<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


(Mark One)

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


For the Quarterly Period Ended       June 30, 1997
                               ------------------------

                                       or

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


For the transition period from                    to
                                 ---------------      -----------------

Commission File Number:             1-5273-1
                          ------------------------
                                STERLING BANCORP
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


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


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


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


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

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                  [X] Yes [] No


         As of June 30, 1997 there were 7,824,340 shares of common stock. 
                        
                         $1.00 PAR VALUE, OUTSTANDING.
<PAGE>   2




                                STERLING BANCORP




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

             Consolidated Financial Statements                                                           3
             Notes to Consolidated Financial Statements                                                  7

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

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


PART II OTHER INFORMATION

        Item 4.  Submission of Matter to a Vote of Security-Holders                                     23
        Item 6.  Exhibits and Reports on Form 8-K                                                       24



SIGNATURES                                                                                              24


EXHIBIT INDEX                                                                                           25

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



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


<TABLE>
<CAPTION>
                                                                     June 30,         December 31,
ASSETS                                                                 1997               1996
                                                                   ------------       ------------
<S>                                                                <C>                <C>         
Cash and due from banks                                            $ 40,720,187       $ 54,512,462
Interest-bearing deposits with other banks                            3,010,000          3,010,000
Federal funds sold                                                           --          3,000,000
Investment securities
   Available for sale (at estimated market value)                    54,963,323         77,597,117
   Held to maturity (estimated market value
     $238,632,476 and $223,668,650, respectively)                   241,267,034        226,733,888
                                                                   ------------       ------------
            Total investment securities                             296,230,357        304,331,005
                                                                   ------------       ------------

Loans, net of unearned discounts                                    467,096,083        465,516,556
Less allowance for possible loan losses                               8,422,719          8,003,392
                                                                   ------------       ------------
            Loans, net                                              458,673,364        457,513,164
                                                                   ------------       ------------
Customers' liability under acceptances                                1,213,262            613,430
Excess cost over equity in net assets of the
   banking subsidiary                                                21,158,440         21,158,440
Premises and equipment, net                                           7,221,745          5,508,740
Accrued interest receivable                                           3,756,328          4,257,142
Other assets                                                          8,068,353          7,700,928
                                                                   ------------       ------------
                                                                   $840,052,036       $861,605,311
                                                                   ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
   Noninterest-bearing deposits                                    $218,281,311       $229,976,783
   Interest-bearing deposits                                        344,861,009        344,445,578
                                                                   ------------       ------------
            Total deposits                                          563,142,320        574,422,361
Federal funds purchased and securities
   sold under agreements to repurchase                               92,644,554         88,144,400
Commercial paper                                                     24,087,400         32,569,900
Other short-term borrowings                                           8,911,372         30,419,791
Acceptances outstanding                                               1,213,262            613,430
Due to factoring clients                                             36,134,726         23,140,504
Accrued expenses and other liabilities                               11,601,687         14,228,490
                                                                   ------------       ------------
                                                                    737,735,321        763,538,876
                                                                   ------------       ------------

Long-term convertible subordinated debentures                         5,336,000          6,389,000
Other long-term debt                                                 14,250,000         14,500,000
                                                                   ------------       ------------
            Total long-term debt                                     19,586,000         20,889,000
                                                                   ------------       ------------
            Total liabilities                                       757,321,321        784,427,876
                                                                   ------------       ------------

Commitments and contingent liabilities


Shareholders' equity
   Preferred stock, $5 par value. Authorized 644,389 shares           2,489,300          2,506,600
   Common stock, $1 par value. Authorized 20,000,000 shares;
      issued  7,866,683 and 7,725,533 shares, respectively            7,866,683          7,725,533
   Capital surplus                                                   40,229,334         38,619,434
   Retained earnings                                                 35,336,792         31,648,806
   Net unrealized appreciation on securities
      available for sale, net of tax                                     24,721             90,001
                                                                   ------------       ------------
                                                                     85,946,830         80,590,374
   Less
      Common shares in treasury at cost, 42,343 shares                  418,959            418,959
      Unearned compensation                                           2,797,156          2,993,980
                                                                   ------------       ------------
            Total shareholders' equity                               82,730,715         77,177,435
                                                                   ------------       ------------
                                                                   $840,052,036       $861,605,311
                                                                   ============       ============
</TABLE>

See Notes to Consolidated Financial Statements.



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


<TABLE>
<CAPTION>
                                                        Three Months Ended                 Six Months Ended
                                                             June 30,                            June 30,
                                                      1997             1996              1997               1996
                                                  -----------       -----------       -----------       -----------

<S>                                               <C>               <C>               <C>               <C>       
INTEREST INCOME
   Investment loans                               $11,406,455       $ 9,259,095       $22,489,977       $17,790,364
   Investment securities
      Available for sale                            1,083,128         1,574,293         2,400,645         3,194,607
      Held to maturity                              4,000,246         3,812,992         7,783,102         7,378,302
   Federal funds sold                                  15,628                --            89,741           277,433
   Deposits with other banks                           64,821            39,897           123,128            81,990
                                                  -----------       -----------       -----------       -----------
            Total interest income                  16,570,278        14,686,277        32,886,593        28,722,696
                                                  -----------       -----------       -----------       -----------


INTEREST EXPENSE
   Deposits                                         3,501,499         2,962,841         6,820,229         5,914,519
   Federal funds purchased
      and securities sold under agreements
      to repurchase                                 1,258,601           958,552         2,350,677         1,843,273
   Commercial paper                                   314,769           364,067           645,462           694,610
   Other short-term borrowings                        159,510           256,045           305,579           380,501
   Long-term debt                                     284,638           418,277           615,984         1,137,385
                                                  -----------       -----------       -----------       -----------
            Total interest expense                  5,519,017         4,959,782        10,737,931         9,970,288
                                                  -----------       -----------       -----------       -----------
Net interest income                                11,051,261         9,726,495        22,148,662        18,752,408
Provision for possible loan losses                    610,000           562,500         1,381,000         1,139,500
                                                  -----------       -----------       -----------       -----------
Net interest income after provision
 for possible loan losses                          10,441,261         9,163,995        20,767,662        17,612,908
                                                  -----------       -----------       -----------       -----------

