DJE Texas (00:02.414)
Welcome to the DJ podcast where you will learn about real estate investing from real life examples. Here's your host, Devon Elder.

DJE Texas (00:17.172)
welcome to the show today. Thanks for joining. My guest is John Rubello. He's the president of Jefferson Bank in the Austin, Texas market. He's a member of the company's executive management team, and he's responsible for overseeing the Jefferson Bank branch in Austin, which is a relatively new venture. Jefferson Bank that we do a lot of business with at DJE started in 1946 and has a big presence in San Antonio. And so Austin is a relatively new market for them a little over a year.

We talk a lot about what they're seeing in Austin and central Texas, how they're approaching their banking, how they're seeing the market right now as we navigate to this higher interest rate environment in the mid 2024 here. And so nice short podcast with some banking insights that I think be helpful to the entrepreneur and the business owner out there. So without further ado, we'll get into the interview with John. Hope you enjoy it.

This episode is brought to you by DJE Texas Management Group, a San Antonio, Texas based real estate investment and management company with a track record of completing hundreds of millions of dollars of real estate transactions since 2012. If you're an accredited investor and would like to learn about investing alongside us in Texas real estate, register for our webinar at djetexas .com slash income fund. John, it's a pleasure to have you on the show. How are you, sir? Good afternoon, Devin. Thanks for having me.

Yeah, I look forward to diving in and talk and shop on central Texas real estate. Before we do that, would love to get an introduction of you and of Jefferson for the, for the benefit of the listeners here. Yeah. You know, I I've worked my entire banking career, you know, my career in banking, you know, started out, you know, the very, it is a credit analyst, my first job out of college and, you know, have worked all kinds of different banks from community banks to.

regional banks, national banks. Spent the last 16 years before I joined Jefferson Bank about a little over a year ago working for a global financial institution. And I feel like I've come full circle here about a year ago joining Jefferson Bank. And back to my community bank roots when I joined Jefferson Bank. And it's been a lot of fun. This is the first location that we've done for Jefferson Bank in Austin.

DJE Texas (02:36.654)
and it's been really well received and so we're excited about more.

Yeah, that is exciting. That is exciting. For those that don't know, Jefferson Banks got a substantial footprint here in San Antonio and we've been a customer for a long time. But exciting to stretch out into new markets, even if it's just up the road in 35. And what is your role right now with Jefferson? So I am the market president in Austin for Jefferson Bank. Got it. So you guys decided last year, we're talking a little bit in the green room.

you know, interesting time for real estate and rates and, and banking. She guys decided to, to make the move into Austin. How's that? How's that been? Has it been received? It's been, and how's that going? Yeah, it's been great. You know, as you know, Jefferson bank has a long, proud history in San Antonio, family owns community bank, been in business since 1946. You know, our business model is kind of all about customer service and building long -term relationships with our clients.

and they had been wanting to come to the Austin market for quite some time. And my previous bank that I worked at had just sold kind of towards the end of the pandemic. And I was trying to decide what I wanted to do next. And really what I wanted to do was build something from the ground up. I kind of half jokingly always say, I wanted to create my own mess instead of inheriting somebody else's mess. And so it's been a lot of fun.

You know, the Austin market is so dominated by large financial institutions. And I saw a real need in this market for a great community bank. And so we've been well received, you know, gotten off to a fast start and we've got big plans for the, for the Austin and central Texas market. Yeah, that's fantastic. Coming back to San Antonio, I will say, you know, if you're listening to you're in San Antonio, you got to, you got to check out Jefferson's new building down there on Broadway.

