Texas Capital Bancshares in Dallas has agreed to sell its insurance premium finance business to Truist Financial in Charlotte, N.C.
The $32.3 billion-asset Texas Capital said in a press release Tuesday that it will sell BankDirect Capital Finance to Truist’s AFCO Credit unit for $3.4 billion in cash. The price represents an 8.5% asset premium.
The deal is expected to close in the fourth quarter.
BankDirect is based in Chicago. It is a national platform with five offices. Premium finance made up 13% of Texas Capital’s loan portfolio at June 30.
The sale includes $3.1 billion of loans and includes the equity interests of BankDirect and associated loan balances held by Texas Capital. No parent funding, deposits or capital will be transferred.
The sale allows Texas Capital “to refocus our capital and expense base consistent with our strategy of creating the flagship full-service financial services firm in Texas,” Rob Holmes, the company’s president and CEO, said in the release.
“The sale follows a deliberate process designed to maximize shareholder value, strengthen our balance sheet, simplify our business model and free up incremental resources to be redeployed to our core businesses,” Holmes added.
The sale should increase Texas Capital’s common equity Tier 1 capital ratio by 199 basis points. Its tangible book value per share accretion should be 6.5%.
Morgan Stanley; Texas Capital Securities; and Cravath, Swaine & Moore advised Texas Capital. RBC Capital Markets, Truist Securities and Willkie Farr & Gallagher advised Truist.