Delaware |
(State or other jurisdiction of incorporation or organization) |
6022 |
(Primary Standard Industrial Classification Code Number |
42-1405748 |
(I.R.S. Employer Identification No.) |
1398 Central Avenue Dubuque, Iowa 52001 (563) 589-2100 |
(Address, including zip code, and telephone number, including area code, of |
Bryan R. McKeag Executive Vice President and Chief Financial Officer Heartland Financial USA, Inc. 1398 Central Avenue Dubuque, Iowa 52001 (563) 589-2100 |
(Name, address, including zip code, and telephone number, including area code, of agent for service) |
Jay L. Swanson | | Lowell W. Harrison | |
John Marsalek | | Jeremy S. Lemmon | |
Dorsey & Whitney LLP | | Fenimore, Kay, Harrison & | |
50 South Sixth Street, Suite 1500 | | 812 San Antonio Street, Suite | |
Minneapolis, Minnesota 55402 | | Austin, Texas 78701 | |
(612) 340-2600 | |||
| (512) 583-5905 |
Large accelerated filer | | | ☒ | | | Accelerated filer | | | ☐ |
Non-accelerated filer | | | ☐ (do not check if smaller reporting company) | | | Smaller reporting company | | | ☐ |
| | | | Emerging growth company | | | ☐ |
Adjusted Tangible Common Equity | | | Stock Consideration Per Share(1) | | | Cash Consideration Per Share (Before Holdback) | | | Total Merger Consideration Per Share (Before Holdback)(1) | | | Per Share Holdback Amount(2) | | | Net Merger Consideration Per Share at Closing(1)(2) |
$180,000,000 | | | $7,240.86 | | | $2,069.70 | | | $9,310.56 | | | $203.63 | | | $9,106.93 |
175,000,000 | | | 7,240.86 | | | 1,866.07 | | | 9,106.93 | | | 203.63 | | | 8,903.30 |
170,000,000 | | | 7,240.86 | | | 1,662.44 | | | 8,903.30 | | | 203.63 | | | 8,699.67 |
165,000,000 | | | 7,240.86 | | | 1,458.81 | | | 8,699.67 | | | 203.63 | | | 8,496.03 |
160,000,000 | | | 7,240.86 | | | 1,255.17 | | | 8,496.03 | | | 203.63 | | | 8,292.40 |
155,000,000 | | | 7,240.86 | | | 1,051.54 | | | 8,292.40 | | | 203.63 | | | 8,088.77 |
150,000,000 | | | 7,240.86 | | | 847.91 | | | 8,088.77 | | | 203.63 | | | 7,885.13 |
145,000,000 | | | 7,240.86 | | | 685.00 | | | 7,925.86 | | | 203.63 | | | 7,722.23 |
(1) | Based on the closing price of a share of Heartland common stock as of October 22, 2020 of $34.98, a stock exchange ratio of 207.0, and 24,553.98 shares of AIM common stock outstanding. |
(2) | Assumes that the aggregate holdback amount is $5.0 million pursuant to the amended and restated merger agreement, which amount may increase or decrease as a result of the Reagor-Dykes litigation and the net income earned by AIM from December 1, 2020 to the closing date, if any. |
• | a proposal to approve the AIM/AimBank merger agreement, as it may be amended from time to time, pursuant to which AIM will merge with and into AimBank, with AimBank as the surviving corporation, on and subject to the terms and conditions contained therein with the understanding that, immediately following the AIM/AimBank merger and without any further action by any of AIM, AimBank, Heartland, FB&T or the AIM shareholders, AimBank will be merged with and into FB&T, with FB&T as the surviving corporation, on and subject to the terms and conditions contained in the amended and restated merger agreement (the “AIM/AimBank merger proposal”); |
• | a proposal to elect Buford A. Duff, Jeremy Ferrell, Scott L. Wade, and Kenneth D. Willmon (the “AIM director nominees”) to serve on the AIM board of directors until their successors are elected and qualified at the next annual meeting of shareholders of AIM or until their earlier death, resignation or removal from office (provided that, if the merger is completed, the separate corporate existence of AIM and AimBank will cease and the composition of FB&T’s board of directors will be modified to include Scott L. Wade and three other former members of the board of AIM or AimBank); and |
• | a proposal to adjourn the annual meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the annual meeting to approve the AIM/AimBank merger proposal. |
| |||
| Sincerely, | ||
| | ||
| | /s/ Scott L. Wade | |
| | Scott L. Wade |
| |||
| Sincerely, | ||
| | ||
| | /s/ Jeremy Ferrell | |
| | Jeremy Ferrell Secretary |
Q: | What |
A: | |
Q: | What |
A: | |
Q: | Why was the original merger agreement amended and restated? |
A: | The amended and restated merger agreement amends and restates the agreement and plan of merger dated February 11, 2020, by between Heartland and AIM (the “original merger agreement”), pursuant to |
Q: | Why am I receiving this proxy statement/prospectus in connection with the merger? |
A: | Heartland and AIM are delivering this proxy statement/prospectus to you for two purposes. First, AIM has called the annual meeting to approve the AIM/AimBank merger proposal and to elect the AIM director nominees. This document contains notice of the annual meeting and serves as a proxy statement for the annual meeting, which describes the proposals to be presented at the annual meeting. Second, this document is a prospectus that is being delivered to AIM shareholders because Heartland is offering shares of its common stock in connection with the merger. This proxy statement/prospectus contains important information about the merger, the proposals being voted on at the annual meeting and an investment in Heartland common stock. You should read the proxy statement/prospectus carefully and in its entirety. The enclosed proxy card provides instructions to you on how to vote your shares of AIM common stock without attending the annual meeting. Your vote is important, and AIM encourages you to submit your vote as soon as possible. |
Q: | When and where is the annual meeting? |
A: | The annual meeting will be held at the AimBank Community Building located at 102 North College Avenue, Levelland, Texas 79336, at 4:00 p.m., local time, on December 1, 2020. |
Q: | What are AIM shareholders being asked to vote on at the annual meeting? |
A: | AIM is soliciting proxies from its shareholders with respect to the following matters: |
Q: | If the AIM shareholders are being asked to vote on the AIM/AimBank merger proposal, what is the purpose of electing AIM directors at the annual meeting? |
A: | The bylaws of AIM require that AIM hold an annual meeting of shareholders each year and that AIM directors be elected at each such annual shareholder meeting. In the event the holders of AIM common stock do not approve the AIM/AimBank merger proposal at the annual meeting, AIM will not be required to hold an additional meeting of shareholders to elect directors because the directors will already have been elected. |
Q: | What will AIM shareholders be entitled to receive in the AIM/AimBank merger? |
A: | If the AIM/AimBank merger is completed, AIM shareholders will be entitled to receive one share of AimBank common stock for each share of AIM common stock owned by such holders immediately prior to the effective time of the AIM/AimBank merger. |
Q: | What will AimBank shareholders be entitled to receive in the FB&T/AimBank merger? |
A: | If the FB&T/AimBank merger is completed, the AimBank shareholders (as former AIM shareholders), will be entitled to receive 207.0 shares of Heartland common stock (the “stock exchange ratio”) and $685.00 of cash (the “cash exchange ratio”, and together with the stock exchange ratio, the “merger consideration”) for each share of AimBank common stock owned by such holders as of the effective time (each ratio subject to adjustment as further described in this proxy statement/prospectus), plus cash in lieu of any fractional shares. For a summary of the merger consideration, see the section titled “Summary—What You Will Receive in the FB&T/AimBank merger.” The merger consideration payable as a result of the FB&T/AimBank merger may be reduced by a holdback amount, if any, to be determined on the closing date based on the status of the Reagor-Dykes litigation as of three business days prior to the closing date and the amount of net income earned by AIM from December 1, 2020 to the closing date, if any, (the “aggregate holdback amount”) as described under the section titled “The Amended and Restated Merger Agreement – the FB&T/AimBank Merger – Aggregate Holdback Amount”. As of the date of the amended and restated merger agreement, the aggregate holdback amount was $5.0 million (or $203.63 per share of AimBank common stock), which amount is subject to adjustment as described herein. |
Q: | What is the value of the merger consideration? |
A: | Between the date of this proxy statement/prospectus and the completion of the merger, the value of the merger consideration will fluctuate based on the market price of Heartland common stock and certain potential adjustments |
Q: | What |
A: | At the effective time of the AIM/AimBank merger, each option to purchase shares of |
Q: | What will happen to AimBank stock options? |
A: | At the effective time of the FB&T/AimBank merger, each AimBank stock option will be canceled in exchange for the right to receive |
Q: | |
A: | |
Q: | |
A: | The AIM board of directors has fixed October 22, 2020 as the record date for the annual meeting. Accordingly, if you were a record shareholder of AIM common stock at the close of business on such date, you are entitled to notice of and to vote at the annual meeting. As of October 22, 2020, there were 24,553.98 shares of AIM common stock issued and outstanding and held of record by shareholders. |
Q: | What constitutes a quorum for the annual meeting? |
