bankers

Why is the Department of Justice Releasing Redacted Lender Details in Loan Fraud Scheme?

Three corrupt bankers and loan officers earned just shy of $7 million dollars in commissions with origination of $876 million in fraudulent loans.

Former Managing Director and Two Former Loan Officers Plead Guilty for Roles in Widespread Bank-Fraud Scheme

MAY 20, 2021 | REPUBLISHED BY LIT: MAY 20, 2021

The former managing director of residential lending and two former loan officers of a financial institution headquartered in Southfield, Michigan, pleaded guilty to participating in a years-long scheme to originate fraudulent residential-mortgage loans through the bank’s low-documentation Advantage Loan Program.

According to court documents and statements made in court, YiHou Han, 39, of San Francisco, California, Hao Liang “Frank” Hu, 48, of Chino Hills, California, and Amy Lu, 33, of Brea, California, each caused the submission of fraudulent loan applications to the financial institution, referred to as Financial Institution A, under the Advantage Loan Program, which resulted in the origination of loans.

(LIT COMMENT: Why is the financial institution redacted? Y’all think you are protecting Sterling Bank & Trust that was nearly delisted by NASDAQ due to this fraud et al?)

Han served as a senior loan officer, and eventually as the managing director of residential lending, at Financial Institution A, while Hu and Lu served as residential-loan officers.

At various times during the conspiracy that ran from 2011 until 2019, Han, Hu, and Lu falsified and caused to be falsified borrowers’ income and debt-to-income ratios, job titles, employment histories, and supporting documents, among other things.

As part of the scheme, they instructed borrowers to fabricate deposit histories and to transfer funds to third parties, who would then transfer the funds back to the borrowers as “gifts” in order to conceal the true source of the funds and to promote the underlying fraud scheme.

Han, Hu, and Lu also knowingly facilitated the approval of loans to borrowers involved in money laundering and tax evasion.

As part of her guilty plea, Han admitted that she and her co-conspirators undermined Financial Institution A’s ability to implement effective anti-money laundering controls to monitor, investigate, and report potentially suspicious activity involving Advantage Loan Program borrowers.

Han further admitted that her falsification of documents and material information about borrowers’ qualifications for the Advantage Loan Program was done with the knowledge and encouragement of members of Financial Institution A’s senior management in order to increase the volume of loans originated under the Advantage Loan Program, which in turn increased the bank’s revenue and the co-conspirators’ personal commissions.

During the conspiracy, Han originated at least 1,288 Advantage Loans, Hu originated at least 825 Advantage Loans, and Lu originated at least 358 Advantage Loans, representing a total of at least 2,471 loans and more than $876 million in credit extend by Financial Institution A.

Han, Hu, and Lu admitted that the overwhelming majority of these loans were based on one or more fraudulent actions and that primarily as a result of the origination of these fraudulent loans

Han earned approximately $3,381,355.26 in commissions, Hu earned approximately $2,519,488.98 in commissions, and Lu earned approximately $990,847.58 in commissions.

Han pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud, while Lu previously pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud, and Hu previously pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud.

Han is scheduled to be sentenced on Aug. 18, 2021, while Lu and Hu are scheduled to be sentenced on June 28, 2021, and June 27, 2022, respectively.

Lu faces a maximum sentence of five years in prison, and Hu and Han each face a maximum sentence of 30 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Assistant Director in Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office; Inspector in Charge Delany De Léon-Colón of the Criminal Investigation Group of the U.S. Postal Inspection Service (USPIS); Acting Special Agent in Charge Francis Mace of the Office of Inspector General for the Federal Deposit Insurance Corporation (FDIC-OIG), San Francisco Region; and Special Agent in Charge Scott K. Redington of the Office of Inspector General – Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau (CFPB), San Francisco Western Division, made the announcement.

The FBI, USPIS, FDIC-OIG, and OIG-Board of Governors of the Federal Reserve System and CFPB investigated the case.

