Dory Wiley, president and CEO of Commerce Street Holdings LLC, admits that October 2007 wasn’t the best time to start a broker-dealer investment bank focused on financial institutions. But what a difference a few years makes.
In 2007, the housing market crumbled, and by Q3 2008, a global financial meltdown gripped Wall Street. Wiley, though, was already in the investment banking business at the Dallas outpost of SAMCO Capital Markets, an Austin-based investment bank. Commerce Street Holdings LLC, the holding company for Commerce Street Capital (a broker/dealer) and Commerce Street Investment Management (an investment adviser), was formed as a friendly lift-out.
“The crash hit us pretty good,” Wiley says. “It strained our three main lines of business at the time, which were investing in banks, raising capital for banks, and mergers and acquisitions for banks. We doubled down on investing and raising funds, and those post-crash funds have done really, really well. They provided the launch pad to expand our investment management business.”
Based on transactions completed in 2014, Commerce Street Capital topped SNL Financial’s list of financial advisers in Texas and the Southwest for the fourth straight year. The investment bank’s sweet spot is middle-market deals worth $200 million or less—an area where it faces little competition.
Soon after its launch, Commerce Street Capital expanded into alternative investment products that cater to small institutions and family offices. It custom-tailored investment opportunities to meet clients’ risk, return, and liquidity objectives.
Most recently, the firm teamed up with Vanguard to launch its first 401(k) plan for Commerce’s banking clients. “We thought it was time to provide a low-cost, high-quality alternative to what is being done in the 401(k) market,” Wiley says. “It won’t make us rich, but it will be great for our customers.”
On alternative investments, Commerce Street Capital touts its private equity “fund to funds” and hedge fund “fund to funds” as “revolutionary,” with a laser focus on investment choices and low or no fees. Launched in 2014, the products are aimed at the likes of private foundations and high net-worth individuals. Other hedge and private equity funds to funds include high fees and over-diversification, Wiley contends; as a result, investors can end up with lower returns. Commerce Street Capital aims to negate those setbacks by accepting investments as small as $250,000, while going directly to a fund might require minimum investments in the multimillions.
Commerce Street Holdings, which employs 53 people, has also recently expanded its lines of business into general corporate finance. It expects to grow that area through its network of 1,600 banking customers. It will achieve this by providing sub loans, mezzanine loans, and mergers and acquisitions services to banking clients and, in turn, their customers.
Wiley has high hopes for the outcome. “We are bullish on our opportunities,” he says. “We feel we have a lot of room to grow.”