A: |
Q: | What is the vote required to approve each proposal at the annual meeting? |
A: | The affirmative vote of the holders of at least two-thirds of the issued and outstanding shares of AIM common stock entitled to vote is required to approve the AIM/AimBank merger proposal. If you mark “ABSTAIN” on your proxy card, fail to vote by proxy or in person at the annual meeting or fail to submit valid proxy instructions to your broker, bank or other nominee with respect to the AIM/AimBank merger proposal, it will have the |
Q: | How does the AIM board of directors recommend that I vote at the annual meeting? |
A: | The AIM board of directors unanimously recommends that you vote “FOR” the AIM/AimBank merger proposal, “FOR” the election of the AIM director nominees and “FOR” the adjournment proposal (if it is necessary or appropriate). For a discussion of the factors considered by the AIM board of directors in reaching its decision to |
Q: | What do I need to do now? |
A: | After you have carefully read this proxy statement/prospectus |
Q: | |
A: | |
Q: | Can I |
A: | Yes. |
Q: | How do I vote if I own shares through the AIM Bancshares, Inc. Employee Stock Ownership Plan (with 401(k) provisions)? |
A: | If you hold shares of AIM common stock beneficially through the AIM Bancshares, Inc. Employee Stock Ownership Plan (with 401(k) provisions) (the “KSOP”), you will receive separate voting instructions from |
Q: | Do I have dissenters' rights with respect to the AIM/AimBank merger? |
A: | Yes. AIM shareholders may exercise dissenters' rights in connection with the AIM/AimBank merger. For further information, see “Summary—You Have Dissenters' Rights Under the TBOC” and “Dissenters' Rights of AIM shareholders,” which discussions are qualified by the full text of the provisions of the Texas Business Organizations Code (“TBOC”) relating to rights of dissent set forth in Appendix C to this proxy statement/prospectus. |
Q: | Do I have dissenters' rights with respect to the FB&T/AimBank merger? |
A: | No. The AIM shareholders who become AimBank shareholders as a result of the Aim/AimBank merger do not have dissenters' rights in connection with the FB&T/AimBank merger. |
Q: | Have any AIM shareholders agreed to vote in favor of the AIM/AimBank merger proposal? |
A: | Yes. Pursuant to an amended and restated shareholder voting agreement, certain holders of shares of AIM common stock have agreed to vote their shares in favor of the AIM/AimBank merger proposal. Under the terms of the amended and restated shareholder voting agreement, such shareholders have also appointed Heartland as their proxy for voting their shares of AIM common stock at the annual meeting with respect to the AIM/AimBank merger proposal. The holders of AIM common stock who have agreed to vote for the AIM/AimBank merger proposal have the right to vote, or direct the voting of, 27.9% of the outstanding shares of AIM common stock as of the record date. In the event the amended and restated merger agreement is terminated, the amended and restated shareholder voting agreement will terminate, and none of the AIM shareholders who have signed such agreement will be required to vote in favor of the AIM/AimBank merger proposal. |
Q: | If certain AIM shareholders have entered into a shareholder voting agreement, why is my vote important? |
A: | The percentage of shares of AIM common stock held by AIM shareholders who have signed the shareholder voting agreement is insufficient to approve the AIM/AimBank merger proposal. |
Q: | Will AIM be required to submit the AIM/AimBank merger proposal to its shareholders at the annual meeting even if AIM's board of directors has withdrawn, modified or qualified its recommendation regarding the AIM/AimBank merger proposal? |
A: | Yes. Unless the amended and restated merger agreement is terminated before the annual meeting, AIM is required to submit the AIM/AimBank merger proposal to its shareholders even if AIM's board of directors has withdrawn, modified or qualified its recommendation. |
Q: | Should I |
A: | |
No. Please do |
Q: | |
A: | Heartland and AIM currently expect to complete the merger in the fourth quarter of 2020. However, neither Heartland nor AIM can assure you of when or if the merger will be completed. Before the AIM/AimBank merger is completed, AIM must obtain the approval of its shareholders for the AIM/AimBank merger proposal, necessary regulatory approvals must be obtained and certain other closing conditions must be satisfied. Furthermore, before the FB&T/AimBank merger is completed, necessary regulatory approvals must be obtained and certain other closing conditions must be satisfied. |
Q: | What happens if the AIM/AimBank merger is not completed? |
A: | If the AIM/AimBank merger is not completed, the holders of AIM common stock will not receive any consideration for their shares of AIM common stock that otherwise would have been received in connection with the AIM/AimBank merger. Furthermore, the FB&T/AimBank merger will not be completed and AIM will remain an independent private company and AimBank will remain a wholly owned subsidiary of AIM. |
Q: | What happens if the FB&T/AimBank merger is not completed? |
A: | If the FB&T/AimBank merger is not completed, the holders of AimBank common stock will not receive any consideration for their shares of AimBank common stock that otherwise would have been received in connection with the FB&T/AimBank merger. Instead, AIM will remain an independent private company and AimBank will remain a wholly owned subsidiary of AIM. |
Q: | How is the deterioration in general business and economic conditions caused by the outbreak of COVID-19 affecting the businesses, results of operations, financial conditions, liquidity and prospects of Heartland and AIM, and how are Heartland and AIM responding to this crisis? |
A: | The outbreak of the novel coronavirus disease 2019 (“COVID-19”) and ensuing pandemic (the “COVID-19 pandemic”) is severely affecting Heartland and AIM and their customers, counterparties, employees and third-party providers. The severity of the COVID-19 pandemic, its duration and extent of its impact on Heartland's and AIM's businesses, results of operations, financial positions, liquidity and prospects remains uncertain. The deterioration in general business and economic conditions and turbulence in the domestic and global financial markets caused by the COVID-19 pandemic have negatively affected Heartland's and AIM's net income, total equity and book value per common share, and continued economic deterioration could adversely affect the value of each company's assets and liabilities, reduce the availability of funding to Heartland and AIM and lead to a tightening of credit. In addition, continued economic disruption could further decrease the price of shares of Heartland common stock and increase stock price volatility. Some economists and investment banks believe that a prolonged recession or depression may result from the continued spread of COVID-19 and its economic consequences. For more information, see sections titled “Risk Factors—COVID-19 Pandemic,” “Information about AIM—Effect of and Response to the COVID-19 Pandemic,” and “Information about Heartland—Effect of and Response to the COVID-19 Pandemic.” |
Q: | Where can I find information about Heartland and AIM? |
A: | You can find more information about Heartland in the section titled “Information About Heartland” and from the various sources described under “Where You Can Find More Information.” You can find more information about AIM in the section titled “Information About AIM.” |
Q: | Whom should I call with questions? |
A: | If you have any questions about either the AIM/AimBank merger, |
Adjusted Tangible Common Equity | | | Total Stock Considera tion(1) | | | Stock Considera tion Per Share | | | Total Cash Considera tion | | | Cash Considera tion Per Share | | | Total Merger Considera tion | | | Merger Considera tion Per Share | | | Aggregate Holdback Amount(2) | | | Per Share Holdback Amount | | | Cash Considera tion Net of Aggregate Holdback Amount | | | Cash Considera tion Per Share Net of Per Share Holdback Amount |
$180,000,000 | | | $177,791,932 | | | $7,240.86 | | | $50,819,476 | | | $2,069.70 | | | $228,611,408 | | | $9,310.56 | | | $5,000,000 | | | $203.63 | | | $45,819,476 | | | $1,866.07 |
175,000,000 | | | 177,791,932 | | | 7,240.86 | | | 45,819,476 | | | 1,866.07 | | | 223,611,408 | | | 9,106.93 | | | 5,000,000 | | | 203.63 | | | 40,819,476 | | | 1,662.44 |
170,000,000 | | | 177,791,932 | | | 7,240.86 | | | 40,819,476 | | | 1,662.44 | | | 218,611,408 | | | 8,903.30 | | | 5,000,000 | | | 203.63 | | | 35,819,476 | | | 1,458.81 |
165,000,000 | | | 177,791,932 | | | 7,240.86 | | | 35,819,476 | | | 1,458.81 | | | 213,611,408 | | | 8,699.67 | | | 5,000,000 | | | 203.63 | | | 30,819,476 | | | 1,255.17 |
160,000,000 | | | 177,791,932 | | | 7,240.86 | | | 30,819,476 | | | 1,255.17 | | | 208,611,408 | | | 8,496.03 | | | 5,000,000 | | | 203.63 | | | 25,819,476 | | | 1,051.54 |
155,000,000 | | | 177,791,932 | | | 7,240.86 | | | 25,819,476 | | | 1,051.54 | | | 203,611,408 | | | 8,292.40 | | | 5,000,000 | | | 203.63 | | | 20,819,476 | | | 847.91 |
150,000,000 | | | 177,791,932 | | | 7,240.86 | | | 20,819,476 | | | 847.91 | | | 198,611,408 | | | 8,088.77 | | | 5,000,000 | | | 203.63 | | | 15,819,476 | | | 644.27 |