NONINTEREST INCOME
   Service charges on deposit accounts                474,794           445,380           984,714           817,885
   Factoring commissions                            1,000,066           771,007         1,928,461         1,373,519
   Letter of credit commissions                       194,037           200,617           434,116           416,028
   Mortgage banking income                            835,991            36,872         1,528,689            69,108
   Gain on sale of securities                              --                --                --            22,161
   Other income                                       516,959           528,234         1,259,256           944,943
                                                  -----------       -----------       -----------       -----------
            Total noninterest income                3,021,847         1,982,110         6,135,236         3,643,644
                                                  -----------       -----------       -----------       -----------


NONINTEREST EXPENSES
   Salaries                                         4,144,517         3,307,120         8,288,115         6,490,945
   Employee benefits                                  926,715           764,205         1,814,332         1,514,171
                                                  -----------       -----------       -----------       -----------
            Total personnel expenses                5,071,232         4,071,325        10,102,447         8,005,116
   Occupancy expense, net                             742,864           594,305         1,475,643         1,182,188
   Equipment expense                                  535,702           430,895         1,101,093           743,048
   Other expenses                                   2,327,142         2,249,951         4,903,812         4,159,202
                                                  -----------       -----------       -----------       -----------
            Total noninterest expenses              8,676,940         7,346,476        17,582,995        14,089,554
                                                  -----------       -----------       -----------       -----------
Income before income taxes                          4,786,168         3,799,629         9,319,903         7,166,998
Provision for income taxes                          2,153,052         1,814,543         4,224,311         3,422,167
                                                  -----------       -----------       -----------       -----------


Net income                                        $ 2,633,116       $ 1,985,086       $ 5,095,592       $ 3,744,831
                                                  ===========       ===========       ===========       ===========


Average number of common shares outstanding
   Primary                                          7,985,308         6,965,918         7,931,233         6,767,391
   Fully diluted                                    8,745,787         8,321,730         8,661,890         8,127,876
Per average common share
   Primary                                        $       .33       $       .28       $       .64       $       .55
   Fully diluted                                          .31               .25               .60               .50
Dividends per common share                                .09               .08               .18               .15
</TABLE>



See Notes to Consolidated Financial Statements.



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





<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                                June 30,
                                                       1997                1996
                                                   ------------        ------------

<S>                                                <C>                 <C>         
 Shareholders' equity at beginning of period       $ 77,177,435        $ 59,657,224
                                                   ------------        ------------

 Net income                                           5,095,592           3,744,831
 Dividends paid
    Common stock - $.18 and $.15 per share,
      respectively                                   (1,386,117)         (1,021,418)
    Preferred stock - at prescribed rates               (21,278)            (10,672)
 Conversions of subordinated debentures
    into common stock                                 1,673,789           6,953,485
 Options exercised                                       59,750              10,875
 Amortization of unearned compensation                  196,824              92,084
 Change in valuation account for securities
    available for sale, net of tax                      (65,280)           (690,486)
                                                   ------------        ------------
Net change in shareholders' equity                    5,553,280           9,078,699
                                                   ------------        ------------
Shareholders' equity at end of period              $ 82,730,715        $ 68,735,923
                                                   ============        ============
</TABLE>


See Notes to Consolidated Financial Statements.



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

<TABLE>
<CAPTION>
                                                                                                    Six Months Ended
                                                                                                        June 30
                                                                                                  1997                1996
                                                                                             ------------        ------------
<S>                                                                                          <C>                 <C> 
OPERATING ACTIVITIES
  Net income                                                                                 $  5,095,592        $  3,744,831
  Adjustments to reconcile net income to net cash
      provided by operating activities:
        Provision for possible loan losses                                                      1,381,000           1,139,500
        Depreciation and amortization of premises and equipment                                   581,341             345,111
        Deferred income tax benefit                                                              (183,706)           (327,769)
        Gain on sale of securities                                                                   -                (22,161)
        Net change in loans held for sale                                                      (2,018,020)            (69,108)
        Amortization of unearned compensation                                                     196,824              92,084
        Amortization of premiums of securities                                                    656,936             900,620
        Accretion of discounts on securities                                                      (75,907)            (78,110)
        Decrease in accrued interest receivable                                                   500,814              19,115
        Increase/(decrease) in due to factored clients                                         12,994,222          (3,830,016)
        Decrease in other liabilities                                                          (2,626,803)         (2,187,790)
        Other, net                                                                             (1,912,711)         (2,522,660)
                                                                                             ------------        ------------

              Net cash provided by (used in) operating activities                              14,589,582          (2,796,353)
                                                                                             ------------        ------------

INVESTING ACTIVITIES
  Purchase of premises and equipment                                                           (2,294,346)         (1,012,897)
   Net increase in interest-bearing deposits
      with other banks                                                                               -                (10,000)
   Net decrease in Federal funds sold                                                           3,000,000           5,000,000
   Net decrease in loans                                                                        1,882,322          19,984,137
   Proceeds from prepayments, redemptions or maturities
      of securities - held to maturity                                                         16,862,986          18,496,830
   Purchases of securities - held to maturity                                                 (31,850,173)        (59,323,005)
   Proceeds from sale of securities-available for sale                                               -              5,017,969
   Purchases of securities - available for sale                                                (5,452,844)         (5,175,461)
   Proceeds from prepayments, redemptions or maturities
      of securities - available for sale                                                       27,838,649           5,040,446 
                                                                                             ------------        ------------
              Net cash provided by (used in) investing activities                               9,986,594        (11,981,981)
                                                                                             ------------        ------------

