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.
Executive Leadership
Reflecting the contribution both organizations bring to the
combined company, the well-respected board and management team that
is comprised of individuals with significant financial services
experience will draw from both sides.
- Steve Retzloff, Chief Executive Officer of Allegiance,
will be the Executive Chairman of the combined company
- Bob Franklin, Chairman, Chief Executive Officer and
President of CBTX, will be the Chief Executive Officer of the
combined company
- Ray Vitulli, President of Allegiance, will be the Chief
Executive Officer of the combined bank
- Paul Egge, Chief Financial Officer of Allegiance, will be
the Chief Financial Officer of the combined company
- Joe West, Chief Credit Officer of CBTX, will be the Chief
Credit Officer of the combined bank
- The board of directors of the combined company will initially
be comprised of 14 directors – seven from Allegiance and seven from
CBTX
- Mr. Retzloff and Mr. Franklin will both be named directors of
the combined company
Approval and Timing
The merger is expected to close early in the second quarter of
2022, subject to the satisfaction of customary closing conditions,
including the receipt of regulatory approvals and approvals of
shareholders of each company.
Transaction Advisors
Raymond James & Associates, Inc. served as financial advisor
to Allegiance with Bracewell LLP serving as legal advisor. Stephens
Inc. served as financial advisor to CBTX, with Fenimore Kay
Harrison LLP and Norton Rose Fulbright US LLP serving as legal
advisors.
Joint Conference Call and Webcast Details
A joint investor call will be held at 9:30 a.m. Central time
today, November 8, 2021, to discuss the transaction. Individuals
and investment professionals may participate in the call by dialing
(877) 279-2520. The conference ID number is 8261126. A simultaneous
audio-only webcast and related presentation may be accessed via the
Investor Relations section on both the Allegiance website at
https://ir.allegiancebank.com and the CBTX website at
https://ir.cbtxinc.com/events-and-presentations. If you are unable
to participate during the live webcast, the webcast will be
archived via the websites listed above.
About Allegiance Bancshares, Inc.
As of September 30, 2021, Allegiance was a $6.8 billion asset
Houston, Texas-based bank holding company. Through its wholly owned
subsidiary, Allegiance Bank, Allegiance provides a diversified
range of commercial banking services primarily to small- to
medium-sized businesses and individual customers in the Houston
region. Allegiance's super-community banking strategy was designed
to foster strong customer relationships while benefiting from a
platform and scale that is competitive with larger local and
regional banks. As of September 30, 2021, Allegiance Bank operated
27 full-service banking locations in the Houston region, which we
define as the Houston-The Woodlands-Sugar Land and Beaumont-Port
Arthur metropolitan statistical areas. Visit www.allegiancebank.com
for more information.
About CBTX, Inc.
CBTX, Inc. is the bank holding company for CommunityBank of
Texas, N.A., a community bank, offering commercial banking
solutions to small and mid-sized businesses and professionals in
Houston, Dallas, Beaumont and surrounding communities in Texas.
Visit www.communitybankoftx.com for more information.
Forward-Looking Statements
Certain statements in this press release which are not
historical in nature are intended to be, and are hereby identified
as, "forward-looking statements" for purposes of the safe harbor
provided by Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended.
These statements include, but are not limited to, statements
about the benefits of the proposed merger of Allegiance and CBTX,
including future financial and operating results (including the
anticipated impact of the transaction on Allegiance's and CBTX's
respective earnings and book value), statements related to the
expected timing of the completion of the merger, the combined
company's plans, objectives, expectations and intentions, and other
statements that are not historical facts. Forward-looking
statements may be identified by terminology such as "may," "will,"
"should," "scheduled," "plans," "intends," "anticipates,"
"expects," "believes," "estimates," "potential," or "continue" or
negatives of such terms or other comparable terminology.
