,262      $     4,023,489      $    13,482,145      $    11,675,115
                                               ===============      ===============      ===============      ===============

Profit:
   Total for reportable operating segments     $    11,150,346      $    10,913,626      $    31,990,008      $    29,542,415
   Other [1]                                        (4,918,427)          (4,891,679)         (14,214,573)         (12,906,722)
                                               ---------------      ---------------      ---------------      ---------------
Consolidated income before income taxes        $     6,231,919      $     6,021,947      $    17,775,435      $    16,635,693
                                               ===============      ===============      ===============      ===============
Assets:
   Total for reportable operating segments     $ 1,108,381,811      $   947,920,480      $ 1,108,381,811      $   947,920,480
   Other [1]                                        38,658,430           37,427,545           38,658,430           37,427,545
                                               ---------------      ---------------      ---------------      ---------------
Consolidated assets                            $ 1,147,040,241         $985,348,025      $ 1,147,040,241      $   985,348,025
                                               ===============      ===============      ===============      ===============
</TABLE>

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


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


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

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


BUSINESS

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

         There is intense competition in all areas in which the Company conducts
its business. In addition to competing with other banks, the Company competes in
certain areas of its business with other financial institutions. At September
30, 1999, the Bank's year-to-date average earning assets (of which loans were
57% and investment securities were 41%) represented approximately 95% of the
Company's year-to-date average earning assets.

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


         Results for the Three Months Ended September 30, 1999 and 1998
         --------------------------------------------------------------

OVERVIEW

The Company reported net income for the three months ended September 30, 1999 of
$3.7 million, representing $0.44 per share, calculated on a diluted basis,
compared to $3.3 million, or $0.38 per share, calculated on a diluted basis, for
the like period in 1998. This increase reflects higher net interest income and
continued growth in noninterest income.

         Net interest income increased to $13.6 million for the third quarter of
1999 compared with $12.7 million for the same period in 1998, principally due to
higher average earning assets outstanding. The net interest margin, on a tax


                                       11
<PAGE>   12
equivalent basis, was 5.91% for the third quarter of 1999 compared to 6.17% for
the like 1998 period. This decrease was principally due to a decrease of 30
basis points in the average yield on earning assets partially offset by a
decrease in average cost of funds of 14 basis points.

         Noninterest income rose to $4.7 million for the three months ended
September 30, 1999 compared to $4.0 million for the like 1998 period principally
due to continued growth in fees from mortgage banking and trade finance.

INCOME STATEMENT ANALYSIS

Net Interest Income
Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
assets, liabilities and shareholders' equity. The increases (decreases) in the
components of interest income and interest expense, expressed in terms of
fluctuation in average volume and rate are shown on page 21. Information as to
the components of interest income and interest expense and average rates is
provided in the Average Balance Sheets shown on page 19.

         Net interest income for the three months ended September 30, 1999
increased $936,000 to $13,621,000 from $12,685,000 for the comparable period in
1998.

         Total interest income aggregated $20,500,000 which was up $1,743,000
for the third quarter of 1999 when compared to $18,757,000 for the same period
of 1998. The tax equivalent yield on interest earning assets was 8.81% for the
three months ended September 30, 1999 compared with 9.11% for the comparable
period in 1998. The increase in interest income was due to an increase in
income earned on the Company's investment securities portfolio and on the loan
portfolio as a result of higher average outstandings. The increase in
investment securities balances reflects the implementation of asset/liability
management  strategies. Loan balances increased as the result of the
implementation of  business plans, including the purchase of portfolios,
designed to increase  funds  employed in this asset category. The decrease in
yield on earning assets was due to lower yields on loans and investment
securities.

         Interest earned on the loan portfolio amounted to $14,141,000 which was
up $660,000 when compared to a year ago. Average loan balances amounted to
$566,415,000 which were up $42,982,000 from an average of $523,433,000 in the
prior year period. The increase in the average loans, primarily in the leasing,
mortgage and commercial and industrial loan segments of the Company's loan
portfolio, accounted for the increase in interest earned on loans. The decrease
in the yield on the domestic loan portfolio to 10.64% for the three months ended
September 30, 1999 from 10.98% for the comparable 1998 period was primarily
attributable to a lower rate environment.

         Tax equivalent interest earned on investment securities increased
$1,155,000 to $6,437,000 in 1999 due to higher average outstandings partially
offset by lower yields.

         Interest expense increased $807,000 to $6,879,000 for the third quarter
of 1999 from $6,072,000 for the comparable period in 1998. The increase in
interest expense was due to higher average funds employed partially offset by
lower average rates paid for those funds.

