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News Release 2014-61 | April 22, 2014

OCC Reports Increased Loan Growth Among Southern District Community Banks and Thrifts; Oil and Gas Lead Growth

DALLAS — The Office of the Comptroller of the Currency (OCC) today reported that the average loan growth rate doubled among community national banks and federal savings associations (FSAs) located in the nine states that make up the OCC’s Southern District from 2012 to 2013, reaching 4 percent in 2013. Some areas experienced even greater average loan growth with as much as 11 percent in areas of Texas and Oklahoma, and 6 percent to 7 percent in some areas of Florida. The growth rate reflects the difference between new loans put on the books minus pay-offs. The OCC’s Southern District includes Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas.

Oil and gas industry activity helped lead accelerated growth in the dollar volume of loans in Texas and Oklahoma. In Florida, retiree migration, good weather, a low-tax environment, and higher employment in hospitality and retail trade contributed to loan growth.

“The growth in loan volume is accelerating,” said Gil Barker, District Deputy Comptroller for the OCC’s Southern District. “We’re seeing a slow, steady improvement compared with pre-recession norms across the district, with a more robust economic recovery in areas where the oil and gas industry is present.”

The OCC reports that community national banks and FSAs in larger cities in Oklahoma and Texas show between 4 percent and 11 percent loan growth. Cities such as Tampa and Miami remain among the more active areas with loan growth ranging from 6 percent to 7 percent at the end of 2013.

Economic growth in cities such as Birmingham, Little Rock, and Nashville lags other large cities in the district, which has contributed to modest and sometimes negative loan growth in those areas. In Georgia, private sector employment is above prerecession peak because of business services and hospitality sectors. House prices are up modestly.

The OCC also reported that 86 percent of the 490 banks and thrifts located in the nine states of the OCC’s Southern District had a composite rating of 1 or 2 at the end of 2013. The composite ratings are a major indication of financial health of a bank and run on a scale of 1-to-5 with 1 being the healthiest.

Additionally, the health of community national banks and thrifts continues to show positive signs. The volume of problem banks within the district is declining and the pace of improvement has accelerated in the past year. The Southern District community national banks’ and thrifts’ average return on assets increased slightly to .75 percent in the fourth quarter of 2013 up from .72 percent a year ago. Capital levels are satisfactory overall. Asset quality also has improved. At the end of 2013, classified assets represented 25 percent of capital compared with 34 percent at the end of 2012.  While problem assets and net loan losses continue to decline, credit risk remains a concern in Alabama, Arkansas, Florida, Georgia, Mississippi and Tennessee.

Community national banks and FSAs located in the district face a number of ongoing strategic challenges. For instance, protracted low interest rates and slow economic growth continue to pressure earnings.

Competition for good quality loans is strong in most markets and is expected to continue. “This competition will affect pricing and put pressure on underwriting,” Mr. Barker said.

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