Permian Banks Now Latest Drag on Texas Economy, Dallas Fed Says
(Bloomberg) -- The slowdown in Permian Basin oil drilling and fracking is spreading to the lenders as austerity takes hold.
The 63 banks and savings associations in the world’s biggest shale field have taken a wild swing from 2018 when they led Texas in loan growth, according to the Federal Reserve Bank of Dallas.
In the third quarter, the outstanding value of loans from banks in West Texas grew 4.8% compared to a year earlier. That lagged the 7.5% loan growth for the Lone Star State as a whole. The greatest disparity was for loans made on apartments and other multifamily development: a 15% drop in the Permian region compared with a 12% surge statewide.
With investors pressing oil explorers to focus on fattening buybacks and dividends, the number of frack crews busy in the Permian is at the lowest level in more than two years. The area has been hemorrhaging jobs this year in stark contrast to 2018’s breakneck expansion.
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