         Interest expense on deposits increased $427,000 for the three months
ended September 30, 1999 to $4,322,000 from $3,895,000 for the comparable 1998
period due to increases in average outstandings partially offset by lower rates
paid on


                                       12
<PAGE>   13
deposits. Average interest-bearing deposit balances amounted to $462,230,000
which were up $63,675,000 from an average of $398,555,000 in the prior year
period. The increase in average balances reflects the implementation of plans,
including raising deposits in the capital markets and lengthening funding
maturities into year 2000, designed to maximize year-end liquidity. The average
rate paid on interest-bearing deposits was reduced to 3.71% in 1999 compared to
3.86% in the comparable year-ago period.

         Interest expense on borrowed funds increased $380,000 for the three
months ended September 30, 1999 to $2,557,000 from $2,177,000 for the comparable
prior year period principally due to increases in average outstandings. Average
borrowed funds amounted to $193,005,000 up $26,950,000 from an average of
$166,055,000 in the prior year period. The increase in borrowings reflects the
implementation of plans designed to support asset growth.

Provision for Credit Losses
Based on management's continuing evaluation of the loan portfolio (discussed
under "Asset Quality" below), and principally as the result of the growth in the
loan portfolio, the provision for credit losses increased to $1,365,000 up
$296,000 when compared to the same period last year.

Noninterest Income
Noninterest income increased $635,000 for the third quarter of 1999 when
compared with the like 1998 period primarily as a result of increased fees from
mortgage banking and trade finance.

Noninterest Expenses
Noninterest expenses increased $1,065,000 for the third quarter of 1999 when
compared with the like 1998 period primarily due to increased personnel and
equipment expenses incurred to support growing levels of business activity and
continued investment in the business franchise.


          Results for the Nine Months Ended September 30, 1999 and 1998
          -------------------------------------------------------------


OVERVIEW

The Company reported net income for the nine months ended September 30,1999 of
$10.7 million, representing $1.26 per share, calculated on a diluted basis,
compared to $9.4 million, or $1.09 per share calculated on a diluted basis, for
the like period in 1998. This increase reflects continued growth in both net
interest income and noninterest income as explained below.

         Net interest income increased to $39.2 million for the first nine
months of 1999 compared with $36.3 million for the same period in 1998,
principally due to higher average earning asset outstandings. The net interest
margin, on a tax equivalent basis, was 6.12% for the first nine months of 1999
compared to 6.00% for the like 1998 period. This increase was principally due to
a 39 basis point decrease in the average cost of funds partially offset by a 19
basis point decrease in average yield on earning assets.

         Noninterest income rose to $13.5 million for the nine months ended
September 30,1999 compared to $11.7 million for the like 1998 period principally
due to continued growth in fees from mortgage banking, factoring, trade finance,
and deposit and various other services.


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

         Net interest income for the nine months ended September 30,1999
increased $2,882,000 to $39,194,000 from $36,312,000 for the comparable period
in 1998.

         Total interest income aggregated $57,411,000 up $2,393,000 for the
first nine months of 1999 as compared to $55,018,000 for the same period of
1998. The tax equivalent yield on interest-earning assets was 8.87% for the nine
months ended September 30, 1999 compared with 9.06% for the comparable period in
1998. The increase in interest income was principally due to an increase in
income earned on the Company's loan portfolio as a result of management's
strategy of increasing loans outstanding. The decrease in yield on earning
assets was due to lower yields on loans and investment securities.

         Interest earned on the loan portfolio amounted to $40,716,000 up
$2,313,000 when compared to a year ago. Average loan balances amounted to
$542,830,000 up $41,340,000 from an average of $501,490,000 in the prior year
period. The increase in the average loans, primarily in the Company's leasing,
mortgage and commercial and industrial loan portfolios, accounted for the
increase in interest earned on loans. The decrease in the yield on the domestic
loan portfolio to 10.83% for the nine months ended September 30,1999 from 11.19%
for the comparable 1998 period was primarily attributable to a lower prime rate
in the 1999 period.

         Tax equivalent interest earned on investment securities increased
$478,000 to $16,743,000 in 1999 due to higher average outstandings partially
offset by lower yields due to a flattening of the U.S. Treasury yield curve.

         Total interest expense decreased $489,000 to $18,217,000 for the first
nine months of 1999 from $18,706,000 for the comparable period in 1998. The
decrease in interest expense was due to lower average rates paid for
interest-bearing deposits and borrowed funds partially offset by higher amounts
of borrowed funds.

