Texas has come down a long trail since the 1840s when banks were virtually banned from the state.
In the boom years of the 1970s, Texas financial institutions were among the most profitable in the US, emerging as the darlings of many in the investment community.
Today if there's one thing Texas bankers like more than oil and money, it seems to be buying other banks. Bank acquisitions took off in 1981, ending up with 46 percent of the state's 1,500 banks owned by five bank holding companies across the state.
This year, however, the banking climate is described as cautious but good, with petroleum investing still the favorite entree. Several banks say they will boost loans for exploration loans as much as 30 percent over coming months.
True to Texas-style, holding companies have begun buying other holding companies. While stock prices have been low and the acquisitions have slowed, analysts believe that once bank stocks begins to rise, there will be another buying spree.
Lynn McCormick, a bank analyst, says that 60 percent of the Texas banks are held by bank holding companies, with the top five holding the majority of the acquired facilities.
Larger acquisitions by holding companies will begin over the next two-year period, provided an economic recovery is not far off, Sandra Flannigan at the Houston office of Roten-Moseley said.
Texas banks have a tremendous amount of faith in the oil industry and will continue making loans, but perhaps more cautiously. Ms. Flannigan notes, ''They (the banks) have always been pretty prudent lenders, but like everyone else they are watching their portfolios.''
One concern is the Mexican financial crisis. Some banks have as much as 2.5 and 3 percent of their liquidity in Mexican loans. McCormick points out that the public has not perceived the difference between loans to the government and private industrial loans. The problem is cash flow more than actual default.
Both analysts feel the Mexican situation will resolve itself over the long period, with very little hazard to banking in Texas.