<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


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


FOR THE QUARTERLY PERIOD ENDED            SEPTEMBER 30, 1996
                              ---------------------------------------  


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


540 MADISON AVENUE, NEW YORK, N.Y.                               10022-3299
----------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES                           (ZIP CODE)


                                  212-826-8000
-----------------------------------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


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


    INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. [X] YES [] NO


    AS OF SEPTEMBER 30, 1996 THERE WERE 7,346,863 SHARES OF COMMON STOCK, $1.00
PAR VALUE, OUTSTANDING.
<PAGE>   2
                                STERLING BANCORP




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

          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                                          10
             Securities                                                          13
             Credit Risk                                                         13
             Results of Operations                                               14
             Average Balance Sheets                                              17
             Rate/Volume Analysis                                                19
             Interest Rate Sensitivity                                           21
             Risk-Based Capital Components and Ratios                            22


PART II OTHER INFORMATION

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



SIGNATURES                                                                       23


EXHIBIT INDEX                                                                    24

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

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

<TABLE>
<CAPTION>
                                                                     September 30,          December 31,
ASSETS                                                                   1996                   1995
                                                                    -------------         -------------
<S>                                                                 <C>                   <C>          
Cash and due from banks                                             $  47,540,507         $  40,720,401
Interest-bearing deposits with other banks                              3,010,000             3,000,000
Federal funds sold                                                           --               5,000,000
Securities
   Held to maturity (estimated market value
     $222,799,273 and $196,573,342, respectively)                     227,999,046           197,567,406
   Available for sale (at estimated market value)                      94,167,371           101,670,466
                                                                    -------------         -------------
            Total investment securities                               322,166,417           299,237,872
                                                                    -------------         -------------

Loans, net of unearned discounts                                      428,760,130           397,228,786
Less allowance for possible loan losses                                 7,788,574             5,192,203
                                                                    -------------         -------------
            Loans, net                                                420,971,556           392,036,583
                                                                    -------------         -------------
Customers' liability under acceptances                                    468,200             2,395,089
Excess cost over equity in net assets of the
   banking subsidiary                                                  21,158,440            21,158,440
Premises and equipment, net                                             4,270,413             2,733,105
Accrued interest receivable                                             4,883,687             4,151,950
Other assets                                                            8,414,681             5,175,001
                                                                    -------------         -------------
                                                                    $ 832,883,901         $ 775,608,441
                                                                    =============         =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
   Noninterest-bearing deposits                                     $ 178,268,818         $ 224,080,543
   Interest-bearing deposits                                          334,829,308           326,947,260
                                                                    -------------         -------------
            Total deposits                                            513,098,126           551,027,803
Securities sold under agreements to repurchase                        108,231,029            51,265,620
Commercial paper                                                       31,684,400            26,607,200
Other short-term borrowings                                            34,545,872             5,331,640
Acceptances outstanding                                                   468,200             2,395,089
Due to factoring clients                                               25,039,843            22,596,179
Accrued expenses and other liabilities                                 17,038,949            17,381,686
                                                                    -------------         -------------
                                                                      730,106,419           676,605,217
                                                                    -------------         -------------

Long-term convertible subordinated debentures                          14,326,000            21,346,000
Other long-term debt                                                   17,750,000            18,000,000
                                                                    -------------         -------------
            Total long-term debt                                       32,076,000            39,346,000
                                                                    -------------         -------------
            Total liabilities                                         762,182,419           715,951,217
                                                                    -------------         -------------

Commitments and contingent liabilities


Shareholders' equity
   Preferred stock, $5 par value. Authorized 644,389 shares             2,510,870             2,525,760
   Common stock, $1 par value. Authorized 20,000,000 shares;
      issued  7,386,706 and 6,496,854 shares, respectively              7,386,706             6,496,854
   Capital surplus                                                     34,730,466            28,091,878
   Retained earnings                                                   29,914,212            25,641,804
   Net unrealized (depreciation) appreciation on securities
      available for sale, net of tax                                      (72,905)              543,747
                                                                    -------------         -------------
                                                                       74,469,349            63,300,043
   Less
      Common shares in treasury at cost, 39,843 and
        150,343 shares, respectively                                      394,184             1,489,239
      Unearned compensation                                             3,373,683             2,153,580
                                                                    -------------         -------------
            Total shareholders' equity                                 70,701,482            59,657,224
                                                                    -------------         -------------
                                                                    $ 832,883,901         $ 775,608,441
                                                                    =============         =============
</TABLE>

  See Notes to Consolidated Financial Statements.

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


<TABLE>
<CAPTION>
                                                      Three Months Ended                Nine Months Ended
                                                         September 30,                     September 30,
                                                     1996             1995            1996              1995
                                                 -----------      -----------      -----------      -----------
<S>                                              <C>              <C>              <C>              <C>        
INTEREST INCOME
   Loans                                         $10,055,302      $ 8,409,633      $27,845,666      $23,827,997
   Securities held to maturity                     3,849,618        3,864,344       11,227,920       11,641,135
   Securities available for sale                   1,599,990        1,135,015        4,794,597        3,532,680
   Federal funds sold                                  2,153           97,708          279,586          300,857
  Deposits with other banks                           35,854           46,404          117,844          137,321
                                                 -----------      -----------      -----------      -----------
            Total interest income                 15,542,917       13,553,104       44,265,613       39,439,990
                                                 -----------      -----------      -----------      -----------