FINANCING ACTIVITIES
   Net decrease in noninterest-bearing deposits                                               (11,695,472)        (43,560,189)
   Net increase in interest-bearing deposits                                                      415,431             349,187
   Net increase in Federal funds purchased and
      securities sold under agreements to repurchase                                            4,500,154          32,806,343
   Net (decrease)/increase in commercial paper
      and other short-term borrowings                                                         (29,990,919)         23,120,203
   Prepayments of debentures                                                                         -                (66,515)
   Decrease in other long-term debt                                                              (250,000)           (250,000)
   Proceeds from exercise of stock options                                                         59,750              10,875
   Cash dividends paid on common and preferred stock                                           (1,407,395)         (1,032,090)
                                                                                             ------------        ------------
              Net cash (used in) provided by financing activities                             (38,368,451)         11,377,814
                                                                                             ------------        ------------
Net decrease in cash and due from banks                                                       (13,792,275)         (3,400,520)
Cash and due from banks - beginning of period                                                  54,512,462          40,720,401
                                                                                             ------------        ------------
Cash and due from banks - end of period                                                      $ 40,720,187        $ 37,319,881
                                                                                             ============        ============

Supplemental schedule of non-cash financing activities:
   Debenture and preferred stock conversions                                                 $  1,673,782        $  6,953,485
   Issuance of treasury shares                                                                       -              1,381,250

Supplemental disclosure of cash flow information:
   Interest paid                                                                             $ 12,375,149        $ 11,479,649
   Income taxes paid                                                                            1,630,749           3,370,750
</TABLE>


See Notes to Consolidated Financial Statements.


                                        6
<PAGE>   7
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


1.         The consolidated financial statements include the accounts of
           Sterling Bancorp ("the parent company") and its subsidiaries,
           principally Sterling National Bank and its subsidiaries ("the bank"),
           after elimination of material intercompany transactions. The term
           "the Company" refers to Sterling Bancorp and its subsidiaries. The
           consolidated financial statements as of and for the interim periods
           ended June 30, 1997 and 1996 are unaudited; however, in the opinion
           of management, all adjustments, consisting of normal recurring
           accruals, necessary for a fair presentation of such periods have been
           made. Certain reclassifications have been made to the 1996 financial
           statements to conform to current presentation. The interim financial
           statements should be read in conjunction with the Company's annual
           report on Form 10-K for the year ended December 31, 1996.

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

3.         The Company's outstanding Preferred Shares comprise 1,230 Series B
           shares (of 4,389 authorized) and 246,470 Series D shares (of 300,000
           authorized). Each Series B share is entitled to cumulative dividends
           at the rate of $0.10 per year, to one vote per share and upon
           liquidation or redemption to an amount equal to accrued and unpaid
           dividends to the date of redemption or liquidation plus an amount
           which is $20 in the case of involuntary liquidation and $28
           otherwise; each Series D share (all of such shares are owned by the
           Company's Employee Stock Ownership Trust) is entitled to dividends at
           the rate of $0.6125 per year, is convertible into one Common Share,
           and is entitled to a liquidation preference of $10 (together with
           accrued dividends). All preferred shares are entitled to one vote per
           share (voting with the Common Shares except as otherwise required by
           law).

4.         In February 1997, the Financial Accounting Standards Board issued
           Statement of Financial Accounting Standards No. 128, "Earnings per
           Share" ("SFAS 128"). SFAS 128, which supersedes Accounting Principles
           Board Opinion NO. 15, "Earnings per Share," establishes standards for
           computing, presenting and disclosing earnings per share.

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

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




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


5.         In February 1997, the Financial Accounting Standards Board issued
           Statement of Financial Accounting Standards No. 129, "Disclosure of
           Information about Capital Structure" ("SFAS 129"). SFAS 129
           supersedes specific disclosure requirements of Accounting Principles
           Board Opinions No. 10, "Omnibus Opinion -- 1996," and No. 15,
           "Earnings Per Share," and Statement of Financial Accounting Standards
           No. 47, "Disclosure of Long-Term Obligations," and consolidates them
           in SFAS 129 for ease of retrieval and for greater visibility to
           non-public entities. SFAS 129 is effective for financial statements
           issued for periods ending after December 15, 1997.

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

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


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


BUSINESS

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

There is intense competition in all areas in which the Company conducts its
business, including deposits, loans, domestic and international financing and
trust services. In addition to competing with other banks, the Company also
competes in certain areas of its business with other financial institutions. At
June 30, 1997, the bank's year-to-date average earning assets (of which loans
were 56% and securities were 43%) represented approximately 96% of the Company's
year-to-date average earning assets. See pages 17 and 18 for the composition of
the Company's average balance sheets for the three and six months ended June 30,
1997 and June 30, 1996.

FINANCIAL CONDITION

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

While the parent company generates income from its own operations, it also
depends for its cash requirements on funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet the
parent company's cash requirements throughout its history. At June 30, 1997, the
parent company had on hand approximately $11,037,000 in cash.





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



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

At June 30, 1997, the parent company's outstanding long-term debt, consisting
principally of convertible subordinated debentures (originally issued pursuant
to rights offerings to shareholders of the Company), aggregated $7,211,000. To
the extent convertible subordinated debentures are converted to common stock of
the parent company (as has been the case with approximately $22 million
principal amount since 1982), the subordinated debt related thereto is retired
and becomes part of shareholders' equity. The parent company's long-term
indebtedness is also met through funds generated from profits and new financing.
Since becoming a public company in 1946, the parent company and its predecessors
have been able to obtain the financing required and have paid at maturity all
outstanding indebtedness. The parent company expects to continue to meet its
obligations in accordance with their terms.