All forward-looking statements are subject to risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of Allegiance or CBTX to differ
materially from any results expressed or implied by such
forward-looking statements. Such factors include, among others: (1)
the risk that the cost savings and any revenue synergies from the
merger may not be fully realized or may take longer than
anticipated to be realized; (2) disruption to the parties'
businesses as a result of the announcement and pendency of the
merger; (3) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement; (4) the risk that the integration of each party's
operations will be materially delayed or will be more costly or
difficult than expected or that the parties are otherwise unable to
successfully integrate each party's businesses into the other's
businesses; (5) the failure to obtain the necessary approvals by
the shareholders of Allegiance or CBTX; (6) the amount of the
costs, fees, expenses and charges related to the merger; (7) the
ability by each of Allegiance and CBTX to obtain required
governmental approvals of the merger (and the risk that such
approvals may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of
the transaction); (8) reputational risk and the reaction of each
company's customers, suppliers, employees or other business
partners to the merger; (9) the failure of the closing conditions
in the merger agreement to be satisfied, or any unexpected delay in
closing the merger; (10) the possibility that the merger may be
more expensive to complete than anticipated, including as a result
of unexpected factors or events; (11) the dilution caused by CBTX's
issuance of additional shares of its common stock in the merger;
(12) general competitive, economic, political and market
conditions; (13) the costs, effects and results of regulatory
examinations, investigations, including the ongoing investigation
by the Financial Crimes Enforcement Network of the U.S. Department
of Treasury, or FinCEN, of CBTX or the ability of CBTX to obtain
required regulatory approvals; (14) the possible results and amount
of civil money penalties related to such FinCEN investigation and
CBTX's BSA/AML program; and (15) other factors that may affect
future results of CBTX and Allegiance including changes in asset
quality and credit risk; the inability to sustain revenue and
earnings growth; changes in interest rates and capital markets;
inflation; customer borrowing, repayment, investment and deposit
practices; the impact, extent and timing of technological changes;
capital management activities; and other actions of the Board of
Governors of the Federal Reserve System and Office of the
Comptroller of the Currency and legislative and regulatory actions
and reforms.
Additional factors which could affect future results of
Allegiance and CBTX can be found in Allegiance's Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, and the Current Reports
on Form 8-K, and CBTX's Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, and Current Reports on Form 8-K, in each case
filed with the SEC and available on the SEC's website at
https://www.sec.gov. Allegiance and CBTX disclaim any obligation
and do not intend to update or revise any forward-looking
statements contained in this communication, which speak only as of
the date hereof, whether as a result of new information, future
events or otherwise, except as required by federal securities laws.
As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
Information about the Merger and Where to Find
It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval.
In connection with the proposed merger, CBTX intends to file a
registration statement on Form S-4 with the SEC to register the
shares of CBTX common stock that will be issued to Allegiance
shareholders in connection with the merger. The registration
statement will include a joint proxy statement/prospectus and other
relevant materials in connection with the proposed merger, which
will be sent to the shareholders of CBTX and Allegiance seeking
their approval of the proposed merger.
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION
STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS
INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY
OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED MERGER
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ALLEGIANCE, CBTX
AND THE PROPOSED MERGER.
Investors and security holders may obtain free copies of these
documents, once they are filed, and other documents filed with the
SEC by Allegiance or CBTX through the website maintained by the SEC
at https://www.sec.gov. Documents filed with the SEC by CBTX will
be available free of charge by accessing the CBTX's website at
www.communitybankoftx.com under the heading “Investor Relations”
or, alternatively, by directing a request by mail or telephone to
CBTX, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046,
Attn: Investor Relations, (713) 210-7600, and documents filed with
the SEC by Allegiance will be available free of charge by accessing
Allegiance’s website at www.allegiancebank.com under the heading
"Investor Relations" or, alternatively, by directing a request by
mail or telephone to Allegiance Bancshares, Inc., 8847 West Sam
Houston Parkway, N., Suite 200, Houston, Texas 77040, (281)
894-3200.
Participants in the Solicitation
CBTX, Allegiance and certain of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the shareholders of CBTX and
Allegiance in connection with the proposed merger. Certain
information regarding the interests of these participants and a
description of their direct or indirect interests, by security
holdings or otherwise, will be included in the joint proxy
statement/prospectus regarding the proposed merger when it becomes
available. Additional information about the directors and executive
officers of CBTX and their ownership of CBTX's common stock is set
forth in CBTX's proxy statement for its annual meeting of
shareholders, filed with the SEC on April 14, 2021. Additional
information about the directors and executive officers of
Allegiance and their ownership of Allegiance's common stock is set
forth in Allegiance's proxy statement for its annual meeting of
shareholders, filed with the SEC on March 10, 2021. These documents
can be obtained free of charge from the sources described
above.
Allegiance Bancshares,
Inc.ir@allegiancebank.com
CBTX,
Inc.investors@CBoTX.com
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