INTEREST EXPENSE
   Deposits                                        3,071,996        2,841,289        8,986,515        8,574,275
   Federal funds purchased
      and securities sold under agreements
      to repurchase                                1,217,882          744,376        3,061,155        2,129,506
   Commercial paper                                  414,377          353,753        1,108,987          855,532
   Other short-term borrowings                       342,468           84,243          722,969          224,577
   Long-term debt                                    552,266          792,209        1,689,651        2,572,027
                                                 -----------      -----------      -----------      -----------
            Total interest expense                 5,598,989        4,815,870       15,569,277       14,355,917
                                                 -----------      -----------      -----------      -----------
Net interest income                                9,943,928        8,737,234       28,696,336       25,084,073
Provision for possible loan losses                   401,250          574,000        1,540,750        1,234,000
                                                 -----------      -----------      -----------      -----------
Net interest income after provision
 for possible loan losses                          9,542,678        8,163,234       27,155,586       23,850,073
                                                 -----------      -----------      -----------      -----------

NONINTEREST INCOME
   Service charges on deposit accounts               516,603          436,582        1,334,488        1,301,052
   Factoring commissions                             949,364          493,484        2,322,883        1,083,082
   Letter of credit commissions                      198,495          212,631          614,523          559,236
   Trust fees                                        236,986          211,395          510,101          497,830
   Mortgage banking income                           672,340           19,539          741,448           19,539
   Gain on sale of securities                           --               --             22,161            4,801
   Other income                                      529,391          276,258        1,201,219          876,649
                                                 -----------      -----------      -----------      -----------
            Total noninterest income               3,103,179        1,649,889        6,746,823        4,342,189
                                                 -----------      -----------      -----------      -----------


NONINTEREST EXPENSES
   Salaries                                        4,033,350        2,652,311       10,524,295        8,195,585
   Employee benefits                                 813,315          658,562        2,327,486        2,073,765
                                                 -----------      -----------      -----------      -----------
            Total personnel expenses               4,846,665        3,310,873       12,851,781       10,269,350
   Occupancy expense, net                            654,983          835,877        1,837,171        2,277,829
   Equipment expense                                 466,353          551,833        1,209,401        1,254,213
   Other expenses                                  2,542,058        1,981,751        6,701,260        5,901,285
                                                 -----------      -----------      -----------      -----------
            Total noninterest expenses             8,510,059        6,680,334       22,599,613       19,702,677
                                                 -----------      -----------      -----------      -----------
Income before income taxes                         4,135,798        3,132,789       11,302,796        8,489,585
Provision for income taxes                         1,974,438        1,640,420        5,396,605        4,443,578
                                                 -----------      -----------      -----------      -----------


Net income                                       $ 2,161,360      $ 1,492,369      $ 5,906,191      $ 4,046,007
                                                 ===========      ===========      ===========      ===========


Average number of common shares outstanding
   Primary                                         7,415,904        6,390,444        6,969,510        6,378,428
   Fully diluted                                   8,763,215        8,563,855        8,325,791        8,555,024
Per average common share
   Primary                                       $       .30      $       .23      $       .85      $       .63
   Fully diluted                                         .27              .21              .77              .57
Dividends per common share                               .08              .06              .23              .18
</TABLE>

See Notes to Consolidated Financial Statements.

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


<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                    September 30,        September 30,
                                                        1996                  1995
                                                    ------------         ------------
<S>                                                 <C>                  <C>         
 Shareholders' equity at beginning of period        $ 59,657,224         $ 53,719,314
                                                    ------------         ------------

 Net income                                            5,906,191            4,046,007
 Dividends paid
    Common stock- $.23  and $.18 per share,
      respectively                                    (1,623,111)          (1,142,347)
    Preferred stock - at prescribed rates                (10,672)              (1,095)
 Conversions of subordinated debentures
    into common stock                                  6,953,485                2,990
 Options exercised                                        10,875                 --
 Issuance of common stock for acquisition                262,995                 --
 Amortization of unearned compensation                   161,147                 --
 Change in valuation account for securities
    available for sale, net of tax                      (616,652)           1,285,575
                                                    ------------         ------------
Net change in shareholders' equity                    11,044,258            4,191,130
                                                    ------------         ------------
Shareholders' equity at end of period               $ 70,701,482         $ 57,910,444
                                                    ============         ============
</TABLE>

   See Notes to Consolidated Financial Statements.

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

<TABLE>
<CAPTION>
                                                                                Nine Months Ended
                                                                                  September 30
                                                                            1996                 1995
                                                                       ------------        -------------
<S>                                                                    <C>                  <C>         
OPERATING ACTIVITIES
  Net income                                                           $  5,906,191         $  4,046,007
  Adjustments to reconcile net income to net cash
      provided by operating activities:
        Provision for possible loan losses                                1,540,750            1,234,000
        Depreciation and amortization of premises and equipment             650,927              867,397
        Deferred income tax benefit                                        (877,131)            (171,720)
        Gain on sale of securities                                          (22,161)              (4,801)
        Gain on sale of loans                                               (69,108)             (19,539)
        Amortization of unearned compensation                               161,147                 --
        Amortization of premiums of securities                            1,311,474            1,096,498
        Accretion of discounts on securities                               (119,583)             (95,315)
        Increase in accrued interest receivable                            (731,737)            (409,837)
        Increase in other liabilities                                     2,100,927           20,062,606
        Other, net                                                       (1,840,868)          (1,173,104)
                                                                       ------------         ------------