DJE Texas (04:35.63)
adjacent to the Pearl. That is that is a real piece of work. It's beautiful. Yeah. 1900 Broadway right down by the Pearl. I'd have to you know say one of the most beautiful buildings that I've seen in San Antonio and so we're really proud to have that as our our new corporate headquarters. I agree. Yeah and so very simple. I'll tell you just quickly. It looks like it's been there for a long time. Yeah. Been there been there a long time and

We're equally excited about our location that we have in downtown Austin, our first location in this market. You know, we're in a very historic building called Norwood Tower for those people that aren't familiar. Built in the 1920s, 100 year old national historic registry owned by the LBJ family. I'm told that Norwood Tower was the tallest building in Austin for about 40 years. And so we started

a space on the ground floor in the lobby on the east side of the building. It's about 4 ,800 square feet. And we quickly outgrew that space, you know, with the growth that we're seeing here. And we're able to also secure the west side of the lobby. And so now we're excited. We have the entire first floor of Norwood Tower and it's been a great landmark for us as a new brand and a new name, new bank in Austin. Everybody knows what Norwood Tower is. And you know, if you don't know what Norwood Tower is, you're for sure know what Perry's Steakhouse is.

pork chop Friday at lunchtime and they're right next door to us on the ground floor. Yeah, I love it. So much energy and, and action in downtown Austin. I was, I go there probably once a month and the amount of development happening downtown in Austin is just, just mind boggling. I mean, everything's just going vertical and, obviously a lot of, a lot of people want to.

be there. I felt like Austin had kind of plateaued a number of years ago and then, you know, Rogan comes in and Elon comes in and it was, it's on a whole other level now that, that part of the state, which is really cool to see. It is. There's a lot of exciting things going on here. You know, exciting time to be in Austin. Yeah. Yeah. So what, what has been you guys focus as you're coming in? Is it real estate? Is it, is it developers? Is it existing stuff? Is it

DJE Texas (06:51.342)
all kinds of businesses. What's kind of been, you know, you guys are pretty new in that market. What's been the focus and what have you guys found success with? Yeah, you know, we do a lot of commercial real estate lending. That's something that we're very comfortable with and have a lot of history and experience with. But, you know, we're really about people and banking the best of the best. You know, I always say is, you know, like so many of our competitors, we're not product pushy. You know, we really try to get to know your business.

and see where we can truly add value and build long -term relationships. We don't want to be a transactional bank, especially starting a new bank here in Austin. It's important for us to have full relationships. We want to have the opportunity to talk to you about deposits and treasury. One of the things that we wanted to make sure really early on in the market is we had all lines of business represented locally. So we not only have commercial bank, but we have retail banking.

We have wealth management, we have mortgage. And so, you know, we want to be able to bring the full capabilities of Jefferson bank to the Austin market, you know, for the first time. And so, you know, when I get positive feedback from our clients and prospects that we're visiting with, you know, that's some of the common things that I hear from them pretty regularly, that we're bringing the full capabilities of the bank to the market and kind of building this from what I call a one team approach. Yeah.

Yeah, I love it. I love launching with that full suite kind of day one up in Austin. Well, you know, I spend all my time in San Antonio and just about all of our portfolios here and I'm aware of Austin and I read the headlines, but what are you guys seeing in that market? You know, you're there day in day out for the last year. What's shaking up in Austin? Yeah, you know, we're still, we're very bullish on everything that's going on in Austin and central Texas.

you know what this is obviously been an interesting time here you know over the last year or so in the banking industry with interest rates and you know some economic headwinds but we are we we just opened the bank fourteen months ago here in austin and you know you know i think a lot of people might say to us hey why did you decide to do that now you've run into this book of interest rate hikes and all these other things some other banks are pulling back

DJE Texas (09:09.07)
But I think to me, I would argue, strongly argue based on what I've seen over the last 14 months since we've been open, that this was the best time for us to do it. It's really allowed us to get our feet in the door on some relationships that we might not have under normal circumstances. I've spent a lot of my career in the past working for publicly traded banks and sometimes you don't make the best long -term decisions. You're kind of living every quarter, every 90 days based on your earnings and your stock price.

And so to get back to working for a great community bank that's family owned, has a long history, it allows us to be a little bit more long -term outlook on our approach on things. And I'd rather be here than anywhere else in Austin and central Texas right now. I know there's some things going on, but I still think long -term, we've got a lot of exciting things that are happening in this market that we're excited to be a part of.

