Pitching In to Serve

Story by Evan Sparks
Photos by Kevin Brusie

Even in the springtime, the unclouded Midland, Texas, sun cooks things up to more than 90 degrees. Blistering winds roar up from the south, rattling the window panes in Ken Burgess’ office on the 12th floor of FirstCapital Bank Plaza. Extending to the horizon on all sides are the hundreds of oil rigs dotting the landscape beyond the downtown high rises.

Two decades ago, Burgess wasn’t taking in the view. He was making the rounds down on the streets, a soon-to-be-unemployed banker trying to open a bank in a town that wasn’t sure it needed another one.

“I’m sitting in my office back in Abilene in 1997, and we just signed an agreement to sell the bank that I was the president of,” Burgess recalls. “Am I going to stay and work for this acquiring bank or am I going to do something else? It just hit me that now might be a good time to go try to start a bank.”

One of the first people Burgess called on was a prominent lawyer named Mike Canon, whose brother Burgess had gotten to know in Abilene. “My brother called me on probably a Wednesday and told me that there’s a guy coming over to Midland that weekend and that he’d be calling me, and it would be a good idea for me to talk to him,” Canon remembers, recalling Burgess’ decisiveness. “We had breakfast that Saturday morning early. Ken at that point informed me that he was thinking about starting a bank here in Midland. One of the things I’ve learned about Ken is when he says ‘I’m thinking about something,’ that means he’s probably going to do it.”

Canon was impressed with the pitch. Burgess knew Midland well—he had started his career at the old First National Bank of Midland—and he was convinced that the Permian Basin needed a new community bank, especially after a wave of failures that had followed the 1980s oil crash. Canon connected Burgess with another local banker and agreed to serve as the bank’s lawyer. Today, Canon is chairman of the holding company’s board; Burgess is the bank’s chairman.

Burgess discusses building plans with a commercial loan customer.

But not everyone was impressed. The oil-driven Midland economy was weak. Oil prices were around $12 per barrel and heading downward. Not only that, he hadn’t lived in Midland for many years. “When Ken first came, I didn’t like him,” says then-mayor Bobby Burns. “My first response was, ‘Here’s one that came from Abilene to rebuild the old First National Bank.’ I didn’t want the outsider taking that role.”

Burgess won over the skeptics. For the next two decades, FirstCapital Bank of Texas would grow organically to $1 billion in assets and four markets sprawled across west and central Texas. And he became a recognized leader in his adopted hometown and the other communities his bank would call home. “It took me no time at all to understand that this guy was a Midlander,” Burns confesses. “It’s simply a matter of giving Ken a chance and he grabbed it and took it. Right now, if Ken asked me to do anything, I would do it.”

Banking ‘in the blood’

Kenneth L. Burgess Jr. is the oldest of three sons of a West Texas farmer. “When I was about six years old, my dad handed me a hoe and had us out working on the farm,” Burgess remembers. It was hard, hot, dusty work, but the boys had fun too. (Ken’s gifts for both leadership and numbers manifested early on when the Burgess brothers and the neighborhood boys would get together to play tabletop football games, says middle brother Greg. “Ken set himself up as the NFL commissioner for our neighborhood,” keeping the stats across all the teams in the “conference.”)

When Ken was in eighth grade, his father changed careers in a way that would transform the family. With his farming experience, Kenneth Sr. became an ag lender at a community bank and swiftly rose to be bank president.

As a result, “I had the opportunity to work in air conditioning in a bank,” Burgess jokes. “I saw that as a job that I would really enjoy.” After studying accounting at Texas Tech in Lubbock, Burgess went to work for First National in Midland in 1979. His two younger brothers, Greg and Brad, also ended up working for banks in Amarillo and Lubbock, respectively, with both eventually joining Ken at FirstCapital Bank. In 2001, Greg led a team in opening up the Amarillo market for FirstCapital Bank; in 2007, Brad launched the bank in Lubbock and is today CEO.

Ken and Cathy Burgess, married since 1980, at their home in Horseshoe Bay, Texas.

Ken is quick to point out that FirstCapital Bank is not a family-owned bank; Burgess family members own no more than about 8 percent of it. But having family ties in the management team has helped it to function well, Greg says. “Ken early on said, ‘You need to be able to ask me questions. You need to critique me. You need to point things out because you can’—meaning that because I’m a brother, I can do that.” And each of the brothers brings unique strengths to their work.