         Interest expense on deposits decreased $1,165,000 for the nine months
ended September 30,1999 to $11,301,000 from $12,466,000 for the comparable 1998
period primarily due to decreases in rates paid on deposits. The average rate
paid on interest-bearing deposits decreased to 3.56% in 1999 compared to 4.02%
in the comparable year ago period.

         Interest expense on borrowed funds increased $676,000 for the first
nine months of 1999 to $6,916,000 from $6,240,000 for the comparable 1998 period
due to increases in average outstandings partially offset by lower average rates
paid for these funds. Average borrowed funds amounted to $178,039,000 up
$20,839,000 from $157,200,000 in the year period. This increase in borrowings
reflects the implementation of plans designed to support asset growth. The
decrease in the average rate paid for borrowed funds to 4.88% for the nine
months ended September 30, 1999 from 5.18% for the comparable 1998 period was
primarily attributable to a lower rate environment.


                                       14
<PAGE>   15
Provision for Credit Losses
Based on management's continuing evaluation of the loan portfolio (discussed
under "Asset Quality" below), and principally as the result of the growth in the
loan portfolio, the provision for credit losses increased to $4,118,000 up
$938,000 when compared to the same period last year.

Noninterest Income
Noninterest income increased $1,807,000 for the first nine months of 1999 when
compared with the like 1998 period primarily as a result of increased fees from
mortgage banking, factoring, trade finance and deposit and other services.

Noninterest Expenses
Noninterest expenses increased $2,611,000 for the first nine months of 1999 when
compared with the like 1998 period primarily due to increased personnel and
equipment expenses incurred to support growing levels of business activity and
continued 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 September 30, 1999, the
Company's portfolio of securities totalled $419,697,000 of which U.S. Government
and U.S. Government corporation and agency guaranteed mortgage-backed securities
having an average life of approximately 4.9 years amounted to $386,345,000. The
Company has the intent and ability to hold to maturity securities classified as
"held to maturity." These securities are carried at cost, adjusted for
amortization of premiums and accretion of discounts. The gross unrealized gains
and losses on "held to maturity" securities were $516,000 and $5,444,000,
respectively. Securities classified as "available for sale" may be sold in the
future, prior to maturity. These securities are carried at market value. Net
aggregate unrealized gains or losses on these securities are included in a
valuation allowance account and are shown net of taxes, as a component of
shareholders' equity. "Available for sale" securities included gross unrealized
gains of $110,000 and gross unrealized losses of $3,168,000. Given the generally
high credit quality of the portfolio, management expects to realize all of its
investment upon the maturity of such instruments, and thus believes that any
market value impairment is temporary in nature.

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

         The Company's commercial and industrial loan portfolio represents
approximately 70% 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


                                       15
<PAGE>   16
represents approximately 15% of gross loans, is secured by mortgages on real
property located principally in the State of New York and the Commonwealth
of Virginia. The Company's leasing portfolio, which consists of finance leases
for various  types of business equipment, represents approximately 12% 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>
                                                            September 30,
                                           --------------------------------------------
                                                    1999                    1998
                                           --------------------    --------------------
                                                       ($ in thousands)
                                                           % of                   % of
                                           Balances       Gross    Balances       Gross
                                           --------       -----    --------       -----
<S>                                        <C>            <C>     <C>             <C>
Domestic
  Commercial and industrial                $461,674        70.1%   $430,765        72.4%
  Equipment lease financing                  80,925        12.3      55,913         9.4
  Real estate                               100,782        15.3      94,050        15.8
  Installment - individuals                  14,317         2.2      13,733         2.3
Foreign
  Government and official institutions          784         0.1         788         0.1
                                           --------       -----    --------       -----
Gross loan                                  658,482       100.0%    595,249       100.0%
                                                          =====                   =====
  Unearned discounts                         11,167                   8,819
                                           --------                --------
Loans, net of unearned discounts           $647,315                $586,430
                                           ========                ========
</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 September 30, 1999, the ratio of the allowance to loans, net of
unearned discounts, was 1.61% and the allowance was $10,430,000. At such date,
the Company's non-accrual loans amounted to $1,470,000; $468,000 of such loans
were judged to be impaired within the scope of SFAS No. 114 and required
valuation allowances of $200,000. 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 losses was deemed adequate to absorb all
estimable losses on specifically known and other possible credit risks
associated with the portfolio as of September 30, 1999. Potential problem
loans, which are loans that are currently performing under present loan


                                       16
<PAGE>   17
repayment terms but where known information about possible credit problems of
borrowers cause management to have serious doubts as to the ability of the
borrowers to continue to comply with the present repayment terms, aggregated
$1,458,000 at September 30, 1999.


