Uncertainty in the oil patch aside, small banks in Texasseem optimistic about their potential to grow in a difficult macroeconomicenvironment.
CommerceStreet Capital LLC Chairman Tex Gross invited community bankers tocultivate a global perspective at the company's bank conference in Dallas. "Todayyou are required and must have a world view," he said.
A keynote speech at the conference highlighted elements ofthe global oil trade beyond Texas, focusing on challenges that lie ahead forSaudi Arabia.
Commerce Street President and CEO Dory Wiley likewiseencouraged community bankers to look beyond their local economies. Althoughcommunity banks are not directly tied to China, Wiley said that"fear-based" trading influences the stock performance of the nation'ssmallest banks.
"China's outlook has a large impact on the U.S. market,as seen in 2016," Wiley said. "When you see some more bad news comingout of China, which you will, that will definitely affect not only the U.S.market but it will affect your local community bank stocks."
Still, he predicted that bank stocks will outperform thebroader market for the remainder of the year. In terms of a 2016 outlook, Wileyforecast minimal growth, flat unemployment and a volatile stock market in theU.S. He said that "credit is pushing itsluck," and that there is more pain in store with regards to oil.
Texas bankers at the event expressed cautious optimism aboutthe environment.
Don Cosby, president and COO of Fort Worth-based ,acknowledged in an interview that challenges lie ahead for community banks, butsaid that he feels confident because they are generally well-capitalized.
During a panel discussion, Craig Scheef, chairman, presidentand CEO of Dallas-based TexasSecurity Bank, pointed to the strength and resilience of his bank'sspecialty in the owner-managed, operating company segment.
"We believe that this space of the economy really isthe strong horse that pulls the entire cart," Scheef said.
John Steinmetz, president and CEO of Ralls, Texas-basedVista Bank, noted thechallenges of the macroeconomic environment and regulatory pressures that smallbanks encounter, but he expressed faith in the perseverance of community bankleaders and their teams. He said that consolidation in the Texas market isprobable because of the scale necessary in the current operating environment,but he pointed out that efficiency can be gained from partnerships.
"I truly believe that some of the greatest days inTexas community banking are ahead of us," Steinmetz said.