At June 30, 1997, the parent company's short-term debt, consisting principally
of commercial paper, was approximately $24,337,400. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$44,401,000 and back-up credit lines with banks of $24,000,000. The parent
company and its predecessor have issued and repaid at maturity approximately $12
billion of commercial paper since 1955. Since 1979, the parent company has had
no need to use available back-up lines of credit.

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to measure capital against risk-weighted assets,
including off-balance sheet items. These regulations define the elements of
total capital into Tier 1 and Tier 2 components and establish minimum ratios of
4% for Tier 1 Capital and 8% for Total Capital. Supplementing these regulations,
is a leverage requirement. This requirement establishes a minimum leverage
ratio, (at least 4%) which is calculated by dividing Tier 1 capital by adjusted
quarterly average assets (after deducting goodwill). In addition the Company and
the bank are subject to the provisions of the Federal Deposit Insurance
Corporation Improvement Act of 1981 ("FDICIA") which imposes a number of
mandatory supervisory measures. Among other matters, FDICIA established five
capital categories ranging from "well capitalized" to "critically under
capitalized". Such classifications are used by regulatory agencies to determine
a bank's deposit insurance premium, approval of applications authorizing
institutions to increase their asset size or otherwise expand business
activities or acquire other institutions. Under the provisions of FDICIA a "well
capitalized" institution must maintain minimum leverage, Tier 1 and Total
Capital ratios of 5% 6% and 10%, respectively. At June 30, 1997, the Company and
the bank exceeded the requirements for "well capitalized" institutions.
Information regarding the Company's and the bank's risk-based capital, at June
30, 1997 and December 31, 1996, is presented on page 22.



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



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

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


ASSET/LIABILITY MANAGEMENT

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

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

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

The income simulation model measures the Company's net interest income
sensitivity or volatility to interest rate changes utilizing statistical
techniques that allow the Company to consider various factors which impact net
interest income. These factors include actual maturities, estimated cash flows,
repricing characteristics, deposits growth/retention and, most importantly, the
relative sensitivity of the Company's assets and liabilities to changes in
market interest rates. This relative sensitivity is important to consider as the
Company's core deposit base is not subject to the same degree of interest rate
sensitivity as its assets. The core deposits costs are internally managed and
tend to exhibit less sensitivity to changes in interest rates than the Company's
adjustable rate assets whose yields are based on external indices and change in
tandem with market interest rates.


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



The Company's interest rate sensitivity is determined by identifying the
probable impact of changes in market interest rates on the yields on the
Company's assets and the rates which would be paid on its liabilities. This
modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management
can project the impact of changes in interest rates on net interest margin. The
Company has established certain limits for the potential volatility of its net
interest margin, assuming certain levels of changes in market interest rates,
with the objective of maintaining a stable net interest margin under various
probable rate scenarios. The Company can also utilize this technique to stress
test its portfolio to determine the impact of various interest rate scenarios on
the Company's net interest income.

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

As part of its interest rate risk strategy, the Company uses off-balance sheet
financial instruments (derivatives) to hedge the interest rate sensitivity of
assets with the corresponding amortization reflected in the yield of the related
on-balance sheet assets being hedged. The Company has written policy guidelines,
which have been approved by the Board of Directors and the Asset/Liability
Committee, governing the use of off-balance sheet financial instruments,
including approved counterparties, risk limits and appropriate internal control
procedures. The credit risk of derivatives arises principally from the potential
for a counterparty to fail to meet its obligation to settle a contract on a
timely basis. At June 30, 1997, all counterparties have investment grade credit
ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.

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

Interest rate floor contracts require the counterparty to pay the Company at
specified future dates the amount, if any, by which the specified interest rate
(3-month LIBOR) falls below the fixed floor rates, applied to the notional
amounts. The Company utilizes these financial instruments to adjust its interest
rate risk position without exposing itself to principal risk and funding
requirements. The interest rate floor contracts require the Company to pay a fee
for the right to receive a fixed interest payment.


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



The Company purchased interest rate floor contracts to reduce the impact of
falling rates on its floating rate commercial loans. The Company paid up-front
premiums of $939,000 for the interest rate floor contracts which are amortized
monthly against interest income from the designated assets. At June 30, 1997,
the unamortized premiums on these contracts totaled $531,000 and are included in
other assets. At June 30, 1997, $19,000 was receivable under the contracts.

SECURITIES

The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency mortgage-backed securities along with
other debt and equity securities. At June 30, 1997, the Company's portfolio of
securities totalled $296,230,000, of which U.S. Government and U.S. Government
corporation and agency guaranteed mortgage-backed securities having an average
life of approximately 2.5 years amounted to $286,918,000. The Company has the
intent and ability to hold to maturity securities classified "held to maturity".
These securities are carried at cost, adjusted for amortization of premiums and
accretion of discounts. The gross unrealized gains and losses on "held to
maturity" securities were $906,000 and $3,545,000, 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 $266,000 and gross unrealized
losses of $224,000. Given the relatively short-term nature of the portfolio and
its generally high credit quality, management expects to realize all of its
investment upon the maturity of such instruments, and thus believes that any
market value impairment is temporary in nature.