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>
                                                    September 30,
                                  ---------------------------------------------
                                           1999                    1998
                                  ---------------------   ---------------------
                                                  ($ in thousands)
                                                  % of                    % of
                                  Balances        Total   Balances        Total
                                  --------        -----   --------        -----
<S>                               <C>             <C>     <C>             <C>
Domestic
  Demand                          $276,163        35.5%   $256,969        39.8%
  NOW                               77,793        10.0      59,653         9.3
  Savings                           25,834         3.3      23,433         3.6
  Money Market                     167,593        21.4     134,168        20.8
  Time deposits                    228,476        29.4     168,357        26.1
                                  --------       -----    --------       -----
      Total domestic deposits      775,859        99.6     642,580        99.6
Foreign
  Time deposits                      2,780         0.4       2,730         0.4
                                  --------       -----    --------       -----
      Total deposits              $778,639       100.0%   $645,310       100.0%
                                  ========       =====    ========       =====
</TABLE>

Fluctuations of balances in total or among categories at any date may occur
based on the Company's mix of assets and liabilities as well as on customer's
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on pages 19 and 20.


CAPITAL
The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against
risk-weighted assets, including off-balance sheet items. These regulations
define the elements of total capital into Tier 1 and Tier 2 components and
establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for
capital adequacy purposes. Supplementing these regulations is a leverage
requirement. This requirement establishes a minimum leverage ratio (at least 3%
to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly
average assets (after deducting goodwill). Information regarding the Company's
and the bank's risk-based capital is presented on page 23. 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


                                       17
<PAGE>   18
capital categories ranging from "well capitalized" to "critically under
capitalized." Such classifications are used by regulatory agencies to determine
a bank's deposit insurance premium, approval of applications authorizing
institutions to increase their asset size or otherwise expand business
activities or acquire other institutions. Under the provisions of FDICIA a "well
capitalized" institution must maintain minimum leverage, Tier 1 and Total
Capital ratios of 5%, 6% and 10%, respectively. At September 30, 1999, the
Company and the bank exceeded the requirements for "well capitalized"
institutions.


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

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

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

      The cost to date of the Y2K project was $355,000 all of which has been
expensed as incurred. Many of the expenditures relate to microcomputer hardware
and software that would have been upgraded in the normal course of the Company's
operations through December 31, 1999.

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

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


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

<TABLE>
<CAPTION>
                                                    1999                                1998
                                      ---------------------------------   -----------------------------------
                                      Average                   Average   Average                     Average
ASSETS                                Balance     Interest        Rate    Balance      Interest         Rate
                                      -------     --------      -------   -------      --------       -------
<S>                                <C>            <C>           <C>       <C>          <C>           <C>
Interest-bearing deposits
   with other banks                  $    515     $     76         6.57%  $    315     $     15         4.87%
Investment securities
   Available for sale [2]             142,495        2,255         6.31    120,549        2,015         6.66
   Held to maturity                   258,472        4,182         6.47    205,007        3,267         6.38
Federal funds sold                      1,707           23         5.31      8,745          122         5.45
Loans, net of unearned discounts
   Domestic [3]                       565,630       14,129        10.64    522,645       13,468        10.98
   Foreign                                785           12         5.96        788           13         6.65
                                   ----------     --------                --------     --------
         TOTAL INTEREST-EARNING
            ASSETS                    969,604       20,677         8.81%   858,049       18,900         9.11%
                                                  --------      =======                --------      =======
Cash and due from banks                37,864                               41,451
Allowance for credit losses           (10,312)                              (9,147)
Goodwill                               21,158                               21,158
Other assets                           19,033                               20,546
                                   ----------                             --------

         TOTAL ASSETS              $1,037,347                             $932,057
                                   ==========                             ========
</TABLE>

<TABLE>
LIABILITIES AND SHAREHOLDERS'
 EQUITY
<S>                                <C>            <C>           <C>       <C>          <C>           <C>
Interest-bearing deposits
 Domestic
   Savings                           $ 24,772          147         2.35%  $ 22,979          132         2.28%
   NOW                                 71,892          443         2.45     66,053          513         3.08
   Money Market                       163,016        1,315         3.20    137,565        1,068         3.02
   Time                               199,770        2,387         4.74    169,228        2,145         5.03
 Foreign
   Time                                 2,780           30         4.25      2,730           37         5.40
                                   ----------     --------                --------      -------
      Total interest-bearing
           deposits                   462,230        4,322         3.71    398,555        3,895         3.86
                                   ----------     --------                --------      -------
</TABLE>

