After striking a deal last month to acquire a small, family-owned Texas bank, Future Financial Bankshares CEO Jeff Kesler knows adept execution of the acquisition will be key to attracting other sellers.

Future Financial is a Plano, Texas-based holding company created last year to acquire community banks and help them thrive, and “setting the foundation that will allow us to make future M&A,” Kesler said, “is very important.”

On July 17, Future Financial announced it will acquire Palmer, Texas-based Palmer Bancshares and its subsidiary Commercial State Bank. The lender has about $121.3 million in assets, a Palmer office and branches in Ferris and Wilmer, Texas. Terms of the deal weren’t disclosed. 

“I think we’re setting forth on something that others will be attracted to and will want to be a part of,” Kesler said. 

Kesler wouldn’t specify an ideal asset size or number of banks for Future Financial, but he sees more targets in the state. That includes banks with less than $1 billion in assets that were capitalized with the idea to sell, face succession challenges, “or may have life events that occur within ownership that ultimately might avail a bank to be for sale,” Kesler said in a recent interview.

“I do believe there are more candidates to partner with in the state of Texas than many see, whether that's due to internal circumstances, balance sheet concentrations, or external circumstances,” Kesler said.

After launching Future Financial last year, Kesler set out to raise $30 million in capital, an effort he said will be complete this quarter. Future Financial is targeting regulatory approval in the fourth quarter and expects to close on the Palmer Bancshares deal Jan. 1.

Kesler is tapping his experience as a former executive at Dallas-based Veritex, where he was involved in seven bank acquisitions in about 15 years. Veritex was acquired by Columbus, Ohio-based Huntington Bank last year.

Kesler sees Future Financial providing the backing smaller Texas banks need to grow or make technology updates. 

Of about 280 banks in the state with less than $1 billion in assets, six fit the profile Kesler was looking for, which included proximity to Dallas/Fort Worth, family-owned and profitable.

“So I picked up the phone and started calling those banks,” he said.

Kesler said he spent more than a year talking with Commercial State Bank CEO Phillip Newsom and his family, to ensure the two parties were aligned.

Newsom, in a news release, said the deal is “an opportunity for the bank to remain independent and retain its character as a community institution but with added resources.”

“I am confident that Mr. Kesler and his team of experienced bankers and professionals, including Chad Newsom, who will continue with Commercial State Bank following the acquisition, share our same values, philosophies and commitment to outstanding customer service,” Phillip Newsom said in the release. “We believe that this partnership will promote long-term value to the communities we serve.”

Phillip Newsom couldn’t be reached for comment Tuesday. He will become an advisory director of the bank, while Chad, Phillip’s son, will serve on the board and remain president of the bank, Kesler said. 

To Kesler, investing in tech upgrades is a priority.

With banks under $1 billion in assets, “profitability can be a challenge, to where reinvestment is not able to be done,” leading small banks to lack treasury management or online account opening capabilities, he said. But as bigger competitors move in and clients want more ways to move or invest their money, those features can be crucial, he said.

Given the flurry of merger and acquisition activity that’s involved Texas banks, Kesler said many bank employees and customers have felt the impact of that disruption. In some cases, they’re contributing to Future Financial’s capital raise. 

“The investor base for me, largely, has come from business owners and entrepreneurs that have been impacted, that value having a relationship,” he said.

He also plans to take advantage of that disruption in the pursuit of organic growth.

As for scouting for more acquisitions, Kesler indicated he may call on the other five banks that fit his initial profile. 

He said he met with about 50 bank CEOs last year; most of those conversations were not about a potential acquisition, but for Kesler to build relationships and learn how other bank CEOs think.

“Spending that time to build that rapport will probably give us an opportunity that others may not see in the market,” he said.