COVID-19 forces Texas Capital, Independent Bank to call off $5.5bn merger

The prevailing coronavirus pandemic has forced US bank holding companies Texas Capital Bancshares and Independent Bank Group to terminate their previously announced all-stock merger of equals worth $5.5 billion.

Both the bank holding companies, which are based in Texas, have mutually scrapped the deal based on the significant impact of the pandemic on global markets and on their ability to fully realize the benefits they anticipated to achieve via the transaction. As a result, there will not be any termination fee paid by neither of the bank holding companies to the other.

Texas Capital Bancshares is the holding company of Texas Capital Bank whereas Independent Bank Group is the parent company for Independent Bank, which operates in Colorado as well. According to the merger deal signed last December, the combined bank holding company would operate as Independent Bank Group and the combined bank as Texas Capital.

Texas Capital Bancshares and Independent Bank Group proposed to merge with an aim to create a premier, super-regional bank based in Texas with approximately $48 billion in assets and deposits of $39 billion.

COVID-19 forces Texas Capital, Independent Bank to call off $5.5bn merger. Image courtesy of Sebastian Thöne from Pixabay.

Under the merger terms, Texas Capital Bancshares’ shareholders were to issue each of their shares in exchange for 1.0311 shares of Independent Bank Group. The exchange ration would result in Texas Capital Bancshares’ shareholders having a 55% stake in the enlarged bank holding company with Independent Bank Group shareholders holding the remaining 45% or so stake.

Larry Helm – Chairman of Texas Capital Bancshares said: “Due to the unprecedented impact of the COVID-19 pandemic, both companies’ boards of directors believe it is in the best interests of our employees, clients and all of our shareholders to focus on managing our business during this time.

“With the talent and depth of our team and strong organic growth model, Texas Capital Bank has built a resilient business with lasting client relationships and a record of value creation through changing market dynamics and economic pressures. Texas Capital Bank remains focused on supporting the health and safety of our colleagues and meeting all our clients’ needs during these challenging times and for many years thereafter.

“As a result of our significant multi-year investments, healthy balance sheet, ability to recruit and foster the best talent and history of driving strong results, Texas Capital Bank is well positioned to continue to execute against a standalone strategy. Our team and resources will be focused on leveraging our innovative and differentiated capabilities to continue providing a premier client experience and deliver elevated returns.

“Further, we maintain the scalability and commitment to operational excellence that will enable us to drive increased efficiencies and profitability and support sustainable, long-term value creation. Our dedicated team, whose tireless efforts to enhance our clients’ experience and the communities where we operate, will continue to guide Texas Capital Bank’s purpose and success.”