In this episode of Retire in Texas, host Darryl Lyons, CEO and Co-Founder of PAX Financial Group, sits down with Steve Mack, Regional President of Liberty Capital Bank. Steve brings more than 40 years of banking experience, including three decades as CEO of Texas Heritage Bank, to discuss the recent merger with Liberty Capital Bank and what it means for Texas communities.
They explore:
- The challenges and opportunities of merging two community banks.
- How community banks differ from big banks in culture, relationships, and lending.
- Why personal relationships still matter in today’s financial system.
- How the FDIC and IntraFi network protect deposits – even beyond the $250,000 limit.
- The role of community banks in supporting small businesses and local economies.
- How local banks stay competitive with interest rates while offering face-to-face service.
If you’ve ever wondered about the safety of community banks, the difference between local and big-bank lending, or how mergers impact customers, this episode provides clear and practical insights.
Listen now and learn why, when it comes to banking, life moves at the speed of relationships.
If you enjoyed today’s episode, share it with your family and friends!
Transcript:
Darryl: Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And today we’ve got a special guest. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. And like I usually mentioned, if you’re looking for financial conversation that’s really grounded in kind of spiritual thought, this is the right place.
And we try to do it in such a way that is practical and relatable and easy to digest. Not a lot of numbers in a financial show, so I always get the feedback. You speak in such a way that I can understand it, and that’s simply because I try not to use a lot of numbers. You can’t always avoid it. But this show, we might not get in a lot of numbers. I don’t think. Steve, I’ve got Steve Mack here. He’s, you have a new title. Because I was going to say CEO, but what’s your new title?
Steve: I’m regional president of Liberty Capital Bank.
Darryl: Yeah. So, Liberty Capital Bank, there’s just recently a merger. Do you want to tell us a little bit about that?
Steve: Sure. The first of all, thanks for having me, Darryl. I’m honored to be in your office and participating in your podcast with you. So, I’m a 40 plus year banker and have for the last 30 years, been CEO of Texas Heritage Bank, which is headquartered in Boerne, Texas. And we recently, in the last several months, announced and have merged with a bank in North Dallas. Addison is where their headquarters are. And the name of the bank is Liberty Capital Bank. So, we’re very excited about the combination of our two banks. We think we’re better together. And there’s a lot of good reasons for that, so we’re happy to talk more about that. If you’d like.
Darryl: We will. Yeah. You know, not a lot of people. I know you’ve done a lot of announcements, but there’s still some community momentum kind of conversations taking place. So, I think the name Liberty will start getting more momentum as we go. And so, it’s almost, it’s almost as though you’re announcing it to the community for the first time, even though you’ve been talking about it a long time.
So, some people are just hearing it for the first time. I’m excited about just being able to work with you guys. And I reflect on my time. You know, when I was younger in Saint Mary’s University, I paid my way through college working at Bank of America. And I remember the merger between Bank of America and Nation’s Bank, and that was, as you know, obviously a big bank and a challenging transaction.
It worked out great. You know, ultimately Bank of America became quite, you know, the bank that it is today, a global bank. But there was clunkiness along that journey, and you had to just figure out how to get the systems in place and the people in the right seats. And what are y’all thinking about now? What’s right in front of you?
Steve: Well, it is a challenge to put two organizations together, because there’s a lot of pieces to the puzzle. Some of them are organizational in nature. There’s a lot of human element to it because you’ve got people that you’ve got to work with and organize into a new structure. And then, of course, you got systems and technology and those kind of things, that have to be dealt with. And, so we’re just kind of stepping through the journey. But it is ramping up. So, we’re getting close to a point where we’re, particularly we’ve got our systems and technology upgrades that are, as we put our two systems together and that’s all taking place in the next 60 days. So, our team is working really hard both in Dallas and in San Antonio to put it all together.
Darryl: It’s that Mark Twain saying they’ve attributed to him – slowly, but all of a sudden.
Steve: Yes.
Darryl: So, you’ve been doing this a long time, and banking’s changed over the years. I’d like to, I would love for the community to think of you guys like a Texas bank. Is that fair?
Steve: Oh, yeah, for sure.
Darryl: Yeah. And this is just your ability to have a greater reach. You know, you guys had, prior to Liberty, you guys had an office in Boerne, a bank in Boerne, Leon Springs, and was at Abilene, right?
Steve: Well, near Abilene in Cross Plains, Texas.
Darryl: Yeah. Okay. I’m not familiar with Cross Plains, but that’s right, Cross Plains, but near Abilene. Yeah. So, Texas Bank and then another geographic footprint from Liberty, but a different geography, but in Texas.
Steve: That’s correct.
