Moody’s shifts Texas Capital view to negative

Moody's Investors Service said it changed the outlook for Texas Capital Bancshares, Inc. and its bank subsidiary, Texas Capital Bank, NA to negative from stable and affirmed the Baa3 long-term issuer rating.

The affirmation and change in outlook follow the announcement of the planned merger of Texas Capital and the unrated Independent Bank Group, Inc.. The companies expect the all-stock transaction to close in mid-2020, subject to regulatory approvals.

“Though the merger will result in a more diversified loan and deposit franchise and provide opportunity for cost savings that could enhance profitability, it also presents material integration risks, which was the driver of the outlook change to negative from stable. Any operational missteps that would surface in the integration process could weaken the financial standing and performance of the combined entity, which may in turn incentivize management to increase the firm's risk appetite to preserve profitability or capital,” Moody’s said in a press release.

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