              Net cash provided by operating activities                   8,010,828           25,432,192
                                                                       ------------         ------------

INVESTING ACTIVITIES
   Purchase of premises and equipment                                    (2,188,235)            (512,356)
   Net increase in interest-bearing deposits
    with other banks                                                        (10,000)             (30,000)
   Net decrease in Federal funds sold                                     5,000,000            3,000,000
   Net increase in loans                                                (30,406,615)         (52,060,323)
   Proceeds from prepayments, redemptions or maturities
      of securities - held to maturity                                   28,067,802           22,738,157
   Purchases of securities - held to maturity                           (59,323,005)         (10,241,813)
   Proceeds from sale of securities-available for sale                    5,017,969            8,977,432
   Proceeds from prepayments, redemptions or maturities of
      securities - available for sale                                     7,083,790            4,108,204
   Purchases of securities - available for sale                          (6,083,164)         (10,918,982)
                                                                       ------------         ------------
              Net cash used in investing activities                     (52,841,458)         (34,939,681)
                                                                       ------------         ------------

FINANCING ACTIVITIES
   Net decrease in noninterest-bearing deposits                         (45,811,725)          (8,774,882)
   Net increase(decrease) in interest-bearing deposits                    7,882,048          (17,373,736)
   Net increase in securities sold under
       agreements to repurchase                                          56,965,409            7,524,041
   Net increase in commercial paper
      and other short-term borrowings                                    34,291,432           31,244,062
   Decrease in other long-term debt                                        (250,000)                --
   Issuance of common stock                                                 262,995                 --
   Options exercised on common shares                                        10,875                 --
   Cash dividends paid on common and preferred stock                     (1,633,783)          (1,143,442)
   Maturities and prepayments on debentures                                 (66,515)          (5,347,010)
                                                                       ------------         ------------
              Net cash provided by financing activities                  51,650,736            6,129,033
                                                                       ------------         ------------
Net increase in cash and due from banks                                   6,820,106           (3,378,456)
Cash and due from banks - beginning of period                            40,720,401           39,224,764
                                                                       ------------         ------------
Cash and due from banks - end of period                                $ 47,540,507         $ 35,846,308
                                                                       ============         ============

Supplemental schedule of non-cash financing activities:
   Conversion of debentures                                            $  6,953,485         $      2,990
   Issuance of treasury shares                                            1,381,250                 --

Supplemental disclosure of cash flow information:
   Interest paid                                                       $ 17,190,180         $ 12,713,016
   Income taxes paid                                                      6,078,493            4,863,462
</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 & Trust Company of New York
              ("the bank"), after elimination of material intercompany
              transactions. The term "the Company" refers to Sterling Bancorp
              and its subsidiaries. The consolidated financial statements as of
              and for the interim periods ended September 30, 1996 and 1995 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 1995 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, 1995.

  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 248,627 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.          Under the provisions of the Stock Incentive Plan, on January 3,
              1996, the parent company made restricted stock awards to key
              employees of 110,500 shares from treasury stock and granted key
              employees incentive stock options to purchase 109,500 shares.

              The restricted stock awards vest in four equal annual installments
              starting one year from the date of the award, with any unvested
              shares to revert to the parent company if the holder's employment
              terminates other than for certain specified reasons. In connection
              with the issuance of the restricted shares, the Company recognized
              unearned incentive compensation, equal to the market value of the
              shares issued on the date of the award, which will be amortized as
              a charge to salaries expense over the vesting period. The balance
              of unearned compensation is reported as a reduction of
              shareholders' equity. For income tax purposes, the Company is
              entitled to deductions as each installment vests in an amount
              equal to the average market value of the shares on the vesting
              date and for dividends paid on unvested shares.

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


              The incentive stock options, awarded at the closing market price
              on the date of grant, expire ten years from the date of grant and
              become exercisable in four annual installments, starting one year
              from the date of grant, or upon death or disability of the
              grantee. No expense is required to be recognized in connection
              with options granted.

              In October 1995, the Financial Accounting Standards Board,
              ("FASB") issued Statements of Financial Accounting Standards No.
              123,"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS
              123 established financial accounting and reporting standards for
              stock-based compensation plans. Such plans include all
              arrangements by which employees or others receive shares of stock
              or other equity instruments of the parent company, or arrangements
              by which the parent company incurs liabilities in amounts based on
              the price of the parent company's stock. Examples are incentive
              stock options, non-qualified stock options, restricted stock,
              stock appreciation rights or any combination thereof. SFAS 123
              allows two alternative accounting methods: (1) a fair-value based
              method, or (2) an intrinsic-value based method which is already
              prescribed by Accounting Principles Board Opinion No.25,
              "Accounting for Stock Issued to Employees" ("APB25"). Both the
              accounting and disclosure requirement of SFAS 123 are effective
              for fiscal years beginning after December 15, 1995. The parent
              company intends to continue accounting for its employee stock
              compensation plans under its current method (APB25), and will
              adopt the disclosure requirements of SFAS 123 in 1996.

  5.          On July 1, 1996, the Company acquired The Real Estate Funding
              Center (now operating as Sterling National Mortgage Company, Inc.)
              for 92,179 shares of common stock. The acquisition was accounted
              for as a pooling of interests. However, prior periods have not
              been restated as the acquisition was not material.

