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In This List

Texas Capital, Independent Bank Group combining in $3.1B all-stock MOE

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Texas Capital, Independent Bank Group combining in $3.1B all-stock MOE

Texas Capital Bancshares Inc. and Independent Bank Group Inc. are combining in an all-stock merger of equals with a total market value of about $5.5 billion.

Under the terms of the deal, Texas Capital shareholders will receive 1.0311 Independent Bank Group common shares for each Texas Capital common share they own. The exchange ratio values Texas Capital at $61.10 per share, translating to a deal value of $3.07 billion based on the bank's 50.3 million outstanding shares as of Oct. 16.

Former Texas Capital shareholders will own 55% of the combined company, while Independent Bank Group shareholders will own 45%. The combined company will have $48 billion in assets and $39 billion in deposits, according to a news release. The combined company expects to offer an annualized dividend of $1.00 per common share, subject to board approval, after the deal closes.

On an aggregate basis, S&P Global Market Intelligence calculates the deal value to be 119.8% of common equity, 120.6% of tangible common equity and 9.7x earnings. The deal value is also 9.31% of assets and 11.39% of deposits, and the tangible book premium to core deposits ratio is 1.99%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southwest region between Dec. 9, 2018, and Dec. 9, 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.

The combined holding company will be named Independent Bank Group, and the name of the combined bank will be Texas Capital. Retail locations in Colorado will continue to operate under the Independent Financial branding. The new corporate headquarters will be in McKinney, Texas, and the combined company will trade as IBTX on the Nasdaq Stock Market.

Independent Bank Group Chairman and CEO David Brooks will be chairman, president and CEO of the combined company. Texas Capital President and CEO C. Keith Cargill will become special adviser to the chairman, president and CEO. Texas Capital Nonexecutive Chairman Larry Helm will become lead independent director of the combined company's board.

The leadership team of the combined company will include five Texas Capital executives and four Independent Bank Group executives, while the board will consist of seven directors from Texas Capital and six directors from Independent Bank Group.

The combined bank will operate 74 branches in Texas, ranked seventh with a 3.41% share of approximately $931.58 billion in total market deposits. It will also operate 33 branches in Colorado, ranked No. 11 with a 2.0% share of approximately $142.65 billion in total market deposits, according to S&P Global Market Intelligence.

The companies expect the deal to deliver about 27% tangible book value per share accretion, 26% EPS accretion to Independent Bank Group and 14% EPS accretion to Texas Capital by the first full year of the deal closing, assuming 75% phase-in of cost savings. The companies expect about $100 million in annual run-rate cost synergies.

The combined company is expected to deliver a return of tangible common equity of about 15% and return on average assets of 1.3%, each assuming 75% phase-in of cost savings, on a pro forma basis.

The merger is expected to close in mid-2020.

For Texas Capital, Jefferies LLC is the lead financial adviser, and Goldman Sachs & Co. LLC is a financial adviser. Sullivan & Cromwell LLP is Texas Capital's legal adviser on the deal. Keefe Bruyette & Woods is the exclusive financial adviser to Independent Bank Group, while Sandler O'Neill & Partners LP rendered a fairness opinion to the company's board. Wachtell Lipton Rosen & Katz is Independent Bank Group's legal adviser.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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