Texas Becomes Ground Zero for the Next Wave of Bank Consolidation
By Steve Cocheo, Senior Executive Editor at The Financial Brand
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Executive Summary
- Strong economic growth in Texas is making acquisition targets there irresistible. As federal regulators’ view on M&A softens under the Trump administration, Texas deals lead the field.
- Some deals are about buying immediate market share, but others function as beachheads that purchasers can use for de novo expansion.
- Texas M&A is a subset of the general movement into the nation’s southern tier, including both the Southeast and the Southwest.
The streamlining of the bank merger and acquisition regulatory process expected under the Trump administration’s regulators is here. The change in attitude from the Biden era, when larger deals could languish in regulatory limbo, has been a marked shift.
“There’s considerable lubrication in the gears now,” says Mark Narron, senior director in Fitch Ratings‘ financial institutions group. He points out that Huntington Bank’s acquisition of Veritex Community Bank was announced on July 14 and was approved within 81 days — less than the length of a quarter. Narron says that’s less than half the time Huntington’s previous four acquisitions took.
The impact of the new attitude is driving more interest and more activity.
“There’s clearly pent-up demand from four years of relative inactivity,” says Narron. Stoking momentum are additional factors. These include healthier industry balance sheets and favorable share prices, “supportive from an economic standpoint,” Narron continues. This comes at a time when more institutions feel the need to upgrade their technology, and the costs of doing so favor consolidation to beef up institutions’ scale, he adds.
“I think we’re playing a game of Jenga,” says Brett Mastalli, banking practice lead at West Monroe. “We’re entering a phase where you’re going to see more of these deals start to happen.”
One factor increasing the urgency, in his view: The industry sees the change in regulatory atmosphere as a finite window that could close after the next presidential election.
“I think banks are taking this into account, and they’re thinking, ‘Hey, we’ve got to make a move,’” says Mastalli.
The other side of that, the target’s side, is getting a piece of that urgency. “If you’re on the board of directors of an independent bank, at some point when the would-be acquirer keeps piling dollars on the table, you have to say yes, that becomes the prudent thing for you and your shareholders to do,” says Steven Reider, founder and president of Bancography.
Reider sees a wave developing in part because “banks are terrible imitators” — getting bigger via mergers is a popular way to grow.
“I see this having legs for the next coming quarters,” says Fitch’s Narron.
That’s the wide picture. Now narrow the lens to one state: Texas.
Huntington’s Veritex deal is also notable in that it was the first of a one, two punch for the acquirer. Seven days after marking completion of that deal, Huntington announced an even larger Texas acquisition: Cadence Bank, which has a strong Texas presence in its southern U.S. system.
In fact, the two deals are part of a surge in Texas M&A targets identified by S&P Global Market Intelligence. In an early November report, company analysts reported that seven of the top 20 bank M&A deals announced involve acquisitions where the target is based in Texas.
Through early November, acquisitions proposed or completed in Texas led the nation, accounting for 21 deals. These include out-of-state acquirers like Fifth Third, which announced its proposed acquisition of Comerica in early October, making it the largest U.S. bank deal thus far in 2025. (Rankings cited here are based on deal value.)
The 21 deals also include those where both the buyer and the target are based in Texas. For example, Prosperity Bancshares, Houston, has acquisitions pending for both Southwest Bancshares, San Antonio, and American Bank Holding Corp., Corpus Christi.
Deals aren’t necessarily only about Texas operations, especially as a growing number of organizations have multi-state presence. But it’s remarkable how often Texas is key part of the deal, especially as the banking industry increases its focus on the southern part of the country. Out-of-state ownership has been a factor for some time in Texas, over the course of the advent of interstate banking and branching, several regional and national banking crises that spawned acquisitions, and more. Reider points out that the top four Texas branch systems are those of outsiders JPMorgan Chase, Wells Fargo, Bank of America and PNC.
What makes Texas such a key ingredient as more institutions get the acquisition bug? We’ll look first at what makes the state attractive overall — beyond its pro-business attitudes and no state income tax — and then at how Texas fits into some acquirers’ strategies.
