Local banks ride out the storm
HOUSTON banks emerged mostly unscathed from the third straight year of crude oil woes and flooding, this time regionwide, managing to log their first significant year of growth in deposits since 2014.
Just as the oil bust showed some signs of relenting, Hurricane Harvey arrived.
Still, deposits increased 10 percent from 2016 to 2017, returning nearly to pre-bust levels at $241 billion, according to the Federal Deposit Insurance Corp.
Banks weathered the downturn and Harvey by way of their diversification, finance executives said.
For Conroe-based Spirit of Texas Bank, that included geographic diversity.
While it saw a slow-
down in lending opportunities in Houston, it didn’t see heightened losses on its loan portfolio and it exceeded loan growth expectations in the College Station and Dallas markets, leading to overall “robust loan growth,” according to company filings.
“Our diversification is our strength through 2017,” CEO Dean Bass said.
According to Insurance Journal, 5.7 percent of Houston-area mortgages were delinquent in the month before Harvey; by December, it jumped to 10 percent. But Texas statechartered bank portfolios weren’t affected to the same degree as other lenders, according to the Texas Department of Banking.
With overall economic conditions improving, banks found lots of room for growth. Spirit of Texas went public in May, and Community Bank of Texas, also Houston-based, made its initial public offering in November.
“Overall, investors are more optimistic about prospects for the energy industry leading to a general improvement in sentiment across Houston,” said Martyn Goossen, president of JPMorgan Chase & Co., which leads the region with a nearly 45 percent market share, according to S&P Global Market Intelligence.
With overall economic conditions improving, banks found plenty of room for growth.
Chase is ramping up its lending to make 2,500 new mortgages in Houston in 2018, 67 percent higher year over year, Goossen said, as real estate markets reached an all-time high in Houston, with a record number of homes purchased at the highest-ever median prices.
For smaller banks far down the list, another boon could be coming in the form of relaxed regulations after Congress agreed to scale back some post-financial crisis rules seen as overly restrictive for community outfits.
“We think that was a strong step in the right direction,” Bass said. “It will allow banks to focus more on what we do.”