As filed with the Securities and Exchange Commission on March 13,October 4, 2019
RegistrationNo. 333-229913333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORMS-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLACIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
MONTANA | ||||
(State or other jurisdiction of incorporation or organization) | 6022 (Primary standard industrial classification code number) | 81-0519541 (I.R.S. employer identification no.) |
49 Commons Loop, Kalispell, Montana 59901 (406)756-4200
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
RANDALL M. CHESLER
President and Chief Executive Officer
49 Commons Loop
Kalispell, Montana 59901
(406)756-4200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of communications to:
STEPHEN M. KLEIN BART E. BARTHOLDT Miller Nash Graham & Dunn LLP Pier 70, 2801 Alaskan Way, Suite 300 Seattle, Washington 98121-1128 Telephone: (206)777-7506 Facsimile: (206)340-9599 |
Telephone: Facsimile: |
Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed document.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided purchase to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐ |
Exchange Act Rule14d-1(d) (Cross-Border Third-Party Tender Offer) ☐ |
CALCULATION OF REGISTRATION FEE |
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Title of Each Class of Securities Being Registered | Amount Being Registered (1) | Proposed Maximum Offering Price Per Share | Proposed Maximum Aggregate Offering Price (2) | Amount of Registration Fee (2) | ||||
Common Stock, $0.01 Par Value | 3,350,000 | N/A | $115,271,060.72 | $14,962.18 | ||||
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(1) | Represents the maximum number of shares of common stock, $0.01 par value per share estimated to be issuable by Glacier Bancorp, Inc. (“Glacier”) upon consummation of the merger with State Bank Corp. (“SBC”) described herein. |
(2) | Estimated solely for purposes of calculating the registration fee and calculated in accordance with Rule 457(f) under the Securities Act of 1933, the proposed maximum offering price of $115,271,060.72 is computed by subtracting $13,714,051 (the estimated cash to be paid by Glacier) from $128,985,111.59 (the product of (A) $15.895, which is the average of the high and low prices of the last sale reported for SBC common stock in the consolidated reporting system of the OTC Pink for SBC common stock on October 2, 2019, times (B) 8,114,823 (the maximum number of shares of SBC common stock expected to be exchanged for the common stock being registered)). |
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT WILL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT WILL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell nor shall there be any sale of these securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
PRELIMINARY—SUBJECT TO COMPLETION—DATED MARCH 13,OCTOBER 4, 2019
PROXY STATEMENT | PROSPECTUS OF | |
OF | GLACIER BANCORP, INC. |
MERGER PROPOSED – YOUR VOTE IS VERY IMPORTANT
Dear FNB BancorpState Bank Corp. Shareholders:
As you may know, the boards of directors of FNB BancorpState Bank Corp. (“FNB”SBC”) and Glacier Bancorp, Inc., Kalispell, Montana (“Glacier”) have each unanimously approved a merger of FNBSBC with and into Glacier, subject to approval by FNBSBC shareholders and appropriate bank regulators. Immediately following the merger, FNB’sSBC’s subsidiary The First NationalState Bank of LaytonArizona (the “Bank”) will be merged into Glacier’s subsidiary Glacier Bank (“Glacier Bank”), subject to approval of appropriate bank regulators.
Under the terms of the Plan and Agreement of Merger, dated January 16,September 30, 2019 (the “merger agreement”), each outstanding share of FNBSBC common stock (including each share of unvested restricted stock) will be exchanged for 0.6474a “unit” comprised of $1.69 and 0.3706 shares of Glacier common stock, subject to certain adjustments. The common stock of Glacier trades on The NASDAQ Global Select Market under the symbol “GBCI.” SBC’s common stock is currently quoted on the OTC Pink under the symbol “SBAZ.”
The amountstock portion of Glacier common stock exchanged for each share of FNB common stockunit is subject to adjustment in the event that the average closing price for Glacier common stock over a20-day period prior to closing is more than $46.63$47.31, or less than $32.44, or less than $34.47,$34.97, if such stock price has also declined by ten percentage points more thanunderperformed the KBW Regional Bank Index.Index by more than fifteen percentage points, or less than $32.91. In thatsuch event either Glacier or FNB,SBC, respectively, may provide notice to terminate the merger agreement, provided thatbut the merger agreement will not be terminated if either FNBSBC or Glacier, as the case may be, elects to adjust the number of sharesconsideration to be issued in the merger, as described in this proxy statement/prospectus. Glacier may also elect to pay additional cash consideration in lieu of increasing the number of shares to be issued in the merger.
The merger agreement establishes a minimum requirement for FNB’scash portion of each unit is subject to adjustment depending on SBC’s capital ($39,285,000) prior to the closing of the merger.merger, calculated in accordance with the merger agreement. If FNB’sSBC’s capital is less than the minimum required, which is $63,611,000 (subject to specified adjustments), the cash portion of each unit will be reduced on a pro rata basis by the amount of such deficiency. If SBC’s closing capital, after being adjusted in accordance with the terms of the merger agreement, to take into account any transaction expenses in excess of amounts permitted under the merger agreement, is in excess of the minimum required, FNBSBC may pay a special dividend to its shareholders in the amount of such excess. If FNB’s closing capital is less than the minimum required, the total Glacier stock consideration will be reduced by a number of shares equal in value to the difference between the required amount of FNB closing capital and the amount of the actual FNB closing capital, as adjusted.
Assuming for purposes of illustration only that (i)there is no increase or reduction of the cash portion of each unit, and(ii) the average closing price for Glacier common stock is $41.06,$[], which was the closing price of Glacier common stock on March 11,[], 2019, as quoted on theThe NASDAQ Global Select Market, and that there is no reduction in the exchange ratio due to the FNB closing capital being less than the required amount, for each of your shares of FNBSBC common stock, you will receive 0.6474 Glacier sharesconsideration with an estimated current value of $26.58.$[], consisting of a combination of $1.69 in cash and 0.3706 shares of Glacier common stock (valued at $[]).
Assuming the exchange of all outstanding FNBSBC common stock for Glacier common stock and cash in accordance with the merger agreement FNBand the stock portion of each unit is not adjusted as described above, SBC shareholders will, in the aggregate, ownreceive approximately 2.36%3,007,353 shares of Glacier common stock in the merger, representing approximately 3.4% of Glacier’s outstanding common stock followingafter taking into account Glacier shares to be issued in the merger.
FNBSBC will hold a special shareholders’ meeting to vote on the merger agreement on April 18,[], 2019, at 10:00 a.m.[] []. m. Mountain Standard Time, at the Davis Conference Center located at 1651 North 700 West, Layton, Utah[], Lake Havasu City, Arizona. 84041.Whether or not you plan to attend the special meeting, please take the time to vote by voting over the Internet, by telephone or completing and mailing the enclosed form of proxy.Please give particular attention to the discussion under the heading “Risk Factors” beginning on page 13 for risk factors relating to the merger which you should consider.
The board of directors of FNBSBC has unanimously recommended that you vote FOR approval of the merger agreement and the other proposals described in this proxy statement/prospectus.
Neither the Federal Deposit Insurance Corporation, Securities and Exchange Commission, nor any state securities commission has approved the securities to be issued by Glacier or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The shares of Glacier common stock to be issued in the merger are not savings or deposit accounts or other obligations of a bank and are not insured by the Federal Deposit Insurance Corporation, the Federal Deposit Insurance Fund or any other governmental agency. Such shares are not guaranteed by Glacier or FNBSBC and are subject to investment risk, including the possible loss of principal.
This proxy statement/prospectus is dated March 13,[], 2019 and is first being mailed to
FNBSBC shareholders on or about March 15,[], 2019.
FNB BANCORPSTATE BANK CORP.
12 South MainLake Havasu City, Arizona 86403
Layton Utah 84041
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18,ON [], 2019
TO THE SHAREHOLDERS OF FNB BANCORPSTATE BANK CORP.:
A special meeting of shareholders of FNB BancorpState Bank Corp. (“FNB”SBC”) will be held on April 18,[], 2019, at 10:00 a.m.[] [].m. Mountain Standard Time, at the Davis Conference Center located at 1651 North 700 West, Layton, Utah 84041.[], Lake Havasu City, Arizona. The special meeting is for the following purposes:
1. | To consider and vote on a proposal to approve the Plan and Agreement of Merger, dated as of |
2. | To approve one or more adjournments of the |
Holders of record of FNBSBC common stock at the close of business on March 6,[], 2019, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of it. The affirmative vote of the holders of at least a majority of the outstanding shares of FNB’s outstandingSBC’s common stock entitled to vote is required for approval of the merger agreement. To that end, FNB’sSBC’s directors and executive officers and certain significant shareholders have signed agreements to vote their shares in favor of the merger agreement. SuchAs of the record date, such persons arewere entitled to vote 1,357,605[] shares representing approximately 42.95%[]% of all outstanding shares of FNBSBC common stock, excluding shares of unvested restricted stock. As of March 6, 2019,the record date, there were 3,160,969[] shares of FNBSBC common stock outstanding.outstanding, excluding [ ] shares of unvested restricted stock, which do not have voting rights.
FNBSBC shareholders have the right to dissent from the merger and obtain payment of the fair valueof their shares of FNBSBC common stock under the Utah Revised Business Corporations Act (“URBCA”), Sections 1301 through 1331.applicable provisions of Arizona law. A copy of the provisions regarding dissenters’ rights is attached asAppendix B to the accompanying proxy statement/prospectus. For details of your dissenters’ rights and how to exercise them, please see the discussion under “The Merger – Dissenters’ Rights.”
Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign, datewe encourage you to submit a proxy to vote your shares as promptly as possible in order to make certain that you are represented at the meeting. You may submit a proxy over the Internet, as well as by telephone or by completing, signing, dating and promptly returnreturning the accompanying proxy using the enclosed envelope. If for any reason you should desire to revoke your proxy, you may do so at any time before it is voted at the meeting.If you do not vote your shares, it will have the same effect as voting against the merger.
The board of directors of FNBSBC has determined that the merger agreement is fair to, advisable, and in the best interests of FNBSBC and its shareholders and unanimously recommends that you vote FOR approval of the merger agreement. With regard to its recommendation that shareholders vote FOR approval of the merger agreement, the board of directors of FNBSBC considered a number of factors, as discussed in “ Background“Background of and Reasons for the Merger” beginning on page 18.23. Such factors also constituted the reasons that the board of directors determined to approve the merger agreement and to recommend that FNBSBC shareholders vote in favor of the merger agreement.
You will receive instructions on how to exchange your shares of FNBSBC common stock for the merger consideration promptly after the closing of the merger.
By Order of the Board of Directors, |
Layton, UtahLake Havasu City, Arizona
March 13,[], 2019
REFERENCES TO ADDITIONAL INFORMATION
Glacier
This proxy statement/prospectus incorporates important business and financial information about Glacier from documents that Glacier has previously filed with the Securities and Exchange Commission (“SEC”) and that are contained in or incorporated by reference into this proxy statement/prospectus. For a listing of Glacier documents incorporated by reference into this proxy statement/prospectus, please see the section entitled “Where You Can Find More Information.” This information is available for you to review at the SEC’s website athttp://www.sec.gov.
You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other information concerning Glacier, without charge, by telephone or written request directed to:
Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
ATTN: Ron Copher, Corporate Secretary
Telephone: (406)751-7706
Certain reports can also be found on Glacier’s website atwww.glacierbancorp.com.
Glacier’s common stock is traded on theThe NASDAQ Global Select Market under the symbol “GBCI.”
You will not be charged for the documents that you request.If you would like to request documents, please do so by April 11,[], 2019 in order to receive them before the FNBSBC special shareholders’ meeting.
FNBState Bank Corp.
FNBSBC does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not file documents or reports with the SEC.
If you have questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, would like copies of FNB’sSBC’s articles of incorporation or bylaws, or would like copies of FNB’sSBC’s historical consolidated financial statements or need help voting your shares, please contact:
FNB BancorpState Bank Corp.
12 South Main1771 McCulloch Boulevard
Layton, Utah 84041Lake Havasu City, Arizona 86403
ATTN: Nic BementKaren Gibbs, Corporate Secretary
(801)(928)813-1600302-5165
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COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF GLACIER AND | ||||
i
Why am I receiving these materials?
We are sending you these materials to solicit your proxy to vote in favor of the merger and to help you decide how to vote your shares of FNB BancorpState Bank Corp. (“FNB”SBC”) common stock with respect to its proposed merger with Glacier Bancorp, Inc. (“Glacier”). The merger cannot be completed unless FNBSBC receives the affirmative vote of the holders of at least a majority of the outstanding shares of FNB’sSBC’s common stock. FNBstock entitled to vote on the matter. SBC is holding a special meeting of shareholders to vote on proposals relating to the merger. Information about the special meeting is contained in this document. See “FNB“SBC Special Shareholders Meeting.”
This document is both a proxy statement of FNBSBC and a prospectus of Glacier. It is a proxy statement because the officers and board of directors of FNBSBC (the “FNB“SBC Board”) are soliciting proxies from FNBSBC’s shareholders in connection with voting on the merger. It is a prospectus because Glacier will issue shares of its common stock in exchange for shares of FNBSBC common stock as a portion of the consideration to be paid in the merger.
What will FNBhappen in the merger?
In the proposed merger, SBC will merge with and into Glacier, with Glacier surviving the merger. Immediately following the merger, State Bank of Arizona (the “Bank”) will be merged into Glacier’s subsidiary Glacier Bank. Shares of Glacier will continue to trade on The NASDAQ Global Select Market, with the trading symbol “GBCI.”
What will SBC shareholders receive in the merger?
Under the terms of the merger agreement, each share of FNBSBC common stock (including each share of unvested restricted stock) will be exchanged for 0.6474a “unit” comprised of 0.3706 shares of Glacier common stock and $1.69 in cash, subject to adjustment as described below.
Assuming for purposes of illustration only that the average closing price for Glacier common stock is $41.06$[] (which was the closing price for Glacier common stock on March 11,[], 2019), and that there is no reduction in the exchange ratio due to the FNB Closing Capital (discussed below) being less than the required amount, each share of FNBSBC common stock would be exchanged for 0.3706 shares of Glacier common stock with a total value equal to $26.58.$[], in addition to the cash consideration of $1.69 per share.
IfThe stock portion of each unit may be adjusted in certain circumstances based on whether Glacier common stock is trading either higher or lower than prices specified in the FNBmerger agreement immediately prior to the closing of the merger, in order to avoid termination of the merger agreement.
The cash portion of each unit will be subject to reduction if the “SBC Closing Capital, (as” as defined in the merger agreement)agreement, is less than the target of $63,611,000, subject to certain adjustments. In such event, the cash portion of each unit will be reduced on a pro rata basis by the amount of such deficiency.
If the SBC Closing Capital exceeds $39,285,000,$63,611,000, subject to certain adjustments, FNBSBC may, upon written notice to Glacier and effective immediately prior to the closing of the merger, declare and pay a special dividend to its shareholders in the amount of such excess.
If the FNB Closing Capital is less than $39,285,000, the total number of Glacier shares issued in the merger will be reduced by a number of shares equal in value to the differential between $39,285,000 and the actual FNB Closing Capital.
The amount of Glacier common stock exchanged for each share of FNB common stock may also be adjusted in certain circumstances if Glacier common stock is trading either higher or lower than prices specified in the merger agreement immediately prior to the closing of the merger, in order to avoid termination of the merger agreement as follows:
If the “average closing price” (determined over a 20 trading day period prior to the closing of the merger, calculated 10 days prior to the closing) of Glacier’s common stock exceeds $46.63, Glacier may terminate the merger agreement, unless FNB elects to accept a reduction on aper-share basis of the number of shares of Glacier common stock to be issued in the merger.
Conversely, if the “average closing price” is (i) less than $34.47 and the price of Glacier common stock has underperformed the KBW Regional Banking Index by more than 10% or (ii) less than $32.44, FNB may terminate the merger agreement, unless Glacier elects
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On March 11, 2019, the closing price of Glacier common stock was $41.06 per share.
By voting to approve the merger agreement, FNBSBC shareholders will give the FNBSBC Board the authority to elect to cause FNBSBC to accept a reduction on aper-share basis of the number of shares of Glacier common stock to be issued in the merger if the Glacier average closing price exceeds $46.63$47.31, as described above.below. See “The Merger – Termination of the Merger Agreement.”
Assuming the exchange of all outstanding FNBSBC common stock for Glacier common stock as a portion of the merger consideration in accordance with the merger agreement FNBand the stock portion of each unit is not adjusted as described above, SBC shareholders will own,receive, in the aggregate, approximately 2.36%3,007,353 shares of Glacier common stock in the merger, representing approximately 3.4% of Glacier’s outstanding common stock followingafter taking into account Glacier shares to be issued in the merger.
Will I receive any fractional shares of Glacier common stock as part of the merger consideration?
No. Glacier will not issue any fractional shares of Glacier common stock in the merger. Instead, Glacier will pay you the cash value of a fractional share (without interest) in an amount determined by multiplying the fractional share interest to which you would otherwise be entitled by the average of the closing sales prices of one share of Glacier common stock on The NASDAQ Global Select Market for the 20 trading days ending on the tenth business day immediately preceding the effective date of the merger.
How soon after the merger is completed can I expect to receive my merger consideration?
Glacier will work with its exchange agent, American Stock Transfer & Trust Company, LLC, to distributecomplete the exchange of your SBC stock certificates for consideration payable in the merger as promptly as practicable following the completion of the merger.
Will I be able to trade the shares of Glacier common stock that I receive in the merger bemerger?
You may freely transferable?
Yes. Thetrade the shares of Glacier common stock issued in the merger, will be transferable freeunless you are an “affiliate” of restrictionsGlacier as defined by Rule 144 under federalthe Securities Act of 1933, as amended. Affiliates consist of individuals or entities that control, are controlled by or are under the common control with Glacier, and state securities laws.include the executive officers and directors of Glacier after the merger and may include significant shareholders of Glacier.
When will the merger occur?
We presently expect to complete the merger duringas early as the secondfourth quarter of 2019. The actual timing of the transaction is subject to a number of factors (primarily regulatory approvals), many of which are beyond the control of Glacier and FNB.SBC. The merger is conditioned upon and will occur after the approval of the merger agreement by the affirmative vote of holders of at least a majority of the outstanding shares of FNBSBC common stock entitled to vote on the matter at the SBC special meeting, after the merger has received regulatory approvals, and following the satisfaction or waiver of the other conditions to the merger described in the merger agreement and summarized under “The Merger” below.
The merger agreement provides that in the event the closing has not occurred by November 30, 2019, the first date on which the closing may occur is February 29, 2020.
If the merger does not occur by SeptemberApril 30, 2019,2020, either Glacier or FNBSBC may unilaterally terminate the merger agreement. However, if asagreement, subject to an extension of September 30, 2019, the condition to closing that all required governmental regulatory approvals have been obtained has not been satisfied, then the deadline for closing of the merger will be extended to on or before November 30, 2019, if Glacier notifies FNB in writing on or prior to September 30, 2019 of its election to extend such closing deadline.date under certain circumstances.
When and where will the special meeting take place?
FNBSBC will hold a special meeting of its shareholders on April 18,[], 2019, at 10:00 a.m.[] [].m. Mountain Standard Time, at the Davis Conference Center located at 1651 North 700 West, Layton, Utah 84041.[], Lake Havasu City, Arizona.
Who may vote at the special meeting?
The FNBSBC Board has set March 6,[], 2019 as the record date for the special meeting. If you were the owner of FNBSBC common stock at the close of business on March 6,[], 2019, you may vote at the special meeting. Each holder of SBC common stock is entitled to one vote for each share of SBC common stock owned as of the record date.
What constitutes a quorum for the special meeting?
The quorum requirement for the special meeting is the presence in person or by proxy of a majority of the total number of outstanding shares of SBC common stock entitled to vote.
What vote is required to approve the merger agreement?
Approval of the merger agreement requires the affirmative vote of the holders of at least a majority of the outstanding shares of FNB’s outstandingSBC’s common stock.stock entitled to vote on the matter. As described in this proxy statement, FNB’sstatement/prospectus, SBC’s directors and executive officers and certain significant shareholders have agreed to vote the shares they are entitled to vote in favor of the merger agreement. As of the record date, hereof, such persons arewere entitled to vote 1,357,605[] shares of FNBSBC common stock, representing approximately 42.95%[]% of all outstanding shares of FNBSBC common stock, excluding shares of unvested restricted stock. See “FNB“SBC Special Shareholders’ Meeting” and “The Merger – Voting Agreement.Agreements.”
What vote is required to approve the adjournment of the special meeting, if necessary or appropriate?
If less than a quorum is represented at the special meeting, a majority of the shares so represented may adjourn the special meeting without further notice. The proposal to adjourn the special meeting, if necessary or appropriate, including adjournments to solicit additional proxies, will be approved if the votes cast in favorapproved by a majority of the proposal exceedvoting power present at the votes cast against the proposal,special meeting, whether in person or by proxy, assuming a quorum is present. If less than a quorum is represented atEach of the Voting Agreements entered into by SBC’s directors and executive officers and certain significant shareholders provides that such persons have agreed to vote the shares subject to such agreement in favor of any proposal to adjourn the special meeting a majority ofif there are not sufficient votes to approve the shares so represented may adjourn the meeting without further notice.merger agreement.
How do I vote?
If you were a shareholder of record on March 6,[], 2019, you may vote on the proposals presented at the special meeting in person or by proxy. We urge you to vote promptly by submitting a proxy to vote through the Internet, by telephone, or by completing the enclosed proxy card. Even if you plan to attend the special meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the special meeting.
You may cast your vote by submitting a proxy through the Internet or by telephone by following the instructions included on the enclosed proxy card or by mail by completing, signing and dating the enclosed proxy card and returning it to us promptly in the enclosed envelope. ReturningSubmitting a proxy through the Internet or by telephone or returning the proxy card will not affect your right to attend the special meeting and vote.
If you choose to vote your shares in person at the special meeting, please bring the enclosed proxy card and proof of identification.
If your shares are registered in “street name” in the name of a broker or other nominee and you wish to vote at the special meeting, you will need to obtain a legal proxy from your bank or brokerage firm. Please consult the voting form sent to you by your bank or broker to determine how to obtain a legal proxy in order to vote in person at the meeting.
What if I fail to submit a proxy or to instruct my broker, bank or other nominee?
If you fail to properly submit a proxy or to instruct your broker, bank or other nominee to vote your shares of SBC common stock, and you do not attend the special meeting and vote your shares in person, your shares will not be voted. This will have the same effect as a vote “AGAINST” approval of the merger agreement, but will have no impact on the outcome of the other proposal.
Can I attend the special meeting and vote my shares in person?
Yes. Although the SBC Board requests that you submit a proxy through the Internet, by telephone or by returning the proxy card accompanying this proxy statement/prospectus, all shareholders are invited to attend the shareholder meeting. Shareholders of record on [], 2019 can vote in person at the special meeting. If your shares are held by a broker, bank or other nominee, then you are not the shareholder of record and you must bring to the shareholder meeting appropriate documentation from your broker, bank or other nominee to enable you to vote at the shareholder meeting.
Can I change my vote after I have mailedsubmitted my signed proxy card?proxy?
Yes. YouIf you do not hold your shares in “street name,” there are three ways you may change your vote at any time after you have submitted your proxy and before your proxy is voted at the special meeting. If your shares of FNB common stock are held in your own name, you may change your vote as follows:meeting:
Byby sending a written notice bearing a date later than the date of your proxy card to theState Bank Corp., 1771 McCulloch Boulevard, Lake Havasu City, Arizona 86403, ATTN:, Karen Gibbs, Corporate Secretary, of FNB at 12 South Main, Layton Utah 84041, ATTN: Secretary, Shelly Holt, stating that you would like to revoke your proxy and provide new instructions on how to vote;proxy;
Byby granting a new, valid proxy bearing a later date (by telephone, through the Internet or by completing and submitting a later-dated proxy card;card); or
Byby attending the meeting and voting in person.person, although attendance at the special meeting will not, by itself, revoke a proxy.
If you choose either the first or second method above, you must submit youra written notice of revocation, or your new proxy card to FNB’sit must be received by SBC’s Secretary prior to the vote at the special meeting. If you grant a new proxy by telephone or Internet, your revised instructions must be received by 11:59 p.m., Eastern Time, one day before the meeting date.
If you have instructed a bank, broker or other nominee to vote your shares, you must follow the directions you receive from your bank, broker or other nominee to change your voting instructions.
What happens if I return my proxy but do not indicate how to vote my shares?
If you sign and return your proxy card but do not provide instructions on how to vote your shares of FNBSBC common stock at the special meeting of shareholders, your shares of FNBSBC common stock will be voted “FOR” approval of the merger agreement and “FOR” approval of one or more adjournments of the special meeting.
If my shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote my shares for me?
No. Your broker, bank or other nominee will not vote your shares unless you provide instructions to your broker, bank or other nominee on how to vote. You should instruct your broker, bank or other nominee to vote your shares by following the instructions provided by the broker, bank or nominee with this proxy statement/prospectus.
How does the FNBSBC Board recommend that I vote?
The FNBSBC Board unanimously recommends that FNBSBC shareholders vote “FOR” the proposals described in this proxy statement/prospectus, including in favor of approval of the merger agreement.
What do I need to do now?
We encourage you to read this proxy statement/prospectus and related information in its entirety. Important information is presented in greater detail elsewhere in this document, and documents governing the merger are attached as appendices to this proxy statement/prospectus. In addition, much of the business and financial information about Glacier that may be important to you is incorporated by reference into this document from documents separately filed by Glacier with the Securities and Exchange Commission (“SEC”). This means that important disclosure obligations to you are satisfied by referring you to one or more documents separately filed with the SEC.
Following review of this proxy statement/prospectus,please complete, sign,submit a proxy through the Internet, by telephone or by completing, signing, and datedating the enclosed proxy card and return it in the enclosed envelopeas soon as possible so that your shares of FNBSBC common stock can be voted at FNB’sSBC’s special meeting of shareholders.
What happens if I sell my shares after the record date but before the special meeting?
The record date of the special meeting is earlier than the date of the special meeting and the date that the merger is expected to be completed. If you sell or otherwise transfer your shares after the record date, but before the date of the special meeting, you will retain your right to vote at the special meeting, but you will not have the right to receive the merger consideration to be received by shareholders in the merger. In order to receive the merger consideration, a shareholder must hold his or her shares through completion of the merger.
What do I do if I receive more than one proxy statement/prospectus or set of voting instructions?
If you hold shares directly as a record holder and also in “street name” or otherwise through a nominee, you may receive more than one proxy statement/prospectus and/or set of voting instructions relating to the special meeting. These should each be voted and/or returned separately in order to ensure that all of your shares are voted.
Should I send in my common stock certificates now?
No.Please do not send your FNBSBC common stock certificates with your proxy card. You will receive written instructions from Glacier’s exchange agent promptly following the closing of the merger on how to exchange your FNBSBC common stock certificates for the merger consideration.
What risks should I consider?consider in deciding whether to vote for approval of the merger agreement?
You should review carefully our discussion under “Risk Factors.” You should also review the factors considered by the FNBSBC Board in approving the merger agreement. See “Background of and Reasons for the Merger.”
What are the material United States federal income tax consequences of the merger to FNBSBC shareholders?
Glacier and FNBSBC expect to report the merger of FNBSBC with and into Glacier as atax-free reorganization for U.S. federal income tax purposes under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). It is a condition to the closing of the merger that Miller Nash Graham & Dunn LLP, tax counsel to Glacier, delivereach party receives an opinion addressed to Glacier and FNBfrom its respective legal counsel that the merger will qualify as a reorganization under Section 368(a).
In atax-free reorganization, a shareholder who exchanges his, her or its shares of common stock in an acquired company for shares of common stock in an acquiring company, plus cash, must generally recognize gain (but not loss) on the exchange in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of the fair market value of the shares of the acquiring company common stock (including any fractional shares) and any cash received pursuant to the merger (excluding any cash received in lieu of fractional shares) over the shareholder’s adjusted tax basis in his, her or its shares of acquired company common stock surrendered pursuant to the merger), or (2) the amount of any cash (excluding any cash received in lieu of fractional shares) received pursuant to the merger.
For a detailed discussion of the material U.S. federal income tax consequences of the merger, see “The Merger – Material U.S. Federal Income Tax Consequences of the Merger.”
We urge you to consult your tax advisor to fully understand the tax consequences to you of the merger. Tax matters are very complicated and in many cases the tax consequences of the merger will depend upon your particular facts and circumstances.
Do I have appraisal or dissenters’ rights?
Yes. If you are an FNBSBC shareholder and you do not agree with the merger, do not vote in favor of the merger agreement, and take certain other actions required by UtahArizona law, you will have dissenters’ rights under the UtahArizona Revised Business Corporations Act,Statutes Sections 1301 through 1331.10-1301 to10-1331.Exercise of these rights will result in the purchase of your shares of FNBSBC common stock at “fair value,” as determined in accordance with UtahArizona law. If you elect to exercise this right, we encourage you to consult with your financial and legal advisors. Please read the section entitled “The Merger – Dissenters’ Rights”for additional information.
Who can help answer my questions?
If you have questions about the merger, the special shareholders meeting, or your proxy, or if you need additional copies of this document or a proxy card, you should contact:
FNB BancorpState Bank Corp.
