Jim Cone, Victory Bank and CapTex Bank (TX)

In this month's episode, the guys are joined by Jim Cone, a Director at both CapTex Bank and Victory Bank (TX). Jim shares insights ranging from his early days in business development to purchasing a bank with just $10 million in assets and growing it to over $1 billion. He also talks about the value of C&I relationships, finding the best businesses in a community and "riding with them," refusing to take “no” for an answer, and not being afraid to “pick up $100 bills if they are laying around on the sidewalk.” Lastly, Jim shares what he deems as the most important metric when evaluating whether to invest in a bank. Please join the conversation for a terrific episode filled with memorable one-liners and great advice.

For more insights and ideas, visit DCG at DarlingConsulting.com or follow us on LinkedIn.

Transcript

On the Balance Sheet: S3 E3: Jim Cone, Victory Bank and CapTex Bank

Transcript

[Vinny, 00:03]

Welcome to On the Balance Sheet Season 3, Episode 3. Today we have an awesome guest, Jim Cone. He is a director extraordinaire, if you will. He's a director at both CapTex Bank and Victory Bank. Jim has got such a diverse background in banking, spanning a couple of decades. I'll tell you; I really enjoyed this one, Zach. He's just a one-line machine, isn't he?

[Zach, 00:25]

I've known Jim for about 7 years now, and you know, through working with CapTex out of Fort Worth, he's got a new endeavor out of Lubbock with Victory Bank, and he actually started with DCG a while ago with Bob Lalo when he was one of the founders at Horizon Bank in Austin, and he cut his teeth with Plains Capital. We'll get into all that in the interview. I think he's got a really unique perspective and really interesting conversation, a little different than we've had with other guests, about investing in banks and what he's looking forward to about growing banks. He's done it three times now, or in the process of doing it for a third time now. So, I'm just really excited that Jim was able to come on. And I think the listeners will be very excited and interested to hear what he had to say. 

[Vinny, 01:03]

Yeah, absolutely. Just a fascinating discussion. And I think everyone's going to like it. So, without further ado, Jim Cohen.

[Zach, 01:15]

Welcome to On the Balance Sheet. We're very pleased to be joined today by an extra special guest. It's Jim Cone. He's a director at CapTex Bank in Fort Worth, TX, as well as Victory Bank based out of the Lubbock area. Jim, thanks for joining us. How are you doing this morning?

[Jim, 01:30]

I'm doing great. Thanks for having me, guys.

[Zach, 01:32]

It's our pleasure. And per usual, we’d love to start Jim, just you got a pretty interesting career in banking. Well, we'll say it's probably an understatement. Can you just walk us through how you got started kind of late 90’s, out of college, you start at Plains Capital and get into the industry. What was it like? Why did you get into the industry? Can you just start us on that journey? And then we'll definitely get into some Horizon bank and some of the stuff you're doing now as we go on.

[Jim, 01:56]

Yeah, sure. So, I'm a little bit different, I got into banking really because I wanted to learn how people make money and get rich. So, I wanted to learn more about how businesses work and what makes them, you know, what makes them great. And so, the lesson I took out of it from being an analyst and doing all that stuff was the secret to wealth is repeatable cash flow, you know? And so, I'm like, well, what would be like a great business with repeatable cash flow and what has more repeatable cash flow than a bank, so I was like – this is a great business, right? And here I am, I've already been working in one for a while. We have a director at Horizon, and he was buddies with Warren Buffett, and he talked about like a compounding machine. And so, I read this book called The Snowball, and there's a few lines in there about Buffett's idea of a compounding machine. You know, it's a business that can earn a high rate of return on its capital and then just continue to earn a high rate of return the next year on taking its prior earnings and just continue to grow with that. And I've only seen a handful of banks that could do that, unfortunately. But all the parts and pieces are there. Horizon Bank was one of them, you know? And it just takes running a really tight ship. You have got to be in an excellent growth market and have good timing, that always that always helps. So anyway, that's how I got into banking, I just wanted to continue to learn more about business.

[Zach, 03:29]

Were you in the lending area at Plains Capital and then you were there for how long, what 7-8 years before you went over to Horizon and started that? 

