By Rebecca Ungarino

Texas has emerged as a center of dealmaking between banks this year, drawing CEOs who are competing for access to the state's deposit base and broader growth relative to other markets, even as some indicators tracked by the government reflect pressure on the economy there.

The state is home to the largest share of banks targeted by other U.S. banks for acquisitions in 2025, according to an analysis by S&P Global Market Intelligence. A multibillion-dollar deal announced Monday became the latest in a series of Texas tie-ups that fit into a broader wave of bank mergers the Trump administration has helped to usher in.

On Monday, Ohio-based Huntington Bancshares said it would acquire Cadence Bank, a Houston- and Tupelo, Miss.-based bank with some $53 billion of assets and 390 branches. The all-stock deal valued at $7.4 billion underscores the rapid pace of bank consolidation in recent months.

Huntington said just last week that it completed its $1.9 billion acquisition of Dallas-based Veritex Holdings. Cadence, meanwhile, has completed two bank deals of its own this year, including one based in Industry, Texas. Huntington and Cadence expect their combination to create a top-10 U.S. bank by assets and close in the first quarter of 2026.

Between the bank's additions of Cadence and Veritex, Huntington is "building a powerful financial powerhouse in Texas," Brant Standridge, who leads the firm's consumer and regional banking, told analysts on Monday.

He cited the state's growth opportunities, like expectations it will lead U.S. population growth through 2031, and called the area known as the "Texaplex" -- the triangle between Dallas, Fort Worth, Houston, Austin, and San Antonio -- a "juggernaut of economic growth."

Some 190,000 new households are forming in the Texaplex region each year and 53 companies in the Fortune 500 are now based there, Standridge noted on the call with analysts. The state's latest real gross domestic product growth rate of 6.8% outpaced the national average of 3.8%, according to the Bureau of Economic Analysis. (North Dakota, with a rate of 7.3%, is the fastest-growing, the latest data show.)

As they compete with larger banks such as Wells Fargo and JPMorgan Chase, regional bank executives have sought to boost their stocks and profit margins through deals. Joining forces can help lenders manage rising costs tied to compliance, technology, and customer acquisition -- costs that larger banks can absorb more easily than small rivals.

Over the past five years, the SPDR S&P Regional Banking ETF is up 49%, trailing a 75% gain for the SPDR S&P Bank ETF and a 110% for the broader S&P 500.

A focus on grabbing market share in expanding Texas markets has been at play across bank deals this year.

Fifth Third Bancorp said in early October that it would acquire Dallas-based Comerica for $10.9 billion, creating the ninth-largest U.S. lender by assets. Glacier Bancorp is buying Addison, Texas-headquartered Guaranty Bancshares, while National Bank Holdings Corp. and Prosperity Bancshares are also acquiring Texas lenders.

"I'm super excited, as I've said, about the opportunities to invest into places like Texas," Fifth Third CEO Timothy Spence said on a recent call with analysts to discuss third-quarter earnings.

At the same time, some indicators show growth in Texas is pressured, presenting a set of risks for firms adding exposure to the economy there. Some of businesses' concerns in the region mirror those around the U.S.

"Outlooks deteriorated with slowing demand, policy uncertainty, and inflation highlighted as the top concerns for businesses," the Federal Reserve said this month, referring to data from the Dallas Fed, which encompasses Texas, northern Louisiana, and southern New Mexico.

Economic activity was flat, retail sales fell, loan demand grew, the housing market "remained weak," employment dipped, and wage growth was modest, the report said of the region. The Trump administration's crackdown on immigration in the U.S. broadly is likely driving weak job growth in Texas, the Dallas Fed said in a separate report this month.

Wall Street's reaction to the latest Texas bank deal was mixed. Wall Street analysts generally viewed the deal positively, though Huntington's stock fell 2.7%, while shares of Cadence rose 4.3%.

Piper Sandler analyst Scott Siefers said the acquisition boosts Huntington's franchise through Texas and the South. He kept his Underweight rating on the stock, though, as a second large acquisition to absorb in a short period means "lots of balls in the air that could cloud the story and keep the shares from advancing for now."

Bank executives and analysts expect more dealmaking. Regulators appointed by President Donald Trump such as Michelle Bowman, have promised a friendly posture as they review bank mergers and other bank regulations.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 28, 2025 02:00 ET (06:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.