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Potential buyers have long been wary of high premiums and the potential for volatility in the energy sector. A harsh correction in oil prices and Texas bank pricing has suddenly given those banks a chance to revisit their views.
January 8 -
Investors have been waiting for George Martinez to take Allegiance Bancshares public, and 2015 was expected to be the year. But a slide in oil prices might complicate the prospects. Still, with an acquisition to integrate and a team that produces 20% annual loan growth, he is looking forward to the coming year.
December 30 -
Though many banks have capitalized on the financial crisis, Home BancShares is a leader among that group. It scooped up seven failed banks in Florida and bought two more open, but deeply distressed, ones, a tally few can top.
November 21
The sharp decline in oil prices has tempered John W. Allison's enthusiasm for buying banks in Texas or even making loans there.
Just three months ago, Allison, the chairman and the largest individual shareholder of Home BancShares in Conway, Ark., said that his $8 billion-asset company was
Since then Allison's appetite for conducting any type of business in the Lone Star State seems to have vanished.
"We looked at a loan yesterday," Allison said during an Apr. 16 conference call to discuss the bank's earnings. "It was a Texas loan and I was just... very, very hesitant to make that loan in Texas even though it [was with] customers we have done business with in the past."
"I'm just hesitant to make those Texas loans right now," Allison said.
Oil prices have risen since January, but remain depressed. West Texas Intermediate oil
Energy is the topic du jour in banking these days. Regional banks like $69 billion-asset Comerica in Dallas and $17 billion-asset
Smaller banks have also been compelled to address their exposure to oil and gas. The $934 million-asset BNCCorp in Bismarck, N.D., said in its
Home BancShares, the holding company for Centennial Bank, has been an active acquirer in recent years but has never bought a bank in Texas. Allison said in January that "it might make some sense to do a deal or two down there," using Home BancShares' stock to lure a Texas bank with a depressed stock price.
Not anymore. Any Texas bank with at least a modicum of exposure to the energy industry could be facing problems, Allison said.
"There are going to be repercussions," for any bank that has been an active lender to energy-related firms, he said.
"Will we buy in Texas? Absolutely," he continued. "We're just not ready at this point to go in there."
The plummeting price of oil has affected Allison personally, too. During the Apr. 16 call, Allison said that an oil company of which he's part-owner has mothballed virtually all of its operations.
"Anything that we were drilling, we're completing," Allison said. "Anything that we have drilled, we fracked and we stopped. We're going to... live off our cash flow from these [oil] wells."
