Its coffers full with freshly raised cash and its first acquisition out of the way, the bank holding company CBFH Inc. in Beaumont, Tex., is scouting for more deals.
The company was formed this year with $80 million of capital, and it used $26 million of that in July to buy the $140 million-asset County Bancshares in Newton. Since then CBFH has absorbed the company, renamed its bank and moved it to Beaumont, more than doubled the bank's assets by significantly raising its lending limit, and raised $25 million more to accelerate its growth. Specifically, CBFH is looking to buy banks in eastern Texas, between Tyler and the outskirts of Houston, that have assets of up to $150 million.
J. Pat Parsons, its chief executive and a co-founder, said the additional capital "gives us a war chest to go out and buy more banks, and that is what we are going to be doing."
Industry watchers said that because CBFH has cash on hand, it probably has an advantage over other would-be acquirers that might use trust-preferred securities or their own stock, both of which have become less attractive in recent months. Moreover, because the company is looking in eastern Texas, where competition is less fierce, prices will be lower than in Texas' major metropolitan areas, where economic growth is more robust.
"That's not where a lot of focus has been," said Stephen Skaggs, the president of Bank Advisory Group Inc. in Austin. "Your cities and metro areas are pretty well picked over. Entry there is going to be expensive, if there are any targets. There are certainly opportunities for synergy or economy of scale outside of the major metros."
Mr. Parsons ran Community Bank and Trust in Beaumont, building the bank's assets to more than $1 billion through nine acquisitions before selling it in 2004 to Texas State Bank for $265 million. Banco Bilboa Vizcaya Argentaria bought Texas State in 2006, when Mr. Parsons left to co-found CBFH and begin building his own shop again.
He is not wasting any time. The deal for County Bancshares closed July 31, and the next day it was renamed CommunityBank of Texas, with Mr. Parsons as its president and CEO. Since then the bank has grown to $370 million of assets as Mr. Parsons raised its lending limit to $10 million and lenders who followed Mr. Parsons from Texas State Bank brought books of business with them.
CommunityBank has also opened four branches in that time and now has 11.
Jim Gardner, the chairman of the investment banking company Commerce Street Capital in Dallas, said the challenge for CommunityBank is to deploy the rest of the capital.
"The problem with having a lot of capital like that is you have to grow really big really fast," he said. "You've got to be at least 10 times your capital to get a decent return."
Mr. Parsons said CBFH has no specific growth goals in mind but knows that acquisitions will be an important part of using the capital.
"We are going to grow it as fast as we can prudently grow it," he said. "We want to be as big as we can, but we are looking for the right opportunity to invest shareholder money."
Because of the bank's lending limit, Mr. Parsons said it is in position to compete with large banks.
"With our capital we can satisfy the credit needs of the vast majority of businesses in our market," he said.
CBFH's capital level also means Mr. Parsons will not have to worry for some time about taking the company public or asking shareholders for more money. He was the president of the eastern Texas market for the publicly traded Texas State Bank before it sold itself. "I have no interest in being [part of] a publicly traded corporation again as long as I live," he said.
