Today on the IC-DISC Show I had a great conversation with Adam Traweek of Amegy bank in Houston, Texas.

As a banker, Adam’s able to give us more of a lay person’s perspective of the IC-DISC and how he uses it as a potential differentiator when talking to potential clients.

We ended the conversation talking about the IC-DISC from a technical perspective and the different ways a bank can structure client loan documents and loan covenants to encompass an IC-DISC.

This was a wide ranging interview and I really enjoyed talking to Adam. I think you’ll appriciate his bright, down to earth approach too.

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Contact Adam
To speak to Adam directly about the services Amegy Bank provide, your can email adam.traweek@amegybank.com, call (281) 238-7148, or visit www.amegybank.com

IC-DISC Show 005 Transcript

Dave: Hi Adam.

Adam: Hi Dave.

Dave: How are you today?

Adam: I’m doing fine, good to talk to you.

Dave: Yeah, likewise. Well, thank you for joining me on the IC-DISC show, and we are live and recording.

Adam: Wonderful.

Dave: Yeah, so just to give a little overview, Adam Traweek is… are you Senior VP now?

Adam: Senior Vice President, yeah.

Dave: Yeah, Senior Vice President at Amegy Bank of Texas. We’re going to learn a little more about his background, and get kind of a banker’s perspective of the IC-DISC. Why don’t we start at the beginning, where you from?

Adam: I like to say all over Texas. What that really is a nice way of saying, is a bunch of small towns all over Texas. Say that, most of the time, right outside of Houston in a small town, East Bernard. Close enough to Houston, to still feel like I could be part of the city.

Dave: Okay, that’s excellent. You went to high school there in East Bernard?

Adam: High School, East Bernard. Then after high school, ended up at Rice University in Houston. Got a economics degree from Rice.

Dave: I understand you were a fireball, throwing fastball pitchers. Is that correct, on the baseball team?

Adam: Well, a pitcher and baseball team, out of that sentence, yeah, that’s correct. The fireball part of it… plus, so I was the little soft toss and left-handed pitcher. I enjoyed my time there, and had a ton of great experiences.

Adam: Made a lot of really good and lifelong friends, from my time on the team. We had a lot of fun and a lot of good guys, and great coaches too.

Dave: That’s great. That is great. Then you graduated from there, and then you went straight to Amegy, is that correct?

Adam: Straight to Amegy. Yes, I’ve been there ever since, so I-

Dave: That’s what, 10, 12 years ago? How long have you been at Amegy?

Adam: Almost 13.

Dave: Okay, and-

Adam: Yeah. I started-

Dave: Go ahead.

Adam: I was going to say I started in the Officer Training Program. The bank has a developmental program for college grads, that they hire a couple of times a year for.

Adam: Being like many 22 and 23-year-olds right out of college, kind of had an idea of what I wanted to do. Like looking back, it turns out I don’t know that I really had any clue, what I really wanted to do at that time.

Dave: Sure, so why did you pick Amegy? Was it because of the officer development program, that drew you to the bank, or there’re other things?

Adam: It was. The chance to go somewhere and be trained, and given a skillset and then some exposure to different industries, and to finance at a deeper level, was really appealing. Also, the interview process was really enjoyable.

Adam: I get to meet with some really senior people around the bank, and really get a great feel for the culture, and how they approach banking in business. Just there were multiple components of that, that just really rang true and joined them.

Adam: I’m so glad I did. I’m not sure if I got lucky, or if I was all that insightful or what, but it’s been a great run.

Dave: Oh, that is great. I guess as the kind of circle of life goes, I think in the last few years, haven’t you been involved in that program, more in the mentor or instructor level?

Adam: Very much, more so it’s something that the bank believes strongly in, is engaging a lot of the young bankers in the recruiting effort. That can mean anything from on-campus interviews, to showing interns and potential candidates around the bank, when they’ve come their interview days.

