If Cullen/Frost Bankers Inc. chairman and chief executive Richard W. Evans Jr. is worried about the blitz of banks entering Texas, he hides it well.
"I respect all competition - big, old, new," Mr. Evans said in an interview Friday. "But at the end of the day, I've got to worry about Cullen/Frost, and make sure that we continue to do what we're good at doing and continue to stay the course and not be reactive to competition."
But that's becoming more and more difficult.
Today the top three banks with branches in the state are the giants JPMorgan Chase & Co., Bank of America Corp., and Wells Fargo & Co. The latest arrival is the $58 billion-asset Comerica Inc., which is moving its headquarters to booming Dallas from downtrodden Detroit.
But Mr. Evans contends his company's deep roots in San Antonio will continue to give it an edge against outsiders.
"I never have been in a race for size. I've been in a race for quality of a relationship bank and I think we got that," he said. "I think we've got the best brand and culture in the state of Texas."
Yet there is no denying the added competition has cost Cullen/Frost.
The $13 billion-asset company has 2.3% of the state's deposit market share, down from 2.8% in 2000.
In two recent interviews, Mr. Evans said Cullen/Frost is not changing its strategy in response to increased competition. Still, it made three acquisitions last year and improved its analytics for branch start-ups to determine the characteristics of successful branches.
Having made those improvements, the company expects to open six branches this year.
"Many of our offices are more like a community bank and have decision makers in that office to take care of not only the good retail business, but also to take care of small businesses," Mr. Evans said.
Cullen/Frost has about 106 branches, up from 97 in 2001. Wells Fargo has more than 550, Bank of America about 500, and JPMorgan Chase about 420.
Mr. Evans said Cullen/Frost remains focused on three things: relationship banking, which includes providing credit and gaining customers' primary transaction account, or what he calls the "funnel account"; modest branch building; and looking for acquisitions in its existing markets of San Antonio, Houston, Dallas, Fort Worth, Austin, Corpus Christi, and the Rio Grande Valley.
In 2006 it bought the $1.1 billion-asset Summit Bancshares Inc. of Fort Worth, in December; the $312 million-asset Alamo Corp. of Texas in the Rio Grande Valley, in March; and the $123 million-asset Texas Community Bancshares Inc. of Dallas, in February.
Brent Christ, an analyst at Fox-Pitt, Kelton Inc., said Monday that Cullen/Frost is "the gold standard for the Texas banks."
Paul B. Murphy Jr., the chief executive of Amegy Bank of Texas in Houston, agreed.
"The Frost organization is highly respected and a top-notch group of people," he said Tuesday. But he said others, including Amegy, stack up favorably against Cullen/Frost in certain metropolitan markets.
Cullen/Frost is the biggest mainstream commercial bank headquartered in Texas. (USAA Federal Savings Bank actually has twice the assets of Cullen/Frost but caters only to members of the military and their families and has just one office, its San Antonio headquarters.) But that will change when Comerica arrives this fall.
On Monday, Comerica announced the opening of a branch in Houston and outlined plans for about eight more branches to open in south Texas by yearend.
A Comerica spokesman wrote in an e-mail Tuesday that with 20 years of experience in Texas, Comerica "is familiar with the competition" and "will be uniquely positioned in Texas as the largest bank holding company in the state."
Comerica, which has 60 Texas branches and 0.88% of the Texas deposit market, is expected to use its Dallas address to expand in the state, perhaps through acquisitions.
Mr. Evans said Cullen/Frost has no interest in being acquired.
"We are not for sale," he said.
Cullen/Frost's history in Texas goes back 139 years. The original Frost Bank was founded in San Antonio in 1868 by former Confederate Army colonel and Texas Ranger Thomas Claiborne Frost.
Frost Bank entered the Houston and Dallas markets in 1977 when it merged with Cullen Bankers and created the holding company Cullen/Frost Bankers.
Mr. Evans, 60, joined Frost Bank more than 30 years ago. He became chairman and chief operating officer of Cullen/Frost in 1995 and CEO in 1997. He is the first person outside the Frost family to run the company.
Cullen/Frost has had revenue growth of 7.2% a year for the past five years, and loans, deposits, and net income all rose in 2006. Its stock has delivered a cumulative return of 104% over the past five years, compared with 55% for the S&P 500 Banks Index and 35% for the S&P 500 Index.
Mr. Evans said the company's reputation helps it woo sellers and retain Texas bankers who want to work for a homegrown bank.
"There are opportunities in every market that we operate in," he said. "There are some obvious things when we get into big markets like Dallas, where we're a very small presence."
But deals may get even pricier with more big banks eyeing Texas.
Banco Bilbao Vizcaya Argentaria SA of Madrid said Feb. 16 that it had agreed to acquire Compass Bancshares Inc. of Birmingham, Ala., which has 165 branches in Texas and 2.4% of the state's deposits. Comerica announced March 6 that it would move its corporate headquarters to Dallas by Sept. 30. BOK Financial Corp. of Tulsa said March 12 that it was buying Worth Bancorp. Inc.; that deal would boost BOK's branch count in the Dallas-Forth Worth area by five, to 29.
"It's going to be interesting to see how that [the competition] plays out," said Daniel Bass, a managing director at Carson Medlin Co., a Houston investment bank. "The pricing is such that it is hard to compete against the big banks like that, that want to get bigger in Texas."
Mr. Evans is undaunted.
"Gosh, when you're in Texas and you've seen everybody in the country interested in acquiring, I think it will just continue what it's been," he said Friday.
In the past five years out-of-state companies have acquired 11 of Texas' 21 largest players by deposit market share, including First State Bank of Texas of Denton, acquired in 2001 by Wells Fargo; Coastal Bancorp Inc. of Houston, bought in 2004 by what is now Capital One Financial Corp.; and Amegy, acquired in 2005 by Zions Bancorp.
Mr. Murphy of Amegy said "it's too early to tell" if Comerica's move will change the local banking landscape.
"People are walking around saying, 'It's a lot more competitive,' and the truth is it's really not, because we've had so many banks acquired in this time frame."