[Jim, 03:36]

Yeah, exactly. And I really kind of started out in business development in Austin, it was kind of a weird deal. I grew up in Lubbock, TX, a small town in west Texas, and that's where Plains Capital was originally headquartered. And so, their deal is, the old CEO, Alan White, he loved to promote young people to their highest level of incompetence. So, it didn't take me long to get to the highest level. But yeah, I mean he shipped another guy that was a couple years older than me, I think he was 29 and I was like 25 or something and he shipped us to Austin. They bought a tiny bank there that was like $25 million in assets, and it was downtown Austin. And they were like – okay, here's your bank, now go get them. We want you to grow at about $100 million dollars this year. We were like – okay, could you tell us what to do for, where are the keys? But yeah, that was a great learning experience at Plains Capital because they taught you basically how to go out and hustle for business and get after it, and also to be a good banker. But they're really big on culture, but also not taking no for an answer when it comes to getting deals that you wanted. And I think that may have been the secret with sending young people out like that, that kind of knew what they were doing and everything. But you know my instructions from Alan White were like, here's the four top business leaders in this town. You know, one’s an engineering company, one’s a title company, one's a real estate developer and one's this law firm. And he's like – you go take them to lunch and just keep calling them until they finally give you a deal. I mean, go grab the guy by the leg and just say give me a deal, you know. And then after he gives you one, just bug him and be like – hey, do you have any friends that might have deals? So anyway, it was a great experience for our team that went on to do Horizon, to cut our teeth at Plains. They were proud of us after we left because we did take a lot from it. The other big deal that I jotted down about Plains, their thing is like – look, you know, here we are in Austin, we've got one location, Wells Fargo's got 75 locations. How are we going to compete with that? And it's like, you just narrow your focus down to a commercial business and figure out all the different ways you can mitigate not having branches. And so, for us it was like it was like – Okay, hit Plains. They started a courier service that was basically a mobile bank branch charter that we had, and for the cost of a bank branch, we can go higher, like 7 or 8 couriers and put them in Toyota Corollas and just have them drive all over town. Dropping off change orders, picking up deposits, doing whatever. So that was a big take away for us, basically having a fun corporate culture going out, getting business and then figuring out how to mitigate branch locations.

[Zach, 06:51]

Jim, what then led you to work with the guys you work with to start a new bank? In Austin obviously the market I'm sure, was booming back then, Austin has been growing for, it seems like a couple of decades now. But can you walk us through just, did you start a new bank, was it a recapitalization of a smaller charter, just some of those things, and why did you want to embark on that? You know, in that case, it was the 05–06-time frame was when you guys started that?

[Jim, 07:13]

Right. We left Plains in 05 and closed on April Fool's Day of 06, so that was kind of fitting. But I really attribute, our motivation is we have pretty big books of business, you know relative to some of the other bankers there in Austin, and these guys were really good bankers that we worked with. But then we had a bunch of CRD exposure so, you know an inflated loan book, it’s kind of different in terms of the real value it created. But we thought we were pretty cool, you know. And so, I like to attribute it to the naive youth, you know? I mean, I think I was 30 years old and the guy James Dyes, who's the CEO, was 31, Jeff Ojibware, their partner, was 29. And we're like – man, we're smart, we can go do this. So anyway, through some other bank mentors that we had, they tried to buy this bank and they didn't get the deal done. So, we just went to them like, “Hey, you think that bank is still for sale?” And they were like, “Yeah, why don't you just call them?” And I would say within two weeks we had it under contract. And that was a different environment, tiny little bank, but it was still three times book value. And again, we were so young it was hard for us to raise a lot of capital. We were really lucky that we had a couple of bigger guys back us and give us give us the opportunity to do it. But you know with that, our whole deal was like, you know we're buying a bank with 10 million in footings and right assets. And we’re putting the budget together for regulatory approval and we’re like – man, we're not going to be able to eat out of this at all. So, our ownership was carried in the deal, and we put whatever money we had into it had a had a good carry. So, we're like – we're not going to take salaries for the first year because the most important thing to us is producing income and having some retained earnings and going down that path. And we had to, you know, completely just change our mindset. First of all, you know, being 30 years old I was like – the biggest risk in banks is you get some loans that go bad, or you get some operations deal that messes up and you lose a wire or do something like that. And the reality is regulatory risk is your greatest risk. We were 30 days into having closed on the bank and the regulators were like, “Hey, we're going to be there in a couple of weeks. Here's your list.” So, it was an eye-opening experience for us where, you know, a couple of months later we're like – okay, we get it. Regulatory risk is our biggest risk and we're going to spend the time and the resources to be good at dealing with that part of it as well.

