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How Big?
They say everything's bigger in Texas, and that's mostly true except for the banks. So the race is on to build a standout Lone Star firm. There's plenty of pickins. What's at stake? Pride.
Paul Murphy, Jr., is on a subtle quest to create a Texas bank that can compete toe-to-toe with big out-of-staters. Founded by a group of Houston business leaders 14 years ago, his Southwest Bancorporation of Texas now boasts 50 branches, $6 billion in assets and a $1.3 billion market cap. Late last year, CEO Murphy bought a small Dallas bank, moving into the state's other big market. Eventually, he envisions about 90 branches in each metropolitan area, along with sizable presences in Austin and San Antonio. "What you're seeing now is the beginning of the reemergence of the major Texas banking franchise," Murphy says. "I'm running the race at my own pace. But do I want to be the state champ some day? Absolutely."
He's not alone. Deep in the heart of almost every Texas banker, it seems, lies a dream to see the Lone Star state once again have at least one flagship institution-preferably theirs-capable of competing with the big national and global players. "There's literally a race to re-create large institutions in Texas," says Scott Alaniz, an analyst with SAMCO Capital Markets in Dallas. "Bankers remember what it was like in the good oF days, and they want to get it back."
In the 1980s, Texas boasted five of the top 25 banks in the country. When oil prices crashed at the end of the decade, they all died. The remnants of those franchises fell into the opportunistic hands of outsiders, while once-proud locals were left to start from scratch. The state economy has long since rebounded, and then some, but the same can't truly be said for the local financial industry. The market's top four (soon to be three) players-Bank of America, JP Morgan Chase, Bank One, and Wells Fargo & Co.-boast a combined 41 percent of Texas deposits, according to the FDIC. In contrast, the four largest homegrown institutions control just 8 percent.
In a land where bigger is better and school kids pledge allegiance to the state flag, the idea that local...