<TABLE>
<S>                                <C>            <C>             <C>    <C>           <C>         <C>
Borrowing
   Federal funds purchased and
     securities sold under$
      agreements to repurchase        115,801        1,432         4.91     70,912          919         5.10
   Commercial paper                    35,440          423         4.73     36,894          475         5.10
   Other short-term debt                5,388          220         5.08     16,849          260         5.17
   Long-term debt                      36,376          482         5.30     41,400          523         5.01
                                   ----------     --------                --------      -------
         Total borrowings             193,005        2,557         4.95    166,055        2,177         5.09
                                   ----------     --------                --------      -------
         TOTAL INTEREST-BEARING
           LIABILITIES                655,235        6,879         4.08%   564,610        6,072         4.22%
                                                  --------      =======                 -------      =======
Noninterest-bearing deposits          227,460                              224,860
Other liabilities                      53,087                               44,488
                                   ----------                             --------
       Total liabilities              935,782                              833,958

Shareholders' equity                  101,565                               98,099
                                   ----------                             --------
    TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY         $1,037,347                             $932,057
                                   ==========                             ========

Net interest income/spread                          13,798         4.73%                 12,828         4.89%
                                                                =======                              =======
Net yield on interest-earning
   assets (margin)                                                 5.91%                                6.17%
                                                                =======                              =======
Less: Tax equivalent adjustment                        177                                  143
                                                  --------                             --------
Net interest income                               $ 13,621                             $ 12,685
                                                  ========                             ========
</TABLE>

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


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


<TABLE>
<CAPTION>
                                                              1999                                       1998
                                            ----------------------------------------     -------------------------------------
                                              Average                        Average      Average                     Average
ASSETS                                        Balance         Interest        Rate        Balance        Interest       Rate
                                            ----------        --------       -------      -------        --------       ----
<S>                                         <C>               <C>            <C>          <C>            <C>            <C>
Interest-bearing deposits
   with other banks                         $      515        $    150         4.91%      $  1,261        $    120      5.09%
Investment securities
   Available for sale [2]                      138,741           6,535         6.28        121,858           5,919      6.48
   Held to maturity                            219,993          10,208         6.19        219,971          10,346      6.27
Federal funds sold                               8,330             296         4.68         11,562             479      5.46
Loans, net of unearned discounts
   Domestic [3]                                542,044          40,680        10.83        500,701          38,363     11.19
   Foreign                                         786              36         6.07            789              40      6.74
                                            ----------        --------                    --------        --------
         TOTAL INTEREST-EARNING
            ASSETS                             910,409          57,905         8.87%       856,142          55,267      9.06%
                                                              --------      =======                       --------   =======

Cash and due from banks                         43,039                                      42,152
Allowance for credit losses                    (10,479)                                     (8,967)
Goodwill                                        21,158                                      21,158
Other assets                                    19,373                                      21,154
                                            ----------                                    --------

         TOTAL ASSETS                       $  983,500                                    $931,639
                                            ==========                                    ========

LIABILITIES AND SHAREHOLDERS'
   EQUITY
Interest-bearing deposits
   Domestic
      Savings                               $   24,544             431         2.35%      $ 23,402             394      2.25%
      NOW                                       68,039           1,252         2.46         61,762           1,360      2.94
      Money Market                             144,581           3,142         2.91        137,616           3,220      3.13
      Time                                     184,647           6,383         4.62        189,391           7,382      5.21
   Foreign
      Time                                       2,755              93         4.50          2,729             110      5.39
                                            ----------        --------                    --------        --------
      Total interest-bearing
           deposits                            424,566          11,301         3.56        414,900          12,466      4.02
                                            ----------        --------                    --------        --------

Borrowings
   Federal funds purchased and
     securities sold under
      agreements to repurchase                  95,824           3,460         4.83         76,493           3,006      5.25
   Commercial paper                             38,395           1,356         4.72         31,801           1,224      5.14
   Other short-term debt                         4,264             573         5.07         15,741             757      5.20
   Long-term debt                               39,556           1,527         5.15         33,165           1,253      5.05
                                            ----------        --------                    --------        --------

      Total borrowings                         178,039           6,916         4.88        157,200           6,240      5.18
                                            ----------        --------                    --------        --------


