The chief executive at Texas Capital Bancshares Inc. says that regional banks like his are losing potential commercial loan business to deposit-rich larger banks that are undercutting them on rates and offering more favorable terms.
Reiterating concerns voiced by other regional and community bankers in recent months, George Jones said at an investor conference in New York Monday that, with few options for deploying excess liquidity, large banks have begun aggressively targeting small- and mid-size businesses that have historically banked with smaller institutions.
"There's no way to buy growth," Jones said, noting the dearth of acquisition opportunities for large banks. "The only way to satisfy the street in terms of growth is to go get it, almost at any cost."
Of course, all banks are flush with deposits these days, but new data from the Federal Deposit Insurance Corp. shows that large banks are taking in a disproportionate amount of the large-denomination deposits of above $250,000.
The $7 billion-asset Texas Capital operates in Texas' five-largest metropolitan markets — Dallas, Fort Worth, Houston, San Antonio and Austin — where it goes head to head with some of the country's largest banking companies. JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. combined control roughly 40% of the state's deposits, and other large players, including Citigroup Inc., Comerica Inc. and BBVA Compass all have a significant presence in the Lone Star State.
Jones, speaking at the Barclays Global Financial Services Conference, said that despite the fierce competition for loans Texas Capital is approving only about one-third of its loan applications and it has no intention of lowering its credit standards - in this economy - to generate more business.
"A lot of us still bear the scars" of the Texas real estate bust in the 1980s, Jones said. "We don't see any need to get too aggressive in this marketplace."