12 South Main1771 McCulloch Boulevard
Layton, Utah 84041Lake Havasu City, Arizona 86403
ATTN: Shelly Holt,Karen Gibbs, Corporate Secretary
Tel. No. (801)(928)831-1600302-5165
This summary, together with the preceding section entitled “Questions and Answers about this Document and the Merger,” highlights selected information about this proxy statement/prospectus. It may not contain all of the information that is important to you. We urge you to read carefully the entire proxy statement/prospectus and any other documents to which we refer to fully understand the merger. The merger agreement is attached asAppendix A to this proxy statement/prospectus.
Information about Glacier and FNBSBC
Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
(406) 756-4200
General
Glacier, headquartered in Kalispell, Montana, is a Montana corporation, initially incorporated in Delaware in 1990, and subsequently incorporated under Montana law in 2004. Glacier is a publicly traded company and its common stock trades on theThe NASDAQ Global Select Market under the symbol “GBCI.” Glacier is a registered bank holding company under the Bank Holding Company Act of 1956, as amended (“BHC Act”), and is a regional bank holding company providing a full range of commercial banking services from 150175 branch locations in Montana, Idaho, Wyoming, Colorado, Utah, Washington and Arizona, operating through 1415 separately branded divisions of its wholly owned bank subsidiary, Glacier Bank. Glacier Bank is a Montana state-chartered bank regulated primarily by the Montana Division of Banking and Financial Institutions and the Federal Deposit Insurance Corporation. Glacier offers a wide range of banking products and services, including transaction and savings deposits, real estate, commercial, agriculture and consumer loans, mortgage origination services, and retail brokerage services. Glacier serves individuals, small tomedium-sized businesses, community organizations and public entities.
As of December 31, 2018,June 30, 2019, Glacier had total assets of approximately $12.115$12.676 billion, total net loans receivable of approximately $8.156$8.713 billion, total deposits of approximately $9.494$9.855 billion and approximately $1.516$1.687 billion in shareholders’ equity.
Financial and other information regarding Glacier, including risks associated with Glacier’s business, is set forth in Glacier’s annual report on Form10-K for the year ended December 31, 2018. Information regarding Glacier’s executive officers and directors, as well as additional information, including executive compensation and certain relationships and related transactions, is set forth or incorporated by reference in Glacier’s annual report on Form10-K for the year ended December 31, 2018 and Glacier’s proxy statement for its 20182019 annual meeting of shareholders, and the Forms8-K filed by Glacier that are incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information.”
Recent Acquisitions
Glacier’s strategy is to profitably grow its business through internal growth and selective acquisitions. Glacier continues to look for profitable expansion opportunities, primarily in existing and new markets in the Rocky Mountain states. The table below provides information regarding Glacier’s most recent completed and pending acquisitions. InformationExcept as noted, information with respect to acquisitions reflects fair value adjustments following completion of the acquisitions.
Total Assets | Gross Loans | Total Deposits | Closing Date | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Inter-Mountain Bancorp, Inc. and subsidiary First Security Bank | 1,109,684 | 627,767 | 877,586 | 2/28/2018 | ||||||||||||
Columbine Capital Corp. and subsidiary Collegiate Peaks Bank | 551,198 | 354,252 | 437,171 | 1/31/2018 | ||||||||||||
TFB Bancorp and subsidiary The Foothills Bank | 385,839 | 292,529 | 296,760 | 4/30/2017 |
FNB Bancorp
12 South Main
Total Assets | Gross Loans | Total Deposits | Closing Date | |||||||||||
(Dollars in thousands) | ||||||||||||||
Heritage Bancorp and subsidiary Heritage Bank of Nevada* | $ | 842,000 | $ | 612,000 | $ | 717,000 | 7/31/2019 | |||||||
FNB Bancorp and subsidiary The First National Bank of Layton | 379,155 | 245,485 | 274,646 | 4/30/2019 | ||||||||||
Inter-Mountain Bancorp, Inc. and subsidiary First Security Bank | 1,109,684 | 627,767 | 877,586 | 2/28/2018 | ||||||||||
Columbine Capital Corp. and subsidiary Collegiate Peaks Bank | 551,198 | 354,252 | 437,171 | 1/31/2018 | ||||||||||
TFB Bancorp and subsidiary The Foothills Bank | 385,839 | 292,529 | 296,760 | 4/30/2017 |
* | Amounts represent Heritage values as of June 30, 2019. The initial accounting for the Heritage transaction has not been completed because the fair market value of financial assets, financial liabilities and goodwill has not yet been determined. |
State Bank Corp.
Layton, Utah 840411771 McCulloch Boulevard
(801)Lake Havasu City, Arizona 86403
(928)813-1600855-0000
FNB,SBC, headquartered in Layton, Utah,Lake Havasu City, Arizona, is an Arizona corporation and a Utah corporation formedregistered bank holding company under the BHC Act. SBC was incorporated in 1999 for2004 and is the purposebank holding company of acquiring the stock of The First NationalState Bank of LaytonArizona (the “Bank”) and becoming the holding companyfor the Bank. FNB. SBC has no substantial operations separate or apart from the Bank. The Bank is a national banking associationan Arizona state-chartered bank, which commenced operations in 1905.1991 and is regulated primarily by the Arizona Department of Financial Institutions and the Federal Deposit Insurance Corporation. The Bank’s principal office is located in Layton, UtahLake Havasu City, Arizona and the Bank maintains branch offices in LaytonLake Havasu City (two branches), Bountiful, ClearfieldKingman (two branches), Prescott (two branches), Prescott Valley, Phoenix, Bullhead City, and Draper,Cottonwood, all in Utah.Arizona.
As of December 31, 2018, FNBJune 30, 2019, SBC had total assets of approximately $334.7$678.6 million, total gross loans receivable of approximately $246.7$413.6 million, total deposits of approximately $285.8$592.0 million and approximately $40.1$70.5 million in shareholders’ equity.
For additional information, see“Information Concerning FNB”State Bank Corp.” below.
The Special Meeting of Shareholders of SBC
Date, Time and Place of the Special Meeting
SBC will hold its special meeting of shareholders on [], 2019, at [] [].m. Mountain Standard Time, at [], Lake Havasu City, Arizona.
Purpose of the Special Meeting
At the special meeting, you will be asked to vote on proposals to:
1. | approve the merger agreement; and |
2. | approve one or more adjournments of the special meeting, if necessary or appropriate. |
Recommendation of the SBC Board
The SBC Board unanimously recommends that you vote “FOR” approval of the merger agreement, and “FOR” approval of the proposal to adjourn the special meeting.
Record Date; Outstanding Shares; Shares Entitled to Vote
Only holders of record of SBC common stock at the close of business on the record date of [], 2019 are entitled to notice of and to vote at the special meeting. As of the record date, there were [] shares of SBC common stock issued and outstanding (not including [] shares of unvested restricted stock, which do not have voting rights) held of record by approximately [] shareholders.
Quorum; Vote Required
A quorum of SBC shareholders is necessary to hold a valid meeting. The quorum requirement for the special meeting is the presence in person or by proxy of a majority of the total number of outstanding shares of SBC common stock entitled to vote. SBC will include proxies marked as abstentions and brokernon-votes in determining the presence of a quorum at the special meeting.
The affirmative vote of holders of at least a majority of the outstanding shares of SBC common stock entitled to vote at the special meeting is required to approve the merger agreement. The affirmative vote of holders of at least a majority of votes cast at the special meeting is required to approve the proposal to adjourn the special meeting.
Share Ownership of Management; Voting Agreements
As of the record date, the directors and executive officers of SBC and their affiliates collectively owned [] shares of SBC common stock, or approximately []% of SBC’s outstanding common stock.
Each of SBC’s directors and executive officers and certain significant shareholders have signed agreements to vote their shares in favor of the merger agreement. As of the record date, such persons were entitled to vote [] shares representing approximately []% of all outstanding shares of SBC common stock.
The Merger
The merger agreement provides for the merger of FNBSBC with and into Glacier, and immediately thereafter, the merger of the Bank with and into Glacier Bank. In the merger, your shares of FNBSBC common stock, if you do not dissent, will be exchanged for the right to receive sharesa combination of Glacier common stock.
In the merger, Glacier will issue shares of its common stock in exchange for all shares of FNB common stock outstanding as of the date of the closing of the merger, except properly dissenting shares. Each outstanding share of FNB will be exchanged for 0.6474 shares of Glacier common stock subject to adjustment as described below.and cash.
Assuming the exchange of all outstanding FNB common stock for stock in accordance with the merger agreement, FNB shareholders will own approximately 2.36% of Glacier’s outstanding common stock following the merger. After the merger, you will no longer own shares of FNB. For additional information, see the discussion under the heading “The Merger” below.
The merger agreement is attached asAppendix A to this proxy statement/prospectus. We encourage you to read the merger agreement in its entirety.
IfIn the averagemerger, Glacier will issue shares of its common stock and pay cash for all shares of SBC common stock outstanding as of the date of the closing priceof the merger, except properly dissenting shares. Each outstanding share of SBC (including each share of unvested restricted stock) will be exchanged for a “unit” comprised of Glacier common stock calculated in accordance with the merger agreement exceeds $46.63, Glacier may elect to terminate the merger agreement unless FNBand cash, as follows:
• | Stock Portion.0.3706 Glacier shares, subject to adjustment as follows: If the average closing price of Glacier common stock calculated in accordance with the merger agreement exceeds $47.31, Glacier may elect to terminate the merger agreement, unless SBC elects to accept a decrease in the number of shares to be issued on aper-share basis, |
Conversely, if the average closing price of Glacier stock calculated in accordance with the merger agreement(i) is (i) less than $34.47$34.97 and the price of Glacier common stock has underperformed the KBW Regional Banking Index by more than 10%15 percentage points or (ii) is less than $32.44, FNB$32.91, SBC may terminate the merger agreement, unless Glacier elects to increase on aper-share basis the number of shares of Glacier common stock, to be issued in the merger, or in Glacier’s discretion, Glacier pays cash, or a combinationincrease the amount of cash, and additional Glacier shares, so that the valuein order to avoid termination of the consideration equals an amount specified in the merger agreement.
On [], 2019, the closing price of Glacier common stock was $[] per share.
Potential adjustments to the per share merger consideration are described under “The Merger – Termination of the Merger Agreement” below.
Glacier will not issue fractional shares and will instead pay cash in lieu of such fractional shares, as described under “The Merger – Fractional Shares” below.
• | Cash Portion. $1.69 in cash, subject to adjustment as follows: If SBC’s closing capital (referred to in the merger agreement as the “SBC Closing Capital”) is less than the minimum required, which is $63,611,000, subject to adjustment as provided in the merger agreement, the cash portion of each unit will be reduced on a pro rata basis based on the amount of such deficiency. |
If the FNBSBC Closing Capital exceeds $39,285,000,is in excess of $63,611,000, subject to certain adjustments, FNBadjustment, SBC may, upon written notice to Glacier and effective immediately prior to the closing of the merger, declare and pay a special dividend to its shareholders in the aggregate amount of such excess.
IfThe amount of the FNBSBC Closing Capital may be reduced or increased, as the case may be, if SBC’s transaction-related expenses are above or below a specified amount.
For additional information, including the manner in which SBC Closing Capital is less than $39,285,000,determined, see the total Glacier stock consideration will be reduced by a number of shares equal in value todiscussion under the amount of the shortfall.
“FNB Closing Capital” is defined in the merger agreement and is equal to an amount, estimated as of the closing date of the merger, equal to FNB’s capital stock, surplus and retained earnings, determined in accordance with generally accepted accounting principles (“GAAP”) on a consolidated basis, net of goodwill and other intangible assets, after giving effect to adjustments, calculated in accordance with GAAP, for accumulated other comprehensive income or loss as reported in FNB’s or the Bank’s balance sheet. FNB’s Closing Capital is subject to downward adjustment if transaction-related expenses exceed certain thresholds set forth in the merger agreement.heading “The Merger” below.
Recommendation of FNBSBC Board
The FNBSBC Board unanimously recommends that holders of FNBSBC common stock vote “FOR” the proposal to approve the merger agreement.
For further discussion of FNB’sSBC’s reasons for the merger and the recommendations of the FNBSBC Board, see “Background of and Reasons for the Merger – Reasons for the Merger – FNB.SBC.”
Opinion of FNB’sSBC’s Financial Advisor
In connection with the merger, FNB’sSBC’s financial advisor, Sandler O’NeillD.A. Davidson & Partners, L.P.Co. (“Davidson”), delivered a written opinion, dated January 15,September 30, 2019, to the FNBSBC Board as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of FNBSBC common stock of the merger consideration in the proposed merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sandler O’NeillDavidson in preparing the opinion, is attached asAppendix C to this document.The opinion was for the information of, and was directed to, the FNBSBC Board (in its capacity as such) in
connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of FNBSBC to engage in the merger or enter into the merger agreement or constitute a recommendation to the FNBSBC Board in connection with the merger, and it does not constitute a recommendation to any holder of FNBSBC common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter.
For further information, see “Background of and Reasons for the Merger – Opinion of FNB’sSBC’s Financial Advisor.”
Interests of FNBSBC’s Directors and Executive Officers in the Merger
When you consider the unanimous recommendation of the FNBSBC Board that FNB’sSBC’s shareholders approve the merger agreement, you should be aware that certain members of FNB’sSBC’s and/or the Bank’s management have interests in the merger that are different from, or in addition to, their interests as FNBSBC shareholders. These interests arise out of, among other things, voting andnon-competition agreements entered into by the directors and executive officers of FNB,SBC, the acceleration of vesting of restricted stock awards, employment agreements entered into with Glacier by certain FNBSBC and Bank executive officers, Glacier’s agreementpayments to appoint several FNBbe made to directors and certain executive officers pursuant to an advisory boardexisting change in control agreements with SBC and/or the Bank, and provisions in the merger agreement relating to indemnification of FNBSBC directors and officers. For a description of the interests of FNB’sSBC’s directors and executive officers in the merger, see “The Merger – Interests of FNBSBC Directors and Executive Officers in the Merger.”
The FNBSBC Board was aware of these interests and took them into account in its decision to approve the merger agreement.
FNBSBC Shareholders Dissenters’ Rights
Under UtahArizona law, FNBSBC shareholders have the right to dissent from the merger and receive cash for the “fair value”of their shares of FNBSBC common stock. The procedures required under UtahArizona law are described later in this document, and a copy of the relevant statutory provisions is attached asAppendix B. For more information on dissenters’ rights, see “The Merger – Dissenters’ Rights.”
Regulatory Matters
Each of Glacier and FNBSBC has agreed to use its commercially reasonable efforts to obtain all regulatory approvals, waivers ornon-objectionsrequired by the merger agreement and the transactions contemplated by the merger agreement. These approvals include approvalApplications or a waiver from the Federal Reserve, the Federal Deposit Insurance Corporation, and the Commissioner of the Montana Division of Banking and Financial Institutions, Applicationsrequests have been filed with thesesuch regulatory bodies seeking such approvals. We expect to obtain all such regulatory approvals, waivers ornon-objections, although we cannot be certain if or when we will obtain them. See “The Merger – Regulatory Requirements.”
Conditions to Completion of the Merger
Currently, Glacier and FNBSBC expect to complete the merger during the secondfourth quarter of 2019. As more fully described in this proxy statementstatement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. Neither Glacier nor FNBSBC can provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived. See “The Merger – Conditions to the Merger.”
Termination of the Merger Agreement
The merger agreement provides that either Glacier or FNBSBC may terminate the merger agreement either before or after the FNBSBC special shareholders meeting, under certain circumstances. See “The Merger – Termination of the Merger Agreement.”
Break-Up Fee
The merger agreement provides that FNBSBC must pay Glacier abreak-up fee of $3,200,000$6,000,000 if the merger agreement is terminated(i) by Glacier if the FNBSBC Board fails to recommend approval of the merger agreement by FNB’sSBC’s shareholders or modifies, withdraws or adversely changes its recommendation, or(ii) by the FNBSBC Board due to its determination that an acquisition proposal received by FNBSBC constitutes a “Superior Proposal” (as defined in the merger agreement), which is acted upon by FNB,SBC, or(iii) by Glacier because an “Acquisition Event” (as defined in the merger agreement) with respect to FNBSBC has occurred. In addition, abreak-up fee of $3,200,000$6,000,000 will be due to Glacier if the merger agreement is terminated(1) by Glacier or FNBSBC due to a failure of FNB’sSBC’s shareholders to approve the merger agreement, (2) by Glacier for FNB’sSBC’s breach of certain covenants set forth in the merger agreement, or(3) by Glacier because a third party has made a proposal to FNB or its shareholders to engage in, or enter into an agreement with respect to, an Acquisition Event and the merger agreement and the merger are not approved by FNB’s shareholdersand within 18 months after any such termination described in clauses(1) throughand(3)(2) above, FNBSBC or the Bank enters into an agreement for, or publicly announces its intention to engage in, an Acquisition Event or within 18 months after any such termination described in clauses(1) throughand(3)(2)above, an Acquisition Event will have occurred.occurs.
FNBSBC agreed to pay thebreak-up fee under the circumstances described above in order to induce Glacier to enter into the merger agreement. This arrangement could have the effect of discouraging other companies from trying to acquire FNB.SBC. See “The Merger –Break-up Fee.”
FNBSBC Shareholders’ Rights After the Merger
The rights of FNBSBC shareholders are governed by UtahArizona law, as well as by FNB’sSBC’s amended and restated articles of incorporation (“FNB’sSBC’s articles”) and amended and restated bylaws (“FNB’sSBC’s bylaws”). After completion of the merger, the rights of the former FNBSBC shareholders receiving Glacier common stock in the merger will be governed by Montana law, and will be governed by Glacier’s amended and restated articles of incorporation (“Glacier’s articles”) and amended and restated bylaws (“Glacier’s bylaws”). Although Glacier’s articles and Glacier’s bylaws are similar in many ways to FNB’sSBC’s articles and FNB’sSBC’s bylaws, there are some substantive and procedural differences that will affect the rights of FNBSBC shareholders. See “Comparison of Certain Rights of Holders of Glacier and FNBSBC Common Stock.”
In addition to the other information contained in or incorporated by reference into this document, including the matters addressed under the caption “Cautionary Note Regarding Forward-Looking Statements,” you should consider the matters described below carefully in determining whether or not to approve the merger agreement and the transactions contemplated by the merger agreement.
Risks Associated with the Proposed Merger
Because you are receiving a fixed number of shares (subject to adjustment) and the market price of the Glacier common stock may fluctuate, you cannot be sure of the value of the shares of Glacier common stock that you will receive.
At the time of the FNBSBC special shareholder meeting, and prior to the closing of the merger, you will not be able to determine the value of the Glacier common stock that you will receive upon completion of the merger. Any change in the market price of Glacier common stock prior to completion of the merger will affect the value of the consideration that FNBSBC shareholders will receive in the merger. Common stock price changes may result from a variety of factors, including but not limited to general market and economic conditions, changes in Glacier’s business, operations and prospects, and regulatory considerations. Many of these factors are beyond the control of Glacier or FNB. On March 11, 2019, the closing price of Glacier common stock was $41.06.SBC. You should obtain current market prices for Glacier common stock.
The merger agreement provides that the number of shares of Glacier common stock to be issued for each share of FNBSBC common stock in the merger may be decreased or increased, as the case may be, if the average closing price of Glacier common stock, determined pursuant to the merger agreement, is greater than or less than specified prices. If Glacier’s average closing price determined in accordance with the merger agreement is greater than $46.63$47.31 and Glacier elects to terminate the merger agreement, the FNBSBC Board wouldcould determine, without resoliciting the vote of FNBSBC shareholders, whether or not to accept a decrease on aper-share basis in the number of shares of Glacier common stock to be issued in the merger to avoid such termination. See “The Merger – Termination of the Merger Agreement.”
The merger agreement limits FNB’sSBC’s ability to pursue other transactions and provides for the payment of abreak-up fee if FNBSBC does so.
While the merger agreement is in effect, subject to very narrow exceptions, FNBSBC and its directors, officers, employees, agents and representatives are prohibited from initiating or encouraging inquiries with respect to alternative acquisition proposals. The prohibition limits FNB’sSBC’s ability to seek offers from other potential acquirers that may be superior from a financial point of view to the proposed transaction. If FNBSBC receives an unsolicited proposal from a third party that is superior from a financial point of view to that made by Glacier and the merger agreement is terminated, FNBSBC will be required to pay a $3,200,000$6,000,000break-up fee. This fee makes it less likely that a third party will make an alternative acquisition proposal. See “The Merger –Break-Up Fee.”
Combining our two companies may be more challenging, costly or time-consuming than we expect.
Glacier and FNBSBC have operated and, until the completion of the merger, will continue to operate, independently. Although Glacier has successfully completed numerous mergers in the recent past, it is possible that the integration of the Bank into Glacier Bank could result in the loss of key employees, the disruption of the ongoing business of the Bank or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers and employees or to achieve the anticipated benefits of the merger. As with any merger of banking institutions, there also may be disruptions that cause us to lose customers or cause customers to take their deposits out of the Bank.
Unanticipated costs relating to the merger could reduce Glacier’s future earnings per share.
Glacier believes that it has reasonably and conservatively estimated the likely costs of integrating the operations of the Bank into Glacier Bank, and the incremental costs of operating as a combined financial institution. However, it is possible that unexpected transaction costs or future operating expenses, as well as other types of unanticipated adverse developments, could have a material adverse effect on the results of operations and financial condition of Glacier after the merger. If the merger is completed and unexpected costs are incurred, the merger could have a dilutive effect on Glacier’s earnings per share, meaning earnings per share could be less than they would be if the merger had not been completed.
The merger agreement may be terminated in accordance with its terms and the merger may not be completed, which could have a negative impact on SBC.
The merger agreement with Glacier is subject to a number of conditions that must be fulfilled in order to close. Those conditions include: approval by the shareholders of SBC, regulatory approval, the continued accuracy of certain representations and warranties by both parties (subject to the materiality standards set forth in the merger agreement), and the performance by both parties of certain covenants and agreements. In addition, certain circumstances exist in which SBC may terminate the merger, including by accepting a superior proposal or by electing to terminate if Glacier’s stock price declines below a specified level. There can be no assurance that the conditions to closing the merger will be fulfilled or that the merger will be completed.
If the merger agreement is terminated, there may be various consequences to SBC, including:
SBC’s business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger; and
SBC may have incurred substantial expenses in connection with the merger, without realizing any of the anticipated benefits of completing the merger.
If the merger agreement is terminated and the SBC Board approves another merger or business combination, under certain circumstances SBC may be required to pay Glacier a $6,000,000 termination fee. SBC’s shareholders cannot be certain that SBC will be able to find a party willing to pay an equivalent or more attractive price than the price Glacier has provisionsagreed to pay in its articlesthe merger.
The fairness opinion delivered to the SBC Board before the execution of incorporation that could impede a takeoverthe merger agreement does not reflect changes in circumstances subsequent to the date of Glacier.the fairness opinion.
Glacier’s articles contain provisions providing for, among other things, preferred stockThe fairness opinion of Davidson was delivered to the SBC Board on September 30, 2019 and super majority shareholder approvalspeaks only as of certain business combinations. Although these provisions were not adopted for the express purpose of preventing or impeding the takeover of Glacier without the approval of Glacier’s board of directors, they may have that effect. Such provisions may prevent you from taking partsuch date. Changes in a transaction in which you could realize a premium over the current market price of Glacier common stock. See “Comparison of Certain Rights of Holdersoperations and prospects of Glacier and FNB Common Stock” for a descriptionSBC, general market and economic conditions, and other factors both within and outside of Glacier’s potential takeover provisions.and SBC’s control may significantly alter the relative value of the companies by the time the merger is completed. Davidson’s opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion.
After the merger is completed, FNBSBC shareholders will become Glacier shareholders and will have different rights that may be less advantageous than their current rights.
Upon completion of the merger, FNBSBC shareholders will become Glacier shareholders. Differences in FNB’sSBC’s articles and FNB’sSBC’s bylaws and Glacier’s articles and Glacier’s bylaws will result in changes to the rights of FNBSBC shareholders who become Glacier shareholders. See “Comparison of Certain Rights of Holders of Glacier and FNBSBC Common Stock.”
SBC’s shareholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.
SBC’s shareholders currently have the right to vote in the election of the SBC Board and on other significant matters affecting SBC, such as the proposed merger with Glacier. When the merger occurs, each SBC shareholder will become a shareholder of Glacier with a percentage ownership of the combined organization that is much smaller than the shareholder’s percentage ownership of SBC. Based on the anticipated number of Glacier common shares to be issued in the merger, it is anticipated that the SBC shareholders will only own approximately 3.4% of all of the outstanding shares of Glacier’s common stock following the merger. Because of this, SBC’s shareholders will have less influence on the management and policies of Glacier than they now have on the management and policies of SBC. Furthermore, shareholders of Glacier do not have preemptive or similar rights, and therefore, Glacier can sell additional voting securities in the future without offering them to the former SBC shareholders, which would further reduce their ownership percentage in, and voting control over, Glacier.
The merger may fail to qualify as a reorganization for federal tax purposes, resulting in the recognition by SBC’s shareholders of taxable gain or loss in respect of their SBC shares.
Glacier and SBC intend the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. Glacier and SBC, as a condition to closing, will each obtain an opinion from their respective legal counsel that the merger will qualify as a reorganization for federal tax purposes. These opinions do not bind the Internal Revenue Service or prevent the Internal Revenue Service from adopting a contrary position. Neither Glacier nor SBC has requested and neither intends to request any ruling from the Internal Revenue Service as to the U.S. federal income tax consequences of the merger. If the merger fails to qualify as a reorganization, an SBC shareholder generally would recognize gain or loss in an amount equal to the difference between (i) the sum of the amount of cash and the aggregate fair market value of the Glacier common stock received in the exchange, and (ii) the SBC shareholder’s aggregate adjusted tax basis in the SBC common stock surrendered in the exchange. Furthermore, if the merger fails to qualify as a reorganization, Glacier, as successor to SBC, may incur a significant tax liability since the merger would be treated as a taxable sale of SBC’s assets for U.S. federal income tax purposes.
Failure to complete the merger could negatively impact the stock prices and future businesses and financial results of Glacier and SBC.
If the merger is not completed, the ongoing businesses of Glacier and SBC may be adversely affected, and Glacier and SBC will be subject to several risks, including the following:
SBC may be required, under certain circumstances, to pay Glacier abreak-up fee of $6,000,000 under the merger agreement;
Glacier and SBC will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;
under the merger agreement, SBC is subject to certain restrictions on the conduct of its business prior to completing the merger, which may adversely affect its ability to execute certain of its business strategies; and
matters relating to the merger may require substantial commitments of time and resources by Glacier’s and SBC’s management, which could otherwise have been devoted to other opportunities that may have been beneficial to Glacier and SBC as independent companies, as the case may be.
In addition, if the merger is not completed, Glacier and/or SBC may experience negative reactions from the financial markets and from their respective customers and employees. Glacier and/or SBC also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against Glacier or SBC to perform their respective obligations under the merger agreement. If the merger is not completed, Glacier and SBC cannot assure their respective shareholders that the risks described above will not materialize and will not materially affect the business, financial results and stock prices of Glacier and/or SBC.
The merger is subject to the receipt of approvals and/or waivers ornon-objections from governmental authorities that may delay the date of completion of the merger or impose conditions that could have an adverse effect on Glacier.
Before the merger may be completed, various approvals, waivers ornon-objections must be obtained from state and federal governmental authorities, including the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Commissioner of the Montana Division of Banking and Financial Institutions, and the Arizona Department of Financial Institutions. Satisfying the requirements of these governmental authorities may delay the date of completion of the merger. In addition, these governmental authorities may include conditions on the completion of the merger, or require changes to the terms of the merger. While Glacier and SBC do not currently expect that any such conditions or changes would result in a material adverse effect on Glacier, there can be no assurance that they will not, and such conditions or changes could have the effect of delaying completion of the merger, or imposing additional costs on or limiting the revenues of Glacier following the merger, any of which might have a material adverse effect on Glacier following the merger. The parties are not obligated to complete the merger should any required regulatory approval, waiver ornon-objection contain a condition or requirement not normally imposed in such transactions that, in the commercially reasonable and good faith opinion of Glacier’s board of directors, would deprive Glacier of the material economic or business benefits of the merger.
Risks Associated with Glacier’s Business
Glacier is, and will continue to be, subject to the risks described in Glacier’s Annual Report on Form10-K for the fiscal year ended December 31, 2018, as updated by a Quarterly Report on Form10-Q for the quarter ended June 30, 2019, and subsequent Current Reports on Form8-K, and Quarterly Reports on Form10-Q, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “References to Additional Information” and “Where You Can Find More Information” included elsewhere in this proxy statement/prospectus.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document, including information included or incorporated by reference in this document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to,(i) statements about the benefits of the merger, including future financial and operating results, cost savings, enhancements to revenue and accretion to reported earnings that may be realized from the merger;(ii) statements about our respective plans, objectives, expectations and intentions and other statements that are not historical facts; and(iii) other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Glacier’s and FNB’sSBC’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
In addition to factors previously disclosed in Glacier’s reports filed with the SEC relating to risks to Glacier’s business and stock price, and those identified elsewhere in this document (including the section entitled “Risk Factors”), the following potential factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed or implied in the forward-looking statements:
the merger may not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all;
Glacier’s stock price could change before closing of the merger due to, among other things, stock market movements and the performance of financial companies and peer group companies, over which Glacier has no control;
benefits from the merger may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions and the degree of competition in the geographic and business areas in which Glacier and FNBSBC operate;
FNB’sSBC’s business may not be integrated into Glacier’s successfully, or such integration may take longer to accomplish than expected;
the anticipated growth opportunities and cost savings from the merger may not be fully realized or may take longer to realize than expected; and
operating costs, customer losses and business disruption following the merger, including adverse developments in relationships with customers, employees, and counterparties may be greater than expected.