Trial Attorneys Kevin Lowell and Jason Covert of the Criminal Division’s Fraud Section are prosecuting the case.

LinkedIn Overview

As a trusted neighborhood bank, Sterling Bank & Trust provides a comprehensive choice of banking solutions, innovative loan products and outstanding personal service to individuals, professionals, businesses and commercial customers.

We’re known for highly competitive deposit rates, expertise in mortgage lending and keeping deposits at work in the local community.

Our customers know that they can stop by any branch and be treated like family. Since the Bank was founded in 1984, our customers have trusted us to help them handle their banking and financial needs.

We have thirteen neighborhood branches in San Francisco and an additional seven in the Bay area. We have expanded on the West Coast into Los Angeles, where we currently have six branches, and Bellevue Washington, where we have a branch and lending staff. In 2017, Sterling Bank & Trust expanded to New York with its division, SBT Advantage Bank.

SBT Advantage Bank offers the same great banking solutions, innovative loan products, and outstanding service that has made Sterling Bank & Trust a success. SBT Advantage has opened two branches —in Brooklyn —and Flushing.

We continue to grow to better serve our customers and the communities we serve in these four major markets across the country, and creating an experience sensitive to the needs of every customer, helping them succeed in achieving their own goals at their own pace.

Our branches are individually curated with original art creating a unique banking environment.

The bank has over $3 billion in assets and in 2019, for the second year in a row, Sterling Bank & Trust was ranked among U.S. banks with between $3B–$10B in assets as the Top Performing Community Bank in the United States by SNL/S&P Global Market Intelligence. Member FDIC Equal Housing Lender. Sterling Bank & Trust NMLS #40941.

Website
http://www.sterlingbank.com
Industry
Banking
Company size:
201-500 employees
204 on LinkedIn

Type:
Public Company

Founded:
1984

Rewind: The FCIC Report of 2011 Records the Greed of Bankers and the Criminal Theft of Citizens Homes

The profound events of 2007 and 2008 known as the financial crisis or the great recession and blame is documented in the fcic report (2011).

Rewind: 2008 Financial Crisis: Indymac Bank

At the time its July 11, 2008 closure, IndyMac had assets of about $32 billion, making its failure the fifth largest bank failure in U.S. history.

Rewind: 2008 Financial Crisis. The Largest Financial Swindling of Citizens in American History

Victims of wrongful foreclosures find justice absent as the banks perpetuating the crimes against them remain too big to be held accountable.

Sterling Faces Nasdaq Delisting Amid Loan Program Fallout

An ongoing review into past misconduct has delayed regulatory filings, threatening the bank’s status as a listed company

SEPT 21, 2020 | REPUBLISHED BY LIT: MAY 20, 2021

Nasdaq is threatening to delist Michigan-headquartered Sterling Bancorp from its stock market after the bank repeatedly failed to file regulatory documents on time.

In a statement last week, Sterling Bancorp – the parent to Sterling Bank & Trust – said it had received a ‘staff delisting determination’ from Nasdaq on September 15.

The bank failed to file its 10-K annual report for the 2019 calendar year, as well as 10-Q forms for the first two quarters of 2020, despite extensions granted by Nasdaq to September 14.

Sterling said it would appeal Nasdaq’s decision by requesting a hearing with the stock market’s hearings panel. The bank said it would use this opportunity to “present its plan to regain compliance with the applicable listing requirements”.

It also plans to request that Nasdaq’s planned delisting of Sterling’s stock be delayed until the hearings panel reaches a decision.

The regulatory filing delays stem from problems with the bank’s Advantage Loan Program, which was suspended in December amid issues with documentation.

Sterling subsequently admitted in March this year that “certain employees engaged in misconduct” connected to the origination of residential loans through the Advantage Loan Program, “including with respect to income verification and requirements, reliance on third parties, and related documentation”.

