Veritex Holdings Inc. (NASDAQ:VBTX), the parent holding company for Veritex Community Bank is buying the Houston-based holding company for Green Bank N.A. for approximately $1 billion, the two banks announced Tuesday.
The transaction will create a bank with 43 branches across Texas, ranking as the tenth largest Texas-based banking institution by deposit market share. The combined franchise would have approximately $7.5 billion in assets, $5.6 billion in loans and $5.9 billion in deposits, based on the companies’ balance sheets as of June 30, 2018.
“The merger with Green represents a tremendous financial and strategic opportunity for Veritex,” said C. Malcolm Holland, chairman and CEO of Veritex. “In addition to producing significant accretion to EPS and improvements to virtually all of our key operating metrics, this merger results in a top 10 Texas-based community bank with virtually all of its franchise in the attractive MSAs of Dallas-Fort Worth and Houston. We are delighted to welcome Green’s stakeholders to Veritex, including a number of key members of Green leadership into executive positions in our combined franchise.”
Under the terms of the merger agreement, upon completion of the merger, shareholders of Green will receive 0.79 shares of Veritex common stock for each share of Green common stock, valuing the transaction at approximately $1 billion, or $25.89 per Green share, based on the closing share price of Veritex of $32.77 on July 23, 2018. Legacy Veritex and Green shareholders will collectively own approximately 45 percent and 55 percent of the combined company, respectively.
Upon completion of the merger, Holland, current Chairman and CEO of Veritex, will continue to serve as chairman and CEO of the combined company. Terry Earley, current chief financial officer of Green, will serve as chief financial officer of the combined company, and Geoffrey Greenwade, current president of Green, will serve as the Houston President of the combined company. The board of directors of the combined company will consist of nine members, six from Veritex’s current board of directors and three from Green’s current board of directors.
Dallas-based Veritex has seven locations in Tarrant County, several that it added when it acquired Liberty Bank in 2017.
Veritex expects this acquisition to be approximately 25 percent accretive to earnings per common share, excluding one-time charges. The transaction is expected to produce approximately 12 percent tangible book value per share dilution at closing with an earnback period of approximately 2.8 years.
The merger agreement has been unanimously approved by the board of directors of both Veritex and Green. The merger agreement contains customary representations and warranties and covenants by Veritex and Green. Closing is subject to customary approvals by regulatory authorities and the shareholders of both Veritex and Green, and is expected to occur in the first quarter of 2019.
Stephens Inc. served as financial advisor to Veritex and Keefe, Bruyette & Woods, A Stifel Company, provided a fairness opinion to Veritex. Covington & Burling LLP served as Veritex’s legal advisor. Goldman Sachs & Co. served as financial advisor to Green. Skadden, Arps, Slate, Meagher & Flom LLP served as Green’s legal advisor.