All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to Glacier or FNBSBC or any person acting on behalf of Glacier or FNBSBC are expressly qualified in their entirety by the cautionary statements above. Neither Glacier nor FNBSBC undertakes any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
SELECTED HISTORICAL FINANCIAL INFORMATION OF GLACIER
The following table presents selected consolidated financial information of Glacier for the fiscal yearsperiods and dates indicated. This information has been derived from Glacier’s consolidated financial statements filed with the SEC. Historical data as of and for the six months ended December 31,June 30, 2019 and 2018 2017, 2016, 2015,are based upon unaudited financial statements and 2014.include, in the opinion of Glacier management, all normal recurring adjustments considered necessary to present fairly the results of operations and financial condition of Glacier. The consolidated financial data below should be read in conjunction with the consolidated financial statements and notes thereto, incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information.”
At or for the Fiscal Years Ended December 31 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | At or for the Fiscal Years Ended December 31 | |||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
Dollars in thousands, exceptper-share data | (Dollars in Thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operations: | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 468,996 | $ | 375,022 | $ | 344,153 | $ | 319,681 | $ | 299,919 | $ | 258,501 | $ | 220,781 | $ | 468,996 | $ | 375,022 | $ | 344,153 | $ | 319,681 | $ | 299,919 | ||||||||||||||||||||||||
Interest expense | 35,531 | 29,864 | 29,631 | 29,275 | 26,966 | 22,993 | 16,935 | 35,531 | 29,864 | 29,631 | 29,275 | 26,966 | ||||||||||||||||||||||||||||||||||||
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Net interest income | 433,465 | 345,158 | 314,522 | 290,406 | 272,953 | 235,508 | 203,846 | 433,465 | 345,158 | 314,522 | 290,406 | 272,953 | ||||||||||||||||||||||||||||||||||||
Provision for loan losses | 9,953 | 10,824 | 2,333 | 2,284 | 1,912 | 57 | 5,513 | 9,953 | 10,824 | 2,333 | 2,284 | 1,912 | ||||||||||||||||||||||||||||||||||||
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Net interest income after provision for loan losses | 423,512 | 334,334 | 312,189 | 288,122 | 271,041 | 235,451 | 198,333 | 423,512 | 334,334 | 312,189 | 288,122 | 271,041 | ||||||||||||||||||||||||||||||||||||
Noninterest income | 118,824 | 112,239 | 107,318 | 98,761 | 90,302 | 59,308 | 57,914 | 118,824 | 112,239 | 107,318 | 98,761 | 90,302 | ||||||||||||||||||||||||||||||||||||
Noninterest expenses | 320,127 | 265,571 | 258,714 | 236,757 | 212,679 | 169,000 | 155,422 | 320,127 | 265,571 | 258,714 | 236,757 | 212,679 | ||||||||||||||||||||||||||||||||||||
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Pre-tax net income | 222,209 | 181,002 | 160,793 | 150,126 | 148,664 | 125,759 | 100,825 | 222,209 | 181,002 | 160,793 | 150,126 | 148,664 | ||||||||||||||||||||||||||||||||||||
Taxes | 40,331 | 64,625 | 39,662 | 33,999 | 35,909 | 24,235 | 17,882 | 40,331 | 64,625 | 39,662 | 33,999 | 35,909 | ||||||||||||||||||||||||||||||||||||
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Net income | $ | 181,878 | $ | 116,377 | $ | 121,131 | $ | 116,127 | $ | 112,755 | $ | 101,524 | $ | 82,943 | $ | 181,878 | $ | 116,377 | $ | 121,131 | $ | 116,127 | $ | 112,755 | ||||||||||||||||||||||||
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Basic earnings per share | $ | 2.18 | $ | 1.50 | $ | 1.59 | $ | 1.54 | $ | 1.51 | $ | 1.19 | $ | 1.00 | $ | 2.18 | $ | 1.50 | $ | 1.59 | $ | 1.54 | $ | 1.51 | ||||||||||||||||||||||||
Diluted earnings per share | $ | 2.17 | $ | 1.50 | $ | 1.59 | $ | 1.54 | $ | 1.51 | $ | 1.19 | $ | 1.00 | $ | 2.17 | $ | 1.50 | $ | 1.59 | $ | 1.54 | $ | 1.51 | ||||||||||||||||||||||||
Cash dividends per share | $ | 1.31 | $ | 1.14 | $ | 1.10 | $ | 1.05 | $ | 0.98 | $ | 0.53 | $ | 0.49 | $ | 1.31 | $ | 1.14 | $ | 1.10 | $ | 1.05 | $ | 0.98 | ||||||||||||||||||||||||
Statement of Financial Conditions: | Statement of Financial Conditions: |
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Total assets | $ | 12,115,484 | $ | 9,706,349 | $ | 9,450,600 | $ | 9,089,232 | $ | 8,306,507 | ||||||||||||||||||||||||||||||||||||||
Net loans receivable | 8,156,310 | 6,448,256 | 5,554,891 | 4,948,984 | 4,358,342 | |||||||||||||||||||||||||||||||||||||||||||
Total deposits | 9,493,767 | 7,579,747 | 7,372,279 | 6,945,008 | 6,345,212 | |||||||||||||||||||||||||||||||||||||||||||
Total assets* | $ | 12,676,361 | $ | 11,897,644 | $ | 12,115,484 | $ | 9,706,349 | $ | 9,450,600 | $ | 9,089,232 | $ | 8,306,507 | ||||||||||||||||||||||||||||||||||
Net loans receivable* | 8,712,723 | 7,817,108 | 8,156,310 | 6,448,256 | 5,554,891 | 4,948,984 | 4,358,342 | |||||||||||||||||||||||||||||||||||||||||
Total deposits* | 9,854,875 | 9,423,575 | 9,493,767 | 7,579,747 | 7,372,279 | 6,945,008 | 6,345,212 | |||||||||||||||||||||||||||||||||||||||||
Total borrowings | 985,085 | 850,927 | 855,830 | 949,995 | 827,067 | 969,324 | 900,527 | 985,085 | 850,927 | 855,830 | 949,995 | 827,067 | ||||||||||||||||||||||||||||||||||||
Shareholder’s equity | 1,515,854 | 1,199,057 | 1,116,869 | 1,076,650 | 1,028,047 | 1,687,376 | 1,473,992 | 1,515,854 | 1,199,057 | 1,116,869 | 1,076,650 | 1,028,047 | ||||||||||||||||||||||||||||||||||||
Book value per share | $ | 17.93 | $ | 15.37 | $ | 14.59 | $ | 14.15 | $ | 13.70 | $ | 19.48 | $ | 17.44 | $ | 17.93 | $ | 15.37 | $ | 14.59 | $ | 14.15 | $ | 13.70 | ||||||||||||||||||||||||
Key Operating Ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on average assets | 1.59 | % | 1.20 | % | 1.32 | % | 1.36 | % | 1.42 | % | 1.68% | 1.52% | 1.59% | 1.20% | 1.32% | 1.36% | 1.42% | |||||||||||||||||||||||||||||||
Return on average equity | 12.56 | % | 9.80 | % | 10.79 | % | 10.84 | % | 11.11 | % | 12.91% | 11.99% | 12.56% | 9.80% | 10.79% | 10.84% | 11.11% | |||||||||||||||||||||||||||||||
Average equity to average assets | 12.67 | % | 12.27 | % | 12.27 | % | 12.52 | % | 12.81 | % | 13.02% | 12.65% | 12.67% | 12.27% | 12.27% | 12.52% | 12.81% | |||||||||||||||||||||||||||||||
Net interest margin (tax equivalent) | 4.21 | % | 4.12 | % | 4.02 | % | 4.00 | % | 3.98 | % | 4.33% | 4.14% | 4.21% | 4.12% | 4.02% | 4.00% | 3.98% | |||||||||||||||||||||||||||||||
Non-performing assets over subsidiary assets | 0.47 | % | 0.68 | % | 0.76 | % | 0.88 | % | 1.08 | % | 0.41% | 0.71% | 0.47% | 0.68% | 0.76% | 0.88% | 1.08% | |||||||||||||||||||||||||||||||
Dividend payout ratio | 60.09 | % | 76.00 | % | 69.18 | % | 68.18 | % | 64.90 | % | 44.54% | 49.00% | 60.09% | 76.00% | 69.18% | 68.18% | 64.90% |
* | Amounts exclude the acquisition of Heritage Bank which was acquired as of 7/31/19. As of 6/30/19, Heritage had total assets of $842 million, gross loans of $612 million, and total deposits of $717 million. |
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION
Glacier Common Stock
Glacier common stock is quoted on The NASDAQ Global Select Market under the symbol “GBCI.” The following table sets forth for the periods indicated:
the high and low sales prices per share for Glacier common stock as reported on The NASDAQ Global Select Market; and
cash dividends declared per share on Glacier common stock.
High | Low | Cash Dividends Declared | High | Low | Cash Dividends Declared | |||||||||||||||||||
2017 | ||||||||||||||||||||||||
First quarter | $ | 38.17 | $ | 31.70 | $ | 0.21 | $ | 38.17 | $ | 31.70 | $ | 0.21 | ||||||||||||
Second quarter | $ | 37.41 | $ | 31.56 | $ | 0.21 | $ | 37.41 | $ | 31.56 | $ | 0.21 | ||||||||||||
Third quarter | $ | 38.18 | $ | 31.38 | $ | 0.51 | $ | 38.18 | $ | 31.38 | $ | 0.51 | ||||||||||||
Fourth quarter | $ | 41.23 | $ | 35.50 | $ | 0.21 | $ | 41.23 | $ | 35.50 | $ | 0.21 | ||||||||||||
2018 | ||||||||||||||||||||||||
First quarter | $ | 41.24 | $ | 36.72 | $ | 0.23 | $ | 41.24 | $ | 36.72 | $ | 0.23 | ||||||||||||
Second quarter | $ | 41.47 | $ | 35.77 | $ | 0.26 | $ | 41.47 | $ | 35.77 | $ | 0.26 | ||||||||||||
Third quarter | $ | 46.28 | $ | 38.37 | $ | 0.26 | $ | 46.28 | $ | 38.37 | $ | 0.26 | ||||||||||||
Fourth quarter | $ | 47.67 | $ | 36.84 | $ | 0.56 | $ | 47.67 | $ | 36.84 | $ | 0.56 | ||||||||||||
2019 | ||||||||||||||||||||||||
First quarter (through March 11, 2019) | $ | 45.47 | $ | 38.86 | $ | 0.00 | ||||||||||||||||||
First quarter | $ | 45.47 | $ | 37.58 | $ | 0.26 | ||||||||||||||||||
Second quarter | $ | 43.44 | $ | 38.65 | $ | 0.27 | ||||||||||||||||||
Third quarter | $ | 42.61 | $ | 37.70 | $ | 0.29 | ||||||||||||||||||
Fourth quarter (through [ ], 2019) |
At March 11,[], 2019, the 84,579,372[] outstanding shares of Glacier common stock were held by approximately 2,414[] holders of record.
FNBSBC Common Stock
FNBTrading in SBC’s common stock has not been extensive and such trades cannot be characterized as constituting an active trading market. SBC’s common stock is not listed on a stock market orany national securities exchange, although it is quoted on any“over-the-counter” marketthe OTC Pink under the ticker symbol “SBAZ.” The following table sets forth for the periods indicated:
high and has been traded only very infrequently. Accordingly, there is no established trading marketlow bid prices for FNBSBC common stock. The trades that have occurred have been in accordance with the terms of the Amended and Restated Shareholder Agreement (as subsequently amended, the “Shareholder Agreement”). FNB shares covered by the Shareholder AgreementBid prices are generally subject to a right of first refusal of FNB and FNB shareholders other than the proposed transferee. The Shareholder Agreement also prohibits any transfer of FNB shares that would, or with the passage of time would, cause a termination of FNB’s election to be subject to subchapter S of the Internal Revenue Code. Upon consummation of the merger, the Shareholder Agreement will be terminated.
FNB has historically paid dividendsbased on its common stock based upon the estimated tax liability of its shareholders arisinginformation received from the pass through of FNB income to shareholders under stateOTC Pink based on all transactions reported on the OTC Pink. Such information reflects inter-dealer prices, without retail markups, markdowns or commissions and federal income tax law. FNB has historically declared andmay not reflect actual transactions.
cash distributions paid dividends based upon assumed marginal state and federal income tax rates as well as payout ratios of earnings from operations. Total dividends per share were $0.72 in 2015, 0.76 in 2016 and $1.05 in 2017.on SBC common stock.
High | Low | Cash Dividends Declared | ||||||||||
2017 | ||||||||||||
First quarter | $ | 8.00 | $ | 7.28 | $ | 0.035 | ||||||
Second quarter | $ | 8.25 | $ | 7.75 | $ | 0.035 | ||||||
Third quarter | $ | 8.50 | $ | 8.06 | $ | 0.04 | ||||||
Fourth quarter | $ | 11.50 | $ | 8.22 | $ | 0.04 | ||||||
2018 | ||||||||||||
First quarter | $ | 12.15 | $ | 10.75 | $ | 0.06 | ||||||
Second quarter | $ | 15.95 | $ | 12.05 | $ | 0.06 | ||||||
Third quarter | $ | 17.80 | $ | 13.80 | $ | 0.06 | ||||||
Fourth quarter | $ | 15.0 | $ | 11.50 | $ | 0.06 | ||||||
2019 | ||||||||||||
First quarter | $ | 13.70 | $ | 12.15 | $ | 0.075 | ||||||
Second quarter | $ | 13.20 | $ | 11.49 | $ | 0.075 | ||||||
Third quarter | $ | 13.35 | $ | 12.10 | $ | 0.075 | ||||||
Fourth quarter (through [ ], 2019) |
At March 6,[], 2019, the 3,160,969[] outstanding shares of FNBSBC common stock were held by approximately 147[] holders of record.
FNBSBC SPECIAL SHAREHOLDERS’ MEETING
Date, Time, Place
The FNBSBC special meeting of shareholders will be held on April 18,[], 2019, at 10:00 a.m.[] [].m. Mountain Standard Time, at the Davis Conference Center located at 1651 North 700 West, Layton, Utah 84041.[], Lake Havasu City, Arizona.
As described below under “Votes Required and Quorum,” approval of the merger agreement requires the affirmative vote of at least a majority of the outstanding shares of FNB’s outstandingSBC’s common stock.stock entitled to vote on the matter. The proposal to adjourn the special meeting, if necessary or appropriate, including adjournments to solicit additional proxies, will be approved if the votes cast in favorapproved by a majority of the proposal exceed the votes cast against the proposal,voting power present, whether in person or by proxy, assuming a quorum is present. If less than a quorum is represented at the special meeting, a majority of the shares so represented may adjourn the special meeting without further notice.
Purpose
At the special meeting, FNBSBC shareholders will:
Consider and vote on a proposal to approve the Plan and Agreement of Merger, dated as of January 16,September 30, 2019, among Glacier, Glacier Bank, FNBSBC and the Bank, under the terms of which FNBSBC will merge with and into Glacier and the Bank will merge with and into Glacier Bank. The merger agreement is attached asAppendix A.
Approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to solicit additional proxies in favor of the merger agreement.
Record Date; Shares Outstanding and Entitled to Vote
The FNBSBC Board has fixed 5:00 p.m. Mountain Timethe close of business on March 6,[], 2019 as the record date for determining the holders of shares of FNBSBC common stock entitled to notice of and to vote at the special meeting. At the close of business on the record date, there were approximately 147[] holders of record and 3,160,969[] shares of FNBSBC common stock issued and outstanding.outstanding, excluding [] shares of unvested restricted stock, which do not have voting rights. Holders of record of FNBSBC common stock, excluding unvested restricted shares, on the record date are entitled to one vote per share and are also entitled to exercise dissenters’ rights if certain procedures are followed. See “The Merger – Dissenters’ Rights” andAppendix B.
FNB’sSBC’s directors and executive officers and certain significant shareholders have agreed to vote all shares of FNBSBC common stock they are entitled to vote that are held or controlled by them in favor of approval of the merger agreement. As of the record date, hereof, a total of 1,357,605[] shares of FNBSBC common stock, representing approximately 42.95%[]% of all outstanding shares of FNBSBC common stock, excluding shares of unvested restricted stock, are covered by thesubject to voting agreement.agreements. See “The Merger – Interests of FNBSBC Directors and Executive Officers in the Merger – Voting Agreement.Agreements.”
Votes Required and Quorum
The affirmative vote of the holders of at least a majority of the outstanding shares of FNB’s outstandingSBC’s common stock entitled to vote is required to approve the merger agreement. At least a majority of the total outstanding shares of FNBSBC common stock entitled to vote must be present, either in person or by proxy, in order to constitute a quorum for the special meeting. For purposes of determining a quorum, abstentions areand brokernon-votes will be counted in determining the shares present at a meeting.
For voting purposes, however, shares must be affirmatively votedFOR approval of the merger agreement in order to be counted as votes in favor of the merger. As a result, abstentions and brokernon-voteswith respect to the proposal to approve the merger agreement will have the same effect as votes against such proposal.
If less thanWith respect to the proposal to adjourn the special meeting if necessary or appropriate, if a quorum is representednot present at the special meeting, a majority ofshareholders entitled to vote at the shares so represented mayspecial meeting, present in person or by proxy, will have the power to adjourn the special meeting. If a quorum is present at the special meeting, without further notice. Thethe proposal to adjourn the special meeting, if necessary or appropriate, including adjournmentsan adjournment to solicit additional proxies in favor of the merger agreement, will be approved if the votes cast in favorapproved by a majority of the proposal exceedvoting power present at the votes cast against the proposal, assuming a quorum is present.special meeting, whether in person or by proxy.
Voting, Solicitation, and Revocation of Proxies
If you are a holder of record of SBC common stock as of the record date for the special meeting there are four ways to have your shares voted:
You can submit a proxy over the Internet at www.investorvote.com/SBAZ, 24 hours a day, seven days a week, by following the instructions on your proxy card.
You can submit a proxy using a touch-tone telephone by calling 1-800-652-8683, 24 hours a day, seven days a week, and following the instructions on your proxy card.
• | You may complete, sign and mail your proxy card to Computershare, 462 South 4th Street, Suite 1600, Louisville, KY 40202. |
Finally, you may vote in person by written ballot at the special meeting.
If the enclosed proxy card is duly executed and received in time for the special meeting, it will be voted in accordance with the instructions given. If the proxy card is duly executed and received but no instructions are given, it is the intention of the persons named in the proxy to vote the shares represented by the proxyFOR the approval of the merger agreement andFOR the proposal to approve one or more adjournments to solicit additional proxies, and in the proxy holder’s discretion on any other matter properly coming before the meeting. Any proxy given by a shareholder may be revoked before its exercise by:
sending written notice to the Secretary of FNB;SBC;
granting a new, valid proxy bearing a later date (by telephone, through the Internet or by completing and submitting a later-dated proxy;proxy card); or
attending and voting at the special meeting in person.person, although attendance at the special meeting will not, by itself, revoke a proxy.
FNBSBC is soliciting the proxy for the special meeting on behalf of the FNBSBC Board. FNBSBC will bear the cost of solicitation of proxies from its shareholders. In addition to using the mail, FNBSBC may solicit proxies by personal interview, telephone, and facsimile. Banks, brokerage houses, other institutions, nominees, and fiduciaries will be requested to forward their proxy soliciting material to their principals and obtain authorization for the execution of proxies. FNB does not expect to pay any compensation for the solicitation of proxies. However, FNBSBC will, upon request, pay the standard charges and expenses of banks, brokerage houses, other institutions, nominees, and fiduciaries for forwarding proxy materials to and obtaining proxies from their principals.
Voting in Person at the Special Meeting
Shares helddirectly in your name as the shareholder of record may be voted in person at the special meeting. If you choose to vote your shares of FNBSBC common stock in person, please bring the enclosed proxy card or proof of identification. Even if you plan to attend the special meeting, we recommend that you vote your shares of FNBSBC common stock in advance as described above so that your vote will be counted if you later decide not to attend the special meeting.
If your shares are registered in “street name” in the name of a broker or other nominee and you wish to vote at the special meeting, you will need to obtain a legal proxy from your bank or brokerage firm. Please consult the voting form sent to you by your bank or broker to determine how to obtain a legal proxy in order to vote in person at the meeting.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger
From time to time, the FNBAs part of its ongoing consideration and evaluation of SBC’s long-term prospects and strategy, SBC’s Board of Directors and senior management have periodically reviewed and assessed strategic opportunities and challenges. The Board of Directors has discussed, analyzed and considered the valueprospects of continued growth and significanceoperating a financial institution under current economic, regulatory and competitive conditions. At the same time, like many other smaller financial institutions, SBC has experienced increasing costs related to technology and regulatory compliance.
As part of FNBthe Board of Directors’ and management’s evaluation of ways to its shareholders, customers,meet these challenges, they have met regularly with Davidson to review developments in the banking industry and employees,the equity markets generally, the mergers and acquisitions market, SBC’s financial performance relative to certain other financial institutions, capital management strategies and valuation trends. Davidson is a nationally recognized investment banking firm with substantial experience advising financial institutions generally, including with respect to mergers and acquisitions.
On July 9, 2018, the SBC Board held a meeting to evaluate a potential strategy for SBC to complete an initial public offering (“IPO”). Davidson and Hogan Lovells US LLP, SBC’s outside legal counsel (“Hogan”), also attended the meeting. The meeting included discussion regarding the requirements for being a public company, as well as the vital role it has playedbenefits and costs to be incurred if SBC decided to pursue an IPO strategy.
On November 29, 2018, the SBC Board held a strategic meeting as part of the Board’s ongoing assessment of SBC’s strategic opportunities and challenges. Representatives of Davidson and Hogan also attended the meeting. At the meeting, Hogan reviewed strategic planning guidelines and an overview of director responsibilities and conduct during the strategic planning process, and the Board reviewed and discussed with Hogan the Board’s fiduciary duties in a merger context. Davidson discussed with the Board developments in the local communitybanking industry, an update on the equity markets as well as valuations for over 110 years. In recent years, several bank holding companies have expressed interestpeer financial institutions and other financial institutions in pursuing a combination with FNB,general, the mergers and acquisition market and current valuation metrics. The discussion also included SBC’s desire to evaluate potential acquisition targets, and the limited number of viable acquisition targets remaining for SBC, especially in Arizona. Davidson also reviewed the merger and acquisition process and other merger considerations, including a list of potential strategic partners for SBC, which such list included Glacier. The SBC Board authorized Brian Riley to contact three parties, including Glacier and Parties A and B, to discuss the possibility of a merger and execute an NDA with the parties.
On December 5, 2018, Brian Riley contacted the CEO of equalsParty A. The parties executed a nondisclosure agreement on December 21, 2018, and an acquisition by a larger institution. As part of its responsibilityParty A was provided with access to consider these expressions of interest, the FNB Board engaged Sandler O’Neill in April of 2014 to provide strategic advisory services to FNB. The FNB Board considered each of the opportunities as they arose,certain confidential information for due diligence.
On December 12, 2018, Brian Riley contacted Glacier’s CEO. Mr. Riley previously met with Glacier’s CEO and each time the FNB Board ultimately determined that remaining independent was in the best interests of the shareholders they represented.
Like many other community banks, the FNB Board has strategized around a number of business issues including: increasing competition from bank andnon-bank institutions, continued allowance of regulatory overreach from local credit unions, heightened compliance and regulatory risk, succession planning around an aging management team, and maintaining loan growth in the face of rising real estate lending concentrations. At an FNB Board meetingSenior Executives in May of 2018, President2017 and Chief Executive Officer K. John Jones presented a shareholder value analysis. The FNB Board considered the analysis and its duty to maximize value for shareholders, as well its responsibility for maintaining the historic legacy of service to the local community, dedicated employees, and the loyal customer base. The FNB Board concluded that remaining independent was in the best interests of the shareholders but confirmed that that if FNB received a bona fide acquisition proposal that would reasonably be expected to result in a certain value for shareholders, that the FNB Board would need to seriously consider the proposal as an alternative to remaining independent, consistent with its fiduciary duty to the shareholders.
Following the FNB Board’s decision to remain independent, Mr. Jones contacted representatives of Sandler O’Neill in early JulySeptember of 2018 and terminated the existing engagement letter.
Later in July of 2018 the Chief Executive Officer of a bank holding company, which we refer to as Company A, met with FNB’s Chairman, Kevin Garn, to discuss business opportunitiesa potential strategic partnership. The parties decided to schedule a meeting in Kalispell, Montana for January 14, 2019, to further discuss a potential merger between Company A and FNB.the two companies. At thethis meeting, Company A’s Chief Executive Officer expressed his strongGlacier described interest in acquiring FNB and expressed Company A’s willingnessmerger discussions, but could not announce a transaction with SBC until the fourth quarter 2019, since Glacier was working on other pending acquisition opportunities which had not been publicly announced. The parties agreed to paypostpone further discussions on a significant merger premium. Followinguntil the meeting, Chairman Garn and Mr. Jones discussed the meeting with representativessummer of Sandler O’Neill and determined it was likely that Company A would make an acquisition proposal that would meet or exceed the threshold established by the FNB Board at its May 2018 meeting. Accordingly, Chairman Garn and Mr. Jones directed representatives of Sandler O’Neill to contact Company A to try to determine the maximum value that Company A would be willing to offer FNB in an acquisition proposal. As part of this discussion, Chairman Garn, Mr. Jones and representatives of Sandler O’Neill also discussed Glacier and two other potential acquirors and the potential values that they might be willing to offer FNB in an acquisition. Following this conversation, representatives of Sandler O’Neill were instructed to contact Glacier and two other bank holding companies, which we refer to as Company B and Company C, to gauge their interest in a possible acquisition of FNB.
Throughout August, representatives of Sandler O’Neill held conversations with Glacier, Company A and Company B about the potential acquisition of FNB. Company C had previously expressed interest in acquiring FNB but had now determined that it was not interested in pursuing acquisition discussions with FNB at that time. The conversations with Glacier, Company A and Company B included the sharing of publicly available information along with some high-level guidance on acquisition assumptions. In addition to the conversations with representatives of Sandler O’Neill, each of the companies met with Chairman Garn and Mr. Jones. In these meetings, Chairman Garn and Mr. Jones emphasized that FNB2019.
intendedOn January 29, 2019, Davidson received anon-binding indication of interest from Party A for 100% stock consideration. The SBC Board held a meeting on January 31, 2019, to remain independent,review the offer from Party A, along with Davidson and Hogan in attendance. After evaluating the offer, and discussing with Davidson and Hogan, the Board decided it would not pursue further discussion with Party A since the consideration value was below SBC’s expectations and more broader concerns with recent volatility in the stock market and impact on Party A’s stock price. Party A was notified and discussions were suspended on February 5, 2019.
On November 14, 2018, Brian Riley met with Party B for an informal discussion on general banking matters. In March and April 2019, SBC had communications with the CEO of Party B and revisited the idea of a strategic merger combination. SBC and Party B executed a nondisclosure agreement on April 26, 2019. Party B was provided with access to certain confidential information for due diligence.
On May 2, 2019, SBC executed an engagement letter with Davidson.
On May 7, 2019, Brian Riley and Glacier’s CEO held a discussion while attending the Davidson annual financial institutions conference. The parties discussed continued interest in a merger and Glacier provided an update on timing for a potential transaction to begin due diligence in July or August 2019, with an announcement in fourth quarter of 2019. On May 17, 2019, Glacier and SBC executed a nondisclosure agreement.
On May 7, 2019, Brian Riley and Party B’s CEO held a discussion while attending the Davidson annual financial institutions conference. The parties discussed continued interest in a merger, preliminary due diligence and timing for next steps.
On May 23, 2019, SBC received anon-binding indication of interest letter from Party B for 100% stock consideration. The offer also included a90-day period of exclusivity with Party B. The SBC Board held a meeting on May 30, 2019, to review the offer from Party B, with Davidson and Hogan in attendance. The SBC Board discussed the offer, and noted the SBC shareholders would retain a sizeable ownership percentage in the pro forma company. The SBC Board authorized Brian Riley and Davidson to continue negotiations with Party B.
On June 6, 2019, SBC and Party B executed a nonbinding indication of interest letter which included a45-day exclusivity period and provided for two (2) of SBC’s directors to join Party B’s Board of Directors. Subsequently, Party B and SBC immediately began due diligence and reverse due diligence, where confidential information was exchanged between the parties. As due diligence continued, SBC management expressed concerns about the integration risk and execution risk with Party B. The SBC Board discussed these concerns at the June 27, 2019, board meeting, but decided to continue its due diligence. SBC and Party B held anin-person meeting for due diligence in early July 2019 with representatives from Davidson and Hogan in attendance. Subsequent to this meeting, the SBC Board held a telephonic meeting to discuss the integration risk and execution risk and voted that it was no longer in the best interest of SBC shareholders to continue pursuing a merger with Party B.
On July 5, 2019, Brian Riley notified Party B that the SBC Board decided to terminate discussions with Party B, but SBC would seriously considerhonor the exclusivity period as agreed upon, which continued through July 21, 2019.
On June 18, 2019, Glacier contacted SBC to inform SBC the timing for a potential merger could be moved up. Davidson and SBC responded to Glacier that SBC had executed an acquisition proposal if it met certain criteria. Maximizing valueindication of interest with another party and was precluded to respond further due to the exclusivity period currently in effect.
