Texas Capital Bancshares, Inc. (“Texas Capital”) (NASDAQ: TCBI)
announced today that it entered into a definitive agreement to sell
BankDirect Capital Finance (“BankDirect”), its insurance premium
finance subsidiary, to AFCO Credit Corporation (“AFCO”), an
indirect wholly-owned subsidiary of Truist Financial
Corp.(“Truist”) (NYSE: TFC).
The sale of BankDirect includes its business operations and loan
portfolio of approximately $3.1 billion as of June 30, 2022. AFCO
is purchasing BankDirect from Texas Capital in an all-cash
transaction for a purchase price of approximately $3.4 billion,
representing an 8.5% asset premium compared to the value of the
purchased loan portfolio as of June 30, 2022. The purchase price is
subject to customary adjustments, including for the net asset value
of the loan portfolio, as set forth in the Purchase Agreement. This
transaction represents the divestiture of the entire business unit
including the equity interests of BankDirect and the associated
loan balances held by Texas Capital Bank and no parent funding,
deposits or capital will be transferred.
“The sale of BankDirect represents an important milestone for
Texas Capital, further enabling us to re-focus our capital and
expense base consistent with our strategy of creating the flagship
full-service financial services firm in Texas,” said Rob C. Holmes,
Chief Executive Officer and President of Texas Capital. “The sale
follows a deliberate process designed to maximize shareholder
value, strengthen our balance sheet, simplify our business model
and free up incremental resources to be redeployed to our core
businesses. BankDirect operates a nationwide business and generates
desirable, granular commercial loans with superior credit quality.
I want to thank the team at BankDirect for their long-term
partnership and solid commitment to building an outstanding
franchise resulting in the success of this transaction.”
The transaction is expected to increase Texas Capital’s capital
levels. Relative to June 30, 2022, Common Equity Tier 1 ratio
expected to increase 199 basis points and Tangible Book Value per
Share accretion is estimated to be 6.5%. Additionally, the
divestiture will improve Texas Capital’s liquidity position as the
Loan to Deposit ratio is expected to decline and the Liquidity
Assets to Assets ratio is expected to rise, before giving effect
for future redeployment actions. Additionally, given the expected
growth in the core business strategy, Texas Capital is reaffirming
forward guidance of delivering year-over-year quarterly operating
leverage by year-end.
The sale is expected to close in the fourth quarter of 2022,
subject to various customary closing conditions.
Morgan Stanley & Co. LLC and Texas Capital Securities served
as financial advisors to Texas Capital. Cravath, Swaine & Moore
LLP served as legal counsel to Texas Capital. RBC Capital Markets
and Truist Securities served as financial advisors, and Willkie
Farr & Gallagher LLP served as legal counsel to Truist in this
transaction.
Conference Call Information
Texas Capital will host a public conference call to discuss the
transaction at 9:00 a.m. Central Time today. The presentation can
also be accessed on the Texas Capital Investor Relations website at
https://investors.texascapitalbank.com.
Participants may pre-register for the call by visiting
https://www.netroadshow.com/events/login?show=0a75c14c&confId=41685
and will receive a unique PIN number to be used when dialing in for
the call for immediate access. Alternatively, participants may call
+1.833.470.1428 and use the conference ID 547919 at least fifteen
minutes prior to the call to join through an operator.
International callers should dial +1.404.975.4839 and enter the
same access code.
A live webcast can also be found on the Texas Capital Investor
Relations website or at
https://events.q4inc.com/attendee/755858622. Replays of the
conference call will be available on the webcast by visiting the
Investor Relations website from September 6, 2022 through September
6, 2023 or by calling +1.866.813.9403 (U.S.) or +44.204.525.0658
(international) with the access code 009241 from September 6, 2022
through September 20, 2022.
About Texas Capital Bancshares, Inc.
Texas Capital Bancshares, Inc. (NASDAQ: TCBI), a
member of the Russell 2000 Index and the S&P MidCap 400, is the
parent company of Texas Capital Bank, a full-service financial
services firm that delivers customized solutions to businesses,
entrepreneurs, and individual customers. Founded in 1998, the
institution is headquartered in Dallas with offices in Austin,
Houston, San Antonio, and Fort Worth, and has built a network of
clients across the country. With the ability to service clients
through their entire lifecycles, Texas Capital Bank has established
commercial banking, consumer banking, investment banking and wealth
management capabilities. TCBI Securities, Inc., doing business as
Texas Capital Securities, is a member of FINRA and SIPC and has
registered with the SEC and other state securities regulators as a
broker dealer. TCBI Securities, Inc. is a subsidiary of Texas
Capital Bank. Securities and other investment products offered by
TCBI Securities, Inc. are not FDIC insured, may lose value and are
not bank guaranteed.
Forward Looking Statements
This communication contains “forward-looking
statements” within the meaning of and pursuant to the Private
Securities Litigation Reform Act of 1995 regarding, among other
things, our financial condition, results of operations, business
plans and future performance. These statements are not historical
in nature and may often be identified by the use of words such as
“expect,” “estimate,” “anticipate,” “plan,” “may,” “will,”
“forecast,” “could,” “should,” “projects,” “targeted,” “continue,”
“become,” “intend” and similar expressions.
Because forward-looking statements relate to
future results and occurrences, they are subject to inherent and
various uncertainties, risks, and changes in circumstances that are
difficult to predict, may change over time, are based on
management’s expectations and assumptions at the time the
statements are made and are not guarantees of future results. A
number of factors, many of which are beyond our control, could
cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. These
factors include, but are not limited to, uncertainties as to the
timing of the sale of BankDirect Capital Finance and the risk that
the transaction may not be completed in a timely manner or at all,
the possibility that any or all of the conditions to the
consummation of the sale of BankDirect Capital Finance may not be
satisfied or waived, risks related to diverting management’s
attention from Texas Capital’s ongoing business operations,
uncertainties as to Texas Capital’s ability and the amount of time
necessary to realize the expected benefits of the transaction,
changes in the economic and financial conditions of Texas Capital’s
business and uncertainties and matters beyond the control of
management, credit quality and risk, the COVID-19 pandemic,
industry and technological changes, cyber incidents or other
failures, disruptions or security breaches, interest rates,
commercial and residential real estate values, economic conditions,
including inflation and the threat of recession, as well as market
conditions in Texas, the United States or internationally, as well
as governmental and consumer responses to those economic and market
conditions, fund availability, accounting estimates and risk
management processes, the transition away from the London Interbank
Offered Rate (LIBOR), legislative and regulatory changes, business
strategy execution, key personnel, competition, mortgage markets,
fraud, environmental liability and severe weather, natural
disasters, acts of war or terrorism or other external events.
These and other factors that could cause results
to differ materially from those described in the forward-looking
statements, as well as a discussion of the risks and uncertainties
that may affect our business, can be found in our Annual Report on
Form 10- K, our Quarterly Reports on Form 10-Q and in other filings
we make with the Securities and Exchange Commission. The
information contained in this communication speaks only as of its
date. Except to the extent required by applicable law or
regulation, we disclaim any obligation to update such factors or to
publicly announce the results of any revisions to any of the
forward-looking statements included herein to reflect future events
or developments.
INVESTOR CONTACT
Jocelyn Kukulka, 469.399.8544
investor.relations@texascapitalbank.com
MEDIA CONTACT
Julia Monter, 469.399.8425
julia.monter@texascapitalbank.com
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