Sterling Bancorp, which focuses on New York City middle- market commercial banking, is waging a campaign to take on the personal finances of its entrepreneurial clients.
To upgrade in the area, Sterling hired Tamar A. Spilo this month to run its private banking group.
A 20-year banking veteran from First Bank of the Americas, also based in New York, Ms. Spilo will concentrate on lending and deposits.
On the investment side, her counterpart is portfolio manager Donna M. Bradley, who joined Sterling from U.S. Trust Corp. in New York three months ago.
All told, there are 10 people dedicated entirely to private client services.
The expansion of senior staff brings "firepower" to the business line, said John C. Millman, president of the $860 million-asset banking company.
He added that the group is expected to help the bank increase noninterest income. Last year, trust fees accounted for about 6.6% of Sterling's $9.9 million in noninterest income, most of which came from its factoring and deposit service charges.
In contrast, Sterling had $60.9 million of total interest income last year, $39.2 million which was garnered from loans. Its commercial loans typically range from $500,000 to $10 million.
Sterling has $130 million of assets under management in its trust and investments group, and Mr. Millman said $500 million is attainable "in a couple of years."
Many commercial clients have family businesses that have stayed with Sterling for decades. But most affluent business owners who bank with Sterling already have their investments managed at other banks and brokerage firms.
Now, bolstered by its ability to pick up additional business covering different needs of clients, Sterling executives are confident they can win some investment assets.
"It's like opening another door to the same room," said Ms. Spilo, who guides private clients to specialized departments.
Sterling has a habit of expanding into businesses that its clients have been getting from other institutions. For instance, Sterling's wealthy clients were buying homes in the Hamptons or in Manhattan and getting financed by other institutions.
"We had a 30-year relationship with these people and they were getting mortgages elsewhere. It's crazy," Mr. Millman said.
The same rationale applies to Sterling's plan to build private banking services.
"Just like we bought a leasing company, a mortgage company, and a factoring business, we are going to build trust and investments," Mr. Millman said.
Yet observers said that investment management is different from other financial services.
"It's easier to add private banking than investment management, because there is less of a scale issue," said William R. White, a senior consultant with Spectrem Group in New York.
"Money management is definitely scale-sensitive," he said, adding than most small shops are financial consulting firms that advise investments managed elsewhere.
A self-styled "community" bank that boasts of exceptionally personalized service, Sterling could also compete on investment performance. Its equity portfolio, which follows 28 stocks, beat the S&P 500 by 1.25% through Sept. 30, said Ms. Bradley, whose role, in part, is to be aggressive with sales.
"We've always served this market, it's just that we've been more reactive," she said.
To increase its visibility, Sterling moved last year to Park Avenue, a veritable private banking heaven. The change of address also proved fortuitous: This month, bricks have been falling off the Madison Avenue office building that used to house Sterling, and its block has been closed to traffic.
"Do you know how lucky we are?" Mr. Millman said. "It would have been catastrophic."