“The full extent of these issues and their potential consequences have yet to be established, and the internal review will take further time and effort on the part of [Sterling Bancorp’s] Special Committee and outside legal counsel to complete,”

the bank said in an 8-K filing earlier this year.

The bank informed Nasdaq in March, May and August that it was experiencing delays in completing its annual and quarterly reports as it continued to investigate the impact of the misconduct.

In the statement last week, Sterling said an “additional review and procedures” relating to the delayed reports were “nearing completion”, but there was no guarantee that its requests to Nasdaq would be granted. An internal review was still taking place and “may require additional work”, it said.

Sterling has until September 22 to officially file its appeal to Nasdaq. The hearings panel then has 15 days to consider the delay request. The panel’s hearings generally happen approximately 30-45 days after a request is filed.

Sterling’s shares are still able to trade in the meantime. They were trading at $2.92 each as of this morning (September 21), but were down 1.68%.

The banking group’s share price plummeted in March along with the wider market as the Covid-19 pandemic swept the US. However, it was left behind in the subsequent stock market rally, and is down 63.5% over the course of 2020 to September 18, according to Nasdaq.

Sterling Bancorp, Inc. (SBT) Q1 2021 Earnings Call Transcript
SBT earnings call for the period ending March 31, 2021.

May 3, 2021 at 2:30PM

Sterling Bancorp, Inc. (NASDAQ:SBT)
Q1 2021 Earnings Call
May 03, 2021, 11:00 a.m. ET

Contents:
Prepared Remarks
Questions and Answers
Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and thank you for joining us today to discuss Sterling Bancorp’s financial results for the first quarter, March 31 of 2021. Joining us today from Sterling’s management team are Tom O’Brien, chairman and CEO and president; and Steve Huber, chief financial officer and treasurer. Tom will discuss the first quarter’s results, and then we’ll open the call to discuss questions. Before we begin, I’d like to remind everyone that this conference contains forward-looking statements with respect to the future performance and financial condition of Sterling Bancorp that involve risks and uncertainties.

Various factors could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These two factors are discussed in the company’s SEC filings, which are available on the company’s website. The company disclaims any obligation to update any forward-looking statements made during this call. Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute for the most directly compared GAAP measures.

The press release available on the website contains the financial and quantitative information to be discussed today, as well as a reconciliation of the GAAP to non-GAAP measures. At this time, I’d like to turn the call over to Tom O’Brien. Tom, please go ahead.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Great. Thank you, and good morning, everyone. Sterling released its first quarter of 2021 financial results today. And just the highlights, we reported $0.05 per share of net income.

Generally, the margin continues to be pressured. It was 2.45% and predominantly due to the ultra-low interest rates we’re all experiencing and then the additional liquidity we keep on the balance sheet. Almost half of our reported expenses in the quarter were related to the multiple reviews and investigations that are — have been going on at the bank since long before I joined, but certainly during my tenure. Credit remained essentially flat in the quarter.

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The numbers didn’t change too much. We’re still dealing with the factors that I outlined in the press release. On the capital levels, I’d note the bank-only capital levels continue to be pretty healthy. But just keep in mind that the holding company, we do have $65 million of debt, which is now callable and losing its capital treatment over the next five years until its maturity.

So at some point, we need to begin to consider additional liquidity at the holding company since we are precluded at this time from dividend up from the bank. And obviously, there’re holding company costs that need to be considered. So that’s something that’ll get our attention — our focused attention in the next quarter or so. Going back to credit.

As I continue to note, the concern from my perspective remains centered in the commercial real estate and the construction portfolios. We continue to manage these portfolios very aggressively to try to get down to the proper risk rating and understanding what the exposures are, the quality of the guarantors, the quality of the property or the project. And we’ve made an awful lot of progress in that. To some extent, the past-due loans are inflated because we’ve had loans that come up for maturity, but we basically have — just on the commercial and construction side, we basically have to reunderwrite each and every one of them and reappraise them, and that just takes a long time.

