"One of our best marketing weapons is lunch," says Louis J. Cappelli, chairman of $550 million-asset Sterling National Bank in New York.

"Every day John C. Millman, our president, and I have lunch with lawyers, CPAs, and heads of businesses seeking credit in the $250,000 to $10 million range, right here in our dining room. They talk about themselves and their businesses. And most of the time, within a week of inviting a lawyer or accountant, we get a deal."

Wait a minute! Isn't this the community banking page? And isn't Sterling National Bank at 55th Street and Madison Avenue in New York? How can it be a community bank?

Listen to Cappelli and Millman talk, and you realize that they run just as much a community bank as any in the nation:

* Lou Cappelli has worked for Sterling for 44 of his 62 years. Millman has been with the bank for 17 years.

* Customers know both of them personally and feel comfortable calling them or other top officers and practically structuring a deal on the phone before they come in with the paperwork.

"They have a pretty good idea if the credit will fly on the first phone call," Cappelli says. We know them and can get a good picture of what they want in a couple of minutes."

* What they want may be as simple as the call Cappelli had a few weeks ago at 5:45 p.m. from a customer asking him, "Will you keep the bank open another half an hour for me to get some important checks in?"

Not only did Lou consider it not unusual for a customer to call him personally to have someone wait for the checks to arrive, but the person who waited was Lou!

In sum, even though it is in the heart of New York's East Side, this bank has all the attributes of a community bank. One way the Millman and Cappelli keep midsize firms and high-net-worth individuals happy is to centralize each relationship with a key officer.

This strategy avoids fragmenting the relationship among several departments or segregating it by type of business.

Employees phone clients to resolve exceptions promblems like overdrawn accounts, and strive to answer requests promptly.

What concerns Lou and John?

Naturally they worry about governmental micromanagement of the bank, capital adequacy, and the other issues that concern top management today. They also agonize over the future direction of the bank.

"To grow and to improve profits and shareholder value is the name of the game" says Cappelli, who became CEO of the holding company that owns Sterling just last year.

This was after several decades of management by a team that stressed super-conservatism, capital strength, and extreme caution in lending. The team was headed by Ted Silbert, who kept tight reins on the bank until he died, well into his 80s.

"Snould we grow for growth's sake?" asks Cappelli. "We could get real economies of scale by acquiring other institutions within a radius of a two-hour driving time that have similar types of operations and where the reduction of redundant personnel could bring real bottom-line results.

"The problem here is knowing what you are buying," Cappelli says.

Joint Effort

Another alternative is to try to develop a network with other community banks around the country that are stressing mid-market loans and service to wealthy individuals.

"We could earn well by selling our talent," Millman says.

One issue that concerns Lou Cappelli is what type of person to pick for vacancies as they occur on the board of directors.

Sterling's board has always included distinguished names -- a former New York City mayor, retired top bankers -- a legacy of the Silbert regime.

"I need board members who can both add stature to the bank and help us formulate and achieve our business goals," Lou says.

Should new board members be picked for their marketing strengths and ability to bring in new business, or should for their ability to advise top management in areas where the bank could use their expertise.

While these are issues that Lou and John agonize over, one thing is clear; They have no trouble getting people to join their board.

So, community bankers around the nation, does Sterling's operation and do its problems sound just like yours? Sure.

What is shows is that community banking is a state of mind -- that the customer is No. 1 and is a person rather than a number.

This is community banking's strong suit. And it can be played on Madison Avenue just as well as in any small town.

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