Business, says Texas Capital Bank President and CEO George F.
Jones Jr., is about relationships.
People do business with people they like, people they trust. Sure,
cost is an issue, but ultimately, especially in complicated financial
decisions, business leaders need a trusted adviser to help them.
“They need a trusted adviser to the business,” Jones says. “We
provide a trusted adviser relationship. That builds customer relationships for a long time. We’ve chosen to stick to that philosophy
and create those relationships.”
The bank caters exclusively to those privately held, small-to-middle market businesses that need somewhere around $2 million to
$20 million in capital and to private clients, who are upper income
people needing individual attention.
Jones and his team have built Texas Capital from the ground up
through their model that, more than anything, the relationships the
bank builds with its customers are what fuel growth. To that end,
he’s hired the very best bankers he can find, calling them relationship managers, and has recruited away from much larger banks
people who excel at creating that hand-in-hand relationship with
businesses and wealthy individuals in the bank’s private client division.
It’s not about a branch and drive-through on every corner. It’s
about building one-on-one relationships. It’s a model that generated revenue of $259 million in 2006.
Jones maintains that if you focus on one or two things and do
them very well, your business will prosper, and his bank is living
proof of that.
Hiring the right people
Building relationships often starts with having something in common with the person you are trying to relate to. A good starting point
is a consistent local connection.
Jones started Texas Capital in 1998 with five partners. Jones, a
native of Dallas himself, knew full well that much of his bank’s success was riding on the ability of its bankers to attract businesses and
private clients to the bank.
Jones says it’s particularly important to keep the key contacts with
customers consistent. With larger organizations, he noticed a lot of
turnover, and that frustrates customers who are looking to build a
long-term relationship. No one wants to refresh a new banker on his
or her company history every six months.
So Jones seeks to recruit bankers who are already excelling. He
doesn’t wait for someone to apply. And he doesn’t look far. In most
cases, people like to do business with, and bond best with, those who
are from their same geographic region. He thinks this is particularly
true in Texas.
“Texans like to do business with Texans,” Jones says. “These customers down here don’t relate as well to people from other markets.
We’re in five markets in Texas. I would no more send a Dallas banker
to our San Antonio location than a man to the moon. Every one of
our locations, we recruit within those cities because all of those
bankers have relationships within that city. It just doesn’t work to
recruit from outside.”
Jones puts everyone in charge of recruiting, particularly those in
management. He and other senior managers even ask other businesspeople who have built a relationship with their bank which
bankers are doing a good job for them, and sometimes, they’ll look
into that person, contact him or her and hire that person if they like what they see.
Relationship managers who already work at Texas Capital are
asked to provide names of competitors or friends who do a good
job, too.
“Good relationship managers hang out with other good relationship
managers,” Jones says. “We incent our relationship managers for providing excellent relationship managers, if they are hired. It can be in
the thousands of dollars. A good relationship manager over two or
three years can make you so much more money than that. If you had
to pay a recruiter, you’d have to pay something like a third of their
salary. It’s the cheapest recruiting there is. Plus, you’ve got (the
endorsement of) someone who works for you, and you’ve got a better shot at that person being successful.”
Texas Capital hires someone whenever the bank finds someone
who is a good fit, and when Texas Capital has an opening, it waits
patiently for the right person. It’s better to have employees working harder to make up for an opening than it is to hire the wrong
person.
“We know the marketplace,” Jones says. “We know our competitors, and we are talking to people all the time. … We don’t wait until
we need one. People don’t just become available when you need
someone. For good people, you have to strike while the iron is hot.
If we find five good ones, we’ll hire five. If we find 10, we hire 10. If
we find two, we hire two.”
On some occasions, Jones and other senior managers talk to a
potential relationship manager for two or three years before they
convince the person to join Texas Capital. He says that’s just good
recruiting.
“You stay in touch, you continue to talk, you never sever that communication with those people,” Jones says.
Pay plays a part in the recruiting effort, but for most relationship
managers, that’s not the sole reason they’re considering changing
jobs.