So there are several in that category that have gone past maturity by 90 days, and we list those as nonaccrual and an abundance of caution and conservatism. But understanding that, as I said earlier, that’s where I think the risk is for the bank, too. On the positive side, we did analysis. I’m sure you saw the securities class action settlement has been submitted, too, and I think at this point, approved by the courts.

And it should begin to wind down to absolute closure in the next two or so months. Other matters, including the look back required under our formal agreement with the OCC, are nearing completion, and that’s been an expensive proposition for the bank and the company also. Notwithstanding that, there are still a lot of moving parts, but we are working diligently to get past as much and as expeditiously as possible. Keep in mind, though, that the OCC and DOJ investigations are basically out of our control.

We have and continue to cooperate fully with all of those. And as you probably noticed, the justice department has begun to take action against certain individuals, and we anticipate that effort will continue. But as I said, both that and the OCC item are out of our control, and we hear about it pretty much at the same time that you do. So with that, probably always best to take questions and see what’s on everybody’s mind.

So operator, if you’d open the line up for any questions.
Questions & Answers:

Operator

[Operator instructions] And the first question will come from Ben Gerling with Hovde Group. Please go ahead.

Ben Gerlinger — Hovde Group — Analyst

Good morning, guys.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Hey, Ben.

Ben Gerlinger — Hovde Group — Analyst

I was wondering if you could just kind of give some rough guidance. I completely understand the expense level for legal is pretty much out of your control. But based on the last call, I think you guys said that 2021 expenses will be near two-thirds or so of 2020 levels, which would kind of — it would definitely imply a ramp down in the back half of the year. I was wondering if you had any updated thoughts on that.

Tom O’Brien — Chairman, Chief Executive Officer, and President

No. I think, yeah, what we said last time was we expected in the second half of the year for expenses not to ratchet down dramatically, but start to step down as this look back completed — is completed and as the securities class action is completed and then hopefully, some of the other matters start to wind down. So it’s still our expectation that the second half will start to see the gradual diminution of these extraordinary expenses. And nothing’s really changed in that respect at this point.

Ben Gerlinger — Hovde Group — Analyst

Gotcha. OK. Well, that’s helpful. And then do you have any line of sight into — opportunities to repurchase more advantage loans? I get that they’re somewhat out of your control and the timing and windows of opportunity are pretty narrow.

I’m just curious of if you see any kind of inconcrete moments over the next six months, so you could repurchase more?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Yeah, yeah. We are — we finished one repurchase during the quarter. And you’re right, they do take some time and documentation. It’s kind of a complex operation.

We have one more we’re expecting in this quarter that is a somewhat larger than the one we completed in the first quarter. I think that was about $88 million or $89 million. This one is probably, by the time we repurchase it, it might be in the $150 million, $160 million category. And then we’ve got one more that is much smaller in the 30s or so.

But just given the securitization that it’s in and the call opportunities, the sponsor really can’t free those up until — I think it’s July next year. Steve can correct if I’m wrong on that date.

Steve Huber — Chief Financial Officer and Treasurer

Yeah, that’s correct. The remaining smaller piece in the $30 million range will be July 2022.

Ben Gerlinger — Hovde Group — Analyst

Gotcha. OK. And then just kind of thinking bigger picture, the selling of the Bellevue, Washington branch, I was kind of curious — I get that it’s not really your “footprint,” and that it was a little bit more of a one-off. I’m just curious how that process went or anything you’re open to talking about in sort of like a bid-ask? Or was it completely sold to one person — or the one entity Washington first? Were they the target specifically? Or did they approach you? Or just any kind of color you might be able to provide on that as well?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Well, there’s two parts of it. First is the motivation. And really, it is exactly as you said, the Bellevue, Washington branch had been fairly successful, but it was a single branch in a very, very remote market for our core business. We had some good business there, some very good employees.

