The Lone Star state is being swept by a new wave of mergers.
This time, though, it's community banks, rather than the state's big players, that are riding the swells. Just about every community bank in Texas, it seems, is thinking merger - whether they admit it or not.
The latest bank to test the waters is San Antonio's Benson Financial Corp., which just hired an investment bank to explore a possible sale. By retaining the adviser, Benson simply made plain what almost every other bank in the state is thinking.
"In the next year or two many more community banks will begin to sell," said Jerry Finger, the acquisitive chief executive of Houston-based Charter Bancshares. "It's an economic necessity for many of them."
Texas' merger environment is just about optimal. The state is home to more than 600 small, independent banks - the sort that flourished under the state's old unit banking system, which barred branching across county lines.
Analysts say competition for market share is heating up between the dominant players - NationsBank and BankAmerica - and such second-tier superregionals as Comerica Inc., Banc One Corp., Norwest Corp., Boatmen's Bancshares, and First Interstate Bancorp. Put simply, the second-tier institutions have to buy banks to take on the big boys in Texas.
Like links in a food chain, the community banks have to buy banks to grow and get the attention of the second-tier banks.
And Benson wants to get in on it.
"We have to ask these questions," said Tom Roddy, chief executive of Benson, which owns two San Antonio banks with combined assets of $448 million. "Should we stay independent? Should we acquire? We just thought the time was right to square off on this."
Benson hired Hoefer & Arnett, the San Francisco investment bank that managed its public offering last year.
"Over the past several weeks, a number of financial institutions have expressed various degrees of interest in pursuing discussions regarding the future course of Benson," Mr. Roddy said in a statement.
"In today's world, every bank is for sale," said William Strunk, a Houston bank consultant who's done work for Benson. "But there's a hundred nuances to the M&A business. (Mr. Roddy) is a great banker, but he was right to admit they could need some help in that area."
Hoefer & Arnett set up investment banking shop in Texas last year to try and capitalize on the growing merger business among community banks.
Everywhere in the state, there is evidence of a massive reorganization of the banking structure. After the nation's largest banks - Chemical, NationsBank, BankAmerica and First Interstate - bought into Texas on the heels of the energy crisis in the late 1980s, a host of smaller midwestern regionals established footholds in the state.
And community banks, finally getting used to life without unit banking, have begun to leverage their large capital bases and pay cash for other community banks and bulk up.
"The merger wave has gotten more impetus this summer," said Charter's Mr. Finger. "We've had three large community banks go in Houston this year, and more are on the way."
The Dallas area has seen a rash of small-bank mergers in recent months. Also, BankAmerica is selling about 21 branches in rural areas of the state, and community banks are eager buyers. Furthermore, the state has opted out of interstate branching until 1999, allowing community banks a window of opportunity to build market share.
Several observers pointed up Norwest, which has been building a Texas franchise piece by piece, as the most likely buyer for Benson. Norwest had approached Benson before it went public, according to several sources, and the Minneapolis' bank's chief executive in Texas lives in San Antonio.
That's not to say other banks won't be interested. Cullen/Frost Bankers is said to want to protect its home base of San Antonio, and a number of aggressive Houston banks - Charter among them - are seeking to get into the market.
Any buyer will have to go through Tom Benson, the automobile sales magnate who controls the biggest stake in the company.
If the company is sold, most of the spoils will go to Mr. Benson, who owns the New Orleans Saints of the National Football League. He formed Benson Financial in 1987 to consolidate his ownership of several San Antonio community banks.