StoneCastle Cancels the Veritex Acquisition, and Stephens Downgrades Veritex to Neutral

Veritex Holdings NASDAQ:VBTX

Veritex Holdings (NASDAQ:VBTX)

After StoneCastle Partners backed out of the deal to sell Veritex, StoneCastle Insured Sweep (formerly known as InterLINK). Veritex Holdings (NASDAQ:VBTX) stated it was examining all possibilities, including breach of contract.

StoneCastle Partners “unilaterally canceled the definitive agreement,” the company said late on Tuesday. In connection with the termination, neither party will pay a termination fee.

Following the cancellation of the agreement, Stephens analyst Matt Olney lowered Veritex Holdings (NASDAQ:VBTX) shares from Overweight to Equal-Weight because he believes it “will produce further headwinds to the stock’s sentiment.”

Veritex (NASDAQ:VBTX) made significant strides toward obtaining the permission of the Federal Deposit Insurance Corp. and already obtained the Texas Department of Banking’s approval for the transaction (“FDIC”). According to the corporation, upon receiving the FDIC approval, all other closing-related requirements were, or might reasonably be expected to be, satisfied.

Stephens Olney believes there are three main ways Veritex (NASDAQ:VBTX) may continue to support its loan pipeline and 93% loan/deposit ratio in the wake of the termination: The following three options would result in net interest margin compression through 2023: 

  • A distinct acquisition focused on deposits, perhaps outside of the metro Texas region; 
  • Limit organic growth from its mid-teen estimate; 
  • Make no changes.

In contrast to Olney’s Equal-Weight rating and the typical Wall Street Strong Buy rating, SA’s Quant rating of Sell is more pessimistic.

Veritex (NASDAQ:VBTX) and InterLINK, a tech-enabled deposit collection platform, reached an agreement in March to buy each other for $91 million.

Earnings summary

Veritex Holdings Inc. reported $29.6 million in earnings for the second quarter. The Dallas-based bank reported 54 cents in earnings per share. After deducting pretax costs, earnings per share were 55 cents.

Wall Street’s expectations were not met by the outcomes. Zacks Investment Research’s three analysts predicted earnings of 69 cents per share on average. The bank holding firm reported $104 million in revenue for the period. Its income after interest costs was $94.9 million, which was less than what Wall Street expected.

Featured Image-  Megapixl @Dolgachov 

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