Frost Bank Charts Independent Course as Texas Banking Landscape Consolidates

This analysis is based on original reporting from Banking Dive. For continuous coverage of the financial sector, subscribe to the Banking Dive newsletter.

The Texas banking market is undergoing a historic transformation, fueled by a surge in mergers and acquisitions as national players rush to establish a foothold in the booming state. Yet, one major homegrown institution, Frost Bank, is conspicuously absent from the deal-making frenzy. Instead, the San Antonio lender is executing a deliberate, branch-by-branch expansion plan, betting that its local focus and service ethos will win out in the long run.

"Our strategy is growth, but it's growth on our own terms," Frost CEO Phil Green stated in a recent interview. He dismissed any notion of Frost participating in the M&A spree that has seen giants like Fifth Third Bancorp and Huntington Bancshares spend billions to acquire Texas-based banks. "People don't talk to me about deals anymore," Green noted pointedly. "They know I'm not in that game, on either side."

This stance sets Frost apart as an outlier. Texas was a top target for bank M&A last year, headlined by Fifth Third's $10.9 billion purchase of Dallas-based Comerica. Huntington has also cemented its presence with two major Texas acquisitions. The consolidation creates disruption, and Frost's leadership sees a clear opportunity. "When customers of acquired banks experience change, that creates an opening for us," Green explained. "I just want to make sure they're not successful with my customers."

Organic Growth as a Strategic Shield

Frost's playbook is centered on physical expansion and relationship banking. Since launching a concerted expansion program in 2018, it has steadily added branches in Dallas, Houston, and most recently, Austin. The $53 billion-asset bank opened 10 new Texas branches last year and plans to open about 15 more in 2025, supported by 150 new hires. It now operates just over 200 branches statewide.

Green argues that being a "low-cost producer" allows Frost to compete on price when necessary, but he asserts the bank "will win against literally anybody on service." This formula appears to be working. Despite the competitive onslaught, Frost reported strong fourth-quarter results, adding approximately 78,000 households through its expansion strategy. Notably, CFO Dan Geddes indicated the bank is gaining about twice as many new relationships from customers of recently acquired banks compared to prior quarters.

Analyst and Industry Perspectives

The Texas banking wars are creating clear winners and losers. We spoke with several industry observers for their take.

"Frost's discipline is admirable," said Michael Rivera, a financial analyst at Lone Star Insights. "In a market drunk on deal-making, they're sticking to a proven, customer-centric model. Their growth metrics in areas like the Permian Basin, where they haven't even expanded physically, prove the power of their brand."

Sarah Chen, a portfolio manager focusing on regional banks, offered a more cautious view: "The 'go-it-alone' strategy carries risk. The scale achieved by competitors through M&A could pressure margins long-term. Frost is betting its superior service can outweigh that, but it's a high-stakes bet in a market where convenience and product bundling are increasingly important."

A more critical perspective came from David Reeves, a former bank executive and now a frequent industry commentator. "This isn't discipline; it's obstinacy," Reeves argued. "The landscape is fundamentally changing. To say you have 'zero interest' in M&A is to ignore a key strategic tool. Frost is leaving itself as a standalone target in a market consolidating around it. This isn't principled independence—it's a potential failure to adapt."

Green acknowledges "headwinds" but remains resolute. He pointed to the Permian Basin as a case study, where Frost saw 8% growth last quarter—outpacing its growth in major cities—without opening a single new branch, a trend he attributes directly to competitor mergers. "That's a microcosm of the opportunity we see," he said.

As the dust settles on the latest wave of deals, Frost Bank is making a defining bet: that in the high-stakes Texas banking battle, the best defense is a good, old-fashioned offense built one customer relationship at a time.