[Vinny, 09:59]

Jim, Vinny here. And thanks so much again for joining us. One of the questions I have for you is, we were talking before we went live here about timing and how the current venture kind of opened prior to COVID and all that sort of stuff. Back to those Horizon days, it sounds like you closed in the 05-06 period, you're not taking a salary. Then right behind that, we get into 08, 09, 10, 11, can you explain to me, what you folks dealt with through that time period and how your credit held up and how that environment influenced your business?

[Jim, 10:33]

That's where the timing really came in great for us. And I like to think of every downtime as kind of an opportunity. But for us, we had this tiny little bank, and we went and recapitalized it. We're sitting there going – well, we all have these big CRE books and everything, and like that's cool. We’d call those guys, you know, some of our old borrowers and we're like – hey, look, you know, I can't really do like some lot development deal for you, but I'd be happy to make you a car loan. So, I mean, we were so small we couldn't get exposure to all, all the stuff that was happening in 05-06 and you know it's just kind of a deal where God looks out for fools. So, like I said, we had to change our playbook and learn some new tricks. And so, we were really fortunate that in 07-08, we really got our game together operationally and everything. And it's like, okay we're not doing CRE stuff anymore, that playbook, it gets put up on the shelf and we're going to have to learn some new stuff here. So, we got into SBA lending and figured that part out which was kind of a new world to us. Luckily, we hired some pretty good people but from an opportunity standpoint, we were sitting there going – ok, now the world's kind of coming to an end, all the bigger banks have completely turned off the credit spigot. And so, we were finding these deals that would have been like B+, A borrowers and they're like – hey, my banker, they said they're not doing any deals, any loans whatsoever. And I've got this owner-occupied building and a line of credit, you know. And we're like – well, how do you feel about the SBA? But we figured it out from the standpoint that you know, I think most borrowers go through an SBA loan process and I think they'd rather have a root canal. And Sergio was like – look, we'll hold your hand through it, we'll fill out the majority of the paperwork, get all this stuff. We'll put in a lot of time and effort on our end to make it as painless as possible. And so that was a great deal that worked out for us. And again, I look at it and go what creates value in the bank? It's not commercial real estate loans, it's the commercial business, the C&I stuff, the owner-occupied real estate loans and the deposits that come with that. Not having a lot of capital really put us in a position where we could focus on doing things that take a little more time and a little more effort but end up ultimately creating a lot more value for the organization. So, we lucked out there and about the time we'd fully deployed all our capital, you know then like the TARP deal came along and I'm not a big fan of programs like that. But if there's $100 bills laying on the sidewalk, we’re going to pick them up, you know? So, we got additional capital through that, ended up paying it back then the SBLF came along right when we were out of capital again and we took as much of that as we could as well. So again, timing, I mean, we just kind of lucked out on some of those deals and of course the SBA deals we were doing, you know it's like at the time you could do, I think it's like a 90% guaranteed SBA 7A deal and we'd max out the floating part and then turn around and sell that into the secondary market, basically to generate capital just so we could continue to grow, right. And then we'd look back on the 10% non-guaranteed portion that we've kept and the servicing and everything that goes along with that. I mean we're getting like a 15% yield on these. So that's the thing. I would just tell anybody if they're, you know, thinking about doing this or just running a mid-sized regional. It's like, figure out some different tricks that maybe you haven't done before. I feel like a lot of banks are like – well, we'll do a mortgage company or something like that. But I’m just saying, there's a lot of other interesting programs like with SBA out there that I've found real beneficial.

[Vinny, 14:41]

That's an awesome insight into how you grew that smaller institution you were talking about. You know, one of the things you may have just touched on it, I'm kind of curious, it seems like most of the lessons that you're sharing with us from Plains and Horizon were really based on lending on that side of the balance sheet and that's all been terrific insight. I wonder if there's any major lessons that you would have gleaned or would share from funding the balance sheet and it may just be some of the things you just mentioned. But I'm just curious, you know, what were some of your major takeaways on how to fund this thing and how to fund the smaller institution as you got started?