Darryl: So, you know, I’m curious to know, get your thoughts, because I have a lot of people that come to me and think about their banking relationship. I had one just the other day, a business owner just kind of frustrated because the, I don’t know, the bank’s got too big. And lost the personalization. So, what do y’all think about it in terms of culture and your relationship with individuals? I want to go forward basis. Do you all have the same philosophy or what does that look like to me or to y’all?
Steve: Well, let me give you a little bit of history just to help with this. So, Texas Heritage Bank is a community bank, and so, we’ve had three offices, roughly 40 employees. So, you know, in the scheme of, of the banking industry, we would be considered a small community bank.
Our partners in this merger, Liberty Capital Bank, started in 2008. They have one office in Addison, Texas, and they’ve got roughly 30 employees. So, a combination of our two banks will be, roughly 70 employees with four locations. Our total assets will be close to 800 million. At the end of the year. And in the scheme of things and in comparison to other banks in the country, we still will be considered a medium sized, community bank, kind of the threshold that a lot of banks look for is, is once they cross $1 billion in assets, then they become more of a regional, top bank. And then, then it’s up from there.
Darryl: Yeah.
Steve: But there’s roughly 6000 banking charters in the United States today. And the vast majority of those are community banks like ours, and they’re typically banks based in smaller markets. Rural markets. A lot of them, our particular merger will give us a footprint that kind of stretches along I-35, from Dallas to San Antonio.
And then we do have our West Texas operation in Cross Plains, which is where Texas Heritage Bank really got its start. And 1931 is the date of our original charter in Cross Plains. And so, we’ve got two organizations that are very relationship oriented community banks, focused on taking deposits in the markets we operate in and then loaning those deposits back out to individuals and businesses.
For various purposes, including construction, real estate, and home mortgages. And working capital facilities for local businesses.
Darryl: It’s one of those things, you know, I am always in this conversation and I’m not ending it now, but I always end this conversation on thinking long term. That’s what I always say. And, you know, I still believe it. And a lot of what we do, and I can only tell you, I’ve heard rhetorically, that big banks fail to meet that need for personalization.
And I only heard it like and thought, oh, that’s cute. You know, it sounds like a sales pitch for a community bank to be able to get the business, but then I needed to borrow money once, it wasn’t a need. It was like a want. I was trying to do this strategic plan, and it was just the environment.
It’s just to give you more insight, USAA was letting go a lot of advisors, and it was just an inflection point in time where I could hire these advisors. But I needed the capital before they had cash flow. So, I went to bank and I had not felt so transactional. I’d been banking with them for so long, and I needed the money and it felt like I couldn’t.
They weren’t listening. I was sending spreadsheet after spreadsheet. And so, I say all that because it’s like, for me, I just learned that, although I discounted relationship, as you know, just being cynical and saying, oh, it’s community bank say relationships just because it’s like a sales pitch, okay, whatever. But then I realized, okay, wait, when I needed the relationship to actually exist, I was stuck.
And it was real problematic for me. I say all that and go back to thinking long term for those that are thinking long term and not anticipating a need for lending, but knowing that life happens, I find that relationship with the bank is actually a really important one. So, I say that to kind of tee it up for you. Can you give any examples of how relationships do matter in your business and maybe from your perspective, kind of sell us on the community bank relative to the bigger one’s a little bit more?
Steve: Sure. I will say that the banking industry in the United States is unique. And it’s very strong. And big banks have a role. And so, we don’t disparage what the big banks in our country do. They have a place. And there’s an important role that they play in our economic system.
However, having said that, for one of the beauties of our system is the ability for entrepreneurs and small businesses and individuals to pull themselves up by their bootstraps and start a business and make, you know, produce goods and hire people and build businesses, and in order to do that, they’ve got to have access to capital. Big banks have their place, but they’re not particularly adept at helping build small businesses and provide capital in smaller markets and rural communities.
That’s the place where community banks really shine. And one of the reasons I think that’s true, Darryl, and your experiences kind of point to this is, you know, a small bank is really a small business.
Darryl: Yeah.
Steve: Folks don’t maybe think about them that way, but it is a small business. We have, as I mentioned, 40 employees. We’ve got the same issues facing us as we try to grow that you have in your business. And so, I think there’s part of the reason that it works better for small businesses to work with small banks is we’re all in business together. We share some of the same challenges that you share or that you have.
So that’s part of the reason that I think small banks work best with small business owners or individuals or investors who are trying to build things.
Darryl: Yeah. And I can see that you can, you know, you can understand if there’s a regional development, you can say, okay, we understand, you know, the players in that market, we understand the, you know, the you know, I’m thinking like a retail center. You’re thinking, well, you know, we’ve seen the growth in that space. We know that there’s apartments going up here.
We know there’s opportunity here. We can see it and feel it. I know that I would imagine bigger banks that are out of town and again, not disparaging them because I do understand their role. I mean, we own them in our portfolios. Even the regional banks get in our portfolios. But the reality is, you just know boots on the ground, what’s going on a lot more.
