Photo: Photos By John Davenport /San Antonio Express-News
A rising population, healthy employment, a robust housing market and business expansion propelled San Antonio banks in 2016.
Seven San Antonio-based banks continued to set new highs in loans and deposits, while six of them once again achieved record annual profits.
Local bankers credit San Antonio’s strong economy for the robust lending activity and profits. Unlike other parts of Texas, San Antonio’s diverse economy has kept it largely isolated from the downturn in oil over the last two years. Unemployment tends to be lower than the rest of Texas thanks to the growing military and service sectors. The San Antonio area is expected to add up to 30,000 new jobs this year as the local workforce of about 1 million people continues to expand, the Federal Reserve Bank of Dallas said last month.
“San Antonio has just continued to fire on all cylinders,” said J. Bruce Bugg, The Bank of San Antonio’s chairman.
Jeff Caughron, CEO and president of Oklahoma community bank consultant The Baker Group, also credited the local economy for rising loan demand and profits.
The improving economy prompted Brian Booker, president and founder of Plano-based ExploreUSA RV Supercenter, a 17-year-old chain of recreational vehicle dealerships, to expand his business last year as consumer demand for his vacation vehicles rises. He said he borrowed more than $10 million from The Bank of San Antonio last year to build “my biggest, nicest RV facility in the state” on 14 acres just south of Boerne in Bexar County. Booker said he’s bullish about his industry over the next five to 10 years.
“We just feel like there’s some things out there on the landscape that are going to be particularly helpful for our industry,” said Booker, a San Antonio native. His customers generally are conservative empty-nesters who are invested in the stock market. “Everything is kind of falling into place for that buyer,” he said.
Construction hasn’t started yet, but he anticipates the dealership will open early next year.
The increase in lending at all seven San Antonio banks hasn’t diminished their safety. BauerFinancial Inc., a Coral Gables, Florida, firm that evaluates banks’ and credit unions’ financial results, has given high ratings on the financial stability of all seven banks.
Broadway Bank, Jefferson Bank, The Bank of San Antonio, Crockett National Bank, Vantage Bank of Texas and Lone Star Capital Bank each received five-star ratings, considered “superior,” as of Sept. 30 from BauerFinancial. (USAA Federal Savings Bank, a San Antonio-based thrift, wasn’t included in this analysis of local institutions because it serves military families around the world and doesn’t make commercial loans.)
Frost Bank, the largest regional bank based in San Antonio with $30.2 billion in assets, is considered by analysts as a bastion of conservatism in the industry. It received a four-star, or “excellent,” rating.
Frost Bank has felt the ups and downs of the oil and gas industry more than any other San Antonio bank. Energy-related loans accounted for 11.6 percent of its lending portfolio as of Dec. 31, more than any other sector. Other San Antonio banks don’t lend to the energy sector.
The rebound in oil prices, the election of President Donald Trump, viewed as pro-business, and the prospects for the economy have sent the stock of Frost Bank’s parent and other regional banks soaring. Since bottoming at $42.55 on Jan. 25, 2016, the shares of parent company Cullen/Frost Bankers Inc. have more than doubled. They closed at a record high of $94.12 on Friday. It is the only local bank that is publicly traded.
The bank also has been benefited from the recovering Texas economy, which expanded 1.6 percent last year, outpacing the national average.
Frost Bank earned a record $308.8 million last year, a 9.4 percent increase over 2015. Annualized loan growth was 13.6 percent in the fourth quarter, giving it “great momentum” for 2017, said Chairman and CEO Phil Green during a conference call with analysts last month. He reported “good growth” in commercial and industrial loans, commercial real estate and in the public-finance arena.
On a percentage basis, The Bank of San Antonio increased its lending by almost 28 percent last year — more than any other local bank. Net loans as of Dec. 31 were $528.7 million, up by about $114 million from the end of 2015.
Bugg attributed the jump in loans at the bank to the local economy, its team of bankers and its new headquarters at 1900 NW Loop 410 in Castle Hills, which he said has given the bank more “visibility” since its July opening.
The Bank of San Antonio generated a record $5 million in profits despite taking a hit because it wasn’t able to sublet its former headquarters in Forum Office Complex at 8000 Interstate 10 West in San Antonio.
The bank, which launched just 10 years ago, has about $635 million in assets.
Bugg likes the area’s prospects, citing figures from the state’s demographer showing population in the metropolitan area will increase by 80 percent to almost 4.3 million by 2050.
“With in-migration and more business activity coming into San Antonio, it fits right into our business strategy of trying to focus on locally owned businesses,” Bugg said. The bank’s core customer base is local companies with revenue of $5 million to $50 million, though he said it recently added personnel to target businesses with revenue in the $1 to $5 million range.
Vantage Bank Texas increased its lending last year by almost $40 million to $400 million. Its bottom line swelled by $3.7 million to $8.2 million. Most of that came from a tax credit, but the bank still would have generated record earnings without that.
“Being in San Antonio and South Texas has been a very good thing,” Vantage CEO Guy Bodine said. He couldn’t say that when he joined the bank in 2009. At the time, it was saddled with hefty operating costs and a bottom line stuck in the red.
BauerFinancial had given Vantage, then known as San Antonio National Bank, a 1-star rating for its “troubled” condition in 2010.
“We added new customers, and that’s the most important thing to us,” Bodine said of Vantage’s performance last year. The company’s core customer base is owner-managed businesses with up to $20 million in revenue. “Any prospect that we call on is being called on by others. We have to compete for the business (and) we’re able to do that.”
Vantage has about $489 million in assets.
Jefferson Bank, with nearly $1.8 billion in assets, is the area’s third-largest bank. It hit a new milestone last year, surpassing $1 billion in total outstanding loans for the first time. It added $98 million in loans last year after adding more than $200 million in 2015.
Chief Financial Officer Bill Goetz said the surge in lending in 2015 occurred after it raised the ceiling on the amount of nonrecourse loans it would make.
“We just didn’t have the same appetite for those type of loans in 2016,” Goetz said.
The bank makes a lot of commercial mortgages, construction loans and residential loans. “We’ve got a good pipeline of opportunities,” he added.
Jefferson Bank reported record net income for the seventh straight year in 2016. Last year’s net income of $22.2 million put it in the 85th percentile among its peers.
Crockett National Bank, with $621.5 million in assets, moved its charter to San Antonio last year after being based in Ozona in Crockett County.
Crockett’s core business is residential lending, CEO Todd Huckabee said. The bank has a controlling interest in Legacy Mutual Mortgage.
The bank had almost $538 million in loans at the end of last year, up slightly from 2015. It had about $15.3 million in net income, another record for the bank.
“We’re very blessed to be in Texas,” Huckabee said.
Broadway Bank, the largest independently owned bank based in San Antonio with about $3.5 billion in assets, posted a 10 percent increase in lending and had more than $1.6 billion in loans at the end of 2016. It earned $37.6 million last year.
Lone Star Capital Bank, the smallest bank based in San Antonio, with about $245 million in assets, reported a 1 percent annual increase in loans to $159.7 million. It earned $903,000 last year, virtually flat compared with 2015.