The local office of Texas Capital Bancshares Inc., doing business as Texas Capital Bank, has seen double-digit growth in the past year, with a particular uptick in deposits.
That is key to the bank’s strategy in the market, a local executive told the Business Journal.
Shaun Kennedy, who has been chairman of Texas Capital Bank in San Antonio since 2013, and David Pope, president for the bank’s San Antonio region, jointly oversee about 50 employees.
Texas Capital Bank (Nasdaq: TCBI) grew its San Antonio-area deposits by 20 percent to $716 million from June 2015 to June 2016, according to records on file with the Federal Deposit Insurance Corp. And its local deposits increased again by nearly 29 percent to $922 million from June 2016 to June 2017, the most recent records available. The institution has only two local branches since most of its client meetings are at those businesses’ locations.
“We have as much of an appetite for deposits as we do for loans. We want to deploy as much of the deposit balance that we have on the books," Kennedy said. “That’s an important piece of our business model that is very unique."
The North Texas bank’s compound annual growth rate has been roughly 20 percent each year since its inception about two decades ago, and its growth in San Antonio has mirrored that trend.
“Our growth rate in San Antonio over the last five years has ranged anywhere from 15 to 23 percent, so we have basically been in lockstep with the bank’s overall growth rate," Kennedy said.
Beyond that, the bank has expanded its services in response to customer demands. While it had been a commercial lender for years, the bank stood up a private banking arm for business executives seeking wealth management services as individuals. Recent additions also include public-sector financing for loans typically smaller than would require issuing a bond, asset-based lending and even a lending product for franchises.
“We’re very opportunistic as a bank, keeping our eye on where there may be a void in the market place. That’s where some of our organic growth comes from,” Kennedy said, noting that the bank has grown without acquisitions over the years.
The bank, which reported more than $24 billion in assets as of March 31, has seen demand for loans across all industry clusters that it works with locally. That encompasses commercial real estate but does not include the energy sector.
“A lot of companies that we bank in San Antonio are either founded here or are family-owned companies here," Kennedy said. "We really have [loan] interest across sectors."
About five years ago, the local Texas Capital Bank loan portfolio was split about evenly between commercial and industrial loans and commercial real estate loans. That’s since tilted slightly, with commercial and industrial loans now accounting for 60 percent of its local loan portfolio; the parent company does not break out the volumes of those loans by metro area.
Texas Capital Bank’s market risk portfolio is separated by geographic region. Market risk refers to properties that are not owner-occupied.
San Antonio represents 11 percent of the bank’s market risk real estate loan portfolio across the state — or $537 million of properties out of $4.7 billion overall — while Austin accounts for a little less than 11 percent of such loans. The Dallas-Fort Worth area accounts for about a quarter of those loans, while another 23 percent are in the Houston area. The remainder are in smaller Texas cities and other states.
Kennedy is bullish about the bank’s future in 2018. During the past two years, clients have been reducing some of their cash stockpiles that started accumulating after the recession. Demand for new construction loans in San Antonio has been strong among developers of various project types, including apartments and infill strip retail centers.
Some clients are looking to use extra cash resulting from last year’s reduction in the corporate tax rate to pay off some debt during 2018. Others have decided to "pull the trigger" on transactions, Kennedy said.