A year ago, Manuel J. Mehos confidently predicted that his Houston- based Coastal Banc State Savings Bank would buy commercial banks on its path to becoming the biggest savings institution in Texas.

Last week, Coastal did just that, becoming one of the very few thrifts in recent years to purchase a healthy community bank. The $2.4 billion thrift inked an agreement to buy Houston's Texas Capital Bancshares and its Texas Capital Bank for $21.1 million.

"Texas Capital is a well-managed and profitable institution that fits precisely with our acquisition strategy of broadening our franchises in Houston as well as in other attractive markets," said Mehos, chief executive of Coastal.

Most of Coastal's branches are in the metro Houston area, but it has offices in Corpus Christi, San Antonio, and several small cities in south Texas. Texas Capital will bring an office in Austin.

Coastal plans to pay for the acquisition in cash. The price amounts to 1.67 times book value. Mr. Mehos said Coastal's holding company is planning on issuing $75 million in senior notes this month, and that money will be downstreamed to the thrift to cushion the blow to Coastal's capital when the acquisition is completed.

The deal will be the latest in a string of acquisitions by Coastal since it was bought and recapitalized in 1988 by Mr. Mehos.

In six years Coastal has become the phoenix of the Texas thrift industry. With the help of the federal government in buying the franchises of failed thrifts and in nongovernment-assisted transactions, it grew to more than $2 billion of assets.

Just last January, it completed a deal to buy $151 million in deposits and eight branches from Texas Trust Savings Bank.

This is Coastal's first whole-institution acquisition. Until now, it has been buying mostly branches and deposits, creating a 36-branch network in south Texas and relying on its huge securities portfolio and low cost structure to make money.

But Texas Capital brings loans to the balance sheet, both commercial and retail, which Coastal needs to maintain its earnings.

"It's part of our plan to develop a business-lending program," Mr. Mehos said. "Texas Capital is a platform for developing that business gradually and conservatively."

The deal still needs to be approved by regulators and shareholders. Mr. Mehos added that the way the deal is structured, Coastal will still be able to pay the lower Bank Insurance Fund premiums on Texas Capital deposits.

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