Adam: All the way to decision committees on, and working with our HR partners, in getting offers out and with our college recruiting team, getting offers out to the various candidates. Yeah, I’ve had a little bit more of a leadership role, over the last couple of years.

Adam: That’s been a lot of fun, really rewarding. I make this comment every year. I look at the candidates that we hire, and just how sharp they are. How well-prepared they are to enter the job market, in so many ways.

Adam: Kind of joke with some of my colleagues, and say, “Man, I’m glad I’m not competing against them as a fellow potential banker, because I don’t know that I’d get hired today.”

Dave: Well, it’s good you got it in when you did.

Adam: Absolutely.

Dave: Your title is Senior Vice President, but what does that translate to? What’s your current role at the bank? What do you do? Do you manage a team? Tell me about that.

Adam: I do, and so I love the term player coach, that it applies in so many ways. I think kind of old school baseball, there were people that were player coaches up until the ’40s and ’50s, and 1940s and ’50s in baseball. Not so much anymore in baseball, but in the job force, very much a player coach.

Adam: I think being able to be a player coach, really helps keep your perspective grounded in some of the day-to-day challenges, some of the real work going on at a level, either one or two levels kind of junior to you. That’s a good tool to use, in how you manage your team.

Adam: I get the privilege of working with a team of about eight here, outside of the Officer Training Program. These are real life bankers and support staff. We have an experience level really across the board. We’ve got two-year bankers on my team, and we’ve got 35 and 40-year bankers on my team.

Adam: Some really talented people. The fun part about the team is, there’s such a diverse skillset and diverse experience background among that range, that really brings a lot of unique perspective, to how we tackle problems for customers on a daily basis.

Dave: Yeah, I know. I’ve seen that firsthand. I mean, in the interest of full disclosure, I’ve been a customer of the banks for several decades. I am certainly familiar with that teamwork approach, to customer service. What-?

Adam: We appreciate your business?

Dave: Well, you’re welcome. What do you most like about being a banker?

Adam: I think every day, I’m amazed by the entrepreneurial minds in our state, in our city, in our country. How so many people come up with unique ways to solve problems, and start a business to do just that.

Adam: I guess that description maybe sounds a little technology, and intellectual-property focused and it’s really not. It could be as simple as a dirt contractor, and somebody who pushes dirt around with heavy equipment for a living.

Adam: All the way to some really, really intricate manufacturing processes and everything in between. It’s so cool to be able to work with company owners, and privately-held companies, to help them grow, to help them impact more families.

Adam: To help them achieve the kind lifestyle, and the goals that they have set out for in their lives. That’s just super rewarding.

Dave: Yeah, I know the feeling, and I’ve seen that firsthand with the clients of ours that I’ve introduced you to, that enthusiasm you have of working with those entrepreneurs. Hey, while I think of it, because our listeners are not all in the Houston area.

Dave: Amegy Bank of Texas is a bank that’s based… the headquarters are in Houston, Texas. It’s part of a larger banking organization, Zions Bancorp. Is that correct, Adam?

Adam: That’s right, Zion Bancorporation, out of Salt Lake City, Utah. Amegy is one of about seven affiliate banks. We all fall under Zions, but we have a decentralized model in so many ways, and so have different flags under the kind of the western states, Texas and Amegy are the farther east.

Adam: Kind of Texas and East is really the footprint all the way through New Mexico, Colorado, Arizona, Utah, Nevada, California, a little bit in Idaho and Washington, Oregon. The bulk of the head count, and kind of the lending assets are in California, Texas and Salt Lake City, Utah.

Dave: Okay, and you’re based in Houston?

Adam: Yes. Yeah, that’s correct.

Dave: Yeah, I just realized we missed there, so well, since this is the IC-DISC show, I guess we need to talk some IC-DISC. We’ve got about 30 minutes left, so I’ll turn it over to you. Can you take 30 minutes to share all the knowledge you have of IC-DISC?

Adam: Well, I’ll-

Dave: I’m just kidding.

Adam: Two minutes sounds better.