                                        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, as amended, with subsidiaries providing a
full range of financial services, including business and consumer loans, asset
based financing, factoring, trade financing, mortgage lending, leasing, and
trust and estate services. The parent company owns Sterling National Bank &
Trust Company of New York (the bank), its principal subsidiary, and Standard
Factors Corporation/Sterling Factors, Universal Finance Corporation, Sterling
Banking Corporation and Sterling Industrial Loan Association (finance
subsidiaries). On July 1, 1996, the Company acquired The Real Estate Funding
Center (now operating as Sterling National Mortgage Company, Inc.). As used
throughout this report, "the Company" refers to Sterling Bancorp and its
subsidiaries.

There is intense competition in all areas in which the Company conducts its
business, including deposits, loans, domestic and international financing and
trust services. In addition to competing with other banks, the Company also
competes in certain areas of its business with other financial institutions. At
September 30, 1996, the bank's year-to-date average earning assets (of which
loans were 48% and securities were 51%) represented approximately 92% of the
Company's year to date average earning assets. See pages 17 and 18 for the
composition of the Company's average balance sheets for the three and nine
months ended September 30, 1996 and September 30, 1995.

FINANCIAL CONDITION

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

While the parent company generates income from its own operations, it also
depends for its cash requirements on funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet the
parent company's cash requirements throughout its history. At September 30,
1996, the parent company had on hand approximately $12,169,000 in cash.

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.

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



At September 30, 1996, 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
$14,326,000. To the extent convertible subordinated debentures are converted to
common stock of the parent company (as has been the case with approximately $18
million principal amount since 1982), the subordinated debt related thereto is
retired and becomes part of shareholders' equity. On April 18, 1996, the parent
company called for redemption as of May 20, 1996, the entire outstanding balance
($7,020,000 ) Fifth Series Convertible Debentures due July 1, 2001. Virtually
all of the debentures were converted into 794,684 shares of common stock. The
parent company's long-term indebtedness is also met through funds generated from
profits and new financing.

At September 30, 1996, the parent company's short-term debt, consisting
principally of commercial paper, was approximately $31,934,000. The parent
company had cash, interest-bearing deposits with banks and other current assets
aggregating $53,984,000 and back-up credit lines with banks of $14,000,000. 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 3%) which is calculated by dividing Tier 1 capital by adjusted
quarterly average assets (after deducting goodwill). At September 30, 1996, the
risk-based capital ratios and the leverage ratio for the Company and the bank
exceeded the most stringent requirements contemplated by these guidelines.
Information regarding the Company's and the bank's risk-based capital, at
September 30, 1996 and December 31, 1995, is presented on page 22.

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.

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.

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


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 several 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.

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

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




opposite results on an institution's net interest margin. However, the
traditional gap analysis does not assess the relative sensitivity of assets and
liabilities to changes in interest rates. The Company utilizes the gap analysis
to complement its income simulations modeling, primarily focusing on the longer
term structure of the balance sheet.

As part of its interest rate risk strategy, the Company uses off-balance sheet
financial instruments (derivatives) to hedge the interest rate sensitivity of
assets with the corresponding amortization reflected in the yield of the related
on-balance sheet assets being hedged. The Company has written policy guidelines,
which have been approved by the Board of Directors and the Asset/Liability
Committee, governing the use of off-balance sheet financial instruments,
including approved counterparties, risk limits and appropriate internal control
procedures. The credit risk of derivatives arises principally from the potential
for a counterparty to fail to meet its obligation to settle a contract on a
timely basis. At September 30, 1996, all counterparties have investment grade
credit ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.

At September 30, 1996, the Company's off-balance sheet financial instruments
consisted of two interest rate floor contracts having a notional amount totaling
$75 million; one contract with a notional amount of $50 million has a final
maturity of February 27, 2000 and the other 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.

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 $715,000 for the interest rate floor contracts that it entered into
in 1995. These premiums are amortized monthly against interest income from the
designated assets. At September 30, 1996, the unamortized premiums on these
contracts totaled $457,000 and are included in other assets. At September 30,
1996, $28,000 was receivable under the contracts.

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


SECURITIES

The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency mortgage-backed securities along with
other debt and equity securities. At September 30, 1996, the Company's portfolio
of securities totalled $322,166,000, of which U.S. Government and U.S.
Government corporation and agency guaranteed mortgage-backed securities having
an average life of approximately 2.9 years amounted to $309,087,000. 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 $448,000 and $5,648,000, 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
$425,000 and gross unrealized losses of $560,000. Given the relatively
short-term nature of the portfolio and its generally high credit quality,
management expects to realize all of its investment upon the maturity of such
instruments, and thus believes that any market value impairment is temporary in
nature.


CREDIT RISK

A key management objective is to maintain the quality of the loan portfolio.
This objective is achieved by maintaining high underwriting standards coupled
with regular evaluation of the creditworthiness of and the designation of
lending limits for each borrower. The portfolio strategies seek to avoid
concentrations by industry or loan size in order to minimize credit exposure and
to originate loans in markets with which it is familiar. The composition of the
Company's and the bank's loan portfolio at September 30, 1996 were as follows:

<TABLE>
<CAPTION>
                                                 Company                 Bank
                                                 -------                 ----
                                                         (in thousands)
<S>                                             <C>                   <C>       
Domestic
  Commercial and industrial                     $  328,211            $  273,923
  Real estate - mortgage                            59,692                58,551
  Real estate - construction                         1,348                 1,348
  Installment - individuals                         14,881                14,881
  Lease financing                                   30,873                30,873
Foreign
  Government and official institutions                 789                   789
                                                ----------            ----------
  Loans, gross                                     435,794               380,365
  Less unearned discounts                            7,034                 6,669
                                                ----------            ----------
Loans, net of unearned discounts                $  428,760            $  373,696
                                                ==========            ==========
</TABLE>

