On the funding side of the business, McGhee says AloStar will continue to source its deposits through the Internet. “Gathering deposits through the Internet versus a traditional branch banking model has been a very important part of our growth. We have also remained active in our correspondent banking business that has provided us with another source as it relates to our liquidity. We have some great partners in that business and we’ll look at participating in loans with them going forward.”
ABL to Continue as AloStar’s Lead Player
Setting his expanded role and any strategies for the future aside, McGhee confirms that the marketplace should experience very little in the way of change as it relates to AloStar and asset-based lending. “This business has always been a very important asset class for AloStar … it is the backbone of this institution’s growth.”
As to the clients AloStar serves, McGhee continues: “We are also going to stay committed to this segment of the market because we love doing business with middle-market companies where we can be great partners. We thrive on situations that provide us with the opportunity to work with these companies and discuss their goals and objectives and then, as an institution, figure out how we can help them attain those goals. Our client testimonials speak for themselves as to how we conduct our business and how we treat our borrowers. That’s not only on the front end, but also in terms of what might happen afterwards when things may not go as well as planned. We are a patient partner and we work very hard to meet our clients’ needs while, at the same time, protecting our balance sheet.”
As for the future, McGhee notes that the next few years may prove to be interesting for the asset-based lending industry. He says, “As an industry, we’ve seen pricing compression, structures loosened and more and more, people are doing stretch pieces. If we have a bit of a downturn in the economy, we may see a shakeup in the business. That’s why we tell our team to do the right deals – the AloStar types of deals – and then if there’s a shakeup in the market, we’ll have dry powder and we’ll take advantage of that.”
For now, McGhee emphasizes that there have been no shakeups with regard to the management of AloStar Business Credit. “We have such an experienced team and for now no one will assume my role. We’ve made one adjustment – we’ve consolidated our underwriter and portfolio management functions under Susan Hall. Aside from that, everyone’s scope is going to be a bit larger, and the good news is that the people on board here are perfectly capable of handling broader responsibilities.”
Two Guys, One Idea
At this juncture, we thought it only fitting to give McGhee an opportunity to speak to his professional relationship and his deep personal regard for his partner in the AloStar odyssey. He takes the opportunity without missing a beat. “Mike has been and continues to be a fantastic partner for us. He and I started out as two guys trying to put an idea together … trying to raise capital and trying to find a platform to make things happen. It’s an experience I’ll never forget.
“Many told us it could never happen and that our idea would never be realized. But it did happen ... and it happened out of sheer determination on Mike’s part as well as mine. Of the many things he contributed, Mike helped build values from both a cultural standpoint and a leadership standpoint that this company will carry forward into the future. We wouldn’t be where we are today without Mike and his contribution … he was a great partner and we miss him here every day.”