And so that’s why we look to exit the way we did. And the terms of the process, we spoke to a fair number of banks. There was some reasonable interest. And First Federal was frankly the most interested and the — had the best chances of success on an application to do this transaction with their regulators.

And attractive for all of our stakeholders, our employees, our customers, and for Sterling itself.

Ben Gerlinger — Hovde Group — Analyst

Yes. All right. Well, that’s all I had. I’ll get back in queue.

Thanks.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Sure.

Operator

The next question will come from Nick Cucharale with Piper Sandler. Please go ahead.

Nick Cucharale — Piper Sandler — Analyst

Hi, Tom and Steve. How are you?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Good morning, Nick.

Steve Huber — Chief Financial Officer and Treasurer

Fine. Good morning.

Nick Cucharale — Piper Sandler — Analyst

Good morning. On the liability side, can you remind us how much of the CD portfolio is expected to mature in the second quarter and your current offering rates there?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Steve, why don’t you handle that?

Steve Huber — Chief Financial Officer and Treasurer

Yes, I can speak to that. Yes, we have CDs maturing in the second quarter of $474 million approximately, which is about a third of the CD portfolio. We’re expecting those to reprice down pretty substantially, assuming that they choose to remain with the bank. A significant piece of that $474 million are our 12-month CDs, which are currently at rates of around $1.35% to $1.45%.

We’re expecting those to reprice down into the 25-basis-point category if they, again, choose to stay with the bank.

Nick Cucharale — Piper Sandler — Analyst

That’s great color. And then on the origination front, pretty stable from quarter to quarter. Do you anticipate loan demand ramping up in the coming periods? Or is it pretty likely to be consistent in the near term?

Tom O’Brien — Chairman, Chief Executive Officer, and President

I think in the near term, it’s going to look like the past — the recent past. We spend an awful lot of time on going through the portfolios that we have and with the regulatory overhang, it’s not exactly easy to ramp up. So we’ll continue to meet the credit demand in the communities that we’re in, but I wouldn’t look for anything to explosive.

Nick Cucharale — Piper Sandler — Analyst

Thank you for taking my questions.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Sure.

Operator

[Operator instructions] Our next question will come from Jeremy Zhu with PW. Please go ahead.

Jeremy Zhu — TCW Investment Management Co. — Analyst

Hi, Tom. It’s as TCW, obviously, so —

Tom O’Brien — Chairman, Chief Executive Officer, and President

Yes, TCW. All right.

Jeremy Zhu — TCW Investment Management Co. — Analyst

A quick question on the cash balance, you still have a pretty elevated cash balance. I know that you have some CDs coming due and a purchase of advantage loan portfolio. Are there any other ways you’re thinking about using the cash?

Tom O’Brien — Chairman, Chief Executive Officer, and President

No. We had to build cash, Jeremy, because we weren’t really — there was no way to determine the level of advantage loans that we ultimately would repurchase. So we had to be prepared for all of that. And then whatever deposit flows happen to be, given some of the news that was coming out last year with the delayed quarterly and 10-K filings and things like that.

So we’ve built up liquidity and an abundance of caution. And those who were taking us up on our offer to repurchase the advantage loans, have raised their hands, and we’re in that process, and the others have declined. So we pretty much know what our needs are in that context at this point. And that’s why you’ll see — you saw in the first quarter that we let deposits run off a little bit through both pricing and then as we discussed a minute ago, the sale of the state of Washington branch will take up some of that liquidity also.

So we hope to get down to a more normal level of liquidity, which should help margin and stabilize things better now that we pretty much know who’s going to give us back the advantage loan or who not. And then you’re always worried in these situations with banks, like I’ve been in with the risk of reputational damage, and we haven’t seen that, and that’s really a credit to the people that we have working in our system and in our branches. And I think in the way we’ve tried to communicate to clients and investors alike.

