Moody's affirmed the ratings of Texas Capital Bancshares Inc. and unit Texas Capital Bank NA and changed the outlook to negative from stable, following the announcement the company will combine with Independent Bank Group Inc. in a merger of equals.
Texas Capital Bancshares has a long-term issuer rating of Baa3, while Texas Capital Bank's long- and short-term deposits are rated A3 and Prime-2, respectively.
The rating agency revised the outlook to negative primarily due to the deal's material integration risks, despite the transaction leading to a more diversified loan and deposit franchise and opportunities for cost savings. The combined company's financial standing and performance could weaken from any operational missteps during integration, which could lead to management increasing the risk appetite to maintain profitability or capital.
Moody's affirmation of the ratings reflects its assessment that the combined company's credit profile will be similar to Texas Capital Bancshares'. The agency said the ratings also consider its weak capitalization compared with rated peers and deposit concentrations, adding that the company's capitalization is its key credit challenge.