The challenge, I think, happened a few years ago. I would like to get your opinion and thoughts on this is when we were all concerned about solvency with banks and run-on banks and, you know, there was concern, said, hey, a community bank is going to run out of money. What are we going to do? Can you tell us a little bit more about how you handle that and how you guys protect the consumer from a run-in bank? Especially for those that think, well, Wells Fargo safer. So, I’m just going to go with them.
Steve: Yeah. And you know, over the course of my 40 plus years in banking, there have been a few occasions, we can talk about those that where there’s been some economic upheaval and folks have become concerned about their bank or their money. And is it safe? One of the beautiful things about the American system is that we do have a safety net with the FDIC.
And all banks that are chartered in the United States participate in FDIC insurance. And every bank has the same guidelines and limits associated with that. So, there is that safety net there. And in my career, there’s been very rare occasions where folks have actually ever lost any money in a bank failure.
Usually there is a, the FDIC works it out so that depositors are protected. And with the $250,000 FDIC limit protecting us. And ways to structure around that. Most depositors, the vast majority of depositors are well protected in any kind of economic strife.
Darryl: You alluded to it, and I just want to double click on it just real quick. You don’t have to go in the details, but there are ways to maybe stretch that 250 just by registering accounts appropriately and some other tools. Right?
Steve: Right. Yeah. So, like, for example, a husband and a wife actually get $500,000, $250 each. And then if they have a child, they can, we can structure things so that they’re protected. We’ve also got, we participate in a network of community banks, called IntraFi.
Darryl: That’s huge, tell us more about that, I like that, I say that’s fun. I think that’s a really creative way to work this.
Steve: It is. And so we’re part of that network and there’s over a thousand other community banks that are also part of the network. And so, you can deposit up to $20 million with us, and we can spread that among those banks that are part of that network. Your primary contact is with us. But we then spread it for you. And each bank is a member of the FDIC and has that $250,000 limit.
Darryl: So the concern that people have of a community bank being too small because of the FDIC limits can be resolved by not only registering money appropriately, but also this IntraFi tool, which to me, when I heard about this years ago, I thought it was absolutely fascinating because I didn’t know it exists and it just impresses me.
I am so impressed. You know, we talk about innovation with internet technology, but, you know, I’m a student of this industry and I have studied it since 1995. I don’t consider myself an expert, just somebody who just continues to learn. But I do appreciate how many smart people make up this whole financial system. And to develop this IntraFi, to be able to handle the FDIC limits, in such a way that people have that peace of mind is really something that, of course, didn’t exist in the 30s and exists today.
I think bank run probability is extremely low. But if it does happen, I’m glad that there’s some safety nets at a community bank. And we think about, if you’re listening, you’re thinking about banking, many people have investment portfolios that are in these large banks. Bank of America, Wells Fargo. You also have regional banks.
That would get investment portfolios. I know there’s a regional bank index. You watch that, right? You watch that index. Does that have and some people watch it as well. Do you find that that kind of is a barometer of health, or is it a barometer of just interest in the space? From a speculation perspective.
Steve: It certainly can be a barometer of health. What I find more interesting is that I followed the regional bank index is more a reflection of what’s going on with interest rates. So, yeah, as rates go up or down the regional bank index often will adjust accordingly. So, as rates have gone up, the regional bank index has been impacted in a negative way, because banks have to adjust to rate changes.
And of course, banks, we try to structure our balance sheets and this would apply to any bank of any size so that where the rates are going up or rates are going down, we keep basically the same margin. But obviously there’s timing associated with that. And we’ve got assets and liabilities that reprice at different times on our balance sheet.
So, even though we try to, manage that as best we can, we can get caught, especially if rates go up fast or down fast if the Federal Reserve handles things in a methodical and slow manner, then banks can adjust more quickly. But, you know, in recent past, when the fed increased rates very rapid.
Darryl: Yeah.
Steve: It caused banks to have to adjust fast and we’re just not, our balance sheets are not tuned up to be able to adjust that quickly. I mean, there’s ways to hedge and protect that which most banks take advantage of. But still, in those kind of environments, it gets a little bit choppy.
Darryl: Yep. I could see that.
Steve: I’d like to say one of the thing about the safety net of the banks, you know, the FDIC is a great tool, but it is a regulated industry. And, most banks, well, all banks are regulated by some federal regulator, either the FDIC or the office of the Comptroller of the currency or the Federal Reserve.
One of those three agencies regulates a bank, and they all operate with really strong guidelines and rules and regulations. And so, banks have a responsibility to their communities and to their depositors to operate in a safe and sound manner. And the regulators help monitor that and regulate that so that banks are managed properly.
