Magazine article American Banker

Loan Growth Prospects Boost Sterling of Texas

Magazine article American Banker

Loan Growth Prospects Boost Sterling of Texas

Article excerpt

Favorable conditions in its home state and strong loan growth should give Houston's Sterling Bancshares Inc. better insulation than other midsize banks from another interest rate hike, an analyst says.

John Pancari of J.P. Morgan Securities Inc. said in a research note issued Thursday that of the 18 banks in his firm's "coverage universe, we believe Sterling is one of the banks best positioned to weather the difficult rate environment and potential slowdown in the broader U.S. economy in '07, while capitalizing on the health of the Texas markets."

The $3.7 billion-asset Sterling has about 40 branches in the Houston, Dallas, and San Antonio areas.

Mr. Pancari said in the note that he expects Sterling's loan growth -- including its solid small-business lending in Houston -- to help boost its net income.

J. Downey Bridgwater, Sterling's chairman, chief executive, and president, said in an interview, "The economy here is very good and continues to be robust."

The company wants to build branches in each of its three markets and would consider further acquisitions, but prices have been too high, Mr. Bridgwater said.

In its last acquisition, in September 2005, Sterling spent $34.4 million for the $106 million-asset Prestonwood Bancshares Inc. of Dallas

Mr. Pancari's note called Texas "a relative safe haven for bank investors." His upgrade to "overweight" from "neutral" helped Sterling's shares gain 5.2% to close at $17. …

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