CREDIT RISK

A key management objective is to maintain the quality of the loan portfolio.
This objective is achieved by maintaining high underwriting standards coupled
with regular evaluation of the creditworthiness of and the designation of
lending limits for each borrower. The portfolio strategies seek to avoid
concentrations by industry or loan size in order to minimize credit exposure and
to originate loans in markets with which it is familiar. The composition of the
Company's and the bank's loan portfolio at June 30, 1997 were as follows:

<TABLE>
<CAPTION>
                                             Company          Bank
                                             --------       --------
                                                (in thousands)
<S>                                          <C>            <C>
Domestic
  Commercial and industrial                  $344,939       $312,831
  Real estate - mortgage                       69,270         69,270
  Real estate - construction                    1,125          1,125
  Installment - individuals                    15,822         15,822
  Lease financing                              42,932         42,932
Foreign
  Government and official institutions            789            789
                                             --------       --------
  Loans, gross                                474,877        442,769
  Less unearned discounts                       7,781          7,598
                                             --------       --------
Loans, net of unearned discounts             $467,096       $435,171
                                             ========       ========
</TABLE>


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


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


The allowance for possible loan losses is maintained through the provision for
possible loan losses, which is a charge to operating earnings. The adequacy of
the provision and the resulting allowance for possible loan losses is determined
by management's continuing review of the loan portfolio, including
identification and review of individual problem situations that may affect the
borrower's ability to repay, review of overall portfolio quality through an
analysis of current charge-offs, delinquency and nonperforming loan data,
estimates of the value of any underlying collateral, review of regulatory
examinations, an assessment of current and expected economic conditions and
changes in the size and character of the loan portfolio. The allowance reflects
management's evaluation of both loans presenting identified loss potential and
of the risk inherent in various components of the portfolio including loans
identified as impaired as required by SFAS No. 114 and No. 118. Thus an increase
in the size of the portfolio or in any of its components could necessitate an
increase in the allowance even though there may not be a decline in credit
quality or an increase in potential problem loans. A significant change in any
of the evaluation factors described above could result in future additions to
the allowance. At June 30, 1997, the Company's allowance was $8,423,000; the
ratio of the allowance to loans, net of unearned discount, was 1.8%. At June 30,
1997, $881,000 of loans were impaired within the scope of SFAS No. 114 and
required a valuation allowance of $225,000. The average recorded investment in
impaired loans during the six months ended June 30, 1997 was approximately
$353,000. Potential problem loans, which are loans that are currently performing
under present loan repayment terms but where known information about possible
credit problems of borrowers cause management to have serious doubts as to the
ability of the borrowers to continue to comply with the present repayment terms,
aggregated $155,000 at June 30, 1997. At June 30, 1997, non-accrual loans
amounted to $987,000. Based on the foregoing, as well as management's judgement
as to the current risks inherent in the loan portfolio, the Company's allowance
for possible loan losses was deemed adequate to absorb all reasonably
anticipated losses on specifically known and other possible credit risks
associated with the portfolio as of June 30, 1997.


RESULTS OF OPERATIONS

Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
interest-earning assets and interest-bearing liabilities. An analysis of the
Company's interest rate sensitivity is presented on page 21. The increases
(decreases) for the components of interest income and interest expense,
expressed in terms of fluctuation in average volume and rate are shown on pages
19 and 20. Information as to the components of interest income and interest
expense and average rates is provided in the Average Balance Sheets shown on
pages 17 and 18.



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



COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 

Total interest income increased $1,855,000 for the three months ended June 30,
1997 when compared with the same period last year principally due to higher
average outstandings. Interest and fees on loans increased $2,148,000
principally due to higher average outstandings. A decrease in average investment
securities available for sale outstandings produced a decrease in related income
of $491,000.

Total interest expense for the three months ended June 30, 1997 increased
$559,000 when compared with the same period in 1996 due to increased average
outstandings and higher rates paid for those funds. Interest expense on
interest-bearing deposits rose $539,000 as a result of increased rates coupled
with an increase in average outstandings.

Based on management's continuing evaluation of the loan portfolio (discussed
under "CREDIT RISK" above), and principally as the result of the growth in the
loan portfolios, $610,000 was provided for possible loan losses for the three
months ended June 30, 1997.

Noninterest income increased $1,040,000 for the second quarter of 1997 when
compared with the same period in 1996 due primarily to increased factoring
commissions and mortgage banking income.

Noninterest expenses increased $1,330,000 for the three months ended June 30,
1997 versus the same period last year reflecting higher personnel and general
business costs associated with the Company's higher levels of business
activities.

The provision for income taxes increased $339,000 for the second quarter of 1997
when compared with the same period last year principally based on the level of
pre-tax profitability.

As a result of the above factors, net income increased $649,000 for the three
months ended June 30, 1997 when compared with the same period in 1996.





                                       15
<PAGE>   16
                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 

Total interest income increased $4,164,000 for the six months ended June 30,
1997 when compared with the same period last year principally due to higher
average outstandings. Interest and fees on loans increased $4,700,000
principally due to higher average outstandings. A decrease in average Federal
funds sold outstandings produced a decrease in related income of $188,000. A
decrease in average investment securities outstanding partially offset by higher
yields, resulted in a decrease in related income of $389,000.

Total interest expense for the six months ended June 30, 1997 increased $768,000
when compared with the same period in 1996 principally due to higher rates paid
for those funds. Interest expense on interest-bearing deposits rose $905,000 as
a result of increased rates coupled with an increase in average outstandings.
Interest expense on borrowings decreased $137,000 for the six months ended June
30, 1997 versus the like period a year ago due to a decrease in average
outstandings partially offset by higher rates paid for those funds.

Based on management's continuing evaluation of the loan portfolio (discussed
under "CREDIT RISK" above), and principally as the result of the growth in the
loan portfolios, $1,381,000 was provided for possible loan losses for the six
months ended June 30, 1997.

Noninterest income increased $2,492,000 for the first six months of 1997 when
compared with the same period in 1996 due primarily to increased factoring
commissions and mortgage banking income.

Noninterest expenses increased $3,493,000 for the six months ended June 30, 1997
versus the same period last year reflecting higher personnel and general
business costs associated with the Company's higher levels of business
activities.

The provision for income taxes increased $802,000 for the first six months of
1997 when compared with the same period last year principally based on the level
of pre-tax profitability.

