The downturn in oil prices is cutting into merger activity in energy-producing states.

Texas and Oklahoma had a surge in consolidation — and some of the nation's highest deal premiums — since the end of the financial crisis. In recent months, however, aspiring buyers have been willing to sit on the sidelines given the uncertainty over targets' credit quality and their own depressed stock prices.

"M&A is essentially on the back burner," said Brad Milsaps, an analyst at Sandler O'Neill. "Most of these companies are focused either internally or on making sure their own credit issues are well in hand and stabilized."

In certain states M&A has suffered a "bit of a slowdown" because of the "perceived impact" of depressed oil prices, said C.K. Lee, a managing director in the financial institutions group at Commerce Street Capital, a Dallas investment bank.

"In my mind, that has everything to do with the impact of oil prices on Texas banks," Lee said. "We saw a big stock sell-off in 2015 that has continued throughout this year."

Only one Texas bank — the $64 million-asset Preston National Bank in Dallas — has agreed to sell itself this year, based on data from S&P Global Market Intelligence. Twenty Texas banks found buyers last year, compared with 27 sellers in each of the prior two years, according to data compiled by Keefe, Bruyette & Woods.

The stock prices of many public banks with meaningful exposure to the energy sector have plunged in the last 18 months. Since late May 2014, share prices for a group of 17 banks whose energy loans made up at least 3.5% of total loans are down 34% on average. Over that time, the KBW Nasdaq Bank Index has lost 9%.

Lower stock prices mean weaker currency for doing deals at a time when potential sellers still have inflated opinions of their institutions' value.

"A lot of the M&A discussions that were happening last year are on hold," said Curtis Carpenter, head of investment banking for Sheshunoff & Co. Investment Banking in Austin, Texas. "No one knows where this will go and everyone is waiting for clarity. Sellers don't want to accept a lower price just yet."

A slowdown in consolidation is especially worrisome for banks that have at least $500 million of assets, since those are generally targeted by larger publicly traded institutions, Carpenter said.

For now, most consolidation in Texas and other energy-dependent states will involve smaller, privately held banks, Carpenter said. In those instances sellers generally lack direct exposure to the oil and gas industries, and other factors such as succession and shareholder liquidity might play a bigger role in influencing deals.

Given such deep uncertainty, traditional acquirers could choose to use capital to repurchase stock, Milsaps said.

Prosperity Bancshares in Houston, which agreed to buy nine banks from 2012 to 2015, had shown a preference for acquisitions and organic growth over repurchasing stock.

The $22 billion-asset company, whose stock price is down 30% since May 2014, is rethinking capital deployment. Prosperity said last month that it could buy back up to 5%, or roughly 3.5 million shares, of common stock this year.

Prosperity's stock is "ridiculously low right now," David Zalman, the company's chairman and chief executive, said during a recent conference call to discuss quarterly results. Completing the planned repurchase program is currently "better than buying a $2 billion or $3 billion bank."

Potential buyers could also be reluctant to acquire other banks because of an uncertain forecast for credit quality. Potential sellers that lack direct exposure to the energy sector could still face problems in areas such as commercial real estate and mortgages.

"Due diligence becomes job one" for banks still intent on pursuing deals in energy-producing states, Lee said. "You need to know how the area will be impacted by what's happening in the oil patch — and that includes one-to-four-family and CRE — and getting a sense of the general economic environment."

Banks in Texas may also have unrealistic views of their oil exposure, Kelly King, chairman and chief executive of the $210 billion-asset BB&T in Winston-Salem, N.C., said in a recent interview.

"Right now … everybody thinks that their portfolio is better than what it may be," King said. Ongoing energy woes "cause us to be much more careful when it comes to determining the quality of the assets" involved.

A number of banks in oil regions are preparing for potential consumer loan losses as employees lose jobs, said Steve Reider, founder of Bancography. Those concerns will limit M&A to a "small subset of banks that are the most confident in their ability to value their loan portfolios with an appropriate discount," he said.

An increase in sales of distressed banks could take place if oil prices remain depressed, though industry observers said it could be a year or more before that scenario starts to play out.

MidSouth Bancorp in Lafayette, La., which completed two acquisitions after the financial crisis, is interested in pursuing deals in Louisiana and Texas, said Rusty Cloutier, the $1.9 billion-asset company's president and chief executive. MidSouth, whose shares are down 62% since May 2014, will wait until its stock price rebounds.

Cloutier said he remains optimistic that banks with energy exposure will weather the downturn, adding that oil prices can dramatically change if there is a shift in world political events or a natural disaster. (More than a fifth of MidSouth's loan portfolio consists of energy credits.)

"We have always said it wouldn't stay at $100 a barrel and it won't stay at $30 a barrel either," Cloutier said. "We think in the next 12 to 18 months the price of oil will skyrocket — and then we can acquire banks."

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