Dave: Okay, so given that you’re not a CPA, how do you describe the IC-DISC like to your customers and potential customers as a banker? Which is more of a higher level overview, but how do you typically describe it to folks?

Adam: I’ll start off first in a little different way, before I get to the description. I’ll start off with a question. I think it’s important as a banker to understand, the revenue mix of particular clients. Kind of where revenue comes from, where their customer comes from.

Adam: If they’re making a product or performing a service, where the product is going or where the service is coming from. If at any point along that line of discovery, we uncover a good or service that has an international component to it.

Adam: Whether they’re selling directly to the international market, or international companies or not, we immediately know to consider the IC-DISC as a potential tool for them to use, to gain some tax advantages. That they might otherwise not be able to.

Adam: I think the description of an IC-DISC is simple. Whenever we do identify an opportunity, or are asking that question, we refer to the DISC by name. Then if they asked for more, we say, “Well, look, it’s an export tax incentive program, that has really been around a long time through the IRS tax code.”

Adam: Many PPA firms specialty, tax advising firms use that product in their various forms or functions. It’s a product that’s not meant for every situation. If it does fit your particular situation, it’s really a great benefit from a tax strategy standpoint. In taking advantage of a longstanding tax program.

Dave: Okay, well, that’s a nice, succinct way to describe it. What in your experience…? I mean, other than some export revenue threshold, what types of companies have you seen that it works best for?

Dave: Is there a particular ownership structure you see, or kind of a mindset of the owner or who does it seem like it works best for?

Adam: Well, I’d say, certainly privately-held companies. Maybe that’s not exclusive, but I think predominantly what we see is privately-held companies. A lot of times that’s single owner. I think I can think of a couple of situations off-hand, where it’s not single owner, but predominantly single owner.

Adam: Generally, it’s an owner that has a creative mindset, for lack of a better term. They can see the value in executing a unique strategy, and really want to go and pursue something that is new, and that they may have not heard about from their CPA and their trusted advisor.

Adam: Who may be with a firm that may or it may not, provide the service. I think that type of situation… other than that, I mean, I think there is a pretty wide net of companies, and kind of different personalities and type of individuals, that we’ve seen be open and willing to use the DISC.

Dave: Okay, but it certainly helps if the owner has a creative mindset, or an outside-the-box mindset to even be willing to entertain a novel idea. Is that right?

Adam: Absolutely, and that’s kind of back to the entrepreneurial mindset. I think those two go hand-in-hand.

Dave: Now, that makes sense. That’s been my experience as well. How do you strategically incorporate the DISC into your service offerings? I guess before you answer that, I know that the bank strategy, is to try to add value to their customers, whether it’s a product they offer or not. Is that accurate?

Adam: That’s right. I will say-

Dave: There is a lot of recommendations or introductions, you all will make, right or?

Adam: That’s accurate. We’re in business to be able to help our customers solve problems, kind of no matter what that problem is. We’re not doing our job as bankers, if we don’t understand ancillary product offerings, from a variety of sources out there.

Adam: Whether that be tax advice or MNA advice or insurance advice, Excel and the list goes on. That’s part of the job of a banker, is to understand where they can help a client, who might be experiencing a problem.

Dave: Okay, that’s perfect. I’m guessing that creative mindset you talked about, is not really just for the DISC, but really for any other ways you can help them, right? You can’t help somebody who doesn’t want your help.

Adam: That’s right. Or I guess maybe a different way to say it is, you can’t uncover opportunities to help, unless you ask the right questions.

Dave: Oh, okay. Yeah, excellent point. Excellent, okay.

Adam: I think back to your original question around just, how we incorporate the IC-DISC into our service offerings, it’s really easy. It’s about asking that question. Back to the original exploration, we’re meeting with a potential client of the bank, or an actual client of the bank.

Adam: We really try to understand their business in a variety of aspects. That includes their sources of revenue, and their customer base. If it feels like an opportunity for IC-DISC, I’m not an IC-DISC expert by any means. My two-minute explanation, didn’t go very far.

