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ALBUQUERQUE, N.M. — The oil boom in Lea and Eddy counties has propelled Carlsbad banker Jason Wyatt into another universe of challenges.
“Although these are big problems, one can say they are good problems to have,” said Wyatt, president of Western Commerce Bank. “I would rather be on this end than in a decreasing economy where jobs are scarce.”
The ripple effect of the influx of capital into the region that holds some of the richest oil deposits in the world means a “significant increase in both loans and deposits,” Wyatt said.
Wyatt stressed that while his community bank cannot serve large oil companies, he and his 90 full-time employees in 11 branches can serve the needs of those who work in the oil field and supporting companies.
Most of those branches are in Lea and Eddy counties, with one branch in Albuquerque.
“There is a major difference between large national banks and community banks, I can only speak as a community banker,” said Wyatt, who is president-elect of the New Mexico Bankers Association.
The oil boom means dramatic increases in economic activity across all business sectors, he added.
For example, Carlsbad had 28,000 residents in 2015, but now the population is estimated from 75,000 to as high as 120,000 people.
“Our town is a bit overwhelmed. Our infrastructure does not support the increased traffic and we are watching our roads deteriorate on a day basis,” he said.
Also, traffic crashes and fatalities have increased, shouldering understaffed police and other emergency services with the burden of responding.
And while there are not enough other services, like restaurants, grocery stores or entertainment establishments to support the increase in population, even if more opened it would be hard to staff them, because wages in the oil field are higher than in the retail sector.
Wyatt said there are more real estate agents than homes for sale.
“Almost any home put on the market is sold within hours,” he said.
Hotel rooms can go for as much as $400 a night, if one is available.
“Because of the housing shortage, we have seen numerous RV parks opened,” he said. “We have several builds working on new housing developments, but the demand far outweighs the pace of new homes constructed.”
Still much of his new business comes from customers seeking mortgages. Commercial lending is also brisk, with customers expanding and upgrading, buying real estate or looking for larger facilities.
As a community banker, Wyatt is concerned about the trend of smaller community banks merging and consolidating.
He tracked the trend back to 2008 and banking regulations that came as a result of the Great Recession.
“Community banks had absolutely nothing to do with the economic collapse, but we were subjected to the same regulatory burdens as the large banks that caused the problems,” he said.
He joked that the federal government regulations, a one-size-fits-all approach, put the squeeze on small banks forcing many out of business and reducing competition for the larger banks.
John Anderson, executive vice president of the New Mexico Bankers Association, said his organization continues to lobby for relief from the consumer protection act that puts an unfair burden on smaller banks: “We want the feds to fit the regulation the size and the business of the bank. One size fits all means a heavy cost for doing business for smaller banks.”
Experts estimated the number of banks in the national system has shrunk from 15,000 in the 1990s to about 5,000.
“At Western Commerce, we spend approximately $1 million a year more in regular compliance than we did before 2008 and we did not have a single foreclosure in the recession,” Wyatt said.
Wyatt said losing community banks shouldn’t be understated: “A community bank or banker is the best person one can go see for financial services or counseling. We live in the communities we serve, attend the same churches, root for the same high school teams. We truly care about our customers – they are our friends and neighbors.”