149,000,000 | | | 177,791,932 | | | 7,240.86 | | | 19,819,476 | | | 807.18 | | | 197,611,408 | | | 8,048.04 | | | 5,000,000 | | | 203.63 | | | 14,819,476 | | | 603.55 |
148,000,000 | | | 177,791,932 | | | 7,240.86 | | | 18,819,476 | | | 766.45 | | | 196,611,408 | | | 8,007.31 | | | 5,000,000 | | | 203.63 | | | 13,819,476 | | | 562.82 |
147,000,000 | | | 177,791,932 | | | 7,240.86 | | | 17,819,476 | | | 725.73 | | | 195,611,408 | | | 7,966.59 | | | 5,000,000 | | | 203.63 | | | 12,819,476 | | | 522.09 |
146,000,000 | | | 177,791,932 | | | 7,240.86 | | | 16,819,476 | | | 685.00 | | | 194,611,408 | | | 7,925.86 | | | 5,000,000 | | | 203.63 | | | 11,819,476 | | | 481.37 |
145,000,000 | | | 177,791,932 | | | 7,240.86 | | | 16,819,476 | | | 685.00 | | | 194,611,408 | | | 7,925.86 | | | 5,000,000 | | | 203.63 | | | 11,819,476 | | | 481.37 |
144,000,000 | | | 177,791,932 | | | 7,240.86 | | | 15,819,476 | | | 644.27 | | | 193,611,408 | | | 7,885.13 | | | 5,000,000 | | | 203.63 | | | 10,819,476 | | | 440.64 |
143,000,000 | | | 177,791,932 | | | 7,240.86 | | | 14,819,476 | | | 603.55 | | | 192,611,408 | | | 7,844.41 | | | 5,000,000 | | | 203.63 | | | 9,819,476 | | | 399.91 |
142,000,000 | | | 177,791,932 | | | 7,240.86 | | | 13,819,476 | | | 562.82 | | | 191,611,408 | | | 7,803.68 | | | 5,000,000 | | | 203.63 | | | 8,819,476 | | | 359.19 |
141,000,000 | | | 177,791,932 | | | 7,240.86 | | | 12,819,476 | | | 522.09 | | | 190,611,408 | | | 7,762.95 | | | 5,000,000 | | | 203.63 | | | 7,819,476 | | | 318.46 |
140,000,000 | | | 177,791,932 | | | 7,240.86 | | | 11,819,476 | | | 481.37 | | | 189,611,408 | | | 7,722.23 | | | 5,000,000 | | | 203.63 | | | 6,819,476 | | | 277.73 |
(1) | Based on the closing price of a share of Heartland common stock as of October 22, 2020 of $34.98, a stock exchange ratio of 207.0, and 24,553.98 shares of AIM common stock outstanding. |
(2) | Assumes that the aggregate holdback amount is $5.0 million pursuant to the amended and restated merger agreement, which amount may increase or decrease as a result of the Reagor-Dykes litigation and the net income earned by AIM from December 1, 2020 to the closing date, if any. |
| | As of and for the Six Months Ended June 30, 2020 | | | As of and for the Year Ended December 31, 2019 | |||||||||||||||||||
| | Heartland | | | AIM | | | Pro Forma Combined | | | Equivalent Pro Forma(1)(2) | | | Heartland | | | AIM | | | Proforma Combined | | | Equivalent Pro Forma(1)(2) | |
Net income per share | | | | | | | | | | | | | | | | | ||||||||
Basic | | | $1.36 | | | $639.66 | | | $1.57 | | | $324.99 | | | $4.14 | | | $846.83 | | | $4.14 | | | $856.98 |
Diluted | | | $1.36 | | | $621.98 | | | $1.56 | | | $322.92 | | | $4.14 | | | $819.30 | | | $4.11 | | | $850.77 |
Dividends per common share | | | $0.40 | | | $—(1) | | | $0.40 | | | $82.80 | | | $0.68 | | | $—(1) | | | $0.68 | | | $140.76 |
Book value per common share(2) | | | $44.42 | | | $7,440.25 | | | $43.39 | | | $8,981.73 | | | $43.00 | | | $6,472.93 | | | $41.57 | | | $8,604.99 |
Tangible book value per common share(2) | | | $31.14 | | | $6,444.32 | | | $31.14 | | | $6,445.98 | | | $29.51 | | | $5,446.80 | | | $29.12 | | | $6,027.84 |
(1) | Prior to January 1, 2018, AIM was an S corporation. Since converting to a C corporation as of such date, AIM has not paid any cash dividends on its common stock. |
(2) | The amounts under the heading “Equivalent Pro Forma” were determined by multiplying the amounts under the heading “Pro Forma Combined” by the stock exchange ratio of 207.0. |
| | Heartland Common Stock Closing Sale Price | | | AIM Common Stock Closing Sale Price(1) | | | Equivalent Price per Share of Heartland Common Stock(2) | |
October 22, 2020 | | | $34.98 | | | $— | | | $7,240.86 |
(1) | There is no active trading market for AIM common stock. |
(2) | The amounts under the heading “Equivalent Price per Share of Heartland Common Stock” were determined by multiplying the closing sales price of a share of Heartland common stock on the above date by the stock exchange ratio of 207.0, which is the number of shares of Heartland common stock that an AimBank shareholder (as a former AIM shareholder) would receive for each share of AimBank common stock in the FB&T/AimBank merger. Such amounts do not include the cash component of the merger consideration to be received by AimBank shareholders in the FB&T/AimBank merger. AimBank shareholders should obtain current market price quotations for shares of Heartland common stock prior to making any decisions with respect to approval of the AIM/AimBank merger proposal. |
| | For the Six Months Ended June 30, (Unaudited) | | | For the Years Ended December 31, | ||||||||||||||||
(Dollars in thousands, except per common share data) | | | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 |
Statement of Income Data | | | | | | | | | | | | | | | |||||||
Total interest income | | | $264,814 | | | $247,724 | | | $514,329 | | | $465,820 | | | $363,658 | | | $326,479 | | | $265,968 |
Total interest expense | | | 28,157 | | | 38,061 | | | 80,600 | | | 51,866 | | | 33,350 | | | 31,813 | | | 31,970 |
Net interest income | | | 236,657 | | | 209,663 | | | 433,729 | | | 413,954 | | | 330,308 | | | 294,666 | | | 233,998 |
Provision for credit losses | | | 48,316(1) | | | 6,553 | | | 16,657 | | | 24,013 | | | 15,563 | | | 11,694 | | | 12,697 |
Net interest income after provision for credit losses | | | 188,341 | | | 203,110 | | | 417,072 | | | 389,941 | | | 314,745 | | | 282,972 | | | 221,301 |
Noninterest income | | | 56,454 | | | 58,778 | | | 116,208 | | | 109,160 | | | 102,022 | | | 113,601 | | | 110,685 |
Noninterest expenses | | | 181,298 | | | 163,328 | | | 349,161 | | | 353,888 | | | 297,675 | | | 279,668 | | | 251,046 |
Income taxes | | | 13,326 | | | 21,894 | | | 34,990 | | | 28,215 | | | 43,820 | | | 36,556 | | | 20,898 |
Net income | | | 50,171 | | | 76,666 | | | 149,129 | | | 116,998 | | | 75,272 | | | 80,349 | | | 60,042 |
Preferred dividends and discount | | | — | | | — | | | — | | | (39) | | | (58) | | | (292) | | | (817) |
Interest expense on convertible preferred debt | | | — | | | — | | | — | | | — | | | 12 | | | 51 | | | — |
Net income available to common stockholders | | | $50,171 | | | $76,666 | | | $149,129 | | | $116,959 | | | $75,226 | | | $80,108 | | | $59,225 |
| | | | | | | | | | | | | | ||||||||
Per Common Share Data | | | | | | | | | | | | | | | |||||||
Net income-diluted | | | $1.36 | | | $2.17 | | | $4.14 | | | $3.52 | | | $2.65 | | | $3.22 | | | $2.83 |
Cash dividends | | | $0.40 | | | $0.32 | | | $0.68 | | | $0.59 | | | $0.51 | | | $0.50 | | | $0.45 |
Dividend payout ratio | | | 29.41% | | | 14.75% | | | 16.43% | | | 16.76% | | | 19.25% | | | 15.53% | | | 15.90% |
Book value per common share (GAAP) | | | $44.42 | | | $41.48 | | | $43.00 | | | $38.44 | | | $33.07 | | | $28.31 | | | $25.92 |
Tangible book value per common share (non-GAAP)(2) | | | $31.14 | | | $28.40 | | | $29.51 | | | $25.70 | | | $23.99 | | | $22.55 | | | $20.57 |
Weighted average shares outstanding-diluted | | | 36,919,555 | | | 35,295,407 | | | 36,061,908 | | | 33,213,148 | | | 28,425,652 | | | 24,873,430 | | | 20,929,385 |
(1) | On January 1, 2020, Heartland adopted ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), commonly referred to as “CECL.” The calculation of the allowance for credit loss under CECL is an expected-loss model that includes expected credit losses over the life of the loan portfolio (including anticipated losses due to deteriorating economic conditions caused by the COVID-19 pandemic). Heartland recorded a provision for credit losses of $21.5 million and $26.8 million during the first quarter and second quarter of 2020, respectively, primarily as a result of the economic dislocation caused by the COVID-19 pandemic. |
(2) | Tangible book value per common share is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net, divided by common shares outstanding, net of treasury shares. This amount is not a financial measure determined in accordance with United States generally accepted accounting principles (“GAAP”) but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of Heartland. This measure should not be considered a substitute for operating results determined in accordance with GAAP. See the table titled “Reconciliation of Tangible Book Value Per Common Share (non-GAAP)” in of this proxy statement/prospectus. |
| | As of and for the Six Months Ended June 30, (Unaudited) | | | As of and for the Years Ended December 31, | ||||||||||||||||
(Dollars in thousands) | | | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 |
Balance Sheet Data | | | | | | | | | | | | | | | |||||||
Investments | | | $4,252,832 | | | $2,681,419 | | | $3,435,441 | | | $2,715,388 | | | $2,492,866 | | | $2,131,086 | | | $1,878,994 |
Loans held for sale | | | 54,382 | | | 34,575 | | | 26,748 | | | 119,801 | | | 44,560 | | | 61,261 | | | 74,783 |
Total loans receivable | | | 9,246,830 | | | 7,853,051 | | | 8,367,917 | | | 7,407,697 | | | 6,391,464 | | | 5,351,719 | | | 5,001,486 |
Allowance for credit losses | | | 119,937 | | | 63,850 | | | 70,395 | | | 61,963 | | | 55,686 | | | 54,324 | | | 48,685 |
Total assets | | | 15,026,153 | | | 12,160,290 | | | 13,209,597 | | | 11,408,006 | | | 9,810,739 | | | 8,247,079 | | | 7,694,754 |
Total deposits(1) | | | 12,708,699 | | | 10,108,557 | | | 11,044,331 | | | 9,396,429 | | | 8,146,909 | | | 6,847,411 | | | 6,405,823 |
