BankAmerica Purchase Sets Up Texas Beachhead

BankAmerica Corp. on Thursday said it acquired a small failed bank in Houston in a potentially significant deal that gives the San Francisco-based bank its first toehold in the Texas retail banking market.

BankAmerica, which over the past year has expanded rapidly in the West by buying the deposits and branches of failed thrifts without taking on their bad loans, has for some time eyed the rebounding Texas market.

BankAmerica is believed by some bankers and analysts to be on the verge of a major acquisition of a failed thrift in Texas, and in particular has been rumored to be interested in Sunbelt Savings, which was assembled by regulators in 1988 using the remains of some of the state’s worst failed thrifts.

Buying Village Green National Bank, a one-branch bank, allows BankAmerica to enter the Texas market with a national banking charter in hand. The move paves the way for expansion in the state because Texas requires out-of-state banks to acquire an established commercial bank before they can operate and expand.

Although the Texas economy is recovering, BankAmerica, parent of Bank of America, will find an increasingly competitive banking market there. The state’s economic shakeout of the 1980s and the failure of most major Texas banks that resulted have left the spoils to a handful of out-of-state institutions such as NCNB, Banc One, Chemical Banking and First Interstate Bancorp.

BankAmerica is paying the Federal Deposit Insurance Corp. a premium of $1.8 million to assume $27 million in deposits and $6 million in loans from the bank, which is being renamed Bank of America Texas.