Bank’s New Building Hailed as Signal of Upturn in Houston’s Economy
In a city where bank closings have become so common they fail to attract much notice, officials of Fondren National Bank of Houston did something that was extraordinary but made no headlines.
They built a $900,000 bank building and opened it in June.
“Obviously if we didn’t feel things were moving positively, we wouldn’t have done it,” said Frank Goldberg, the bank’s president. “We think things are better. We know they are.”
Fondren National, with assets of about $37 million, is far from the largest bank in town, but the confidence its officials are showing in the city mirrors other signs that make some believe that the economic nightmare that followed the energy crash of the early 1980s is slowly ending.
Troubled Image
When the oil bust hit, Houston was left with the image of a city of empty skyscrapers, unprecedented unemployment, banking chaos and, more recently, highly publicized bankruptcies involving prominent Texans like former Gov. John Connally and surgeon Denton Cooley.
But even New York bond rating firms are nodding cautiously that the worst may be over for Houston, which in the past decade used the energy boom to push past Detroit and Philadelpia and become the nation’s fourth-largest city.
Last month, Moody’s Investor Service, swayed by optimistic pleas from top Houston officials, kept the city’s bond rating at the more favorable “Aa” category.
“We looked at the relationship of the city’s attempt to balance the current budget and finish the year in a positive mode,” said Robert Stanley, a Moody’s vice president.
“Their perceptions of Houston were wrong,” said Paul Mabry, spokesman for Mayor Kathryn Whitmire, explaining why Moody’s officials changed their minds.
What Moody’s officials were told is that Whitmire will resolve an unexpected budget deficit with a recently approved 18.9% tax increase. And they were delivered a rosy picture of a city on its way back.
For example, unemployment, at nearly 13% in June, 1987, most recently was reported at 7.1%.
In the 12 months ending in May, employment rose by 28,000. In May alone, Texas Employment Commission figures showed the total number of people working rose by 15,000 to 1,495,100.
Expects New Jobs
Figures also show that the city expects at least 20,000 new jobs this year with economic growth up 2% and expanding in subsequent years.
City officials also are touting Houston’s depressed housing market as a plus for people moving in, noting that home costs and apartment rents are among the lowest of major U.S. cities. For example, a 2,000-square-foot, three-bedroom house that sells for $250,000 in Boston or Los Angeles goes for a mere $80,000 in Houston.
Barton Smith, who heads the University of Houston’s economics department, is forecasting home prices will jump 10% next year and continue to climb in the early 1990s.
Elsewhere, shipments through the Port of Houston were 30.2 million tons through April, up 15% from the previous year.
At the Texas Medical Center, construction worth $1.5 billion is ensuring that the complex remains the world’s largest medical center.
And Southwestern Bell Telephone Co. reported that it installed more new phone lines in April than any month in nearly three years.
At federal bankruptcy court, where clerks were so busy at one point that they refused to answer the telephone, the number of filings has leveled off, according to a Price Waterhouse survey.
Although the court received 429 petitions in the first quarter of the year--up 3% from the previous quarter--the number was 8% below the peak third quarter of 1986 and close to the average of 422 recorded over the past year.
“While the overall number of business bankruptcies increased slightly during the first quarter, various sectors of Houston’s economy showed signs of improvement,” said Donald Thomas of Price Waterhouse. “Several companies have announced relocation plans moving them to Houston. . . . With low real estate and wage costs, Houston continues to be an attractive market for corporate relocations.”
