Arlington, Texas-based BancAffiliated Inc. on Dec. 8 agreed to acquire Odessa, Texas-based Southwest Bank from Odessa SouthWest Bancshares Inc. in a stock-and-cash transaction.

Under the terms of the deal, BancAffiliated unit Affiliated Bank NA and Southwest Bank will merge, with Southwest Bank being the surviving charter. The combined franchise will have about $1.4 billion in assets, $1.1 billion in loans and $1.2 billion in deposits, based on the companies' balance sheets as of Sept. 30, according to a news release.

The transaction is expected to close during the second quarter of 2020.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southwest region between Dec. 8, 2018, and Dec. 8, 2019, averaged 173.00% of book and 182.82% of tangible book and had a median of 16.37x last-12-months earnings, on an aggregate basis.

Based on S&P Global Market Intelligence data, BancAffiliated will enter Ector County, Texas, with three branches to be ranked fifth with a 9.53% share of approximately $3.41 billion in total market deposits, will enter Lubbock County, Texas, with two branches to be ranked No. 20 with a 0.46% share of about $8.72 billion in total market deposits and will enter Midland County, Texas, with one branch to be ranked No. 16 with a 0.34% share of approximately $7.01 billion in total market deposits.

Stephens Inc. was financial adviser to BancAffiliated and rendered a fairness opinion to the company's board. Alston & Bird LLP acted as BancAffiliated's legal counsel.

Commerce Street Capital served as financial adviser to Odessa SouthWest Bancshares and rendered a fairness opinion to the company's board. Thompson & Knight LLP acted as Odessa SouthWest Bancshares' legal counsel.

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