Long-term obligations | | | 306,459 | | | 282,863 | | | 275,773 | | | 274,905 | | | 285,011 | | | 288,534 | | | 263,214 |
Preferred equity | | | 110,705 | | | — | | | — | | | — | | | 938 | | | 1,357 | | | 81,698 |
Common stockholders' equity | | | 1,636,672 | | | 1,521,787 | | | 1,578,137 | | | 1,325,175 | | | 990,519 | | | 739,559 | | | 581,475 |
Earnings Performance Data | | | | | | | | | | | | | | | |||||||
Return on average total assets | | | 0.73% | | | 1.35% | | | 1.24% | | | 1.09% | | | 0.83% | | | 0.98% | | | 0.88% |
Return on average common stockholders' equity | | | 6.32% | | | 11.13% | | | 10.12% | | | 9.93% | | | 8.63% | | | 11.80% | | | 11.92% |
Annualized net interest margin (GAAP) | | | 3.81% | | | 4.09% | | | 4.00% | | | 4.26% | | | 4.04% | | | 3.95% | | | 3.80% |
Annualized net interest margin, fully tax-equivalent (non-GAAP)(2) | | | 3.85% | | | 4.14% | | | 4.04% | | | 4.32% | | | 4.22% | | | 4.13% | | | 3.97% |
Asset Quality Ratios | | | | | | | | | | | | | | | |||||||
Nonperforming assets to total assets | | | 0.66% | | | 0.71% | | | 0.66% | | | 0.69% | | | 0.76% | | | 0.91% | | | 0.67% |
Nonperforming loans to total loans | | | 1.01% | | | 1.02% | | | 0.96% | | | 0.98% | | | 0.99% | | | 1.20% | | | 0.79% |
Net loan charge-offs to average loans | | | 0.17% | | | 0.12% | | | 0.11% | | | 0.25% | | | 0.24% | | | 0.11% | | | 0.12% |
Allowance for credit losses to total loans | | | 1.30% | | | 0.81% | | | 0.84% | | | 0.84% | | | 0.87% | | | 1.02% | | | 0.97% |
Allowance for credit losses to nonperforming credits | | | 129.01% | | | 79.91% | | | 87.28% | | | 85.27% | | | 87.82% | | | 84.37% | | | 122.77% |
Consolidated Capital Ratios | | | | | | | | | | | | | | | |||||||
Average equity to average assets | | | 11.62% | | | 12.10% | | | 12.26% | | | 10.94% | | | 9.69% | | | 8.53% | | | 8.55% |
Average common equity to average assets | | | 11.60% | | | 12.10% | | | 12.26% | | | 10.93% | | | 9.68% | | | 8.31% | | | 7.35% |
Total capital to risk-weighted assets | | | 15.16% | | | 14.76% | | | 13.75% | | | 13.72% | | | 13.45% | | | 14.01% | | | 13.74% |
Tier 1 capital to risk-weighted assets | | | 13.34% | | | 13.24% | | | 12.31% | | | 12.16% | | | 11.70% | | | 11.93% | | | 11.56% |
Common equity tier 1 to risk-weighted assets | | | 10.87% | | | 11.61% | | | 10.88% | | | 10.66% | | | 10.07% | | | 10.09% | | | 8.23% |
Tier 1 leverage | | | 9.95% | | | 10.66% | | | 10.10% | | | 9.73% | | | 9.20% | | | 9.28% | | | 9.58% |
(1) | Excludes deposits held for sale. |
(2) | Computed on a tax-equivalent basis using an effective tax rate of 21% for the six months ended June 30, 2020, 21% for the years ended December 31, 2019 and December 31, 2018 and 35% for all years ended on or prior to December 31, 2017. Annualized net interest margin, fully tax-equivalent, is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management of Heartland believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP. See the table titled “Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)” in this proxy statement/prospectus. |
Reconciliation of Tangible Book Value Per Common Share (non-GAAP) (Dollars in thousands, except per share data) | | | As of and for the Six Months Ended June 30, (Unaudited) | | | As of and for the Years Ended December 31, | |||||||||||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
Common stockholders’ equity (GAAP) | | | $1,636,672 | | | $1,521,787 | | | $1,578,137 | | | $1,325,175 | | | $990,519 | | | $739,559 | | | $581,475 |
Less goodwill | | | 446,345 | | | 427,097 | | | 446,345 | | | 391,668 | | | 236,615 | | | 127,699 | | | 97,852 |
Less core deposit intangibles and customer relationship intangibles, net | | | 43,011 | | | 52,718 | | | 48,688 | | | 47,479 | | | 35,203 | | | 22,775 | | | 22,020 |
Tangible common stockholders' equity (non-GAAP) | | | $1,147,316 | | | $1,041,972 | | | $1,083,104 | | | $886,028 | | | $718,701 | | | $589,085 | | | $461,603 |
Common shares outstanding | | | 36,844,744 | | | 36,690,061 | | | 36,704,278 | | | 34,477,499 | | | 29,953,356 | | | 26,119,929 | | | 22,435,693 |
Common stockholders' equity (book value) per common share (GAAP) | | | $44.42 | | | $41.48 | | | $43.00 | | | $38.44 | | | $33.07 | | | $28.31 | | | $25.92 |
Tangible book value per common share (non-GAAP) | | | $31.14 | | | $28.40 | | | $29.51 | | | $25.70 | | | $23.99 | | | $22.55 | | | $20.57 |
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) (Dollars in thousands) | | | As of and for the Six Months Ended June 30, (Unaudited) | | | As of and for the Years Ended December 31, | |||||||||||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
Net interest income (GAAP) | | | $236,657 | | | $209,663 | | | $433,729 | | | $413,954 | | | $330,308 | | | $294,666 | | | $233,998 |
Plus tax-equivalent adjustment(1) | | | 2,547 | | | 2,680 | | | 4,929 | | | 6,228 | | | 15,139 | | | 12,919 | | | 10,216 |
Net interest income, fully tax-equivalent (non-GAAP) | | | $239,204 | | | $212,343 | | | $438,658 | | | $420,182 | | | $345,447 | | | $307,585 | | | $244,214 |
Average earning assets | | | $12,497,307 | | | $10,342,229 | | | $10,845,940 | | | $9,718,106 | | | $8,181,914 | | | $7,455,217 | | | $6,152,090 |
Net interest margin (GAAP) | | | 3.81% | | | 4.09% | | | 4.00% | | | 4.26% | | | 4.04% | | | 3.95% | | | 3.80% |
Net interest margin, fully tax-equivalent (non-GAAP) | | | 3.85% | | | 4.14% | | | 4.04% | | | 4.32% | | | 4.22% | | | 4.13% | | | 3.97% |
(1) | Computed on a tax-equivalent basis using an effective tax rate of 21% for the six months ending June 30, 2020, 21% for the years ended December 31, 2019 and December 31, 2018 and 35% for all years ended on or prior to December 31, 2017. |
As of and for the Nine Months Ended September 30, 2017 | As of and for the Year Ended December 31, 2016 | |||||||||||||||||||||||||||||||
Heartland | Signature | Pro Forma Combined | Equivalent Pro Forma | Heartland | Signature | Pro Forma Combined | Equivalent Pro Forma | |||||||||||||||||||||||||
Net income per share | ||||||||||||||||||||||||||||||||
Basic | $ | 2.23 | $ | 0.28 | $ | 2.31 | $ | 0.14 | $ | 3.26 | $ | 0.36 | $ | 3.35 | $ | 0.20 | ||||||||||||||||
Diluted | $ | 2.21 | $ | 0.26 | $ | 2.28 | $ | 0.14 | $ | 3.22 | $ | 0.33 | $ | 3.30 | $ | 0.20 | ||||||||||||||||
Dividends per common share | $ | 0.33 | $ | 0.11 | $ | 0.38 | $ | 0.02 | $ | 0.50 | $ | 0.17 | $ | 0.59 | $ | 0.04 | ||||||||||||||||
Book value per common share | $ | 32.75 | $ | 1.92 | $ | 32.71 | $ | 2.00 | $ | 28.31 | $ | 1.71 | $ | 28.31 | $ | 1.73 |
Closing Sale Price | ||||||
Heartland Common Stock | Signature Common Stock | Equivalent Price per Share of Heartland Common Stock | ||||
November 10, 2017 | $47.30 | — (1) | $2.89 | |||
January 11, 2018 | $54.55 | — (1) | $3.33 |
Calendar Quarter | High | Low | Dividends | |||||||||
2016 | ||||||||||||
First | $ | 32.44 | $ | 25.95 | $ | 0.10 | ||||||
Second | 35.96 | 29.58 | 0.10 | |||||||||
Third | 37.90 | 33.50 | 0.10 | |||||||||
Fourth | 49.15 | 35.30 | 0.20 | |||||||||
2017 | ||||||||||||
First | $ | 51.70 | $ | 44.55 | $ | 0.11 | ||||||
Second | 52.65 | 44.15 | 0.11 | |||||||||
Third | 50.10 | 42.10 | 0.11 | |||||||||
Fourth | 56.40 | 46.50 | 0.18 | |||||||||
2018 | ||||||||||||
First (Through January 11, 2018) | $ | 54.80 | $ | 51.85 | $ | — |
Calendar Quarter | Dividends(1) | |||
2016 | ||||
First | $ | 0.04 | ||
Second | 0.04 | |||
Third | 0.05 | |||
Fourth | 0.03 | |||
2017 | ||||
First | $ | 0.04 | ||
Second | 0.03 | |||
Third | 0.04 | |||
Fourth | 0.06 | |||
2018 | ||||
First (Through January 11, 2018) | — |
As of and for the Nine Months Ended September 30, (Unaudited) | As of and for the Years Ended December 31, | ||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | 2017 | 2016 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Statement of Income Data | |||||||||||||||||||||||||||
Interest income | $ | 261,590 | $ | 243,702 | $ | 326,479 | $ | 265,968 | $ | 237,042 | $ | 199,511 | $ | 189,338 | |||||||||||||
Interest expense | 24,138 | 24,196 | 31,813 | 31,970 | 33,969 | 35,683 | 39,182 | ||||||||||||||||||||
Net interest income | 237,452 | 219,506 | 294,666 | 233,998 | 203,073 | 163,828 | 150,156 | ||||||||||||||||||||
Provision for loan losses | 10,235 | 9,513 | 11,694 | 12,697 | 14,501 | 9,697 | 8,202 | ||||||||||||||||||||
Net interest income after provision for loan losses | 227,217 | 209,993 | 282,972 | 221,301 | 188,572 | 154,131 | 141,954 | ||||||||||||||||||||
Noninterest income | 76,494 | 89,146 | 113,601 | 110,685 | 82,224 | 89,618 | 108,662 | ||||||||||||||||||||
Noninterest expenses | 219,797 | 209,756 | 279,668 | 251,046 | 215,800 | 196,561 | 183,381 | ||||||||||||||||||||
Income taxes | 22,314 | 28,196 | 36,556 | 20,898 | 13,096 | 10,335 | 17,384 | ||||||||||||||||||||
Net income | 61,600 | 61,187 | 80,349 | 60,042 | 41,900 | 36,853 | 49,851 | ||||||||||||||||||||
Net income available to noncontrolling interest, net of tax | — | — | — | — | — | (64 | ) | (59 | ) | ||||||||||||||||||
Net income attributable to Heartland | 61,600 | 61,187 | 80,349 | 60,042 | 41,900 | 36,789 | 49,792 | ||||||||||||||||||||
Preferred dividends and discount | (45 | ) | (273 | ) | (292 | ) | (817 | ) | (817 | ) | (1,093 | ) | (3,400 | ) | |||||||||||||
Interest expense on convertible debt | 12 | 48 | 51 | — | — | — | — | ||||||||||||||||||||
Net income available to common stockholders | $ | 61,567 | $ | 60,962 | $ | 80,108 | $ | 59,225 | $ | 41,083 | $ | 35,696 | $ | 46,392 | |||||||||||||
