Texas Capital Bancshares in Dallas and Independent Bank Group in McKinney, Texas, are the latest banks to announce a large merger.
Shareholders of the $33 billion-asset Texas Capital will own 55% of the combined company, which will use the Independent name. The bank will be known as Texas Capital, except in Colorado, where it will continue to operate as Independent Financial.
The all-stock deal, which is expected to close in mid-2020, has a value of about $3.1 billion, based on Texas Capital’s shares outstanding on Oct. 16.
The company will have $48 billion in assets, $36 billion in loans and $39 billion in deposits. It will operate in half of the 10 fastest-growing markets in the country.
David Brooks, the chairman and CEO of the $15 billion-asset Independent, will become the company’s chairman, president and CEO. Keith Cargill, Texas Capital’s president and CEO, will serve as a special adviser to Brooks
“This combination with Texas Capital is a singular opportunity to significantly diversify our customer base, business lines and loan concentrations, enabling us to accelerate our growth and enhance our financial flexibility for continued strategic investments,” Brooks said in Monday’s press release.
“At the same time, Independent ... will benefit from the strength of Texas Capital’s technology, processes and systems to ensure we are even better positioned to serve and compete for clients in all lines of business while mitigating risk,” Brooks added.
“I am confident that executing this transformative merger of equals is the right strategy for our team, our company, our clients, our communities and our shareholders,” Cargill said. “We have found the ideal partner in Independent … given our shared core values and strong commitment to fostering talent and delivering a premier client experience."
The merger is expected to be 26% accretive to Independent’s 2021 earnings and 14% accretive to Texas Capital, taking into account three-fourths of the deal’s planned cost savings. The deal should be 27% accretive to the combined company’s tangible book value.
The companies plan to cut about $100 million in annual noninterest expenses. Nearly three-fourths of the companies’ branches are within five miles of one another.
The companies expect to incur $180 million in merger-related expenses.
The leadership team will include five Texas Capital executives and four Independent executives. The board will include seven directors from Texas Capital and six from Independent. Larry Helm, Texas Capital’s chairman, will serve as the company’s lead independent director.
Jefferies, Goldman Sachs and Sullivan & Cromwell advised Texas Capital. Keefe, Bruyette & Woods and Wachtell, Lipton, Rosen & Katz advised Independent, while Sandler O’Neill provided a fairness opinion.
