Texas Capital Bank and Independent Bank won’t be forging the largest bank in Texas after all.
Five months after the banks announced a $5.5 billion merger, they announced it would be mutually terminated.
The deal, announced Dec. 9, 2019, was an all-stock merger, but both sides said their boards of directors had signed off on the termination “after careful consideration and given the significant impact of the COVID-19 pandemic on global markets and on the companies’ ability to fully realize the benefits they expected to achieve through the merger.”
“Due to the unprecedented impact of the COVID-19 pandemic, both companies’ boards of directors believe it is in the best interests of our employees, clients and all of our shareholders to focus on managing our business during this time,” Texas Capital Bancshares Chairman Larry Helm said in a press release. “With the talent and depth of our team and strong organic growth model, Texas Capital Bank has built a resilient business with lasting client relationships and a record of value creation through changing market dynamics and economic pressures. Texas Capital Bank remains focused on supporting the health and safety of our colleagues and meeting all our clients’ needs during these challenging times and for many years thereafter.
“As a result of our significant multi-year investments, healthy balance sheet, ability to recruit and foster the best talent and history of driving strong results, Texas Capital Bank is well positioned to continue to execute against a standalone strategy. Our team and resources will be focused on leveraging our innovative and differentiated capabilities to continue providing a premier client experience and deliver elevated returns. Further, we maintain the scalability and commitment to operational excellence that will enable us to drive increased efficiencies and profitability and support sustainable, long-term value creation. Our dedicated team, whose tireless efforts to enhance our clients’ experience and the communities where we operate, will continue to guide Texas Capital Bank’s purpose and success.”
Neither side will pay a termination fee as a result of the decision to terminate the merger, the release stated.
The same day the termination was announced, Texas Capital announced that its president and CEO, C. Keith Cargill, had resigned his positions and his spot on the board of directors of Texas Capital Bank and parent company Texas Capital Bancshares.
Helm will serve as executive chairman, CEO and president of both companies in an interim basis as the company begins a search for Cargill’s successor, the release stated.
“After much deliberation, the board and I have decided that now is the right time for me to step down as president and CEO of Texas Capital Bancshares and Texas Capital Bank,” Cargill said in the release. “It has been one of the greatest honors of my life to be one of the founders of this great company and serve as CEO alongside our exceptional management team and our talented colleagues. Our team has transformed Texas Capital Bank into one the most successful banks in the country that caters to entrepreneurs, business owners, private wealth clients and other loyal individuals.”
Cargill will continue to serve as vice chairman of both companies through the end of 2020 while James Browning, an independent director and member of the Texas Capital Bancshares board since 2009, has been appointed lead director.
The parent company’s board said it engaged Egon Zehnder, a leading executive search firm, as part of a “robust and ongoing” succession planning process.
“Under Keith’s leadership, the Texas Capital Bank team has built one of the best, fastest-growing business and private wealth banks in the United States,” Helm said. “Through multiple cycles, the company has achieved significant growth by fostering top talent and a culture of integrity, innovation and collaboration, earning and keeping the trust of our clients through exceptional service and meeting the needs of middle-market entrepreneurs.
“On behalf of the entire board, I want to thank Keith for his contributions as CEO and as a founder of Texas Capital Bank. I look forward to working with Keith and our leadership team to ensure a smooth transition for all our stakeholders, particularly as we navigate the current impact presented by the global pandemic. We wish Keith the very best in his future endeavors.”
Texas Capital Bancshares Governance and Nominating Committee Chairwoman Elysia Ragusa said this was the right time for the leadership change.
“As part of our focus on succession planning, the board believes that it is the right time for a transition in leadership as the company executes a strategy to achieve enhanced operational focus and profitable, long-term value creation,” Ragusa said. “We are fortunate to have someone of Larry’s caliber and experience ready to assume the role of executive chair, CEO and president at this important juncture for the company. We are confident that he is the right person to lead Texas Capital Bank until we have identified a permanent successor for the CEO role.”