Allegiance Bancshares, CBTX To Combine To Create Texas Banking Franchise

Author: Benzinga Newsdesk | November 08, 2021 10:10am

• Merger of equals between the two largest community banks in a region dominated by large out-of-state banks and underserved by locally-based community banks

• Combination of complementary platforms and shared vision of continued growth to create a company with enhanced competitive position in highly attractive and growing Texas markets
  
  
   
• Combined franchise will have over $11 billion in assets and be well-positioned to support future growth and performance
  
  
   
• Significant shareholder value creation through anticipated earnings per share accretion and enhanced profitability
  
  
   
• Experienced and compatible management team with strong cultural alignment and shared values including deep community ties, customer-centric focus and commitment to performance that will provide significant advantages and better opportunities
   

HOUSTON, Nov. 08, 2021 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) (Allegiance), the holding company of Allegiance Bank, and CBTX, Inc. (NASDAQ:CBTX) (CBTX), the parent company of CommunityBank of Texas, N.A., jointly announced today that they have entered into a definitive agreement pursuant to which the companies will combine in an all-stock merger of equals to create a combined company with an equity market capitalization of approximately $1.5 billion and the 17th largest deposit market share in the State of Texas.

Under the terms of the definitive merger agreement, Allegiance shareholders will receive 1.4184 shares of CBTX common stock for each share of Allegiance common stock they own. Based on the number of outstanding shares of Allegiance and CBTX as of November 5, 2021, Allegiance shareholders will own approximately 54% and CBTX shareholders will own approximately 46% of the combined company.

"We are very excited to partner with CBTX with whom we share culture, strategic vision and a commitment to our stakeholders. This transaction is a true merger of equals, combining the best of our highly-respected community banks which better positions us to serve our customers and drive enhanced financial performance," said Steve Retzloff, Allegiance's Chief Executive Officer.

"Our companies complement each other beautifully and the combined company will be a formidable competitor across our markets. The combination is poised to deliver long-term value for our shareholders, customers, employees and communities. I have long admired Bob's leadership and the high-quality community bank franchise that CBTX has built. I am thrilled that we will be on the same team and look forward to working closely as, together, we become Texas' premier community bank," continued Retzloff.

CBTX Chairman, CEO and President Bob Franklin said, "Bringing two of the Houston region's best community banks together is a great thing for our communities. Allegiance is a trusted, local bank, and there is no better team with which to unite to work together to preserve the tradition of community banking, while meeting the diverse needs of the customers that we serve."

Mr. Franklin continued, "I have tremendous respect for Steve and the Allegiance team and look forward to leveraging our respective strengths as we focus on our combined future. We are committed to the idea that the Houston region needs a financial institution with significant scale that operates with the culture of a community bank and local decision making led by banking professionals with deep experience. The combination enhances our ability to deliver for our communities, shareholders, customers and employees in a better way than either company could achieve alone and gives us the ability to compete in the next generation of banking. The combined company will unify under new branding to be identified prior to the completion of the merger. This will be important as we take the best of both to build our future."

Financially Attractive Merger for Shareholders

Enhanced Profitability: On a pro forma basis, the combined company expects to deliver improved performance, with a targeted 2023 return on average assets of approximately 1.3%, return on average tangible common equity of approximately 12% and efficiency ratio of approximately 52%.

Cost Synergy Opportunity: The merger is expected to generate an estimated $35.5 million of run-rate cost synergies by 2023, which represents approximately 15% of combined annual operating expense.

Meaningful earnings per share and earnings accretion: The merger is targeted to deliver 40% and 17% accretion to CBTX's and Allegiance's earnings per share in 2023, respectively (first full year of realized cost savings).

Strong Combined Capital Levels: The combined company is expected to have a tangible common equity ratio of above 9.5% at closing. The combined company's expected strong capital ratios will support growth and capital management strategies.

Posted In: ABTX CBTX