[Jim, 15:15]

So, to me, the approach to take is sort of a philosophy. It's like hey, you know what, the way we're going to grow the bank is going to be on the liability side of it and that is going to be the most important part of it. We'll turn down good loan opportunities if we don't quite have the have the funding there, you know. And so, it's like – ok, well where can we go find low hanging fruit and that SBA deal certainly helped with this. But as you can imagine you're still out funding deposits and stuff that go with it. And so, for me going back to Plains Capital where they were like – hey go to that title company and hang on to that leg until he gives you an account. Well, it's the same deal, you know, and so title companies have always been a big no brainer for me from the standpoint that they've got tons of free deposits and all you have to do is eat the account analysis fees and have a top-notch wire department to service them. Anyway, that’s kind of an easy low hanging fruit deal. But you know coming out of Plains, they were a different generation of bankers, and so what was really important to those guys was how big they are. And there's certainly nothing wrong with that. And I think part of it is like over the years, you know, having the investment bankers whisper in their ear like – hey, you know, that's great that you got to a billion in assets, but if you were 2 billion in assets, I could really get you a good deal. And so, these guys have always been like you know, it's just this motivation of like I want to get bigger, bigger, bigger. And for us, being so undercapitalized, we were like – well, that's not really an option, right? So, our deal is, we want to be as profitable as possible, you know. How do you do that? And so, for us, it was just kind of tapping into some of those relationships we had from Plains and to get a few of those guys to move over. And then really just focusing on the C&I part of things and just looking for you know, there's a ton of operating companies out there in Austin. Wells Fargo had made a bunch of acquisitions in the 90’s and you've got these great companies that have no borrowing needs that have been over there for 20 years and they're paying all these account analysis fees and all this stuff. I would just say going out, networking, hustling and just trying to find those overlooked deposit accounts that are hidden in some big bank. Of course that's a little more challenging in today's environment. We're really too big to fail, come on. I mean, it's kind of amazing. I think like with Chase and that part of it. I would say like the Fortune 1000 mentality of that they weren't going to do business with us anyway, but now, they wouldn't even do business with like Wells Fargo at this point.

[Zach, 18:00]

No, it's all good, Jim. And you know, I'm wondering too, so you guys go from 10 million and Horizon, for listeners, now is almost 2.5 billion today. You left, you know what mid 2000’s, right? And they're over a billion.

[Jim, 18:14]

Yeah, I left at the end of 2015.

[Zach, 18:18]

Yeah, and they were well into the billions, or the billion at that point. And then you move over and you kind of, I don’t want to say you redid the playbook to a degree, but you got involved with First National Bank of Trenton, right, which is now CapTex bank. So, can you walk us through some of the similarities, maybe in how you started Horizon and how you were involved in the Trenton, CapTex deal? And I guess in general, how did you get involved there and what did you take from Horizon that you were able to transition over to the group there over at CapTex?

[Jim, 18:50]

A lot of Texas bankers pay attention to the banks that are in Texas and Horizon, I mean, they've averaged an 18% return on equity since probably 2007 or so. So that bank's unbelievable just in terms of what it's done. So, you know, over the years I'd have bankers call me and then you know, they're like – hey, you know, can you tell me the secrets to success? And it's like, I can give you the playbook. It doesn't mean you're necessarily going to do it. But yeah, I'm more than happy to tell you. So, a friend of mine, Mike Thomas from Fort Worth, called me up and he's like – hey, you know, I was just wondering if I could take you to lunch. I just want to talk to you about what y'all did and figure out if that's something that I could do. And I was still at Horizon, that conversation, I think it ended up lasting like four or five hours that day where I was finally like, okay, I've got to get back to work. But Mike was really inspired. And he's one of the principals over at CapTex. Anyway, so they basically got on the hunt looked around, Mike and George Lee, and they found a couple of different banks that they made runs at, ended up hooking up with some investment bankers that were representing both sides. And so, they bought the First National Bank in Trent. That deal, again, timing wasn't necessarily great in Fall of 2017, it was okay. But basically, one of the things we didn't discount enough was that the bank didn't have a lot of a lot of sticky C&I loans or any of that kind of stuff. They had a warehouse lending operation. Which we subsequently closed within like 30 days of closing on the bank. It was tough because there were like 35 employees in there, but you're like man, this thing may make a couple of 100,000 a year or lose more than that and who knows what your trailing liability is. So, we got out of that business pretty quick. But you're sitting there and you're like – okay, we got a pretty good cost of funds, decent balance sheet, liabilities and everything, I mean it's all nice except the asset side of the balance sheet was just sort of hollow. And I remember the second meeting we had, you know, looked at it and going – oh my gosh, we're going to have to gin 120 million in loans to get this thing to where it's making a decent return. Anyway, they got after it and moved the headquarters from a small town out east of Dallas and Trenton to Fort Worth and you know, they haven't looked back since. So, they've done well, and Fort Worth is a competitive market more so than Austin, which is surprising, but they've been good there.

