Magazine article American Banker

Sterling of Houston Looking to New Markets

Magazine article American Banker

Sterling of Houston Looking to New Markets

Article excerpt

Sterling Bancshares has built itself into one of Houston's most prominent small-business lenders by aggressively acquiring other community banks and targeting customers shunned by the market's big banks.

Now $1.4 billion-asset Sterling is ready to expand and is looking for another high-growth city, such as Dallas, Phoenix, Denver, or Atlanta.

Sterling, which has made six acquisitions in greater Houston since 1993, focuses on loans of under $1 million. That is a sector that community banks can serve better than large banks-no matter where they are, Sterling chairman George Martinez said.

"Our model can be replicated into other markets," Mr. Martinez said.

Analysts, however, are urging Sterling to approach its expansion conservatively. Part of its success in Houston, they say, has been its ability to use its local-bank status to woo customers from its out-of-town competitors, namely Charlotte, N.C.-based Bank of America Corp., Bank One Corp. of Chicago, Chase Manhattan Corp. of New York, and San Francisco's Wells Fargo & Co.

But Mr. Martinez said Sterling would not bill itself as an outsider in new markets. Any bank that Sterling buys would retain its name and management team.

"We want to be as close as we can to the local bank," Mr. Martinez said.

Sterling has drawn up a list of possible targets. Mr. Martinez said the company will take its time to find a company that matches Sterling's dedication to small-business owners.

"There's a tendency to move too quickly," he said of other active acquirers. "The main thing we look for is compatibility-personal service and commitment to the customer."

That strategy is working in Houston, analysts say.

All but one of its acquisitions have had $50 million to $150 million of assets and are located near clusters of small businesses. …

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