Texas Banks Not Worsening as Fast as Expected

The speed of credit deterioration in Texas banks isn't as quick as KBW had expected -- after reviewing the latest call reports, the firm upgrades Cullen/Frost, Prosperity Bancshares, First Financial and Southside Bancshares to market perform. Non-performing loans for Texas banks remained flat at 1.22%. Signals remain mixed for the Texas economy, firm says, with positives from higher energy offset by rising unemployment in the state. However, the slow pace of credit deterioration will allow the banks more time to prepare for a weak economy with higher loan loss provisions and retained earnings, KBW says.