Adam: It’s really about getting the right person, the right team and the right group of people involved, to consider whether or not the disc makes sense, for that individual company. I think as far as how we use it to differentiate ourselves, I mean, we structure an offering.

Adam: Whenever we come in and we’re talking about a loan or deposit, or some other product or service that the banks can offer, we will look for other ways to make a relational difference with that company.

Adam: If that means introducing them to someone who’s outside the bank, or the bank didn’t make any money off of a particular introduction, well, that’s okay. It’s good for the client.

Adam: Hopefully, they kind of see how we do business, and that we have interests that align with them being more successful. That incentivizes them to come and consider us as a banking partner in the longterm.

Adam: In fact, I can think of of one situation earlier in my career, where we were looking at moving a particular company, over from another lending institution. The lending institution was one of the mega banks, and their loan pricing was just incredibly cheap. They weren’t charging any fees.

Adam: We were having a hard time, creating an economic incentive for the company to move. They said, “Well, hey, we like you guys, but you’re not showing us any value, outside of kind of a relationship-based approach. While there is value there, we need to have a good reason economically too.”

Adam: We said, “Well, okay, let us take a creative approach.” As we dove into the data, and we understood their… it appeared to be a nice IC-DISC opportunity. Thanks to you and your firm Dave, for answering some silly questions-

Dave: Yeah.

Adam: … we ended up introducing them to you guys, and y’all made us look like heroes and export tax advisors. You really made us look good. They in many ways, gave us credit for first some tax savings that you helped them achieve. Thanks for that.

Dave: Well, hey, that’s okay. Did they end up becoming a customer then?

Adam: They did. They’ve become a customer, and they’ve been a good long-term loyal customer for about eight or nine years now. I think the money that, that client has paid to us and interest expense, and bank fees and other things over the past eight or nine years. It’s been offset 10 fold by the savings that they’ve achieved, through the IC-DISC. They really look at us fondly.

Dave: That is awesome. Does that mean they don’t beat you up, on 20 basis points every chance they get?

Adam: That’s right. They have a little more tolerance, for our desire and need to make money as a bank. They’ll fight us over 20 basis points.

Dave: Awesome, that is awesome. You had mentioned earlier, that there was a number of ways that you seek to help your clients. Aside from non-banking things such as tax incentives in general, via IC-DISC or some other incentive, insurance, other things.

Dave: I’m just curious, what do you look for in a firm in general, that if you are looking to refer some non-banking services to…? What matters to you or what do you look for? Is it, how fancy their offices are?

Dave: How many years they’ve been doing it? How pleasant they are to work with, how responsive they are? What do you use as your criteria, to kind of choose those partners?

Adam: Well, certainly all of the aspects that you mentioned are important, and I think can factor into the equation. I think one word and one idea really rises above the rest, and that’s trust.

Dave: Okay.

Adam: I’d say especially in the situation that I just described, I was a young banker at the time, and fairly inexperienced. I had developed a high degree of trust, in a potential business partner.

Adam: Being able to, with confidence introduce someone who is outside of the bank, a third-party service provider and say, “Hey, I think these guys or this group of people, or this lady is going to be good to know, and can help you with your business.” With confidence, makes all the difference in the world.

Adam: I don’t know at what point relationships reach that. It’s more of a feel, than kind of a checklist that you hit, or a potential or a particular inflection point.

Adam: Whenever that feeling of trust is reached, I think that’s what makes that third-party non-banking kind of service provider, really elevate themselves to someone I want to introduce to clients, friends, and prospective clients, et cetera.

Adam: I think some of the other items that you mentioned as well, are they good to work with? Well, yes, that’s hugely important. That speaks to the level of confidence, and their ability to execute. Which if they can execute for me, well, then I feel confident they can execute for my client.

