Strength in Texas Banking Sector Reflects Solid State Economy: Inexpensive Housing, Probusinesses State Government and Energy Industry Aid in the Success of Texas Regional Banks

Wall Street Transcript

67 WALL STREET, New York - March 6, 2013 - The Wall Street Transcript has just published its Pacific and Southwest Banks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Heightened M&A Activity - Regulatory Obstacles and Fee Income Replacement - Interest Rates and Loan-Growth Strategies - Pockets of Growth in Western Banking - Regulatory Outlook Gains Clarity

Companies include: Texas Capital BancShares Inc. (TCBI), Viewpoint Financial Group (VPFG) and many more.

In the following excerpt from the Pacific and Southwest Banks Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Where are the banks experiencing growth today? How is loan growth trending?

Mr. Milsaps: Loan growth for banks in Texas continues to be as good as or better than the average community bank in the U.S. It's still driven a fair amount by market share gains. Most of the publicly traded banks that are domiciled in Texas still have relatively small market share, so they are still able to take market share from large organizations.

Also, there is some organic demand related to some of the aspects I spoke about earlier - business activity continues good, employment and job growth is positive - so you are seeing some of that, but generally a lot of the small banks in Texas capitalize on gaining share from their larger brethren.

TWST: What are you expecting this year in terms of consolidation and M&A activity?

Mr. Milsaps: Our firm's view is that M&A activity is going to pick up. We saw several deals in the state of Texas last year. It was probably one of the strongest areas for M&A in the country. I think that's because, one, the buyers there are relatively well-heeled, have strong levels of capital, good currencies, so they were able to make deals work.

The sellers were able to get relatively good prices because of that, certainly not what they were five, six years ago, but they're able to sell for multiples of book versus elsewhere where there are concerns over the quality of the balance sheets. For these reasons, it's a little bit easier to get deals done in Texas.

If you look at the state, there are about 600 or so banks domiciled in the state of Texas, but if you look at size, I think only 500 or so are less than $1 billion in assets, and then maybe 20 or 25 are greater than $2 billion in deposits...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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