Diving overview:
Winter Haven, Fla.-based Southstate Corp. has agreed to acquire McKinney, Texas-based Independent Bank Group in an all-stock transaction valued at about $2 billion, the companies announced Monday.
Southstate said the combined company would have total assets of $65 billion, deposits of $55 billion, loans of $48 billion and a market capitalization of approximately $8.2 billion.
The transaction is expected to close by the first quarter of 2025 and will expand Southstate’s footprint in the Dallas/Fort Worth, Austin and Houston areas of Texas. Denver, Colorado Springs, and Fort Collins areas of Colorado.
Dive Insight:
The movement expands further south state According to the bank’s investor presentation about the acquisition, it has expanded its branch network to 343 locations, strengthened its presence in 12 of the 15 fastest-growing metropolitan areas in the U.S. and established itself as the fifth-largest regional bank in the South.
the South State It would be the bank’s first transaction since acquiring Atlantic Capital Bancshares in 2022 to expand into Atlanta.
“With our local geographic management model, industry-leading track record in credit, and presence in some of the nation’s best markets, Independent Bank Group is a perfect fit.”
In a call with analysts on Monday, Corbett cited his longtime interest in expanding into Texas, citing the state’s diverse economy, favorable operating costs due to loose regulation and the lack of a state income tax, and a booming population in its major cities.
Corbett highlighted markets like Austin that have seen significant growth over the past decade, due in part to an influx of residents from expensive states like California looking for a more affordable lifestyle.
“We are often asked about our ideal M&A partner at financial results briefings. We say we would be fine with a partner that accounts for about one-third of the company, and we want to invest in high-growth markets.” “We specifically named Tennessee and Texas,” Corbett said. American banker. “We also believe it is wise to allocate capital where people are moving, rather than where they are leaving.”
Founded in 1988, Independent Bank Group has $18.9 billion in assets, $15.7 billion in deposits and $14.5 billion in loans. The company operates 92 branches and has 1,511 employees, the presentation said.
“We are excited about the opportunity to join Southstate, whose culture, business model and credit management are a great fit with ours,” Independent CEO David R. Brooks said in a statement Monday. “The combination of these two companies operating in growth markets creates a great opportunity for Independent Bank Group’s teammates, customers and communities to thrive.”
south state expects to recover visible book dilution of 9.6% within two years.Bank Predicted Pretax merger costs were $175 million. south state It also expects Independent to achieve cost savings of 25% on a non-interest expense basis in 2025, the company said in its presentation.
If the deal doesn’t go through, either Independent Bank will pay Southstate a $60.9 million termination fee or Southstate will pay Independent Bank $186 million, according to Reuters.
As part of the transaction, Independent Bank stockholders will receive 0.60 shares of SouthState common stock for each outstanding share of Independence common stock.
Once the transaction closes, three directors from Independent Bank Group, including Brooks and the bank’s lead independent director, G. Stacey Smith, will join Southstate Corporation and the bank’s board of directors, according to Monday’s release.
