When Southwest Capital Bank CEO Chez Steel first joined the northern New Mexico bank in April 2020, he knew he was stepping into a fiscal mess.
Southwest Capital was under the shadow of an FDIC consent order – an agreement requiring a bank to correct significant breaches of regulatory standards – and a slew of news reports about those problems had tarnished the reputation of the 135-year-old institution.
“The bank had gone through a bit of a rough patch in 2017, 2018, 2019, and was in a bit of a rough patch in 2020. It was a bit of a gamble on my part,” Steel said. “And I took that leap.”
By 2022, that FDIC order was lifted, signaling a healthy operation that was adhering to bank mandates and protocols.
“We are now a highly rated institution by our regulators, and that caught the attention of a lot of people,” Steel said.
That included the leadership of El Paso’s WestStar Bank, the region’s leading commercial bank with 14 branches and assets of more than $3 billion. Last month, WestStar announced that WestStar Bank Holding Company Inc. would acquire Las Vegas Bancorporation Inc., Southwest Capital’s Albuquerque-based holding company.
The merged operation will have $3.8 billion in assets, $2.9 billion in loans and $3.3 billion in deposits. With this move, leaders from the two banks plan to create “a premier community banking franchise serving New Mexico and the Borderplex region,” according to the news release announcing the agreement.
The joint operation “will pair Southwest Capital Bank’s deep community relationships and market knowledge with WestStar’s financial strength and expanded capabilities in commercial banking, treasury management, wealth management, title services, digital banking and other financial solutions.”
In a conversation with El Paso Inc., WestStar CEO David Osborn said the bank’s interest in acquiring Southwest Capital began about a year ago.
“We started looking at how we could fill out our footprint in Albuquerque and northern New Mexico,” Osborn said. “We already have a strong footprint in the Borderplex region, including Las Cruces and northern Chihuahua, and we started looking at what community banks up there might be available to merge with us.”
He said his New Mexico contacts spoke highly of Southwest Capital, which piqued his interest.
“Some of our clients and customers are the same customers they have,” he said. “So as we came across our customers in New Mexico, they kept telling us what a good bank Southwest Capital Bank is.”
Long interested in expanding into New Mexico, WestStar reached out to Southwest Capital early this past summer, and “it was a mutual interest between them and us,” Osborn said.
“So instead of trying to go out there on our own and start from scratch, we found each other. And that’s how this merger has come about,” he said. “It was a private transaction. It wasn’t out on the market.”
The leadership of both banks hit it off right away, bank officials said.
“Their response was quick. They don’t drag things out. That’s a community bank feel, which I appreciate,” Steel said. “You can drag people through the mud for two months and then say yes, or then say no, but WestStar didn’t do that. And we tried to do the same thing. We try to be honest and transparent, and that’s what it felt like they were doing.”
Osborn agreed, calling it a coming together of “like-minded” leadership.
“We have strong cultures, and we stress community banking, which stresses client service and just being really close to our customers,” he said. “We provide that in the Borderplex region, including northern Mexico, El Paso, Chihuahua. And now we’ll be in northern New Mexico, headquartered out of Albuquerque.”
WestStar’s acquisition comes on the heels of another high-profile attempted merger involving Southwest Capital that fell flat.
U.S. Eagle Federal Credit Union, which has 11 branches in Albuquerque, Farmington, Bernalillo and Santa Fe, had tried to acquire Southwest Capital, but the deal was officially scrapped in July 2025.
U.S. Eagle was eyeing the lucrative New Mexico cannabis lending and banking operations already secured by Southwest Capital. But Southwest Capital pulled out, citing concerns about U.S. Eagle’s financials. The credit union reported a $2.35 million loss for the first quarter of 2025.
“Southwest Capital Bank is very profitable. (U.S. Eagle is) not. They’re having trouble,” said Steel in comments to New Mexico media at the time of the abandoned deal. “Those are the key components.”
Steel was also quick to dispel rumors that the terminated deal had left Southwest Capital in a vulnerable financial position in need of a bailout.
“When that fell apart, we were approached by many, many organizations because they thought we were desperate and for sale. We were not,” he said. “We’ve enjoyed what we do, and we’ve had some success, and we were plugging along. There was no one out there trying to sell the bank.”
Osborn confirmed that.
“They weren’t for sale,” he said. “They came across us, and we came across them, and we found a mutual understanding, and a future together that would be bright. And that’s when we came across a deal,” Osborn said.
Southwest Capital Bank currently has about 85 employees and six locations in New Mexico – one in Albuquerque, one in Mora, one in Pecos and three in Las Vegas, N.M. The locations will become part of WestStar, and the El Paso-based banking operation will establish a New Mexico division headed by Steel. He will report to Osborn and L. Frederick “Rick” Francis, executive chairman of WestStar Bank Holding Company.
“WestStar and Southwest Capital Bank share more than a commitment to community banking. We share remarkably similar values,” Francis said in a statement.
“Both institutions were shaped by generations of bankers, business owners and families who believed their communities deserved a bank that understood them,” he said. “That shared history and approach to banking made Southwest Capital Bank a natural fit for WestStar.”
The board of directors for both banks have approved the acquisition, and applications have been filed with regulatory agencies. Approval is expected in early December, which will prompt a shareholder vote on the deal.
Osborn said he will stay on as president and CEO, and Francis will remain as executive chairman “for a couple more years to help us get through this merger.” Steel’s title in the expanded operation will be market president for New Mexico.
If all goes through, the deal will close Jan. 1, 2027.
By June 2027, the El Paso-based banking company plans to integrate the New Mexico bank operations into its IT systems, and the WestStar name will then replace Southwest Capital.
“We’ll change the names over a weekend, change their accounting software and update all their account numbers to match our system,” Osborn said.
For clients of both banks, it remains business as usual, bank officials said. As the merger comes together, customers can continue using their accounts in the same manner as before.
“Both clients and staff will be provided with timely, advance notice of any changes that may affect them,” stated a merger news release.
WestStar’s last merger was a little more than a decade ago, when it acquired First National Bank of Fabens.
“That built our footprint to cover all El Paso County, and that couldn’t have gone better,” Osborn said. “Here we are 11 years later making our next big merger. We’re going to have a really, really positive footprint going forward.”