Jeremy Zhu — TCW Investment Management Co. — Analyst

Yes. So in other words, you think you have a pretty good visibility of the cash needs at this point. You’re just sort of slowly working that down through letting them run off and other things?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Yes. Much better than we– much better than we did when I joined the bank. I mean —

Jeremy Zhu — TCW Investment Management Co. — Analyst

And we — so when you buy back the advantaged loans, are you buying them back at par? Are these performing loans or nonperforming loans?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Well, we buy back the portfolios with the — with those who’re interested in taking us up on it. And the mortgage loan purchase agreement that we entered into at the time sets forth the formula for the repurchase. But it’s basically such that we pay on the reduced principal balance, the premium that we were paid on the original sale. So for instance, if we sold $100 million of loans at 1.02% and that $100 million is now $40 million, we would buy the $40 million back at 1.02%.

And the and the — last year, if you recall, we set up what we called the repurchase reserve to account for that cost. So in this case, we hit 2% of $40 million comes out of that reserve. And then we have a process for fair valuing the loans that we repurchased at the time of purchase. And that has been as much as a two-point discount to closer to par, and it really depends on the market interest rates at the time of the repurchase, and that we flow through the income statement.

Jeremy Zhu — TCW Investment Management Co. — Analyst

And are these —

Tom O’Brien — Chairman, Chief Executive Officer, and President

And does it — I’m sorry, I was going to say it does include — so in this case, if we buy back $40 million of a portfolio from a seller to us, then that would be the entire portfolio. So there might be some nonaccruals in there. There might be some slow pays and there might be, obviously just regular performing loans. For the most part, the nonaccrual percentages have been no worse than what we’ve seen at the bank.

For our own portfolio, and that’s been relatively modest. I’d say 2% to 3%.

Jeremy Zhu — TCW Investment Management Co. — Analyst

Hopefully, that just answers my second part of the question. And then you were also looking at unload it to small portion of the resi portfolio. Has there been a lot of interest on that? And do you think you’ll unload that a par at — or I mean, at your mark rather than any sort of discount or —

Tom O’Brien — Chairman, Chief Executive Officer, and President

We – yes, we marked them down. We marked about $22 million or $23 million of nonperforming advantaged loans to held for sale at year-end. And at the time, what I was saying is that we intend to sell them — we just had so many things going on in the first quarter that I just didn’t want to overload the system. So we had them marked, and I think we marked them down to $0.85 on the dollar.

And we’re now going to begin the process of actively marketing it as soon as we’re — or at the market, as soon as we get the 10-Q filed. And hopefully, there will be done this quarter. And my expectation is that the sale price will be no worse than where the mark is.

Jeremy Zhu — TCW Investment Management Co. — Analyst

Thank you.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Sure.

Operator

[Operator instructions] This concludes our question-and-answer session. Excuse me, it seems that we just had a question to come in.

Tom O’Brien — Chairman, Chief Executive Officer, and President

OK.

Operator

And that next question will come from Anthony Polini with American Capital Partners. Please go ahead, sir.

Anthony Polini — American Capital Partners — Analyst

Hi, Tom. Hi, Steve.

Tom O’Brien — Chairman, Chief Executive Officer, and President

How are you doing, Anthony?

Steve Huber — Chief Financial Officer and Treasurer

Hi, Anthony.

Anthony Polini — American Capital Partners — Analyst

Great Mets game last night. So, guys, how hard did you try to find charge-offs this quarter?

Tom O’Brien — Chairman, Chief Executive Officer, and President

We always try to make sure we’re careful with that. But this one is a little bit more of a benign quarter than one might expect. But that’s why I said in the press release, Anthony. We’re going to have some.

It’s undoubtable. What other institutions may or may not face, who knows. But I think just given, especially the focus we had on construction, I just — I think we’re going to — we’ll see some charge-offs. So from the reserve perspective, I think we’re OK.