As a result of the above factors, net income increased $1,351,000 for the six
months ended June 30, 1997 when compared with the same period in 1996.


                                       16
<PAGE>   17
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                           Three Months Ended June 30,


<TABLE>
<CAPTION>
                                                          1997                                          1996
                                            --------------------------------------      ------------------------------------
                                            Average                       Average       Average                       Average
ASSETS                                      Balance        Interest         Rate        Balance        Interest         Rate
                                            --------       --------       --------      --------       --------       ------
<S>                                         <C>            <C>            <C>           <C>            <C>            <C>
Interest-bearing deposits
   with other banks                         $  4,077       $     65          5.21%      $  2,950       $     40          5.44%
Investment securities
   Available for sale [2]                     65,368          1,083          6.64%        93,941          1,574          6.72
   Held to maturity                          237,168          4,000          6.75        235,168          3,813          6.49

Federal funds sold                             1,132             16          5.46             --             --            --
Loans, net of unearned
   discounts [3]                             430,753         11,407         11.33        349,158          9,259         11.36
                                            --------       --------                     --------       --------
         TOTAL INTEREST-EARNING
            ASSETS                           738,498         16,571          9.31        681,217         14,686          8.90
                                                           --------        ------                      --------        ------

Cash and due from banks                       47,005                                      37,291
Allowance for possible
   loan losses                                (8,108)                                     (5,917)
Goodwill                                      21,158                                      21,158
Other assets                                  20,880                                      15,095
                                            --------                                    --------

         TOTAL ASSETS                       $819,433                                    $748,844
                                            ========                                    ========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
   Savings                                  $180,998          1,229          2.72       $169,760          1,012          2.40
   Other time                                175,669          2,273          5.08        155,240          1,951          5.05
                                            --------       --------                     --------       --------
      Total interest-bearing
           deposits                          356,667          3,502          3.94        325,000          2,963          3.67
                                            --------       --------                     --------       --------

Borrowings
   Federal funds purchased and
     securities sold under
      agreements to repurchase                92,891          1,258          5.43         75,986            959          5.07
   Commercial paper                           23,596            315          5.35         28,467            364          5.14
   Other short-term debt                       7,455            159          5.28         14,431            256          5.22
   Long-term debt                             20,027            285          5.70         35,831            418          6.70
                                            --------       --------                     --------       --------
         Total borrowings                    143,969          2,017          5.45        154,715          1,997          5.44
                                            --------       --------                     --------       --------
         TOTAL INTEREST-BEARING
           LIABILITIES                       500,636          5,519          4.37        479,715          4,960          4.20
                                                           --------          ----                      --------          ----

Noninterest-bearing deposits                 195,492                                     167,634
Other liabilities                             43,395                                      38,407
                                            --------                                    --------
       Total liabilities                     739,523                                     685,756

Shareholders' equity                          79,910                                      63,088
                                            --------                                    --------
         TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY             $819,433                                    $748,844
                                            ========                                    ========

Net interest income/spread                                 $ 11,052          4.94%                     $  9,726          4.70%
                                                           ========          ====                      ========          ====

Net yield on interest-earning
   assets (margin)                                                           6.18%                                       5.81%
                                                                             ====                                        ====
</TABLE>


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

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

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



                                       17
<PAGE>   18
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                            Six Months Ended June 30,

<TABLE>
<CAPTION>
                                                        1997                                        1996
                                            --------------------------------------      ------------------------------------
                                            Average                       Average       Average                       Average
ASSETS                                      Balance        Interest         Rate        Balance        Interest         Rate
                                            --------       --------       --------      --------       --------       ------
<S>                                         <C>            <C>            <C>           <C>            <C>            <C>
Interest-bearing deposits
   with other banks                         $  3,546       $    123          5.39%      $  2,987       $     82          5.52%
Investment securities
   Available for sale [2]                     71,131          2,401          6.78         95,382          3,195          6.72
   Held to maturity                          231,384          7,783          6.73        226,542          7,378          6.51

Federal funds sold                             3,326             90          5.37          9,940            278          5.52
Loans, net of unearned
   discounts [3]                             428,999         22,490         11.36        344,657         17,790         11.07
                                            --------       --------                     --------       --------
         TOTAL INTEREST-EARNING
            ASSETS                           738,386         32,887          9.31        679,508         28,723          8.73
                                                           --------        ------                      --------        ------

Cash and due from banks                       47,703                                      38,175
Allowance for possible
   loan losses                                (8,237)                                     (5,668)
Goodwill                                      21,158                                      21,158
Other assets                                  19,034                                      15,397
                                            --------                                    --------

         TOTAL ASSETS                       $818,044                                    $748,570
                                            ========                                    ========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
   Savings                                  $186,468          2,472          2.67       $176,532          2,079          2.37
   Other time                                168,885          4,348          5.09        154,639          3,836          4.99
                                            --------       --------                     --------       --------
      Total interest-bearing
           deposits                          355,353          6,820          3.87        331,171          5,915          3.59
                                            --------       --------                     --------       --------

Borrowings
   Federal funds purchased and
     securities sold under
      agreements to repurchase                88,917          2,351          5.33         72,499          1,843          5.11
   Commercial paper                           25,051            645          5.20         27,205            695          5.13
   Other short-term debt                       7,626            306          4.88         10,085            381          5.19
   Long-term debt                             20,346            616          6.11         37,587          1,137          6.84
                                            --------       --------                     --------       --------
         Total borrowings                    141,940          3,918          5.39        147,376          4,056          5.51
                                            --------       --------                     --------       --------
         TOTAL INTEREST-BEARING
           LIABILITIES                       497,293         10,738          4.31        478,547          9,971          4.12
                                                           --------          ----                      --------          ----

Noninterest-bearing deposits                 198,181                                     168,624
Other liabilities                             43,735                                      39,598
                                            --------                                    --------
       Total liabilities                     739,209                                     686,769