Yeah, we are insulated in central Texas in a lot of ways from, from a lot of things, which is, which is good, but yeah, I completely agree with you. I mean, a lot of shops are pencils down or our deal flows down, but doesn't mean there's not work to be done. Yeah, we're still a lot of opportunities out there and you know, pretty broad spectrum, you know, we're doing multifamily and we're doing retail and, you know, industrial warehouse, construction.

And so again, you know, kind of like I said before, we're big believers in people and following the right, we want to bank the best of the best. And, you know, I don't think that you're going to hear Jefferson Bank talk too much about what we do and don't have appetite for, like some of our competitors, you know, we bank people that got good experience and are well established in those different industries and see how we can help them. And like I said, we've been well received and gotten off to a fast start.

We want to continue to get the Jefferson bank name out there in this market and do more of it. Yeah. Yeah. I love it. Any particular projects you want to highlight? I know there's maybe confidentiality with certain customers, but I think I saw a press release too on a project that you guys had worked on, but I'd love to hear from any specifics if you're at Liberty. Yeah, we're doing a lot of different projects right now. We have a lot of things going on, but we do have one project that you mentioned.

DJE Texas (11:29.966)
which is called OM Properties, which is a project up in Georgetown. And it's on Highway 29 between Georgetown and Leander. And as you probably know, you know, Georgetown for two straight years has been the fastest growing city in the United States. Leander's in the top 10. And so what's going on in that Highway 29 corridor up in Williamson County between Leander and Georgetown is just remarkable. And this is a mixed use.

development. It's got some retail, it's got some office, it's got some flex warehouse. And I think, you know, there has been recently so many rooftops, residential rooftops that have gone up in that area. There was a real need in that market for more local goods and services, people, places where they could go shop, places where they could go out to dinner. And so we're excited about being part of this project. The first phase is about $19 million that we're involved in.

and then there will be subsequent phases after that. But we have really made a conscious effort of not only growing in downtown Austin, but capitalize on everything that's going on up in Williamson County. We've hired a banker that I've worked with in the past, Tommy Gonzalez. He was a 12 -year city commissioner in Georgetown, and he's really helped us get our foot in the door in the Georgetown market.

We're doing a number of different projects in there, but OM is one that we're particularly excited about.

Yeah, that's fantastic. Congratulations. There are so many rooftops going up there. We've got one of our divisions for our company is a land business and that land business owns a helicopter that I pilot. And so I get this perspective on some of these markets flying up to Dallas or flying to Austin where you're you're literally flying over going, holy smokes, Georgetown is exploded or Kyle. How many rooftops of are there in Kyle now? And then Austin obviously just exploded. So it's been it's been really neat to to be able to see that.

DJE Texas (13:30.478)
Yeah, you know, I think over time you could make an argument that we probably need to have several locations up in the Williamson County area between what's going on in Cedar Park and in Round Rock and Kyle and then even, you know, excuse me, Georgetown as you go west east, you know, what's going on in Manor and Taylor with all the Samsung development. So that whole is really just taken off in a lot of respects. It's exciting to see what's going on. You know, every time I go up there,

I see changes and you almost don't recognize it. Yeah. Yeah, that's right. Well, I want to get your perspective on something, John. You know, I've been doing real estate since 2012, which is, you know, it's all relative, but that's not a incredibly long time, but, we're talking in May of 2024. Now everybody's kind of watching the fed sort of kick the can on keeping rates where they are. How does this season?

feel to you versus maybe previous cycles that we saw in 08 or 2000? What's kind of your perspective having been in the industry on where we are versus tumultuous periods we've seen in the past couple of decades? Yeah, you know, I think as an industry, the US banking environment is very strong.

And I think what I saw during the financial crisis in 2008, 2010, that time period is that we saw a pretty significant deterioration in some of our credit portfolio, particularly commercial real estate. And we just haven't seen that as an industry this time around. And so I think that I'm optimistic. Call it whatever you want to call it, if there's a soft landing.

and how we get through all this. But I think, you know, our pipeline of new business opportunities seems to be pretty robust still. And so I think maybe deals are taking a little bit longer to materialize just because I think some people were maybe thinking that we would start getting some interest rate decreases, you know, now sooner, maybe a few more than what we're expecting at the present time.