On July 9, 2019, Glacier sent an unsolicited nonbinding indication of interest to SBC, which included per share consideration of 80% in Glacier stock and 20% in cash, plus additional cash for FNB shareholdersa dividend prior to closing. After SBC discussed with Hogan and Davidson, SBC instructed Davidson to inform Glacier that SBC received the letter, but SBC was of primary importance, but preserving FNB’s rich legacy, minimizing employee impact,bound to the exclusivity period with the other party, and continuingwill not discuss anything further with Glacier until the exclusivity period expired.
On July 11, 2019, Hogan sent a letter to supportinform Party B, as required by the local community were also important considerationsterms of the FNB Board.
On September 7, 2018 representativesexclusivity period in the indication of interest between Party B and SBC, that SBC received an unsolicited indication of interest from Glacier met with Chairman Garn, Mr. Jones and other members of the FNB executive team in Layton, Utah.
On September 14, 2018, Company B submitted anon-binding letter of intent outlining the proposed terms of third party (Glacier) for an acquisition of FNB for merger consideration comprisedSBC, but would honor the exclusivity period..
On July 21, 2019, the exclusivity period with Party B expired.
On July 22, 2019, SBC contacted Glacier and informed them that SBC would discuss the Glacier offer at the regularly scheduled SBC Board meeting on July 30, 2019.
On July 30, 2019, the SBC Board reviewed the nonbinding indication of 75% Company B common stockinterest from Glacier with Davidson and 25% cash. At that time, there was no public market for Company B’s common stock, but Company BHogan representatives in attendance. Davidson provided an estimateupdate of the valuemergers and acquisitions market and recent trends in merger market metrics for financial institutions, and discussed recent transactions involving peer institutions, the financial terms of Company B stock. Company B further indicatedthe indication of interest from Glacier in comparison to those metrics and in comparison to the expected future performance of SBC based upon information and projections provided by management. The Board reviewed the process and timeline that it was not preparedwould occur if the Board determined to proceed with a transaction immediately, but expected to be ready to commence due diligence andmerger. Davidson then reviewed in detail the negotiationindication of definitive merger documents during the first quarter of 2019.
On October 10, 2018, Glacier submitted anon-binding letter of intent outlining the principal terms for the proposed acquisition of FNB in exchange for Glacier common stock based on a fixed exchange ratio of 0.5770 Glacier shares in exchange for each share of FNB stock.
Also on October 10, 2018, Company A submitted anon-binding letter of intent outlining the principal terms for the proposed acquisition of FNB in exchange for Company A common stock, which was publicly traded, based on a fixed exchange ratio.
Representatives of Sandler O’Neill discussed thenon-binding letters of intent withinterest from Glacier, and Company AGlacier’s history and Company B, respectively, and provided additional information as requested.
On October 23, 2018, after review of additional information presented, Glacier submitted an updated letter of intent in which it increased the exchange ratio to 0.6652 Glacier shares in exchange for each share of FNB stock.
On October 28, 2018, the FNB Board met with representatives of Sandler O’Neill and legal counsel to discuss the threenon-binding letters of intent. An overall lower valuation and the lack of a public trading market for Company B’s stock made Company B’s proposal less desirable than the proposals from Company A and Glacier. Based on recent closing stock prices as of the meeting date, the value of Company A’s proposal was estimated at $27.32 per FNB share and the value of Glacier’s proposal was estimated at $26.84 per FNB share. The FNB Board considered the value of the proposals on that day and over the prior six months. The FNB Board reviewed the attributes of Glacier and Company A stock including valuation multiples, historical stock price performance, daily stock trading volume, quarterly cash dividends and institutional research analyst recommendations. The FNB Board reviewed the historical financial performance and acquisition track-recordtrading metrics. The SBC Board discussed the pricing offered, as well as Glacier’s intention to remain committed to community banking in Arizona, Glacier’s model for operating banking divisions and its desire for Brian Riley to serve as President and CEO of each of Glacier and Company A, recognizing the deal values for each would fluctuate on a daily basis. The FNB Board considered the strategic implications of the Glacier proposal andGlacier’s Arizona division, with the expectation that based on Glacier’s intentionthe business structure would limit disruption to create a new Utah division comprised of the operations of FNB’sSBC’s business and Glacier Bank’s Utah branches, it was expected that a merger with Glacier would have a limited impact on FNB’s employees. Additionally, the new division would be able to operate with a certain level of autonomy after the merger,SBC’s employees, customers and be better positioned to understand and serve the local community. In contrast, the FNB Board expected that Company A’s proposal would result in more employee job loss and a potential disruption to FNB’s business. The FNB Board considered the proposals against FNB’s expected performance on a stand-alone basis.communities. After considering all three proposalsGlacier’s proposal, the SBC Board indicated it was interested in a merger with Glacier, and evaluating FNB’s stand-alone prospects, the FNB Board concluded that the Glacier proposal was superiorinstructed Davidson to the other alternatives. Glacier’s long-term stock, dividend performance, stock trading liquidity, community banking modelrespond to Glacier. Between July 31 and proposal to continue
FNB’s operations as part of a separate division with a local advisory board would best serve its customers, employees and community, and would likely provide a higher value to shareholders over the long-term, than remaining independent. Accordingly, the FNB Board decided to move forward with the proposal from Glacier, subject to satisfactory resolution of a few terms of the letter of intent.
Between October 28 and October 30, 2018, FNBAugust 10, 2019, SBC and Glacier, with the assistance of their respective legal counsel and financial advisors, negotiated several aspects of Glacier’s letterindication of intent. After several discussionsinterest.
SBC provided Glacier with updated financial results including the second quarter of 2019 and based on this information, Glacier submitted an updated indication of interest on August 10, 2019, which included a modified and improved offer for merger consideration Glacierof $16.94 per share in the form of 90% stock and FNB signed10% cash, plus potential additional cash for a closing dividend for SBC’s excess capital at closing, subject to adjustment. SBC held a special Board meeting on August 12, 2019 to review Glacier’s latest proposal and the SBC Board voted unanimously to execute the nonbinding letterindication of intent on October 30, 2018 which described the principal merger terms and provided that FNB would negotiateinterest with Glacier, exclusivelywhich provided Glacier with exclusivity for a period of 9060 days. Accordingly, FNB’s discussions
On August 29, 2019, Glacier’s counsel provided SBC’s counsel with Company A and Company B ceased.
Between October 30, 2018 and January 15, 2019,an initial draft of the merger agreement. Glacier, FNBSBC and their respective legal counsel and financial advisors conducted appropriate due diligence and drafted and negotiated the merger agreement and related ancillary agreements. FNB provided Glacier with information regarding, among other things, the financial aspects of its business, its marketsagreements through September 27, 2019.
Beginning September 9, 2019, SBC and its operations. Glacier provided FNB with information regarding, among other things, its employee benefit policies, its insurance policies and itsnon-competition arrangements with its directors and executive officers.
Davidson conducted document due diligence on Glacier. On September 6 and 7, 2018, representatives from Glacier were accompanied by representatives of FNB on a due diligence trip to review the branches of FNB and its markets. Glacier representatives met with representatives from FNB to discuss the transaction and conduct due diligence interviews.
On January 4, 2019, representatives of Glacier informed representatives of FNB that Glacier’s due diligence revealed higher transaction expenses and a higher reserve for loan losses than initially anticipated. As a result, Glacier offered a reduced exchange ratio of 0.6474 Glacier shares in exchange for each FNB share.
On January 9,18, 2019, representatives from FNB, Sandler O’NeillSBC, Davidson, Hogan, Glacier and GlacierKBW participated in a reverse due diligence conference call to provide information to FNBSBC regarding Glacier and answer questions from FNBSBC and Sandler O’Neill.Davidson.
On January 10,September 19, 2019, the FNBSBC Board, together with representatives of Sandler O’NeillDavidson and legal counsel,Hogan, met to consider Glacier’s due diligence findings, the reduced exchange ratio and the proposed definitive merger agreement as negotiated to date. Representatives of Sandler O’NeillDavidson reviewed the financial aspects of the proposed merger. FNB’s legal counselHogan reviewed the specific terms of the merger agreement and the substantial process involved in negotiating its terms. The FNBSBC Board considered all these matters and determined that the reduced offer still constituted s significant premium and unanimously confirmed its desire to proceedcontinue with negotiations of the proposed merger.
On January 11, 2019, FNB management conducted onsite diligence at Glacier’s headquarters.
On January 15,September 30, 2019, the FNBSBC Board, together with representatives of Sandler O’NeillDavidson and legal counsel,Hogan, again met to consider the negotiated proposed definitive merger agreement. Hogan reviewed the terms of the proposed merger agreement and the changes to the proposed merger agreement since the SBC Board’s September 19, 2019, meeting, and all related ancillary agreements. Representatives of Sandler O’NeillDavidson then reviewed the financial aspects of the proposed merger and rendered to the FNB BoardSBC a verbal fairness opinion, which was subsequently confirmed in writing, to the effect that, as of that date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill,Davidson, the merger consideration in the proposed merger with Glacier was fair, from a financial point of view, to the holders of FNBSBC common stock. Legal counsel then reviewed the terms of the proposed merger agreement and the changes to the proposed merger agreement since the FNB Board’s January 10 meeting. Among other matters considered, the FNBSBC Board reviewed
the specific terms of the merger agreement, the form and value of the consideration to be received by FNBSBC shareholders, the price and historical performance of Glacier common stock and related dividend payouts, current market conditions including comparable bank merger and acquisition transactions, the employment of certain FNBSBC employees following the merger, and the implications of the merger to FNB’sSBC’s employees, customers, and communities. After due consideration of these and other matters, and taking into consideration the fairness opinion of Sandler O’Neill,Davidson, the FNBSBC Board unanimously approved entering into the merger agreement.
On January 15, 2019, the board of directors of Glacier, together with its legal counsel and representatives of Piper Jaffray & Co., met to consider approval of the definitive merger agreement. Piper Jaffray & Co. provided updated pro forma financial analyses and Glacier’s legal counsel presented a review of the key terms of the merger agreement and related ancillary agreements. Among other matters discussed, the board of directors and Glacier’s advisors summarized the results of due diligence reviews, the terms of the merger agreement and related ancillary agreements, key pricing metrics, the pro forma financial impact of the merger to Glacier’s shareholders, the benefits of establishing a new bank division in Utah, risks of the merger, and the timing and process for consummation of the merger. After due consideration of these and other matters, the board of directors of Glacier approved the merger agreement.
The parties entered into the merger agreement on January 16,September 30, 2019. After the close of business on January 16,September 30, 2019, the parties issued a joint press release announcing the merger.
Reasons for the Merger – FNBSBC
At a board meeting held on January 15,September 30, 2019, the FNBSBC Board determined that the terms of the merger agreement were fair to and in the best interests of FNBSBC and its shareholders.shareholders and recommended that SBC’s shareholders vote for approval of the merger agreement. In the course of reaching this determination and related decision to approve the merger agreement, the FNBSBC Board evaluated the merger and the merger agreement in consultation with the management of FNBSBC and FNB’sSBC’s financial advisor and legal counsel. In reaching its determination, the FNBSBC Board considered a number of factors. Such factors also constituted the reasons that the FNBSBC Board determined to approve the merger agreement and to recommend that FNBSBC shareholders vote in favor of the merger agreement. Such reasons includedThe following discussion of the information and factors considered by the SBC Board is not intended to be exhaustive; it does, however, include all material factors considered by the SBC Board.
In reaching its decision to approve the merger agreement, the SBC Board considered the following:
the understanding of the SBC Board of the strategic options available to SBC and the SBC Board’s assessment of those options, including the potential future need to raise capital and accelerate growth to remain as an independent institution and the determination that none of those options were more likely to create greater present value for SBC’s shareholders than the value to be paid by Glacier;
the terms offered and discussions held with other prospective strategic partners, including financial terms and the level of integration risk associated with other potential partners as compared to a transaction with Glacier;
the terms of the merger agreement and the value and form of consideration to be received by FNBSBC shareholders in the merger;
the historical trading ranges for Glacier common stock;
information concerning the historicbusiness, earnings, operations, financial condition, asset quality and prospective businessprospects of FNBSBC and Glacier, both individually and as a combined company;
the ability to become part of a larger institution with a higher lending limit and the strategic plan of FNB;infrastructure for growth in small and middle-market lending, helping to further service the Bank’s customer base;
conditions and activity in the mergers and acquisition market providing an opportunity for SBC to deliver accelerated and enhanced stockholder value, as compared to organic growth;
the likely impact of the merger on the employees and customers of the Bank and the strategic plans, methods of operation and organizational structure of Glacier Bank;
the illiquidity of FNB stock, FNB and Bank capital planning and capital retention and growth prospects;
the geographic locations of Glacier Bank and the Bank;
the belief that with Glacier’s greater assets and broader market relative to FNB,SBC, Glacier common stock represents a greater diversification of risk for FNBSBC shareholders than FNB common stock;
the election to be subject to Subchapter S of the Internal Revenue Code and limitations on the number and type of shareholders and the limitations on securities that FNB may issue;
the effects of termination of the FNB election under Subchapter S including the aggregate tax liability of FNB and its shareholders;
the Shareholder Agreement and the restrictions on transfer of FNBSBC common stock;
information concerning Glacier’sthe ability of Glacier to complete the merger, from a business, financial, condition and resultsregulatory perspective, and its proven track record of operations as well as the likelihood that Glacier would be able to obtain regulatory approval for the merger;successfully completing acquisition transactions;
the opinion, dated January 15,September 30, 2019, of Sandler O’NeillDavidson to the FNBSBC Board as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of FNBSBC common stock of the merger consideration in the proposed merger, as more fully described below under “Opinion of FNB’sSBC’s Financial Advisor”;
the legal analyses as to the structure of the merger, the merger agreement, the fiduciary and legal obligations applicable to directors when considering a sale or merger of a company, and the process that SBC (including its board of directors) employed in considering potential strategic alternatives, including the merger with Glacier;
the results of the solicitation process conducted by SBC, with the advice and assistance of its advisors;
the terms of the merger agreement, including the fixed cash and stock consideration and the expected tax treatment of the merger as a “reorganization” for United States federal income tax purposes;
the expectation that FNBSBC shareholders would have the opportunity to continue to participate in the growth of the combined company and would also benefit from the significantly greater liquidity of the trading market for Glacier common stock;
that Glacier has historically paid cash dividends on its common stock;
the fact that Glacier’s common stock is widely held and has an active trading market, whereas FNB’s stock is illiquid;
the future employment opportunities for the existing employees of the Bank;
the enhanced resources andof the combined company, which will enhance the ability to meet the growing needs ofbetter serve the Bank’s customers;
the expectation that Glacier’s plans to operate the Bank’s officescustomers and Glacier Bank’s existing offices asretain a distinct division of Glacier Bank and Glacier’s agreement to establish a local advisory board will allow retention of local decision making and preservation of a tradition of service to the Bank’s localstrong community following the merger;banking presence in Arizona;
the provisions in the merger agreement that provide for the ability of the FNBSBC Board to respond to an unsolicited acquisition proposal that the FNBSBC Board determines in good faith is a superior proposal as defined in the merger agreement and to otherwise exercise its fiduciary and legal duties; and
the provisions of the merger agreement that provide for the ability of the FNBSBC Board to terminate the merger agreement, subject to certain conditions, including the payment of abreak-up fee, if FNBSBC has entered into a definitive agreement with respect to a “Superior Proposal”; andProposal.”
the likelihood of the merger being approved by applicable regulatory authorities without undue conditions or delay.
The FNBSBC Board also considered a number of uncertainties and risks in its deliberations concerning the transactions contemplated by the merger agreement, including the following:
that a portion of the merger consideration will be paid through the issuance of a fixed number of shares of Glacier common stock, and any decrease in the market price of Glacier common stock after the date of the merger agreement will result in a reduction in the merger consideration to be received by FNBSBC shareholders at the time of completion of the merger, subject to the adjustment procedures described under “The Merger – Termination of the Merger Agreement”;
that FNBSBC shareholders will not necessarily know or be able to calculate the actual value of the merger consideration which they would receive upon completion of the merger;
the possible disruption to FNB’sSBC’s business that may result from the announcement of the merger and the resulting distraction of management’s attention from theday-to-day operations of FNB’sSBC’s business;
the risk of potential employee attrition and/or adverse effects on business and customer relationships as a result of the pending merger;
that a termination fee in the amount of $6,000,000 would have to be paid to Glacier if SBC determined to terminate the merger agreement under certain circumstances, including to accept a superior proposal;
the potential costs associated with executing the merger agreement, including change in control payments and related costs, as well as estimated advisor fees;
the possibility of litigation in connection with the merger;
the need to and likelihood of obtaining approval by stockholders of SBC and regulators to complete the transaction; and
the restrictions contained in the merger agreement on the operation of FNB’sSBC’s business during the period between signing of the merger agreement and completion of the merger, as well as the other covenants and agreements of FNBSBC contained in the merger agreement.
The foregoing discussion
Opinion of SBC’s Financial Advisor
On May 2, 2019, SBC entered into an engagement agreement with D.A. Davidson & Co. to render financial advisory and investment banking services to SBC. As part of its engagement, Davidson agreed to assist SBC in analyzing, structuring, negotiating and, if appropriate, effecting a transaction between SBC and another corporation or business entity. Davidson also agreed to provide the reasons that ledSBC Board with an opinion as to the FNB Board to approve the merger agreement and recommend that FNB’s shareholders vote in favorfairness, from a financial point of view, of the merger agreement is not intendedconsideration to be exhaustive but is believed to include all of the material reasons for the FNB Board’s decision. In reaching its determination to approve and recommend the transaction, the FNB Board based its recommendation on the totality of the information presented to it and did not assign any relative or specific weightspaid to the reasons considered in reaching that determination. Individual directors may have given differing weights to different reasons. After deliberating with respect to the merger with Glacier, considering, among other things, the matters discussed above, the FNB Board unanimously approved the merger agreement and the merger with Glacier as beingholders of SBC common stock in the best interests of FNB and its shareholders.
Opinion of FNB’s Financial Advisor
FNB retained Sandler O’Neill to act as an independent financial advisor to FNB’s board of directors in connection with FNB’s consideration of a possible business combination. Sandler O’Neillproposed merger. SBC engaged Davidson because Davidson is a nationally recognized investment banking firm whose principal business specialtywith substantial experience in transactions similar to the merger and is financial institutions. In the ordinary coursefamiliar with SBC and its business. As part of its investment banking business, Sandler O’NeillDavidson is regularlycontinually engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.
Sandler O’Neill acted as an independent financial advisor in connection withOn September 30, 2019, the SBC Board held a meeting to evaluate the proposed transaction and participated in certainmerger. At this meeting, Davidson reviewed the financial aspects of the negotiations leadingproposed merger and rendered an opinion to the execution of the merger agreement. At the January 15, 2019 meeting at which FNB’s board of directorsSBC Board that, as such date and based upon and subject to assumptions made, procedures followed, matters considered and discussedlimitations on the terms of the merger agreement and the merger, Sandler O’Neill delivered to FNB’s board of directors its oral opinion, which was subsequently confirmed in writing, to the effect that, as of January 15, 2019,review undertaken, the merger consideration provided for in the merger agreement was fairto be paid to the holders of FNBSBC common stock was fair, from a financial point of view.view, to such holders of SBC common stock in the proposed merger.
The full text of Sandler O’Neill’sDavidson’s written opinion, dated September 30, 2019, is attached as Appendix C to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters consideredstatement-prospectus and qualifications and limitations on the review undertakenis incorporated herein by Sandler O’Neill in rendering its opinion.reference. The description of the opinion set forth belowherein is qualified in its entirety by reference to the full text of thesuch opinion. Holders of FNB common stockSBC’s shareholders are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.
Sandler O’Neill’sDavidson’s opinion speaks only as of the date of the opinion and Davidson undertakes no obligation to revise or update its opinion. The opinion wasis directed to FNB’s board of directors in connection with its consideration of the merger agreementSBC Board and the merger and does not constitute a recommendation to any shareholder of FNB as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the merger agreement and the merger. Sandler O’Neill’s opinion was directedaddresses only to the fairness, from a financial point of view, of the merger consideration to be paid to the holders of FNBSBC common stock andin the proposed merger. The opinion does not address, and Davidson expresses no view or opinion with respect to, (i) the underlying business decision of FNBSBC to engage in the merger, the form or structure of the merger or any other transactions contemplated in the merger agreement,(ii) the relative merits or effect of the merger as compared to any other alternative business transactions or business strategies that might exist for FNBmay be or may have been available to or contemplated by SBC or the effectSBC Board, or (iii) any legal, regulatory, accounting, tax or similar matters relating to SBC, its shareholders or relating to or arising out of the merger. The opinion expresses no view or opinion as to any terms or other transaction in which FNB might engage. Sandler O’Neill didaspects of the merger, except for the merger consideration. SBC and Glacier determined the merger consideration through the negotiation process. The opinion does not express any opinionview as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, directorof SBC’s or employee of FNBGlacier’s officers, directors or Glacier Bancorp, Inc. (or, for the purposes of this section, “GBCI”),employees, or any class of such persons, if any, relative to the compensationmerger consideration, or with respect to be received in the merger byfairness of any other shareholder, including the consideration to be received by the holders of FNB common stock. Sandler O’Neill’ssuch compensation. The opinion washas been reviewed and approved by Sandler O’Neill’s fairnessDavidson’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.
Davidson has reviewed the registration statement on FormS-4 of which this proxy statement-prospectus is a part and consented to the inclusion of its opinion committee. to the SBC board of directors as Appendix C to this proxy statement-prospectus and to the references to Davidson and its opinion contained herein. A copy of the consent of Davidson is filed as Exhibit 99.2 to the registration statement on FormS-4.
In connection with rendering its opinion, Sandler O’NeillDavidson reviewed, and considered, among other things:things, the following:
a draft of the merger agreement, dated January 14,September 27, 2019;
certain publicly available financial statements and other historical financial and business information about SBC and Glacier made available to Davidson from published sources and/or from the internal records of FNBSBC and The First National Bank of LaytonGlacier that Sandler O’Neillwe deemed relevant;
certain publicly available financial statements and other historical financial information of GBCI and Glacier Bank that Sandler O’Neill deemed relevant;
internal net income projections for FNB for the years ending December 31, 2018 through December 31, 2020 with an annual net income growth rate for the years thereafter, as provided by the senior management of FNB, as well as estimated dividends per share for the years ending December 31, 2019 through December 31, 2022, as directed by the senior management of FNB;
publicly available consensus analyst earnings per share estimates for GBCI for the years ending December 31, 2018 through2019 and December 31, 2020 as well as aand an estimated long-term earnings per share growth rate for the years thereafter through December 31, 2024, in each case as discussed with, and dividend payout ratioconfirmed by, senior management of Glacier and SBC;
financial projections for SBC for the years ending December 31, 2019, December 31, 2020, and an estimated long-term growth rate for the years thereafter through December 31, 2022,2024, in each case as directedprovided by, theand discussed with, senior management of GBCI;
the pro forma financial impact of the merger on GBCI based on certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of GBCI;
the publicly reported historical price and trading activity for GBCI common stock, including a comparison of certain stock market information for GBCI common stock and certain stock indices as well as publicly available information for certain other similar companies, the securities of which were publicly traded;
a comparison of certain financial information for FNB and GBCI with similar financial institutions for which information was publicly available;
the financial terms of certain recent business combinations in the banking industry (on a nationwide basis), to the extent publicly available;SBC;
the current market environment generally and the banking environment in particular;
the market and trading characteristics of selected public companies and selected public bank holding companies in particular;
the financial terms of certain other transactions in the financial institutions industry, to the extent publicly available;
the relative contributions of the Glacier and SBC to the combined company;
the pro forma financial impact of the transaction, taking into consideration the amounts and timing of the transaction costs, cost savings and revenue enhancements;
the net present value of SBC with consideration of projected financial results; and
such other information, financial studies, analyses and investigations and financial, economic and market criteria and other information as Sandler O’Neillwe considered relevant.
Sandler O’Neill also discussedrelevant including discussions with certain membersmanagement and other representatives and advisors of the management of FNBGlacier and its representativesSBC concerning the business, financial condition, results of operations and prospects of FNBGlacier and held similar discussions with certain members of the management of GBCI and its representatives regarding the business, financial condition, results of operations and prospects of GBCI.SBC.
In performingarriving at its review, Sandler O’Neillopinion, Davidson assumed and relied upon the accuracy and completeness of all of the financial and other information that was publicly available, supplied or otherwise made available to, anddiscussed with or reviewed by Sandler O’Neill from public sources, that was provided to Sandler O’Neill by FNB or GBCI or their respective representatives, or that was otherwise reviewed by Sandler O’Neill,for Davidson. Davidson did not independently verify, and Sandler O’Neill assumeddid not assume responsibility for independently verifying, such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler O’Neillinformation. Davidson relied on the assurances of the respective managementsmanagement of FNB and GBCISBC that they wereare not aware of any facts or circumstances that would have mademake any of such information, forecasts or estimates inaccurate or misleading. Sandler O’Neill was not asked to andDavidson did not undertake an independent verificationevaluation or appraisal of any of such information and Sandler O’Neillthe assets or liabilities (contingent or otherwise) of SBC or Glacier. In addition, Davidson did not assume any obligation to conduct, nor did Davidson conduct any physical inspection of the properties or facilities of SBC or Glacier and has not been provided with any reports of such physical inspections. Davidson assumed that there has been no material change in SBC’s or Glacier’s business, assets, financial condition, results of operations, cash flows, or prospects since the date of the most recent financial statements provided to Davidson.
With respect to the financial projections and other estimates (including information relating to certain pro forma financial effects of, and strategic implications and operational benefits anticipated to result from, the Transaction) provided to or otherwise reviewed by or for or discussed with us, we have been advised by management of SBC that such forecasts and other analyses were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of SBC as to the future financial performance of SBC and the other matters covered thereby, and that the financial results (including the potential strategic implications and operational benefits anticipated to result from the Transaction) reflected in such forecasts and analyses will be realized in the amounts and at the times projected. We assume no responsibility for and do not express an opinion as to these forecasts and analyses or liability for the accuracy or completeness thereof. Sandler O’Neillassumptions on which they were based.
Davidson did not make an independent evaluation or perform an appraisal of the loan and lease portfolios, classified loans, other real estate owned or any other specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of FNB or GBCI or any of their respective subsidiaries, nor was Sandler O’Neill furnished with any such evaluations or appraisals. Sandler O’Neill rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of FNB or GBCI. Sandler O’Neill did not make an independent evaluation ofhas Davidson assessed the adequacy of the allowance for loan losses of FNBSBC or GBCI, or of the combined entity after the merger, and Sandler O’Neill didGlacier. Davidson has not reviewreviewed any individual credit files relating to FNBSBC or GBCI. Sandler O’NeillGlacier. Davidson assumed with the consent of FNB, that the respective allowances for loan losses for both FNBSBC and GBCI wereare adequate to cover such losses and wouldwill be adequate on a pro forma basis for the combined entity.
In preparing its analyses, Sandler O’Neill used internal net income projections for FNB for Davidson did not make an independent evaluation of the years ending December 31, 2018 through December 31, 2020 withquality of SBC’s or Glacier’s deposit base, nor have we independently evaluated potential deposit concentrations or the deposit composition of SBC or GBCI. Davidson did not make an annual net income growth rate forindependent evaluation of the years thereafter, as provided by the senior managementquality of FNB, as well as estimated dividends per share for the years ending December 31, 2018 through December 31, 2022, as directed by the senior management of FNB. In addition, Sandler O’Neill used publicly available consensus analyst earnings per share estimates for GBCI for the years ending December 31, 2018 through December 31, 2020, as well as a long-term earnings per share growth rate for the years thereafter and dividend payout ratio for the years ending December 31, 2018 through December 31, 2022, as directed by the senior management of GBCI. Sandler O’Neill also received and used in its pro forma analyses certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of GBCI. With respect to the foregoing information, the respective senior managements of FNB and GBCI confirmed to Sandler O’Neill that such information reflected (or,SBC’s or Glacier’s investment securities portfolio, nor have we independently evaluated potential concentrations in the caseinvestment securities portfolio of the publicly available consensus analyst estimates referred to above, were consistent with) the best currently available projections, estimates and judgments of those respective managements as to the future financial performance of FNB and GBCI, respectively, and the other matters covered thereby, and Sandler O’NeillSBC or Glacier.
Davidson assumed that the future financial performance reflectedall representations and warranties contained in such information would be achieved. Sandler O’Neill expressed no opinion as to such information, or the assumptions on which such information was based. Sandler O’Neill also assumed that there had been no material change in the respective assets,
financial condition, results of operations, business or prospects of FNB or GBCI since the date of the most recent financial statements made available to Sandler O’Neill. Sandler O’Neill assumed in all respects material to its analysis that FNB and GBCI would remain as going concerns for all periods relevant to Sandler O’Neill’s analysis.
Sandler O’Neill also assumed, with FNB’s consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements that all of the representations and warranties contained in such agreements wereare true and correct in all respects material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreementsDavidson’s analysis, and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger no delay, limitation, restriction or condition would be imposed that would have an adverse effect on FNB, GBCI, the merger or any related transactions, and (iii) the merger and any related transactions wouldwill be consummated in accordance with the terms of the merger agreement, without any waiver, modification, or amendment of any material term, condition or agreementcovenant thereof the effect of which would be in any respect material to Davidson’s analysis. Davidson has assumed that all material governmental, regulatory or other consents, approvals, and in compliance with all applicable laws and other requirements. Finally, withwaivers necessary for the consentconsummation of FNB, Sandler O’Neill relied upon the advice that FNB received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger will be obtained without any material adverse effect on SBC or the contemplated benefits of the merger.
