The Office of the Comptroller of the Currency (OCC) found in a new study that the average loan growth rate has doubled among banks and federal savings associations (FSAs) in the nine states that make up the OCC’s Southern District. The OCC’s findings were from loan growth in 2012 to 2013, and reached 4 percent in 2013.
The states that make up the OCC’s Southern District include Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas.
Some areas of Texas and Oklahoma experienced growth as much as 11 percent, while some sections of Florida saw gains as much as six or seven percent.
The oil and gas industry is largely credited with fueling the accelerated growth in terms of the dollar volume of loans in Texas and Oklahoma. Florida, however, is seeing spikes from retiree migration, good weather, a low-tax environment, and higher employment numbers in hospitality and the retail trade.
"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."
Composite ratings, which are major indicators for the financial health of banks, also served as positive signs for the Southern District. Of the 490 banks and thrifts in the Southern District, 86 percent received a rating of one or two at the end of 2013, with 1 being the best out of a five-point scale.
However, the OCC reports that not all areas are experiencing impressive gains like Oklahoma, Texas, and Florida. Metros in Alabama, Arkansas, and Tennessee are lagging behind.
"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," the OCC said.
The report continued, "While problem assets and net loan losses continue to decline, credit risk remains a concern in Alabama, Arkansas, Florida, Georgia, Mississippi and Tennessee," the OCC found. Additionally, protracted low interest rates and slow economic growth continue to put downward pressure on earnings.