WoodysGirl
10-18-2008, 01:16 PM
By BRAD HEM Copyright 2008 Houston Chronicle
Oct. 17, 2008, 10:54PM
Area banks say they're still looking for the credit crunch they keep hearing about.
Executives of several local and regional banks said that, although they are giving greater scrutiny to loans and have raised some interest rates, money is still available. For the most part, they said any tightening in the credit markets amounts to a correction from an era of frivolous lending.
"Every deal we look at today, we probably look at with a little more scrutiny," said George Boltwood, senior executive vice president for corporate banking for Compass Bank, which is based in Birmingham, Ala., has about 50 locations around Houston and does most of its business in Texas. "We certainly have tightened our standards. Rates have gotten more competitive. Truth be told, they're back to where they should have been."
While the federal government is giving megabanks billions of dollars to stay afloat and ease their ability to lend money, smaller state-chartered banks are dodging the chaos for the most part.
Just eight state-chartered financial institutions hold Fannie Mae and Freddie Mac preferred shares that will lose value, but they're not at risk to go under, according to a Texas Department of Banking report issued Thursday.
The report also noted 21 Texas banks qualified as "problem institutions," based on June 30 data, up from 14 a year ago but still a small percentage of the total. No state banks have been affected by the bankruptcy at Lehman Bros. or AIG's liquidity debacle.
"We're trying to figure out where the credit crunch is," said Daryl Bohls, president of Houston's Allegiance Bank Texas, which opened a year ago and has one office and $168 million in holdings. "We're still in the money."
That's good news for would-be borrowers. Of course subprime mortgages are history, as are so-called "liar loans" — which did not require proof of income — but money is available. There also is money for businesses looking to put up a new building, buy property or make an acquisition.
The exception is credit to buy large tracts of land for development, said Paul Murphy, president of Amegy Bank, which is part of Zions Bancorporation and is based in Houston, with more than $11 billion in assets and more than 85 locations around Texas.
A borrower would have to be "very strong" and would likely need an equity equal to nearly half the loan amount, he said.
Houston-based CECO Pipeline Services didn't have any trouble getting a 25 percent increase to its line of credit from Amegy two weeks ago, said Richard Hotze, the company's treasurer.
"The line was up for renewal," he said. "They asked me if I needed an increase in my line and how much, and they did it overnight."
Young companies without proven credit records or highly leveraged companies will have to meet stricter standards.
It is difficult to specify how much interest rates have increased or other standards have tightened because they vary depending on each deal and customer, Murphy and other bankers said.
Generally speaking, Murphy said, a customer with good credit and a down payment of 10 percent to 20 percent could get a home mortgage without much trouble. There are loans available without down payments, but they require mortgage insurance.
The bankers said they resent the negative attention their industry has been getting because of the actions of a few national financial institutions.
"That's frustrating for those of us who have been playing by the rules," said Dan Rollins, president of Houston-based Prosperity Bank.
They see the hit to the megabanks as an opportunity for small banks to gain market share. Customers who may have put more trust in bigger banks may have had their eyes opened. And customers who would have been skeptical of a smaller bank with fewer assets might be comforted by the government's recent decision to lift Federal Deposit Insurance Corp. deposit limits.
"We should be able to take advantage of a thing like this," Rollins said.
brad.hem@chron.com
Oct. 17, 2008, 10:54PM
Area banks say they're still looking for the credit crunch they keep hearing about.
Executives of several local and regional banks said that, although they are giving greater scrutiny to loans and have raised some interest rates, money is still available. For the most part, they said any tightening in the credit markets amounts to a correction from an era of frivolous lending.
"Every deal we look at today, we probably look at with a little more scrutiny," said George Boltwood, senior executive vice president for corporate banking for Compass Bank, which is based in Birmingham, Ala., has about 50 locations around Houston and does most of its business in Texas. "We certainly have tightened our standards. Rates have gotten more competitive. Truth be told, they're back to where they should have been."
While the federal government is giving megabanks billions of dollars to stay afloat and ease their ability to lend money, smaller state-chartered banks are dodging the chaos for the most part.
Just eight state-chartered financial institutions hold Fannie Mae and Freddie Mac preferred shares that will lose value, but they're not at risk to go under, according to a Texas Department of Banking report issued Thursday.
The report also noted 21 Texas banks qualified as "problem institutions," based on June 30 data, up from 14 a year ago but still a small percentage of the total. No state banks have been affected by the bankruptcy at Lehman Bros. or AIG's liquidity debacle.
"We're trying to figure out where the credit crunch is," said Daryl Bohls, president of Houston's Allegiance Bank Texas, which opened a year ago and has one office and $168 million in holdings. "We're still in the money."
That's good news for would-be borrowers. Of course subprime mortgages are history, as are so-called "liar loans" — which did not require proof of income — but money is available. There also is money for businesses looking to put up a new building, buy property or make an acquisition.
The exception is credit to buy large tracts of land for development, said Paul Murphy, president of Amegy Bank, which is part of Zions Bancorporation and is based in Houston, with more than $11 billion in assets and more than 85 locations around Texas.
A borrower would have to be "very strong" and would likely need an equity equal to nearly half the loan amount, he said.
Houston-based CECO Pipeline Services didn't have any trouble getting a 25 percent increase to its line of credit from Amegy two weeks ago, said Richard Hotze, the company's treasurer.
"The line was up for renewal," he said. "They asked me if I needed an increase in my line and how much, and they did it overnight."
Young companies without proven credit records or highly leveraged companies will have to meet stricter standards.
It is difficult to specify how much interest rates have increased or other standards have tightened because they vary depending on each deal and customer, Murphy and other bankers said.
Generally speaking, Murphy said, a customer with good credit and a down payment of 10 percent to 20 percent could get a home mortgage without much trouble. There are loans available without down payments, but they require mortgage insurance.
The bankers said they resent the negative attention their industry has been getting because of the actions of a few national financial institutions.
"That's frustrating for those of us who have been playing by the rules," said Dan Rollins, president of Houston-based Prosperity Bank.
They see the hit to the megabanks as an opportunity for small banks to gain market share. Customers who may have put more trust in bigger banks may have had their eyes opened. And customers who would have been skeptical of a smaller bank with fewer assets might be comforted by the government's recent decision to lift Federal Deposit Insurance Corp. deposit limits.
"We should be able to take advantage of a thing like this," Rollins said.
brad.hem@chron.com