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


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


The allowance for possible loan losses is maintained through the provision for
possible loan losses, which is a charge to operating earnings. The adequacy of
the provision and the resulting allowance for possible loan losses is determined
by management's continuing review of the loan portfolio, including
identification and review of individual problem situations that may affect the
borrower's ability to repay, review of overall portfolio quality through an
analysis of current charge-offs, delinquency and nonperforming loan data,
estimates of the value of any underlying collateral, review of regulatory
examinations, an assessment of current and expected economic conditions and
changes in the size and character of the loan portfolio. The allowance reflects
management's evaluation of both loans presenting identified loss potential and
of the risk inherent in various components of the portfolio including loans
identified as impaired as required by SFAS No. 114 and No. 118. Thus an increase
in the size of the portfolio or in any of its components could necessitate an
increase in the allowance even though there may not be a decline in credit
quality or an increase in potential problem loans. A significant change in any
of the evaluation factors described above could result in future additions to
the allowance. At September 30, 1996, the Company's allowance was $7,789,000
(after giving effect to a third quarter recovery of $1,333,000 on a previously
charged-off loan in the bank); the ratio of the allowance to loans, net of
unearned discount, was 1.8%. At September 30, 1996, $265,000 of loans were
impaired within the scope of SFAS No. 114 and required a valuation allowance of
$120,000. The average recorded investment in impaired loans during the nine
months ended September 30, 1996 was approximately $400,000. 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
$376,000 at September 30, 1996. At September 30, 1996, non-accrual loans
amounted to $654,000. Based on the foregoing, as well as management's judgement
as to the current risks inherent in the loan portfolio, the Company's allowance
for possible loan losses was deemed adequate to absorb all reasonably
anticipated losses on specifically known and other possible credit risks
associated with the portfolio as of September 30, 1996.


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
 second                        STERLING BANCORP AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Total interest income increased $1,990,000 for the three months ended September
30, 1996 when compared with the same period last year principally due to higher
average outstandings. Interest and fees on loans increased $1,645,000
principally due to higher average outstandings. An increase in average
securities outstandings resulted in an increase in income from securities of
$451,000.

Total interest expense for the three months ended September 30, 1996 increased
$783,000 when compared with the same period in 1995 due to increased average
outstandings and higher rates paid for those funds. Interest expense on
interest-bearing deposits rose $231,000 as a result of increased rates coupled
with an increase in average outstandings. Interest expense on borrowings
increased $552,000 for the three months ended September 30, 1996 versus the like
period a year ago primarily due to 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, $401,000 was provided for possible loan losses for the three
months ended September 30, 1996.

Noninterest income increased $1,453,000 for the third quarter of 1996 when
compared with the same period in 1995 due primarily to increased mortgage
banking income, principally due to the acquisition of The Real Estate Funding
Center (See Note 5 on page 8), and increased factoring commissions.

Noninterest expenses increased $1,830,000 for the three months ended September
30, 1996 versus the same period last year reflecting higher personnel and
general business costs associated with the Company's higher levels of business
activities (including the acquisition of The Real Estate Funding Center).

The provision for income taxes increased $334,000 for the third quarter of 1996
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 $669,000 for the three
months ended September 30, 1996 when compared with the same period in 1995.

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



COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Total interest income increased $3,612,000 for the nine months ended September
30, 1996 when compared with the same period last year principally due to higher
average outstandings. Interest and fees on loans increased $4,018,000
principally due to higher average outstandings. An increase in average
securities outstandings resulted in an increase in income from securities of
$848,000.

Total interest expense for the nine months ended September 30, 1996 increased
$1,213,000 when compared with the same period in 1995 principally due to
increased average outstandings. Interest expense on interest-bearing deposits
rose $412,000 as a result of increased rates coupled with an increase in average
outstandings. Interest expense on borrowings increased $801,000 for the nine
months ended September 30, 1996 versus the like period a year ago. The increase
is attributable to an increase in average outstandings partially offset by lower
rates paid.

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, $1,541,000 was provided for possible loan losses for the nine
months ended September 30, 1996.


Noninterest income increased $2,405,000 for the first nine months of 1996 when
compared with the same period in 1995 due primarily to increased mortgage
banking income, principally due to the acquisition of The Real Estate Funding
Center (see Note 5 on page 8), and increased factoring commissions.

Noninterest expenses increased $2,897,000 for the first nine months ended
September 30, 1996 versus the same period last year, reflecting higher personnel
and general business costs associated with the Company's higher levels of
business activities (including the acquisition of The Real Estate Funding
Center).

The provision for income taxes increased $953,000 for the first nine months of
1996 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 $1,860,000 for the nine
months ended September 30, 1996 when compared with the same period in 1995.