Per Common Share Data | |||||||||||||||||||||||||||
Net income-diluted | $ | 2.21 | $ | 2.48 | $ | 3.22 | $ | 2.83 | $ | 2.19 | $ | 2.04 | $ | 2.77 | |||||||||||||
Cash dividends | $ | 0.33 | $ | 0.30 | $ | 0.50 | $ | 0.45 | $ | 0.40 | $ | 0.40 | $ | 0.50 | |||||||||||||
Dividend payout ratio | 14.93 | % | 12.10 | % | 15.53 | % | 15.90 | % | 18.26 | % | 19.61 | % | 18.05 | % | |||||||||||||
Common stockholders’ equity (book value) per share (GAAP) | $ | 32.75 | $ | 28.48 | $ | 28.31 | $ | 25.92 | $ | 22.40 | $ | 19.44 | $ | 19.02 | |||||||||||||
Tangible book value per common share (non-GAAP)(1) | $ | 23.61 | $ | 22.34 | $ | 22.55 | $ | 20.57 | $ | 19.99 | $ | 16.90 | $ | 17.03 | |||||||||||||
Weighted average shares outstanding- diluted | 27,833,924 | 24,580,897 | 24,873,430 | 20,929,385 | 18,741,921 | 17,460,066 | 16,768,602 |
As of and for the Nine Months Ended September 30, (Unaudited) | As of and for the Years Ended December 31, | ||||||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Balance Sheet Data | |||||||||||||||||||||||||||
Investments | $ | 2,372,916 | $ | 1,943,080 | $ | 2,131,086 | $ | 1,878,994 | $ | 1,706,953 | $ | 1,895,044 | $ | 1,561,957 | |||||||||||||
Loans held for sale | 35,795 | 78,317 | 61,261 | 74,783 | 70,514 | 46,665 | 96,165 | ||||||||||||||||||||
Total loans receivable(1) | 6,373,415 | 5,438,715 | 5,351,719 | 5,001,486 | 3,878,003 | 3,502,701 | 2,828,802 | ||||||||||||||||||||
Allowance for loan losses | 54,885 | 54,653 | 54,324 | 48,685 | 41,449 | 41,685 | 38,715 | ||||||||||||||||||||
Total assets | 9,755,627 | 8,202,215 | 8,247,079 | 7,694,754 | 6,051,812 | 5,923,716 | 4,990,553 | ||||||||||||||||||||
Total deposits | 8,231,884 | 6,912,693 | 6,847,411 | 6,405,823 | 4,768,022 | 4,666,499 | 3,845,660 | ||||||||||||||||||||
Long‑term obligations | 301,473 | 294,493 | 288,534 | 263,214 | 395,705 | 350,109 | 389,025 | ||||||||||||||||||||
Preferred equity | 938 | 1,357 | 1,357 | 81,698 | 81,698 | 81,698 | 81,698 | ||||||||||||||||||||
Common stockholders’ equity | 980,746 | 703,031 | 739,559 | 581,475 | 414,619 | 357,762 | 320,107 | ||||||||||||||||||||
Earnings Performance Data | |||||||||||||||||||||||||||
Return on average total assets | 0.94 | % | 1.00 | % | 0.98 | % | 0.88 | % | 0.70 | % | 0.70 | % | 1.04 | % | |||||||||||||
Return on average common stockholders' equity | 9.88 | % | 12.28 | % | 11.80 | % | 11.92 | % | 10.62 | % | 10.87 | % | 15.78 | % | |||||||||||||
Annualized net interest margin (GAAP) | 4.00 | % | 3.98 | % | 3.95 | % | 3.80 | % | 3.77 | % | 3.58 | % | 3.79 | % | |||||||||||||
Annualized net interest margin, fully tax- equivalent (non-GAAP)(2) | 4.19 | % | 4.15 | % | 4.13 | % | 3.97 | % | 3.96 | % | 3.78 | % | 3.98 | % | |||||||||||||
Asset Quality Ratios | |||||||||||||||||||||||||||
Nonperforming assets to total assets | 0.82 | % | 0.85 | % | 0.91 | % | 0.67 | % | 0.74 | % | 1.23 | % | 1.59 | % | |||||||||||||
Nonperforming loans to total loans | 1.03 | % | 1.06 | % | 1.20 | % | 0.79 | % | 0.65 | % | 1.21 | % | 1.53 | % | |||||||||||||
Net loan charge-offs to average loans | 0.23 | % | 0.09 | % | 0.11 | % | 0.12 | % | 0.39 | % | 0.22 | % | 0.23 | % | |||||||||||||
Allowance for loan losses to total loans | 0.86 | % | 1.00 | % | 1.02 | % | 0.97 | % | 1.07 | % | 1.19 | % | 1.37 | % | |||||||||||||
Allowance for loan losses to nonperforming loans | 83.41 | % | 94.39 | % | 84.37 | % | 122.77 | % | 165.33 | % | 98.27 | % | 89.71 | % | |||||||||||||
Consolidated Capital Ratios | |||||||||||||||||||||||||||
Average equity to average assets | 9.54 | % | 8.45 | % | 8.53 | % | 8.55 | % | 8.00 | % | 8.09 | % | 8.47 | % | |||||||||||||
Average common equity to average assets | 9.53 | % | 8.15 | % | 8.31 | % | 7.35 | % | 6.60 | % | 6.46 | % | 6.58 | % | |||||||||||||
Total capital to risk-adjusted assets | 13.58 | % | 12.85 | % | 14.01 | % | 13.74 | % | 15.73 | % | 14.69 | % | 15.35 | % | |||||||||||||
Tier 1 capital | 11.84 | % | 10.79 | % | 11.93 | % | 11.56 | % | 12.95 | % | 13.19 | % | 13.36 | % | |||||||||||||
Common Equity Tier 1(3) | 10.01 | % | 8.97 | % | 10.09 | % | 8.23 | % | — | — | — | ||||||||||||||||
Tier 1 leverage | 9.48 | % | 8.59 | % | 9.28 | % | 9.58 | % | 9.75 | % | 9.67 | % | 9.84 | % |
As of and for the Nine Months Ended September 30, (Unaudited) | As of and for the Years Ended December 31, | ||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | 2017 | 2016 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Reconciliation of Tangible Book Value Per Common Share (non-GAAP) | |||||||||||||||||||||||||||
Common stockholders’ equity (GAAP) | $ | 980,746 | $ | 703,031 | $ | 739,559 | $ | 581,475 | $ | 414,619 | $ | 357,762 | $ | 320,107 | |||||||||||||
Less goodwill | 236,615 | 127,699 | 127,699 | 97,852 | 35,583 | 35,583 | 30,627 | ||||||||||||||||||||
Less core deposit intangibles and customer relationship intangibles, net | 37,028 | 23,922 | 22,775 | 22,019 | 8,947 | 11,171 | 2,833 | ||||||||||||||||||||
Tangible common stockholders’ equity (non-GAAP) | $ | 707,103 | $ | 551,410 | $ | 589,085 | $ | 461,604 | $ | 370,089 | $ | 311,008 | $ | 286,647 | |||||||||||||
Common shares outstanding | 29,946,069 | 24,681,380 | 26,119,929 | 22,435,693 | 18,511,125 | 18,399,156 | 16,827,835 | ||||||||||||||||||||
Common stockholders’ equity (book value) per share (GAAP) | $ | 32.75 | $ | 28.48 | $ | 28.31 | $ | 25.92 | $ | 22.40 | $ | 19.44 | $ | 19.02 | |||||||||||||
Tangible book value per common share (non-GAAP) | $ | 23.61 | $ | 22.34 | $ | 22.55 | $ | 20.57 | $ | 19.99 | $ | 16.90 | $ | 17.03 |
As of and for the Nine Months Ended September 30, (Unaudited) | As of and for the Years Ended December 31, | ||||||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | |||||||||||||||||||||||||||
Net interest income (GAAP) | $ | 237,452 | $ | 219,506 | $ | 294,666 | $ | 233,998 | $ | 203,073 | $ | 163,826 | $ | 150,156 | |||||||||||||
Plus tax-equivalent adjustment(1) | 11,581 | 9,408 | 12,919 | 10,216 | 10,298 | 9,467 | 7,398 | ||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP) | 249,033 | 228,914 | $ | 307,585 | $ | 244,214 | $ | 213,371 | $ | 173,293 | $ | 157,554 | |||||||||||||||
Average earning assets | $ | 7,942,810 | $ | 7,368,856 | $ | 7,455,217 | $ | 6,152,090 | $ | 5,384,275 | $ | 4,582,296 | $ | 3,962,268 | |||||||||||||
Net interest margin (GAAP) | 4.00 | % | 3.98 | % | 3.95 | % | 3.80 | % | 3.77 | % | 3.58 | % | 3.79 | % | |||||||||||||
Net interest margin, fully tax-equivalent (non- GAAP) | 4.19 | % | 4.15 | % | 4.13 | % | 3.97 | % | 3.96 | % | 3.78 | % | 3.98 | % |
Name of Nominee | | | Director Since | | | Age | | | Title |
Buford A. Duff | | | 2008 | | | 86 | | | Director and Vice President |
Jeremy Ferrell | | | 2017 | | | 46 | | | Director, Secretary and Treasurer |
Scott L. Wade | | | 2003 | | | 56 | | | Chairman of the Board and Chief Executive Officer |
Kenneth D. Willmon | | | 2003 | | | 69 | | | Director and President |
Selected Transactions Group: | |||
Buyer (State) | | | Target (State) |
Virginia National Bankshares Corporation (VA) | | | Fauquier Bankshares, Inc. (VA) |
First Mid Bancshares, Inc. (IL) | | | LINCO Bancshares, Inc. (MO) |
Hanover Bancorp, Inc. (NY) | | | Savoy Bank (NY) |
Enterprise Financial Services Corp. (MO) | | | Seacoast Commerce Banc Holdings (CA) |
Provident Financial Services, Inc. | | | SB One Bancorp (NJ) |
Implied Value for AIM Based On: | | | Price-to-Tangible Common Book Value Multiple | | | Price-to-LTM Earnings Multiple | | | Premium-to-Core Deposits Multiple |
Total Deal Value | | | 132% | | | 10.0x | | | 3.8% |
Selected Transactions Group: | | | | | | | |||
Median | | | 121% | | | 10.5x | | | 3.3% |
Minimum | | | 87% | | | 9.5x | | | 1.3% |
Maximum | | | 151% | | | 21.0x | | | 16.5% |
| | Tangible Equity/ Tangible Assets | | | Core Deposits | | | LTM ROAA(1) | | | LTM ROAE(2) | | | Efficiency Ratio | | | NPAs/ Assets(3) | | | LLR/ NPLs(4) | |
AIM | | | 9.07% | | | 89.0% | | | 1.30% | | | 14.30% | | | 56.3% | | | 0.55% | | | 185.5% |
Selected Transactions Group: | | | | | | | | | | | | | | | |||||||
Median | | | 8.61% | | | 84.4% | | | 1.14% | | | 11.33% | | | 68.2% | | | 0.89% | | | 93.1% |
(1) | Last 12 months return on average assets. Excludes one-time gain/loss on sales of securities. |
(2) | Last 12 months return on average equity. Excludes one-time gain/loss on sales of securities. |
(3) | Non-performing assets as a percent of total assets. |
(4) | Allowance for loan and lease losses as a percentage of non-performing loans. |
Implied Value for AIM Based On: | | | Price-to-Tangible Common Book Value Multiple | | | Price-to-LTM Earnings Multiple | | | Premium-to-Core Deposits Multiple |
Total Deal Value | | | 132% | | | 10.0x | | | 3.8% |
DCF Analysis – Perpetuity Model | | | | | | | |||
Midpoint | | | 145% | | | 10.9x | | | 5.2% |
DCF Analysis – Terminal P/E Multiple | | | | | | | |||
Midpoint | | | 86% | | | 6.5x | | | -1.6% |
DCF Analysis – Terminal P/TBV Multiple | | | | | | | |||
Midpoint | | | 114% | | | 8.6x | | | 1.7% |
Discount Rate | ||||||||||||
14% | 13% | 12% | ||||||||||
Present value (in thousands) | $ | 35,792 | $ | 41,096 | $ | 47,799 | ||||||
Present value (per share) | $ | 2.16 | $ | 2.49 | $ | 2.89 |
Banner Corporation | | | Independent Bank Group, Inc. |
Columbia Banking System, Inc. | | | International Bancshares Corporation |
