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FORT WORTH-Compass Bancshares Inc. and TexasBanc Holding Co. will wed in a $464-million plan to become the state's fifth largest bank and fourth largest in the Dallas/Fort Worth metropolitan area. The deal is expected to close in January.

Admittedly, the Birmingham, AL-based Compass won't catch up with the Big Three in terms of its Texas deposits, but the buyout does secure a top-tier ranking and sets up a play to expand TexasBank's business customer-only platform into a full-service bank, Gary Hegel, Compass' CFO, tells GlobeSt.com. When the deal closes, Compass Bank will be sporting $3.6 billion in Texas deposits and 163 locations in the state.

Hegel says the buyout is Compass' largest this year for its growth plan. The re-branding will begin shortly after the deal is inked, he says, adding more locations are sure to be opened in all Texas metros. Compass annually adds 10 to 20 branches in high-growth markets. When the portfolios are combined, Compass will have 68 locations in Dallas/Fort Worth, 42 in Houston, 23 in San Antonio, 22 in Austin and eight in smaller Central Texas cities. Compass presently operates 139 locations in the state, of which 45 are in Dallas/Fort Worth.

Hegel says JPMorgan Chase leads the state with 157 locations and $17 billion in deposits with Bank of America running right behind with 187 branches and $16.9 billion in deposits. Third-place ranked Wells Fargo has 142 banks and $5.4 billion in deposits, according to Hegel. "We'll never catch them, but we're not interested in being the biggest in the business," he explains.

Hegel says Compass "constantly calls" on smaller banking networks to propose partnerships. And, it's not done with its courtship of the Texas ranks. "There are some other fill-in banks that we'd like to have a chance at," he says.

The buyout will be funded with five million shares of Compass' common stock and $232 million in cash. Compass is predicting a $36-million pretax hit for the restructuring. The estimated $464-million value is based on Compass' 10-day average closing stock price. And when the deal closes, TexasBank president and CEO Vernon Bryant will become Compass' regional president.

Within hours of yesterday's announcement, Fitch said it "views the rationale of the transaction to be sound" and affirms Compass Bancshares' current ratings of A-minus for senior unsecured debt and BBB plus for subordinated debt and preferred stock. Though the deal is costly, Fitch says the price is "in line with other Texas banking acquisitions." The transaction is awaiting regulatory approval.

Instant Insights /

Compass Bancshares, TexasBanc Sign $464M Buyout Plan

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