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ViewPoint Financial (VPFG) in Plano, Texas, has agreed to buy LegacyTexas Group in Plano.
November 26 -
The positive reaction to Independent Bank Group's $170 million agreement to buy BOH Holdings shows how precrisis M&A valuation methods are returning and that the industry is getting stronger.
November 25 -
Prosperity Bancshares in Houston has agreed to buy F&M Bancorp in Tulsa, Okla.
August 29 -
Cullen/Frost Bankers, led by Dick Evans, is breaking into oil-rich west Texas with a deal for WNB Bancshares. The seller was attractive partly because it resembled Cullen/Frost, Evans says.
August 15 -
Little noticed was the fact that the recent ViewPoint agreement to buy Highlands Bancshares was one of the pricier deals in months. However, it's probably an exception to the rule.
December 15
There are all sorts of sales tactics involved in bank M&A. In Texas, Lone Star state pride is one of them.
ViewPoint Financial Group (VPFG) is
LegacyTexas had a reputation for being fiercely independent, but Kevin Hanigan, the chief executive of ViewPoint, says the $300 million stock-and-cash deal was built on the premise of together giving the out-of-state folks some good competition.
"In our first meeting one of the things we rallied behind was the ability to bring Texas banking back to Texas," Hanigan says. "We've lost it to New York and Birmingham. Dallas is the fourth-largest metropolitan area and it is not a financial center but it used to be."
The combined bank would have assets of $5 billion and be the third-largest deposit holder of banks based in that market and the third-largest overall in Collin County, which is northeast of Dallas and includes Plano, the headquarters city of both banks.
So many of Dallas' homegrown banks either failed in past downturns or have been rolled up into megabanks, Hanigan says. The plan now is try to become a premier player in Dallas-Fort Worth under the LegacyTexas name, which "resonates very well locally," he says.
So much of bank M&A in Texas this year has been about expanding into new or at least complementary markets.
The new LegacyTexas could be a formidable player in these other metro markets, but Hanigan says ViewPoint's motivation was to get better in its existing one.
"Building size and scale in a single market is really important," Hanigan says. "If we go into Houston, we are unknown."
Hanigan estimates that entering a new market would cost about $750 in marketing and advertising per customer, but only make about $250 a year on each customer. Though the LegacyTexas deal will entail rebranding costs, the bank won't have to buy newspapers ads or conduct direct-mail marketing in new markets.
"It is a three-year payback for us to go to a new market," Hanigan says. "With Legacy, our advertising and marketing costs are driven down, versus driven up."
So often in-market deals are more about financial, rather than strategic, gains. The ViewPoint/LegacyTexas deal has both. From a financial standpoint, the buyer is projecting 35% cost savings from LegacyTexas' noninterest expenses. It is also projecting a more than 40% boost to earnings in 2015.
In a strategic sense, the deal is the final chapter in
That was one of Hanigan's goals when he took over the company last year when
Analysts applauded Hanigan, saying that he has delivered on his promise of striking an acquisition in a competitive market. With a stock trading at 185% of its tangible book value before the deal was announced, he was at a disadvantage to other acquirers like Prosperity and Independent, both of which traded much higher.
"This is a good bank, and it is a good fit for them to deploy their capital," says Michael Rose, an analyst at Raymond James. "Let's see what they can do with it, but so far Hanigan has delivered on every promise he has made."
The ability to build a bigger Dallas bank was attractive to LegacyTexas, says Aaron Shelby, its executive vice president, who will take on a similar role at the combined company. Shelby's family owns roughly 75% of LegacyTexas' stock.
"With the size we are, we were capping out our best customers," Shelby says. "We could continue slow and steady. We are going to have our best profits this year, but we were definitely being restrained from our ability to grow naturally."