One of the primary capital providers for buy-here, pay-here dealers not only in the Lone Star State, but elsewhere nationwide, is merging with another bank in Texas.
On Monday, Texas Capital Bancshares, the parent company of Texas Capital Bank, and Independent Bank Group, the holding company for Independent Bank, announced that they have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals with a total market value of approximately $5.5 billion.
According to a news release, the merger is expected to close during the middle of next year and is subject to satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of each company.
Officials indicated the name of the combined holding company will be Independent Bank Group and the name of the combined bank will be Texas Capital. They noted retail locations in Colorado will continue to operate and retain the Independent Financial branding.
The corporate headquarters of the combined company will be located in McKinney, Texas. The combined company will trade under the Independent Bank Group ticker symbol “IBTX” on The Nasdaq Stock Market.
Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, Texas Capital shareholders will receive 1.0311 shares of Independent Bank Group for each Texas Capital share they own. Former Texas Capital shareholders will own 55% and Independent Bank Group shareholders will own 45% of the combined company.
Upon consummation of the transaction, the combined company expects to offer an annualized dividend on its common stock of $1.00 per share, subject to approval by the board of directors.
Top executives highlighted the merger combines two relationship-driven, client-focused and founder-led institutions with complementary lines of business and deep benches of talent. Together, the leaders believe Independent Bank Group and Texas Capital are ideally positioned to leverage their respective strengths to deliver exceptional operational and financial performance.
“Today is an exciting day for Texas Capital and I am confident that executing this transformative merger of equals is the right strategy for our team, our company, our clients, our communities and our shareholders, Texas Capital president and chief executive officer Keith Cargill said in the news release.
“It has been an honor to build Texas Capital into one of the best business and private wealth banks in the U.S.,” Cargill continued. “We have found the ideal partner in Independent Bank Group given our shared core values and strong commitment to fostering talent and delivering a premier client experience.
“Independent Bank Group is an outstanding complement to Texas Capital with its enviable commercial branch network, small business market leadership and solid deposit funding model in combination with our strong corporate banking practice and powerful technology and compliance infrastructure,” he added. “Importantly, this accretive transaction delivers significant value to our shareholders, with substantial growth drivers, an annual dividend and increased profitability run rate with meaningful synergies.
“I believe that David is the right individual to lead the combined organization into the future, and I look forward to working with him and the rest of the team to merge these two great businesses into one team, one culture and one of the highest performing banks in America,” Cargill went on to say.
The executive Cargill referenced is David Brooks, who is Independent Bank Group chairman and CEO and will be president and CEO of the combined company. Cargill will serve as special advisor to the chairman, president and CEO and continue to assist the franchise in talent and client retention in addition to advising on key strategic initiatives.
The announcement also mentioned the leadership team led by Brooks will include five current Texas Capital executives and four current Independent Bank Group executives.
The board of directors will be composed of seven directors from Texas Capital and six directors from Independent Bank Group. Larry Helm, Texas Capital Non-Executive Chairman of the Texas Capital Board, will serve as lead independent director of the combined company’s board of directors.
“Combining Independent Bank Group and Texas Capital is the logical next step for both companies,” Brooks said in the news release. “We have built a strong, broad commercial branch footprint across Texas and in Colorado through multiple transactions, which have effectively doubled our assets every two years.
“This combination with Texas Capital is a singular opportunity to significantly diversify our customer base, business lines and loan concentrations, enabling us to accelerate our growth and enhance our financial flexibility for continued strategic investments,” he continued. “At the same time, Independent Bank Group will benefit from the strength of Texas Capital’s technology, processes and systems to ensure we are even better positioned to serve and compete for clients in all lines of business while mitigating risk.
“With our combined scale, a deeply experienced and talented team with similar cultures and focus on superior operational execution, we believe that together we are well positioned to generate enhanced value for both companies’ shareholders through improved efficiency, strong returns on capital and earnings accretion,” Brooks went on to say.
“I am honored to lead the organization following the close of the transaction and want to offer my deepest gratitude for the outstanding leadership of Keith, who has been instrumental in reaching this exciting day,” Brooks added.
Executives also mentioned six other what they called “strategically compelling” reasons this move benefits both organizations, including:
—Enhanced scale to drive growth and improve profitability: The combined company, with approximately $48 billion in assets and $39 billion in deposits, will create the largest Texas headquartered bank by Texas deposits with a significant presence in Colorado and will provide a strong foundation to serve clients. The enhanced scale provided by the combination enables further investment in technology to better manage risk and serve clients across business lines.
— Diversified business mix: This combination will create a full-service financial institution with extensive strategic and client coverage, including enhancing the revenue mix by diversifying each company’s client base, business lines and loan and funding concentrations.
— Strengthened core deposits franchise: Texas Capital and Independent Bank Group will benefit from a substantially solidified and granular core deposit business, which will allow for a more stable source of funds and increased optionality to compete in a dynamic market environment.
— Attractive, fast-growing markets: The combined company will have a strong presence in five of the top 10 fastest-growing metro areas in the United States.
— Experienced combined management team: In addition to a strong track record of organic growth and high-performance, the combined management team has significant experience successfully executing and integrating transformative transactions.
— Strong cultural alignment and commitment to communities: Texas Capital and Independent Bank Group are committed to preserving the strong cultures of collaboration and entrepreneurial spirit in our efforts to deliver premier and differentiated client experiences. Both companies will maintain the important community relationships built over decades and the combined company is committed to continuing its investments to local programs and communities.