Community Banking and Hurricane Relief / Equifax Breach / Community Banks That Break the Mold

By: Sharon J. Lorman
Jeffrey P. Marsico
Gregg J. Wagner

Guests: R. Scott Heitkamp, Chairman of Independent Community Bankers of America ® (ICBA) and President and CEO of ValueBank Texas; Carrie Heitkamp Quality Assurance at ValueBank Texas

Podcast Show Notes:

Our This Month In Banking (TMIB) podcast features discussion with colleagues and other industry thought leaders on interesting banking news that happened this month. TMIB will be available on the last Wednesday of every month here, and on Apple and Droid podcast apps for your listening enjoyment. Join us on your commute or at your desk.

Topic 1: Community Banking and Hurricane Relief
Start time 1:44
R. Scott Heitkamp, Chairman of Independent Community Bankers of America (ICBA) and President and CEO of ValueBank Texas in Corpus Christi and Carrie Heitkamp, Quality Assurance at the Bank, are TMIB’s guests for our first topic, Community Banking and Hurricane Relief. Hurricane Harvey was a catastrophic flood disaster in southeast Texas. Harvey made landfall on August 25th as a Category 4 Hurricane with winds of 130 mph near Rockport, Texas. As a tropical storm, Harvey dropped 40-52 inches of rainfall in southeast Texas and southwest Louisiana and triggered flash flooding in parts of Arkansas, Kentucky and Tennessee from August 31st to September 1st. As of mid-September, Texas officials said they believe that at least 82 people died as a result of the hurricane and intense flooding it brought to Houston and coastal areas. Following Harvey, Hurricane Irma was one of the most powerful Atlantic hurricanes ever recorded. It caused devastation in the Caribbean and made landfall on the lower Florida Keys on September 10th. Hurricane Maria followed, causing devastation in Puerto Rico. The devastation from all three hurricanes is far-reaching and will have long-term impacts on their respective regions.
In good times and bad, community financial institutions are woven into the fabrics of their communities. Extensive disaster-relief efforts are being run by community financial institutions to help employees and customers during these difficult times.
R. Scott Heitkamp has more than 23 years of community banking experience, currently serving as President/CEO of ValueBank Texas in Corpus Christi and as Chairman of the ICBA. As ICBA chairman, Mr. Heitkamp is chairman of the Executive Committee as well as the board of directors. He is a member of the Bank Services, Nominating and Policy Development committees. He also is a former chairman of ICBA’s Federal Delegate Board, ICBPAC and the Membership/Marketing Committee, and a previous chairman and current member of the Independent Bankers Association of Texas.
On the local level, Heitkamp has served as chairman on the Driscoll Hospital Development Foundation board of directors, is a current member of the board of directors of the Texas State Aquarium, is previous chairman of the San Patricio County Economic Development Corporation and is past president of the Aransas Pass Rotary Club. Mr. Heitkamp is also past president of the Independent Bankers Association of Texas Leadership Division and past advisory director of the Texas Tech University Banking School. Mr. Heitkamp is a graduate from Texas Tech University, where he received his Bachelor of Business Administration in finance.

Topic 2: Equifax Breach
Start time 21:30
The Equifax cyberattack potentially exposed the personal information of 143 million people due to its failure to patch a serious software vulnerability. Bloomberg reported last week that Equifax learned about a major breach of its computer systems in March, months before the date it publicly disclosed the recent hack. Equifax said the March incident was unrelated to the recently disclosed hack that was first announced on September 8, 2017 but occurred between May and July 2017. Equifax first detected suspicious activity on July 29, 2017 and hired cybersecurity firm Mandiant to investigate both the March and July incidents. It is still unknown who was responsible for the hack disclosed this month.
What impact does the breach have on banks including on consumer loan demand and regulation of the banking industry?

Topic 3: Community Banks That Break the Mold
Start time 30:27
Triumph Bancorp has built a business model around acquiring banks with lower loan to deposit ratios in rural markets and using those lower cost deposits to fuel growth in factoring and other nontraditional business lines that many community banks tend to avoid. Aaron Graft founded Triumph to buy distressed real estate assets and in November 2010 led a recapitalization of Equity Bank in Dallas which was under a cease and desist order from the FDIC. Triumph had $2.8B in assets as of June 30, 2017 and a year-to-date ROAA of 1.51%. Total Net Loans grew 77.7% from year-end 2015 to June 30, 2017. The company specializes in the construction, transportation and waste industries and makes loans on trucks, trailers and construction equipment such as bulldozers and cranes. The Company also provides factoring to independent owners and operators of trucking companies with fleets of 100 trucks or less.
Example of other banks that have broadened their revenue streams to include non-traditional sources include $3.4B (at June 30, 2017) Bryn Mawr Bank Corp. which launched a proprietary mutual fund under the umbrella of a new subsidiary, BMT Investment Advisors, and $229 million-asset Quaint Oak Bancorp which recently bought Premier Choice Real Estate and merged it into an agency it formed in 2009.

Watch for episode 22 of This Month in Banking to be released on Wednesday, October 25, 2017 and a new episode on the last Wednesday of every month.

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