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LegacyTexas at a 'crossroads,' looking for a sale or a merger-of-equals

Executivesat LegacyTexas Financial GroupInc. are no longer looking at acquiring smaller banks and will onlyconsider a merger-of-equals transaction or a sale to a larger player.

Speakingat the Plano, Texas-based bank's July 20 second-quarter earnings call, CEOKevin Hanigan said the bank has achieved its previously stated goal of reaching$8 billion in size with strong fundamental performance, targeting a ROAA of1.25% and an efficiency ratio of less than 50%. Hanigan said he is comfortablethat the bank's efficiency ratio will remain under 50%, and the 1.25% returnwill be achievable as long as energy provisioning does not worsen further.

"Sowe've hit all of those goals," Hanigan said. "But we've also saidthat when we did that we're going to hit a crossroads of: What do we do next?And we sit down with our board once a year in August and talk about all thosekinds of things. So, we have a date planned in the not-too-distant future."

Giventhe bank's strong fundamentals and its proximity to the all-important $10billion asset threshold that triggers additional regulatory compliancerequirements, the bank is not looking at any small acquisitions, Hanigan said.

"Itmakes no sense for us to go up buy a half-billion bank when we're growingalmost a half-billion in the quarter," he said.

Instead,the bank will look at a merger-of-equals to leapfrog the $10 billion thresholdand hit $12 billion to $15 billion in assets. Or, the bank will look to sell toa large acquirer interested in the franchise.