Because, as I mentioned, there’s a — among the nonperforming loans that the level is elevated, but you kind of have to break it down between the content of the different loan portfolios. And in that, there’s, I don’t know, I’d say, $60 million to $70 million of commercial and construction that I would say I worry about. And the balance, not the balance of the nonaccrual, not so worried about.

Anthony Polini — American Capital Partners — Analyst

Now, that $72 odd million in allowance that you have, I assume a high percentage of that is allocated toward that worrisome portfolio. And if we had an increase in charge-offs, we wouldn’t necessarily have a like increase in provision in the quarter?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Yes. No, as I mentioned, the credit quality has been pretty stable, which is — and we had some recoveries in the allowance during the quarter. So that’s why that really didn’t move so much. I think that’s a fair assessment, Anthony, that if we have deterioration or actually realized losses on some of the commercial and construction, it’s pretty well accounted for in the allowance.

But the — some of the product like we have these loans in San Francisco that are what I generically referred to as SROs, but single room occupancy, that’s, in my view, kind of akin to a hotel type loan. And those are slower to recover in terms of occupancy and valuation and cash flows. So it remains to be seen. But yes, it’s an elevated concern for us as we look at that portfolio.

Anthony Polini — American Capital Partners — Analyst

Do you have a good handle now? Oh, I’m sorry.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Yes. No, I was going to say the construction stuff, I mean, my general feel with construction is, I feel OK if the project has never started or if it’s completed. But in the middle, that’s where I worry. So we’ve got some that are completed, and they’re in the marketing period, and I think we feel pretty good about the chances of success for marketing those.

Those in the middle, you just — you have to monitor them closely, but you’re not really in control of the process until they’re — they get nearer completion, and they can start marketing it as originally intended. But there’s some elevated concern there with the valuations at the original underwriting and the structure.

Anthony Polini — American Capital Partners — Analyst

OK. How big was the Bellevue branch?

Tom O’Brien — Chairman, Chief Executive Officer, and President

Seventy million, Steve, $70 million?

Steve Huber — Chief Financial Officer and Treasurer

Yes. I’d say $78 million in deposits.

Anthony Polini — American Capital Partners — Analyst

Do you have a pretty good handle now? A good idea of where the — what size this company will be by the end of the year? Or is that still a pretty moving target?

Tom O’Brien — Chairman, Chief Executive Officer, and President

By the end of the year, that’s probably a little harder to guess. Ideally, if you look at the structure of the retail distribution, in California, the number of branches, the product mix, and all that it’s — and the capital levels, you’d say, ideally, this is a low $3 billion balance sheet in my opinion.

Anthony Polini — American Capital Partners — Analyst

OK. Well, I think you’re doing a great job, and I know it’s tough, but I congratulate you guys. Thank you.

Tom O’Brien — Chairman, Chief Executive Officer, and President

Thanks, Anthony. I appreciate you.

Steve Huber — Chief Financial Officer and Treasurer

Thank you.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Tom O’Brien for any closing remarks. Please go ahead, sir.

Tom O’Brien — Chairman, Chief Executive Officer, and President

OK. Thank you. Just always happy to have these calls and a chance to catch up with our investors, and we certainly appreciate your interest in our efforts. And in the process we’re going through here, it’s — at times, it’s challenging, but we wouldn’t have this opportunity were not for the public investors we have in Sterling Bancorp, and we all appreciate for that and for your interest, and I look forward to the next quarter.

Thank you.

Operator

[Operator signoff]

Duration: 27 minutes
Call participants:

Tom O’Brien — Chairman, Chief Executive Officer, and President

Ben Gerlinger — Hovde Group — Analyst

Tom OBrien — Chairman, Chief Executive Officer, and President

Steve Huber — Chief Financial Officer and Treasurer

Nick Cucharale — Piper Sandler — Analyst

Jeremy Zhu — TCW Investment Management Co. — Analyst

Anthony Polini — American Capital Partners — Analyst

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Why is the Department of Justice Releasing Redacted Lender Details in Loan Fraud Scheme?
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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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