Community Bank System, Inc. | | | Northwest Bancshares, Inc. |
First BanCorp. | | | Renasant Corporation |
First Financial Bancorp. | | | Sandy Spring Bancorp, Inc. |
First Interstate BancSystem, Inc. | | | TowneBank |
First Merchants Corporation | | | Trustmark Corporation |
Home BancShares, Inc. | | | United Community Banks, Inc. |
Hope Bancorp, Inc. | | | WesBanco, Inc. |
Independent Bank Corp. | | | WSFS Financial Corporation |
Price/ Book | Price/ Tangible Book | Price/ 8% Tangible Book | Price/ LTM* Earnings | Price/ Assets | Price/ Deposits | Premium/ Deposits | ||||||||||
Maximum | 2.32x | 2.65x | 2.71x | 28.90x | 26.10 | % | 33.80 | % | 20.50 | % | ||||||
Minimum | 0.89x | 0.89x | 0.88x | 9.00x | 7.50 | % | 9.20 | % | (1.20 | )% | ||||||
Median | 1.48x | 1.48x | 1.73x | 18.20x | 16.50 | % | 20.30 | % | 6.60 | % | ||||||
Signature (net offer) | 1.93x | 2.07x | 1.92x | 16.70x | 14.20 | % | 16.30 | % | 8.50 | % |
Price/ Book | Price/ Tangible Book | Price/ 8% Tangible Book | Price/ LTM* Earnings | Price/ Assets | Price/ Deposits | Premium/ Deposits | ||||||||||
Maximum | 2.41x | 2.65x | 2.71x | 32.60x | 26.10 | % | 33.80 | % | 20.60 | % | ||||||
Minimum | 0.56x | 0.90x | 0.86x | 9.00x | 9.80 | % | 12.50 | % | (1.40 | )% | ||||||
Median | 1.67x | 1.72x | 1.79x | 18.90x | 16.20 | % | 20.10 | % | 7.40 | % | ||||||
Signature (net offer) | 1.93x | 2.07x | 1.92x | 16.70x | 14.20 | % | 16.30 | % | 8.50 | % |
| | Market Cap ($M) | | | Price/ Tangible Book Value | | | Price/ LTM EPS | | | Price/ 2020E EPS | | | Dividend Yield | | | YTD/Price Change | | | One Year Total Return | |
Heartland | | | $1,236 | | | 108% | | | 10.1x | | | 10.1x | | | 2.38% | | | -32.5% | | | -23.4% |
Comparable Companies: | | | | | | | | | | | | | | | |||||||
Median | | | $1,527 | | | 115% | | | 12.6x | | | 13.0x | | | 3.91% | | | -34.1% | | | -28.3% |
Dollars in thousands, except per share data | Assets | % | Loans | % | Deposits | % | ||||||||||||||
Heartland | $ | 9,755,627 | 96 | % | $ | 6,354,325 | 95 | % | $ | 8,231,884 | 96 | % | ||||||||
Signature | $ | 390,292 | 4 | % | $ | 326,063 | 5 | % | $ | 339,129 | 4 | % | ||||||||
Combined Company | $ | 10,145,919 | 100 | % | $ | 6,680,388 | 100 | % | $ | 8,571,013 | 100 | % | ||||||||
Annualized Net Interest Income | % | Annualized Non-Interest Income | % | Annualized Non-Interest Expenses | % | |||||||||||||||
Heartland | $ | 316,603 | 95 | % | $ | 94,588 | 98 | % | $ | 289,329 | 96 | % | ||||||||
Signature | $ | 15,499 | 5 | % | $ | 1,795 | 2 | % | $ | 10,988 | 4 | % | ||||||||
Combined Company | $ | 332,102 | 100 | % | $ | 96,383 | 100 | % | $ | 300,317 | 100 | % | ||||||||
Annualized Earnings | % | Shares | % | Common Tangible Equity | % | |||||||||||||||
Heartland | $ | 82,133 | 96 | % | 29,946,069 | 97 | % | $ | 707,103 | 96 | % | |||||||||
Signature | $ | 3,318 | 4 | % | * | 913,214 | 3 | % | ** | $ | 26,737 | 4 | % | |||||||
Combined Company | $ | 85,451 | 100 | % | 30,859,283 | 100 | % | $ | 733,840 | 100 | % | |||||||||
*Signature earnings are tax effected at 40.5% | ||||||||||||||||||||
**Deal equates to 82.3% stock with the remainder in cash. A 100% stock deal would be 3.6% | ||||||||||||||||||||
Note: Financials as of September 30, 2017, estimated shares to Signature based on 20-day average Heartland stock price as of November 1, 2017 |
Heartland | Peer Group Median | ||||
Return on Average Assets | 0.96 | % | 1.11 | % | |
Return on Average Equity | 10.70 | % | 9.68 | % | |
Net Interest Margin | 4.11 | % | 3.71 | % | |
Efficiency Ratio | 67.20 | % | 58.90 | % | |
Loan Loss Reserves to Total Loans | 1.01 | % | 0.93 | % | |
Ratio of Non-performing Assets to Total Assets | 0.80 | % | 0.65 | % | |
Tangible Equity to Tangible Assets | 7.98 | % | 9.13 | % | |
Risk Based Capital Ratio | 14.80 | % | 13.40 | % |
Heartland | Peer Group Median | ||||
Market Price as a Multiple of Stated Book Value | 1.50x | 1.63x | |||
Market Price as a Multiple of Stated Tangible Book Value | 2.09x | 2.19x | |||
Price as a Multiple of LTM Earnings | 16.70x | 19.30x | |||
Market Price as a Percent of Assets | 15.10 | % | 18.50 | % | |
Dividend Yield | 0.93 | % | 1.97 | % | |
Dividend Payout | 17.10 | % | 35.30 | % |
Capital Bancorp, Inc. | | | Meridian Corporation |
Central Valley Community Bancorp | | | MetroCity Bankshares, Inc. |
ChoiceOne Financial Services, Inc. | | | MVB Financial Corp. |
Citizens & Northern Corporation | | | Northrim BanCorp, Inc. |
Coastal Financial Corporation | | | Parke Bancorp, Inc. |
Farmers & Merchants Bancorp, Inc. | | | Premier Financial Bancorp, Inc. |
First Bancorp, Inc. | | | Red River Bancshares, Inc. |
First Choice Bancorp | | | Shore Bancshares, Inc. |
First Western Financial, Inc. | | | Timberland Bancorp, Inc. |
FS Bancorp, Inc. | | | Unity Bancorp, Inc. |
LCNB Corp. | | | Waterstone Financial, Inc. |
Macataway Bank Corporation | | | Meridian Corporation |
| | Market Cap ($M) | | | Price/ Tangible Book Value | | | Price/ LTM EPS | | | Price/ 2020E EPS | | | Dividend Yield | | | YTD/Price Change | | | One Year Total Return | |
Deal Value | | | $219 | | | 132% | | | 10.0x | | | N/A | | | N/A | | | N/A | | | N/A |
Comparable Companies: | | | | | | | | | | | | | | | |||||||
Median | | | $183 | | | 102% | | | 8.5x | | | 10.2x | | | 3.69% | | | -29.8% | | | -17.1% |
| | Heartland as a Percentage of Total | | | AIM as a Percentage of Total | |
Balance Sheet: | | | | | ||
Assets | | | 89% | | | 11% |
Gross Loans | | | 89% | | | 11% |
Deposits | | | 88% | | | 12% |
Tangible Common Equity | | | 88% | | | 12% |
| | | | |||
Net Income: | | | | | ||
LTM Net Income | | | 82% | | | 18% |
LTM Core Net Income(1) | | | 85% | | | 15% |
2020 Estimated Net Income | | | 80% | | | 20% |
2021 Estimated Net Income | | | 84% | | | 16% |
| | | | |||
Pro Forma Ownership: | | | | | ||
Shares based on Theoretical 100% Stock | | | 85% | | | 15% |
Shares based on Amended and Restated Merger Agreement | | | 88% | | | 12% |
(1) | Excludes gain on the sale of securities. |
| | Projected Years Ending | |||||||
(dollars in millions) | | | December 31, 2020 | | | December 31, 2021 | | | December 31, 2022 |
Income Statement Highlights | | | | | | | |||
Net Interest Income | | | $72,485 | | | $68,714 | | | $69,050 |
Provision for Loan Losses | | | 7,515 | | | 3,500 | | | 2,000 |
Total Noninterest Income | | | 16,963 | | | 9,117 | | | 9,386 |
Total Noninterest Expense | | | 46,760 | | | 46,499 | | | 47,869 |
Net Income before Taxes | | | 35,173 | | | 27,832 | | | 28,568 |
| | Projected Years Ending | |||||||
(dollars in millions) | | | December 31, 2020 | | | December 31, 2021 | | | December 31, 2022 |
Tax Provision | | | 7,318 | | | 5,845 | | | 5,999 |
Effective Tax Rate | | | 21.0% | | | 21.0% | | | 21.0% |
Net Income | | | $27,855 | | | $21,988 | | | 22,569 |
Preferred Stock Dividend | | | — | | | — | | | — |
Net Income Available for to Holders of AIM Common Stock | | | $27,855 | | | $21,988 | | |
• |
Adjusted Tangible Common Equity | | | Total Stock Consideration(1) | | | Stock Consideration Per Share | | | Total Cash Consideration | | | Cash Consideration Per Share | | | Total Merger Consideration | | | Merger Consideration Per Share | | | Aggregate Holdback Amount(2) | | | Per Share Holdback Amount | | | Cash Consideration Net of Aggregate Holdback Amount | | | Cash Consideration Per Share Net of Per Share Holdback Amount |
$180,000,000 | | | $177,791,932 | | | $7,240.86 | | | $50,819,476 | | | $2,069.70 | | | $228,611,408 | | | $9,310.56 | | | $5,000,000 | | | $203.63 | | | $45,819,476 | | | $1,866.07 |
175,000,000 | | | 177,791,932 | | | 7,240.86 | | | 45,819,476 | | | 1,866.07 | | | 223,611,408 | | | 9,106.93 | | | 5,000,000 | | | 203.63 | | | 40,819,476 | | | 1,662.44 |
170,000,000 | | | 177,791,932 | | | 7,240.86 | | | 40,819,476 | | | 1,662.44 | | | 218,611,408 | | | 8,903.30 | | | 5,000,000 | | | 203.63 | | | 35,819,476 | | | 1,458.81 |
165,000,000 | | | 177,791,932 | | | 7,240.86 | | | 35,819,476 | | | 1,458.81 | | | 213,611,408 | | | 8,699.67 | | | 5,000,000 | | | 203.63 | | | 30,819,476 | | | 1,255.17 |
160,000,000 | | | 177,791,932 | | | 7,240.86 | | | 30,819,476 | | | 1,255.17 | | | 208,611,408 | | | 8,496.03 | | | 5,000,000 | | | 203.63 | | | 25,819,476 | | | 1,051.54 |
155,000,000 | | | 177,791,932 | | | 7,240.86 | | | 25,819,476 | | | 1,051.54 | | | 203,611,408 | | | 8,292.40 | | | 5,000,000 | | | 203.63 | | | 20,819,476 | | | 847.91 |
150,000,000 | | | 177,791,932 | | | 7,240.86 | | | 20,819,476 | | | 847.91 | | | 198,611,408 | | | 8,088.77 | | | 5,000,000 | | | 203.63 | | | 15,819,476 | | | 644.27 |
149,000,000 | | | 177,791,932 | | | 7,240.86 | | | 19,819,476 | | | 807.18 | | | 197,611,408 | | | 8,048.04 | | | 5,000,000 | | | 203.63 | | | 14,819,476 | | | 603.55 |
148,000,000 | | | 177,791,932 | | | 7,240.86 | | | 18,819,476 | | | 766.45 | | | 196,611,408 | | | 8,007.31 | | | 5,000,000 | | | 203.63 | | | 13,819,476 | | | 562.82 |
147,000,000 | | | 177,791,932 | | | 7,240.86 | | | 17,819,476 | | | 725.73 | | | 195,611,408 | | | 7,966.59 | | | 5,000,000 | | | 203.63 | | | 12,819,476 | | | 522.09 |
146,000,000 | | | 177,791,932 | | | 7,240.86 | | | 16,819,476 | | | 685.00 | | | 194,611,408 | | | 7,925.86 | | | 5,000,000 | | | 203.63 | | | 11,819,476 | | | 481.37 |
145,000,000 | | | 177,791,932 | | | 7,240.86 | | | 16,819,476 | | | 685.00 | | | 194,611,408 | | | 7,925.86 | | | 5,000,000 | | | 203.63 | | | 11,819,476 | | | 481.37 |