DJE Texas (15:46.094)
And so I think people were maybe a little bit dragging their feet on deciding when the right time was to start a new project. But we still have people that are very optimistic and are doing new deals and we're happy to be a part of that. I mean, I think that, you know, you can't really ask in this environment, like, you know, what's your opinion of the real estate market, even if you say like residential or commercial. I mean, I just think you got to be more granular than that because

There are some real pockets of strength, still even in this market, that's important. And so you've got to get a little bit more granular when you talk about, what do you see in the marketplace in terms of some of these industries? Yeah, I completely agree with that granular approach. Makes sense. Business owners are out there running their business and spinning a bunch of plates and trying to kind of keep up with the whiplash that we've all had since

really since 2020, it's been just kind of a wild, wild ride. A lot of things coming at us from different angles. What do you say, what makes a business owner walking in the door at Jefferson makes you, puts you guys at ease where you're like, hey, we want to do business with this team. Is there maybe some pointers for that person that's approaching a lender or a bank that, you know, people listening could benefit from?

Yeah, you know what, this sounds so basic, but it really comes back to the people that work for us here at Jefferson Bank in Austin. We're up to, I think, a total of 13 people, including myself now. And I brag about our branch in Norwood Tower, our banking center in Norwood Tower, but what I really always say is the best part of this banking center is the people who work inside of it. And so, you know...

We've got really good relationships with our employees as well. And I think it was important to us as we started putting together the team to hire people who were well respected in this market, had a high profile, and were connected with kind of the who's who in Austin. And so I think, again, it goes back to the relationships that we have. And even though Jefferson Bank is fairly new in this market, the bankers that are working here have a long history and a lot of experience in the Austin market.

DJE Texas (18:10.062)
and have good strong relationships with the right people. And so we try to sit down with them and understand what their plans are and see how we can help them going forward. And, you know, I was, you know, we were visiting in the green room before this a little bit. And one of the things that I mentioned to you was, you know, we onboarded a lot of new clients in 2023. And when we started off 2024, we sat down with those clients and said, hey, tell us about your plans for this year and how we can help you.

I was really pleased about the feedback that we had gotten from our clients about their first time doing business with Jefferson Bank. Every bank talks about customer service, but I think that they got to see it once they started doing business here firsthand and how we manage things and do things differently. I think that when both sides, the client and the bank, are committed to building long -term relationships and doing business together and sitting down and talking about projects.

It would be just to work to it together to find a way that it makes sense and to try to get a deal done with everybody. Yeah, yeah, that makes perfect sense. So your sense is that folks kind of looking, we're almost halfway through this year, but you know, the business owners that you're working with, they're finding ways to get projects done. They're, you know, maybe getting creative, but they're finding ways to put their people to work and get deals to pencil.

Yeah, I mean, I think there's no question it gets harder in this interest rate environment to get deals to pencil out for the developer, for the client and for the bank. So I think that we've just found ways, whether that's them putting in some additional equity or we go along a little longer on the amortization and try to find a way that makes sense for both the client and the bank. But I think that people are definitely what I'm seeing again from our pipeline and the volume activity that we're doing.

there's still a lot of deal flow out there and still a lot of people that are anxious to work on their projects and even in this current environment. Yeah. Yeah. It's been interesting. You know, everybody's kind of holding their breath for a while and then, you know, see if rates are going to come down, but then at some point like, Hey, you gotta, you gotta get to work. You know, you're not just going to sit on the sidelines if it's going to be three years or whatever, you got to find some way to, yeah. If we're going to be in a similar type rate environment for a while now still.

DJE Texas (20:30.126)
I think a lot of people that I'm talking to every day just have the attitude or the thought process that, hey, we still need to do business and get our projects taken care of. There's still a lot of people coming to Austin, businesses, individuals, a lot of growth. And so we need to make sure that we take care of our projects. Yeah, absolutely. Well, I won't ask you for your crystal ball. I think that's not a fair question for anybody. What's the Fed going to do election year, all that.