         TOTAL INTEREST-BEARING
           LIABILITIES                         602,605          18,217         3.95%       572,100          18,706      4.34%
                                                              --------      =======                       --------    ======

Noninterest-bearing deposits                   233,153                                     220,552
Other liabilities                               45,746                                      43,490
                                            ----------                                    --------
       Total liabilities                       881,504                                     836,142

Shareholders' equity                           101,996                                      95,497
                                            ----------                                    --------
         TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY             $  983,500                                    $931,639
                                            ==========                                    ========

Net interest income/spread                                     39,688         4.92%                         36,561     4.72%
                                                                            =======                                  ======


Net yield on interest-earning
   assets(margin)
                                                                              6.12%                                    6.00%
                                                                            =======                                  ======

Less: Tax equivalent adjustment                                    494                                         249
                                                              --------                                    --------

Net interest income                                           $ 39,194                                    $ 36,312
                                                              ========                                    ========
</TABLE>


[1]      The average balances of assets, liabilities and shareholders' equity
         are computed on the basis of daily averages. Average rates are
         presented on a tax equivalent basis.

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

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


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


<TABLE>
<CAPTION>
                                                      Increase/(Decrease)
                                                      Three Months Ended
                                                 September 30, 1999 and 1998
                                              --------------------------------
                                              Volume        Rate         Net[2]
                                              ------        ----         ------
<S>                                           <C>          <C>          <C>
INTEREST INCOME
Interest-bearing deposits with other banks    $    41      $    20      $    61
                                              -------      -------      -------
Investment securities
   Available for sale                             351         (111)         240
   Held to maturity                               868           47          915
                                              -------      -------      -------
      Total                                     1,219          (64)       1,155
                                              -------      -------      -------

Federal funds sold                                (96)          (3)         (99)
                                              -------      -------      -------

Loans, net of unearned discounts [3]
   Domestic                                     1,131         (470)         661
   Foreign                                         --           (1)          (1)
                                              -------      -------      -------
      Total                                     1,131         (471)         660
                                              -------      -------      -------

TOTAL INTEREST INCOME                         $ 2,295      $  (518)     $ 1,777
                                              =======      =======      =======

INTEREST EXPENSE
Interest-bearing deposits
 Domestic
   Savings                                    $    11      $     4      $    15
   NOW                                             42         (112)         (70)
   Money Market                                   187           60          247
   Time                                           371         (129)         242
 Foreign
   Time                                             1           (8)          (7)
                                              -------      -------      -------
      Total                                       612         (185)         427
                                              -------      -------      -------

Borrowings
   Federal funds purchased and securities
    sold under agreements to repurchase           549          (36)         513
   Commercial paper                               (19)         (33)         (52)
   Other short-term debt                          (39)          (1)         (40)
   Long-term debt                                 (68)          27          (41)
                                              -------      -------      -------
      Total                                       423          (43)         380
                                              -------      -------      -------

TOTAL INTEREST EXPENSE                        $ 1,035      $  (228)     $   807
                                              =======      =======      =======

NET INTEREST INCOME                           $ 1,260      $  (290)     $   970
                                              =======      =======      =======
</TABLE>


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

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

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


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

<TABLE>
<CAPTION>
                                                      Increase/(Decrease)
                                                       Nine Months Ended
                                                 September 30, 1999 and 1998
                                                 ---------------------------
                                               Volume        Rate        Net[2]
<S>                                            <C>          <C>          <C>
INTEREST INCOME
Interest-bearing deposits with other banks     $    28      $     2      $    30
                                               -------      -------      -------
Investment securities
   Available for sale                              802         (186)         616
   Held to maturity                                  1         (139)        (138)
                                               -------      -------      -------

      Total                                        803         (325)         478
                                               -------      -------      -------

Federal funds sold                                (121)         (62)        (183)
                                               -------      -------      -------

Loans, net of unearned discounts [3]
   Domestic                                      3,608       (1,291)       2,317
   Foreign                                          --           (4)          (4)
                                               -------      -------      -------

      Total                                      3,608       (1,295)       2,313
                                               -------      -------      -------

TOTAL INTEREST INCOME                          $ 4,318      $(1,680)     $ 2,638
                                               =======      =======      =======


INTEREST EXPENSE
Interest-bearing deposits
 Domestic
   Savings                                     $    19      $    18      $    37
   NOW                                             129         (237)        (108)
   Money Market                                    157         (235)         (78)
   Time                                           (181)        (818)        (999)
 Foreign
   Time                                              1          (18)         (17)
                                               -------      -------      -------
      Total                                        125       (1,290)      (1,165)
                                               -------      -------      -------