Adam: Then the amount of experience they have, I think that goes without saying. That somebody has seen almost everything out there, really can add value at a level where someone who has three to five years of experience, just never will be able to.

Dave: Now, that makes sense, because I guess at the end of the day, when you make an introduction to somebody, you’re putting your reputation on the line every time, aren’t you?

Adam: That’s right. I think there’s two ways to learn that lesson. There is the hard way-

Dave: Yeah.

Adam: … especially when you’re young and inexperienced. Although I guess you can learn that same lesson, when you have 30 years of experience too, but you certainly are putting your reputation on the line. You have to be careful with that, and thoughtful with it.

Dave: Yeah, I know that from our businesses, and introductions we make as well. We have a similar philosophy as the bank, in that we just do one thing, the IC-DISC. There’s lots of ways that our clients can benefit, from people we know.

Dave: Yeah, I know that feeling of putting your own reputation on the line. What I’d like to… now, let’s change gears a little bit, and get a little bit into the banking nitty gritty of IC-DISC.

Dave: The reason I ask this is that, so many times when we have a new client that comes on board, probably only 5% of the time the client comes to us from a banker referral. It’s mostly an existing client, and then followed by probably their CPA firms, kind of the next biggest source of new clients.

Dave: An interesting thing happens, so for the 95% of the time that the bankers didn’t introduce us, at some point in the first few months, we invariably get a call from the banker who has little to no IC-DISC experience, and we need to help them out.

Dave: I don’t say that with any negativity or criticism, because it’s just a very niche part of the tax code. I always tell the bankers. They feel kind of bad, because they feel like they should know about this. I try to convey to them that they shouldn’t, and most bankers don’t.

Dave: Since you’ve had some experience, for a number of years with IC-DISC and with your clients. I’d kind of like to talk about like loan structure, deal structure, for the different types of IC-DISC.

Dave: Honestly I’m asking this, because I myself don’t really fully understand it. These bankers will call, they’ll ask me some questions. I think I know the direction they’re going, but I never really know kind of for sure, how they’re looking at the IC-DISC. That’s what I’d kind of like to talk about.

Dave: Let’s just start with like a flow through a corporation, an S Corp or LLC, or partnership that has an IC-DISC. That typically, that the operating company owns the IC-DISC. What will you all do for loan structure, loan covenants to kind of factor in the fact that they have an IC-DISC?

Dave: Then I’m going to contrast that with a C Corporation, where the individual shareholders own the DISC. Maybe kind of contrast, if you handle those the same, or if you handle them differently.

Adam: All right. Dave, there is no question that the mechanics, and some of the different structural considerations for an IC-DISC, can impact how loan structuring can work within the context of the DISC. Happy to try to kind of walk through that, and how we’ve looked at it in the past.

Dave: Yeah.

Adam: I actually think it’s easier to start with that flow through corporation, where the shareholders own the DISC. The problems are… I think they’re more clear, and the solutions are a little more clear.

Dave: Okay.

Adam: First, just a couple of comments. I think it took us a period of time, to get comfortable with the mechanics, and how to craft covenants and flow of funds. Then also, how to really set expectations, and communicate with the owner of the company.

Adam: Around kind of a structure that we could both the bank and the owner, could be good with. Then still met kind of IC-DISC requirements.

Dave: Okay.

Adam: Just probably the bigger piece was understanding and communication, to your point. Bankers aren’t IC-DISC, or tax experts in any way. Those two components have their challenges. Back to kind of the DISC structure.

Adam: I think the two main components that get impacted in a bankers’ view, on a DISC are things that are really important to us, because we care. Generally, we’re loaning money to that company. Otherwise, you don’t have the banker involved.

Dave: Sure.

Adam: If you’re lending money to the company, you likely care about cashflow and things that impact cash flow, and capital structure, and things that impact capital structure.

Dave: Okay.

Adam: To address both of those points, cashflow, when the DISC is active and there are DISC commissions being paid out to that the DISC entity, there is a reduction in perceived cashflow by all standard definitions.

