Magazine article American Banker

Home BancShares' Allison Steering Clear of Texas — for Now

Magazine article American Banker

Home BancShares' Allison Steering Clear of Texas — for Now

Article excerpt

Byline: Andy Peters

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 contemplating acquisitions in the Lone Star State. The price of oil had dropped below $50 per barrel and worries about the Texas economy had chopped down some of the lofty values attached to the state's banks.

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 traded at around $57 per barrel on Thursday, according to Bloomberg. As a result of the worldwide oil glut, oil and gas producers nationwide have idled 4,731 wells.

Energy is the topic du jour in banking these days. Regional banks like $69 billion-asset Comerica in Dallas and $17 billion-asset PacWest Bancorp in Los Angeles have faced relentless questioning from analysts about their exposure to oil and gas loans. …

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