Independent Bank Group, Inc. (NASDAQ:IBTX), a Texas-based commercial bank, has successfully completed the issuance and sale of $175 million in subordinated notes, according to a recent 8-K filing with the Securities and Exchange Commission. The offering, which closed on Wednesday, involved 8.375% Fixed-to-Floating Rate Subordinated Notes due 2034.
The notes were sold under an underwriting agreement with Keefe, Bruyette & Woods, Inc., and U.S. Bancorp Investments, Inc., with a 1.50% underwriting discount. This resulted in net proceeds of approximately $172.375 million before offering expenses. Part of these proceeds will be used to repay the company's 5.875% subordinated notes due August 1, 2024, with the remainder allocated for general corporate purposes.
The interest on the notes will be fixed at 8.375% per annum, paid semi-annually until August 15, 2029. Subsequently, the rate will switch to a floating rate based on a benchmark rate expected to be Three-Month Term SOFR, plus 460.5 basis points, paid quarterly.
These notes rank junior to any existing and future Senior Indebtedness and equal with the company's current and future subordinated indebtedness. They are also structurally subordinated to all existing and future liabilities of Independent Bank (NASDAQ:INDB) and the company's other subsidiaries.
In other recent news, Independent Bank Group reported a net loss of $493.5 million for the second quarter due to a substantial goodwill impairment charge of $518.0 million. Despite this, the bank's adjusted net income was $24.9 million, excluding the impairment and other non-recurring items. The bank also declared a quarterly cash dividend of $0.38 per share. The bank's net interest margin expanded by 5 basis points to 2.47%, and loan yields expanded by 10 basis points to 6.03%. The bank's credit metrics remained healthy, with a nonperforming asset ratio of 0.35% and a net charge-off to average total loans ratio of 0.03% over the last twelve months.
In other recent developments, Independent Bank Group is set to merge with SouthState Corporation. Piper Sandler upgraded Independent Bank Group's stock from Underweight to Overweight in response to the merger. However, Truist Securities downgraded the bank's stock to Hold from Buy, citing the impact of the merger. Meanwhile, Keefe, Bruyette & Woods reduced its price target for Independent Bank Group's shares to $46.00 from $55.00 but maintained an Outperform rating.
In other company news, Independent Bank Group held its Annual Meeting, where four directors were elected to the company's Board, and the compensation of the company's named executive officers was approved. The shareholders also ratified the appointment of RSM US LLP as the company's independent registered public accounting firm for 2024. These recent developments highlight the strategic decisions the company is making to navigate the dynamic financial landscape.
InvestingPro Insights
As Independent Bank Group, Inc. (NASDAQ:IBTX) navigates its financial restructuring with the issuance of subordinated notes, real-time data and insights from InvestingPro offer a deeper look into the company's current market position. Notably, the company's market capitalization stands at a robust $2.45 billion, reflecting investor confidence despite the bank's revenue having experienced a decline of 17.79% over the last twelve months as of Q2 2024. This suggests a challenging economic environment, yet the company's strategic financial moves aim to strengthen its long-term position.
InvestingPro Tips highlight that analysts predict Independent Bank Group will be profitable this year, which aligns with the company's own forward-looking statements about its business trajectory. Additionally, the stock has seen a strong return over the last three months, with a 60.74% price total return, signaling positive market sentiment. These insights are particularly relevant as the company approaches the repayment of its 2024 notes and seeks to maintain stable growth. For investors seeking more detailed analysis, there are additional InvestingPro Tips available that could further inform investment decisions.
It's worth noting that the company has maintained dividend payments for 12 consecutive years, with a dividend yield of 2.57% as of the latest data, demonstrating a commitment to shareholder returns even as it manages its debt obligations. As Independent Bank Group continues to adapt to market conditions, these metrics and tips from InvestingPro serve as valuable tools for investors monitoring the company's performance.
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