On Monday, President Barack Obama said the wave of bank failures would continue, but many Texas banks seem to be faring better than others across the country.
A recent study by Bank Director magazine, which ranked the top 150 banks in the nation, showed that Texas placed four banks in the top 25, the most of any state in the U.S.
First Financial Bankshares in Abilene was second on the list and the highest in the state. President and CEO Scott Dueser said the bank’s success comes from a conservative plan. The bank doesn’t lend outside its area, which consists of North and West Texas.
“The best place to loan money is where you’re at,” Dueser said. “When you don’t know people, that’s when you get into trouble — when you lend outside your area.”
He said one of the main reasons for the failure of other banks nationwide has been subprime loans. A bank lends a subprime loan to a borrower with bad credit history who is likely to default on the loan. However, when interest rates rise, like mortgages have during the recession, borrowers have no way to pay off the loan.
The recession has forced many banks to turn to the federal government for help. The Troubled Assets Relief Program provided banks in danger of failing with billions in relief funds in exchange for partial ownership of their bank.
“The markets are punishing them for their stupidity, and, unfortunately, the government’s giving the stupid people millions of dollars,” said business lecturer Michael Brandl. “And they can do whatever they want with it. Therein lies the problem, because the banks have just been sitting on it.”
Texas Capital Bancshares Inc., which came in at No. 67 on Bank Director magazine’s list, received $75 million in funds from the Capital Purchase Program, another relief fund.
Kerry Hall, president of Texas Capital’s Austin region, said she applied for the money in case the bank needed it.
“We wanted to be sure we could continue to grow and not run out of capital,” Hall said. “We don’t know how long the recession will last.”
Hall said the bank has had 32 consecutive quarters of profitability. She said the success of Texas banks is due to the Texas economy.
“The Legislature has made Texas more businessfriendly here,” Hall said. “There’s incentives to move here, and there’s no income tax. It’s all about job growth, period. There was better job growth in Texas in 2008 than the rest of the country combined.”
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