Growth is the Polish that Makes the Lone Star State Shine
In slower-growth markets, institutions get together to gain in-market scale, Reider explains, but a keyto find growth is finding opportunities where the buyer can get aboard a trend.
“The way an acquirer recoups the premium paid in an acquisition is by getting growth above and beyond what the institution could have achieved on its own,” says Reider. “In order to do that, you generally need to be in a high-growth market.”
Reider points out that Texas’ household growth, in terms of the number of new households formed, is second only to Florida’s. He says that it has the six-highest rate of growth, currently.
But things will grow hotter still in Texas. In a late October investor presentation Huntington’s Brantley Standridge, senior EVP and president of consumer and regional banking, pointed out that the Texas economy is the eighth-largest economy in the world and that it was projected to pull into the lead in population growth, adding 2.1 million people by 2031.
“The ‘Texaplex’ — the triangle between Dallas-Fort Worth to the north, Houston to the Southeast, and Austin and San Antonio to the Southwest, is a juggernaut of economic growth, with approximately 190,000 new households migrating there each year, and 53 Fortune 500 companies headquartered in the region,” said Standridge. (The Texaplex — a term coined by a real estate author — is also called “The Texas Triangle.”)
Sheer appetite for products and services makes that appealing. “Growth creates a supply/demand imbalance in terms of every retail service,” says Reider, “be it banking or restaurants or what have you. So that makes Texas a good place to open a business, or, in the case of banks, to buy a chunk of business.”
Reider adds that the sheer size of the state, in terms of both geography and population, means that it can tolerate the entrance of more competition.
“If there are 10 branches in a market, and I build another one, now there’s 11, which means my slice of the pie is going to be smaller. However, if the pie is growing,a smaller slice of the pie can add up to the same absolute number,” says Reider. And it could potentially mean even more. At least two entrants, cited later, are banking on that, with future branching plans.
“The Texas economy has been outperforming the national average for a long time, so it’s naturally an attractive place for banks to gravitate to,” says Fitch’s Narron.
Read more:
How Banks are Treating Texas Opportunities
Every acquirer’s game plan has its own specific aims and wrinkles. A sampling of what’s going on:
1. Fifth Third’s acquisition of Comerica: This deal involves more than Texas, as Comerica has a substantial Midwest presence that, because of its business banking concentration, complements Fifth Third’s midwestern retail franchise. Fifth Third has already been aggressively pursuing de novo branching in the Southeast. The merger will create the ninth-largest U.S. bank.
In Texas, Fifth Third’s Tim Spence, chairman, CEO and president, sees Comerica’s business-focused operations as a beachhead in four large markets. What Comerica lacks is branch density.
So, once the acquisition is approved, Fifth Third plans to follow up on the beachheads by continuing its plans to open 150 new branches in Texas by the end of 2029 to become a significant player in Dallas, Houston and Austin. By the end of that year, officials say, over half of Fifth Third’s branches will be in the Southeast, Texas and Arizona — all of them high-growth markets.
However, Fifth Third’s game plan is more ambitious. Spence calls the 150-branch plan a “milestone along the path, as opposed to a destination.” The bank thinks it will take 185 branches, all told, to rank among the top five institutions in Texas overall.
2. Huntington Bank’s one, two punch: The Cadence Bank acquisition will elevate Huntington to be the country’s tenth-largest bank — a “multi-region powerhouse,” in the words of Stephen Steinour, chairman and CEO, that will be in 21 states in the Midwest and the South, including Texas.
In Texas, Cadence will add 110 branches to the 34 that Huntington had already established, providing what management is calling a “springboard for acceleration,” along with the already approved Veritex Community Bank purchase. Huntington has said it does not intend to close any Cadence branches. Cadence has 390 throughout the southern tier.
The Cadence deal will make Huntington the number five institution in deposits in Dallas and Houston, and number eight statewide. Veritex brought strong density in Dallas to the combination, with an emphasis on commercial lending, while Cadence brought presence in Houston and the central part of Texas, with consumer banking strength.
Bancography’s Reider notes that Huntington already had plans to build out a retail branch network in Texas on top of a growing commercial presence there. He sees the Cadence opportunity as a way for Huntington to say, “Hey, wow, we can get there in a hurry.”