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

<TABLE>
<CAPTION>
                                                            1996                                         1995
                                            -------------------------------------       -------------------------------------
                                            Average                       Average       Average                       Average
ASSETS                                      Balance        Interest         Rate        Balance        Interest         Rate
                                            --------       --------       --------      --------       --------       ------
<S>                                         <C>            <C>               <C>        <C>            <C>               <C>  
Interest-bearing deposits
   with other banks                         $  3,010       $     36          5.03%      $  2,997       $     46          6.14%
Securities
   Held to maturity                          233,375          3,850          6.60        235,952          3,864          6.55
   Available for sale [2]                     95,148          1,600          6.71         66,625          1,135          6.78

Federal funds sold                               152              2          5.52          6,522             98          5.86
Loans, net of unearned
   discounts [3]                             379,385         10,055         11.06        317,896          8,410         10.69
                                            --------       --------                     --------       --------
         TOTAL EARNING ASSETS                711,070         15,543          8.90        629,992         13,553          8.62
                                                           --------        ------                      --------        ------

Cash and due from banks                       40,153                                      35,066
Allowance for possible
   loan losses                                (6,450)                                     (4,913)
Goodwill                                      21,158                                      21,158
Other assets                                  15,499                                      14,746
                                            --------                                    --------

         TOTAL ASSETS                       $781,430                                    $696,049
                                            ========                                    ========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
   Savings                                  $168,182          1,036          2.45       $171,294            965          2.23
   Other time                                159,226          2,036          5.09        148,867          1,876          5.00
                                            --------       --------                     --------       --------
      Total interest-bearing
           deposits                          327,408          3,072          3.73        320,161          2,841          3.52
                                            --------       --------                     --------       --------

Borrowings
   Federal funds purchased and
     securities sold under
      agreements to repurchase                89,455          1,218          5.42         53,328            744          5.54
   Commercial paper                           31,169            414          5.29         25,536            354          5.50
   Other short-term debt                      21,737            343          5.02          6,769             85          4.94
   Long-term debt                             32,076            552          6.85         44,799            792          7.02
                                            --------       --------                     --------       --------
         Total borrowings                    174,437          2,527          5.61        130,432          1,975          6.01
                                            --------       --------                     --------       --------
         TOTAL INTEREST-BEARING
           LIABILITIES                       501,845          5,599          4.38        450,593          4,816          4.24
                                                           --------          ----                      --------          ----

Noninterest-bearing deposits                 173,964                                     153,361
Other liabilities                             36,895                                      34,926
                                            --------                                    --------
       Total liabilities                     712,704                                     638,880

Shareholders' equity                          68,726                                      57,169
                                            --------                                    --------
         TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY             $781,430                                    $696,049
                                            ========                                    ========

Net interest income/spread                                 $  9,944          4.52%                     $  8,737          4.38%
                                                           ========          ====                      ========          ====

Net yield on earning assets
   (margin)                                                                  5.67%                                       5.54%
                                                                             ====                                        ====
</TABLE>

[1]  The average balances of assets, liabilities and shareholders' equity are
     computed on the basis of daily averages for the bank and monthly averages
     for the parent company and its finance subsidiaries. Dollars are presented
     in thousands.
[2]  Interest on tax-exempt securities included herein is immaterial and is not
     presented on a tax equivalent basis.
[3]  Non-accrual loans are included in the average balance, which reduces the
     average yields.

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

<TABLE>
<CAPTION>
                                                           1996                                         1995
                                            --------------------------------------      -------------------------------------
                                            Average                       Average       Average                       Average
ASSETS                                      Balance        Interest         Rate        Balance        Interest         Rate
                                            --------       --------       --------      --------       --------       -------
<S>                                         <C>            <C>              <C>         <C>            <C>               <C>  
Interest-bearing deposits
   with other banks                         $  2,995       $    118          5.26%      $  2,986       $    137          6.01%
Securities
   Held to maturity                          228,836         11,228          6.54        237,554         11,641          6.54
   Available for sale [2]                     95,304          4,794          6.71         70,252          3,533          6.74

Federal funds sold                             6,653            279          5.52          6,846           301           6.02
Loans, net of unearned
   discounts [3]                             356,209         27,846         11.14        299,629         23,828         10.94
                                            --------       --------                     --------       --------
         TOTAL EARNING ASSETS                689,997         44,265          8.82        617,267         39,440          8.65
                                                           --------        ------                      --------        ------

Cash and due from banks                       38,840                                      37,257
Allowance for possible
   loan losses                                (5,930)                                     (4,539)
Goodwill                                      21,158                                      21,158
Other assets                                  15,408                                      13,597
                                            --------                                    --------

         TOTAL ASSETS                       $759,473                                    $684,740
                                            ========                                    ========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest-bearing deposits
   Savings                                  $173,729          3,115          2.40       $175,692          3,035          2.31
   Other time                                156,179          5,871          5.02        150,422          5,539          4.92
                                            --------       --------                     --------       --------
      Total interest-bearing
           deposits                          329,908          8,986          3.64        326,114          8,574          3.52
                                            --------       --------                     --------       --------

Borrowings
   Federal funds purchased and
     securities sold under
      agreements to repurchase                78,192          3,061          5.23         50,799          2,129          5.60
   Commercial paper                           28,536          1,109          5.19         20,840            856          5.49
   Other short-term debt                      13,998            723          5.08          6,121            225          4.91
   Long-term debt [4]                         35,736          1,690          6.84         47,178          2,572          7.29
                                            --------       --------                     --------       --------
         Total borrowings                    156,462          6,583          5.55        124,938          5,782          6.19
                                            --------       --------                     --------       --------
         TOTAL INTEREST-BEARING
           LIABILITIES                       486,370         15,569          4.21        451,052         14,356          4.26
                                                           --------          ----                      --------          ----

Noninterest-bearing deposits                 170,397                                     150,181
Other liabilities                             38,580                                      27,768
                                            --------                                    --------
       Total liabilities                     695,347                                     629,001

Shareholders' equity                          64,126                                      55,739
                                            --------                                    --------
         TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY             $759,473                                    $684,740
                                            ========                                    ========

Net interest income/spread                                 $ 28,696          4.61%                     $ 25,084          4.39%
                                                           ========          ====                      ========          ====

Net yield on earning assets
   (margin)                                                                  5.72%                                       5.49%
                                                                             ====                                        ====
</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.
[4]  Parent company convertible debentures were converted in May 1996 (see
     "FINANCIAL CONDITION" above). As a result, no interest was payable in 1996
     on the converted debentures and the yield for the 1996 period has been
     calculated without regard for the aforesaid debentures. 