Shareholders' equity                          78,835                                      61,801
                                            --------                                    --------
         TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY             $818,044                                    $748,570
                                            ========                                    ========

Net interest income/spread                                 $ 22,149          5.00%                     $ 18,752          4.61%
                                                           ========          ====                      ========          ====

Net yield on interest-earning
   assets (margin)                                                           6.25%                                       5.69%
                                                                             ====                                        ====
</TABLE>

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

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

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


                                       18
<PAGE>   19
                        STERLING BANCORP AND SUBSIDIARIES
                              Rate/Volume Analysis
                           Three Months Ended June 30,
                                  (000 omitted)


<TABLE>
<CAPTION>
                                                           Increase/(Decrease)
                                                           Three Months Ended
                                                         June 30, 1997 and 1996
                                                -------------------------------------
                                                  Volume         Rate          Total[1]
                                                 -------        -------        -------
<S>                                              <C>            <C>            <C> 
INTEREST INCOME
Interest-bearing deposits with other banks       $    21        $     4        $    25
                                                 -------        -------        -------

Investment securities
   Available for sale [2]                           (484)            (7)          (491)
   Held to maturity                                   13            174            187
                                                 -------        -------        -------
      Total                                         (471)           167           (304)
                                                 -------        -------        -------


Federal funds sold                                     8              8             16
                                                 -------        -------        -------

Loans, net of unearned discounts [3]               2,192            (44)         2,148
                                                 -------        -------        -------
TOTAL INTEREST INCOME                            $ 1,750        $   135        $ 1,885
                                                 =======        =======        =======

INTEREST EXPENSE
Interest-bearing deposits
   Savings                                       $    69        $   148        $   217
   Other time                                        273             49            322
                                                 -------        -------        -------
         Total                                       342            197            539
                                                 -------        -------        -------

Borrowings
   Federal funds purchased and securities
    sold under agreements to repurchase              217             82            299
   Commercial paper                                  (65)            16            (49)
   Other short-term debt                             (96)            (1)           (97)
   Long-term debt                                   (156)            23           (133)
                                                 -------        -------        -------
      Total                                         (100)           120             20
                                                 -------        -------        -------

TOTAL INTEREST EXPENSE                           $   242        $   317        $   559
                                                 =======        =======        =======

NET INTEREST INCOME                              $ 1,508        $  (182)       $ 1,326
                                                 =======        =======        =======
</TABLE>


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

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

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




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


<TABLE>
<CAPTION>
                                                           Increase/(Decrease)
                                                            Six Months Ended
                                                         June 30, 1997 and 1996
                                                 -------------------------------------
                                                 Volume          Rate          Total[1]
                                                 -------        -------        -------

<S>                                              <C>            <C>            <C>
INTEREST INCOME
Interest-bearing deposits with other banks       $    29        $    12        $    41
                                                 -------        -------        -------

Investment securities
   Available for sale [2]                           (824)            30           (794)
   Held to maturity                                  137            268            405
                                                 -------        -------        -------
      Total                                         (687)           298           (389)
                                                 -------        -------        -------


Federal funds sold                                  (182)            (6)          (188)
                                                 -------        -------        -------

Loans, net of unearned discounts [3]               4,368            332          4,700
                                                 -------        -------        -------
TOTAL INTEREST INCOME                            $ 3,528        $   636        $ 4,164
                                                 =======        =======        =======

INTEREST EXPENSE
Interest-bearing deposits
   Savings                                       $   118        $   275        $   393
   Other time                                        383            129            512
                                                 -------        -------        -------
         Total                                       501            404            905
                                                 -------        -------        -------

Borrowings
   Federal funds purchased and securities
    sold under agreements to repurchase              417             91            508
   Commercial paper                                  (59)             9            (50)
   Other short-term debt                             (62)           (12)           (74)
   Long-term debt                                   (488)           (33)          (521)
                                                 -------        -------        -------
      Total                                         (192)            55           (137)
                                                 -------        -------        -------

TOTAL INTEREST EXPENSE                           $   309        $   459        $   768
                                                 =======        =======        =======

NET INTEREST INCOME                              $ 3,219        $   177        $ 3,396
                                                 =======        =======        =======
</TABLE>


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

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

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





                                       20
<PAGE>   21
                        STERLING BANCORP AND SUBSIDIARIES
                            Interest Rate Sensitivity


To mitigate the vulnerability of earnings to changes in interest rates, the
Company manages the repricing characteristics of assets and liabilities in an
attempt to control net interest rate sensitivity. Management attempts to confine
significant rate sensitivity gaps predominantly to repricing intervals of a year
or less so that adjustments can be made quickly. Assets and liabilities with
predetermined repricing dates are placed in a time of the earliest repricing
period. Based on the interest rate sensitivity analysis shown below, the
Company's net interest income would increase during periods of rising interest
rates and decrease during periods of falling interest rates. Amounts are
presented in thousands.

