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Sterling National Fights the Banking Trend

While Sterling Bancorp's total assets declined slightly year-over-year, to $2.56 billion as of June 30, the company's total portfolio loans grew 8% sequentially and 15% year-over-year, to $1.57 billion.

Sterling Bancorp CEO Louis Cappelli said that the company has "a depth of expertise in an array of products, including categories that are often overlooked or underserved by competitors, which gives us many opportunities for growth," with a "relatively high level of noninterest income, at approximately 30% of total revenues, [providing] balance and consistency at a time when loan yields are affected by the low interest rate environment."

Sterling Bancorp's second-quarter return on average tangible equity was 9.68%, increasing from 7.65% a year earlier.

The company's asset quality was very strong, with a ratio of nonperforming assets to total assets of 0.28% as of June 30.

Sterling reported a tangible common equity ratio of 8.09% as of June 30, declining slightly from 8.17% at the end of the first quarter, but increasing from 7.67% in June 2011.

In an interview with TheStreet on Tuesday, John Millman discussed the bank's unique product and service offerings.

TheStreet: Can you describe the bank's products and services that Mr. Cappelli said "are often overlooked or underserved by competitors?"

John Millman: We're really a business bank, so the overwhelming majority of what we do is provide an array of services to small and medium sized businesses and entrepreneurial entities. Businesses that at various points in the cycle have been overlooked by competitors include payroll processing, commercial real estate lending, and warehouse lending.

We have been very active since 2006 in financing staffing companies. It is one of the largest industries in America, particularly at this time when the economy is picking up in a tentative way. All over the country, there are many of these relatively small staffing companies that have limited balance sheet resources or capital, but have excellent accounts receivable from major companies. Right now it is a booming industry that a lot of banks aren't particularly active in.

Before the financial crisis, many banks were rushing to make commercial real estate loans, and the values were overheated. All of these banks ended up with very large commercial real estate portfolios, and the concentration for those banks relative to capital was very high. So the regulators took the position that they had to lower their concentrations in that kind of loan.
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