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Independent Bank Group to acquire Houston-based Integrity Bancshares

In Texas, McKinney-based Independent Bank Group Inc. is acquiring Integrity Bancshares Inc. of Houston for an aggregate 2,072,131 common shares and $31.6 million in cash, subject to adjustment.

Based on Independent's closing price of $64.05 on Nov. 27, the deal value is $164.3 million.

SNL calculates the deal value to be 202.5% of book and tangible book and 22.9x earnings, on an aggregate basis. It is also 20.41% of assets and 24.12% of deposits. The premium to tangible book amounts to 14.56% of core deposits.

For comparison, SNL valuations for bank and thrift targets in the Southwest region between Nov. 28, 2016, and Nov. 28, 2017, averaged 170.71% of book, 181.98% of tangible book and had a median of 19.18x last-12-months earnings, on an aggregate basis.

Integrity Bancshares, the parent company of Integrity Bank SSB, had $805 million in assets, $679 million in deposits and $84 million in total equity, as of Sept. 30. Independent Bank Group, the parent of Independent Bank, had $8.89 billion in assets.

The deal, pending regulatory and shareholder approvals, is expected to close in the second quarter of 2018. Should it fall through under certain circumstances, Integrity will pay a termination fee of $4.7 million.

In Texas, Independent Bank Group will expand in Harris County by three branches to be ranked No. 15 with a 0.60% share of about $201.89 billion in total market deposits, and will expand in Montgomery County by one branch to be ranked eighth with a 2.24% share of roughly $11.96 billion in total market deposits.

For the acquisition, Piper Jaffray & Co. and Haynie Rake Repass & Klimko PC served as Independent's financial adviser and legal counsel, respectively. Integrity was advised by Sandler O'Neill & Partners LP and Jackson Walker LLP.

Independent Bank Group has also commenced an offering of 2,135,506 common shares, of which 1,745,506 shares are being offered by five selling shareholders.

Stephens Inc. serves as the offering's sole book-running manager. Keefe Bruyette & Woods, a Stifel company; Sandler; Evercore ISI; and Raymond James & Associates Inc. are co-managers. The company intends to grant underwriters a 30-day option to buy 58,500 more shares, and some of the selling shareholders plan to give a similar option for up to 154,453 more shares.

Independent will not receive any of the proceeds from the sale of shares by selling shareholders.

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