This comes at a time when some of the largest banks, like JPMorgan Chase, Bank of America, PNC and Wells, have been branching both into new markets and to build out toeholds. PNC, which in early November announced a commitment to 100 additional branches, also announced a deal in September to acquire FirstBank, in Colorado, another high-growth market. Reider points out that recently Fifth Third told analysts that organic growth, without acquisitions, was very successful and that M&A wouldn’t be necessary. Comerica faced increasing pressure to sell, from activist investor HoldCo, and opportunity presented itself.
“The large institutions target demographically attractive geographies realize it takes a long time to build a lot of branches,” says Reider, “and they see that they can short circuit that development through acquisitions.”
3. National Bank Holdings Corp. to acquire Vista Bancshares: Speaking of Colorado, in mid-September NBH, of Denver, announced its deal to buy Vista, based in Dallas. Vista has been one of Texas’ fastest-growing banks, and NBH expects the deal to expand its presence in the Dallas-Fort Worth market. In an atypical move, most of the holding company’s banking operations will rebrand to the Vista name, and Vista’s current CEO will head up the combined Texas organization.
Regarding the name change, Tim Laney, NBH founder, chairman and CEO, said “I love its meaning and it should not be lost on anyone that the name plays well in both English and Spanish.”
4. Glacier Bancorp purchase of Guaranty Bancshares: This deal, announced in June, was completed in early October. Glacier has treated M&A as a business line for years and has been an active acquirer. The company historically focused on Rocky Mountain West markets but began expanding its scope to the Southwest in 2017. The acquisition of Guaranty Bancshares continues the latter strategy, bringing the acquirer into key markets like Dallas-Fort Worth, Houston and Austin. Guaranty came into the deal with top five deposit share in eight Texas markets.
During third quarter earnings, an analyst asked Randy Chesler, president and CEO at Glacier, if the move presaged greater emphasis on the Texas market the company. Chesler said no, that the company was not looking for targets in any one of its markets over another. “We have a lot of optionality with very, very good sellers across the entire area,” Chesler said.
Glacier’s current annual report noted that “we operate in a target-rich environment for bank acquisitions and in great markets with decades of growth opportunity.”
5. Prosperity Bancshares picks up two Texas players: Prosperity, based in Houston, announced its acquisition of Southwest Bancshares, parent of Texas Partners bank in San Antonio, in early October. In July Prosperity had announced a deal to buy American Bank Holding Company. The two deals together would about double Prosperity’s branch density in the central Texas area, which centers on San Antonio, the third-largest metropolitan area in Texas. It would also increase the company’s presence in south Texas, through the American Bank acquisition. Prosperity is already one of the state’s largest branch networks operated by a Texas parent company.
David Zalman, senior chairman and CEO, told analysts that discussions about additional deals continue: “We believe that higher technology and staffing costs, funding costs, loan competition, succession planning concerns and regulatory burden, all point to continued consolidation.”
6. FirstSun’s acquisition of First Foundation: In late October, FirstSun Capital Bancorp announced an agreement to acquire Irving, Texas-based First Foundation. While the target bank holding company is based in Texas, FirstSun management spoke much more of how the deal would enable the combined organization to capitalize on opportunities in southern California.
Read more: A Wave of New Charters is Coming. Meet Your New Competitors
Looking Ahead During the M&A Window of Opportunity
The Texas situation highlights the importance of geography in the mergers and acquisition picture, but Fitch Ratings’ Mark Narron says that won’t be the only factor prompting dealmaking. As mentioned earlier, another will be the search for scale to spread the costs of tech upgrades and more.
But Narron adds that bankers must also be alert to strategic combinations. One prime example is the rumored get-together of BNY and Northern Trust. News of conversations leaked during the summer, as reported at the time by the Wall Street Journal. Ultimately, Northern Trust distanced itself from talk of merger with its larger competitor.
Narron cites the BNY-Northern concept as an example of possibilities in the current environment.
“That was something that would have been inconceivable under the prior administration,” says Narron.
Read this next: Should Banks Prepare for a Lighter Regulatory Load? The Signs Are Good
