Houston is hot for community bank deals.

Seven deals to buy Houston banks have been announced this year, and 19 since January 1998. The latest, announced last month by Whitney Holding Corp. of Houston, was a $58 million deal for Bank of Houston.

The nation's fourth-largest metropolitan market has dozens of independent community banks, and observers say the current consolidation wave there will continue.

"There are several buyers who have told us that they would take a look at anything in Houston," said Charlie I. Miller, managing director of investment banking at Alex Sheshunoff & Co. in Austin, Tex.

Most of the deals have been in-market, with companies such as Sterling Bancshares Inc., Prosperity Bancshares, and Woodforest Bancshares buying smaller competitors. But the Whitney deal illustrates out-of-state banks' eagerness to enter Houston, which has a diverse economy and a strong concentration of deposits.

"The greater Houston area has $45 billion of deposits, which is more than the whole state of Louisiana," said William L. Marks, chairman and chief executive officer of $5.2 billion-asset Whitney. "It's a no-brainer to be there."

Another newcomer is $42.5 billion-asset Southtrust Corp. of Birmingham, Ala. The company entered Houston in March by purchasing Langham Creek National Bank for $24.5 million and followed up in July with a $18 million purchase of Navigation Bank.

Analysts and investment bankers note that a main reason Houston still has more than 50 banks with less than $1 billion of assets is that Texas was one of the last states to get rid of unit banking.

High on everyone's list of potential Houston-property buyers is Wells Fargo & Co of San Francisco, which already has a deal pending to buy $2 billion-asset Prime Bancshares for nearly $250 million. Others include Southtrust; its Birmingham neighbor Compass Bancshares; Union Planters Corp. in Memphis; and BOK Financial Inc. of Oklahoma City.

"There is a nice supply-and-demand equation in Houston," said Jeff Davis, an analyst at J.C. Bradford in Nashville. "If someone wants to build market share, there are certainly some consolidation plays available."

Still, it will be tough to build market share quickly in Houston, which has only three banks with more than $1.5 billion of assets - Southwest Bancorp. of Texas, Sterling, and Coastal Bancorp.

And Houston's community bankers shrug off the talk of further consolidation, sounding as if they are determined to remain independent.

"The chatter isn't any more or less than what it has been the past 10 years," said Paul J. Murphy, president and chief operating officer of Southwest with $2.7 billion of assets. "With Houston's low cost of living and long term growth prospects, this is a good place to have a bank."

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