First Bank & Trust seeks Texas acquisitions near Lubbock, Permian Basin areas, CEO says31 March 2008

First Bank & Trust, an approximately USD 400m asset-size, Lubbock, Texas-based bank, is seeking acquisitions within a 60 mile radius and possibly further towards the Permian Basin, said CEO Barry Orr.
He said that First Bank, which made an area acquisition last year, sees more potential buying opportunities of smaller banks, rather than larger ones. Orr said that smaller banks can be excellent sources of deposits, but may not have the loan demand and capabilities or technology of a bank like First Bank. These factors, he said, combined with increased regulatory costs such as those involved with Patriot Act compliance, provide a reason for smaller banks to join forces with larger banks.
Two industry sources said that a potential nearby acquisition for First Bank could be Shallowater-based, First State Bank. Based in a city less than 15 miles northwest of Lubbock, First State, with assets of more than USD 45m, is close to First Bank’s acquisition last year of Wilson State Bank, which has USD 50m in assets. The sources said they thought the size, demographics and operations of First Bank and First State could be a good fit. The more than 47-year-old First State is owned by privately-held and Shallowater-based South Texas Bancshares.
The sources said that a fertile area for possible growth for First Bank was to the south, extending further south from its recent purchase into the Permian Basin. The sources said a potentially good fit for First Bank could be Lubbock-based, Lone Star State Bank of West Texas. Lone Star, owned by privately-held and Lubbock-based, Lone Star Bancshares, has one office in Lubbock and one in Odessa, in Ector County – a county that is considered part of the Permian Basin. Lone Star, with approximately USD 45.4m in deposits and USD 87.5m in assets, opened late last year and was capitalized with approximately USD 25.8m from area investors. The sources said that Lone Star's operations have been good, and that they are in a desirable area and could possibly consider a quick exit given the current banking environment.
Within the Permian Basin, a potential First Bank acquisition could be First National Bank of Stanton, the sources said. With approximately USD 59.1m in assets, the sources said First National could likely benefit from being part of a larger bank.
Orr said the Lubbock area economy has many positives, being a medical center hub and an area that has not experienced big economic swings, with housing prices rising last year. First State is owned by privately-held and Lubbock-based First Bank Lubbock Bancshares, which Orr said has used Massachusetts-based Darling Consulting Group as its asset liability manager. He said First Bank has used Hunton & Williams as its legal counsel.
The first of the industry sources said that he believed Howe Barnes Hoefer & Arnett advised First Bank on its purchase of Wilson, which closed last July.
David Matthews, who is the CEO First National Bank of Stanton, said his bank is not actively looking to sell, but his board would likely consider an offer if the price was high enough. The bank, which has been in Stanton since 1906, has had a strong year, said Matthews, with deposits increasing by USD 10m last year based on the strength of oil and gas and higher commodity prices. Matthews is a graduate of Texas A&M, but said that most of his customers are Texas Tech Red Raider fans.
Lone Star State Bank CEO Alan Lackey did not comment on whether his bank could be a target, and said the bank is focused on expansion. Lone Star Bank does not currently have a financial adviser, Lackey said.
First State Bank did not return calls.

by Mark Eissman and Kevin Nafziger

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