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


<TABLE>
<CAPTION>
                                                                       Increase/(Decrease)
                                                                       Three Months Ended
                                                                   September 30, 1996 and 1995
                                                               Volume         Rate          Total[1]
                                                               ------         ----          --------
<S>                                                           <C>            <C>            <C>     
INTEREST INCOME
Interest-bearing deposits with other banks                    $    (1)       $    (9)       $   (10)
                                                              -------        -------        -------

Securities
   Held to maturity                                               (43)            29            (14)
   Available for sale [2]                                         482            (17)           465
                                                              -------        -------        -------
      Total                                                       439             12            451
                                                              -------        -------        -------


Federal funds sold                                                (92)            (4)           (96)
                                                              -------        -------        -------

Loans, net of unearned discounts [3]                            1,503            142          1,645
                                                              -------        -------        -------
   TOTAL INTEREST INCOME                                      $ 1,849        $   141        $ 1,990
                                                              =======        =======        =======

INTEREST EXPENSE
Interest-bearing deposits
   Savings                                                    $   (21)       $    92        $    71
   Other time                                                     128             32            160
                                                              -------        -------        -------
         Total                                                    107            124            231
                                                              -------        -------        -------

Borrowings
   Federal funds purchased and securities
    sold under agreements to repurchase                           486            (12)           474
   Commercial paper                                                76            (16)            60
   Other short-term debt                                          221             36            258
   Long-term debt                                                (222)           (17)          (240)
                                                              -------        -------        -------
      Total                                                       561             (9)           552
                                                              -------        -------        -------

TOTAL INTEREST EXPENSE                                        $   668        $   115        $   783
                                                              =======        =======        =======

NET INTEREST INCOME                                           $ 1,181        $    26        $ 1,207
                                                              =======        =======        =======
</TABLE>


[1]  The rate/volume variance is allocated equally between changes in volume and
     rate.
[2]  Includes Federal Reserve Bank and other stock investments.
[3]  Nonaccrual loans have been included in the amounts outstanding and income
     has been included to the extent accrued.

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



<TABLE>
<CAPTION>
                                                                Increase/(Decrease)
                                                                 Nine Months Ended
                                                            September 30, 1996 and 1995
                                                            Volume          Rate         Total[1]
                                                            ------          ----         --------
<S>                                                         <C>           <C>            <C>     
INTEREST INCOME
Interest-bearing deposits with other banks                  $   (1)       $   (18)       $   (19)
                                                            ------        -------        -------

Securities
   Held to maturity                                           (399)           (14)          (413)
   Available for sale [2]                                    1,279            (18)         1,261
                                                            ------        -------        -------
      Total                                                    880            (32)           848
                                                            ------        -------        -------

Federal funds sold                                              (2)           (20)           (22)
                                                            ------        -------        -------

Loans, net of unearned discounts [3]                         4,151           (133)         4,018
                                                            ------        -------        -------
   TOTAL INTEREST INCOME                                    $5,028        $  (203)       $ 4,825
                                                            ======        =======        =======

INTEREST EXPENSE
Interest-bearing deposits
   Savings                                                  $  (31)       $   111        $    80
   Other time                                                  226            106            332
                                                            ------        -------        -------
         Total                                                 195            217            412
                                                            ------        -------        -------

Borrowings
   Federal funds purchased and securities
    sold under agreements to repurchase                      1,097           (165)           932
   Commercial paper                                            310            (57)           253
   Other short-term debt                                       391            107            498
   Long-term debt                                             (670)          (212)          (882)
                                                            ------        -------        -------
      Total                                                  1,128           (327)           801
                                                            ------        -------        -------

TOTAL INTEREST EXPENSE                                      $1,323        $  (110)       $ 1,213
                                                            ======        =======        =======

NET INTEREST INCOME                                         $3,705        $   (93)       $ 3,612
                                                            ======        =======        =======
</TABLE>


[1]   The rate/volume variance is allocated equally between changes in volume
      and rate. The extra day in 1996 has been included in the change due to
      volume.

