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AloStar Ascending – An Exclusive Interview With Andy McGhee

Date: May 06, 2015 @ 07:00 AM

Every journey “home” or odyssey has a starting point. In the case of Andy McGhee, his most recent professional odyssey began in late December 2009 with a road trip from Atlanta to Birmingham. His destination was to visit an ailing Nexity Bank. With McGhee was Michael Gillfillan, McGhee’s partner, and their quest was to first find and then launch a suitable banking platform flexible enough to accommodate a yet-to-be formed asset-based lending business with a national presence. In April of 2011, the two industry veterans, along with an impressive list of seasoned ABL professionals and key bankers retained from Nexity, launched the operations of AloStar Bank of Commerce. Gillfillan served as its Chairman and CEO of AloStar Bank of Commerce and McGhee assumed the leadership of AloStar Business Credit, the bank’s asset-based lending arm.

In March of this year, the banking world learned of Gillfillan’s intention to retire from his post at AloStar with McGhee named as his successor. We took the opportunity to speak with McGhee to reflect on AloStar’s first four years in business and to find out what may lie on the company’s horizon.

A Staffing Strategy Pays Off

We asked McGhee to reflect on AloStar’s key accomplishment since its founding. “That’s an easy question to answer,” he says. “Our biggest accomplishment was our ability to assemble a team of high quality and experienced professionals. And that was our intention from the start – to bring professionals on board who were known in the industry. We were out to create a powerful brand as a startup.” This strategy, McGhee emphasizes, “is the single biggest thing we’ve done here – everything that has happened in this company is the result of that very intentional strategy.”

Photo of Andrew S. McGhee - Chief Executive Officer - AloStar Bank of Commerce

It is important to remember, McGhee advises, that AloStar as a banking institution, didn’t emerge as a completely blank slate. He explains, “The interesting thing is that the legacy institution, Nexity Bank, had a culture and reputation of providing great client service. That culture meshed extremely well with the character of the professionals we brought into the organization to run AloStar Business Credit.”

McGhee makes it a point to mention that while the AloStar Business Credit team underwent an interviewing process, so did the Nexity team. “We had the opportunity to choose our entire team and meld the culture right out of the gate. Having the legacy team in place has been a big part of our success … having a deposit franchise in place was incredibly important in our ability to grow our ABL business quickly. Undertakings such as these are not always successful. Ours happened nicely in that we were able to retrain the right people and at the same time, hire a top-notch ABL team.”

As it relates to AloStar Business Credit, McGhee notes that to date, the ABL platform has committed more than $1.2 billion since May of 2012. “We rolled out AloStar Business Credit in the fourth quarter of 2011 and ‘hit the streets’ in January of 2012. We started to have great success in booking transactions in May of that year. When you look at that timeframe, we’ve booked $1.2 billion of $5 million to $20 million credit facilities in three years. We’ve been on a really nice pace in terms of the business we have booked.”

McGhee goes on to note that AloStar has used its national franchise to its best advantage – to continue growth at an appropriately measured pace while protecting the bank’s balance sheet with the right kind growth. “That’s important because there are things happening in the market right now that we probably won’t get involved with … our approach allows us to continue our growth and still remain selective as to the kind of business we take on.”

With fewer than three weeks at the post of CEO, McGhee is now charged thinking more strategically as to how AloStar will position itself for the future. He states, “We have to think about what we will take on next and how we want to fund our business. We’ve built a great reputation in the $5 million to $20 million slice of the ABL market. Now, it’s time to expand our suite of products to include a real estate component and an equipment focused product. That won’t necessarily include equipment leasing, but will include equipment loans with slightly longer tenors.”

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