<TABLE>
<CAPTION>
                                                                           Repricing Date
                                     --------------------------------------------------------------------------------------------
                                                     More than                                           Non
                                     3 months        3 months         1 year to          Over            Rate
                                     or less         to 1 year        5 years           5 years        sensitive          Total
                                     ---------       ---------        ---------        ---------       ---------        ---------

<S>                                  <C>             <C>              <C>              <C>             <C>              <C>
ASSETS
   Interest-bearing deposits
       with other banks              $   2,010       $   1,000        $      --        $      --       $      --        $   3,010
   Investment securities                 5,038          12,277           29,636          243,186           6,093          296,230
   Loans, net of unearned
    discounts                          344,283          29,085           58,792           42,717          (7,781)         467,096
   Noninterest-earning assets
    and allowance for possible
    loan losses                             --              --               --               --          73,716           73,716
                                     ---------       ---------        ---------        ---------       ---------        ---------

      Total Assets                     351,331          42,362           88,428          285,903          72,028          840,052
                                     ---------       ---------        ---------        ---------       ---------        ---------

LIABILITIES AND SHAREHOLDERS'
EQUITY
   Interest-bearing deposits           181,555          61,229          102,077               --              --          344,861
  Securities sold under
     agreements to repurchase           90,373           2,272               --               --              --           92,645
  Commercial paper                      24,087              --               --               --              --           24,087
  Other short-term borrowings            5,411           3,500               --               --              --            8,911
   Long-term debt                        5,336              --           13,900              350              --           19,586
   Noninterest-bearing
    liabilities and share-
     holders' equity                        --              --               --               --         349,962          349,962
                                     ---------       ---------        ---------        ---------       ---------        ---------

       Total Liabilities and
          Shareholders' Equity       $ 306,762       $  67,001        $ 115,977        $     350       $ 349,962        $ 840,052
                                     =========       =========        =========        =========       =========        =========

Net Interest Rate
      Sensitivity Gap                $  44,569       $ (24,639)       $ (27,549)       $ 285,553       $(277,934)       $      --
                                     =========       =========        =========        =========       =========        =========

Cumulative Gap at
      June 30, 1997                  $  44,569       $  19,930        $  (7,619)       $ 277,934       $      --        $      --
                                     =========       =========        =========        =========       =========        =========

Cumulative Gap at
      June 30, 1996                  $   9,776       $  (6,605)       $ (71,196)       $ 216,450       $      --        $      --
                                     =========       =========        =========        =========       =========        =========

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



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



<TABLE>
<CAPTION>
                                                    The Company                       The Bank
                                              ------------------------        ------------------------
                                               6/30/97        12/31/96        6/30/97         12/31/96
                                              --------        --------        --------        --------
                                                                   ($ in thousands) 

<S>                                           <C>             <C>             <C>             <C>
COMPONENTS
Stockholders' equity                          $ 82,731        $ 77,177        $ 52,310        $ 46,503
Add/(Subtract):
   Goodwill                                    (21,158)        (21,158)             --              --
   Net unrealized appreciation
      on securities available for sale,
       net of tax effect (1)                       (25)            (90)            (23)            (89)
                                              --------        --------        --------        --------

   Tier 1 Capital                               61,548          55,929          52,287          46,414
                                              --------        --------        --------        --------

Allowance for possible loan losses
   (limited to 1.25% of total risk-
     weighted assets)                            6,649           6,580           6,246           5,014
Subordinated debt (limited to 50%
   of Tier 1 Capital)                            1,067           1,278              --              --
                                              --------        --------        --------        --------

   Tier 2 Capital                                7,716           7,858           6,246           5,014
                                              --------        --------        --------        --------

   Total Risk-based Capital                   $ 69,264        $ 63,787        $ 58,533        $ 51,428
                                              ========        ========        ========        ========
</TABLE>






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

       The Company                      7.71%              6.89%                                           $31,931        $39,914
                                                                   }       4.00%             5.00%
       The bank                         6.81               6.13                                             30,695         38,369


   Tier 1 Risk-based Capital

       The Company                     11.61%             10.65%                                           $21,207        $31,811
                                                                   }        4.00%            6.00%
       The bank                        10.47               9.63                                             19,979         29,969


   Total Risk-based Capital

       The Company                     13.06%             12.15%                                           $42,415        $53,019
                                                                   }        8.00%           10.00%
       The bank                        11.72              10.67                                             39,958         49,948
</TABLE>


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



                                       22
<PAGE>   23
                        STERLING BANCORP AND SUBSIDIARIES




                           PART II - OTHER INFORMATION



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

              (a)    The Annual Meeting of Shareholders of the Company was held
                     on April 17, 1997.

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

                     (1) Election of Directors *

<TABLE>
<CAPTION>
                               Nominee                        Total Votes For                Total Votes Withheld
                               -------                        ---------------                --------------------

<S>                                                           <C>                            <C>    
                           Joseph M. Adamko                        6,709,903                          567,165
                           Lillian Berkman                         6,656,159                          567,165
                           Louis J. Cappelli                       6,715,330                          567,165
                           Walter Feldesman                        6,652,852                          567,165
                           Allan F. Hershfield                     6,709,103                          567,165
                           Henry J. Humphreys                      6,708,823                          567,165
                           John C. Millman                         6,715,403                          567,165
                           Maxwell M. Rabb                         6,652,534                          567,165
                           Eugene T. Rossides                      6,712,148                          567,165
                           William C. Warren                       6,653,100                          567,165
</TABLE>

                           * All nominees were incumbents at the time of the
                             Annual Meeting of Shareholders and all nominees
                             were re-elected.


                     (2) Amendment of Stock Incentive Plan

<TABLE>
<S>                                                              <C>      
                           Total Votes For                       6,399,530
                           Total Votes Against                     850,692
                           Total Abstentions                        52,165
                           Total Broker Nonvotes                         0
</TABLE>


                                       23
<PAGE>   24
                        STERLING BANCORP AND SUBSIDIARIES




Item 6.  Exhibits and Reports on Form 8-K

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

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

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




                                   SIGNATURES




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


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




Date  8/13/97                             /s/ Louis J. Cappelli
-------------                                 -----------------
                                              Louis J. Cappelli
                                              Chairman and
                                              Chief Executive Officer



Date  8/13/97                             /s/ John W. Tietjen
-------------                                 -----------------
                                              John W. Tietjen
                                              Senior Vice President, Treasurer
                                              and Chief Financial Officer





                                       24
<PAGE>   25
                        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                26
                          Per Share Earnings



    27                    Financial Data                                              X                27
                          Schedule
</TABLE>


                                       25