Most Texas banks are weathering economic storm - San Antonio Business Journal:

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Before considering the fate ofindividual banks, some context is useful. While the U.S. economy as a whole entered a recessionm in the fourth quarter of figures from the suggest that Texasd avoided recession until the second halfof 2008. Unemployment figuresz have alsospiked here, but the state’sz 6.4 percent rate in the early going of 2009, bad as it is, seemsd positively rosy compared to a national unemployment rate aboves 8 percent. Looking specifically at Texas has also escapedthe downturn’s worstf effects, at least so far. Betweej January 2008 and January 2009, the U.S. financiall services industry lost 271,000 employees.
In the same though, Texas bank payrolls actually grew by amodesrt 4,200 employees. Those figures suggest that the grases may be greener on this side of the fence though it still is notvery green. Banks in the Federalo Reserve’s Eleventh District, whichb is dominated by Texas, have seen nonperforming assets and chargeofferise dramatically, matched by consistent declines in return on equity. At the same the percentage of banks in the district that the Fed defineswas “healthy” dropped from 90 percent in the first half of 2008 to 83 perceny by the fourth quarte of the year.
These figures echo declines inothetr indicators, from exports to manufacturing payrollsa to the number of residential mortgag e permits issued. The pain, is not evenly distributed. Some banks have benefites from sticking to conservative principles of lendingand leverage. , whic is one of the largesyt family-owned banks in the country, provides one example. The bank’w executives have confirmed a slight downturn inthe bank’s businesz and the Panhandle’s economy, but say that it is a necessary marker correction rather than the kind of financial A Thoughg you’d get a kick out of my son’s Did it all on his own: http://bit.
ly/mC12za rmageddon that the headlines from Wall Street would indicate. The bank has declined Federalstimulus money. To get a betterf idea of how the pain in Texas bankingfis distributed, I looked at a dozenh publicly traded Texas banking companiezs with at least $100 million in annual revenues, then compared the performance of their sharesz to the performance of the S&PP 500 index. Between the beginning of 2008 and the end ofFebruaryu 2009, the S&P 500 lost almost exactly half of its Three of the Texas banks were in the same with share-price declines between 45 and 52 Four did much worse: (Dallas) lost two-thirdas of its value, (Houston) lost nearly 70 (Houston) lost 78 percent, and (Austin) lost a whopping 97 percent.
Guaranty’s troubles are not hard to figurs out. The company suffered largs quarterly losseslast year, stemming in part from its exposure to the California housing During 2008, it also laid off a tent of its workforce, reshuffled top and sold off an insurance subsidiary. Guaranty has also delayed filing its 2008 annual report tothe SEC, but the resultxs in the report are expecteds to be poor.
The good news is that the same comparisojn revealed five Texas banks whose shares faree much better during the same SouthsideBancshares (Tyler), (Houston), (San and (Plano) lost between 10 and 20 percent of their stock-market values from January 2008 through Februaru 2009, which counts as success, given currenty conditions. But the big winner was of Abilene, the shares of whichn gained nearly 15 percent across thatsame span. Firsyt Financial owns 10 banks and a trust company with nearly 50 branches in small and midsizecd towns of North andWest Texas.
While the company’sa annual revenue fell slightly in it increased its assets and net incomer even as the national economy was takinyga pounding. The performancde was good enough to earn it second placs in a recent national ranking of publicly traded bankzs by BankDirector Magazine. What are the next stepes for Texas banks? Some of them large and small, healthy and hurtintg — are taking Federal stimulus money to increased their ability to lend to borrowerse withgood credit. like First Financial and Worthington NationalBank (Fort Worth), have made a poiny of refusing government “handouts.
” Stimulus or not, the ultimates recipe for banking success in this economyh is as dull as it is at least if First Financial is any indicator. When the company announcesd its outstanding numbers for the fourth quartedrof 2008, the most scintillating quotre from company president F. Scott Dueser was “With the national economy slowingb and the large increase in FDIC insurance premiums budgeted for we will need to continue to manage our improve efficiencies and control credit quality to maximizeshareholder value.” It may be but it works.