Dallas-based Texas Capital Bancshares Inc. and McKinney, Texas-based Independent Bank Group Inc.'s $3.07 billion merger of equals marks the fourth MOE valued at more than $1 billion during 2019.
On a conference call to discuss the announced deal, management described the combination of the two companies as a "balanced, true MOE." Analysts on the call praised the pending deal as strategically and financially compelling.
Following the deal announcement, Texas Capital shares were up 10.5% as of 12:01 p.m. ET on Dec. 9, while Independent Bank Group's stock was up 4.93% as of that time.
The opportunity to gain scale in Texas and Colorado and invest in technology were the main drivers of the "powerhouse combination," management said on the call. The combined companies will have $48 billion in pro forma assets, creating the largest Texas-based bank by deposits, according to the investor presentation.
"[The deal] will help us take it to the next level with additional branch power with a much stronger network," Texas Capital President and CEO Keith Cargill said on the conference call.
The key to creating a balanced MOE is "checking our egos at the door, coming together and recognizing the benefits each of our companies will bring to the table," Cargill said.
Independent Bank Chairman, President and CEO David Brooks will lead the combined organization as president and CEO. Cargill will be the special adviser to the CEO.
"Our job here is to turn this into one high-performing company. So the conclusion we came to is that there needs to be one face, one voice and one spokesperson," Brooks said. Management expects the combined franchise to continue to grow well above its peers, he said.
Management also acknowledged the potential risk for customer and talent attrition that comes with a large MOE.
"We understand disruption is real and [it] is an opportunity for smaller banks to try to pick off and acquire great talent," Brooks said. Communicating with employees about the opportunity the merger presents and making sure talent is excited about the future of the combined companies is a top priority, Cargill said.