Davidson assumed in all respects material to its analysis that SBC and the other transactions contemplated by the merger agreement. Sandler O’Neill expressed no opinionGlacier will remain as going concerns for all periods relevant to any such matters.
Sandler O’Neill’sits analysis. Davidson’s opinion was necessarily based onupon information available to Davidson and economic, market, financial economic, regulatory, market and other conditions as in effectthey exist and can be evaluated on and the information made available to Sandler O’Neill as of, the date thereof. Events occurring after the date thereof could materially affect Sandler O’Neill’s opinion. Sandler O’Neill didfairness opinion letter was delivered to SBC’s board of directors.
Davidson’s opinion does not undertaketake into account individual circumstances of specific holders with respect to update, revise, reaffirmcontrol, voting or withdraw its opinion or otherwise comment upon events occurring after the date thereof. Sandler O’Neill expressed noother rights which may distinguish such holders.
Davidson also does not express an opinion as to the tradingactual value of GBCIGlacier’s common stock when issued in the merger or the prices at which GBCI’s common stock will trade following announcement of the merger or at any timefuture time.
Davidson has not evaluated the solvency or what thefair value of GBCI common stock would be once itSBC or Glacier under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Davidson’s opinion is actually receivednot a solvency opinion and does not in any way address the solvency or financial condition of SBC or Glacier. Davidson is not expressing any opinion as to the impact of the merger on the solvency or viability of SBC or Glacier or the ability of SBC or Glacier to pay their respective obligations when they come due.
Set forth below is a summary of the material financial analyses performed by the holders of FNB common stock.
InDavidson in connection with rendering its opinion, Sandler O’Neill performed a varietyopinion. The summary of financial analyses. The summarythe analyses of Davidson set forth below is not a complete description of the analysis underlying its opinion, and the order in which these analyses underlying Sandler O’Neill’s opinionare described below is not indicative of any relative weight or the presentation madeimportance given to those analyses by Sandler O’Neill to FNB’s boardDavidson. The following summaries of directors, but is a summary of all materialfinancial analyses performed and presented by Sandler O’Neill. The summary includesinclude information presented in tabular format.In order to fully understand the financial analyses, You should read these tables must be read together with the accompanying text. Thefull text of the summary financial analyses, as the tables alone doare not constitute a complete description of the financial analyses. The preparation
Unless otherwise indicated, the following quantitative information, to the extent it is based on market data, is based on market data as of aSeptember 27, 2019, the last trading day prior to the date on which Davidson delivered the fairness opinion is a complex process involving subjective judgments asletter to the most appropriateSBC’s board of directors, and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O’Neill believes that its analyses must be considered as a whole and that selecting portionsindicative of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or allmarket conditions after such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to FNB or GBCI and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or transaction values, as the case may be, of FNB, GBCI and the companies to which they are being compared. In arriving at its opinion, Sandler O’Neill did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler O’Neill made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O’Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion, rather, Sandler O’Neill made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.date.
In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which are beyond the control of FNB, GBCI and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solelyImplied Valuation Multiples for purposes of rendering its opinion and provided such analyses to FNB’s board of directors at its January 15, 2019 meeting. EstimatesSBC based on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of FNB common stock or the prices at which FNB common stock or GBCI common stock may be sold at any time. The analyses of Sandler O’Neill and its opinion were among a number of factors taken into consideration by FNB’s board of directors in making its determination to approve the merger agreement and should not be viewed as determinative of the exchange ratio or the decision of FNB’s board of directors or management with respect to the fairness of the merger. The type and amount of consideration payable in the merger were determined through negotiation between FNB and GBCI.Merger Consideration
Summary of Exchange Ratio and Implied Transaction Metrics. Sandler O’NeillDavidson reviewed the financial terms of the proposed merger. Subject to certain adjustments and termination provisions, as more fullytransaction. As described in the merger agreement, at the effective time, each share of FNBSBC common stock issued and outstanding prior to the effective time, except for certain shares of FNB common stock as specified in the merger agreement, will be converted into the right to receive 0.64740.3706 shares of GBCI common stock. BasedGlacier Common Stock and $1.69 in cash. The terms and conditions of the merger are more fully described in the merger agreement. For purposes of the financial analyses described below, based on the closing price of GBCIGlacier common stock on January 14,September 27, 2019, of $41.66, Sandler O’Neill calculated$40.43, the merger consideration represented an implied transaction pricevalue of $16.67 per share of FNBSBC common stock, of $26.97 and an aggregate implied transaction value of approximately $85.3or $135.3 million in exchange for all FNB common stock issued and outstanding as of January 14, 2019.aggregate. Based upon historical financial information for FNB as of or for the twelve month period ended June 30, 2019 and other financial and market information described below, Davidson calculated the following transaction ratios:
Transaction Ratios | ||||||||
Per Share | Aggregate | |||||||
Transaction Price / LTM Net Income | 15.6 | x | 15.6 | x | ||||
Transaction Price / 2019E Net Income (1) | 15.2 | x | 15.2 | x | ||||
Transaction Price / 2020E Net Income (1) | 13.6 | x | 13.6 | x | ||||
Transaction Price / Book Value | 191.3 | % | 191.9 | % | ||||
Transaction Price / Tangible Book Value | 212.1 | % | 212.7 | % | ||||
Tangible Book Premium / Core Deposits (2) | — | 14.2 | % | |||||
Transaction Price / SBC’s Closing Price as of 9/27/2019 (3) | 25.8 | % | ||||||
Transaction Price / SBC’s20-Day Average Price as of 9/27/2019 (4) | 29.5 | % |
(1) | Financial projections in 2019 and 2020 as provided by and discussed with SBC management |
(2) | Tangible book premium / core deposits calculated by dividing the excess or deficit of the merger consideration compared to tangible book value by core deposits |
(3) | Based on SBC’s Closing Price as of September 27, 2019 of $13.25 |
(4) | Based on SBC’s20-Day Average Price as of September 27, 2019 of $12.87 |
Stock Price Performance of SBC and GBCI
Davidson reviewed the history of the reported trading prices and volume of SBC and Glacier common stock and certain stock indices, including the Russell 3000 and the KBW Regional Bank Index. Davidson compared the stock price performance of SBC or Glacier with the performance of the Russell 3000 and the KBW Nasdaq Regional Bank Index as follows:
One Year Stock Performance | ||||||||||
Beginning Index Value on 9/27/2018 | Ending Index Value on 9/27/2019 | |||||||||
Russell 3000 | 100.0 | % | 100.5 | % | ||||||
KBW Nasdaq Regional Bank Index | 100.0 | % | 89.7 | % | ||||||
SBC | 100.0 | % | 90.8 | % | ||||||
GBCI | 100.0 | % | 94.5 | % |
Three Year Stock Performance | ||||||||||
Beginning Index Value on 9/26/2016 | Ending Index Value on 9/27/2019 | |||||||||
Russell 3000 | 100.0 | % | 136.3 | % | ||||||
KBW Nasdaq Regional Bank Index | 100.0 | % | 117.3 | % | ||||||
SBC | 100.0 | % | 194.9 | % | ||||||
GBCI | 100.0 | % | 143.2 | % |
Contribution Analysis
Davidson analyzed the relative contribution of SBC and Glacier to certain financial and operating metrics for the pro forma combined company. Such financial and operating metrics included: (i) market capitalization; (ii) net income during the preceding twelve months ending June 30, 2019; (iii) projected net income in 2019 for Glacier based on average Street EPS estimates as discussed with and confirmed by GBCI and SBC management, and projected net income in 2019 for SBC as provided by and discussed with SBC management; (iv) total assets; (v) gross loans; (vi) total deposits; and (vii) tangible common equity. The relative contribution analysis did not give effect to the impact of any synergies as a result of the proposed merger. The results of this analysis are summarized in the table below, which also compares the results of this analysis with the implied pro forma ownership percentages of SBC or Glacier shareholders in the combined company based on the merger consideration, and also hypothetically assuming 100% stock consideration in the proposed merger:
Contribution Analysis | ||||||||||||||||
GBCI Stand-alone | SBC Stand-alone | GBCI % of Total | SBC % of Total | |||||||||||||
Market Capitalization | ||||||||||||||||
Market Capitalization (9/27/2019) (in thousands) | $ | 3,502,317 | $ | 107,236 | 97.0% | 3.0% | ||||||||||
Income Statement | ||||||||||||||||
LTM Net Income (in thousands) (1) | $ | 200,459 | $ | 8,671 | 95.9% | 4.1% | ||||||||||
2019E Net Income (in thousands) (2) (3) | $ | 208,536 | $ | 8,898 | 95.9% | 4.1% | ||||||||||
Balance Sheet | ||||||||||||||||
Total Assets (in thousands) | $ | 12,676,361 | $ | 678,570 | 94.9% | 5.1% | ||||||||||
Gross Loans, Incl. Loans HFS (in thousands) | $ | 8,896,488 | $ | 413,636 | 95.6% | 4.4% | ||||||||||
Total Deposits (in thousands) | $ | 9,854,875 | $ | 591,989 | 94.3% | 5.7% | ||||||||||
Tangible Common Equity (in thousands) | $ | 1,301,843 | $ | 63,611 | 95.3% | 4.7% | ||||||||||
Pro Forma Ownership | ||||||||||||||||
Merger Transaction - Actual | 96.8% | 3.2% | ||||||||||||||
Merger Transaction - 100% Stock Equivalent | 96.5% | 3.5% |
(1) | Net income for the preceding twelve months ending June 30, 2019 |
(2) | Financial projections for GBCI in 2019 based on average Street EPS estimates, as discussed with and confirmed by GBCI and SBC management |
(3) | Financial projections for SBC in 2019 as provided by and discussed with SBC management |
Glacier Comparable Companies Analysis – Group One
Davidson used publicly available information to compare selected financial and market trading information for Glacier and 12 financial institutions selected by Davidson which: (i) were headquartered in Arizona, California, Colorado, Idaho, Montana, North Dakota, Nevada, New Mexico, Oregon, South Dakota, Utah, Washington or Wyoming; (ii) had their common stock listed on the NASDAQ or NYSE; (iii) had assets between $7.5 billion and $30.0 billion; and (iv) were not pending merger targets or ethnic-focused banks. These 12 financial institutions were as follows:
Banc of California, Inc. Banner Corporation Columbia Banking System, Inc. CVB Financial Corp. First Interstate BancSystem, Inc. Great Western Bancorp, Inc. | Opus Bank Pacific Premier Bancorp, Inc. PacWest Bancorp Umpqua Holdings Corporation Washington Federal, Inc. Western Alliance Bancorporation |
Note: Does not reflect impact from pending acquisitions or acquisitions closed after September 27, 2019
The analysis compared the financial condition and market performance of Glacier and the 12 financial institutions identified above based on publicly available financial and market trading information for Glacier and the 12 financial institutions as of and for the twelve-month or three-month period ended June 30, 20182019. The analysis also compared the 2019 and internal2020 earnings per share multiples for Glacier and the 12 financial institutions identified above based on average Street EPS estimates for FNBGlacier and the 12 financial institutions. The table below shows the results of this analysis (excluding the impact of earnings per share multiples considered not meaningful by Davidson).
Financial Condition and Performance | ||||||||||||||||||||
Comparable Companies | ||||||||||||||||||||
GBCI | Median | Average | Minimum | Maximum | ||||||||||||||||
Total Assets (in millions) | $ | 12,676 | $ | 13,023 | $ | 15,716 | $ | 7,857 | $ | 27,986 | ||||||||||
Loan / Deposit Ratio | 89.7% | 95.1% | 93.8% | 78.3% | 106.8% | |||||||||||||||
Non-Performing Assets / Total Assets | 0.41% | 0.35% | 0.48% | 0.07% | 1.51% | |||||||||||||||
Tangible Common Equity Ratio | 10.59% | 9.70% | 9.71% | 7.39% | 11.71% | |||||||||||||||
Net Interest Margin (Most Recent Quarter) | 4.33% | 4.18% | 3.94% | 2.86% | 4.72% | |||||||||||||||
Cost of Deposits (Most Recent Quarter) | 0.23% | 0.81% | 0.78% | 0.19% | 1.61% | |||||||||||||||
Efficiency Ratio (Most Recent Quarter) | 54.5% | 51.9% | 54.0% | 39.1% | 71.3% | |||||||||||||||
Return on Average Tangible Common Equity (Most Recent Quarter) | 16.85% | 14.87% | 14.67% | 5.72% | 23.58% | |||||||||||||||
Return on Average Assets (Most Recent Quarter) | 1.69% | 1.35% | 1.35% | 0.45% | 2.05% |
Market Performance Multiples | ||||||||||||||||||||
Comparable Companies | ||||||||||||||||||||
GBCI | Median | Average | Minimum | Maximum | ||||||||||||||||
Market Capitalization (in millions) | $ | 3,502 | $ | 2,649 | $ | 2,587 | $ | 716 | $ | 4,735 | ||||||||||
Price vs.52-Week High | -15.2% | -19.2% | -17.3% | -26.7% | -2.5% | |||||||||||||||
Price vs.52-Week Low | 9.7% | 17.4% | 21.4% | 8.9% | 51.3% | |||||||||||||||
Price Change (LTM) | -5.5% | -17.3% | -13.1% | -25.1% | 17.2% | |||||||||||||||
Price Change (YTD) | 2.0% | 7.5% | 11.5% | 2.2% | 39.7% | |||||||||||||||
Price / MRQ Earnings Per Share | 16.6x | 13.2x | 13.8x | 8.1x | 23.8x | |||||||||||||||
Price / LTM Earnings Per Share | 17.1x | 13.5x | 14.3x | 9.4x | 29.3x | |||||||||||||||
Price / 2019E Earnings Per Share (1) | 17.1x | 13.2x | 14.2x | 9.7x | 29.5x | |||||||||||||||
Price / 2020E Earnings Per Share (1) | 16.4x | 12.9x | 12.7x | 9.4x | 16.8x | |||||||||||||||
Price / Tangible Book Value Per Share | 269.0% | 175.1% | 174.7% | 104.0% | 239.3% | |||||||||||||||
Dividend Yield (Most Recent Quarter) | 2.87% | 2.96% | 3.22% | 1.70% | 6.63% |
(1) | Earnings per share estimates based on average Street EPS estimates |
Glacier Comparable Companies Analysis – Group Two
Davidson used publicly available information to compare selected financial and market trading information for Glacier and 19 financial institutions selected by Davidson which: (i) were headquartered in nationwide; (ii) had their common stock listed on the NASDAQ or NYSE; (iii) had assets between $7.5 billion and $30.0 billion; (iv) had return on average assets above 1.50% for the year ending December 31,last twelve months; and (v) were not pending merger targets or ethnic-focused banks. These 19 financial institutions were as follows:
BancFirst Corporation Bank OZK Columbia Banking System, Inc. Commerce Bancshares, Inc. Community Bank System, Inc. CVB Financial Corp. Eagle Bancorp, Inc. First Financial Bankshares, Inc. First Merchants Corporation Heartland Financial USA, Inc. | Hilltop Holdings Inc. Home BancShares, Inc. International Bancshares Corporation PacWest Bancorp Pinnacle Financial Partners, Inc. ServisFirst Bancshares, Inc. TCF Financial Corporation Umpqua Holdings Corporation Western Alliance Bancorporation |
Note: Does not reflect impact from pending acquisitions or acquisitions closed after September 27, 2019
The analysis compared the financial condition and market performance of Glacier and the 19 financial institutions identified above based on publicly available financial and market trading information for Glacier and the 19 financial institutions as providedof and for the twelve-month or three-month period ended June 30, 2019. The analysis also compared the 2019 and 2020 earnings per share multiples for Glacier and the 19 financial institutions identified above based on average Street EPS estimates for Glacier and the 19 financial institutions. The table below shows the results of this analysis (excluding the impact of earnings per share multiples considered not meaningful by Davidson).
Financial Condition and Performance | ||||||||||||||||||||
Comparable Companies | ||||||||||||||||||||
GBCI | Median | Average | Minimum | Maximum | ||||||||||||||||
Total Assets (in millions) | $ | 12,676 | $ | 13,091 | $ | 16,435 | $ | 7,642 | $ | 27,986 | ||||||||||
Loan / Deposit Ratio | 89.7% | 89.8% | 87.5% | 63.4% | 106.4% | |||||||||||||||
Non-Performing Assets / Total Assets | 0.41% | 0.38% | 0.42% | 0.15% | 1.07% | |||||||||||||||
Tangible Common Equity Ratio | 10.59% | 10.20% | 10.96% | 8.76% | 14.88% | |||||||||||||||
Net Interest Margin (Most Recent Quarter) | 4.33% | 3.98% | 4.04% | 3.44% | 4.72% | |||||||||||||||
Cost of Deposits (Most Recent Quarter) | 0.23% | 0.82% | 0.79% | 0.19% | 1.49% | |||||||||||||||
Efficiency Ratio (Most Recent Quarter) | 54.5% | 51.0% | 50.6% | 34.3% | 81.7% | |||||||||||||||
Return on Average Tangible Common Equity (Most Recent Quarter) | 16.85% | 17.85% | 17.40% | 11.50% | 23.58% | |||||||||||||||
Return on Average Assets (Most Recent Quarter) | 1.69% | 1.73% | 1.76% | 1.54% | 2.14% |
Market Performance Multiples | ||||||||||||||||||||
Comparable Companies | ||||||||||||||||||||
GBCI | Median | Average | Minimum | Maximum | ||||||||||||||||
Market Capitalization (in millions) | $ | 3,502 | $ | 3,172 | $ | 3,323 | $ | 1,549 | $ | 6,647 | ||||||||||
Price vs.52-Week High | -15.2% | -14.8% | -15.2% | -30.6% | -1.0% | |||||||||||||||
Price vs.52-Week Low | 9.7% | 17.2% | 19.5% | 5.8% | 47.6% | |||||||||||||||
Price Change (LTM) | -5.5% | -12.0% | -9.4% | -28.8% | 20.6% | |||||||||||||||
Price Change (YTD) | 2.0% | 8.8% | 9.9% | -8.0% | 36.0% | |||||||||||||||
Price / MRQ Earnings Per Share | 16.6x | 11.5x | 12.7x | 7.9x | 27.1x | |||||||||||||||
Price / LTM Earnings Per Share | 17.1x | 12.1x | 13.7x | 8.5x | 29.0x | |||||||||||||||
Price / 2019E Earnings Per Share (1) | 17.1x | 11.8x | 13.2x | 8.2x | 28.2x | |||||||||||||||
Price / 2020E Earnings Per Share (1) | 16.4x | 11.5x | 12.9x | 8.6x | 26.9x | |||||||||||||||
Price / Tangible Book Value Per Share | 269.0% | 192.5% | 208.9% | 106.3% | 461.1% | |||||||||||||||
Dividend Yield (Most Recent Quarter) | 2.87% | 2.65% | 2.72% | 1.13% | 6.63% |
(1) | Earnings per share estimates based on average Street EPS estimates |
SBC Comparable Companies Analysis
Davidson used publicly available information to compare selected financial and market trading information for SBC and a group of 12 financial institutions selected by Davidson which: (i) were headquartered in Arizona, California, Colorado, Idaho, Montana, New Mexico, Nevada, Oregon, Utah, Washington, or Wyoming; (ii) had their common stock listed on theover-the-counter markets; (iii) had assets between $500 million and $1.0 billion; and (iv) were not pending merger targets or ethnic-focused banks. The 12 financial institutions were as follows:
1st Capital Bank American Riviera Bank Baker Boyer Bancorp Bank of Southern California, N.A. Citizens Bancorp CommerceWest Bank | Mission Bancorp Pacific Financial Corporation Private Bancorp of America, Inc. Santa Cruz County Bank Suncrest Bank Valley Republic Bancorp |
Note: Does not reflect impact from pending acquisitions or acquisitions closed after September 27, 2019
The analysis compared the senior managementfinancial condition and market performance of FNB, Sandler O’Neill calculatedSBC and the 12 financial institutions identified above based on publicly available financial and market trading information for SBC and the 12 financial institutions as of and for the twelve-month or three-month period ended June 30, 2019. The table below shows the results of this analysis (excluding the impact of earnings per share multiples considered not meaningful by Davidson).
Financial Condition and Performance | ||||||||||||||||||||
Comparable Companies | ||||||||||||||||||||
SBC | Median | Average | Minimum | Maximum | ||||||||||||||||
Total Assets (in millions) | $ | 679 | $ | 759 | $ | 761 | $ | 582 | $ | 944 | ||||||||||
Loan / Deposit Ratio | 68.6% | 83.8% | 83.5% | 56.9% | 108.1% | |||||||||||||||
Non-Performing Assets / Total Assets | 0.92% | 0.03% | 0.15% | 0.00% | 0.81% | |||||||||||||||
Tangible Common Equity Ratio | 9.47% | 10.31% | 10.42% | 8.46% | 11.93% | |||||||||||||||
Net Interest Margin (Most Recent Quarter) | 3.84% | 4.28% | 4.31% | 3.26% | 4.82% | |||||||||||||||
Cost of Deposits (Most Recent Quarter) | 0.53% | 0.46% | 0.52% | 0.08% | 0.98% | |||||||||||||||
Efficiency Ratio (Most Recent Quarter) | 60.7% | 60.5% | 61.6% | 47.0% | 78.6% | |||||||||||||||
Return on Average Tangible Common Equity (Most Recent Quarter) | 14.92% | 12.69% | 15.37% | 4.04% | 49.33% | |||||||||||||||
Return on Average Assets (Most Recent Quarter) | 1.25% | 1.16% | 1.24% | 0.47% | 1.89% | |||||||||||||||
Market Performance Multiples | ||||||||||||||||||||
Comparable Companies | ||||||||||||||||||||
SBC | Median | Average | Minimum | Maximum | ||||||||||||||||
Market Capitalization (in millions) | $ | 107 | $ | 109 | $ | 111 | $ | 82 | $ | 161 | ||||||||||
Price vs.52-Week High | -11.7% | -12.4% | -12.0% | -21.6% | 0.0% | |||||||||||||||
Price vs.52-Week Low | 15.4% | 8.0% | 7.6% | 0.0% | 15.8% | |||||||||||||||
Price Change (LTM) | -9.2% | -11.8% | -9.3% | -20.6% | 13.6% | |||||||||||||||
Price Change (YTD) | 7.3% | 1.4% | 2.6% | -10.5% | 13.6% | |||||||||||||||
Price / MRQ Earnings Per Share | 11.8x | 12.7x | 13.4x | 8.3x | 25.7x | |||||||||||||||
Price / LTM Earnings Per Share | 12.4x | 12.1x | 12.9x | 9.2x | 22.6x | |||||||||||||||
Price / Tangible Book Value Per Share | 168.6% | 136.5% | 145.2% | 117.8% | 215.4% | |||||||||||||||
Dividend Yield (Most Recent Quarter) | 2.26% | 0.00% | 1.02% | 0.00% | 4.16% |
Precedent Transactions Analysis
Davidson reviewed three sets of comparable merger and acquisition transactions. The sets of mergers and acquisitions included: (1) “Nationwide,” (2) “Western United States,” and (3) “High-Performing Banks”.
“Nationwide” transactions included 24 transactions where:
the selling company was a bank or thrift headquartered in the United States;
the transaction was announced between January 1, 2019 and September 27, 2019;
the selling company’s total assets were between $400 million and $3.5 billion;
the acquiror’s common stock was listed in the NASDAQ or NYSE exchanges;
the transaction had a stock component to the merger consideration;
the transaction’s pricing information was publicly available; and
the transaction was not a merger of equals
“Western U.S.” transactions included 15 transactions where:
the selling company was a bank or thrift headquartered in the Arizona, California, Colorado, Idaho, Montana, New Mexico, Nevada, Oregon, Utah, Washington and Wyoming;
the transaction was announced between January 1, 2018 and September 27, 2019;
the selling company’s total assets were between $300 million and $2.0 billion;
the transaction’s pricing information was publicly available; and
the transaction was not a merger of equals
“High-Performing Banks” included 18 transactions where:
the selling company was a bank or thrift headquartered in the United States;
the transaction was announced between January 1, 2018 and September 27, 2019;
the selling company’s total assets were between $400 million and $1.0 billion;
the selling company had a return on average assets greater than 1.00% for the last twelve months;
the transaction’s pricing information was publicly available; and
the transaction was not a merger of equals
The following implied transaction metrics.tables set forth the transactions included in “Nationwide,” “Western United States,” and “High-Performing Banks” and are sorted by announcement date:
Nationwide
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Note:
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FNB Comparable Company Analyses. Sandler O’Neill used publicly available information as of September 30, 2018, unless otherwise noted, and information provided by FNB management as of September 30, 2018, to compare selected financial information for FNB with a group of banks selected by Sandler O’Neill (the “FNB Peer Group”). The FNB Peer Group consisted of publicly-traded banks headquartered in the United States with total assets between $200 million and $500 million andyear-to-date return on average assets greater than 1.00%, excluding announced merger targets and companies whose securities trade OTC PINK. The FNB Peer Group consisted of the following companies:
9/19/2019* | First Financial | TB&T Bancshares, Inc. | ||
9/11/2019* | First Community Bankshares, Inc. | Highlands Bankshares, Inc. | ||
9/09/2019* | First Defiance Financial Corp. | United Community Financial Corp. | ||
8/28/2019* | First Midwest Bancorp, Inc. | Bankmanagers Corp. | ||
8/16/2019* | ConnectOne Bancorp, Inc. | Bancorp of New Jersey, Inc. | ||
8/09/2019* | OceanFirst Financial Corp. | Two River Bancorp | ||
8/09/2019* | OceanFirst Financial Corp. | Country Bank Holding Company, Inc. | ||
7/31/2019* | Simmons First National Corporation | Landrum Company | ||
7/25/2019* | Wintrust Financial Corporation | SBC, Incorporated | ||
7/24/2019* | Banner Corporation | AltaPacific Bancorp |
7/24/2019* | Investors Bancorp, Inc. | Gold Coast Bancorp, Inc. | ||
7/23/2019* | WesBanco, Inc. | Old Line Bancshares, Inc. | ||
7/22/2019* | First Bancshares, Inc. | First Florida Bancorp, Inc. | ||
7/15/2019* | Carolina Financial Corporation | Carolina Trust BancShares, Inc. | ||
7/02/2019* | ACNB Corporation | Frederick County Bancorp, Inc. | ||
6/27/2019* | Nicolet Bankshares, Inc. | Choice Bancorp, Inc. | ||
6/05/2019* | S&T Bancorp, Inc. | DNB Financial Corporation | ||
5/16/2019* | Heritage Commerce Corp | Presidio Bank | ||
4/03/2019 | Glacier Bancorp, Inc. | Heritage Bancorp | ||
3/05/2019 | BancorpSouth Bank | Summit Financial Enterprises, Inc. | ||
2/21/2019 | German American Bancorp, Inc. | Citizens First Corporation | ||
1/16/2019 | Heartland Financial USA, Inc. | Blue Valley Ban Corp. | ||
1/07/2019 | First Financial Corporation | HopFed Bancorp, Inc. |
* | Indicates the transaction was pending as of September 27, 2019 |
Western United States
Announcement Date | Acquirer | Target | ||
7/24/2019* | Banner Corporation | AltaPacific Bancorp | ||
5/28/2019* | Santa Cruz County Bank | Lighthouse Bank | ||
5/16/2019* | Heritage Commerce Corp | Presidio Bank | ||
4/03/2019 | Glacier Bancorp, Inc. | Heritage Bancorp | ||
1/16/2019 | Glacier Bancorp, Inc. | FNB Bancorp | ||
12/10/2018 | BayCom Corp | Uniti Financial Corporation | ||
11/01/2018 | Enterprise Financial Services Corp | Trinity Capital Corporation | ||
10/11/2018 | First Interstate BancSystem, Inc. | Idaho Independent Bank | ||
7/25/2018 | Banner Corporation | Skagit Bancorp, Inc. | ||
7/17/2018 | FS Bancorp, Inc. | Anchor Bancorp | ||
4/25/2018 | First Interstate BancSystem, Inc. | Northwest Bancorporation, Inc. | ||
3/08/2018 | Heritage Financial Corporation | Premier Commercial Bancorp | ||
2/26/2018 | First Choice Bancorp | Pacific Commerce Bancorp | ||
2/12/2018 | Mechanics Bank | Learner Financial Corporation | ||
1/11/2018 | Heritage Commerce Corp | United American Bank |
* | Indicates the transaction was pending as of September 27, 2019 |
High-Performing Banks
Announcement Date | Acquirer | Target | ||
9/19/2019* | First Financial Bankshares, Inc. | TB&T Bancshares, Inc. | ||
8/28/2019* | First Midwest Bancorp, Inc. | Bankmanagers Corp. | ||
7/25/2019* | Wintrust Financial Corporation | SBC, Incorporated | ||
7/25/2019* | South Plains Financial, Inc. | West Texas State Bank | ||
7/24/2019* | Banner Corporation | AltaPacific Bancorp | ||
7/22/2019* | First Bancshares, Inc. | |||
5/16/2019* | Heritage Commerce Corp | Presidio Bank | ||
4/24/2019 | BancFirst Corporation | Pegasus Bank | ||
4/03/2019 | Glacier Bancorp, Inc. | Heritage Bancorp | ||
3/05/2019 | BancorpSouth Bank | Summit Financial Enterprises, Inc. | ||
2/21/2019 | German American Bancorp, Inc. | Citizens First Corporation | ||
11/27/2018 | Spirit of Texas Bancshares, Inc. | First Beeville Financial Corporation | ||
11/16/2018 | First Citizens BancShares, Inc. | Biscayne Bancshares, Inc. | ||
10/25/2018 | OceanFirst Financial Corp. | Capital Bank of | ||
6/11/2018 | CapStar Financial Holdings, Inc. | Athens Bancshares Corporation | ||
4/24/2018 | National Commerce Corporation | |||
4/18/2018 | BancorpSouth Bank | Icon Capital Corporation | ||
4/18/2018 | ||||
Indicates the transaction was pending as of |
The analysis
For each transaction referred to above, Davidson compared, among other things, the following implied ratios:
transaction price compared to tangible book value on a per share and aggregate basis, based on the latest publicly available financial informationstatements of the target company prior to the announcement of the transaction;
transaction price compared to earnings per share for the last twelve months, based on the latest publicly available financial statements of the target company prior to the announcement of the transaction;
transaction price per share compared to the closing stock price of the target company for the day prior to the announcement of the transaction; and
tangible book premium to core deposits based on the latest publicly available financial statements of the target company prior to the announcement of the transaction.
