Thursday, March 25, 2010

Texas banks lending more

Texas banks lending more
Borrowers shunned by national banks finding funds here

Austin Business Journal
By: Christopher Calnan ABJ Staff
Friday, March 19, 2010  Modified: Monday, March 22, 2010, 12:00am CDT
Bucking the national trend, Texas banks continued to increase their lending levels during 2009 compared with 2008. Industry observers point to Texas’ stronger economy combined with the state’s mortgage restrictions as enabling banks to maintain lending levels during the recession.

Texas’ 629 banks reported $247.1 billion in loans and leases last year versus $233.5 billion during 2008 and $229.1 billion during 2007, according to the Federal Deposit Insurance Corp. Nationally, total loan and lease balances declined to $7.2 trillion during 2009 compared with $7.8 trillion in 2008 and $7.9 trillion in 2007.

The nationwide decrease is being attributed to several factors, including federal requirements that mandate banks to keep more cash on hand than previous years.

The increased activity in Texas is a positive if it was prompted by business expansion, but not if it was caused by increased credit card debt, industry experts said. The FDIC doesn’t break down the type of lending that has occurred, but local bankers indicate that much of the increased activity is the result of businesses coming to Texas banks after being shunned by national giants.

Lending levels are important to the state because they fuel growth — enabling businesses to expand and residents to complete projects such as building new homes or starting new businesses, said John Heasley, general counsel for the Texas Bankers Association.

Locally, high oil prices and banking regulations adopted in Texas following the real estate bubble of the late 1980s and early 1990s largely muted the recession’s effects. Those regulations, coupled with the Lone Star State’s diversity of business sectors, are contributing to the strong lending position, Heasley said.

“We’re still very strong in our fundamentals,” he said. “For a major state, we have the healthy economy and healthy environment for borrowers and lenders.”

Last year, U.S. banks...

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