Another group of wealthy Texans is buying up community banks.
Five former directors of Summit Bancshares Inc. in Fort Worth, which was sold to Cullen/Frost Bankers Inc. in December 2006 for $364 million, have formed a buyout company called Texas American Acquisition Group Inc. that has struck two deals in the Fort Worth area.
In December it announced it was buying the $104 million-asset Liberty Bank in North Richland Hills for $24 million, and on March 12 it said it had a deal to buy the $73 million-asset Starbanc Holding Co. in Fort Worth for $17 million.
Last week Texas American began raising capital to pay for the deals, which are expected to close this summer, with both banks to do business as Liberty Bank.
The group is at least the fourth formed in Texas in the last three years for the purpose of buying community banks. Similar groups have formed in other states with heavy consolidation, but they seem to be more prevalent in Texas. Observers said the state’s strong economy, growing population, and sheer number of small banks have created opportunities for veteran bankers to build larger banking companies.
For example, after Wells Fargo & Co. bought First Community Capital Corp. of Houston in 2005, First Community’s chief executive, Nigel Harrison, kept a charter and formed FC Holdings Inc., which has acquired four additional banks in the state. Vernon Bryant, the chief executive of the $1.8 billion-asset TexasBank of Fort Worth, left a few months after TexasBank’s 2006 sale to Compass Bancshares Inc. and started organizing First Texas BHC Inc. in Fort Worth, which has acquired two banks in the market.
But unlike other Texas acquiring groups, Texas American is made up largely of former directors.
Typically when a banking company is formed it enlists experienced lenders and has existing customer relationships to draw on, industry watchers said.
“The question is going to be can those guys attract some lenders from around the city so they can begin to generate additional business in the banks they are acquiring,” said Jim Gardner, the chairman of the Dallas investment banking group Commerce Street Capital.
The group has no lenders on board from the old $1.1 billion-asset Summit — organizers do have commitments from lenders at the banks they are acquiring — but opportunities to hire lenders may be on the horizon.
Elliott Garsek, Texas American’s president, said contracts that Cullen/Frost secured in the Summit acquisition expire in July.
Texas American’s long-term plan is to build a company modeled after Summit, focusing on commercial and industrial lending and branching into similar areas of Fort Worth.
“We want to be all the good things of Summit but be better and improve on it, like with everything you do in life,” said Mr. Garsek, who chaired Summit’s executive and merger and acquisition committees.
Clark Locke, a vice president and the head of Texas investment banking operations for Hovde Financial Inc., said a booming natural gas industry and the recent consolidation are giving banks opportunities to land deposits, loans, and lenders in the Forth Worth market. Also, prices for banks have come down off their high of a couple of years ago, when Summit was able to sell for almost five times book.
“There are just so many things going on that are good in Fort Worth,” Mr. Locke said. “It is definitely a good time to pick up some community banks and consolidate them.”
Including the two Texas American is buying, 13 Fort Worth-area banks with assets totaling about $6 billion have been sold since the beginning of 2005, information from Hovde shows.
Mr. Garsek agreed the recent consolidation should present opportunities his group.
“It’s a great time for a solid, home-grown bank in this market,” he said.
Texas American is looking to raise $48 million — $41 million to complete the acquisitions and $7 million for additional capital. Its leadership team is well known in the marketplace and should not have much trouble raising the money, Mr. Gardner said.
“There is a lot of money around and it’s all scared to death, looking for a safe place to go,” he said.
