Nathan C. Collins, chief executive of BancTexas Group, wants to buy banks.

There's just one thing stopping him: BancTexas' untimely rate squeeze, which has kept it out of the profit picture while the Dallas holding company's rivals are enjoying some of the fat-test profits in 60 years.

In fact, BancTexas NA, the company's Houston-based bank, is one of just six independent community banks in Texas - out of 404 such banks - to lose money in 1993.

Nonetheless, Mr. Collins says he wants to take part in the merger-and-acquisition wave that is sweeping Texas. He said the bank could do a deal sometime this year. And, if rates go up and increase the spread on his predominantly consumer portfolio, the bank could earn some money and its stock might get a boost, increasing the chances for a successful merger. The stock trades at only $1.38 a share now, down from its $2.25 52-week high.

Profit Turns to Loss

BancTexas lost $190,000 in the first quarter, compared to $311,000 profit a year earlier, the last time the company posted a profit.

"The loss from operations for the first quarter of 1994 was substantially the same as for the fourth quarter of 1993," Mr. Collins said.

Mr. Collins said three-quarters of BancTexas's loan portfolio is automobile paper bought from car dealers, a niche the bank has cultivated profitably in the last six years. In the ease of this product, he said, "there has been a ferocious amount of competition from the superregionals in Texas in automobile lending. It's an important niche for us, and we wanted to keep it, so we met them on price."

A 'Wider Base' Is Sought

The competitive pressure on yields exposed weaknesses in the banks cost structure and, thus, the losses.

To deal with it, Mr. Collins is diversifying into more commercial products such as small business loans, mortgage warehousing, and single-family construction loans.

He also wants to go on the merger path to try and add some bulk to his balance sheet. Saying his costs are in line with a medium-sized balance sheet instead of a small bank's balance sheet, "we need to spread our infrastructure across a wider base."

And though the company is losing money, it has a comfortable capital cushion and one thing that most community banks in Texas don't have:a listing on the New York Stock Exchange. and the liquidity such a listing assures.

"It gives us an intriguing currency with which to talk to other banks," he said. "It's not cash, but it's the next best thing when you're talking about stocks."

BancTexas has 14,000 shareholders, none of whom own more than 5%.

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