Local banks jockeying to be new top dog

EDINBURG — Robert Gandy III’s wall is smattered with blueprints of future projects, including a 115-acre campus near downtown that will be a new home for First National Bank.

It’ll have three corporate office buildings and a data center for technical support for the entire bank chain. It will also include two lakes and several more office buildings.

“Right now, we’re scattered all over the place,” said Gandy, president and CEO of First National Bank. “We need to have everything in one location.”

The project is still 10 to 15 years from completion, Gandy said, but it will play center stage in First National’s plans to be the largest locally owned bank in Texas.

Nearly two years since Texas State Bank was purchased by Spanish-firm BBVA, First National is the heir apparent to the title of the Rio Grande Valley’s locally owned dominant banking institution.

The Valley and the state have been dominated by local banks for years, said Dave Jackson, a banking expert and finance professor at the University of Texas-Pan American.

“It’s more of a Texas phenomenon,” Jackson said.

He said national banks have been slow to enter the market since the Texas market allowed branch banking in the 1980s. Texas was one of the last states in the nation to allow branch banking.

While Texas State Bank could retain its share of the Valley’s growing bank deposits, history and some local insiders say it may have a hard time after the buyout.

Less than a decade ago, Texas Commerce Bank was the Valley’s and state’s dominant bank.

While it was owned by a New York company, much of the control was in Houston and throughout Texas.

But the bank was purchased by JPMorgan Chase Bank in 1998. And the company began a long decline in the Valley. Chase Bank now has fewer than 6 percent of the local market, according to the FDIC.

Many companies often make the mistake of pulling all local control after buying community banks, said Carlos Garza, president and CEO of Inter National Bank. The bank was purchased by Mexico’s Banorte in January 2006.

However since the purchase, Inter National Bank has managed to increase its market share by about 50 percent.

“They gave us all the advantages of being an international bank without taking away our key people,” Garza said.

That’s the way BBVA has been running Texas State Bank since the purchase, said Julissa Bonfonte, a spokesman for BBVA in Houston.

“We don’t want to make it just a branch of the bank in South Texas,” she said.

That’s why BBVA decided to keep Texas State Bank CEO and founder Glen Roney with the company as part of the buyout, Bonfonte said.

Lone Star National Bank CEO Jabiercq Rodriguez said local control helps banks keep loyalty among big customers.

“If you have control locally, you have the ability to look beyond someone’s credit score,” Rodriguez said.

That’s particularly important with commercial customers, who make up a majority of the bank’s loan portfolio. Much of the bank’s success can be attributed to the residential and commercial building boom of the last five years, Rodriguez said. Those relationships are important to any bank who wants to grow in the Valley, he said.

Lone Star is now the Valley’s second largest locally owned bank, behind First National, and has been growing rapidly in recent years. The bank is awaiting new office and branch in North McAllen on Nolana.

“There are lots of opportunities here,” Rodriguez said. “We think we’ll continue to grow.”