Davidson compared the multiples of the comparable transaction groups and other operating financial data where relevant to the proposed merger multiples and other operating financial data of SBC as of September 30, 2018 for FNB, as provided by FNB senior management, with the corresponding publicly available dataor for the FNB Peer Group as of September3-month period ended June 30, 2018 (unless otherwise noted) with pricing data as of January 14, 2019. The table below sets forth the data for FNB and the high, low, mean and median data for the FNB Peer Group.results of this analysis.
FNB Peer Group | ||||||||||||||||||||||||
FNB (As Reported) | FNB (Core) 1 2 | High | Low | Mean | Median | |||||||||||||||||||
Total Assets (in millions) | $ | 326 | — | $ | 494 | $ | 241 | $ | 377 | $ | 388 | |||||||||||||
Market Value (in millions) | — | — | $ | 152 | $ | 29 | $ | 60 | $ | 53 | ||||||||||||||
Price/Tangible Book Value | — | — | 236 | % | 76 | % | 135 | % | 121 | % | ||||||||||||||
Price/YTDA Earnings Per Share | — | — | 27.5x | 8.4x | 13.1x | 11.4x | ||||||||||||||||||
Current Dividend Yield | — | — | 4.8 | % | 0.0 | % | 1.8 | % | 1.3 | % | ||||||||||||||
One-Year Stock Price Change | — | — | 9.2 | % | (19.3 | %) | (1.5 | %) | 1.2 | % | ||||||||||||||
YTD Efficiency Ratio | 56 | % | — | 89 | % | 32 | % | 64 | % | 64 | % | |||||||||||||
YTD Net Interest Margin3 | 5.18 | % | — | 5.24 | % | 3.35 | % | 4.07 | % | 3.96 | % | |||||||||||||
YTD Return on Average Assets | 2.59 | % | 1.40 | % | 2.53 | % | 1.00 | % | 1.36 | % | 1.31 | % | ||||||||||||
YTD Return on Average Equity | 22.7 | % | 12.3 | % | 16.9 | % | 5.2 | % | 12.0 | % | 11.5 | % | ||||||||||||
Tangible Common Equity/Tangible Assets | 12.0 | % | — | 48.6 | % | 8.7 | % | 12.8 | % | 10.2 | % | |||||||||||||
Loans/Deposits | 87 | % | — | 145 | % | 55 | % | 88 | % | 86 | % | |||||||||||||
Non-performing Assets/Total Assets | 0.69 | % | — | 0.99 | % | 0.00 | % | 0.39 | % | 0.33 | % |
Financial Condition and Performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Nationwide | Western United States | High-Performing Banks | ||||||||||||||||||||||||||||||||||||||||||||||||||
SBC | Median | Average | Minimum | Maximum | Median | Average | Minimum | Maximum | Median | Average | Minimum | Maximum | ||||||||||||||||||||||||||||||||||||||||
Total Assets (in millions) | $ | 679 | $ | 756 | $ | 1,081 | $ | 435 | $ | 3,290 | $ | 536 | $ | 621 | $ | 314 | $ | 1,254 | $ | 579 | $ | 618 | $ | 412 | $ | 990 | ||||||||||||||||||||||||||
Return on Average Assets (Last Twelve Months) | 1.25 | % | 1.16 | % | 1.11 | % | 0.34 | % | 2.37 | % | 0.98 | % | 1.13 | % | 0.42 | % | 2.37 | % | 1.26 | % | 1.34 | % | 1.00 | % | 2.37 | % | ||||||||||||||||||||||||||
Return on Average Equity (Last Twelve Months) | 13.07 | % | 10.44 | % | 10.67 | % | 4.41 | % | 19.75 | % | 8.63 | % | 10.17 | % | 3.63 | % | 19.75 | % | 12.85 | % | 13.18 | % | 9.01 | % | 19.75 | % | ||||||||||||||||||||||||||
Tangible Common Equity Ratio | 9.47 | % | 9.84 | % | 9.85 | % | 6.88 | % | 12.45 | % | 10.36 | % | 10.66 | % | 6.96 | % | 14.36 | % | 9.97 | % | 9.91 | % | 6.75 | % | 12.38 | % | ||||||||||||||||||||||||||
Efficiency Ratio (Last Twelve Months) | 60.7 | % | 62.6 | % | 61.3 | % | 36.2 | % | 84.1 | % | 65.4 | % | 63.4 | % | 36.2 | % | 79.6 | % | 55.9 | % | 56.3 | % | 36.2 | % | 68.7 | % |
Note:
Transaction Multiples | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Nationwide | Western United States | High-Performing Banks | ||||||||||||||||||||||||||||||||||||||||||||||||||
SBC | Median | Average | Minimum | Maximum | Median | Average | Minimum | Maximum | Median | Average | Minimum | Maximum | ||||||||||||||||||||||||||||||||||||||||
Transaction Price / Tangible Book Value (Per Share) | 212.1 | % | 171.2 | % | 175.5 | % | 122.0 | % | 283.4 | % | 199.9 | % | 195.5 | % | 113.6 | % | 250.9 | % | 182.0 | % | 196.3 | % | 147.9 | % | 283.4 | % | ||||||||||||||||||||||||||
Transaction Price / Tangible Book Value (Aggregate) | 212.7 | % | 171.9 | % | 177.8 | % | 122.5 | % | 283.4 | % | 210.5 | % | 199.8 | % | 113.6 | % | 266.7 | % | 182.0 | % | 196.9 | % | 148.5 | % | 283.4 | % | ||||||||||||||||||||||||||
Transaction Price / Last Twelve Months EPS | 15.6 | x | 15.3 | x | 17.0 | x | 12.3 | x | 27.3 | x | 17.1 | x | 19.3 | x | 12.7 | x | 28.8 | x | 15.2 | x | 15.7 | x | 11.2 | x | 22.8 | x | ||||||||||||||||||||||||||
One-Day Market Premium (1) | 25.8 | % | 22.5 | % | 26.5 | % | 1.8 | % | 53.7 | % | 17.7 | % | 21.0 | % | 3.5 | % | 56.6 | % | 19.3 | % | 18.6 | % | 3.5 | % | 29.0 | % | ||||||||||||||||||||||||||
Tangible Book Premium / Core Deposits (2) | 14.2 | % | 9.5 | % | 11.2 | % | 4.6 | % | 26.1 | % | 13.9 | % | 13.3 | % | 3.6 | % | 20.8 | % | 12.5 | % | 13.2 | % | 6.8 | % | 26.1 | % |
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FNB Net Present Value Analyses.Analysis for SBC Sandler O’Neill
Davidson performed an analysis that estimated the net present value per share of FNBSBC common stock assuming FNBunder various circumstances. The analysis assumed: (i) SBC performed in accordance with internal net incomeSBC management’s financial projections for FNB for the years ending December 31, 2018 through December 31, 2020 with an annual net income growth rate for the years ending December 31 2021 through December 31, 2022, as provided by the senior management of FNB, as well as estimated dividends per share for the years ending December 31, 2019, and December 31, 2020; and (ii) an estimated long-term growth rate for the years thereafter through December 31, 2022,2024, as directedprovided by the senior management of FNB.and discussed with SBC management. To approximate the terminal value of a share of FNBSBC common stock at December 31, 2022, Sandler O’Neill2024, Davidson applied price to 2022 earnings per share multiples ranging from 10.00xof 11.0x to 16.67x18.0x and price to December 31, 2022multiples of tangible book value per share multiples ranging from 110%150.0% to 185%255.0%. The income streams and terminal values were then discounted to present values using different discount rates ranging from 9.0%11.00% to 15.0% which were17.00% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of FNBSBC’s common stock. As illustrated inIn evaluating the following tables, the analysis indicated an imputed range of values per share of FNB common stock of $15.68 to $30.29 when applying multiples of earnings per share and $13.33 to $25.65 when applying multiples of tangible book value per share.
Earnings Per Share Multiples | ||||||||||||||||||||||||
Discount Rate | 10.00x | 11.33x | 12.67x | 14.00x | 15.33x | 16.67x | ||||||||||||||||||
9.0% | $ | 19.20 | $ | 21.42 | $ | 23.64 | $ | 25.85 | $ | 28.07 | $ | 30.29 | ||||||||||||
10.0% | $ | 18.55 | $ | 20.68 | $ | 22.82 | $ | 24.96 | $ | 27.10 | $ | 29.24 | ||||||||||||
11.0% | $ | 17.92 | $ | 19.98 | $ | 22.04 | $ | 24.11 | $ | 26.17 | $ | 28.23 | ||||||||||||
12.0% | $ | 17.32 | $ | 19.31 | $ | 21.30 | $ | 23.29 | $ | 25.28 | $ | 27.27 | ||||||||||||
13.0% | $ | 16.75 | $ | 18.67 | $ | 20.59 | $ | 22.51 | $ | 24.43 | $ | 26.35 | ||||||||||||
14.0% | $ | 16.20 | $ | 18.05 | $ | 19.91 | $ | 21.76 | $ | 23.62 | $ | 25.47 | ||||||||||||
15.0% | $ | 15.68 | $ | 17.47 | $ | 19.26 | $ | 21.05 | $ | 22.84 | $ | 24.63 |
Tangible Book Value Per Share Multiples | ||||||||||||||||||||||||
Discount Rate | 110% | 125% | 140% | 155% | 170% | 185% | ||||||||||||||||||
9.0% | $ | 16.29 | $ | 18.16 | $ | 20.03 | $ | 21.91 | $ | 23.78 | $ | 25.65 | ||||||||||||
10.0% | $ | 15.74 | $ | 17.55 | $ | 19.35 | $ | 21.15 | $ | 22.96 | $ | 24.76 | ||||||||||||
11.0% | $ | 15.22 | $ | 16.96 | $ | 18.70 | $ | 20.44 | $ | 22.18 | $ | 23.92 | ||||||||||||
12.0% | $ | 14.71 | $ | 16.39 | $ | 18.07 | $ | 19.75 | $ | 21.43 | $ | 23.11 | ||||||||||||
13.0% | $ | 14.23 | $ | 15.85 | $ | 17.47 | $ | 19.09 | $ | 20.71 | $ | 22.33 | ||||||||||||
14.0% | $ | 13.77 | $ | 15.33 | $ | 16.90 | $ | 18.46 | $ | 20.03 | $ | 21.59 | ||||||||||||
15.0% | $ | 13.33 | $ | 14.84 | $ | 16.35 | $ | 17.86 | $ | 19.37 | $ | 20.88 |
Sandler O’Neill also considered and discussed with the FNB board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to projected net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming FNB’s net income varied from 15% above projections to 15% below projections. This analysis resulted in the following range of per share values for FNB common stock, applying the price to 2022 earnings per share multiples range of 10.00x to 16.67x referred to above and a discount rate, Davidson used industry standard methods of 12.68%.adding the current risk-free rate, which is based on the20-year Treasury yield, plus the published Duff & Phelps Industry Equity Risk Premium and plus the published Duff & Phelps Size Premium.
Earnings Per Share Multiples | ||||||||||||||||||||||||
Variance to Net Income Projection | 10.00x | 11.33x | 12.67x | 14.00x | 15.33x | 16.67x | ||||||||||||||||||
(15.0%) | $ | 14.75 | $ | 16.40 | $ | 18.05 | $ | 19.70 | $ | 21.35 | $ | 23.00 | ||||||||||||
(10.0%) | $ | 15.47 | $ | 17.22 | $ | 18.97 | $ | 20.72 | $ | 22.46 | $ | 24.21 | ||||||||||||
(5.0%) | $ | 16.20 | $ | 18.05 | $ | 19.89 | $ | 21.74 | $ | 23.58 | $ | 25.43 | ||||||||||||
0.0% | $ | 16.93 | $ | 18.87 | $ | 20.81 | $ | 22.76 | $ | 24.70 | $ | 26.64 | ||||||||||||
5.0% | $ | 17.66 | $ | 19.70 | $ | 21.74 | $ | 23.78 | $ | 25.81 | $ | 27.85 | ||||||||||||
10.0% | $ | 18.39 | $ | 20.52 | $ | 22.66 | $ | 24.79 | $ | 26.93 | $ | 29.07 | ||||||||||||
15.0% | $ | 19.11 | $ | 21.35 | $ | 23.58 | $ | 25.81 | $ | 28.05 | $ | 30.28 |
Sandler O’NeillAt the September 30, 2019 SBC Board meeting, Davidson noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.
Analysis of Selected Merger Transactions. Sandler O’Neill reviewed a group of merger and acquisition transactions involving U.S. banks (the “Nationwide Precedent Transactions”). The Nationwide Precedent Transactions group consisted of bank transactions announced between January 1, 2018 and January 14, 2019 with disclosed deal values, target assets at the time of announcement between $200 million and $500 million, and a return on average assets greater than 1.00% for the trailing twelve months prior to announcement.
The Nationwide Precedent Transactions group was composed of the following transactions:
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Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler O’Neill reviewed the following transaction metrics: transaction price to LTM earnings per share, transaction price to tangible book value per share and tangible book value premium to core deposits. Sandler O’Neill compared the indicated transaction multiples for the merger to the high, low, mean and median multiples of the Nationwide Precedent Transactions group.
Nationwide Precedent Transactions | ||||||||||||||||||||||||
FNB/GBCI (Tax-Effected)2 | FNB/GBCI (Core, Tax- Effected)2 3 | High | Low | Mean | Median | |||||||||||||||||||
Transaction Price / LTM Earnings Per Share: | 14.2x | 18.6x | 22.8x | 7.0x | 15.9x | 15.3x | ||||||||||||||||||
Transaction Price / Tangible Book Value Per Share: | 217 | % | — | 289 | % | 135 | % | 184 | % | 180 | % | |||||||||||||
Tangible Book Value Premium to Core Deposits1: | 17.6 | % | — | 31.4 | % | 6.2 | % | 11.2 | % | 8.8 | % |
Note:
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GBCI Comparable Company Analyses. Sandler O’Neill used publicly available information as of September 30, 2018, unless otherwise noted, to compare selected financial information for GBCI with a group of banks selected by Sandler O’Neill (the “GBCI Peer Group”). The GBCI Peer Group consisted of major exchange-traded banks with total assets between $10 billion and $14 billion,year-to-date return on average assets greater than 1.00%, excluding announced merger targets. The GBCI Peer Group consisted of the following companies:
Note:
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The analysis compared publicly available financial information for GBCI as of or for the period ended September 30, 2018 with the corresponding publicly available data for the GBCI Peer Group as of September 30, 2018, unless otherwise noted, with pricing data as of January 14, 2019. The table below sets forth the data for GBCI and the high, low, mean and median data for the GBCI Peer Group.
GBCI Peer Group | ||||||||||||||||||||
GBCI | High | Low | Mean | Median | ||||||||||||||||
Total Assets (in millions) | $ | 11,909 | $ | 13,843 | $ | 10,514 | $ | 12,139 | $ | 12,073 | ||||||||||
Market Value (in millions) | $ | 3,521 | $ | 3,163 | $ | 1,274 | $ | 2,108 | $ | 2,028 | ||||||||||
Price/Tangible Book Value | 306 | % | 350 | % | 134 | % | 196 | % | 186 | % | ||||||||||
Price/YTDA Earnings Per Share | 19.7 | x | 18.8 | x | 8.3 | x | 13.3 | x | 13.3 | x | ||||||||||
Price/Estimated 2019 Earnings Per Share | 17.0 | x | 19.0 | x | 8.0 | x | 11.5 | x | 10.8 | x | ||||||||||
Price/Estimated 2020 Earnings Per Share | 16.4 | x | 18.2 | x | 7.2 | x | 10.9 | x | 10.3 | x | ||||||||||
Current Dividend Yield | 2.5 | % | 3.4 | % | 0.0 | % | 2.5 | % | 2.7 | % | ||||||||||
One-Year Stock Price Change | 4.5 | % | 11.1 | % | (37.6 | %) | (18.3 | %) | (17.4 | %) | ||||||||||
YTD Efficiency Ratio | 54 | % | 66 | % | 41 | % | 55 | % | 55 | % | ||||||||||
YTD Net Interest Margin | 4.17 | % | 4.41 | % | 3.42 | % | 3.91 | % | 3.87 | % | ||||||||||
YTD Return on Average Assets | 1.56 | % | 1.77 | % | 1.04 | % | 1.31 | % | 1.29 | % | ||||||||||
YTD Return on Average Equity | 12.3 | % | 13.1 | % | 7.4 | % | 9.7 | % | 9.5 | % | ||||||||||
Tangible Common Equity/Tangible Assets | 10.0 | % | 13.6 | % | 7.7 | % | 9.2 | % | 9.0 | % | ||||||||||
Loans/Deposits | 85 | % | 104 | % | 74 | % | 89 | % | 89 | % | ||||||||||
Non-performing Assets/Total Assets | 0.81 | % | 1.51 | % | 0.07 | % | 0.53 | % | 0.46 | % |
GBCI Stock Trading History. Sandler O’Neill reviewed the historical stock price performance of GBCI common stock for theone-year and three-year periods ended January 14, 2019. Sandler O’Neill then compared the relationship between the stock price performance of GBCI’s common stock to movements in the GBCI Peer Group (as described above) as well as certain stock indices.
GBCIOne-Year Stock Price Performance | ||||||||
Beginning January 14, 2018 | Ending January 14, 2019 | |||||||
GBCI | 100.0 | % | 104.5 | % | ||||
GBCI Peer Group | 100.0 | % | 82.6 | % | ||||
NASDAQ Bank | 100.0 | % | 82.5 | % | ||||
S&P 500 | 100.0 | % | 92.7 | % | ||||
GBCI Three-Year Stock Price Performance | ||||||||
Beginning January 14, 2016 | Ending January 14, 2019 | |||||||
GBCI | 100.0 | % | 177.4 | % | ||||
GBCI Peer Group | 100.0 | % | 137.0 | % | ||||
NASDAQ Bank | 100.0 | % | 134.3 | % | ||||
S&P 500 | 100.0 | % | 134.4 | % |
GBCI Net Present Value Analyses. Sandler O’Neill performed an analysis that estimated the net present value per share of GBCI common stock assuming that GBCI performed in accordance with publicly available consensus analyst earnings per share estimates for GBCI for the years ending December 31, 2018 through December 31, 2020, as well as a long-term earnings per share growth rate for the years thereafter and dividend payout ratio for the years ending December 31, 2019 through December 31, 2022, as directed by the senior management of GBCI. To approximate the terminal value of a share of GBCI common stock at December 31, 2022, Sandler O’Neill applied price to 2022 earnings per share multiples ranging from 10.0x to 20.0x and price to December 31, 2022 tangible book value per share multiples ranging from 160% to 310%. The terminal values were then discounted to present values using different discount rates ranging from 8.0% to 11.0% which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of GBCI common stock. As illustrated in the following tables, the analysis indicated an imputedindicates a range of values per share of GBCISBC common stock of $23.69$8.86 to $48.08$18.19 when applying the price to earnings multiples of earnings per shareto the financial projections and $24.54$9.90 to $48.55$21.21 when applying the multiples of tangible book value per share.to the financial projections.
Earnings Per Share Multiples
Earnings Per Share Multiples | ||||||||||||||||||||||||
Discount Rate | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x | 20.0x | ||||||||||||||||||
8.0% | $ | 26.24 | $ | 30.61 | $ | 34.98 | $ | 39.34 | $ | 43.71 | $ | 48.08 | ||||||||||||
9.0% | $ | 25.35 | $ | 29.56 | $ | 33.77 | $ | 37.98 | $ | 42.19 | $ | 46.40 | ||||||||||||
10.0% | $ | 24.50 | $ | 28.56 | $ | 32.62 | $ | 36.67 | $ | 40.73 | $ | 44.79 | ||||||||||||
11.0% | $ | 23.69 | $ | 27.60 | $ | 31.51 | $ | 35.43 | $ | 39.34 | $ | 43.25 |
Earnings Per Share Multiple | |||||||||||||||||||||||||||||||||||||||||||
Discount Rate | 11.0x | 12.0x | 13.0x | 14.0x | 15.0x | 16.0x | 17.0x | 18.0x | |||||||||||||||||||||||||||||||||||
11.00% | $ | 11.66 | $ | 12.59 | $ | 13.52 | $ | 14.46 | $ | 15.39 | $ | 16.33 | $ | 17.26 | $ | 18.19 | |||||||||||||||||||||||||||
12.00% | $ | 11.12 | $ | 12.01 | $ | 12.90 | $ | 13.79 | $ | 14.68 | $ | 15.57 | $ | 16.46 | $ | 17.34 | |||||||||||||||||||||||||||
13.00% | $ | 10.62 | $ | 11.46 | $ | 12.31 | $ | 13.16 | $ | 14.00 | $ | 14.85 | $ | 15.70 | $ | 16.54 | |||||||||||||||||||||||||||
14.00% | $ | 10.14 | $ | 10.95 | $ | 11.75 | $ | 12.56 | $ | 13.37 | $ | 14.17 | $ | 14.98 | $ | 15.79 | |||||||||||||||||||||||||||
15.00% | $ | 9.69 | $ | 10.46 | $ | 11.23 | $ | 12.00 | $ | 12.76 | $ | 13.53 | $ | 14.30 | $ | 15.07 | |||||||||||||||||||||||||||
16.00% | $ | 9.26 | $ | 10.00 | �� | $ | 10.73 | $ | 11.46 | $ | 12.20 | $ | 12.93 | $ | 13.66 | $ | 14.39 | ||||||||||||||||||||||||||
17.00% | $ | 8.86 | $ | 9.56 | $ | 10.26 | $ | 10.96 | $ | 11.66 | $ | 12.36 | $ | 13.05 | $ | 13.75 |
Tangible Book Value Multiples
Tangible Book Value Per Share Multiples | ||||||||||||||||||||||||||||
Discount Rate | 160% | 185% | 210% | 235% | 260% | 285% | 310% | |||||||||||||||||||||
8.0% | $ | 27.19 | $ | 30.75 | $ | 34.31 | $ | 37.87 | $ | 41.43 | $ | 44.99 | $ | 48.55 | ||||||||||||||
9.0% | $ | 26.27 | $ | 29.70 | $ | 33.13 | $ | 36.56 | $ | 39.99 | $ | 43.42 | $ | 46.85 | ||||||||||||||
10.0% | $ | 25.38 | $ | 28.69 | $ | 32.00 | $ | 35.31 | $ | 38.61 | $ | 41.92 | $ | 45.23 | ||||||||||||||
11.0% | $ | 24.54 | $ | 27.73 | $ | 30.92 | $ | 34.11 | $ | 37.30 | $ | 40.49 | $ | 43.68 |
Tangible Book Value Per Share Multiple | |||||||||||||||||||||||||||||||||||||||||||
Discount Rate | 150.0% | 165.0% | 180.0% | 195.0% | 210.0% | 225.0% | 240.0% | 255.0% | |||||||||||||||||||||||||||||||||||
11.00% | $ | 13.05 | $ | 14.21 | $ | 15.38 | $ | 16.54 | $ | 17.71 | $ | 18.88 | $ | 20.04 | $ | 21.21 | |||||||||||||||||||||||||||
12.00% | $ | 12.44 | $ | 13.55 | $ | 14.66 | $ | 15.78 | $ | 16.89 | $ | 18.00 | $ | 19.11 | $ | 20.22 | |||||||||||||||||||||||||||
13.00% | $ | 11.88 | $ | 12.93 | $ | 13.99 | $ | 15.05 | $ | 16.11 | $ | 17.16 | $ | 18.22 | $ | 19.28 | |||||||||||||||||||||||||||
14.00% | $ | 11.34 | $ | 12.35 | $ | 13.36 | $ | 14.36 | $ | 15.37 | $ | 16.38 | $ | 17.38 | $ | 18.39 | |||||||||||||||||||||||||||
15.00% | $ | 10.83 | $ | 11.79 | $ | 12.75 | $ | 13.71 | $ | 14.67 | $ | 15.63 | $ | 16.59 | $ | 17.55 | |||||||||||||||||||||||||||
16.00% | $ | 10.36 | $ | 11.27 | $ | 12.19 | $ | 13.10 | $ | 14.02 | $ | 14.93 | $ | 15.85 | $ | 16.76 | |||||||||||||||||||||||||||
17.00% | $ | 9.90 | $ | 10.77 | $ | 11.65 | $ | 12.52 | $ | 13.39 | $ | 14.27 | $ | 15.14 | $ | 16.01 |
Sandler O’NeillDavidson also considered and discussed with the FNB board of directorsSBC Board how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’NeillDavidson performed a similar analysis assuming GBCI’s net incomeSBC estimated earnings per share in 2024 varied from 15%20.00% above estimatesprojections to 15%20.00% below estimates. This analysis resultedprojections. As illustrated in the following table, the analysis indicates a range of values per share values for GBCIof SBC common stock applyingof $8.37 to $18.69 when using the price to 2022 earnings per share multiples range of 10.0x11.0x to 20.0x referred to above18.0x and a discount rate of 8.96%14.00%.
Earnings Per Share Multiples | ||||||||||||||||||||||||
Variance to Net Income Estimate | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x | 20.0x | ||||||||||||||||||
(15.0%) | $ | 22.23 | $ | 25.81 | $ | 29.40 | $ | 32.98 | $ | 36.56 | $ | 40.15 | ||||||||||||
(10.0%) | $ | 23.28 | $ | 27.08 | $ | 30.87 | $ | 34.67 | $ | 38.46 | $ | 42.25 | ||||||||||||
(5.0%) | $ | 24.34 | $ | 28.34 | $ | 32.35 | $ | 36.35 | $ | 40.36 | $ | 44.36 | ||||||||||||
0.0% | $ | 25.39 | $ | 29.61 | $ | 33.82 | $ | 38.04 | $ | 42.25 | $ | 46.47 | ||||||||||||
5.0% | $ | 26.45 | $ | 30.87 | $ | 35.30 | $ | 39.72 | $ | 44.15 | $ | 48.58 | ||||||||||||
10.0% | $ | 27.50 | $ | 32.14 | $ | 36.77 | $ | 41.41 | $ | 46.05 | $ | 50.68 | ||||||||||||
15.0% | $ | 28.55 | $ | 33.40 | $ | 38.25 | $ | 43.10 | $ | 47.94 | $ | 52.79 |
Variance to | Earnings Per Share Multiple | ||||||||||||||||||||||||||||||||||||||||||
2024 EPS | 11.0x | 12.0x | 13.0x | 14.0x | 15.0x | 16.0x | 17.0x | 18.0x | |||||||||||||||||||||||||||||||||||
20.00% | $ | 11.92 | $ | 12.88 | $ | 13.85 | $ | 14.82 | $ | 15.79 | $ | 16.75 | $ | 17.72 | $ | 18.69 | |||||||||||||||||||||||||||
15.00% | $ | 11.47 | $ | 12.40 | $ | 13.33 | $ | 14.25 | $ | 15.18 | $ | 16.11 | $ | 17.04 | $ | 17.96 | |||||||||||||||||||||||||||
10.00% | $ | 11.03 | $ | 11.92 | $ | 12.80 | $ | 13.69 | $ | 14.58 | $ | 15.46 | $ | 16.35 | $ | 17.24 | |||||||||||||||||||||||||||
5.00% | $ | 10.58 | $ | 11.43 | $ | 12.28 | $ | 13.12 | $ | 13.97 | $ | 14.82 | $ | 15.67 | $ | 16.51 | |||||||||||||||||||||||||||
0.00% | $ | 10.14 | $ | 10.95 | $ | 11.75 | $ | 12.56 | $ | 13.37 | $ | 14.17 | $ | 14.98 | $ | 15.79 | |||||||||||||||||||||||||||
-5.00% | $ | 9.70 | $ | 10.46 | $ | 11.23 | $ | 12.00 | $ | 12.76 | $ | 13.53 | $ | 14.29 | $ | 15.06 | |||||||||||||||||||||||||||
-10.00% | $ | 9.25 | $ | 9.98 | $ | 10.71 | $ | 11.43 | $ | 12.16 | $ | 12.88 | $ | 13.61 | $ | 14.33 | |||||||||||||||||||||||||||
-15.00% | $ | 8.81 | $ | 9.50 | $ | 10.18 | $ | 10.87 | $ | 11.55 | $ | 12.24 | $ | 12.92 | $ | 13.61 | |||||||||||||||||||||||||||
-20.00% | $ | 8.37 | $ | 9.01 | $ | 9.66 | $ | 10.30 | $ | 10.95 | $ | 11.59 | $ | 12.24 | $ | 12.88 |
Sandler O’Neill notedFinancial Impact Analysis
Davidson performed pro forma merger analyses that combined projected income statement and balance sheet information of SBC and Glacier. Assumptions regarding the accounting treatment, acquisition adjustments and cost savings were used to calculate the financial impact that the net present value analysis is a widely used valuation methodology, but themerger would have on certain projected financial results of such methodology are highly dependent uponGlacier. In the numerous assumptions that must be made, and the results thereof are not necessarily indicativecourse of actual values or future results.
