Prosperity to buy LegacyTexas Bank for $2.1 billion
Prosperity Bancshares in Houston has agreed to buy LegacyTexas Financial Group in Plano.
The $22.4 billion-asset Prosperity said in a press release Monday that it will pay $2.1 billion in cash and stock for the $9.3 billion-asset LegacyTexas. The deal, which is expected to close in the fourth quarter, priced LegacyTexas at 216% of its tangible book value.
LegacyTexas has 42 branches, $8.1 billion in loans and $7.1 billion in deposits.
Kevin Hanigan, LegacyTexas’ president and CEO, will become Prosperity’s president and chief operating officer and president of Prosperity Bank. Mays Davenport, LegacyTexas’ chief financial officer, will become Prosperity’s director of corporate strategy.
Three LegacyTexas directors, including Hanigan, will join Prosperity’s board.
Prosperity would become the second-largest bank based in Texas, behind Comerica.
"Our increased scale better positions us to invest in future opportunities and serve our customers,” David Zalman, Prosperity’s chairman and CEO, said in the release.
“We believe that our banks are complementary and provide many opportunities for continued growth,” Zalman added. “This is a rare opportunity to significantly enhance our presence in the Dallas/Fort Worth MSA, a market with a diverse economy that is continually attracting investment and has a growing population.”
Prosperity said it expects the deal to be 6.6% accretive to its 2020 earnings per share, based on its cost-cutting projections. Prosperity plans to cut about a quarter of LegacyTexas’ annual noninterest expenses.
Prosperity estimated that it will incur $60 million in merger-related charges. It should take less than five years for Prosperity to earn back any dilution to its tangible book value.
Keefe, Bruyette & Woods and Bracewell advised Prosperity. J.P. Morgan Securities and Shapiro Bieging Barber Otteson advised LegacyTexas.