As banks begin reporting fourth-quarter earnings, one question is on the lips of investors and stock analysts: How will energy-related loans affect the banks?
Investors are panicking, Brady Gailey, an analyst with Keefe, Bruyette & Woods, told The Wall Street Journal. Gailey said nervous investors are peppering him and other bank analysts with questions about how much stock to keep.
At banks where energy loans account for at least 5 percent of the loan portfolio, stock prices have fallen more than 20 percent on average since oil peaked on June 20, according to FactSet Research Systems and data from Keefe, Bruyette & Woods.
Those banks include Lafayette-based MidSouth Bancorp and Gulfport, Miss.-based Hancock Holding, regional banks where energy loans make up 20.5 percent and 13 percent of the total loan portfolio respectively.
Hancock is scheduled to release its earnings report after the stock market closes Thursday. MidSouth is expected to release its earnings after the markets close Friday.
Cratering oil prices strike fear into the hearts of bankers who survived the 1980s bust, when crude prices sank and took hundreds of banks and savings and loans with them.
Bankers and regulators say measures have been put in place to prevent a repeat of that debacle. Banks are trying to reassure investors about those steps, mostly during conference calls with investors and analysts.
In December, Lafayette-based IberiaBank Corp. told investors that energy loans accounted for 7.6 percent of the company’s loan portfolio as of Sept. 30, down from 8.4 percent six months earlier.
IberiaBank is expected to report fourth-quarter earnings after the markets close on Wednesday.