Banking on the Boom

by Walter Pierce

Lake-area financial institutions seeing green.

Lake-area financial institutions seeing green. By Patrick Flanagan

Friday, Nov. 14, 2014

Lake Charles is ground zero for what's being hailed as one of the biggest industrial booms in Louisiana history, and local bankers are already seeing signs of what's to come.

Loans are on the rise, as is the number of credit lines being increased by small businesses, says Greg Robertson, CEO of Business First Bank's Southwest region.

Greg Robertson

"There are two different types of investments we're seeing," Robertson tells ABiz. "There's speculative investments, people betting on the projections, and there's the people with the more scientific approach of having connections directly with the industries being impacted by the growth who are making steps and plans now to either increase their labor force or their facilities. We are also seeing some of the effects now with some of our business clients who will eventually service some of the activity in the petrochem industry; they've already started ramping up in preparation for that."

The boom traces back about five years with the announcements of several major developments in the area's petrochemical industry, the biggest coming from South African chemical company Sasol Ltd. and its plans for a liquefied natural gas plant, in addition to project announcements from Cheniere Energy and Trunkline LNG, among others. In all, about $80 billion in industrial projects have been announced for the Lake Charles area, and according to economist Loren Scott, this will mean a ton of jobs. Scott estimates 3,300 this year, an extra 4,500 in 2015, as well as upwards of 25,000 in temporary, short-term workers, mostly coming from construction companies flocking to the area to help with the resulting demand for housing.

"We're already seeing a lot of activity in the real estate market, and we're involved in two major real estate developments in this area, and it's only the beginning of more of what's to come," says Robertson.

Though Robertson says he couldn't name names, a little digging reveals one of those residential projects is the Morganfield Development, in which Business First is partnering with Lafayette's Southern Lifestyle Development, parent company of River Ranch Development, for a similar-sized traditional neighborhood development on the south side of Lake Charles.

"A few things are going to happen for Lake Charles," says Robertson. "The increased amount of business, the large dollars coming into the market from a lot of major investments, are from the petrochem industries, and that will hopefully spur a lot of the trickle-down effect for the local banks here."

Though the 8-year-old Business First Bank is headquartered in Baton Rouge, an effort is under way to expand its presence in the Lake Charles market, starting with staffing, says Robertson.

"Our focus is going to be on manpower initially, and then marketing will follow and possibly an expansion in facilities will follow behind that," he notes.

Other local banks are also seeing the coming petrochem boom as an opportunity for growth. That's already proven the case for Boyd Boudreaux and JD Bank, a Jennings-based community bank with a large presence in Calcasieu Parish, especially Lake Charles.

Boudreaux, JD Bank's president and CEO, says three new branches were opened over the last year in preparation for the area's economic growth, bringing the bank's total to nine in the Lake Charles market.

"We have definitely seen a positive impact already," says Boudreaux. "We're seeing people coming in for mortgage loans from the Sasol plant. These are employees buying houses. Our small business customers are also increasing their lines of credit to beef up for the work ahead of them. These are rental companies, construction companies and companies that service the oil and gas and chemical industries."

JD Bank has responded by hiring more employees and by increasing the bank's mortgage lending services.

"Housing is definitely going to grow, tremendously, over the next few years as more permanent jobs are created," says Boudreaux.

And JD Bank isn't alone in its efforts to prepare for what's coming.

"We're seeing banks without a Lake Charles presence moving in, and the other community banks who are already here are also expanding," notes Boudreaux, pointing to First National Bank of Deridder and Sabine State Bank, both of which recently opened branches in Lake Charles.