SSB - The Merger Between Independent Bank Group And SouthState Corporation Is Unexciting

2024-06-29 15:12:10 ET

Summary

• Independent Bank Group and SouthState Corporation are merging in a $2 billion all-stock deal, creating a large regional bank in the southern US.
• The merger is expected to bring significant cost savings, but these savings will not come easy.
• SouthState Corporation is acquiring Independent Bank Group at a discount due to the lower quality of assets, putting all future risks on SouthState Corporation.
• At the end of the day, this is not terribly exciting and limited upside exists for both firms.

For nearly a year and a half, I have dedicated a good portion of my time to analyzing and understanding financial institutions better. For the vast majority of the 16 years that I have spent investing, I largely shied away from those firms. But because of the banking crisis that occurred last year, I could not resist the allure of them any further. Two banks that I have analyzed previously that I took rather neutral stances on were Independent Bank Group ( IBTX ) and SouthState Corporation ( SSB ). In the case of Independent Bank Group, shares of the business have seen upside of only 4.5% since I wrote about it in February of this year. That's below the 7.2% increase seen by the S&P 500 over the same window of time. And since I originally wrote about SouthState Corporation in September of 2023, shares have seen upside of only 4.2% at a time when the S&P 500 has jumped by 20.9%....

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