Saturday, June 9, 2012

Money, money everywhere in EFS but where to invest it?

Formerly sleepy Carrizo $prings, Texas

From The Houston Chronicle Online

South Texas landowners getting fat checks from energy companies for drilling on their land have been a boon to banks based in the Eagle Ford Shale.

Deposits at most of those banks have surged. For example, Karnes county National Bank's deposits rocketed 110 percent to almost $168 million from the end of 2009 through the first quarter of this year.
Eleven other institutions registered jumps in deposits that ranged from 46.8 percent to 82.7 percent. By comparison, domestic deposits at U.S. banks increased 14.7 percent during that time.

The influx of deposits has left the Eagle Ford-area banks with something of a challenge: how to deploy that money.

Deposits at Security State Bank in Pearsall, for example, climbed by $150 million from 2009 through March 31, mostly as a result of oil and gas activity, said Mike Wilson, president and CEO.
"Where we used to hunt for money, we don't have to hunt anymore," he said.

Curtis Carpentar, who follows banks as managing director of Sheshunoff & Company Investment Banking in Austin, likened the situation to having "more than you can say grace over."
Still, the deposit windfall has yet to translate to the same growth in loans.

"You can only loan money where it makes sense," he said. "And the fact that all of these deposits are coming in doesn't necessarily translate into lending opportunities."

Those opportunities will pick up as the Eagle Ford area prospers from the energy activity, Carpenter said. Bankers agreed, saying they are eager to loan on multifamily and single-family residential projects. There is some reticence to loan for RV parks and motels because of concerns that they've saturated the area.

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