144,000,000 | | | 177,791,932 | | | 7,240.86 | | | 15,819,476 | | | 644.27 | | | 193,611,408 | | | 7,885.13 | | | 5,000,000 | | | 203.63 | | | 10,819,476 | | | 440.64 |
143,000,000 | | | 177,791,932 | | | 7,240.86 | | | 14,819,476 | | | 603.55 | | | 192,611,408 | | | 7,844.41 | | | 5,000,000 | | | 203.63 | | | 9,819,476 | | | 399.91 |
142,000,000 | | | 177,791,932 | | | 7,240.86 | | | 13,819,476 | | | 562.82 | | | 191,611,408 | | | 7,803.68 | | | 5,000,000 | | | 203.63 | | | 8,819,476 | | | 359.19 |
141,000,000 | | | 177,791,932 | | | 7,240.86 | | | 12,819,476 | | | 522.09 | | | 190,611,408 | | | 7,762.95 | | | 5,000,000 | | | 203.63 | | | 7,819,476 | | | 318.46 |
140,000,000 | | | 177,791,932 | | | 7,240.86 | | | 11,819,476 | | | 481.37 | | | 189,611,408 | | | 7,722.23 | | | 5,000,000 | | | 203.63 | | | 6,819,476 | | | 277.73 |
(1) | Based on the closing price of a share of Heartland common stock as of October 22, 2020 of $34.98, a stock exchange ratio of 207.0, and 24,553.98 shares of AIM common stock outstanding. |
(2) |
Adjusted Tangible Common Equity | Cash Adjustment per Share | Cash Consideration per Share | Stock Consideration per Share(1) | Total Consideration per Share | ||||||||||||
$29.350 million | $ | 0.099 | $ | 0.434 | $ | 3.328 | $ | 3.762 | ||||||||
$28.850 million | 0.099 | 0.434 | $ | 3.328 | 3.762 | |||||||||||
$28.350 million | 0.066 | 0.401 | $ | 3.328 | 3.729 | |||||||||||
$27.850 million | 0.033 | 0.368 | $ | 3.328 | 3.696 | |||||||||||
$27.350 million | — | 0.335 | $ | 3.328 | 3.663 | |||||||||||
$27.238 million | — | 0.335 | $ | 3.328 | 3.663 | |||||||||||
$27.125 million | — | 0.335 | $ | 3.328 | 3.663 | |||||||||||
$26.625 million | (0.033 | ) | 0.302 | $ | 3.328 | 3.630 | ||||||||||
$26.125 million | (0.066 | ) | 0.269 | $ | 3.328 | 3.597 | ||||||||||
$25.625 million | (0.099 | ) | 0.236 | $ | 3.328 | 3.564 | ||||||||||
$25.125 million | (0.132 | ) | 0.203 | $ | 3.328 | 3.531 |
• |
(in thousands) | | | | | | | | | Modification Types | |||
Loan Category | | | Balances of Loans Modified | | | Percent of Total Category Loans | | | Interest Only Payment | | | Principal and Interest Payments |
Commercial | | | $139,408 | | | 19.9% | | | 50.5% | | | 49.5% |
Agriculture | | | $4,228 | | | 1.5% | | | 94.9% | | | 5.1% |
Residential | | | $14,860 | | | 7.1% | | | 37.7% | | | 62.3% |
Consumer | | | $536 | | | 3.2% | | | 8.6% | | | 91.4% |
Total Modifications | | | $159,032 | | | 13.3% | | | 50.3% | | | 49.7% |
(in thousands) | | | June 30, 2020 | |||
Industry | | | Amount | | | Percent of Total Loans |
Oil and Gas – Direct | | | $98,333 | | | 8.20% |
Lodging | | | $63,855 | | | 5.32% |
Retail Properties | | | $47,631 | | | 3.97% |
Multi-Family | | | $21,665 | | | 1.81% |
Restaurants | | | $18,321 | | | 1.53% |
Nursing/Assisted Living | | | $13,714 | | | 1.14% |
Church/Daycare | | | $11,744 | | | 0.98% |
Retail Trade | | | $— | | | 0.00% |
Total | | | $275,262 | | | 22.95% |
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Shares(1) | Percent of Class(2) | ||||
Signature Bancshares, Inc. Employee Stock Ownership Plan and Trust dated March 31, 2015(3) | 3,880,585.00 | (3) | 25.66 | % | ||
R. Matthew Mithun | 965,000.00 | 6.38 | ||||
Executive officers and directors | ||||||
Kenneth D. Brooks | 2,302,115.00 | (4) | 14.68 | |||
Leif E. Syverson | 1,522,828.00 | (5) | 9.80 | |||
Daniel W. Dryer | 917,154.00 | (6) | 6.04 | |||
Eugene H. Storms | 104,600.40 | (7) | 0.69 | |||
Randy T. Morgan | 104,600.40 | (7) | 0.69 | |||
John A. Berg | 385,655.20 | (8) | 2.54 | |||
Michele L. Boeder | 130,857.00 | (9) | 0.86 | |||
Ken D. Wilmer | 81,600.00 | (10) | 0.54 | |||
Daniel J. Roberts | 320,687.40 | (11) | 2.11 | |||
All executive officers and directors as a group (nine persons) | 5,870,097.40 | (12) | 36.02 |
Name of Beneficial Owner | | | Title | | | Number of Shares Beneficially Owned | | | Percent of Class |
Greater than 5% Shareholders | | | | | | | |||
AIM Bancshares, Inc. Employee Stock Ownership Plan (with 401(k) provisions)(1) | | | N/A | | | 3,374.82 | | | 13.74% |
| | | | | | ||||
Directors and Executive Officers | | | | | | | |||
Buford Duff | | | Director and Vice President | | | 417 | | | 1.70% |
Jeremy Ferrell | | | Director, Secretary and Treasurer | | | 906.43(2) | | | 3.69% |
Scott L. Wade | | | Chairman of the Board and Chief Executive Officer | | | 1,901.90(3) | | | 7.75% |
Kenneth D. Willmon | | | Director and President | | | 892.50(4) | | | 3.73% |
| | | | | | ||||
Directors and Executive Officers, as a group (four persons) | | | N/A | | | 4,117.83 | | | 16.77% |
(1) | Each KSOP participant has the right to direct the KSOP trustees to vote the shares allocated to the participant’s account on the AIM/AimBank merger proposal. In the event that a participant does not direct the KSOP trustee on how to vote his or her allocated shares, the KSOP plan committee will determine how such shares are voted and will direct the KSOP trustee accordingly. The KSOP plan committee also has the right to direct the KSOP trustee to vote all shares held by the KSOP that are not allocated to the accounts of participants and may be deemed the beneficial owner thereof. |
(2) | Includes 800 shares held by Mr. Ferrell individually, 56.43 shares held by the KSOP and allocated to Mr. Ferrell's account, and 50 shares subject to currently exercisable options. |
(3) | Includes 1,476.48 shares held by Mr. Wade individually, 375.42 shares held by the KSOP and allocated to Mr. Wade's account, and 50 shares subject to currently exercisable options. |
(4) | Includes 516.47 shares held by Mr. Willmon individually, 60 shares held by Mr. Willmon's spouse, 276.03 shares held by the KSOP and allocated to Mr. Willmon's account, and 40 shares subject to currently exercisable options. |
Industry | | | Total Exposure(1) | | | % of Gross Exposure(1) | | | Total Exposure(1) | | | % of Gross Exposure(1) |
Lodging | | | $490,475 | | | 4.38% | | | $498,596 | | | 4.47% |
Multi-family properties | | | 474,610 | | | 4.24 | | | 436,931 | | | 3.92 |
Retail trade | | | 407,030 | | | 3.64 | | | 367,727 | | | 3.30 |
Retail properties | | | 369,782 | | | 3.31 | | | 408,506 | | | 3.66 |
Restaurants and bars | | | 255,701 | | | 2.29 | | | 247,239 | | | 2.22 |
Nursing homes/assisted living | | | 130,103 | | | 1.16 | | | 126,267 | | | 1.13 |
Oil and gas | | | 63,973 | | | 0.57 | | | 56,302 | | | 0.50 |
Childcare facilities | | | 44,968 | | | 0.40 | | | 48,455 | | | 0.43 |
Gaming | | | 34,618 | | | 0.31 | | | 34,790 | | | 0.31 |
Total | | | $2,271,260 | | | 20.30% | | | $2,224,813 | | | 19.94% |
(1) | Total loans outstanding, excluding PPP loans, and unfunded commitments. |
• | Heartland's Annual Report on Form 10-K for the year ended December 31, 2019; |
• |
• | Heartland's Current Reports on Form 8-K dated April 23, 2020; May 21, 2020; June 19, 2020; June 26, 2020; July 15, 2020; July 23, 2020; August 28, 2020; October 22, 2020; October 22, 2020; and October 22, 2020; |
• | Heartland's definitive Proxy Statement for its annual meeting of stockholders held on May 20, 2020; and |
| | AIM BANCSHARES, INC. | ||||
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| | By: | | | /s/ Scott L. Wade | |
| | | | Scott L. Wade Chairman of the Board and Chief Executive Officer | ||
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| | AIMBANK | ||||
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| | By: | | | /s/ Scott L. Wade | |
| | | | Scott L. Wade Chairman of the Board, President and Chief Executive Officer |
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| |
Definition | | | Defined |
ABFI | | | 4.1(b) |
ABFI Common Stock | | 4.3(c) | |
Actual Cash Consideration | | | 2.4 |
Affordable Care Act | | 4.26(k) | |
Agreement | | | Preamble |
AIM | | Preamble | |
AIM Annual Financial Statements | | | 4.5(a) |
AIM Board Recommendation | | | 6.2(a) |
AIM Employees | | | 4.25(j) |
AIM Financial Statements | | | 4.5(a) |
AIM IT Systems | | | 4.20(c) |
AIM Merger | | | Recitals |
AIM Merger Agreement | | | Recitals |
AIM Merger Closing Date | | | 2.2(d) |
AIM Merger Effective Date | | | 2.2(d) |
AIM Merger Effective Time | | | 2.2(d) |
AIM Preferred Stock | | | 4.3(a) |
AIM Regulatory Reports | | | 4.10 |
AIM Shareholder Meeting | | | 6.2(a) |
AimBank | | | Preamble |
AimBank Annual Financial Statements | | | 4.5(b) |
AimBank Common Stock | | | Recitals |
AimBank Financial Statements | | | 4.5(b) |
ALLL | | | 4.8 |
Bank Holding Company Act | | | 3.1(a) |
Bank | | 4.19 | |
Bank Regulatory Approvals | | 3.2(b) | |
Blue Sky Laws | | 3.2(b) | |
Bottom Threshold Amount | | 2.4 | |
Change of AIM Board Recommendation | | 6.2(a) | |
Closing | | 2.10 | |
Closing Date | | | 2.10 |
Code | | Recitals | |
D&O Insurance | | 6.7(b) | |
Dissenting Shareholder | | 2.8(a) | |
Dissenting Shares | | 2.8(a) | |
Downwardly Adjusted Cash Consideration | | | 2.4 |
Effective Date | | | 2.2(d) |
Effective Time | | | 2.2(d) |
Employment Agreements | | Recitals | |
Environmental | | 4.18(a)(i) | |
Environmental Law | | 4.18(a)(ii) | |
Exchange | | 3.2(b) |
Definition | | | Defined |
Exchange Ratio | | 2.3(a) | |
Expenses | | 8.3 | |
FB&T | | Preamble | |
FB&T Common Stock | | 3.4(b) | |
FB&T Subsidiaries | | | 3.1(b) |
FDIA | | | 3.1(b) |
FDIC | | | 3.2(b) |
Ferrell | | | Recitals |
Fractional Share Amount | | | 2.3(b) |
Hazardous Materials | | 4.18(a)(iii) | |
Heartland | | Preamble | |
Heartland 10-K Reports | | | 3.5(a) |