Ken met his future wife, Cathy, when they were both working in Midland after college, and they married in 1980. (Cathy is the yin to Ken’s yang; her effusiveness and infectious laugh balance Ken’s quiet reserve and dry wit.) The family banking tradition continued with the Burgesses’ three now-grown kids. Kenneth III, known as “KB3,” runs FirstCapital Bank’s loan review function from Amarillo. Their daughter, Brittany Livingston, was a credit analyst at a bank in the Dallas area before she and her husband opened a chain of bakery cafes. And their younger son, Will—a musician whom Ken and Cathy never thought would be interested in banking—this spring started work at a community bank in Nashville.

“It’s kind of been a family business for us,” Ken says. “It’s been a little in the blood.”

Shaking things up

Burgess cut his teeth as a banker during the oil collapse in the 1980s and the ongoing fallout from the savings and loan crisis into the 1990s. He spent a decade dealing with workouts and bad loans. “It wasn’t a lot of fun at the time but as I look back on it now, it’s probably some of the best experience that I could have ever had,” he says. Even as the economy recovered—and, in Texas, came to soar—he never forgot the lessons of his early days. “It taught me what to look for and what to avoid, and to try to minimize the possibility of loans going bad because you can see things in businesses,” he says.

Burgess’ instincts were tested over the past few years, as oil soared again. From 2011 to 2014, oil prices held to a plateau of around $80-100 per barrel. Midland saw unbelievable growth as workers poured into the Permian basin; new homes and apartments couldn’t keep up with the growing workforce. Salaries skyrocketed as oil producers and oilfield services firms competed for workers, and as other businesses competed too.

Burgess held steady, avoiding excessive concentrations in oil and gas. And while the Midland economy overall is tied to oil, when prices inevitably plummeted to $40-50 per barrel in 2015, FirstCapital Bank was insulated from the worst effects because of its diverse markets. Amarillo is a hub for ranching and defense, while Lubbock centers a farming region and hosts a major university. The newest market, fully opened in 2016, is Horseshoe Bay, a lakeside resort and retirement community in the Texas hill country west of Austin.

Burgess greets investors at First Bancshares’ annual shareholder meeting.

Burgess didn’t just help FirstCapital Bank diversify—he helped its hometown economy do the same. Burns—the former mayor who is now president and CEO of the local chamber of commerce—credits Burgess for being a visionary in that effort when he chaired the chamber board. He helped to create a fund that generates $10-12 million per year to promote a more diverse economy.

“His leadership has had a big long-term impact on Midland,” says Burns, pointing to the growth of the aerospace sector. Midland’s airport has been recently designated as a spaceport, and spaceplane and spaceflight materials company XCOR and spacesuit manufacturer Orbital Outfitters are located there. “A lot of that comes from Ken’s work years ago, laying the groundwork, giving us the tools to get there,” Burns adds.

‘Leading edge, not bleeding edge’

When teenage Ken Burgess first started working at a bank, ATMs were only a few years old, magnetic stripe cards were a novelty and most customers interacted with their financial institutions during those constrained time frames known as “banker’s hours.” His career has traced an arc of constant change, and he’s infused FirstCapital Bank with an attitude that welcomes technological evolution. “If you don’t like change, you don’t need to be at this bank,” says Robin Richey, SVP and trust officer at FirstCapital Bank. She joined in 2000 as the bank’s 15th employee (there are more than 200 today), and “it’s been on a rapid pace ever since I got here.”

A big part of the FirstCapital Bank story has been Burgess’ practice of investing in new technologies. While he’s quick to mention that he likes to be “on the leading edge, not the bleeding edge,” he’s also willing to make a jump when he thinks it might pay off.

Case in point: interactive teller machines, a story that illustrates Burgess’ vision and hands-on leadership. He got curious about the concept in 2011 as a way of addressing both the rising cost of hiring employees in boomtown Midland and growing customer expectations of service availability. “We need to make sure that we can deliver the service that they’re looking for,” Burgess says. “I’ve always felt that we need to provide service at the time the customer wants it and not just when we want to be open.”

Thanks to research by SVP and IT manager Chris McGinnis, Burgess and his team visited a North Carolina credit union to check out the technology and was deeply involved in vetting the concept and developing the product. FirstCapital was the first bank in West Texas to launch the video product, which provides banking services seven days a week from 6 a.m. to midnight. TellerConnect machines are available at drive-throughs, free-standing locations and even branch lobbies—where, Burgess says, some customers prefer the video service.

Key to the concept as it works at FirstCapital is that there’s a real person on the other end of the transaction. The Lubbock branch is home to the TellerConnect team that serves ATMs across the network. The bank has had success recruiting Texas Tech students on a part-time basis to staff the center—collegians being much more amenable to late night hours or hungry enough to take the 6 a.m. shift. “It allows us bean counters to meet the numbers, but at the same time we serve our customers better than before,” says Tony Pena, the bank’s Lubbock market president, who notes that TellerConnect allows customers to do about 95 percent of what they can do at the counter.