Borrowings
   Federal funds purchased and securities
    sold under agreements to repurchase            710         (256)         454
   Commercial paper                                238         (106)         132
   Other short-term debt                          (178)          (6)        (184)
   Long-term debt                                  248           26          274
                                               -------      -------      -------

      Total                                      1,018         (342)         676
                                               -------      -------      -------

TOTAL INTEREST EXPENSE                         $ 1,143      $(1,632)     $  (489)
                                               =======      =======      =======

NET INTEREST INCOME                            $ 3,175      $   (48)     $ 3,127
                                               =======      =======      =======
</TABLE>


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

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

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


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


RATIOS AND MINIMUMS
(dollars in thousands)

<TABLE>
<CAPTION>
                                                                             For Capital           To Be Well
                                                         Actual           Adequacy Minimum         Capitalized
                                                  -------------------    ------------------   --------------------
AS OF SEPTEMBER 30, 1999                          Amount        Ratio    Amount       Ratio   Amount         Ratio
------------------------                          -------------------    ------------------   --------------------
<S>                                              <C>            <C>     <C>            <C>    <C>            <C>
Total Capital (to Risk Weighted Assets):
  The Company                                    $93,296        12.94%  $57,691        8.00%  $72,114        10.00%
  The bank                                        74,399        10.98    54,227        8.00    67,784        10.00

Tier 1 Capital (to Risk Weighted Assets):
  The Company                                     84,264        11.68    28,845        4.00    43,268         6.00
  The bank                                        66,264         9.78    27,114        4.00    40,671         6.00

Tier 1 Leverage Capital (to Average Assets):
  The Company                                     84,264         8.29    40,468        4.00    50,809         5.00
  The bank                                        66,264         6.81    38,910        4.00    48,638         5.00

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

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

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


                                       23
<PAGE>   24
                          QUANTITATIVE AND QUALITATIVE
                            DISCLOSURES ABOUT MARKET

ASSET/LIABILITY MANAGEMENT

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

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


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

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

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

      The Company's balance sheet structure is primarily short-term in nature
with a substantial portion of assets and liabilities repricing or maturing
within one year. The Company's gap analysis at September 30, 1999, is presented
on page 27. The results of both the income simulation analysis and the gap
analysis, reveal that net interest income would increase during periods of
rising interest rates and decrease during periods of falling interest rates.

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


                                       24
<PAGE>   25
limits and appropriate internal control procedures. The credit risk of
derivatives arises principally from the potential for a counterparty to fail to
meet its obligation to settle a contract on a timely basis.

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

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

      The interest rate floor contracts require the Company to pay a fee for the
right to receive a fixed interest payment. The Company paid up-front premiums of
$879,000 which are amortized monthly against interest income from the designated
assets. At September 30, 1999, the unamortized premiums on these contracts
totaled $150,000 and are included in other assets. At September 30, 1999,
$32,000 was receivable under these contracts.

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

      The Company's interest rate sensitivity is determined by identifying the
probable impact of changes in market interest rates on the yields on the
Company's assets and the rates which would be paid on its liabilities. This
modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management
can project the impact of changes in interest rates on net interest margin. The
estimated effects of the Company's interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain limits
for the potential volatility of its net interest margin assuming certain levels
of changes in market interest rates with the objective of maintaining a stable
net interest margin under various probable rate scenarios. Management generally
has maintained a risk position well within the policy limits. As of September
30, 1999, the model indicated the impact of a 200 basis point parallel and pro
rata rise in rates over twelve months would approximate a 1.85% ($1,000,000)
increase in net interest income, while the impact of a 200 basis point decline
in rates over the same period would approximate a 3.48% ($2,000,000) decline
from an unchanged rate environment.


                                       25
<PAGE>   26
      The preceding sensitivity analysis does not represent a Company forecast
and should not be relied upon as being indicative of expected operating results.
These hypothetical estimates are based upon numerous assumptions including: the
nature and timing of interest rate levels including yield curve shape,
prepayments on loans and securities, deposit decay rates, pricing decisions on
loans and deposits, reinvestment/replacement of asset and liability cash flows,
and others. While assumptions are developed based upon current economic and
local market conditions, the Company cannot make any assurances as to the
predictive nature of these assumptions including how customer preferences or
competitor influences might change.