[Zach, 21:37]

Jim, it's one of those things where it seems like the guys there went back to some of their core competencies, which was the commercial side. I mean, Mike's a southwest guy, Richard, obviously was a southwest bank guy. They actually knew Matt, our president, from his days working with them and I remember when you first started with them, I think they were 30% loan asset when you guys bought them. So that $1.20 of loans you had to put on, I mean, this was a bank that was swimming in liquidity, but not exactly the most profitable. So, to me it was a really interesting story over the last seven years. The other piece of this Jim is, you've done something recently on a similar path. I won't say it's the same story, but you're now involved with Victory Bank. Which was First National Bank of Winters, is that how you pronounce it?

[Jim, 22:22]

State Savings Bank of Winters, yes.

[Zach, 22:23]

State Savings Bank of Winters. So can you walk us through too, it seems like this is maybe your third foray into, okay, you buy a smaller charter, you recapitalize and then you build it out from there. Can you walk us through what Victory is up to and your playbook so to speak, on that side.

[Jim, 22:41]

Yeah, sure. It's pretty similar. I mean it’s looking at yourself in the mirror and going – okay, we're in a competitive market here in Lubbock, this is a town with 300,000 people or so, it’s been overbanked. The reason these guys decided to go and buy a charter and bring a bank back to Lubbock was because there have been quite a few acquisitions that had occurred with some of the bigger banks in town and they felt like it created a vacuum. So, these guys, I mean, they're young as well, but they went out and raised, I think 55 or 56 million in capital, which is an awful lot for basically buying a bank with 95 million in assets. From a timing perspective, goodness, they closed February of last year, so February 2023. And so, you don't have to just go out and make a ton of loans like with your hair on fire, the way we were at CapTex, to try to get to profitability because the overnight rates and even putting some duration on the portfolios certainly made it easier. So those guys, it's like look, first order of business, get your operations house in order. And that's putting together a great wire room, great customer service crew, having all that stuff. So, they're converting cores I think next month or the month after. Anyway, they've been getting their feet underneath them. With that they've hired two really good lenders that have kind of a C&I background. And so, it's focusing on staying out of the majority of the CRE stuff. I mean like, commercial real estate has its place, but it's like let's just pick a couple of the most competent people in our business area and just ride with those guys. So anyway, we've seen so far, the business they've been putting on the books has been real diverse, lots of C&I stuff, a lot of medical. I wouldn't say they specialize in medical, but they have a ton of doctors that are banking with them, moving their practices and been doing those kinds of things. But as far as I'm concerned, the playbooks are like operations in order, figure out on branches how to mitigate not having branches all over the place. And that's where I go back to remote deposit captures, couriers. Whatever it is you've got to do to bring the banks of high-net-worth individuals and business owners. And I like banking people that have to put their pants on and go to work every day, we don't need the idle rich, right? But yeah, that's their playbook and having gone what they've gone through in the last year, it's just like – here we go, the liquidity sponge is sucking up all the liquidity out there, your banks failing and stuff like last March. And so, they’ve dealt with that, but they also have a shareholder list with 300 plus names on it. And so, you know, my deal is like – hey, don't advertise, don't do anything until you've exhausted that list of shareholders, then we can talk about the next steps in marketing and doing those kinds of things. And that was an old Plains Capital deal. They knew they wouldn’t get much bang for their buck out of advertising. It's all about rifle marketing.

[Vinny, 25:59]

Jim, one of the things you mentioned earlier was how important it is to be in a growing market. And clearly that's one of the things we always think about. There's so many good bankers, but they're just in bad markets, so it's like you're kind of hand strung. It doesn't matter if you're the world's greatest banker, if you're not in the market that's going to support your ideas, you have no chance. I'm just curious, you're talking about Dallas, Fort Worth, Lubbock and I know that market a little bit. One of those banks that I think you were just talking about being consolidated away, I used to work with them. I’m curious what your outlook is moving forward for the state of Texas and some of the markets that you're watching more closely at. There's obviously been a ton of population growth. I'm just kind of curious what the outlook is in your mind moving forward.

