Dive Brief:

• Houston-based Prosperity Bancshares will acquire San Antonio-based Southwest Bancshares, the holding company of Texas Partners Bank, in an all-stock transaction valued at $268.9 million, the banks said Wednesday. 
• Texas Partners, which has 11 branches in central Texas, had $2.4 billion in assets, $1.9 billion in loans and $2.1 billion in deposits as of June 30, according to a news release. The bank’s top two loan segments are commercial real estate (39% of its portfolio) and commercial and industrial (26%). 
• The merger, expected to close during the first quarter of 2026, awaits regulatory and Southwest shareholders’ approval. 

Dive Insight:

The Texas Partners deal is the second announced by the $38.4 billion-asset Prosperity in less than three months. In mid-July, Prosperity said it would buy Corpus Christi-based American Bank Holding Company for $321.5 million. 

Buying American — which is similarly sized to Texas Partners — is also aimed at bolstering the acquirer’s presence in south and central Texas. That deal is expected to close in the fourth quarter of 2025 or the first quarter of next year.

Texas Partners, founded in 2007 under the name Bank of San Antonio, counts Frost Bank and Jefferson Bank among its San Antonio-based competitors. 

Prosperity, which has about 283 branches across Texas and Oklahoma, has been working toward greater density across Texas, where there’s still some 300 banks. 

“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,” Prosperity CEO David Zalman said in the release. “Combined with the American Bank acquisition, we will have ten (10) banking centers in the San Antonio area, expand into Kerrville and Bandera, Texas, and enhance our presence in Austin, Fredericksburg and New Braunfels.”

Texas Partners CEO Brent Given will become San Antonio area chairman for Prosperity, while Tom Moreno, Texas Partners’ chief operating officer, will take on a senior management role at Prosperity, the release said. “Additional members of Texas Partners management will maintain leadership roles in the combined organization,” the release said.

And Gene Dawson Jr., Southwest’s interim chairman, CEO and president, will join Prosperity’s board. Bruce Bugg, Southwest’s previous chairman, CEO and president, died in August, according to the Texas Tribune. 

“We are excited to join Prosperity Bank, a leading Texas-based financial institution, bringing together the strength and resources of a larger regional bank, while maintaining the local decision-making and personalized service our clients know and trust,” Given said in the release. 

The deal’s value is based on Prosperity's closing share price of $65.97 on Monday. Prosperity is paying a core deposit premium of 4.5%, the bank said in an investor presentation.

Prosperity estimates 2027 earnings-per-share accretion of 2.5%, assuming all cost savings have been phased in. The bank said tangible book value per share dilution will be about 1.2%, and the earnback period is estimated to be less than three years. 

Additionally, the bank expects $18 million in one-time transaction-related expenses tied to the deal, according to the presentation. 

Texas has been one of the most targeted states for bank M&A activity this year: Columbus, Ohio-based regional Huntington Bank is buying Dallas-based Veritex Holdings for $1.9 billion; Kalispell, Montana-based Glacier Bank is acquiring Mount Pleasant-based Guaranty Bancorp in a $476.2 million deal; Denver-based National Bank Holdings is buying Dallas-based Vista Bancshares in a $369.1 million deal.

Prosperity’s two transactions enhance the bank’s scale in central Texas, doubling its branch density — from 20 to 39 — and bolstering its deposit market share in Austin and San Antonio, said D.A. Davidson analyst Peter Winter.

Given a more favorable regulatory environment, Prosperity’s capital position and the two announced deals being relatively small, Winter said he expects Prosperity will keep an eye on other M&A opportunities while closing and integrating these two recent acquisitions. 

Prosperity “treats M&A as a line of business, having done 30 deals since 2000 (not including these 2 pending deals),” he wrote.