As acquisition hungry Sterling Bancshares looks to expand its market to other southwestern banks beyond its Houston headquarters, the regional bank gets closer to using securitization as a financing tool.
Sterling is not there yet. However, after acquiring smaller banks in the Houston area every year since 1993, the bank is now looking to expand into other cities - Dallas is the likely target, a senior Sterling executive said - which means an asset-backed deal could be issued sooner rather than later.
"Keep us on your radar screen," the executive said. "We'll have to be closer to the $5 billion mark before we have enough excess production and/or portfolio management to enter the securitization market." Sterling currently holds $1.4 billion in assets.
According to the official, the bank has "plenty of production," but prefers a "customer-driven strategy" versus a "transaction-driven approach."
The bank is focused on small-business lending, targeting companies generally shunned by bigger, out-of-town competitors. Sterling has a legal lending limit of $15 million that can be certified as additional surplus to raise that limit to the $25 million range.
"I'm hopeful that at some point in the future we'll develop a sort of middle market banking group that does credits in the $10 million to $20 million range," said the source. A three-year growth plan is currently under way.
Sterling also has a $40 million Small Business Administration warehouse facility with Coastal Partners, described by the source as one of the primary SBA securitization packagers.