News Column

Betting on Growth

June 1, 2005

Joel Russell

A single decision increased revenues nearly 50 percent for Texas-based International Bank of Commerce. Last June, the company acquired Local Oklahoma Bank and its 52 branches, using cash and publicly traded stock to finance the deal. "It gave us a nearly 50-percent increase in revenues," says CEO Dennis Nixon. "Our company has been an active acquirer for a long time, and interested in the Southwest, so Oklahoma was in our frame of reference."

Data for the Hispanic Business 500 shows that International Bancshares Corp. (IBC), the bank's holding company, grew revenues by 45.2 percent to rank 10th on the directory. That may sound like great performance in most sectors, but low interest rates and strong demand delivered a great 2004 for financial services. A report by consulting firm Mercer Oliver Wyman found the global finance industry grew 24 percent last year and should grow three times faster than the overall U.S. economy in 2005.

Improved efficiency helped United PanAm Financial, number 41 on the Hispanic Business 500, grow revenues 35.9 percent last year. United PanAm deals in sub-prime auto loans, a capital-intensive niche. During 2004, the company switched from financing its operations as a bank (voluntarily exiting its government charter) to funding from public capital markets. "As a result of our controlled growth strategy, our automobile financing receivables continued to grow during 2004 at over 30 percent," says CEO Guillermo Bron.

Equipment leasing firm Somerset Capital Group, number 40 on the Hispanic Business 500, increased revenues 40.9 percent last year when two big customers bought out their leases. "Our clients are mostly Fortune 1000 corporations, so they have the cash to buy this equipment if they want," explains CEO Pedro Wasmer. "But if they're in acquisition mode, they'll save every dime for the acquisition. So they go out and lease a lot of their equipment."

A Mercer Oliver Wyman survey of CEOs predicts an upswing in mergers and acquisitions in 2005, and Mr. Nixon says IBC will "continue to push the envelope and acquire." So far in 2005, the company has expanded by adding five branches in its core market along the Interstate 35 corridor. Likewise, United PanAm opened 17 new offices last year and intends "to pursue growth for the foreseeable future in our automobile finance business by opening new branches," according to the company's annual report.

Mr. Wasmer sees a healthy economy for 2005, based on strong equipment leasing in the first quarter. "Someone needs equipment to do their business, and they wouldn't need it if they didn't have business to do," he says.

In recent years IBC has benefited from increased U.S.-Mexico trade and what Mr. Nixon calls "a broadening of the border region." The Rio Grande Valley has urbanized, creating an economy that feeds on itself: More people means more businesses, more schools, and more banking. At the same time, the border economy has connected with the mainstream U.S. economy. "Before we were isolated, off the main track," says Mr. Nixon, "but now our company is not so much a border bank. Ten years ago, 60 percent of our revenues were tied to the border. That's down to about 40 percent now."

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