Pro Forma Merger Analysis. Sandler O’Neill analyzed certain potential pro forma effects of the merger. In performing this analysis, Sandler O’Neill utilizedDavidson used the following information and assumptions: (i) the merger closes on June 30, 2019; (ii) internal net income projectionsaverage Street EPS estimates for FNB for the years ending December 31, 2018 through December 31, 2020 with an annual net income growth rate for the years thereafter, as provided by the senior management of FNB, as well as estimated dividends per shareGlacier for the years ending December 31, 2019 through December 31, 2022, as directed by the senior management of FNB; (iii) publicly available consensus analyst earnings per share estimates for GBCI for the years ending December 31, 2018 throughand December 31, 2020 as well as a long-term earnings per share growth ratediscussed with and confirmed by Glacier and SBC management. In addition, Davidson used SBC management’s projections for the years thereafter and dividend payout ratioSBC for the years ending December 31, 2019 and December 31, 2020, and an estimated long-term growth rate for the years thereafter through December 31, 2022, as directed by the senior management of GBCI; and (iv) certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses,2024, as provided by the senior management of GBCI. Theand discussed with SBC management. This analysis indicated that the merger couldis expected to be accretive to GBCI’sGlacier’s estimated earnings per share (excludingbeginning in 2020, after excludingone-timenon-recurring transaction costs and expenses) at closing, and accretivetransaction-related expenses. The analysis also indicated that the merger is expected to GBCI’s estimatedbe dilutive to tangible book at closing.
In connection with this analysis, Sandler O’Neillvalue per share for Glacier and that Glacier would maintain capital ratios in excess of those required for Glacier to be considered and discussed with the FNB board of directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closingwell-capitalized under existing regulations. For all of the transaction, and noted thatabove analyses, the actual results achieved by Glacier and SBC prior to and following the combined company maymerger will vary from the projected results, and the variations may be material.
Sandler O’Neill’s Relationship. Sandler O’Neill
Davidson prepared its analyses for purposes of providing its opinion to the SBC Board as to the fairness, from a financial point of view, of the merger consideration to be paid to the holders of SBC’s common stock in the proposed merger and to assist SBC’s board of directors in analyzing the proposed merger. The analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties and their respective advisors, none of SBC, GBCI or Davidson or any other person assumes responsibility if future results are materially different from those forecasted.
Davidson’s opinion was one of many factors considered by the SBC Board in its evaluation of the merger and should not be viewed as determinative of the views of the SBC Board or management with respect to the merger or the merger consideration.
Davidson and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions. Davidson acted as FNB’sfinancial advisor to SBC in connection with, and participated in certain of the negotiations leading to the merger. Davidson is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, financing and brokerage activities for both companies and individuals. In the ordinary course of these activities, Davidson and its affiliates may provide such services to SBC, Glacier and their respective affiliates, may actively trade the debt and equity securities (or related derivative securities) of SBC and Glacier for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities. SBC selected Davidson as its financial advisor because it is a recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to a letter agreement executed on May 2, 2019, SBC engaged Davidson as its financial advisor in connection with the transaction and will receive a fee for its services in an amount equalcontemplated transaction. Pursuant to 1.25%the terms of the aggregate purchase price, whichengagement letter, SBC agreed to pay Davidson a cash fee of $150,000 concurrently with the rendering of its opinion. SBC will pay to Davidson at the time of announcement and based on the GBCI closing stock price on January 14, 2019 was approximately $1.1 million. Sandler O’Neill also received a fee of $100,000 for rendering its opinion, which fairness opinion fee will be credited in full towards the transaction fee becoming due and payable to Sandler O’Neill on the day of closing of the merger. FNBmerger a contingent cash fee equal to 1.125% of the aggregate consideration. SBC has also agreed to reimburse Davidson for all reasonableout-of-pocket expenses, including fees of counsel, and to indemnify Sandler O’NeillDavidson and certain related persons against certain claims andspecified liabilities, including liabilities under the federal securities laws, relating to or arising out of Sandler O’Neill’sits engagement. In
During the two years preceding the date of Sandler O’Neill’sDavidson’s opinion, Sandler O’Neill did not provideneither Davidson nor its affiliates had any other material financial advisory or other material commercial or investment banking services to FNB, nor did Sandler O’Neill provide any investment banking services to GBCI inrelationships with SBC.
During the two years preceding the date of Sandler O’Neill’s opinion. InDavidson’s opinion, Davidson has provided investment banking and other financial services to Glacier for which Davidson has received customary compensation. Such services during such period have included representing Glacier on M&A transactions. During the ordinary coursetwo years preceding the date of Sandler O’Neill’s business as a broker-dealer, Sandler O’Neill may purchase securities fromDavidson’s opinion, Davidson has also provided investment banking and sell securitiesother financial services to FNB, GBCIHeritage Bancorp, and Columbine Capital Corporation, in their respective affiliates. Sandler O’Neill may also actively trade the equity and debt securities of FNB, GBCI and their respective affiliatesacquisitions by Glacier, for Sandler O’Neill’s own account and for the accounts of Sandler O’Neill’s customers.which Davidson has received customary compensation.
The following is a brief description of the material aspects of the merger. There are other aspects of the merger that are not discussed below but that are contained in the merger agreement. You are being asked to approve the merger in accordance with the terms of the merger agreement, and you are urged to read the merger agreement carefully. The following summary is qualified in its entirety by reference to the complete text of the merger agreement, which is incorporated by reference into this proxy statement/prospectus and is attached to this proxy statement/prospectus asAppendix A.
Basic Terms of the Merger
The merger agreement provides for the merger of FNBSBC with and into Glacier and, immediately thereafter, the merger of the Bank with and into Glacier Bank, Glacier’s wholly-owned subsidiary. Following the merger, the former branches of the Bank will be combined with Glacier Bank’s four existing Utah branches and operated as a new division of Glacier Bank.
In the merger, FNBSBC shareholders will receive a combination of Glacier common stock and cash for their FNBSBC common stock, as described below. See “– Merger Consideration.”
While Glacier and FNBSBC believe that they will receive the necessary regulatory approvals for the merger, there can be no assurance that such approvals will be received or, if received, as to the timing of such approvals or as to the ability to obtain such approvals on satisfactory terms. See “–“ — Conditions to the Merger” and “– Regulatory Requirements.”
Merger Consideration
As of the effective date of the merger, each share of FNBSBC common stock (including each share of unvested restricted stock) will be converted into the right to receive 0.6474 sharesa “unit” comprised of Glacier common stock and cash, as follows:
Stock Portion of Merger Consideration
0.3706 Glacier shares, subject to adjustment as follows:
If the average closing price of Glacier common stock calculated in accordance with the merger agreement exceeds $46.63,$47.31, Glacier may elect to terminate the merger agreement unless FNBSBC elects to
accept a decrease on aper-share basis in the number of shares of Glacier common stock to be issued in the merger. In prior merger transactions with similar adjustment rights, Glacier has exercised its right to terminate the merger agreement, and the selleron aper-share basis; in such prior merger transactions elected to accept a decrease inevent, theper-share stock consideration will be the number of Glacier shares equal to the quotient obtained by dividing (a) the quotient obtained by dividing (i) the result of (A) the number of shares of SBC stock outstanding at the effective time of the merger, multiplied by (B) 0.3706, further multiplied by (C) $47.31, by (ii) the Glacier commonaverage closing price, and (b) the number of shares of SBC stock issuedoutstanding at the effective time of the merger, in order to avoid termination of the merger.merger agreement.
Conversely, if the “averageaverage closing price”price of Glacier stock (i) is (i) less than $34.47$34.97 and the price of Glacier common stock has underperformed the KBW Regional Banking Index by more than 10%15 percentage points or (ii) is less than $32.44, FNB$32.91, SBC may terminate the merger agreement, unless Glacier elects to increase on aper-share basis the number of shares of Glacier common stock, or in Glacier’s discretion, an amount of cash, as follows, in order to avoid termination of the merger agreement:
If the termination is because the Glacier average closing price is less than $34.97 and the price of Glacier common stock has underperformed the KBW Regional Bank Index by more than 15 percentage points, Glacier may elect to adjust theper-share stock consideration (or in Glacier’s discretion theper-share cash consideration, or a combination thereof) such that the total value of Glacier common stock to be issued in the merger, orplus any additional cash consideration, is equal to the result of (i) the number of shares of SBC stock outstanding at the effective time of the merger, multiplied by (ii) 0.3706, multiplied by (iii) $34.97.
If the termination is because the Glacier average closing price is less than $32.91, Glacier may elect to adjust theper-share stock consideration (or in Glacier’s discretion Glacier paysthe per share cash or a combination of cash and additional Glacier shares, soconsideration) such that the total value of the consideration received by FNB shareholders equals an amount specified in the merger agreement.
Assuming for purposes of illustration only that the average closing price of Glacier common stock to be issued in the merger, plus any additional cash consideration, is $41.06 (which wasequal to theper-share closing price result of Glacier common stock on March 11, 2019), FNB shareholders would receive 0.6474(i) the number of shares of Glacier commonSBC stock for each share of FNB common stock becauseoutstanding at the average closing price did not exceed $46.63 or fall below $32.44.
The actual Glacier average closing price will not be determined until 10 days prior to the closingeffective time of the merger, and it cannot be predicted whether such average closing pricemultiplied by (ii) 0.3706, multiplied by (iii) $32.91.
Cash Portion of Merger Consideration
$1.69 in cash, subject to adjustment as follows: If the “SBC Closing Capital” as determined in accordance with the merger agreement is less than the minimum required, which is $63,611,000, subject to adjustment as provided in the merger agreement, the cash portion of each unit will be above or belowreduced on a pro rata basis based on the collar rangeamount of between $46.63 and $32.44.
Possible Special Dividendsuch deficiency.
If the FNBSBC Closing Capital exceeds $39,258,000, FNBis in excess of $63,611,000, subject to adjustment as provided in the merger agreement, SBC may, upon written notice to Glacier and effective immediately prior to the closing of the merger, declare and pay a special dividend to its shareholders in the aggregate amount of such excess.
“FNBSBC Closing Capital” is defined in the merger agreement and is equal to an amount, estimated as of the closing date of the merger, equal to FNB’sof SBC’s capital stock, surplus and retained earnings determined in accordance with generally accepted accounting principles (“GAAP”) on a consolidated basis, net of goodwill and other intangible assets, calculated in the same manner in which FNB’sSBC’s consolidated tangible equity capital at December 31, 20172018 and SeptemberJune 30, 20182019 was calculated, after giving effect to adjustments, calculated in accordance with GAAP, for accumulated other comprehensive income or loss as reported on FNB’s or the Bank’sSBC’s balance sheet.
The FNBSBC Closing Capital may be reducedadjusted based on the estimated final amount of transaction-related expenses to be incurred by FNB,SBC, as determined and agreed upon between FNBSBC and Glacier in accordance with the merger agreement (the “Final Transaction-Related Expenses”).agreement. To the extent the Final Transaction-Related Expenses exceed $6,000,000,that such final transaction-related expenses do not equal $5,487,323, the amount of such excess,difference, on anafter-tax basis, will be reflected as apro-forma adjustment to the FNBSBC Closing Capital, reducing or increasing, as the amountcase may be, the SBC Closing Capital.
Assuming for purposes of illustration only that(i) there is no reduction of the FNB Closing Capital.cash portion of the merger consideration, and(ii) the average closing price of Glacier common stock immediately prior to the closing of the merger is $[] (which was the closing price of Glacier common stock on [], 2019), SBC shareholders would receive consideration with a value equal to $[], consisting of $1.69 in cash and 0.3706 shares of Glacier common stock (valued at $[]) for each share of SBC common stock.
Fractional Shares
No fractional shares of Glacier common stock will be issued to any holder of FNBSBC common stock in the merger. For each fractional share that would otherwise be issued, Glacier will pay cash in an amount equal to the fraction multiplied by the Glacier average closing price calculated as provided in the merger agreement. No interest will be paid or accrued on cash payable in lieu of fractional shares of Glacier common stock.
Effective Date of the Merger
Subject to the satisfaction or waiver of conditions to the obligations of the parties to complete the merger as set forth in the merger agreement, the effective date of the merger will be the date the merger becomes effective under the Montana Business Corporation Act and the UtahArizona Revised Business Corporations Act.Statutes. Subject to the foregoing and the possible adjustment of the closing date as discussed under “—Closing Date” below, it is currently anticipated that the merger will be consummated during the secondfourth quarter of 2019.
Letter of Transmittal
PromptlyWithin five business days following the effective date of the merger, Glacier’s exchange agent will send a letter of transmittal to each holder of record of FNBSBC common stock. This mailing will contain instructions on how to surrender FNBSBC common stock certificates or other evidence of ownership in exchange for the merger consideration that the holder is entitled to receive under the merger agreement.
With the exception of any proposed dissenting shares, each FNBSBC stock certificate will, from and after the effective date of the merger, be deemed to represent and evidence only the right to receive the merger consideration payable with respect to such certificate. FNBSBC shareholders must provide properly completed and executed letters of transmittal in order to effect the exchange of their shares of FNBSBC common stock for(i) evidence of issuance in book entry form, or upon the written request of the holder, stock certificates, representing Glacier common stock,(ii) a check, or, at the election of the SBC shareholder, a wire transfer (but only of the amount of cash included in that shareholder’s merger consideration exceeds $100,000) in the event that Glacier elects to pay cash consideration under the circumstances described under “– Terminationamount of the Merger Agreement” below,cash portion of the merger consideration, and/or(iii) a check representing the amount of cash in lieu of fractional shares, if any.
Lost, Stolen or Destroyed Certificates
If a certificate for FNBSBC common stock has been lost, stolen or destroyed, the exchange agent will be authorized to issue or pay the holder’s merger consideration, if the holder provides Glacier with(i) satisfactory evidence that the holder owns the FNBSBC common stock and that the certificate is lost, stolen or destroyed,(ii) any affidavit or security Glacier may require (including any bond that may be required by the exchange agent in accordance with its policies), and(iii) any reasonable additional assurances that Glacier or Glacier’s exchange agent may require, which may include indemnification of Glacier if the lost, stolen or destroyed certificates are subsequently presented.
Voting AgreementAgreements
FNB’sSBC’s directors and executive officers (in their individual capacities as SBC shareholders) and certain significant shareholders have entered into a voting agreement,agreements, dated as of January 16,September 30, 2019. In the voting agreement,agreements, each person agrees, among other things, to vote the shares of FNBSBC common stock that he or she is entitled to vote and that he or she owns or controls in favor of the merger agreement. As of the record date, hereof, the persons who have entered into the voting agreementagreements are entitled to vote a total of 1,357,605[] shares of FNBSBC common stock, representing approximately 42.95%[]% of all outstanding shares of FNBSBC common stock. The voting agreements also provide that the SBC shares covered by such agreement will be voted in favor of any proposal to adjourn the special meeting if there are not sufficient votes to approve the merger agreement. Any such vote to adjourn, if necessary, would occur at the special meeting.
Dissenters’ Rights
Under Utah law, FNBthe Arizona Business Corporation Act (“ABCA”), SBC shareholders have the right to dissent from the merger and to receive payment in cash for the “fair value” of their shares of FNBSBC common stock.
FNBSBC shareholders electing to exercise dissenters’ rights must comply with the provisions of the URBCAapplicable Arizona laws in order to perfect their rights. The following is intended only as a brief summary of the material
provisions of the procedures that an FNBSBC shareholder must follow in order to dissent from the merger and perfect dissenters’ rights.This summary, however,is not a complete statement of all applicable requirements and is qualified in its entirety by reference to the URBCA,Arizona dissenters’ rights laws, the full text of which is set forth in Appendix B to this document.
A shareholder who wishes to assertexercise dissenters’ rights must:
before FNB shareholders vote on the merger agreement, deliver to FNBSBC before the special meeting written notice of the shareholder’s intent to demand payment for the shareholder’s shares if the merger is completed, and
not vote any of such shareholder’s shares in favor of the merger.
A shareholder wishing to deliver a notice asserting dissenters’ rights should hand-deliverhand deliver or mail the notice to the following address:
FNB BancorpState Bank Corp.
12 S. Main1771 McCulloch Boulevard
Layton, Utah 84041Lake Havasu City, Arizona 86403
ATTN: Shelly Holt,Karen Gibbs, Corporate Secretary
A shareholder who wishes to exercise dissenters’ rights generally must dissent with respect to all of the shares the shareholder owns.owns or over which the shareholder has the power to direct the vote. However, if a record shareholder is a nominee for several beneficial shareholders, some of whom wish to dissent and some of whom do not, then the record holder may dissent with respect to all the shares beneficially owned by any one person by notifying FNBSBC in writing of the name and address of each person on whose behalf the record shareholderowner asserts dissenters’ rights. A beneficial shareholder may assert dissenters’ rights directly by submitting to FNBSBC the record shareholder’s written consent to the dissent and by dissenting with respect to all the shares of which the shareholder is the beneficial shareholder.shareholder or over which the shareholder has the power to direct the vote.
A shareholder who does not, prior to the FNB shareholder vote on the merger agreement,special shareholders meeting, deliver to FNBSBC a written notice of the shareholder’s intent to demand payment for the “fair value” of the shares will lose the right to exercise dissenters’ rights. In addition, any shareholder electing to exercise dissenters’ rights must either vote against the merger or abstain from voting.
If the merger is completed, Glacier (as the surviving corporation) will, within 10 days after the effective date of the merger, deliver a written notice to all FNBSBC shareholders who properly gave notice of their intent to exercise dissenters’ rights. The notice will, among other things:
state an address at which Glacierwhere the payment demand must be sent and where and when certificates for certificated shares must be deposited;
inform holders of uncertificated shares to what extent transfer of the shares will receivebe restricted after the payment demands and an address at which certificates shall be deposited;demand is received;
supply a form for demanding payment;payment that includes the date of the first announcement of the terms of the merger and that requires that the person asserting dissenters’ rights certify whether or not the person acquired beneficial ownership of the shares before that date.
set a date by which Glacier must receive the payment demand, and by which certificatesdate must be deposited at the address indicated in the dissenters’ notice, which dates will be betweenleast 30 and 70but not more than 60 days after the date the notice is delivered;
providestate Glacier’s estimate of the “fair value” for the shares and include specified financial and other information related to the estimate; and
be accompanied by a copy of the dissenters’ rights provisions of the URBCA, Title 16, Part 13,ABCA, Sections 130110-1320 through 1331.10-1331.
A shareholder wishing to exercise dissenters’ rightssent a notice as described above must at that time filedemand payment, certify whether the payment demand and deliver share certificatesshareholder acquired beneficial ownership of the shares before the date the terms of the merger were first announced as requiredset forth in the notice, and deposit the shareholder’s certificates in accordance with the terms of the notice. Failure to do so will cause thatA shareholder to lose hiswho demands payment and deposits the shareholder’s certificates retains all other rights of a shareholder until these rights are canceled or her dissenters’ rights.modified.
A shareholder who does not demand payment or does not deposit the shareholder’s certificates if required, each by the date set in the notice, is not entitled to payment for the shareholders shares.
The ABCA provides that Glacier (as the surviving corporation) must pay any dissenter who has complied with the requirements summarized in the previous paragraph may nevertheless decline to exercise dissenters’ rights and withdraw from the appraisal process by notifying Glacier by the date set forth in the written notice provided by Glacier following consummation of the merger. If the shareholder does not withdraw from the appraisal process by the specified date, he or she may not do so thereafter unless Glacier consents to such withdrawal in writing.
Upon completion of the merger or receipt of the payment demand, whichever is later, Glacier will pay each dissenter with properly perfected dissenters’ rights Glacier’s estimate ofabove the “fair value” of the shareholder’s shares plus accrued interest from the effective date of the merger. The payment will be accompanied by specified financial information as required by the URBCA and a statement as to Glacier’s estimate of the fair value of the shares and the interest payable with respect to the shares.
With respect to a dissenter who did not beneficially own shares of FNBSBC prior to the public announcement of the merger, Glacier is not required to make the payment until the dissenter has agreed to accept the payment in full satisfaction of the dissenter’s demands.
“Fair “Fair value” is defined in the URBCA asmeans the value of the FNB shares immediately before the effective date of the merger, excluding any appreciation or depreciation in anticipation of the merger.merger unless exclusion is inequitable. The “fair value” may be less than, equal to, or greater than the value of the consideration that an FNBSBC shareholder would be entitled to receive under the merger agreement. The rateInvestment banker opinions as to the fairness, from a financial point of interest will beview, of the rate of interest providedconsideration payable in a transaction such as the merger are not opinions as to, and do not address, “fair value” under applicable law.the ABCA.
Within 30 days of Glacier’s payment (or offer of payment in the case of shares acquired after public announcement of the merger) to a dissenting shareholder, a dissenter dissatisfied with Glacier’s estimate of the fair value of the shares may notify Glacier of the dissenter’s own estimate of the fair value and demand payment of that amount. If Glacier does not accept the dissenter’s estimate and the parties do not otherwise settle on a fair value, then Glacier must, within 60 days of receiving the estimate and demand, petition a court to determine the fair value.
In view of the complexity of the UtahArizona statutes governing dissenters’ rights, FNBSBC shareholders who wish to dissent from the merger and pursue dissenters’dissenter’s rights should consult their legal advisors.
The failure of an FNBSBC shareholder to comply strictly with the UtahArizona statutory requirements will result in a loss of dissenters’ rights. A copy of the relevant statutory provisions is attached as Appendix B. You should refer to Appendix B for a complete statement concerning dissenters’ rights and the foregoing summary of such rights is qualified in its entirety by reference to Appendix B.
Conditions to the Merger
Consummation of the merger is subject to various conditions. No assurance can be provided as to whether these conditions will be satisfied or waived by the appropriate party. Accordingly, there can be no assurance that the merger will be completed.
Certain customary conditions must be satisfied, or specified events must occur, before the parties will be obligated to complete the merger. Each party’s obligations under the merger agreement are conditioned on satisfaction by the other party of conditions applicable to them. Some of these conditions, applicable to the respective obligations of both Glacier and FNB, are as follows:
the accuracy of the other party’s representations and warranties in the merger agreement and any certificate or other instrument delivered in connection with the merger agreement;
material compliance by the other party of all terms, covenants, and conditions of the merger agreement;
that there shall have been no material damage, destruction, or loss, or other event, individually or in the aggregate, constituting a Material Adverse Effect (as defined in the merger agreement) with respect to the other party or the commencement of any proceeding against the other party that, individually or in the aggregate, is reasonably expected to have a Material Adverse Effect with respect to such party;
that no action or proceeding has been commenced or threatened by any governmental agency to restrain or prohibit or invalidate the merger;
the parties shall have agreed on the amount of the FNB Closing Capital and Final Transaction Related Expenses, each as defined in the merger agreement; and
the registration statement filed with the SEC, required to register the Glacier common stock to be issued to shareholders of FNB, has become effective, and no stop-order suspending such effectiveness has been issued or remains in effect and no proceedings for that purpose have been initiated or threatened by the SEC.
In addition to the above, the obligations of Glacier under the merger agreement are subject to conditions that:
Glacier shall have obtained from legal counsel, and delivered to FNB, an opinion addressed to FNB and Glacier (subject to reasonable limitations, conditions and assumptions) to the effect that each of the merger of FNB with and into Glacier and the merger of the Bank with and into Glacier Bank will be a reorganization within the meaning of Internal Revenue Code Section 368(a); and
Proposed dissenting shares to the merger must not represent more than 10% of FNB’s outstanding common stock.
Additionally, either Glacier or FNBSBC may terminate the merger if certain conditions applicable to the other party are not satisfied or waived. Those conditions are discussed below under “–Termination of the Merger Agreement.”
Either Glacier or FNBSBC may waive any conditions applicable to its obligations, except those that are required by law (such as receipt of regulatory approvals and FNBSBC shareholder approval). Either Glacier or FNBSBC may also grant extended time to the other party to complete an obligation or condition.
Covenants
The merger agreement contains numerous agreements between the parties regarding the handling of various matters before the merger. These agreements include:
for SBC, a general obligation to conduct business in the ordinary course, consistent with past practice in compliance with applicable laws and to generally maintain and preserve intact its, properties, business, management and compensation structure;
actions that SBC must refrain from taking, and certain actions that the SBC must take, during the period between the date of the merger agreement and the closing with regard to a number of matters outside the ordinary course of business;
agreements by both parties to cooperate in the preparation and submission of proxy materials, regulatory applications and for Glacier to make certain filings and notices;
agreement by SBC to convene a shareholders’ meeting and submit the merger agreement for consideration at such meeting and, subject to certain limitations (described below under“No-Shop”/Board Recommendation Provisions), solicit approval of the merger agreement from its shareholders and recommend that shareholders approve the merger agreement;
agreements by the parties that they will provide notice to each other of certain events, including notice by either party of the occurrence of any event that could be expected to have a material adverse effect; and
agreements by the parties to use commercially reasonably efforts to permit the consummation of the merger to occur not later than April 30, 2020 (subject to any delays resulting from SEC review or bank regulatory processing).
“No-Shop”/Board Recommendation Provisions
The merger agreement provides that, as of the signing of the merger agreement, SBC and the Bank must cease any existing activities, discussions or negotiations with any parties with respect to a third-party acquisition proposal and, except as otherwise permitted under the merger agreement, SBC and the Bank may not, and must direct and use their best efforts to cause their directors, officers, employees, agents and representatives not to:
initiate, solicit or encourage or take any other action to facilitate inquiries or proposals regarding, or the making of any proposal or offer with respect to, a third-party acquisition;
engage in any negotiations or discussions with any person concerning a third-party acquisition;
provide any confidential information to any person in connection with any third-party acquisition; or
otherwise facilitate any effort or attempt to make or implement a third-party acquisition.
Notwithstanding the immediately preceding provision, before SBCs shareholders approve the merger, if SBC receives a written unsolicited acquisition proposal and its board of directors determines in good faith that (a) the proposal constitutes or is reasonably likely to result in a superior proposal and (b) the board’s fiduciary duties require SBC to engage in negotiations with, provide confidential information to, or have any discussions with, a person in connection with such proposal, then SBC may do so to the extent the board determines that failure to take such actions would result in a breach of the directors’ fiduciary duties under applicable law. In such event, prior to providing any confidential information, SBC must enter into a confidentiality agreement with the person on terms at least as favorable to SBC as its confidentiality agreement with Glacier. SBC must notify Glacier of any unsolicited acquisition proposal it receives.
The merger agreement provides that the SBC board of directors will recommend approval of the merger agreement to SBC’s shareholders, and will not withdraw, modify or qualify its recommendation unless SBC receives a superior proposal and the SBC board of directors determines, in good faith and after consultation with its legal counsel, it determines that it would be inconsistent with its fiduciary duties not to withdraw, modify or qualify its recommendation.
Representations and Warranties
SBC and Glacier have made certain customary representations and warranties to each other in the merger agreement relating to their businesses. The representations and warranties contained in the merger agreement were made only for purposes of such agreement and are made as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed to by the parties, including being qualified by disclosures between the parties. These representations and warranties may have been made to allocate risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality that differ from the standard of materiality that an investor may apply when reviewing statements of factual information.
Amendment of the Merger Agreement
The merger agreement may be amended upon authorization of the boards of directors of the parties, whether before or after the special meeting of the shareholders of FNB.SBC. To the extent permitted under applicable law, the parties may make any amendment or supplement without further approval of FNBSBC shareholders. However, after FNBSBC shareholder approval, any amendment that would change the form or reduce the amount of consideration that FNBSBC shareholders will receive in the merger would require further approval from FNBSBC shareholders.
Termination of the Merger Agreement
The merger agreement contains several provisions entitling either Glacier or FNBSBC to terminate the merger agreement under certain circumstances. The following briefly describes these provisions:
Lapse of Time. If the merger has not been consummated on or before SeptemberApril 30, 2019,2020, then at any time after that date, either Glacier or FNBSBC may terminate the merger agreement and the merger if(i) the terminating party’s board of directors decides to terminate by a majority vote of all of its members, and(ii) the terminating party delivers to the other party written notice that its board of directors has voted in favor of termination. However, if as of SeptemberApril 30, 2019,2020, all required regulatory approvals have not been obtained, then the deadline for consummation of the merger will be extended to on or before November 30, 2019,July 31, 2020, if Glacier notifies FNBSBC in writing on or prior to SeptemberApril 30, 20192020 of its election to extend such date.
Glacier Average Closing Price Greater than $46.63$47.31. By specific action of its board of directors, Glacier may terminate the merger agreement if the Glacier average closing price (as defined in the merger agreement) is greater than $46.63.
