Fast-growing Texas bank buying branches in Austin, San Antonio

Spirt of Texas Bancshares in Conroe has acquired three banks since raising $42.1 million in a May 2018 initial public offering. Now, the hyper-acquisitive $2.3 billion-asset institution has struck its first branch deal.

On Tuesday, Spirit of Texas agreed to purchase four branches and a loan production office in Austin, San Antonio and Tilden, Texas, from the $17.8 billion-asset Simmons First National in Pine Bluff, Ark.

The deal, expected to close in the second quarter, would give Spirit of Texas an additional $272 million of loans and $160 million of deposits. Spirit of Texas has agreed to pay a 5% deposit premium, as well as the difference between loans and deposits.

The announced sale comes about six weeks after Spirit of Texas closed its $66 million acquisition of the $347.2 million-asset Chandler Bancorp in Tyler, Texas. Spirit of Texas entered San Antonio in April, after closing a $64 million cash-and-stock deal for the $435 million-asset First National Bank of Beeville.

Chairman and CEO Dean Bass said the branch deal would give Spirit of Texas a foothold in Austin, one of the nation’s fastest-growing cities with a population nearing 1 million, according to the Census Bureau.

In a research note Tuesday, Sandler O'Neill analyst Stephen Scouten wrote that while the branches are in what Simmons First considers to be strong markets, they are outside of the Arkansas company's core footprint. Most of the loans being sold are tied to commercial real estate, so parting with them will reduce Simmons First’s CRE concentration.

The sale will allow Simmons First "to hone its franchise after several years of rapid expansion," Scouten wrote.

Simmons First agreed in July to pay about $434 million in stock for Landrum Co., the Columbia, Mo., holding company for the $3.3 billion-asset Landmark Bank.

Staying true to its practice of adding bankers from the acquired institution to its management team, Spirit of Texas said Clay Jett, Simmons’ regional chairman for the five branches, will join Spirit of Texas in a similar capacity.

Jett “has an extensive background in commercial banking in these markets and will provide the leadership we need in growing our market presence," Bass said.

After acquiring Chandler and its Citizens State Bank unit, Spirit of Texas added Gregg Kidd, Chandler’s chairman, to its board. It also named David Monk, Citizens State’s president and CEO, as regional president for northeast Texas.

Since its founding in September 1976, Spirit of Texas has acquired 10 banks, all in Texas.