Scott Heitkamp is set to chair the Independent Community Bankers of America at what will likely be a pivotal time for the banking industry.
Look no further than a community banker meeting Heitkamp attended last week hosted by President Trump at the White House. While regulatory relief was the main topic, Trump and his advisers also sought feedback from the bankers on the structure of the Consumer Financial Protection Bureau and appointments for key agency posts.
Heitkamp, president and CEO of the $214 million-asset ValueBank Texas in Corpus Christi, has made no secret that reducing regulatory burden will be his focus once he becomes the ICBA’s chairman on Saturday. In light of the recent meeting with Trump, he is feeling encouraged by the tone coming out of Washington, he said.
“The attitude has changed drastically,” he said. “The talk today is about the wind in our sails. We’re going to get some things happening for community banking … and I think people are feeling better about the industry as a whole.”
Heitkamp seems to have what is required to take a long view of the industry.
Growing up, he watched his father, Harlan, work as a civil engineer and serve as a community bank director. That exposure was enough to convince the younger Heitkamp that banking was the right career path.
“There was no Plan B,” he said. “I got to see the engineering industry early on and I knew I didn’t want to be an engineer.”
After graduating from Texas Tech University in 1984 with a finance degree, Heitkamp worked at a couple of small Texas banks. Around that time, Harlan Heitkamp bought a controlling stake in International Bank of Corpus Christi.
By 1987, Heitkamp was recruited to join his father at what would eventually become ValueBank. (Harlan Heitkamp remains the bank’s chairman.)
“My dad called me one day and said, ‘We’ve got these banks. You’re in banking. Why don’t you come and help us? ’” Heitkamp said. “We went from a father-and-son relationship to a partner relationship. I got married around that time and my wife said, ‘Oh my God, how do you live with one another?’ ”
Heitkamp, who became the bank’s president in 1995 and CEO five years later, said that, as the leader of a family-controlled bank, he knows what it means to have skin in the game.
“You see a different level of passion at family banks,” said Chris Williston, president and CEO of the Independent Bankers Association of Texas, which Heitkamp chaired in 2011. “It’s their money. … They’re probably a little more intense at some of those family legacy banks.”
When it comes to compliance, it doesn’t take much to get every banker in Texas wound up.
Regulation is “No. 1 on every survey we conduct,” Williston said. “I just did 18 town hall meetings around our state and saw four-fifths of our members, and the regulatory situation still dominates the conversation.”
While Heitkamp presided over ValueBank’s rebranding, his most memorable challenge involved consolidating the company’s four banks.
Heitkamp still recalls the date: May 8, 1991. It was also the day his daughter, Hailey, was born.
“We did [the consolidation] at noon and we had our daughter at 2 pm,” Heitkamp said. “We call Hailey our merger baby.”
Heitkamp also has a son, Andrew, who he exposed to banking at an early age.
“I put him to work early on when he was young,” Heitkamp said, recalling how they would go over credit applications. “I’d make him study some of our loan memorandums. On the way to school in the morning I’d ask him, ‘Should we make this loan?’”
Andrew Heitkamp has followed his father and grandfather into banking. He is a credit analyst at Centennial Bank in Lubbock, Texas.
Heitkamp is comfortable taking on more duties at the ICBA because of the people he leaves behind in Corpus Christi. And Heitkamp, who once led the Young Bankers Division for the Independent Bankers Association of Texas, also knows the importance of getting younger people engaged with the industry.
“I’ve been working over the last [few] years trying to get a variety of ages in our bank,” he said. “I get out of their way so they can do what they need to do.”
Succession has also been an area of focus for Heitkamp, who has made it clear that Seth Watts, a millennial and the bank’s chief financial officer, is poised to take the helm at ValueBank in the not-so-distant future.
Watts “will probably be the president of the bank within the next three years,” Heitkamp said.
A final area of concern for Heitkamp is the rapid consolidation of community banks. The number of banks with $10 billion or less in assets has decreased by nearly 30% since the financial crisis, to 5,807 institutions at Dec. 31.
“Without community banks the economics of this country really change,” Heitkamp said. “Eight out of 10 large businesses today got their start with a community bank. … Without the entrepreneurship of the community banker, you wouldn’t have their stories.”
While succession is a contributing factor, Heitkamp immediately points to regulatory burden as the main reason for consolidation.
“People are just saying we can’t afford it nor do I want to deal with it,” he said, adding that he wants to see an increase in tiered regulation that distinguishes even more between large and small banks.
To be sure, some of that already exists in areas such as stress testing, caps on interchange fees and call report disclosures.
“I believe there’s a difference between big banks and small banks,” Heitkamp said. “The regulations need to reflect that.”