Heartland 10-Q Report | | | 3.5(a) |
Heartland Common Stock | | | Recitals |
Heartland | | 6.4(c) | |
Heartland Regulatory Reports | | 3.7(a) | |
Heartland Series A Preferred Stock | | 3.4(a) | |
Heartland Series B Preferred Stock | | 3.4(a) | |
Heartland Series C Preferred Stock | | 3.4(a) | |
Heartland Series D Preferred Stock | | 3.4(a) | |
Heartland Series E Preferred Stock | | | 3.4(a) |
Indemnified Party | | 6.7(a) | |
Latest AIM Balance Sheet | | | 4.5(a) |
Latest AimBank Balance Sheet | | | 4.5(b) |
Latest Balance Sheets | | | 4.5(c) |
Leased Real Property | | | 4.16(c) |
Letter of Transmittal | | | 2.7(a) |
List | | | 4.18(a)(iv) |
Material Contracts | | | 4.22(a) |
Materially Burdensome Regulatory Condition | | | 7.1(a) |
Merger | | | Recitals |
Merger Consideration | | | 2.3(a) |
NASDAQ | | | 3.2(b) |
New Mexico Offices | | | Recitals |
NMB&T | | | Recitals |
Operating Real Property | | | 4.16(c) |
Option Consideration | | | 2.9 |
OREO | | | 4.7(c) |
Owned Real Property | | | 4.16(b) |
Paying Agent | | | 2.7(a) |
Prior Bank Merger Agreement | | | Recitals |
Prior Holding Company Merger Agreement | | | Recitals |
Proxy Statement/Prospectus | | | 6.2(b) |
Real Property | | | 4.16(c) |
Registration Statement | | | 6.2(b) |
Regulatory Action | | | 4.18(a)(v) |
Related AIM Statements | | | 4.5(a) |
Related AimBank Statements | | | 4.5(b) |
Related Financial Statements | | | 4.5(c) |
Release | | | 4.18(a)(vi) |
Definition | | | Defined |
Representatives | | | 5.8(a) |
Required Consents | | 5.6 | |
Retained Earnings | | 2.4(b) | |
Retention Agreements | | Recitals | |
Securities Act | | 3.2(b) | |
Senior Executives | | | Recitals |
Shareholder Representative | | Preamble | |
Shareholder Representative Costs | | 6.16(b) | |
Shareholder Voting Agreement | | | Recitals |
Statutory Trust Termination | | 6.9 | |
Stay Bonus Letters | | Recitals | |
Stay Pay Agreements | | Recitals | |
Stephens | | 3.15 | |
Stock Consideration | | 2.3(a) | |
Surviving Corporation | | 2.1 | |
Termination Date | | 8.1(d)(i) | |
TBOC | | 2.1 | |
TDB | | 3.2(b) | |
Texas Certificate of Merger | | 2.2(d) | |
TFC | | 3.2(b) | |
Third-Party Environmental Claim | | 4.18(a)(vii) | |
Upwardly Adjusted Cash Consideration | | | 2.4 |
Wade | | Recitals |
if to Heartland or FB&T: | ||||||
| | | | |||
| | Heartland Financial USA, Inc. | ||||
| | 707 17th Street, Suite 2950 | ||||
| | Denver, Colorado 80202 | ||||
| | Attention: | | | J. Daniel Patten, Executive Vice President, Finance and Corporate | |
| | Telephone: | | | (720) 873-3780 | |
| E-mail: | | | dpatten@htlf.com | ||
| | | |
with copies to: | ||||||
| | | | |||
| | Heartland Financial USA, Inc. | ||||
| | 9800 Bren Road East | ||||
| | Suite 200 | ||||
| | Minnetonka, Minnesota 55343 | ||||
| Attention: | | | Jay L. Kim, Executive Vice President and General Counsel | ||
| Telephone: | | | (952) 562-1504 | ||
| | | | |||
and | ||||||
| | | | |||
| | Dorsey & Whitney LLP | ||||
| | 50 South Sixth Street, Suite 1500 | ||||
| | Minneapolis, Minnesota 55402 | ||||
| | Attention: | | | Jay L. Swanson | |
| | Telephone: | | | (612) 340-2600 | |
| | | | swanson.jay@dorsey.com | ||
| | | | marsalek.john@dorsey.com | ||
| | | | |||
if to AIM or AimBank: | ||||||
| | | | |||
| | AIM Bancshares, Inc. | ||||
| | 110 College Avenue | ||||
| | Levelland, Texas 79336 | ||||
| | Attention: | | | Scott L. Wade, Chairman of the Board, | |
| | Telephone: | | | (806) 897-4310 | |
| | E-mail: | | | SWade@aimbankonline.com | |
| | | | |||
with a copy to: | ||||||
| | | | |||
| | Fenimore, Kay, Harrison & Ford, LLP | ||||
| | 812 San Antonio Street | ||||
| | Suite 600 | ||||
| | Austin, Texas 78701 | ||||
| | Attention: | | | Lowell W. Harrison | |
| | Telephone: | | | (512) 583-5905 | |
| | E-mail: | | | LHarrison@fkhfpartners.com |
| |||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||
| | | | | |||||
| | By: | | | /s/ Lynn B. Fuller | ||||
| | | | Name: | | | Lynn B. Fuller | ||
| | | | Title: | | | Executive Operating Chairman |
| | FIRST BANK & TRUST | |||||||
| | | | | |||||
| | By: | | | /s/ Barry H. Orr | ||||
| | | | Name: | | | Barry H. Orr | ||
| | | | Title: | | | Chief Executive Officer |
| | AIM BANCSHARES, INC. | |||||||
| | | | | |||||
| | By: | | | /s/ Scott L. Wade | ||||
| | | | Name: | | | Scott L. Wade | ||
| | | | Title: | | | Chairman of the Board and | ||
Chief Executive Officer |
| | AIMBANK | |||||||
| | | | | |||||
| | By: | | | /s/ Scott L. Wade | ||||
| | | | Name: | | | Scott L. Wade | ||
| |||||||||
| | | Title: | | | Chairman of the Board, President and Chief Executive Officer |
| | SHAREHOLDER REPRESENTATIVE: | ||||
| | | | |||
| | /s/ Michael F. Epps | ||||
| | Michael F. Epps, | ||||
| | solely in his capacity as the Shareholder Representative |
(i) | |
(ii) | reviewed unaudited financial statements for AIM and AimBank for the nine-month period ended September 30, 2020; |
(iv) | reviewed audited financial statements for AIM, AimBank, Heartland and FB&T, as of and for the year ending December 31, 2019; |
(v) | reviewed certain historical annual reports of AIM, AimBank, Heartland and FB&T, including for the year ending December 31, 2019; |
(vi) | reviewed certain historical publicly available business and financial information concerning each of AIM, AimBank, Heartland and FB&T; |
(vii) | reviewed certain internal financial statements and other financial and operating data of AIM, AimBank, Heartland and FB&T including, without limitation, internal financial analyses and forecasts prepared by management of AIM, AimBank, Heartland and FB&T, and held discussions with senior management of AIM, AimBank, Heartland and FB&T regarding recent developments and regulatory matters; |
(viii) | reviewed financial projections prepared by certain members of senior management of AIM, AimBank, Heartland and FB&T; |
(ix) | discussed with certain members of senior management of AIM, AimBank, Heartland and FB&T, the business, financial condition, results of operations and future prospects of AIM, AimBank, Heartland and FB&T; the history and past and current operations of AIM, AimBank, Heartland and FB&T; AIM’s, AimBank’s, Heartland’s and FB&T’s historical financial performance; and their assessment of the |
(x) | reviewed and analyzed materials detailing the |
(xi) | assessed general economic, market and financial conditions; |
(xii) | analyzed the |
(xiii) | reviewed certain S&P CapIQ consensus income and balance sheet estimates for Heartland for 2020, 2021 and 2022; |
(xiv) | reviewed historical market prices and trading volumes of Heartland’s Common Stock; |
(xv) | reviewed materials and financial information relating to Reagor-Dykes Litigation provided by AIM and its legal advisors; |
(xvi) | reviewed publicly available financial information and stock market data related to selected public financial institutions/commercial banks that we deemed relevant to our analysis; |
(xvii) | |
(xviii) | |
(xix) | |
| | Sincerely, | |
| | ||
| | MAGSTAR CAPITAL, LLC | |
| |
Item 20. | Indemnification of Directors and Officers. |
Item 21. | Exhibits and Financial Statement Schedules. |
Number | | | Description |
| | ||
Amended and Restated Agreement and Plan of Merger, dated as of | |||
| | ||
| | ||
| | ||
| | ||
| | ||
| |||
| |||
|
Number | | | Description |
| |||
| |||
| Consent of KPMG | ||
| Consent of Dorsey & Whitney | ||
| Consent of | ||
| | Consent of Magstar Capital, LLC* | |
| Power of | ||
|
* | Previously Filed. | ||
** | Filed |
Item 22. | Undertakings. |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
(i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(ii) | |
Each prospectus required to be filed pursuant to Rule 424(b)(2), 424(b)(5), or 424(b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), 415(a)(1)(vii), or 415(a)(1)(x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of the securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(5) | That, for purposes of determining any liability under the Securities Act of 1933, each filing of the |
(6) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
(7) | To respond to requests for information that is incorporated by reference into the proxy statement/prospectus pursuant to Items 4, 10 (b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(8) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
| | HEARTLAND FINANCIAL USA, INC. | ||||
| | | | |||
| | By: | | | /s/ | |
| | | Executive Vice President, General Counsel, and |
Signature | | | Title |
/s/ | | President, Chief Executive Officer | |
Bruce K. Lee | | ||
| | ||
/s/ Bryan R. McKeag* | | | Executive Vice President and Chief Financial Officer (principal financial officer) |
Bryan R. McKeag | | ||
| | ||
/s/ Janet M. Quick* | | | Executive Vice President and Deputy Chief Financial Officer (principal accounting officer) |
Janet M. Quick | | ||
| | ||
/s/ | | | Executive Operating Chairman and Director |
Lynn B. Fuller | | ||
| | ||
/s/ Robert B. Engel* | | | Director |
Robert B. Engel | | | |
| | ||
/s/ Mark C. Falb* | | | Director |
Mark C. Falb | | | |
| | ||
/s/ Thomas L. Flynn* | | | Director |
Thomas L. Flynn | | | |
| | ||
/s/ | | | Director |
Jennifer K. | | | |
| | ||
/s/ R. Michael McCoy* | | | Director |
R. Michael McCoy | | | |
| | ||
/s/ | | | Director |
Susan G. Murphy | | | |
| | ||
/s/ Barry H. Orr* | | | Director |
Barry H. Orr | | | |
| | ||
/s/ John K. Schmidt* | | | Director |
John K. Schmidt | | |