Adam: One thought is to amend the definition of cashflow, to capture commissions being paid to the DISC. You can do it very simply in naming those DISC commissions.

Adam: Or you can do it in a slightly more complicated way, where the shareholder is contributing back the excess DISC commissions, over their individual tax liability to the company, and capture the delta there.

Adam: Then a fairly similar concept around that contribution, back to the operating company from the shareholder, that’s frequently done in the form of sub-debt. The bank would need to contemplate subordination of that debt, or subordination of those funds that are coming back into the company, from the shareholder.

Adam: What form they’re going to take, if there’re truly will be of a debt form with a note formalized, or if it’s really more of equity. The donor’s willingness to subordinate that, if it is in fact that, is a component of that too. Part of that’s the discussion, and the communication piece that I referenced earlier.

Dave: Okay, that makes sense. I was familiar with some of that. Like amending the definition of cashflow, I hadn’t heard of that approach, but it makes perfect sense. It’s like you’re trying to normalize the cashflow.

Dave: Kind of like when a company is looking to sell, they’ll kind of normalize the cashflow by adding back, like owner perks and such that… like a large corporate buyer, wouldn’t be paying. It seems like that’s kind of a similar approach, to sort of normalize the cashflow. Did I understand that correctly?

Adam: Absolutely, that’s 100% right. It’s really an expense that’s controllable, to the point where it could really be turned off if needed to, at some point to provide that additional cashflow.

Adam: In our view, the overall picture of cashflow isn’t really changing, but the presentation of it might be. That’s how we look at it.

Dave: Yeah, that makes sense. Then I’m guessing then that the other situation we see frequently, that would have to be easier as what you have, a flow-through corporation. Like an S Corp, where the flow-through corporation itself owns the DISC.

Dave: That the DISC is effectively just a wholly-owned sub, of the operating company. That the commission gets paid at the DISC. Then the DISC returns the money immediately to the company, as dividend income. I’m guessing that’s easier to get a comfortable with. I mean, is that a fair assumption?

Adam: It is, with the assumption that you’ve got accounting presentation, that’s accurate and a large enough. Hopefully, sophisticated enough accounting firm, to document and explain that, in the notes to the financial statements every year.

Dave: Okay.

Adam: I think that’s where there is frequently confusion, is a company prepared financial statements. May present the information accurately, but when there’s not those added notes, there bankers are going to ask questions. We would do the same thing in many of those positions, to make sure we understand.

Dave: Okay, that makes sense. You need to make sure that the financials, appropriately reflect that structure and the timing, and the receipt of the dividend income by the operating company.

Adam: Yeah, that’s accurate. I think we see…. and Dave, any clients that you’ve ever had experience with in the world of IC-DISC, I think we’ve seen companies that are really nice size, larger, middle market, privately-held companies. 2, 3, $400 million a year in revenue.

Adam: Sophisticated internal accounting, and financial reporting capabilities. Have a good well-known or well-respected CPA firms, doing audited financial statements every year. Follow gap guidelines.

Adam: Then kind of on the smaller end of that, you have kind of really small businesses, down in the $10 to $15 million a year revenue space, that maybe feel a little more mom-and-pop. They’re frequently great companies and really well run, and doing high-margin work.

Adam: They have maybe a little less controls, a little less documentation. Really at that size, they’re likely with a smaller CPA firm and not required to produce audited financial statements, which is fine. We see that too. Just the information is less available and apparent, in those situations.

Dave: That makes sense. I don’t know if I’ve ever shared this with you, but probably three quarters of our IC-DISC clients don’t borrow money. It’s one of the reasons that oftentimes that the… well, sort of does two things.

Dave: One is, if they’re not borrowing money, I’m probably not thinking about an introduction to another banker. Without borrowing money, they’re just not as seen as compelling of a customer. The other thing that does is, it seems like many of our clients are the largest client of their CPA firm.

