Prosperity strikes deal to buy Texas Partners Bank

Prosperity Bancshares in Houston has agreed to buy Southwest Bancshares in San Antonio, Texas.

The $38.4 billion-asset Prosperity said in a press release that it will pay $268.9 million in stock for the $2.4 billion-asset parent of Texas Partners Bank. The deal, expected to close in the first quarter, priced Southwest at 153% of its tangible book value.

Texas Partners has 11 branches, $1.9 billion of loans and $2.1 billion of deposits.

Brent Given, Texas Partners’ interim chairman, president and CEO, will join Prosperity as San Antonio area chairman, and Tom Moreno, the bank’s chief operating officer, will have a senior management position.

Gene Dawson Jr., Southwest’s interim chairman, president and CEO, will join the board of Prosperity’s bank.

“We have wanted to expand our presence in the fast-growing and desirable San Antonio and Hill Country areas and Southwest’s locations are an excellent fit,” David Zalman, Prosperity’s senior chairman and CEO, said in the release.

“Combined with the American Bank acquisition, we will have 10 banking centers in the San Antonio area, expand into Kerrville and Bandera, Texas, and enhance our presence in Austin, Fredericksburg and New Braunfels,” Zalman added.

The deal is expected to be 1% accretive to Prosperity’s 2026 earnings per share, assuming that a quarter of the project cost savings are achieved, and 2.5% accretive the following year with all costs addressed. It should take less than three years for Prosperity to earn back an estimated 1.2% dilution to its tangible book value.

Prosperity plans to cut 30% of Southwest’s annual operating expenses. It expects to incur $18 million of pretax merger-related expenses.

Southwest was advised by Stephens and Fenimore Kay Harrison. Wachtell, Lipton, Rosen & Katz advised Prosperity.