[Jim, 26:44]

Well, each market is different. And so, one of the reasons Austin was so good to me really was because, you know, there's a ton of young people there, but they were all smart enough to not be bankers. They're like, I can make so much more money, you know, selling insurance or working in technology or whatever. So, I kind of think, for me, cutting my teeth, it's like in the late 90s, early 2000s, I mean, anybody with any brains, was in .com stuff or technology in Austin. And so, there's a there's kind of a missing generation of bankers that are my age, like I'm almost 50 now, in Austin. And so there was a real asset to be a competent banker. I mean, there were there were some shoe salesman types around, but you know, we didn't really have just a ton of competition from people that were in our age group and all that kind of stuff that actually were given the opportunity to learn how to be like a really good banker. And with that said, I'd come home to visit Lubbock, you know, and I'd see all these bankers out at, like, some social event, and I'm just like – oh my gosh, you guys could run circles around us in Austin in terms of your competency. You know, it's like it's amazing. It's like a knife fight for every deal here. I mean, they literally cut each other's throats just fighting over deals because, you know, the growth is just not in a town like Lubbock, the way it is in Austin. Fort Worth is kind of a mix in between. And it's weird to say this, but the reason these markets are different, I mean Lubbock, is because it's five hours from Dallas way up in West Texas by itself on an island. But the two most competitive markets in Texas have always been Waco and Lubbock and you're like, why is that? And it's because, you know, in the 80s, banks in Waco and Lubbock didn't fail. They failed in Midland, Dallas, Houston and Austin. Then you had a lot of acquisitions that would happen in those markets, but nobody's acquiring banks in Lubbock and Waco. And so, you had all these independents that had just been raising bankers for a long time and they all, as Alan White put it – it’s like squeezing blood out of a turnip. You know, there's just so much you can get in these markets. So yeah, that's kind of a challenge, I think with Lubbock. But I do think with these guys, it's like they've got the pick of the litter as far as young, up and coming lenders and have just by the amount of capital they raise, which was all local for the for the most part, I'd say it's 99% local, they certainly have a following. So, it's going to be interesting and challenging for Victory Bank, because I would like to see them get all their capital deployed here, but I do think they're going to have to look more in like Central Texas, that area as far as more growth opportunities, at least further down the road.

[Zach, 29:43]

Jim, as an investor, just kind of a segway off this, what are the things that you look for? Is it the people, is it the profitability potential, growth markets? Are there certain metrics or certain keys you're looking at when you’ve made some investments in banks or just when you're looking? I know we've taught a bunch about banks over the years and who's doing well, who’s not. What are the things you look for, generally speaking?

[Jim, 30:05]

Yeah. So, when I was a banker and had an SNL subscription, I would sit there and look because, you know, there's all these publicly traded banks in California that are small. And so, to me, when we're talking about banks that are a billion to the 5 or 6 billion that I'd be looking at or investing like on these private, I hate to call them startups, but I mean, that's essentially kind of what they are when they're recapped. Bigger, more mature banks that are publicly traded, it's looking for management with ownership and like the deals I've done, I want management to have as much ownership as we'll give them. And the reason why is because I got to watch this in Austin with some other banks that were kind of peers with us, and it's like, you can have management make their money by having ownership and equity in the deal, and they're going to treat it like owners, right? Or you can have management that has like 2 or 3% ownership in the deal, and they're going to look at it and go – well, this is all about my salary. And so, I'm really motivated to grow this, get to a billion as fast as possible or 2 billion as fast as possible because the salary profile is just that much greater. And so, I would say that's why the most important part for me is to have management that has pretty significant ownership in the deal. I don't care if it's carried interest and all that kind of stuff because they're the ones that wake up every day and have to go run the place and get after it. And I want their salary just to be kind of, not making ends meet, but not their motivation. Their motivation needs to be to create value, you know. So, that's kind of the biggest deal to me. I would say that it's certainly much easier to be in a big growth market like Austin, Dallas or Houston for sure. That's a big plus. But with that said, you know, I think with the right team of people and everything and things shaking up in a small town like Lubbock, we can still make it work and make it happen. But anyway, the biggest deal to me would be management having ownership in the deal.

[Zach, 32:15]

Jim, that's fascinating, and I don't have any other questions for you. I mean, I can actually talk to you for hours.

[Vinny, 32:19]

Jim, the only question I have is in my research, I had noticed this grain elevator that supposedly, I don't know if it's urban legend, that supposedly tells time depending on how you look at it when you drive by it. Now is there any truth to this? I don't know if you want to give our listeners who are intrepid enough to look it up and might still be listening in, but can you see the clock and what time it supposedly is 11:25 when you drive by it supposedly? I don't know if you want to give the listeners an overview of what I'm actually talking about.

