NEW ORLEANS - As Bill Marks sees it, the local grocery store has as much at stake as his bank does in the fluctuations of the region's oil and gas industry.

"It's part of our economy here in the tidewater," said Mr. Marks, chairman and chief executive of Whitney National Bank in New Orleans. "Whatever happens in that business affects everyone."

Deep-Gulf Find Spurs Hope

While only a few banks are currently targeting what was once common lending to oil and gas companies, observers say all should benefit if predictions of a rebound in production prove true.

Few expect a return to the glory days, but the recent announcement of a major oil find deep in the Gulf of Mexico has many hoping for economic growth that could spur consumer and other types of lending.

"How [the industry] hurt the banks was part of the effect on the overall economy," said Peter Tuz, bank analyst at Morgan, Keegan & Co.. a Memphis-based brokerage. "All the banks had higher than normal chargeoffs for a couple of years."

Betting on $100 a Barrel

But to what degree tile collapse of the oil industry contributed to the failure of so many banks and thrifts in the Southwest is a matter of debate.

In his office, Bill Gilmer, a senior economist and energy industry expert at the Federal Reserve Bank of Dallas, keeps a book of newspaper clippings that tell of the failure of some of the region's once rock-solid banks.

Many say it was the first plunge in oil prices in 1981 that pushed bankers to believe in forecasts that oil prices would rebound dramatically and top $100 a barrel.

This wishful thinking led bankers to make riskier loans. Then the price of oil fell below $10 a barrel.

Fueling Realty Speculation

"I think a lot of false expectations led to some of the overspeculation in real estate," said Frank Anderson, a bank analyst at Stephens Inc., Little Rock, Ark. "It fueled a lot of senseless development."

But Mr. Gilmer, the economist, said the price collapse taught banks a valuable lesson.

"When that happened, everybody realized that oil wasn't going to go up forever," he said. "It broke a real psychological barrier."

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