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


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

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


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

<TABLE>
<CAPTION>
                                                                    Repricing Date
                                     ---------------------------------------------------------------------------------------
                                                     More than                                          Non
                                     3 months        3 months        1 year to         Over            Rate
                                      or less        to 1 year        5 years         5 years        Sensitive        Total
                                     ---------       ---------       ---------       ---------       ---------       -------
<S>                                 <C>            <C>              <C>             <C>            <C>            <C>      
ASSETS
   Interest-bearing deposits
       with other banks             $   1,530      $   1,480        $   --          $   --         $   --         $   3,010
   Securities                           6,016         42,665          30,839         236,555          6,091         322,166
   Federal funds sold                    --             --              --              --             --              --
   Loans, net of unearned
    discounts                         348,502          4,290          39,681          43,321         (7,034)        428,760
   Noninterest-earning assets
    and allowance for possible
    loan losses                          --             --              --              --           78,948          78,948
                                    ---------      ---------       ---------       ---------      ---------       ---------

      Total Assets                    356,048         48,435          70,520         279,876         78,005         832,884
                                    ---------      ---------       ---------       ---------      ---------       ---------

LIABILITIES AND SHAREHOLDERS'
EQUITY
   Interest-bearing deposits          148,569         76,012         110,248            --             --           334,829
   Securities sold under
     repurchase agreements             93,698         14,533            --              --             --           108,231
   Commercial paper                    31,684           --              --              --             --            31,684
   Other short-term borrowings         34,296            250            --              --             --            34,546
   Long-term debt                      14,326           --            17,050             700           --            32,076
   Noninterest-bearing
    liabilities and share-
     holders' equity                     --             --              --              --          291,518         291,518
                                    ---------      ---------       ---------       ---------      ---------       ---------

       Total Liabilities and
          Shareholders' Equity      $ 322,573      $  90,795       $ 127,298       $     700      $ 291,518       $ 832,884
                                    =========      =========       =========       =========      =========       =========

Net Interest Rate
      Sensitivity Gap               $  33,475      $ (42,360)      $ (56,778)      $ 279,176      $(213,513)       $   --
                                    =========      =========       =========       =========      =========       =========

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

Cumulative Gap at
      September 30, 1995            $  50,076      $   6,428       $ (24,721)      $ 199,821       $   --          $   --
                                    =========      =========       =========       =========      =========       =========

Cumulative Gap at
      December 31, 1995             $  76,612      $  53,606       $  23,820       $ 256,359       $   --          $   --
                                    =========      =========       =========       =========      =========       =========
</TABLE>

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



<TABLE>
<CAPTION>
                                                            The Company                        The Bank
                                                      -------------------------         ------------------------ 
                                                      9/30/96          12/31/95         9/30/96         12/31/95
                                                      -------          --------         -------         --------
                                                                             ($ in thousands)
<S>                                                  <C>              <C>              <C>             <C>      
COMPONENTS
   Stockholders' equity                              $  70,701        $  59,657        $  48,067       $  47,940
   Add/(Subtract):
      Minority interest                                   --                  8             --              --
      Goodwill                                         (21,158)         (21,158)            --              --
      Net unrealized depreciation(appreciation)
         on securities available for sale,
          net of tax effect (1)                             73             (544)              73            (541)
                                                     ---------        ---------        ---------       ---------

      Tier 1 Capital                                    49,616           37,963           48,140          47,399
                                                     ---------        ---------        ---------       ---------

   Allowance for possible loan losses
      (limited to 1.25% of total risk-
        weighted assets)                                 6,060            5,192            5,119           3,649
   Subordinated debt (limited to 50%
      of Tier 1 Capital)                                 5,730           12,751             --              --
                                                     ---------        ---------        ---------       ---------

      Tier 2 Capital                                    11,790           17,943            5,119           3,649
                                                     ---------        ---------        ---------       ---------

      Total Risk-based Capital                       $  61,406        $  55,906        $  53,259       $  51,048
                                                     =========        =========        =========       =========


RATIOS
   Tier 1 Risk-based Capital                             10.27%            8.54%           11.27%          11.98%
                                                     =========        =========        =========       =========
   Total Risk-based Capital                              12.71%           12.58%           12.47%          12.90%
                                                     =========        =========        =========       =========
   Tier 1 Leverage                                        6.53%            5.37%            6.82%           7.19%
                                                     =========        =========        =========       =========

Memoranda
   Tier 1 Capital minimum requirement                $  19,321        $  17,777        $  17,090       $  15,826
                                                     =========        =========        =========       =========
   Total Capital minimum requirement                 $  38,643        $  35,554        $  34,180       $  31,652
                                                     =========        =========        =========       =========
   Risk-weighted assets, net of goodwill
      & excess allowance for loan losses             $ 483,035        $ 444,425        $ 427,251       $ 395,645
                                                     =========        =========        =========       =========
   Quarterly average assets, net of goodwill         $ 760,272        $ 706,632        $ 705,729       $ 659,574
                                                     =========        =========        =========       =========
</TABLE>

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

                                       22
<PAGE>   23
                        STERLING BANCORP AND SUBSIDIARIES




Item 6. Exhibits and Reports on Form 8-K

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

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

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




                             SIGNATURES




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

                                       STERLING BANCORP
                                       .............................
                                           (Registrant)




Date      11/14/96                     /s/ Louis J. Cappelli
    ---------------------                  ------------------------------------
                                           Louis J. Cappelli
                                           Chairman and
                                           Chief Executive Officer



Date      11/14/96                     /s/ John W. Tietjen
    ---------------------                  ------------------------------------
                                           John W. Tietjen
                                           Senior Vice President, Treasurer
                                           and Chief Financial Officer

                                       23
<PAGE>   24
                        STERLING BANCORP AND SUBSIDIARIES


                                  Exhibit Index






<TABLE>
<CAPTION>
                                                   Incorporated                         Sequential
   Exhibit                                           Herein By           Filed             Page
    Number            Description                  Reference To         Herewith            No.
<S>                   <C>                          <C>                     <C>              <C>
    11                Computation of                                       X                26
                      Per Share Earnings



    27                Financial Data                                       X                27
                      Schedule
</TABLE>

                                       24