Huntington Bancshares Inc.’s strategic acquisition campaign over the past few years has transformed it from a Midwestern player into a regional banking giant. The Ohio-based bank’s purchase of Veritex Holdings Inc. on Monday is another key piece of its expansion-driven evolution.
By buying Dallas-based Veritex for $1.9 billion in an all-stock deal, Huntington will increase its Texas footprint considerably, particularly in Dallas-Fort Worth and Houston. Columbus-based Huntington boasts approximately $210 billion in assets, while Veritex, as of March 31, reported nearly $13 billion in assets, $9 billion in loans and $11 billion in deposits.
Simpson Thacher & Bartlett is serving as legal advisor to Veritex, while Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Huntington. Keefe, Bruyette & Woods is serving as financial advisor to Veritex, while Evercore and Commerce Street Capital are serving as financial advisors to Huntington.
“This combination supports our ambitions and reflects our long-term commitment to the state of Texas, one of the most dynamic and fastest-growing economies in the country,” said Steve Steinour, Chairman, President and CEO of Huntington Bancshares, in a news release. “The Veritex team brings deep local relationships, a strong commercial banking franchise and customer loyalty, and this partnership will serve as a springboard for substantial future growth in the state.”
In June 2023, Veritex CEO Malcolm Holland, who has led the bank’s operations since it was founded in 2010, didn’t reject the idea of pursuing a sale. Still, he said that wasn’t his goal, preferring instead to boost the bank’s balance sheet to $20 billion in assets within a few years. Holland, who will join Huntington in a non-executive role as Chairman of Texas, told the Dallas Business Journal in an interview two years ago that the question came up a lot because Veritex was viewed as “the prettiest girl at the dance.”
Now Veritex has a date and it’s with one of the most desirable regional banks in the country. Huntington has been on a buying spree over the past few years. Its purchase of Veritex supersizes the extra Texas presence Huntington has craved, but it’s all part of a more comprehensive strategy.
Coupled with two of its previous purchases, TCF Financial Corp. in 2021 and Capstone Partners in 2022, Huntington can use the deal to deepen its Texas ties to middle-market companies and small businesses, where it has operated since 2009 and has been a top provider of government-backed SBA loans.
Its multiyear strategy of expansion reveals a methodical and balanced plan of attack, combining a $22 billion transformational deal (TCF) that fundamentally altered Huntington’s scale and reach, one capability-building buy (Capstone) that sharpened its investment banking edge and the purchase of Veritex, which doubles down on Huntington’s positioning in high-growth Texas markets.
The deal with TCF created a top 10 U.S. regional banking giant and brought Huntington into Minnesota and Colorado for the first time, as well as bolstering its short-term business financing tied to inventory capabilities. The purchase of Capstone enhanced Huntington’s capital markets and advisory services offerings.
By buying Veritex beyond the significant expansion in Texas that would be reason enough to do the deal, Huntington gains Veritex’s sought-after client base. It is laden with sexy smaller and midsized companies, with quite a few brought aboard in the wave of acquisitions Holland led once Veritex went public in 2014.
“Veritex has always been a people and community focused bank. We have found a partner in Huntington Bank who shares and lives out those same values,” said Holland in the release. “We are very excited about becoming part of the Huntington family and bringing more capabilities to our Texas clients than ever before.”
Huntington, which has approximately 200 employees in Texas, said it intends to keep Veritex’s roughly 30 branch locations, which will transition next year to the new branding, and continue to grow the network “over time.”
As of Dec. 31, Veritex had 858 full-time equivalent employees in Texas.
Under the terms of the deal, Huntington will issue 1.95 shares for each outstanding share of Veritex in the all-stock transaction. Based on Huntington’s closing price of $17.39 as of July 11, that implies $33.91 per Veritex share for an aggregate value of $1.9 billion.
Pending regulatory approval, the deal is expected to close in the fourth quarter.
The all-New York and Washington, D.C., team for Simpson Thacher on the deal included Sven Mickisch, Timothy Gaffney, Elias Rosenblatt and Wells Hamilton (M&A); Brian Christiansen and Collin Janus(bank regulatory); Larry Moss, Ryan Stott and Benjamin Faber (executive compensation and employee benefits); Jonathan Goldstein (tax); Jamie Talbot (IP); Krista McManus (real estate); and Carleigh Rodriguez (environmental).