You know, what do you, how do you guys talk internally about, your strategy? I guess if, if we're in a higher for longer rate situation versus, you know, if they come down 25 bips, 50 bips, you know, in the next couple of months, is there, is there a big kind of strategy change or you guys take it as it comes or how does the bank kind of view that uncertainty of what we've got ahead of us this year? Yeah, I think, you know, we're, we're trying to, to, to be proactive and forward looking and,

thoughtful in our approach to new opportunities and nobody as you said has a perfect crystal ball. Are we going to get as many rate drops as quickly as we thought this year? Maybe not. So maybe it's going to be a little bit longer in this current rate environment. But again, I think that we're very optimistic about everything that's going on in Texas as a whole really, but especially in Austin and central Texas. And so, you know,

Again, it goes back to us needing to build full relationships with deposits and treasury and some other things to allow us to be probably a little bit more competitive on the financing piece. It's just rough to be a transactional bank in this environment. We would build full relationships. And I think that when we're able to do that, we want to be involved in projects that people are doing.

Because I think that when you're again when you're not there for your client when they have something that they're looking to work on It makes it tough. I mean, you know that that loyalty that commitment works both ways and we feel you know We've got the saying our slogan if you go on to our website This is personal to us and you know, I know it's got something that they put in their website but you know, that's such a you know, a perfect way that describes how we do business and it really is personal to us and

DJE Texas (22:51.822)
So many people in San Antonio have banked with this with Jefferson bank for such a long time. We've done business through good and challenging times. And I think we're taking very much that same attitude that's worked so well for so many years in San Antonio and applying it to how we're starting in the Austin market. Yeah. Yeah. I love it. looking at real estate, you know, we kind of mostly talk about real estate on this show, but, are there certain asset classes you guys are?

are more intrigued by or maybe newer types of asset classes or is it, hey, we're gonna kind of look at everything that customers bring us and underwrite it and look at it case by case or is there anything kind of emerging that you guys find real interesting? Yeah, you know, I think that again, you're never gonna really hear us say we have an appetite for this or that. It really is about the people that are involved in it. And I think that, you know, what you'll see even just in central Texas area,

that there can be some pretty significant and important differences between where you see maybe some strengths or a little bit more weakness. And so it really is a matter of understanding the client and the market that they're in or the particular sub market that they're in and making sure that we understand that and can go forward and do a deal with them. Yeah. Yeah. That makes sense. That makes sense.

very good. Well, John certainly appreciate you joining today. If somebody wants to connect, learn more about Jefferson bank and Austin, do we put them in touch with you or the team or where can we send them? I think, put them in touch with me, you know, jeffersonbank .com is our website, but put them in touch with me here locally in Austin. We're in Norwood tower in downtown Austin on seventh street between Congress and Colorado. The whole world seems to walk back by our front windows here behind me.

and I'll make sure that they get in touch with the right person and stay personally involved. And, you know, in many ways, you know, even though we're 14 months down the road, we're still kind of in our infancy in this market. And I always say it's kind of like a grassroots effort. You know, we've got a great story to tell, and we just want to tell people one person at a time, you know, the differences about Jefferson Bank and what we do. And I think that we again, we've been very well received.

DJE Texas (25:11.63)
We look forward to getting to know more and more people in the Austin market and telling them the Jefferson bank story. Yeah, I love it. I love it. And just to just to finish up for folks, I was introduced by a mutual friend to your now CEO a number of years ago, just kind of informally at a restaurant in San Antonio. And we opened one account and now, you know, we've probably opened over 100. And so that, you know, I think that's a testament to to

Jefferson Bank and at least in San Antonio, but we've been really impressed. We continue to enjoy the relationship. So I'm excited to see you guys expand into Austin. And if you're listening or a business owner, I recommend you check them out if you haven't already. So John, thank you very much. Wish you guys a good second half of the year here in 2024. Devin, thanks for having me on. I really enjoyed it and appreciate having the opportunity to talk about Jefferson Bank and everything that's going on in Austin.

Alright, wonderful. We'll have a good week. We'll catch up soon. Alright, talk to you soon. Thanks.

DJE Texas (26:14.83)
Thank you for listening to the DJE Podcast. For more information, please go to djetexas .com.