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


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

      The parent company generates income from its own operations. Its cash
requirements are supplemented from funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet the
parent company's cash 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 September 30, 1999, the parent company's short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $34,814,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$59,138,000 and back-up credit lines with banks of $19,000,000. Since 1979, the
parent company has had no need to use available back-up lines of credit.

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


                                       26
<PAGE>   27
                        STERLING BANCORP AND SUBSIDIARIES
                            Interest Rate Sensitivity


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

<TABLE>
<CAPTION>
                                                                       Repricing Date
                                     ----------------------------------------------------------------------------------
                                                   More than     More than                       Non
                                     3 months       3 months     1 year to       Over            Rate
                                      or less      to 1 year      5 years       5 years        sensitive        Total
                                     --------      ---------     ---------      -------        ---------        -----
ASSETS
<S>                                 <C>           <C>            <C>            <C>           <C>            <C>
   Interest-bearing deposits
       with other banks             $      515    $       --     $       --     $       --    $       --     $      515
   Investment securities                 9,956         8,717         15,559        378,632         6,834        419,698
   Loans, net of unearned
      discounts
       Commercial and Industrial       460,247           231          4,853          2,898          (485)       467,744
       Lease financing                     730         3,256         74,618          1,264       (10,327)        69,541
       Real estate                      18,612         3,555         24,843         49,064          (160)        95,914
       Installment                       9,648           106          2,185          1,551          (158)        13,332
       Foreign government and
         official institutions             784            --             --             --            --            784
   Noninterest-earning assets
      and allowance for
      credit losses                         --            --             --             --        79,512         79,512
                                    ----------    ----------     ----------     ----------    ----------     ----------

        Total Assets                   500,492        15,865        122,058        433,409        75,216      1,147,040
                                    ----------    ----------     ----------     ----------    ----------     ----------
LIABILITIES AND SHAREHOLDERS'
EQUITY
   Interest-bearing deposits
      Savings [1]                           --            --         25,834             --            --         25,834
      NOW [1]                               --            --         77,793             --            --         77,793
      Money Market [1]                 135,660            --         31,934             --            --        167,594
      Time - domestic                   86,381       119,613         22,181            300            --        228,475
           - foreign                       150         2,630             --             --            --          2,780
  Federal funds purchased &
      securities sold under
      agreements to repurchase         125,506         7,000             --             --            --        132,506
  Commercial paper                      34,814            --             --             --            --         34,814
  Other short-term borrowings            5,458           350             --             --            --          5,808
   Long-term borrowings - FHLB          20,000        10,000          1,050             --            --         31,050
   Noninterest-bearing
    liabilities and share-
     holders' equity                        --            --             --             --       440,386        440,386
                                    ----------    ----------     ----------     ----------    ----------     ----------

       Total Liabilities and
          Shareholders' Equity         407,969       139,593        158,792            300       440,386      1,147,040
                                    ----------    ----------     ----------     ----------    ----------     ----------

Net Interest Rate
      Sensitivity Gap               $   92,523    $ (123,728)    $  (36,734)    $  433,109    $ (365,170)    $       --
                                    ==========    ==========     ==========     ==========    ==========     ==========

Cumulative Gap at
      September 30, 1999            $   92,523    $  (31,205)    $  (67,939)    $  365,170    $       --     $       --
                                    ==========    ==========     ==========     ==========    ==========     ==========

Cumulative Gap at
      September 30, 1998            $  122,134    $   69,450     $    2,911     $  336,590    $       --     $       --
                                    ==========    ==========     ==========     ==========    ==========     ==========

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


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


                                       27
<PAGE>   28
                       STERLING BANCORP AND SUBSIDIARIES


Item 6.  Exhibits and Reports on Form 8-K

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

               (11) Statement Re: Computation of Per Share Earnings
               (27) Financial Data Schedule

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


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                STERLING BANCORP
                                ----------------
                                  (Registrant)




Date     11/12/99                       /s/  Louis J. Cappelli
-----------------------                 ----------------------------------------
                                             Louis J. Cappelli
                                             Chairman and
                                             Chief Executive Officer


Date     11/12/99                       /s/  John W. Tietjen
-----------------------                 ----------------------------------------
                                             John W. Tietjen
                                             Executive Vice President, Treasurer
                                             and Chief Financial Officer


                                       28
<PAGE>   29
                        STERLING BANCORP AND SUBSIDIARIES


                                  EXHIBIT INDEX



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

      27               Financial Data                                               X                 32
                       Schedule
</TABLE>


                                       29