Dave: We have clients that have $100 million a year of revenue, 5, 6, 7, $8 million of taxable income. Their CPA firm is a tax guy, working out of the spare bedroom of his house.

Dave: It’s because they don’t borrow money, there is not a bank requiring audited or reviewed financial statements. All they use the CPA for, is just preparing the corporate and individual tax returns.

Adam: Well, I’d say we see lots of customers, that fit that profile. Dave, I know you pay more attention to a IC-DISC and IRS tax code changes. In the banking world, deposits are sexy again these days, so-

Dave: Oh, are they? Okay, that’s good to know.

Adam: Some-

Dave: Now that interest rates are above zero, deposits are more attractive?

Adam: That’s right. There is a reason they are above zero. It’s supply and demand. You’ve got many banks out there, who are seeking to grow their deposit base and fund their loan growth, with the cheapest cost capital available.

Adam: That’s generally demand deposits, from operating accounts for many of these companies. If you notice any of your customers, is not generating some level of return on their cash balances, they should be talking to their bank or a new bank.

Dave: Thank you for that, that is really good to know. I guess I’ve kind of just gotten lulled into a sense of complacency, that banks don’t care about deposits.

Dave: Of course, I don’t think any bank ever said, “We don’t care about deposits.” There was a sense that I would receive from banks, not just Amegy but that others four, five, six years ago, that deposits weren’t as sexy as loaning money.

Adam: Well, you read the dailies 100% correctly on that. That like, rates were so low for so long, that most bankers didn’t want to talk about deposit rates, because there was nothing to talk about, so the winds shifted.

Dave: Okay. Well, that is good to know. Clients that have substantial deposit balances, they should actually be making some money on that, is what I think I hear you saying.

Adam: They should. I’m not a rate expert, and nor am I licensed to really talk about specific rates. I know, kind of the last check I saw as of this morning, many of your overnight rates were anywhere between kind of 1 and 2, to slightly above 2%.

Adam: Just depending on what those balances were in. Of course, I’m referring to kind of larger dollar clients-

Dave: Sure.

Adam: … that have the excess cash, to just sweep into accounts to earn interest.

Dave: Okay. Well, that is very good to know. I’m just making a note of that, so deposits are sexy. That’s a good thing to know.

Adam: That’s a great title.

Dave: Yeah, deposits are sexy. I guess as we’re kind of nearing the end here, I want to just talk… we kind of touched on it a little bit. As far as the type of clients, that you and the bank are best able to serve, I’d like to talk just a bit more about what the characteristics are, of the client you can most help.

Dave: The example you gave earlier, you were talking about that your customer was with one of the mega banks, they had great rates. You couldn’t really match the rates, and some of the fees and stuff that they were waving or reducing. That it made it really difficult for you to compete, kind of on just pure price.

Dave: Is that still kind of the case, that competing on prices is…? Because I guess there is always somebody willing to do something cheaper, right? With that in mind, what are the characteristics you look for, where you really can help a company?

Adam: Well, you’re right. It is hard to compete solely on price at times. It’s generally not a great position to be in because… that’s the point you illustrated. Depending on the time, there is always somebody willing to be cheaper.

Adam: I think where we do get really aggressive on price, and actually in that part of situation, we matched price. We weren’t going to let it be a race to the bottom. We wanted to show that we could provide some value in other ways. That was a more meaningful discussion with the client. That’s kind of where we-

Dave: Okay.

Adam: … we focused our efforts. I’d say in looking at the existing clients, and potential clients of the Amegy, we largely focus our efforts on privately-held, which means in many cases family-owned businesses. The core of the bank was really built on businesses, $10 million to $500 million in revenue. That’s a pretty wide swath.

Adam: Depending on who you talk to, that’s defined as middle-market companies or lower-middle market companies, if you’re talking to a big bank. We really like that sweet spot. That’s how the bank was really built.

Adam: Then over the years, we added on ancillary service offerings, to take care of the needs that companies and company owners, ran across in that space. One, we’ve got to be able to serve bigger than that. We have a syndicated loans desk, where we can lead syndications, some very large syndication.

