"It feels great to have lunch with the president and chairman in the private dining room. They are trying to understand my business,” says Bryan, whose company has been banking with Sterling for 19 years.
Law firm Abrams, Garfinkel, Margolis & Bergson, LLP, another Sterling client, says the check-writing machine developed by Sterling to print certified bank checks right in the law firm helped increase the efficiency in their business.
“I cannot imagine large banks would do that,” says Neil Garfinkel, a partner at the law firm.
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Risk Tolerance
The relationship model of community banks means they have to know their customers’ businesses well and be able to make informed lending decisions. Because of their size, they often can’t afford to make risky or poorly researched loans. On the contrary, says Merski, large banks generally lend according to formulas and broad policy decisions.
“Say one day they are cutting manufacturing loans. They cut it regardless of whether your company is doing differently than others,” he says.
With large amounts of personal capital invested, executives in community banks tend to be more cautious and take less risk when making decisions. Recently, this has led to higher capital levels and healthier balance sheets compared with larger financial institutions.
Taking Advantage of TARP
Small community banks, according to the New York Times, are the first ones to pay back TARP money. Examples include Signature Bank of New York, Old National Bancorp of Indiana, Iberiabank of Louisiana and Bank of Marin Bancorp of Novato, Calif.
As a TARP recipient, Sterling also is considering the possibility of returning the $42 million it received from the government. Millman says the bank together with many other banks didn’t really need the money, but the bank considered it an opportunity to make more loans and grow their business.
“We have seen unique opportunities in '08 and '09 because more customers that are rejected by distressed big banks turn to Sterling for loans,” Millman says.
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