Safety and Soundness Come First at Sterling
1991; American Bankers Association; Volume: 83; Issue: 6 Linguagem: Inglês
ISSN
0194-5947
Autores Tópico(s)Banking stability, regulation, efficiency
ResumoSterling National Bank and its chairman learned the importance of capital and soundness during the Great Depression, and have never forgotten Higher capital requirements are driving many bankers to shrink their assets or grow their capital, but not Theodore H. Silbert. His bank, Sterling National Bank and Trust, New York City, ended 1990 with a risk-based capital ratio of 33%. Capital is the single most important ratio in commercial banking, says Silbert, who is the bank's chairman. In 1968, he and the rest of the management team decided that, in order to protect depositors, they would allow most of the bank's earnings to go into capital. The bank advertises this strength; in the beginning of the year it hung signs in the windows of its main branch indicating its liquidity and capital. in the first two months, at least a dozen customers came in of the sign and made large deposits, according to Josephine Lupo, assistant vice-president. Suddenly people aren't as concerned about rates as they are about she says. It's a strong selling point. Could 33% be too much'? Sure, it's too much, says Silbert. may have erred on the side of conservatism, but that's better than going out of business. points out that in the future the bank may be in a good position to merge with or acquire banks that are overloaned and have inadequate capital. Sterling National Bank's return on assets is 1.20%. Silbert, who at 87 has the sturdy build and strong handshake (not to mention strong opinions) of someone at least 25 years younger, has enforced a code of conservatism throughout the bank since his factoring company bought it in 1968, a time when many banks were buying out factoring businesses. The bank's holding company, Sterling Bancorp, still owns factoring subsidiaries. He plays a very active role, says John C. Millman, president and CEO of Sterling, about the bank's chairman. He's in the bank every day. provides direction and leadership on policy issues. Silbert's conservative approach to finance was strongly influenced by events during the first few years of his career--notably the Depression. At that he was a new business solicitor at Broadway National Bank, New York which was later acquired by NatWest). The low-income wage earner witnessed the closing of 50% of the commercial banks at that time, he recalls, practically overnight. Wage earners witnessed the loss of their savings. Sterling National itself began life the year of the crash. Imagine starting a bank in 1929 and succeeding, Silbert says. believes the bank always had an image of safety, strength, and liquidity, from day one. It has subsequently faced many setbacks in the economy and continued to grow. Careful loan policy. Most of the bank's business consists of loans to middle market businesses. On the battlefield, we may get some shrapnel, but we've never been fatally injured by bad loans, is the analogy Silbert uses. The bank's nonperforming loans as a percentage of total loans was 1/7 of 1% at year-end 1990. How does a bank do this in the highly competitive New York City loan market'? must have good credit judgment, says Silbert, because in the last three years-we don't know about tomorrow-we've had no reason to make any provision for additional reserves or allowance for bad debts. We have never been involved in leveraged buyouts, loans to lesser-developed countries, highly leveraged transactions, or real estate expansion and land development- all of the booby traps for bankers. The age and experience of the older members of Sterling's management team, Silbert feels, is an advantage. (I've been with the bank 41 years-you can tell we're drifters here, quips Louis J. Cappelli, senior executive vice-president.) have been able to guide the younger officers at the bank to avoid the pitfalls of bad loans when everybody was euphoric in the 1980s, Silbert says. …
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