Adam: Many of those are for family-owned, privately-held companies that have grown substantially past that revenue bandwidth. Then we also have a great and growing small business portfolio companies, that are less than $10 million in revenue.

Adam: I think just from our differentiation, from our competition in the market, Amegy has really, really tried to maintain consistency of approach with our clients over the years, and not take a flavor of the month kind of attitude. We want to be competitive, and we want to earn potential clients’ business.

Adam: We want to make our existing clients happy, through our service level. There’s industry and other challenges to that personnel. It’s never fun when somebody leaves, but that does happen at times.

Adam: I think we have a really unique approach, from the executive team all the way down to the baby bankers, I’ll call them, on how we try to take care of clients. It’s not perfect, we’re not perfect.

Adam: We work really hard to communicate well, to really take a lot of effort in thoughtful approaches, in how we bring value to our clients. In many cases, sometimes it’s just staying out of the way. We like to think we-

Dave: Okay.

Adam: … trace companies and company owners, that are top of their niche or top of their industry. We’re just there to help. Sometimes we can offer advice that’s really valuable.

Adam: Sometimes it’s them picking up the phone and saying, “Hey, here is what I need you to do, can you make this happen?” It’s a lot of fun to be able to say, “Yes,” in those situations.

Dave: Okay. Well, that really… I think gives some insight into the types of companies, that you play best with or work best with. Well, I guess as we wrap up here, is there anything I didn’t ask you, that you think needs to be mentioned?

Adam: Well, certainly not about the IC-DISC. I think the depth of my knowledge around IC-DISC was tested any further, I’d be exposed.

Dave: Okay, fair enough. I only have one more question for you, and I think this one will be pretty easy for you. What’s your contact info, email address and phone number?

Adam: Sure, happy to share that. That is easy. Thanks for finishing that way. Again, my name is Adam Traweek. My direct office line is 2812387148. My email address is, adam.traweek, T-R-A-W-E-E-K, @amegybank.com. For anybody outside of Texas, that doesn’t know how to spell Amegy, it’s, A-M-E-G-Y.

Dave: Excellent. Yeah, it’s kind of one of those made up names. I remember when you all rebranded.

Adam: We-

Dave: Yeah, I remember one of your colleagues, I was asking about the name. I remember he said, “I know it sounds kind of peculiar, but over time it’ll sound very normal,” and he was right.

Adam: It really is.

Dave: There was one more question I was going to ask you, your contact info. Oh, are you generally amenable? Say some CFO or business owner of a company in the Houston area or even in Texas, would like to just call you.

Dave: Just pick your brain on something, are you generally amenable to those calls? Or do you have a strict screening process, that they have to jump through, 10 steps to talk to you on the phone?

Adam: No, I’m generally amenable. I try to do a good job of being in my office, and returning phone calls within 24 hours if I’m not. I love to talk to people, and love to meet new owners, CFOs, people who are curious about ways to add value to their company.

Adam: If I can be some small part of that, that’s a lot of fun for me. Happy to take any and all comers.

Dave: Well, that is great. Well, Adam, I appreciate you spending some time to talk to me on the IC-DISC show. I hope you have a great-

Adam: Dave, it was really great-

Dave: Oh. Go ahead.

Adam: This was a lot of fun.

Dave: Well, good. Well, it was fun for me as well. It was fun for me as well. Well, you have a great day then, and I’ll talk to you soon.

Adam: Thank you Dave, you too. Take care.

Dave: All right, bye. There we have it. Another great episode. Thanks for listening in. If you want to continue the conversation, go to icdiscshow.com. That’s ic- D-I-S-C-S-H-O-W.com.

Dave: We have additional information on the podcast, archived episodes, as well as a button to be a guest. If you’d like to be a guest, go select that and fill out the information. We’d love to have you on the show. That’s it. We’ll be back next time, with another episode of the IC-DISC show.