3 min read April 2024 — Invest: spoke with Victor Tekell, managing director and head of Houston middle market banking at Texas Capital, to discuss how the institution transformed its platform to provide customized, full life-cycle service to clients. “The Houston economy is perfect for middle market banking,” he said.
What have been your key takeaways from the past couple of years?
The firm brought on our new president and CEO, Rob C. Holmes, in January 2021, and he implemented a firm-wide transformation by bringing in talented people with a wealth of experience and instituting a new strategy. From that point, we have doubled our frontline staff, invested heavily in new technology and upgraded our product offerings, bringing in top-tier products for treasury and private wealth services. There was also an expansion of our industry verticals, including healthcare, technology media telecom, financial institutions group, and not for profit to name a few. And since 2021, we have successfully stood up a full-service investment bank from scratch that includes sales and trading, M&A, capital solutions and debt capital markets. Overall, we evolved from a community bank into a full-service financial firm that can serve a client through their entire financial life cycle. This created a platform wherein we’re the only Texas-based bank with these capabilities. Now, it’s all about execution and gaining market share by delivering good advice and service to our clients, which is the biggest differentiator for any firm.
What is it that distinguishes Texas Capital from other banks in the region?
We aren’t trying to be the biggest bank, but the most relevant to our clients by being the flagship financial institution of Texas, banking the best companies and people that Texas has to offer. At the end of the day, we will be defined by our clients. That has been a cornerstone of our transformation. Our clients also appreciate our local decision making, which is another differentiator for Texas Capital and a clear value proposition.
What is your assessment of the banking market in Houston today?
I truly believe that if you can’t be successful in banking in Houston, you probably need to find another profession. The Houston economy is perfect for middle-market banking. There are so many successful companies and we have great access to distribution, with the Port of Houston transporting more product than any other port in the country. There are a lot of solid manufacturing businesses that are ideal for banking partners. The energy sector is obviously huge in Houston, but it’s really about the businesses supporting them and the ripple effect it creates for the economy here.
Where have you seen the most growth in the market?
Texas is the eighth-largest economy in the world and produces 40% of U.S. oil and 25% of the country’s natural gas. We have low tax rates and one of the largest transportation networks in the country. There is a reason why there are more Fortune 500 companies in Texas than anywhere else. That breeds success and people want to be here to do business. There has been broad growth across all sectors. Our portfolio is diverse without a lot of industry concentration. We bank all types of industries, from distribution, manufacturing, retail and consumer products and professional services. That speaks to the diverse economy of Houston, where there is so much more than just the energy sector.
What is your outlook for banking in Texas, given recent economic headwinds?
Not every bank is the same. One of the things our CEO did in 2022 was to sell nonstrategic assets, which created a lot of liquidity and capital for the firm. When several banks failed last year, we saw a lot of them become inwardly focused. Instead, we were proactive. We were sure to reach out to our clients within the first 48 hours of that happening. We wanted to explain what was going on and talk about the financial resilience of Texas Capital. There were a lot of negative impacts to banks from a capital and liquidity standpoint and some of those banks aren’t lending in the market now, but we are leaning into our strengths. Strong banks with a lot of liquidity can take advantage of tough times, and that’s where we are today, bringing in new clients and providing all types of financial products and services to meet their needs.
What is Texas Capital’s vision for recruiting and retaining talent?
Part of our transformation was the creation of an emerging leaders training program which we call STARs. We started three years ago by hiring 60 college graduates and have been doing that ever since. It has created a solid bench, which is important especially when more experienced employees retire. Recruitment is a continuous process and it’s important to give people opportunities to advance if you want to keep them long term. It’s about being strategic and consistent, otherwise you risk losing that talent.
How is Texas Capital integrating technological innovation to better serve clients?
We’ve invested a lot in improving technology to benefit and protect our clients. Having advanced technology that can integrate a client’s business with banking services in a secure and protected way is fundamental to everything we do. In terms of efficiency, we created a proprietary digital onboarding platform called Texas Capital Initio that allows a client to open an account online within a couple of days, whereas it takes weeks for most banks. Security and efficiency are major demands from clients right now and it is critical to stay ahead because it continues to evolve.
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