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Hilltop Holdings Inc. (NYSE: HTH) announced today that its subsidiary, PlainsCapital Bank, has entered into a purchase and assumption agreement with the FDIC to assume substantially all of the liabilities and purchase substantially all of the assets of Edinburg, TX-based First National Bank. The transaction is structured as a whole bank purchase and assumption agreement with loss share coverage. PlainsCapital Bank assumed all deposits and will open all branches during normal business hours under its name.
Based on April 19, 2013 balances of First National Bank, PlainsCapital Bank purchased at book value approximately $2.6 billion of assets and assumed approximately $2.4 billion of liabilities. Under the terms of this transaction, PlainsCapital Bank assumed all deposits and did not pay a deposit premium to the FDIC. PlainsCapital Bank bid an asset discount of $260 million. This transaction is expected to be immediately accretive to earnings.
The loss share coverage is based on a 3 tranche structure for the covered loans and other real estate owned. The FDIC will reimburse PlainsCapital Bank for 80 percent, 0 percent and 80 percent of the losses it incurs on all covered assets for tranche 1, 2 and 3, respectively.
Hilltop Holdings previously has bid on failed banks through FDIC-assisted transactions, but this is the first successful acquisition. First National Bank’s deposit franchise and expansive branch network allows PlainsCapital Bank to further develop its Texas footprint. This transaction also allows PlainsCapital Bank to enter the Rio Grande Valley, Houston, Corpus Christi, Laredo and El Paso markets, among others.
“The First National Bank transaction provides an extension of PlainsCapital Bank’s franchise into new Texas markets and strengthens our franchise in markets that we are already serving. We previously have bid on other failed bank transactions and are excited about the opportunity we have in our first FDIC-assisted acquisition,” said Jeremy B. Ford, president and CEO of Hilltop Holdings. “We envision a smooth transition for both customers and employees as we integrate First National Bank into PlainsCapital Bank’s strong platform and culture.”