A TellerConnect machine at FirstCapital Bank’s Lubbock location.

After TellerConnect rolled out, Burgess was very deliberate about talking to other bankers and sharing FirstCapital Bank’s experience—including mistakes made—with peers in the industry. Chief deposit and technology officer George Reeves notes that about 30 banks have called to ask questions or learn more. “It’s been a lot of fun to visit with those banks and share our knowledge with them,” he says.

As part of his commitment to helping bankers pool their expertise and share insights about technology, shortly after he served as chairman of ABA’s Community Bankers Council in 2012-13, Burgess became the founding chairman of the ABA Endorsed Solutions Banker Advisory Council. This group meets regularly to evaluate potential vendor endorsements, identify new technological trends and advise ABA staff about what they’re seeing in the marketplace.

“We need to be able to deliver the kind of services to our customers that they can’t find anywhere else, especially with the bigger banks,” he says. “Technology has leveled the playing field. If we stay up to date with what’s happening in technology as it’s moving forward, then we really can compete on the same level as they can.”

Industry leadership

Sharing insights with banking peers on topics like TellerConnect has been one of the great advantages of industry leadership and participation, says Burgess. And he has had ample opportunities to get to know thousands of bankers nationwide through his ABA service and chairmanship of the Texas Bankers Association.

Amplifying the banking industry’s voice in Austin and Washington has long been a priority. Burgess’ father was “involved in our state association and involved with ABA,” he says, “and I saw from him the importance at that time trying to influence the policies that we all have to live under.” Industry advocacy is yet another family value he carries with him.

“BankPac is really important to him and we always hold a very strong internal campaign,” says bank EVP Katie Boyd. In 2014, Burgess decided to up the ante. He offered to shave his head—a pretty big offer for a buttoned-up guy like Burgess—if the staff drive raised $30,000. During a staff meeting, someone challenged bank president Jay Isaacs to do the same—which he agreed to do if the staff got to $50,000.

“Well, our employees came through with flying colors,” says Isaacs. “We ended up at $55,000 for a private raise of BankPac funds, probably the third or fourth largest community BankPac fundraiser in the state of Texas.”

“We really worked hard internally to make sure that was going to happen,” Boyd chuckles. “Knowing Ken and Jay, that’s very outside of their comfort zone.”

Beyond mildly embarrassing fundraising stunts, though, Burgess makes a point of getting staff at all levels of the bank involved in public engagement on behalf of the industry. The bank has a volunteer staff grassroots committee. “We’ve given everyone in our organization the opportunity to join,” he says, “and if they’re a member then anytime we have a congressman come to our bank, we invite all of them in to visit with the congressman.”

Three flags over Texas outside FirstCapital Bank’s Horseshoe Bay branch.

While Burgess emphasizes that engaging in grassroots and BankPac is entirely voluntary, grassroots advocacy participation is part of what he thinks about when identifying future leaders for the bank and when considering who they’ll send to professional development opportunities and industry gatherings. “They’re the ones who’ve shown the interest to be involved in the process,” he says. “We try to give everybody that’s on the grassroots committee an opportunity to go to a meeting or two each year.”

Sleeves rolled up

When Burgess is interviewing a potential hire, he always pulls out a business card. On the back is printed the FirstCapital Bank vision: “We are family. We serve people. We change lives.” That first statement “has been indicative of how Ken feels about his bank and his community,” says Robin Richey. “It starts with Ken and it trickles down. We don’t just speak it; we live it.”

Scott Streit, president of the Horseshoe Bay market, tells a story about Burgess that illustrates the point. While FirstCapital Bank was building out its full-service branch in Horseshoe Bay, it had a small mortgage production office in an existing part of the building. The space was cramped and with the construction going on, not everything was working as it should.

One morning, mortgage loan officer Heather Franklin came in and found that “the plumbing had decided to go the opposite direction and it was all over the floor,” as Streit delicately puts it. Franklin panicked, knowing that Burgess would be in the office that day. When he arrived, she was on her hands and knees with paper towels cleaning everything up.

Burgess was indeed upset—by the fact that his team member was having to deal with the mess on her own. “He immediately took off his jacket, got on his hands and knees, and helped her clean up,” says Streit. “It’s leadership by participation and example. It’s leadership in the small things. It’s leadership that makes us all feel like a family.”

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About Evan Sparks

Evan Sparks
Evan Sparks is editor-in-chief of the ABA Banking Journal and vice president for editorial services at the American Bankers Association.