Texas Capital, Independent Bank to Merge Into a ‘Super-regional Bank’ in $5.5 Billion Deal

Two North Texas-based banks, Texas Capital Bancshares Inc. and Independent Bank Group Inc., are merging in an all-stock deal valued at $5.5 billion.

Under the agreement announced early Monday, the resulting holding company will retain the Independent Bank Group name and its bank will operate as Texas Capital. The merged company will be based in McKinney, where Independent recently moved into a new $52 million headquarters.

Independent Bank’s 165,000-square-foot corporate home in McKinney’s Craig Ranch is the first phase of a 400,000-square-foot campus that was originally meant house as many as 1,200 workers. A recent campus master plan drawn up by Independent since merger discussions arose includes three buildings, instead of two, that could accommodate up to 1,700 workers, according to the companies.

It could take five to 10 years to fully relocate employees, but Independent Bank expects to break ground on the expansion by the time the merger closes in mid-2020.

With a combined $39 billion in Texas deposits, the combination of Texas Capital Bancshares Inc. and Independent Bank Group Inc. will create the largest Texas-based bank by that measure, according to the companies based on S&P Global and FDIC deposit data.

The publicly traded banks will combine under Independent’s IBTX ticker symbol to create what the companies described as a “super regional bank.” Texas Capital shareholders will receive 1.0311 shares of Independent Bank Group for each Texas Capital share they own. Those shareholders will control 55% of the combined company.

Texas Capital shares soared 10% in Monday’s trading to close at $63.49. Independent Bank Group’s shares rose 4% to close at $61.61.

The deal, which is subject to regulatory approvals, will create a bank with $48 billion in assets.

“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," said a statement from C. Keith Cargill, Texas Capital president and CEO.

David R. Brooks, Independent Bank Group’s chairman and CEO, will lead the merged bank. Cargill will serve as a special adviser, assisting with talent and client retention and strategic initiatives. Cargill, one of Texas Capital’s founders, could receive an exit package totaling around $8 million based on the company’s regulatory filings.

“We’re very sober in understanding that this is, in many ways, the start line,” Brooks told The Dallas Morning News.

His leadership team will include five Texas Capital and four Independent Bank executives. The company’s board will include seven Texas Capital and six Independent Bank directors.

“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,” Brooks said in a statement.

The merger is expected to result in an annual cost savings of $100 million, the companies said. That cost savings could come mostly from cuts in staffing, overhead and technology. Eight of 11 Texas Capital branches are within 5 miles of an Independent Bank branch, according to the companies.

Brooks declined to describe where staff cuts might occur.

The two companies have focused banking operations in Texas’ four major metros — Dallas, Austin, San Antonio, Houston — and Denver. The companies said the merger will strengthen core deposits through the combination of centrally located downtown bank branches and suburban branch networks.

Brooks and Cargill described the merger as being something the two banks began discussing “awhile back.”

“We get to serve the most interesting group of business people in America — and that’s the entrepreneur who builds these private companies and finds ways to stay relevant and agile and win against these mega-companies they go up against," Cargill said. “So that gets us excited to find each other and how we both think strategically about how to be a more significant, relevant bank for our clients and have an even brighter future for our colleagues and shareholders.”