Veritex Holdings in Dallas has agreed to buy StoneCastle Cash Insured Sweep, also known as interLINK.
The $9.8 billion-asset Veritex said in a press release Thursday that it will pay StoneCastle Partners $91 million in cash and stock for the business, which administers about $8 billion of deposit for broker/dealers and clearing firms through FDIC-insured cash sweep programs.
Veritex also plans to commence a common stock offering to raise about $150 million.
Veritex said that, once integrated into its treasury function, interLINK will provide “flexible and scalable access” to roughly $5.7 billion of “highly diversified, stable core deposits.”
“We are excited at the opportunity to enhance our funding and liquidity profile with a modern, branchless distribution channel that provides sticky core deposits to fund several years of future growth,” C. Malcolm Holland, Veritex’s chairman and CEO, said in the release.
“Meeting the needs of customers and communities is priority number one and interLINK enables us to do that with low-cost, flexible funding that will continue to scale with minimal overhead to generate positive operating leverage,” Holland added. “The financial benefits to shareholders are expected to be significant with low-risk given the capital-light nature of the business and our significant expertise buying and integrating businesses over that last 10 years.”
Veritex said it will be able to provide broker/dealers with other services, including private banking and securities lending. The company said that interLINK administers about 420,000 retail brokerage accounts.
StoneCastle will hold a roughly 4% stake in Veritex after the deal closes.
Veritex said it expects the deal to be neutral to 2023 earnings per share and 8% accretive the following year. It should also be accretive to tangible book value.
The deal is expected to close in the third quarter.
Goldman Sachs and Skadden, Arps, Slate, Meagher & Flom advised Veritex. Keefe, Bruyette & Woods and Dechert advised StoneCastle.