NEW YORK ( TheStreet) -- Texas's banks and thrifts are healthier than in the rest of the nation, but that doesn't mean all is right in the Lone Star State. While industry consolidation has been a theme on our coverage of the banking scene in four key states seeing turmoil from the real estate crisis -- Georgia, Florida, Illinois and California -- the prime catalyst for consolidation in Texas is not the need for additional capital or the threat of bank failures, it is the lackluster earnings. During the fourth quarter, 15% of Texas banks and thrifts posted net losses, which compares well to 19% for all of the United States, according to data supplied by HighlineFI. But 36% of all Texas institutions had fourth quarter returns on average equity (ROE) of less than 5%, which is a rather lousy return, especially if you are sitting on the board of directors of a privately held three-branch community bank, considering whether or not to throw in the towel. While banks are seeing a boost to earnings at this point in the credit cycle from improving asset quality and the release of loan loss reserves, net interest margins are squeezed in the prolonged low-rate environment, banks face repeated hits to their fee revenue. Following the reduction in fee income from the requirement that customers "opt-in" before receiving expensive overdraft protection that was implemented in August 2010, large banks were hit with the Durbin Rule's clampdown on interchange fees charged to merchants for processing debit card purchases, which of course affected smaller banks as well. Community banks now see another threat to the "free checking" business model, with Consumer Financial Protection Bureau, last Wednesday announcing that it had "launched an inquiry into checking account overdraft programs to determine how these practices are impacting consumers," with Director Richard Cordray saying that "overdraft practices have the capacity to inflict serious economic harm on the people who can least afford it." KBW analyst Fred Cannon on Wednesday said that "the contraction in the mortgage securitization market and new regulations for NSF fees and debit interchange are the primary drivers of lower fee income," and that "it feels like the banks have come full circle now back to the early 1990s," and that "banks must find another avenue for fee income growth in order to expand ROEs, if no other variables change."