KBRA Places Ratings for Veritex Holdings, Inc. on Watch Upgrade Following Merger Announcement

KBRA places the ratings for Dallas, Texas-based Veritex Holdings, Inc. (NASDAQ: VBTX) on Watch Upgrade, including the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 following the announcement on July 14, 2025, that Huntington Bancshares, Inc. (NASDAQ: HBAN) would acquire VBTX in an all-stock transaction. In addition, KBRA places the ratings for lead subsidiary, Veritex Community Bank on Watch Upgrade, including the the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2.

On July 14, 2025, Veritex Holdings, Inc. announced a definitive merger agreement with Huntington Bancshares, Inc., under which VBTX will merge with and into HBAN. VBTX shareholders will receive 1.95 shares of HBAN stock for each outstanding share of VBTX in a 100% stock transaction valued at $1.9 billion (1.52x VBTX TBV). The transaction is expected to be modestly dilutive to HBAN’s TBV with earnback projected within approximately one year. The deal is expected to close in 4Q25.

HBAN is the holding company for The Huntington National Bank, one of the 20 largest banks in the United States (based on Fed data from 1Q25) with approximately $210 billion in total assets, $133 billion in loans, and $166 billion in deposits. HBAN’s markets cover 13 states, namely in the Midwest as well as recent expansion into the South (North Carolina and South Carolina along with Texas). HBAN’s loan portfolio is well diversified, with C&I and residential mortgage loans representing the company’s largest concentrations (35% and 26% respectively at 1Q25). HBAN’s CRE concentration is very limited, totaling less than 10% of total loans (or 63% of total risk-based capital) at 1Q25, thus diluting VBTX’s comparatively elevated CRE concentration which stood at 280% of risk-based capital at 1Q25. This transaction is expected to be neutral to HBAN's regulatory capital ratios, which have historically been managed efficiently, generally tracking within range of peers of similar size.

This transaction deepens HBAN’s presence in the vibrant Texas market with proforma loans within the state of Texas of $15 billion and proforma deposits of $13 billion, becoming the 3rd largest state by loans and deposits for HBAN. VBTX provides HBAN with commercial offices from which to expand within the region. Moreover, HBAN expects to be able to deepen the commercial banking relationships VBTX’s has, with HBAN’s full suite of payments capabilities as well as its wealth & investment management services. Notably, VBTX's Chairman, CEO and President, Malcolm Holland, is expected to take on the role of Chairman of Texas for HBAN following the completion of the transaction.

The Watch Upgrade is reflective of our view towards the longstanding performance of HBAN underpinned by its rather robust deposit franchise and a well-diversified loan portfolio (both in terms of geography and loan type), along with meaningful revenue contributions from its various fee generating business lines, typically representing 25% - 30% of total revenues.

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