Texas Capital Bancshares in Dallas and Independent Bank Group in McKinney, Texas, have called off their planned $3.1 billion merger.
The $35.9 billion-asset Texas Capital also announced on Monday that Keith Cargill, 67, had stepped down as its president and CEO, adding that it plans to conduct a national search for his permanent successor. Cargill was set to relinquish day-to-day management of the combined company had the merger closed.
Texas Capital and the $15.6 billion-asset Independent said they were going their separate ways after the coronavirus outbreak hurt global markets and the companies’ ability to meet the merger’s objectives.
“Due to the unprecedented impact of the COVID-19 pandemic, both companies’ boards … 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,” Larry Helm, Texas Capital’s chairman, said in a press release.
No termination fees will be assessed.
The deal, in December, would have created a $50 billion regional bank in Texas. David Brooks, Independent’s chairman and CEO, was set to lead the combined company, with Cargill becoming a special adviser.
Fallout from the COVID-19 crisis has created turmoil in the energy sector, which has hurt banks that focus on the sector.
Texas Capital lost $19 million in the first quarter after recording a $96 million loan-loss provision. The company set aside $55 million for two energy loans and another $30 million to address potential issues tied to the pandemic.
Texas Capital, in a separate release, disclosed Cargill’s departure. The company said Helm, 72, will serve as interim CEO until a permanent leader is hired. Helm is a former regional executive for Bank One.
Cargill will serve as vice chairman until the end of this year to help with the transition.
Texas Capital said it is working with the executive search firm Egon Zehnder to identify candidates to succeed Cargill.
“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,” Elysia Ragusa, chairman of the company’s governance and nominating committee, said in the release.