Sterling Bancorp's annual report for 1997 gives shareholders a concrete way to take advantage of low mortgage rates: an offer to refinance their mortgages. The New York-based banking and financial service company enclosed a blue card good for $250 off closing costs.

"We felt that this was an opportunity to provide something of value to our shareholders," said Louis J. Cappelli, chairman and chief executive. This offer was Sterling's second instance of piggybacking an offer with a financial statement. In the company's third-quarter report, Sterling also offered a $250 discount on closing costs.

Companies often turn to handouts as a way to maintain investor loyalty and to stand out from the competition. Offering investors a sample or a product of the company can help make shareholders feel a greater connection to their investment, investor relations experts say.

Sterling's current offer is valid through July 31, and may betransferred to a family member or friend.

"Financial service companies, including mortgage companies, have to do something to differentiate themselves, to have an edge over their competitors," said Anne Morgan Moore, president of Synergistic Research in Atlanta.

"Sometimes a coupon or a discount is that little edge that is the incentive that will get you to go ahead," she added.

Consumers have been conditioned by the retail industry to look for the best deal and to negotiate conditions such as credit card rates, Ms. Morgan Moore said. Younger consumers also have very little loyalty, so small incentives can make the difference, she added.

Sterling National Mortgage Co. has had a significant backlog in refinancings, Mr. Cappelli said. Closings are up almost 50% for its residential mortgage lending business based in Great Neck, N.Y. Sterling Bancorp has over $1 billion of assets, and its principal banking subsidiary is Sterling National Bank.

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