Chemical New York Corp., Texas Banking Firm to Merge
It would be one of the largest interstate banking mergers in U.S. history, creating a holding company with assets of $75 billion, and comes at a time when Texas banks are facing severe economic pressures.
Houston-based Texas Commerce Bancshares is considered the strongest bank in the state, but its recent performance has suffered due to heavy loan losses and nonperforming assets. It has $18.9 billion in assets and is the 26th largest bank holding company in the country.
The decision to unite with Chemical follows legislative action in Texas to make it easier for out-of-state financial institutions to acquire Texas banks, bank holding companies or savings and loan associations.
The Texas measure was enacted amid what some state lawmakers called a "banking crisis." The oil price slump has impaired the loan portfolios of some of the state's banks to the point where an infusion of money from outside the region was deemed the only solution to keeping the banks solvent.
Ben Love, chairman and chief executive of Texas Commerce Bancshares, said: "This partnership will give Texas Commerce a significant competitive edge by being the first Texas bank to diversify so broadly.
"It adds substantial financial resources to the Texas economy at a time of Texas' greatest need. . .and prospective opportunities."
Texas Commerce, the state's largest banking system with 70 branches, will continue to operate as a wholly owned subsidiary of Chemical. Texas Commerce is considered the most financially stable in Texas, where more than a dozen banks have failed over the past year.
The merger requires approval from the Federal Reserve Board, state regulatory authorities and shareholders. …