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Guaranty Bancshares to buy Texas peer Westbound Bank

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Guaranty Bancshares to buy Texas peer Westbound Bank

In Texas, Guaranty Bancshares Inc. of Mount Pleasant has signed a cash-and-stock deal to acquire Katy-based Westbound Bank.

Under the terms, Guaranty will issue 900,000 common shares and pay $6.4 million in cash, subject to certain adjustments. Westbound may additionally pay a cash distribution to its shareholders before the deals close. In aggregate, the deal is valued at $34.7 million, based on an assumed volume-weighted average of stock price of $31.42 per share.

SNL calculates the deal to be 207.7% of book, 207.8% of tangible book and 21.6x earnings, on an aggregate basis. It is 15.47% of assets and 18.18% of deposits and carries a tangible book premium-to-core deposits ratio of 13.31%.

For comparison, SNL valuations for bank and thrift targets in the Southwest between Jan. 29, 2017, and Jan. 29, 2018, averaged 166.10% of book, 175.32% of tangible book and had a median of 18.71x last-12-months earnings, on an aggregate basis.

Guaranty assumes a tangible book value dilution of 3.20% at close, to be earned back in 2.5 years. Cost saves are pegged at 27%.

Westbound, which had $228.0 million in assets, $160.3 million in loans and $188.5 million in deposits, as of Dec. 31, 2017, will merge into Guaranty Bank & Trust NA, which had $1.92 billion in assets as of Sept. 30, 2017. Westbound's four branches will be kept open. The combined company will have more than $2.2 billion in assets and 32 locations. The buyer will expand in Texas, entering Harris County with three branches, to be ranked No. 47 with a 0.07% share of approximately $201.89 billion in total market deposits, and entering Montgomery County with one branch, to be ranked No. 29 with a 0.15% share of approximately $11.96 billion in total market deposits.

Westbound CEO James England will become Guaranty's Houston area chairman.

The deal is expected to close in the second quarter, subject to regulatory and shareholder approvals. Guaranty has already entered into a voting agreement with Westbound and certain shareholders, who beneficially own 29.83% of the company, in aggregate.

Should the deal not close, Westbound will pay a termination fee of $1.5 million, under certain circumstances.

Sandler O'Neill & Partners LP and Fenimore Kay Harrison & Ford LLP served as Guaranty's financial adviser and legal counsel, respectively. For Westbound, it was The Bank Advisory Group LLC and Hunton & Williams LLP.

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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