Voice of Experience: Carla Brooks, Managing Director at Commerce Street Capital

By Elizabeth Harrin (London)

“I come from a family of bankers so it must be somewhat ingrained,” says Carla Brooks, managing director at Commerce Street Capital. But it’s more than just growing up with the knowledge a career in finance meant. Brooks excelled in math during her school years and took this interest and skill with her to further education. “My college undergraduate thesis was titled ‘Bank Holding Companies: Their Growth and Future,’” she says. So it shouldn’t come as a surprise that Brooks has ended up in such a senior role in fund management.

“I joined the team at Dallas-based Commerce Street Capital LLC and its predecessor firm in 2002,” Brooks explains. Since then, she has put her three decades of experience analyzing financial institutions to good use. Having built a successful career in bank regulation and oversight, Brooks was in a unique position to help create private equity funds to invest in banks at Commerce Street Capital. “Private equity’s involvement with banks is relatively a young concept,” she adds.

This concept is also a different take on the ‘traditional’ view of asset management, in which asset managers invest in multiple industries. Brooks’ focus is on just the one industry – banking. “I get to look at hundreds of financial institutions, and though the types of assets they have are basically the same, there is variety in the types of challenges each have within their specific markets,” she explains. “Each bank is unique and behaves differently to the circumstances to which they are faced. However, the similarity allows me to easily generate peers against which to compare a particular institution.”

Prior to her current role at Commerce Street Capital, Brooks was the first vice president of corporate acquisitions in the Office of the Chairman of California Federal Bank, FSB. “For twelve years I was with KPMG in the Regulatory Advisory Practice,” she adds, “as well as the Corporate Recovery Practice where I performed various investigatory financial analyses and due diligence projects.”

As well as her MD role, Brooks serves as Assistant Portfolio Manager and Chief Operating Officer for Commerce Street Financial Partners, which also place calls on her time. “My job responsibilities are very demanding,” she says. “I am instrumental in sourcing potential investments for the firm’s funds and to date, have analyzed more than 610 financial institutions. Once a potential investment has been targeted I either write the summary memorandum or review the written memorandum performed by a co-worker, thereby evaluating each investment. If it is determined that the investment warrants further review, I usually perform the detailed financial analysis as well as conduct the due diligence conference call and/or site visit.”

Business Philosophy: Know Your Stuff

Bringing on a new investment is a complex operation, and it doesn’t come as any surprise to learn that Brooks’ business philosophy is to make a decision only after she has dug deep and learned all the facts. “The financial analysis consists of a five-year balance sheet, income statement, cash flow and reconciliation of the particular depository institution as well as its parent company, if applicable,” Brooks explains. “In addition, upon the conclusion of the due diligence, I write a more detailed investment memorandum and present it to the investment committee prior to making an investment. In certain circumstances, this process has to be performed in a very short time frame. I have to know my stuff and know it quick.”

It is clear that Brooks does know her stuff. Starting with no assets under management, the five private equity funds she created grew to $150 million in five years, and have a projected growth of $450 million or more.

Brooks also gets involved with the investment banking area. “I am asked to attend various meetings regarding financial institution mergers and acquisitions,” she says. Mergers and acquisitions change the financial landscape, and Brooks often takes responsibility for preparing the projections related to the M&A.

With such a busy and responsible day job, getting a good balance between office life and home life is important. “I balance my life by keeping a calendar with all of my work related and personal activities and meetings so that I don’t miss anything,” Brooks explains. “Naturally, I’m very busy at work, but thankfully planning time away from work even if it is just a couple of hours here or there really satisfies me.”

When she’s not at work, Brooks can be found in the garden or playing the piano at her church. But she also has another demanding pastime: she’s co-chair for the 2008 and 2009 Relay for Life of Rockwall County, Texas. Relay is a fund-raising event where teams of people take turns to walk or run around a track over a period of up to 24 hours. “I lost my husband to liver cancer nine years ago and my father to prostate cancer 18 months ago,” Brooks explains. “I also have many friends who are battling cancer or who have family members battling cancer. Through Relay I can help others celebrate, remember, and fight back against cancer.” Last year, under her co-leadership, the Rockwall County event raised more than $128,000 and this year the total stood at slightly over $100,000, which – given the economic climate – is no mean feat.

Back in the office, those organization and leadership skills are put to use steering Commerce Street Capital’s investments. “I think having great accounting and analytical skills are key to working in this sector,” she says. “You also have to understand the regulations that go along with the financial institutions.”

Brooks herself has extensive regulatory experience which comes from working with the Federal Reserve Bank of Dallas. “I was the manager of applications processing in the Reserve Bank’s supervision and regulation department,” she says. “While only a regulator for seven years, the values associated with it became very entrenched. I see larger private equity firms having some troubles, because they don’t have many, if any, staff on board that have a thorough understanding of the current regulatory issues.”

Expert Tips for Women Aspiring to the Top

It’s insights like these which have contributed to Brooks being ranked recently at number twelve in U.S. Banker magazine’s Top 25 Nonbank Women in Finance. “I was ranked number thirteen in 2008,” she says, and I get the sense that she’s justifiably proud to have moved up a place. “I believe the key to my success is the ability to match the wants and needs of my clients with that of the regulators,” she explains. “In short, listening.”

Listening is a good tip for women who would like to grow into the kind of senior finance role that Brooks holds, but it’s not the top piece of advice she passes out to young women. “The best piece of advice I have been given and that I pass along to young women is to pick a career which you enjoy rather than for money and you will excel no matter what,” she says. “Act confident and you will be confident in whatever you do.”