After a New York fish market vendor signed up with Signature Bank for a variety banking services, the new client told Signature president and chief executive officer Joseph DePaolo that, after 50 years he had run out of patience with his big bank.

"They were not getting the attention they used to get and had become accustomed to," DePaolo told analysts during a conference call last week to discuss quarterly performance.

For banks such as Signature, New York Community Bancorp and Sterling Bancorp, it is small and midsize businesses like fish-market vendors at Hunts Point in the Bronx that are fueling loan growth. Commercial lenders in around the city also said they are benefitting from rock-bottom vacancy rates for apartments.

"The economy in the Northeast ... didn't get hit quite as hard as other sections of the country," said Mark Fitzgibbon, an analyst at Sandler O'Neill & Partners LP. "For a small bank, operating in a market like Manhattan, surrounded by massive institutions, a market chock full of small businesses, it tends to be a better market than a rural area."

Executives at Signature and Sterling said much of their loan growth in the second quarter came from new customers who dumped relationships with bigger banks.

"Our clients didn't feel they were being properly serviced," said John Millman, the president of $2.3 billion-asset Sterling, which has a dozen metro New York branches. "The other institutions have decided to focus on bigger fish."

JPMorgan Chase & Co. and its "too big to fail" brethren "do a very wonderful job battling each other for retail, putting branches just about everywhere," DePaolo said during his company's conference call.

"Everyone is killing themselves over marketing, advertising and putting new branches out there," DePaolo added. "So, that's the mass-market retail, which we don't compete in."

During the second quarter, loans at Signature rose 8.3% from a quarter earlier, to $6.1 billion. At Sterling, its loan portfolio increased by 5.9%, to $1.36 billion from the first quarter.

Loan growth seemed strong across the Hudson River in New Jersey, as Investors Bancorp Inc. in Short Hills, N.J., reported that its loan book grew 4% from the first quarter, to $8.5 billion. The $10.2 billion-asset company has more than 80 offices in New Jersey and New York.

The loan mix at Investors is shifting to commercial loans from residential lending, Kevin Cummings, the company's president and chief executive, said during a quarterly conference call. Commercial loans as a percentage of the total portfolio grew to 38% at March 31, compared to 29% a year earlier.

New York Community also had loan growth. The $40.6 billion-asset company said it s loan book increased by 1.1% from a quarter earlier, to $28.84 billion.

Signature and Sterling executives said they are getting loan growth from different segments of the economy. At Sterling, the growth is centered on commercial and industrial loans, with a big part of the push coming from professional services such as law firms, accounting firms and the staffing industry. Executives at Sterling see opportunity for more loan growth in coming quarters.

"The greatest density of mid-sized companies in the nation is in our marketplace," Millman said. "We only have one-quarter of 1% of that market."

The wellspring for the $12.4 billion-asset Signature is commercial real estate, particularly multifamily housing, which has remained strong during the downturn, Fitzgibbon said. "Apartment vacancies are virtually nil in the New York market and that's helped hold up values," he said.

DePaolo, whose Signature Bank has 25 branches in metro New York, said his bank has been able to fight off pricing pressure from much-larger rivals in the apartment sector. New multifamily loans have been brought in at interest rates of 37.5 basis points to 50 basis points higher than competitors. Pricing pressure will continue to be an obstacle for smaller banks, though.

"The most intense competition is with money center banks, and they all have mid-level divisions and some have rediscovered small and midsize businesses," Millman said. "You will see the large international banks go after our clients and they'll do it on pricing, and do it at or below the rates that we provide."

Commercial lending is also strong for Signature, DePaolo said, partly because many borrowers feel they can't get their relationship bankers on the phone at the biggest banks.

"The [fish market vendors was] with Chase for 50 years and they decided that they couldn't take it anymore," he said. "We are hearing more and more of those stories."

Michael Fusco, a Chase spokesman, declined to specifically comment on Signature's unnamed client or on DePaolo's comments. "We've made a concerted effort to grow our state's economy by drastically increasing our small-business lending," he said.

Fusco said that Chase has committed up to $12 billion in lending to small businesses this year, a 20% increase over last year, added that the company is the top U.S. Small Business Administration lender in the New York market.

SBA loans, which are typically pricey due government backing, are not the source of commercial-lending growth for Signature or Sterling, accrdoing to the companies' executives. "Usually our clients stand on their own and don't need" the government guarantee of an SBA loan, DePaolo said.

"The very large banks, with large market share, would be natural targets of the marketing efforts of some of the smaller community banks looking to grow market share," John Cole, who oversees business banking in the Northeast for Wells Fargo & Co., said in an interview Tuesday.

Still, he said the San Francisco company "has not seen attrition from within our book" in the New York market. "We've put a lot of resources here and, as part of our brand launch, are putting even more focus in this area," he said.

Calls to Bank of America Corp. in Charlotte, N.C., and Citigroup Inc. in New York, which also have sizeable operations in the city, were not immediately returned.