M&A activity in the community bank space ramped up in Texas in the third quarter, with nine bank or thrift deals with a Texas-based target announced through Sept. 23, up from seven in the first half of 2019. In 2018, 22 whole-company or minority deals were announced.
On Sept. 19, Abilene-based First Financial Bankshares Inc. announced it would acquire Bryan-based TB&T Bancshares Inc. for $198.0 million, the largest Texas deal of the quarter and the second-largest deal of the year. Houston-based Prosperity Bancshares Inc.'s $2.08 billion deal to acquire Plano-based LegacyTexas Financial Group Inc., the parent company of LegacyTexas Bank, was the largest transaction among Texas banks with less than $10 billion in assets.

Community banks and thrifts in Texas performed well through the second quarter, topping the national median in all six of the major financial metrics examined by S&P Global Market Intelligence, while lagging the broader Southwest in profitability.
The median return on average equity for Texas community banks and thrifts under $10 billion in assets was 11.33% in the second quarter, slightly below the Southwest median of 11.39%, but much higher than the national median of 9.59%. Similarly, Texas' 4.08% median net interest margin was 7 basis points lower than the Southwest median but 25 basis points higher than the U.S. median.
Meanwhile, the state's nonperforming assets ratio was 0.33% in the second quarter, lower than the 0.52% median for the Southwest and the 0.63% median for the U.S.
Loans and deposits also grew faster at Texas community banks and thrifts compared to their peers across the U.S. During the second quarter, median deposit growth in Texas was 4.4% year over year and median loan growth was 5.9%. At the national level, deposits at community banks and thrifts grew by a median 3.4% and loans grew by 5.0%.

Dallas-based thrift NexBank SSB posted significant year-over-year growth in both loans and deposits in the second quarter, driven primarily by mortgages and money market deposit accounts. As of June 30, NexBank reported $3.11 billion in closed-end one- to four-family home mortgages, up from $2.53 billion at the end of March and $2.51 billion at June 30, 2018. Meanwhile, NexBank's total money market deposit account deposits jumped to $6.14 billion, up from $4.99 billion at March 31 and $4.24 billion a year earlier.

Texas, like most of the rest of the U.S., is seeing more branch closures than openings, as banking continues to go digital. In the second quarter, 49 bank or thrift branches were closed in Texas, while 41 were opened. In the last 12 months to June 30, 164 branches were closed and 132 opened.

Click here for an Excel spreadsheet containing results for all Texas community banks in the second quarter.
