Rob Holmes took the reins of Dallas-based Texas Capital Bank just over a year ago, and he hasn’t been shy about bringing in new faces as he leads a transformation at the ‘company wide.
Former JPMorgan Chase executive focused on bringing in high profile names from top institutions across the US
“Each of these leaders came from larger, more complex institutions with significant and relevant experience,” he said on the bank’s latest earnings call.
One of the first things Holmes did was set up an operating committee at the bank and, despite replacing more than half of the group in the last 12 months, Holmes said nobody had been fired.
“Any time you have a 2,000-person company, sometimes both sides realize it’s better to change,” Holmes said. “There were people fired but not on the operating committee.”
Holmes has been driven to expand the bank’s products and capabilities beyond its legacy business model which has focused on middle market banking services since its inception in 1998. And attracting top talent is key to transition, he said.
“We’re building something of value, which takes time, talent, investment and courage,” he said on the call.
When Holmes joined the bank in January 2021, it had about 1,500 employees following a failed $5.5 billion merger with McKinney-based Independent Bank and poor financial performance.
“We had a downsizing, which was a very difficult time for our business, before I got there,” Holmes said.
Now, a year later, the bank with around $35 billion in assets employs more than 2,000 workers, with most of the 500 new employees having been hired since June.
Holmes said a number of recent hires were a necessity due to new initiatives, such as the addition of verticals, such as healthcare and a new affiliate broker, Texas Capital Securities. For example, Anna Alvardo was hired as a legal director to help with her application for the Financial Industry Regulatory Authority.
“We’ve been on the offensive, aggressively developing talent for our strategy,” Holmes said. “And as we restructured the bank by segment and by vertical, there were gaps to fill.”
On September 1, Holmes released a detailed strategic plan for the bank, including cutting costs, pursuing better technology and launching “one of the most aggressive hiring plans in the history of the bank.” business” to more than double its customer-facing roles by 2025.
During the company’s latest earnings call, Holmes said he had achieved his goal of having a full senior team in place by the end of his freshman year on January 24 and that he saw 2022 as the “true launching point” of the strategic plan.
For the last three months of 2021, the bank recorded a profit of $65 million, compared to $60 million for the same period in 2020. Total deposits decreased by 9% for the same period. The bank improved its credit quality, with loans at risk of default totaling $582.9 million for the period, compared to $918.4 million for the same period in 2020.
The bank is trying to self-fund its transformation, identifying more than $130 million in ongoing savings to spend on more than $100 million in new investments, including expanded coverage and new products and services.
Salaries and benefits increased from approximately $78 million for the last three months of 2020 to approximately $89 million for the same period in 2021.
Holmes notably brought in a number of executives from his 31-year-old former home, JPMorgan Chase. This includes Nancy McDonnell, who was hired into the new role of head of treasury services after retiring from JPMorgan in 2020; Tim Storms, who retired from JPMorgan in 2019 and was named Chief Risk Officer, replacing John Turpen; and Jay Clingman, who was hired into the new role of vice president of commercial banking after working at JPMorgan for more than three decades.
“We didn’t push anybody,” Holmes said. “When you bring in talent like we were able to bring in, they have a following and bring in talent, and it just goes downhill. If and when they hire someone, they replace two or three of their directs with new talent and it builds on itself.
It’s easy to attract talent from across the country when you’re headquartered in a business-friendly state with great weather and an affordable cost of living, Holmes said. He cited the example of an anonymous employee who resigned from a high-level position at a boutique in New York after living there for 35 years to run much of the Texas Capital sales and trading office launched This year.
“He was happy about this opportunity,” Holmes said. “It was literally like I was talking to one of my kids. He was so excited. That, to me, is incredibly invigorating.
One of Holmes’ biggest changes came in December when Matt Scurlock, who had previously served as company treasurer, took over the role of chief financial officer from Julie Anderson, who had been at the bank for 22 years as a financial director. Holmes said Scurlock will help the company “improve our internal reporting” to show investors the company’s progress.
Holmes said Anderson wanted to do something different.
“She was here a long, long time and she hired [Scurlock],” he said. “And she knew [Scurlock] was ready and she was excited to do something different for the next chapter.
Scurlock was the first person Holmes met at the company, in an empty conference room with a yellow pad, Holmes said. Scurlock asked Holmes what he wanted to do at Texas Capital and started jotting down ideas, Holmes said.
“He’s literally been by my side with every decision we’ve made to date and helped implement it,” Holmes said.
The ambitious CEO said he’s not worried about causing tension within the company with hiring. His team is focused “on retaining who we want at the bank as we grow with outside talent,” he said.
The initial reluctance seemed to evaporate once he presented his strategic plan, he said.
“You’re always worried when there’s a profound change,” Holmes said. “But there was a lot of excitement. And frankly, it was totally necessary. So the need outweighed the worry.