We are also regulated by the Texas Department of Banking. So, we’ve got a state regulated regulator that is looking over our shoulder checking our books, doing exams. And we also have the FDIC that comes in on a regular basis. So, all banks have that same regulatory framework. So, we’re, among all industries. I mean, I really feel like banks are as safe as any business because we’ve got so many eyes looking at our books. We have a public trust that we’ve got to maintain. And so, it’s critical that we live within those boundaries that safety and soundness prescribed for us.
Darryl: Yeah, a lot of people who may not understand, you know, the regulatory environment in banking. I just want you to hear that there is benefits of it, of this regulation and having, you know, reflected on what happened in the 20s and 30s and even going beyond that. You know, those regulations were fine-tuned, and they continue to be fine-tuned because humans innovate.
And we have new I mean, you know, I can think of just new recent, right, recent banking innovation that’s being revisited, you know with crypto that’s, you know, just creating a whole another facet. So constantly reinventing itself, but constantly with this consumer in mind, I got to land the plane. But just another question.
As I, as we do that, you know, a lot of people who are retired listen to this show and they, you know, go to like, you know, different websites to find the best rate on cash reserves. And so, can you help us understand how you guys compete there? I know as a business owner; you can’t race to the bottom in anything because it’s just a losing proposition.
So, I’m not assuming that you guys say, hey, we’re going to always have the best money market rate. I don’t want to put words in your mouth, but that seems to be rational conversation or a fair talking point. So, knowing that you can’t always beat the, you know, whatever bank or financial institutions offering the highest money market, in what way could you encourage the consumer to maybe, you know, find it, you know, offer a competitive rate, but work within y’all’s ecosystem. And what’s your value add towards that?
Steve: Right. You know, we operate in a competitive marketplace. And in our, particularly let me just use Boerne, San Antonio as an example. We do monitor the rates that our competitors are paying for money market accounts and savings accounts and certificates of deposit. And we want to be competitive with this marketplace that we call home.
Darryl: Understood.
Steve: So, we’re not trying to compete with rates in Chicago or rates in Tampa, Florida, or rates in San Francisco. That’s not our market. That’s not, we’re not trying to compete for deposits from those areas. But we are conscious of kind of the national scope on rates. But principally, we focus on our competitors here locally.
And we say, you know, we want to be trustworthy enough that you can trust that we’ve shopped the market and we’re going to provide you with a competitive rate. And generally speaking, we’re going to be in the top quartile of those rates because we want to serve our customers well and serve our market well.
So, we do some shopping on that. It’s not a rate we just pick out of the air. It is comparable to what’s happening around here. So how do we differentiate ourselves?
Darryl: Yeah, exactly.
Steve: It’s the person to person face to face relationship. I realize you can get on the internet and you can find a better interest rate than what you might have at Liberty Capital Bank, but what you’re not going to get if you do that through the internet is you’re not going to get the opportunity to get advice and counsel from a banker in the market who knows you, who is a neighbor of yours, who lives, works, and worships in the same community that you do.
And so, if there is an issue that occurs, a question, a problem, you know who to go to. And, you know, we say at our bank, you know, if you call our bank, you get a human on the phone. We don’t have a phone tree that you have to go through. And that’s part of the element of relationship that we think is valuable and helpful to folks who live their life in the neighborhoods and communities that we operate in.
Darryl: You know, I didn’t again, kind of it may be my generation. It’s probably every generation has a skepticism towards this, but the older I get and now I tell my kids, life moves at the speed of relationships. And so, I appreciate having the relationships. And not always trying to say, okay, where can I, you know, where can I maximize currently every single dollar?
I’ve just recognized that it’s so important to have these banking relationships and then I think you’ve did a good job, and I want to double click, make sure people understand this. There’re three tiers of relationships, and they all play different roles in the marketplace. The international banking system, which is, you know, a lot of, you know, very important in underwriting.
And then that regional banking space, you know, especially for, you know, cross pollination and cross commerce between states. And then you have the community banks and all three play a different role. And I’m glad you pointed that out, because I don’t think about that often. And I’m glad you guys know who you are in the community and in Texas specifically.
I’m glad to know you. And I know what you stand for, and I know the people you spend time with. So, I’m honored that you could come on today and share that story with us.
Steve: Thank you, Darryl, it’s a pleasure. And we appreciate the relationship we’ve got with PAX. And, And you, thank you.
Darryl: Thank you. Thanks for listening. I know we’re a little longer than normal. I appreciate you hanging with us and learning more about banking. To me, it’s always been a fascinating part of our financial ecosystem. And remember, you think different when you think long term. Have a great day.
The investment products and services offered by PAX are independent of the products and services offered by Liberty Capital Bank and are not FDIC insured, may lose value, are not bank guaranteed and are not insured by any federal or state government agency. Investment products and services are offered by appropriately licensed investment advisor representatives, subject to the general oversight and authority of PAX.
Listen on:
