Texas Gulf Bank succeeds by sticking to its roots
In the decade before Texas Gulf Bank expanded into Houston, deposits rose by 58 percent, to $302 million in 2010. By the end of last year, they were up by another 73 percent.
The chief executive and chairman, James “Jimmy” Brown, credits this sustained prosperity to a few simple practices hewed to for nearly a century serving as a traditional community bank in Brazoria County: developing relationships with customers, understanding the risks they face in the local environment and catering to their needs. Everything hinges on his staff, he said.
“It starts with people, community people. People who are knowledgeable and aware of what is going on in their surroundings,” Brown said. “These people have to be supported by technology. But if we didn’t have our people, we would essentially become an internet bank.”
Clients include some oil and gas companies, but the customer base consists primarily of small to midsize businesses, commercial and home developers, farmers and ranchers. The bank does little mortgage lending and is not large enough to serve as banker for, say, Fortune 100 corporations.
The privately held Texas Gulf Bank, with about 60 shareholders, also has bucked a national trend of consolidation among formerly independent banks. In 1980, there were about 12,000 independent banks in the U.S., a federal banking report says. By 2015, there were less than 6,000.
Likewise, the number of banks headquartered in Texas declined more than 60 percent over the last 25 years, said Mike Townsend, public relations director of the American Bankers Association. In 1992, 1,153 banks had their headquarters in the state. In 2017, the number had dwindled to 454.
Texas Gulf Bank’s longevity may also be credited to conservative banking policies designed to achieve modest growth based on making loans to businesses and people with quality credit. It typically keeps its loan-to-deposit ratio below the threshold allowed by banking regulatory agencies.
Last year, the bank held $522
million in deposits while its loans totaled $356 million.
“We fall to the more conservative side than the more liberal side,” Brown said. “We at times have taken some borrowers to our legal lending limit. But we don’t do that often. We are extremely careful if we do.”
Texas Gulf Bank’s forerunner, Freeport National Bank, opened its doors on West Park Avenue in Freeport in 1913. It provided payroll services for the Freeport Sulphur Co.
Freeport National remained sound throughout the Great Depression.
For decades, banking regulations did not allow the bank to open branches. Freeport National instead opened sister banks. Chemical National Bank opened in Clute in 1976. Coastal National Bank launched in Angleton in 1983.
After regulations changed and allowed Freeport National Bank to operate branches, the banks were merged under its current name, Texas Gulf Bank, in 1990.
Rodney Mowery, who farms a 2,500-acre spread in the Rosharon area of Brazoria County, said he started with Freeport National in 1983 and has continued banking with Texas Gulf.
Like many small and midsize farmers, Mowery is not liquid enough to buy farm equipment, fertilizer, seed, water, insecticide and sundry other items annually. He relies on a production line of credit from Texas Gulf Bank.
As he harvests the rice, sorghum, corn and soybeans he grows each year, he pays down his loan of at least several hundreds of thousands of dollars.
What is left over at the end of his season is his profit or salary.
When temperatures soared above 100 degrees nearly every day in August 2011, some of Mowery’s crops wilted. When Hurricane Harvey saturated the area last summer, his crops suffered again. Texas Gulf Bank has stuck by him in lean years as well as good.
“In the ag industry, there are always ups and downs,” Mowery said. “I’m sure there are times when the bank has been leery. But they always have been there for us.”
Mowery said he has approached the Farm Credit Bank of Texas, part of the national Farm Credit System established by Congress to provide loans to farmers and ranchers. But he said the Farm Credit Bank of Texas applies state or regional standards to Southeast Texas growers, and the standards are sometimes inappropriate for, say, Southeast Texas’ weather.
“Most of Texas Gulf ’s loan officers we have dealt with have some type of knowledge of farming and ranching. Sometimes, they know too much,” he said, laughing. “It’s always easier to deal with somebody who is local and knows the local production practices and needs. They are more familiar with the weather and the other growers in the area.”
In 2009, leaders of Texas Gulf Bank decided to venture out of Brazoria County and compete in the Houston market.
“We were so close to this large metropolis, we wanted to enjoy some of the fruits we saw there,” Brown said.
As a way of entry, it brought aboard several bankers with strong track records in Houston, especially in the Memorial villages area. These bankers had banking customers who followed them to the Texas Gulf Bank branch that opened at Voss and San Felipe.
Rich Jochetz, formerly of Tanglewood Bank, was among those bankers and he serves as Texas Gulf Bank’s president.
Texas Gulf later opened branches in other affluent areas of southwest and west Houston: CityCentre, West University and the Rice Village area.
Kendall Miller, president of the Tanglewood Corp., said his company banks with Texas Gulf Bank in part because Jochetz is so knowledgeable about the ins and outs of doing business in the Galleria and Memorial Village areas, where Miller’s company owns and manages shopping centers and development properties.
“Their bankers have great insight into how our part of town works,” Miller said, “and they have been a pleasure to work with.”