Coastal Bancorp, one of Texas' largest thrifts, is horse-trading some branches with Alabama's Compass Bancshares.
The Houston company is selling its three San Antonio branches to Birmingham-based Compass in return for the Alabama bank's branch in Bay City.
The two banks are exchanging the branches in a straight swap, no cash.
Catherine N. Wylie, Coastal's chief financial officer, said the thrift wasn't ready to make the commitment the San Antonio market required.
"We'd considered expanding in San Antonio and trying to get a larger market share, but there are a lot of credit unions and other banks there," she said. "It's heavily banked and you really have to decide if it's a market you want to be in.
"You have to be a bigger player than we were to make things work in San Antonio," she added.
The three San Antonio branches have combined deposits of $58 million, while the Bay City office has deposits of $86 million.
The purchase will give the $2.8 billion-asset thrift, parent of Coastal Banc, entry into Bay City, a town of 20,000 near the Gulf Coast, between Houston and Corpus Christi.
"This acquisition will further expand our market presence in small to midsize cities in southeast Texas," said Manuel J. Mehos, chief executive of Coastal Bancorp. "In addition, Bay City is a very attractive market for us because it is comparable to the communities we currently serve."
Compass, with more than $4 billion in Texas assets, has been extremely active there of late, making several acquisitions in the past year alone. Most recently, Compass announced plans to acquire Post Oak Bank and Pro Bank, both in Houston. It will have more than 90 offices in Texas when the deals are complete.
Ms. Wylie said Compass already has more than a dozen branches in San Antonio.
San Antonio, with nearly one million residents, already has a handful of entrenched banking companies besides Compass. Frost National Bank, subsidiary of Cullen/Frost Bankers Inc., San Antonio, has nearly $4 billion in assets, while the Texas units of Bank America Corp., Banc One, and NationsBank all have several offices in the city.
Coastal Bancorp will have 38 offices in south and central Texas once the deal is closed. Coastal was formed 10 years ago, from four failed thrifts in the initial Southwest Plan deal. It has since made several acquisitions.
Ms. Wylie said there is some overlap between Coastal and Compass, but the two generally do not compete heavily against one another.
