San Antonio banker J. Bruce Bugg Jr. sees big opportunities for growth on the horizon for The Bank of San Antonio and its affiliated banks.

Encouraged by the region’s explosive population growth, and propelled forward by the success of a recent business reorganization, the banks’ parent company recently raised $35 million by selling debt offerings.

That money will beef up the banks’ loan capacity, allow them to reach larger clients, and maybe even one day charter new banks in Boerne or the Interstate 35 corridor, Bugg said.

“It supports our organic growth,” said Bugg, chairman, CEO and president of Southwest Bancshares, the holding company for The Bank of San Antonio. He emphasized “organic” as a contrast to the mergers and acquisitions that often power other banks’ expansions, but which can prove complicating to operations.

Southwest Bancshares chartered The Bank of San Antonio in 2007. Its founders also chartered Texas Hill Country Bank in 2009 and The Bank of Austin in 2017.

The three banks ran the back end of their operations separately until mid-2020, when Southwest Bancshares merged them under the umbrella of a new organization: Texas Partners Bank. Bugg said the move not only cut costs on the administrative side by slashing redundancies, but it also freed up executives to focus on cultivating relationships with local business clients, which is the bread and butter of banks like theirs.

Over the following year, in 2021, Texas Partners Bank grew its total assets by 34%. “That’s just phenomenal,” Bugg said. “We did not understand how powerful that merger would be.”

The bank had $2.1 billion in total assets by the end of the first quarter of 2022, according to the Federal Deposit Insurance Corp. (FDIC).

While San Antonio is home to banking behemoths USAA Federal Savings Bank and Frost Bank, Texas Partners Bank occupies a different market segment, with an asset size similar to that of Jefferson Bank, at $2.5 billion, and Vantage Bank, at $2.8 billion, according to a June 2021 ranking by the Texas Department of Banking.

Beyond the merger’s boost, Bugg believes there’s much more room for growth in the coming years.

“Austin to San Antonio is the fastest-growing corridor in the entire United States,” said Bugg, who is also chairman of the Texas Transportation Commission and chairman and trustee of the Tobin Endowment. “And a lot of businesses have prospered by being in the area.”

Bugg said he sees the bank network expanding services into areas like New Braunfels, Boerne, and the stretch of I-35 between Austin and San Antonio.

The $35 million will allow the bank to maintain its long-standing conservative capital-to-asset ratio while it pursues new clients and bigger loan growth, he said.

All three banks under Texas Partners Bank focus on cultivating relationships with local businesses and servicing them with commercial loans, as well as providing a growing number of financial services for all customers like insurance, wealth management, and recently added, mortgages, according to Bugg. Each bank has a board of directors comprising local business leaders.

Elaine Mendoza, a board member of the Bank of San Antonio and a longtime client, said a loan from the bank helped her biotech company Conceptual MindWorks Inc. make a risky pivot. The company transitioned from primarily relying on defense contracts to one that developed its own self-funded software project.

“They listened,” Mendoza said of the bank. “They allowed us to talk about how we were going to do that, even though it was a completely different industry, a completely different business model. They took a chance on us,” she said.  

Today her company is thriving, she said.

The Bank of San Antonio has also found a niche in supporting fast food and drive-through restaurant franchisers like Joe Shields, who was recently able to open San Antonio’s first Andy’s Frozen Custard location thanks to financing from the bank. Shields said he hopes to open more.

Texas Partners, the umbrella organization for the three banks, reported around $1.4 billion in loans and $1.9 billion in deposits at the end of the first quarter this year, according to the FDIC.

The Tobin Endowment is a financial supporter of the San Antonio Report. For a full list of business members and supporting foundations, click here.

Waylon Cunningham

Waylon Cunningham writes about business and technology. Contact him at waylon@sareport.org.