Colonial BancGroup of Montgomery, Ala., is planning a big expansion in Texas.
Starting with a small Dallas bank it is buying, Colonial officials plan to rapidly build a sizable presence in some high-growth markets. Chairman Robert E. Lowder said he has his eye on Houston and Austin.
Colonial, with assets of $8.2 billion, operates in Alabama, Georgia, Florida and Tennessee.
Last week it agreed to buy $162 million-asset FirstBank of Dallas for an undisclosed price. Privately held FirstBank has one office in the northern part of the city.
Though small, the deal offers large opportunities, Colonial officials said. If all goes as planned, a string of Texas bank deals will come together quickly.
"If you think that is going to be our first and last acquisition in Texas, you'd be mistaken," said W. Flake Oakley, Colonial's chief financial officer.
The Texas strategy will mirror Colonial's effort in Florida, Colonial officials said. The company entered Florida in July 1996, paying $50 million for $232 million-asset Southern Banking Corp., Orlando.
Colonial put that company's CEO, a longtime and well-known Florida banker named Charles Brinkley, in charge of building a Florida franchise. Twenty-two months and 12 acquisitions later, Colonial has a $2.5 billion- asset Florida banking company with 79 branches. A pending deal would add another $84 million, in Daytona Beach.
Colonial officials said they were attracted to FirstBank because it had a strong management team, as did Southern Banking. FirstBank was founded in October 1992, but chairman and founder Roy Gene Evans, 52, and CEO and co- founder D. Michael Redden, 47, have deep roots in their headquarters state. Mr. Evans has worked as a banker in Texas since 1969, and Mr. Redden since 1974.
With their experience and contacts, the two will probably be able to help further deal-making, Mr. Oakley said.
The idea is for Mr. Evans to chase deals while Mr. Redden runs the operational side of Colonial's Texas franchise, Mr. Lowder said.
Analysts generally applauded the strategy.
Colonial has "been awfully successful building franchises in new markets," said Christopher T. Kelley of Morgan Keegan & Co., Memphis. "Dallas is indeed not a place they've been before, but there is a lot of opportunity for them there and throughout the state. It wouldn't surprise me to see them do a lot of deals there."
Expansion into Texas also makes sense because Dallas is a regional headquarters for Colonial's mortgage company.
For that reason, Colonial executives do not view the FirstBank deal as an out-of-market transaction, said Jefferson L. Harralson of Robinson- Humphrey Co., Atlanta.
Mr. Lowder speculated recently about extending his banking franchise to Washington State, where Colonial Mortgage operates another regional office and generates its highest loan production.
"We still have plenty of good opportunities" in Colonial's current markets, Mr. Lowder said, "but we're going to look west."