“Typically, these are people who might be frustrated where they
are,” Jones says. “They might be in a bureaucratic situation. Most of
the people you want are more interested in how they can serve their
customer. If they can’t feel they can serve their customer in a timely
and effective way, they’ll find somewhere that they can.”
One key part of the compensation package is equity. If the relationship managers perform well, they’re offered equity in Texas
Capital Bank, which gives them the chance to be a part owner of
the company. Jones says that’s important to help build the entrepreneurial spirit of the bank, another key to growth.
Building an entrepreneurial culture
The most important characteristic Jones looks for in relationship managers, who he regards as the bank’s sales force, is an
entrepreneurial spirit. Jones wants to hire relationships managers
who want to build their own book of business, and thus, help
grow Texas Capital. So he asks new relationship managers to put
together a detailed business plan for how they plan to build their
own portfolio of business.
“We want them to tell us what they can do with a good entrepreneurial corporate culture behind them, what do they think they can
do,” Jones says. “We work with them on a fairly detailed plan. We
hold them to it. That’s their road map for the next several years. They
have to know they can produce. If they will sign off on that basis, we
have a good shot at achieving that plan.”
Relationship managers who successfully build their book of clients
can go out and recruit more people to work under them.
“These people want to feel like they are building their own business
within our business,” Jones says. “That’s how we create a career path
for a number of these relationship managers. When they get to a certain level, we let them go out and recruit people to work for them.”
They are also asked to do something really different than what’s the
norm these days: Jones wants them out of their offices, talking with
customers, meeting them in person.
“You have to have high-touch service,” Jones says. “You have to
understand their needs and execute. You walk down the halls of our
offices, and you won’t see many people there. Most people are out
with our customers or calling on prospects. I don’t want them in their
offices typing e-mails. I want them out seeing people. I want them out
recruiting new customers. I want them to be seen in the marketplace.”
Jones thinks the personal relationship built between the bank and
its customer is what helps the bank survive tough times.
“Anybody can make them a loan,” Jones says. “Our money is all the
same color. It’s our delivery system that’s so important. That relates
to high touch. That relates to the trusted adviser role. The more we
know about the customer, the more we’re able to help advise them.”
That’s advice that works for any sales relationship, Jones says.
“You want your extensions, your relationship managers, your sales
personnel to create a relationship with that customer,” Jones says.
“When the chips are down, that’s the difference between keeping a
customer or not. I know we’re not the cheapest guy in town. I know
some of our customers can go to other financial institutions and get a
better rate. I don’t think they can get a better relationship.”
Growth comes naturally
While many businesses have grown by acquisition, Jones considers
that to be an imperfect method of growth. Texas Capital hasn’t
acquired any other financial institutions, instead preferring to build
the offices it wants.
“Acquisitions today are extremely expensive in our business,”
Jones says. “They are dilutive. It’s very difficult to earn past it. We
believe our shareholders are better served if we can organically grow
our assets without diluting our tangible capital.”
Acquisitions can also drag a business away from its key focus,
something that Jones doesn’t want to do.
“You get loans you don’t necessarily want,” Jones says. “You get
relationships you don’t necessarily want. And you get people you
don’t necessarily want.”
Texas Capital has 10 locations throughout Texas. The bank chooses locations by the demographics, looking at where businesses are
typically located and where potential private clients live before opening an office. Since the relationship managers typically go to the customers, Jones says that’s about the right number, even though it
bucks current banking trends.
“That’s very little for a bank our size,” Jones says. “We’ve been
able to address our customer needs with the branching network
we have.”
Jones sees the future of Texas Capital as vibrant. While the bank
has been consistently successful, there’s lots of room for growth.
“We don’t have any more than five percent in any one of our markets,” Jones says. “Somebody else has 95 percent. We have lots of
room to grow our business, to attack our competitors, and fortunately, we have big, robust growth markets. The Texas economy is as
healthy as any today.”
HOW TO REACH: Texas Capital Bank, (214) 932-6600 or www.texascapitalbank.com