[Jim, 32:46]

I feel sorry for your listeners, this is where you can tune out. Yeah, it's on the side of the Interstate, so I'd actually encourage people not to look for the clock because there's been several fatalities from people trying to see this. But yeah, I think it says 5:00 or at least that's what I'd choose. But, you know, it's faded. But yeah, when I got out of banking at the end of 2015, I came back to Lubbock to run my family’s commodity business and that's like physical grain though, and then we do well in gas stuff. But anyway, yeah, it's not near as sexy of a business as banking.

[Vinny, 33:26]

And that's saying something. That's saying something, really. And by the way, just for our listeners, there's a grain elevator and the initials you basically have, it that says Cone on it and depending on the way you go look at it, once you get to a certain angle, some people say it resembles a clock. I couldn't see it. I don't know what the hell they're talking about. But anyways, I thought we'd get a giggle out of you there.

[Jim, 33:51]

Oh yeah. Yeah, my poor friends from Austin when they're driving to Colorado during the summer they always send me pictures of it. Just stop looking at it. Keep driving forward.

[Vinny, 34:02]

We don't need any liability. Move on.

[Zach, 34:07]

But no, that's a wrap Jim. Thanks again so much for the time, we really appreciate it. Yeah, I thought of some pretty cool insights too, with how you've invested over the years and how banking has changed since the late 90s to today. A lot of things are the same, right. But there's certainly a lot of things that have changed too. So, we really appreciate your time.

[Jim, 34:23]

Good. Well, thanks guys.

[Vinny, 34:25]

Thank you so much and that was terrific.

[Vinny, 34:28]

Well, welcome back to On the Balance Sheet. What an awesome interview that was with Jim. And I'll tell you, Zach, I really enjoyed it. One thing that I think came through the discussion on several different occasions was really Jim talking about bankers getting up, putting on their pants and going to work. It seemed like one of the things he had mentioned was just really picking the most competent businesses in an area. And I think he actually uses his words and just riding with them, particularly you, you can hear him mention title businesses and so forth, title companies I should say. And I think it speaks volumes, the value of C&I and building an organization and really building value in a bank. You don't always hear that. More often times there's more made of, you know, folks with a hyper focus on commercial real estate and in some markets, they might not like that strategy today. That's what really stuck out to me, going after the best businesses in an area and just kind of riding with them.

[Zach, 35:31]

Yeah, I think that that was a really important takeaway and what's really impressed me about Jim over the years and getting to know him and the banks I know he's worked in, is they always look at different ways of doing things. And I think that's one of those areas where he's like, we can't compete with Chase or Wells or whoever. So, we got to find other ways to do this, and they've found some good niches there over time at Horizon, CapTex, I'm sure they will at Victory too. And my big takeaway was from the question I asked about as an investor, what's he looking for? Because he's invested in a few banks over the years, and I wasn't quite sure what he was going to answer, I was really curious. The whole thing about having skin in the game and having management ownership, what he looks for in that and making sure that they care more, or they have that skin in the game because like I said, if you have 2% ownership versus 10 or 15 or 20, there would be very different decisions that you would make. And he wants you to make the best one for the bank and the value of that, not the best one for you, maybe personally. And I think that's a really interesting way to look at it and obviously you mentioned Horizon, all those things are important too. But I thought the one thing that he focused on was management ownership, skin in the game and that was really, for me, the most powerful takeaway.

[Vinny, 36:42]

Yeah, that was terrific. I mean, clearly, people are going to behave to their motivations, right? That's just human nature. But all in all, just a terrific discussion. I really enjoyed that. I thought that was one of our best interviews, wide-ranging interviews we've had, so huge thanks to Jim and thanks for listening and we look forward to having you again next month on On the Balance Sheet.

[Dana, 37:07]

On the Balance Sheet is a podcast produced by Darling Consulting Group, DCG. All views and opinions expressed by the host and guests are solely their own and may not represent those of DCG. All third parties are independent entities and are not affiliated with DCG. This podcast is intended for informational and educational purposes only and is not considered as advice. All views and opinions expressed are based on the information available at the time and may have changed based on the current market and other conditions. The more information about DCG, please visit www.darlingconsulting.com or e-mail us at info@darlingconsulting.com. Today's background music is provided by John, Sid and Como Media and can be found on pixabay.com.

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