$47.31. If Glacier provides written notice of its intent to terminate the merger agreement because the Glacier average closing price is greater than $46.63, FNB$47.31, SBC may elect, within three business days of its receipt of such notice, to accept a decrease in the total number of Glacier shares, that will be issuedcalculated in the merger. In such event, the total numbermanner described above under “—Merger Consideration – Stock Portion of Glacier shares issued in the merger will be equal to the quotient obtained by dividing(a) the product of (i) the value of “TotalPre-Collar-Adjusted GBCI Shares” multiplied by(ii)$46.63 by(b) the Glacier average closing price rounded up to the nearest whole share.
“TotalPre-Collar-Adjusted GBCI Shares” is defined in the merger agreement as 2,046,411 Glacier shares, minus any adjustment in the number of shares to be issued by Glacier resulting from the FNB Closing Capital being less than the amount required under the merger agreement ($39,285,000).Merger Consideration.”
If FNBSBC makes the election to accept such decrease in the number of Glacier shares to be issued, no termination of the merger agreement will occur, and the merger agreement will remain in effect in accordance with its terms, except that the total number of Glacier shares to be issued in the merger would decrease. As a result, the amount of Glacier common stock exchanged for each share of FNBSBC common stock would decrease. In prior merger transactions with similar adjustment rights, Glacier has exercised its right to terminate the merger agreement, and the seller in such prior merger transactions elected to accept a decrease in the number of Glacier shares issued in the merger.
Glacier Average Closing Price Less than $34.47Specified Amounts. FNBSBC may provide written notice to Glacier of its intent to terminate the merger agreement because the Glacier average closing price is(a)(i)less than $34.47 $34.97and(ii) the price of Glacier common stock, during a period defined in the merger agreement, underperformed the KBW Regional Banking Index by more than ten15 percentage points, or(b) less than $32.44.$32.91.
If FNBSBC has provided notice of its intent to terminate the merger agreement because the Glacier average closing price is below $34.47 and the price of Glacier common stock has underperformed the KBW Regional Banking Index by more than ten percentage points, Glacier may elect, within three business of its receipt of such notice, to increase the number of Glacier shares to be issued in the merger, or in Glacier’s sole discretion, pay cash consideration, or a combination of additional Glacier shares and cash, such that the total valueeither of the Glacier shares to be issued (based on the Glacier average closing price rounded up to the nearest whole share) plus any cash consideration is equal to the product of(i) the value of the TotalPre-Collar-Adjusted GBCI Shares multiplied by(ii) $34.47.
If FNBforegoing events has provided notice of its intent to terminate the merger agreement because the Glacier average closing price is below $32.44, thenoccurred, Glacier may elect, within three business days of its receipt of such notice, to increase the number of Glacier shares to be issued in the merger, or in Glacier’s sole discretion, pay additional cash consideration, or a combination of additional Glacier shares and cash, such thatcalculated in the total valuemanner described above under “—Merger Consideration – Stock Portion of the Glacier shares to be issued (based on the Glacier average closing price rounded up to the nearest whole share) plus any cash consideration is equal to the product of(i) the value of the TotalPre-Collar-Adjusted GBCI Shares multiplied by(ii)$32.44.Merger Consideration.”
If Glacier elects to increase the total number of shares issuable in the merger or pay cash consideration (or a combination of additional shares and cash, as described above)cash), no termination of the merger agreement will occur, and the merger agreement will remain in effect in accordance with its terms, except as the consideration has been adjusted.
Mutual Consent. The parties may terminate the merger agreement at any time before closing, whether before or after approval by FNBSBC shareholders, by mutual consent if the board of directors of each party agrees to terminate by a majority vote of all of its members.
No Regulatory Approvals. Either party may terminate the merger agreement if the regulatory approvals required to be obtained are denied, or if any such approval is conditioned on a substantial deviation from the transactions contemplated by the merger agreement, subject to certain rights granted in the merger agreement to appeal the denial of such regulatory approval.
Breach of Representation or Covenant. Either party may terminate the merger agreement (so long as the terminating party is not then in material breach of any of its representations, warranties, covenants or agreements in the merger agreement) if there has been a material breach of any of the representations, warranties, covenants or agreements set forth in the merger agreement by the other party, which is not cured within 30 days following written notice to the party committing such breach, or which breach, by its nature, cannot be cured prior to the closing of the merger.
Failure to Recommend or Obtain Shareholder Approval. Glacier may terminate the merger agreement if the FNBSBC Board(i) fails to recommend to its shareholders approval of the merger, or(ii) modifies, withdraws or changes in a manner adverse to Glacier its recommendation to shareholders to approve the merger. Additionally, regardless of whether or not the FNBSBC Board recommends approval of the merger to its shareholders, Glacier or FNBSBC may terminate the merger agreement if FNBSBC shareholders electdo not to approve the merger.
Dissenting Shares. Glacier may terminate the merger agreement if holders of 10% or more of the outstanding FNBSBC shares have properly given notice of their intent to assert dissenters’ rights under Utah law.Arizona law, provided that SBC will be provided an opportunity not to exceed 10 days from notice to reduce the percentage of proposed dissenting shares to below 10% prior to any termination.
Superior Proposal – Termination by FNBSBC. FNBSBC may terminate the merger agreement if its board of directors determines in good faith that FNBSBC has received a “Superior Proposal” (as defined in the merger agreement). This right is subject to the requirement that FNBSBC may terminate the merger agreement only if FNBSBC(i) has not breached its covenants regarding the initiation or solicitation of acquisition proposals from third parties and submission of the merger agreement to FNBSBC shareholders;(ii) immediatelypromptly following the delivery of such notice of termination to Glacier, FNBSBC enters into a definitive acquisition agreement relating to such Superior Proposal,(iii) FNBSBC has provided Glacier with at least five days’ prior written notice (the “Notice Period”) that the FNBSBC Board is prepared to accept a Superior Proposal and has given Glacier, if it so elects, an opportunity to amend the terms of the merger agreement during the Notice Period (and negotiated with Glacier in good faith with respect to such terms)terms during the Notice Period) in such a manner as would enable the FNBSBC Board to proceed with the merger and(iv) simultaneously upon entering into such definitive acquisition agreement relating to the Superior Proposal, it delivers to Glacier thebreak-up fee described below.
Superior Proposal – Termination by Glacier. Glacier may terminate the merger agreement if an “Acquisition Event” (as defined in the merger agreement) has occurred.
Break-Up Fee
If the merger agreement is terminated because(i) the FNBSBC Board fails to recommend shareholder approval of the merger agreement or modifies, or withdraws or changes its recommendation in a manner adverse to Glacier; or(ii) FNBSBC terminates the merger agreement after receiving a Superior Proposal and Glacier declines the opportunity to amend the terms of the merger agreement to enable the FNBSBC Board to proceed with the merger; or(iii) Glacier terminates the merger agreement if an Acquisition Event has occurred, then FNBSBC will immediately pay Glacier abreak-up fee of $3,200,000.$6,000,000.
In addition, if the merger agreement is terminated(i) by Glacier for FNB’sSBC’s breach of certainspecified covenants set forth in the merger agreement or(ii) by either Glacier or FNB due to the merger agreement not being approved by the FNBSBC shareholders,and within 18 months after any such termination, FNBSBC or the Bank enters into an agreement for, or publicly announces its intention to engage in, an Acquisition Event, or an Acquisition Event occurs, then FNBSBC will promptly following such entry, announcement, or occurrence pay Glacier thebreak-up fee of $3,200,000.$6,000,000.
Allocation of Costs Upon Termination
If the merger agreement is terminated (except under circumstances that would require the payment of abreak-up fee) Glacier and FNBSBC will each pay their ownout-of-pocket expenses incurred in connection with the transaction.
Conduct Pending the Merger
The merger agreement provides that, until the merger is effective, FNBSBC will conduct its business only in the ordinary and usual course. TheIn that regard, the merger agreement also provides that, unless Glacier otherwise consents in writing, and except as required by applicable regulatory authorities, FNBSBC and the Bank will refrain from engaging in the following activities:
issuing, selling or otherwise permitting to become outstanding, or disposing of, encumbering or pledging, or authorizing or proposing the creation of, any additional shares of FNB securities or Bank securities;
with specified exceptions, adjusting, splitting, combining, redeeming, reclassifying, purchasing, or otherwise acquiring any shares of FNB stock or Bank stock;significant activities.
other than as permitted by the merger agreement or as otherwise consistent with past practices, declaring or paying any dividends, or making any other distribution with respect to shares of FNB;
acquiring, selling, transferring, assigning, encumbering or otherwise disposing of any material assets having a value greater than $100,000, or making any material commitment other than in the ordinary and usual course of business;
soliciting or accepting deposit accounts of a different type from accounts previously accepted by the Bank or at rates materially in excess of prevailing interest rates, or, other than as permitted by the merger agreement, incurring or increasing any indebtedness for borrowed money;
offering or making loans or other extensions of credit of a different type, or applying different underwriting standards, from those previously offered or applied by the Bank, or offering or making a new loan or extension of credit (other than with respect to commitments existing as of the date of execution of the merger agreement) in an amount greater than $500,000 without prior consultation with Glacier;
making any negative provisions to the Bank’s ALLL or failing to maintain an adequate reserve for loan and lease losses;
other than as permitted by the merger agreement, acquiring an ownership interest (except other real estate owned or other ownership interest acquired through foreclosure with a value not exceeding $400,000) or leasehold interest in any real property and in the case of any acquisition of an ownership interest, acquiring such ownership interest without conducting an appropriate environmental evaluation and providing such evaluation to Glacier at least 30 days in advance of such acquisition;
other than as permitted by the merger agreement, entering into, amending, renewing, or terminating any contracts calling for a payment of more than $50,000;
selling any securities other than in the ordinary course of business, or selling any securities even in the ordinary course of business if the aggregate gain or loss realized from all sales after the date of execution of the merger agreement would exceed $75,000, or transferring any investment securities between portfolios available for sale and portfolios of securities to be held to maturity;
amending its articles of incorporation, bylaws, or other formation agreements, or converting its charter or form of entity;
other than as permitted by the merger agreement, implementing or adopting any material changes in its operations, policies or procedures;
other than as permitted by the merger agreement, implementing or adopting any change in its accounting principles, practices, or methods;
other than in accordance with binding commitments existing on the date of execution of the merger agreement, making any capital expenditures in excess of $50,000 per project or series of related projects or $100,000 in the aggregate;
entering into any other material transaction or making any material expenditure other than in the ordinary and usual course of its business except for expenses reasonably related to the completion of the merger; and
taking any action which would materially and adversely affect or delay the ability of either party to obtain any necessary approvals, consents or waivers of any governmental authority required for the merger or for either party to perform in all material respects their respective covenants and agreements under the merger agreement.
Bank Management and Operations After the Merger
Immediately following the merger of the BankSBC with and into Glacier, the Bank will be merged with and into Glacier Bank. It is anticipated that theThe former branches of the Bank will be combined with Glacier Bank’s existing four Utah branches andin Arizona, which will then operate as a new division of Glacier and Glacier Bank (the “Division”).
As described below under “Interests of FNBSBC Directors and Executive Officers in the Merger,” certain executive officersBrian Riley President and Chief Executive Officer of the Bank haveSBC, has entered into an employment agreementsagreement with Glacier and Glacier Bank, effective upon closing of the merger, pursuant to which theyhe will serve as executive officersPresident and Chief Executive Officer of the Division.
Employee Benefit Plans
The merger agreement confirms Glacier’s intent that Glacier’s and Glacier Bank’s current personnel policies will apply to any employees of SBC or the Bank who remain employed following the closing of the merger. Such employees will be eligible to participate in all of the benefit plans of Glacier that are generally available to similarly situated employees of Glacier and/or Glacier Bank. Current employees’ prior service with FNBSBC and/or the Bank will constitute prior service with Glacier for purposes of determining eligibility and vesting under benefit plans of Glacier and Glacier Bank. Any current employees of SBC or the Bank (a) who are not entitled to severance, change in control, or other payments at or in connection with closing of the merger and are not offered a position by Glacier or retained by Glacier Bank following the closing of the merger will receive severance payments in accordance with Glacier Bank’s severance policy in effect at the closing on the basis of the number of years of prior service with SBC and the Bank, at the expense of Glacier.
Interests of FNBSBC Directors and Executive Officers in the Merger
Certain members of the FNBSBC and/or Bank Board and executive management may be deemed to have interests in the merger, in addition to their interests as shareholders of FNBSBC generally. The FNBSBC Board was aware of these factors and considered them, among other things, in approving the merger agreement.
Change in Control Agreements
SBC and the Bank previously entered into employment agreements or severance agreements with certain executive officers of SBC and the Bank that provide for benefits payable in the event of a termination of employment following a change in control of SBC. The employment agreement with Brian Riley, President and Chief Executive Officer, and the severance agreements with Peter Hill, Executive Vice President and Chief Credit Officer, Craig Wenner, Executive Vice President and Chief Financial Officer, and Randall Austin, Executive Vice President and Chief Operating Officer, provide that if the executive’s employment is terminated without Cause or by the executive with Good Reason (as such terms are defined in the respective agreements) within a specified period following a change in control, the executive would be entitled to alump-sum severance payment. Thelump-sum severance payment for Mr. Riley would be equal to the sum of (i) 36 times his monthly base salary plus (ii) the incentive compensation paid to him during the 36 months prior to his termination of employment. Thelump-sum severance payment for each of Messrs. Hill, Wenner and Austin would be equal to 12 times the executive’s monthly base salary. Additionally, the Bank has previously entered on a severance agreement with Karen Gibbs, Senior Vice President and Manager of Human Resources, providing for benefits payable in the event of a termination of employment without Cause following a change in control, in the form of a severance payment equal to 12 times Ms. Gibbs’ monthly base salary, payable in normal semi-monthly payroll payments.
The payments or payment agreements described below will satisfy the rights to payments that such executive officers are entitled to receive pursuant to their respective prior employment or severance agreements.
Closing Payment Agreement
Glacier, Glacier Bank, SBC and the Bank have entered into an agreement (the “Closing Payment Agreement”) with Brian Riley, which supersedes his prior employment agreement with respect to the change in control severance benefits provided for in that agreement. The Closing Payment Agreement is effective on (and conditioned upon) the closing of the merger. The Closing Payment Agreement provides that if Mr. Riley remains employed with SBC and the Bank through the closing date of the merger, he will receive alump-sum cash payment of up to $1,565,750 less applicable tax withholdings, which is equal to the amount of severance benefits payable pursuant to the terms of Mr. Riley’s prior employment agreement. The Closing Payment Agreement provides, however, that if such amount, together with any other payments or rights to which Mr. Riley may be entitled to receive, would constitute an “excess parachute payment” under applicable provisions of the Internal Revenue Code, payments pursuant to the Closing Payment Agreement will be reduced to the extent necessary to ensure that no portion of such payments will be subject to the excise tax imposed on excess parachute payments (this is referred to as a “Section 280G Cutback”).
Post-Closing Payment Agreements
Glacier Bank has entered into agreements (the “Post-Closing Payment Agreements”) with Messrs. Hill, Wenner and Austin and with Ms. Gibbs. The Post-Closing Agreements are effective on (and conditioned upon) the closing of the merger. As described above, each of such executives was a party to a prior severance agreement that provided for the payment of benefits in the event of a change in control of SBC or the Bank in certain circumstances. Each Post-Closing Payment Agreement provides that the executive will serve as an employee of Glacier Bank following the closing of the merger and continuing until the 30thday following the systems conversion date for the Bank’s information systems (the “Retention Date”). During such term, the executive will be paid for continuing services based on his or her annualized base salary with the Bank as of the closing date of the merger.
Effective on the Retention Date, unless the parties otherwise agree, the executive’s position will be eliminated, and provided the executive has remained continuously employed through such date, the executive will be entitled to receive alump-sum cash payment of $215,000 to Mr. Hill; $205,000 to Mr. Wenner; $200,000 to Mr. Austin, and $130,000 to Ms. Gibbs (in the case of Ms. Gibbs, paid over 12 months corresponding to normal payroll payments), less applicable taxes and withholdings, in full satisfaction of all payment obligations under the executive’s prior severance agreements. The Post-Closing Agreements provide, however, that payments pursuant such agreements are subject to potential Section 280G Cutbacks as described above with respect to Mr. Riley’s Closing Payment Agreement.
If Glacier Bank terminates the executive’s employment before the Retention Date without Cause (as defined in the agreement), the executive’s right to receive the payments described above will be accelerated.
Employment AgreementsAgreement with Glacier Bank
K. John Jones
Glacier Bank has entered into an employment agreement with K. John Jones,Brian Riley, currently President and Chief Executive Officer of the Bank, governingSBC, regarding employment by Glacier Bank following the merger. Mr. JonesRiley will serve as President and Chief Executive Officer of the Division. The employment agreement is effective on (and conditioned upon) the closing of the merger and continues until December 31, 2020.2022. The employment agreement provides forthat Mr. Riley will receive an annualized base salary of $272,000,$410,000, subject to increasepossible increases in the sole discretion of Glacier Bank’s or Glacier’s board of directors baseddirectors.
Mr. Riley will also be eligible for a retention bonus in the aggregate amount of $170,000, of which $130,000 will be paid on performanceDecember 31, 2020, and additional duties$40,000 will be paid on December 31, 2021, provided that he remains employed by Glacier Bank through each such date. In the event that Mr. Riley’s employment is terminated by Glacier Bank without Cause or Mr. Riley terminates his employment with Good Reason (as such terms are defined in the employment agreement), his entitlement to any unpaid retention bonus(es) will be accelerated and responsibilities, if any.paid in a single lump sum.
The employment agreement provides that within 30 days of the closing of the merger, Glacier will grant to Mr. JonesRiley a restricted stock unit award under Glacier’s equity compensation plan in the amount of $225,000 (“RSU Award”). If Mr. Riley’s employment terminates for any reason prior to the closing of the merger, no RSU Award will be granted. The RSU Award will vest on December 31, 2022. If Mr. Riley’s employment is terminated for any reason, except as a result of death or disability, the right to receive any unvested portion of the RSU Award will be forfeited. In the event of Mr. Riley becoming disabled or his death, unvested units of the RSU Award will vest immediately.
Mr. Riley will be eligible to participate in Glacier’s profit sharing plan, Glacier Bank’s Bank President annual cash bonus program, and Glacier’s Long-Term Incentive Plan. Additionally, long-term incentive program.
Mr. JonesRiley will be also be entitled to participate in any group life insurance, disability, health and accident insurance plans, and any other employee fringe benefit plansbenefits that Glacier or Glacier Bank may have in effect from time to time for its similarly situated employees. Mr. Jones will be entitled to the use of an automobile currently used by him in the course and scope of his employment, and at the end of the term of the agreement or upon any termination of employment except by Glacier Bank for Cause or by Mr. Jones without Good Reason (as such terms are defined in the agreement) title of the automobile will transfer to Mr. Jones.
If Mr. Jones’Riley’s employment is terminated for Cause or he terminates his employment without Good Reason, Glacier Bank will pay him the annualized base salary earned and expenses reimbursable incurred through the date of termination.
If Mr. Jones’Riley’s employment is terminated without Cause or he terminates his employment for Good Reason, contingent upon his execution of a release of claims Glacier Bank will pay Mr. Jones a lump sum severance payment in an amount equal to the amount of annualized base salary remaining to be paid during the unexpired term of the agreement.employment agreement, plus any unpaid retention bonuses as described above.
The employment agreement provides that during Mr. Jones’Riley’s employment and for a periodthe greater of the remaining term of the employment agreement or one year after termination of employment, Mr. JonesRiley will not provide the samecompete with Glacier or similar services as he performed on behalf of Glacier Bank at any time duringin the last 12 months of his employment with Glacier Bank to any person or entity engaged in any competing businessfinancial services industry within specified counties in Utah.Arizona.
The employment agreement provides that during his employment and for a period of two years following anyafter termination of employment, Mr. JonesRiley will not solicit, recruit persuade or entice, or attempt to solicit, recruit or entice, any employee of Glacier or Glacier Bank to terminate his or her employment with Glacier or Glacier Bank, or any other person or entity to terminate, cancel, rescind or revoke its business or contractual relationships with Glacier or Glacier Bank. Additionally, during his employment and for a period of two years followingafter termination of employment,employment. Mr. JonesRiley will not solicit or attempt to solicit, divert or take away from Glacier Bank or Glacier Bank any person or entity that is a current customer of Glacier Bank or Glacier Bank and to whom Mr. Jones,Riley, directly or indirectly, provided services, contracted with, or solicited business on behalf of Glacier, BankGlacier Bank. SBC or Glacierthe Bank within 12 months prior to the termination of Mr. Jones’Riley’s employment.
Shelly Holt, Nicolas BementAccelerated Vesting of Restricted Stock Awards
The directors and Jason Robinson
Glacier Bank has also entered into employment agreements with Shelly Holt, Executive Vice President and Chief Operations Officercertain executive officers of SBC have previously received restricted stock awards that vest over time. The vesting of such awards will be accelerated by virtue of the Bank; Nicolas Bement, Executive Vice President and Chief Financial Officerclosing of the Bank; and Jason Robinson, Senior Vice Presidentmerger. The amounts of such unvested restricted stock awards that will vest upon the closing of the Bankmerger assuming a closing in 2019 are: Messrs. Anderson, Baker, Casson and Nexsen, 300 shares per person; Mr. Fain, 200 shares; and Messrs. Riley, Wenner, Austin and Hill, 1,001 shares per person. The directors and executive officers who hold restricted stock awards will receive the same consideration for their shares of restricted stock as will other shareholders of SBC.
Deferred Compensation Plan
Messrs. Riley, Hill, Wenner and Austin each participate in a deferred compensation plan sponsored by SBC (the “Executives”“DCP”). Except as described below,Pursuant to the termsDCP, upon the closing of the employment agreements with the Executives are substantially identical to each other and are substantially identicalmerger, any thenun-vested employee contributions credited to the employment agreement of Mr. Jones as described above.
Ms. Holt will serve as Executive Vice President and Chief Operations OfficerDCP on behalf of the Division; Mr. Bement will serve as Executive Vice Presidentexecutive officers, and Chief Financial Officer of the Division; and Mr. Robinson will serve as Executive Vice President and Chief Lending Officer of the Division. The terms of the agreements are for two years from the effective date of the merger.
The employment agreements provide for an annualized base salary of $177,000 for Ms. Holt, $177,000 for Mr. Bement, and $165,000 for Mr. Robinson. The Executives will be eligible to participate in Glacier’s profit sharing plan, the Division annual cash bonus program, and Glacier’s Long-Term Incentive Plan.
The employment agreements with the Executives contain the same restrictions on solicitation of employee and customers described aboveany earnings or appreciation with respect to Mr. Jones’ employment agreement, but do not contain provisions regardingnon-competition withsuch credited amounts, will automatically and fully vest. In addition, an amount equal to the business of Glacier Bank.
Change-in-Control Agreements
FNB has previously entered into Change in Control Compensation Agreements (“CIC Agreements”), each dated May 31, 2018, with Mr. Jones, Mr. Bement and Ms. Holt. In order to satisfy payment obligationsaggregate balance credited to each executiveexecutive’s account under the CIC Agreements in the event of a Change in Control of FNB (as defined in the CIC Agreement), Glacier Bank has agreed to pay, and each executive has respectively agreed to accept, a payment in the amount of $724,161 to Mr. Jones, $529,122 to Mr. Bement, and $523,009 to Ms. Holt. Each paymentDCP will be madepaid to the executive in a lump sum onas of the first regular payroll period following the 55th day after the effective date of the closing of the merger.
Stock Ownership
As of the record date, of the special meeting, FNBSBC directors, executive officers and their spouses beneficially own 1,357,605owned [] shares of FNBSBC common stock.stock, which does not include [] shares of restricted stock that will vest at the closing of the merger as described above. The directors and executive officers of FNBSBC will receive the same consideration in the merger for their shares as will other shareholders of FNB.SBC.
Division Advisory Board
The merger agreement provides that promptly after the closing of the merger, Glacier Bank will establish an advisory board for the Division, to be comprised initially of three or more persons who had served on the board of directors of the Bank as of the closing of the merger. The advisory board will operate in manner consistent with boards of Glacier Bank’s other divisions, and will advise and support Glacier Bank regarding the Division and its market area, deposit retention, lending activities and customer relationships.
Indemnification of Directors and Officers; Insurance
The merger agreement provides that Glacier will, for a period ofsix years following the closing of the merger, indemnify the present and former directors and officers of FNBSBC and the Bank against liabilities or costs that may arise in the future, incurred in connection with claims or actions arising out of or pertaining to matters that existed or occurred prior to the effective date of the merger. The scope of this indemnification is to the fullest extent that such persons would have been entitled to indemnification under applicable law, FNB’sSBC’s articles or the Bank’s articles or FNB’sSBC’s bylaws or the Bank’s bylaws, as applicable.
The merger agreement also provides that Glacier will use commercially reasonable efforts to cause to be maintained in effect for a period of six years following the effective date of the merger, director and officer liability insurance with respect to claims arising from facts or events that occurred before the effective date of the merger. Prior to the effective date of the merger and in lieu of the foregoing, Glacier agrees to use commercially reasonable efforts to purchase, with FNB’sSBC’s cooperation, a policy providing substantially such coverage and fully pay for such policy prior to the effective date of the merger.
Additional Agreements
Voting AgreementAgreements
As described above under “—Voting Agreement,Agreements,” each of the directors and executive officers of FNB andSBC have entered into a voting agreement, dated as of January 16,September 30, 2019. Pursuant to the voting agreements,agreement, each signing person agrees to vote the shares of FNBSBC common stock that he or she is entitled to vote and that he or she owns or controls in favor of the merger.
FNBSBC DirectorNon-Competition Agreement
Each member of the FNBSBC Board has entered into anon-competition agreement with Glacier, Glacier Bank, FNBSBC and the Bank.Bank, which agreement establishes certain obligations of each director not to compete with Glacier or Glacier Bank following the merger. Except under certain limited circumstances, thenon-competition agreement generally prohibits such directors from becoming involved in any substantial way in a business that competes with Glacierdepository financial institution, wealth management company, trust company or any of Glacier’s subsidiaries, divisions or affiliatesholding thereof within specified counties in Utah.TheArizona.The agreement also prohibits the solicitation of Glacier’s employees or customers. The term of thenon-competition agreement commences upon the effective date of the merger and continues until the later to occur of(i)two years followingafter the later of(i) effective date of the merger, or(ii) if applicable, one year after the termination of the director’sany service on theby such director as a post-merger member of an advisory board of directors offor the Division.
Regulatory Requirements
Closing of the merger is subject to approval or waiver by the appropriate banking regulatory authorities, including the Federal Reserve, theFederal Deposit Insurance Corporation, andthe Board of Governors of the Federal Reserve System, the Commissioner of the Montana Division of Banking and Financial Institutions, and the Arizona Department of Financial Institutions. The U.S. Department of Justice is able to provide input into the approval process of federal banking agencies to challenge the merger on antitrust grounds. Glacier and SBC have filed or will file all required applications and waiver requests to obtain the regulatory approvals and waivers ornon-objections necessary to consummate the merger. Glacier and SBC cannot predict whether the required regulatory approvals and waivers ornon-objections will be obtained, when they will be received or whether they will be subject to any conditions.
Material U.S. Federal Income Tax Consequences of the Merger
This section generally describes the anticipated material U.S. federal income tax consequences of the merger of FNBSBC with and into Glacier, to U.S. holders (as defined below) of FNBSBC common stock who exchange shares of FNBSBC common stock for shares of Glacier common stock pursuant to the merger. The summary is based on the Internal Revenue Code, applicable Treasury Regulations, judicial decisions and administrative rulings and practice, all in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. The summary does not address any tax consequences of the merger under state, local or foreign laws, or any federal laws other than those pertaining to income tax.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of FNBSBC common stock who for U.S. federal income tax purposes is:
an individual citizen or resident of the United States;
a corporation, or an entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state or political subdivision thereof;
a trust that (1) is subject to (A) the primary supervision of a court within the United States and (B) the control of one or more U.S. persons or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes; or
an estate that is subject to U.S. federal income tax on its income regardless of its source.
If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) holds FNBSBC common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding FNBSBC common stock, you should consult your tax advisor about the consequences of the merger to you.
This discussion addresses only those FNBSBC shareholders that hold their FNBSBC common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code, and does not address all the U.S. federal income tax consequences that may be relevant to particular FNBSBC shareholders in light of their individual circumstances or to FNBSBC shareholders that are subject to special rules, including, without limitation:
banks and other financial institutions;
pass-through entities or investors in pass-through entities;
persons who are subject to alternative minimum tax;
insurance companies;
tax-exempt organizations;
dealers or brokers in securities, commodities, or currencies;
traders in securities that elect to use a mark to market method of accounting;
persons who exercise dissenters’ rights;
persons who hold FNBSBC common stock as part of a straddle, hedge, constructive sale or conversion transaction;
certain expatriates or persons that have a functional currency other than the United States dollar;
retirement plans, individual retirement accounts, or other tax deferred accounts;
mutual funds;
regulated investment companies;
real estate investment trusts;
foreign persons; and
shareholders who acquired their shares of FNBSBC common stock through the exercise of an employee stock option or otherwise as compensation or through atax-qualified retirement plan.
In addition, the discussion does not address any alternative minimum tax or any state, local ornon-U.S. tax consequences of the merger.
It is a condition to the respective obligations of Glacier and FNBSBC to complete the merger that Glaciereach party will have obtained from Miller Nash Graham & Dunn LLP, taxits counsel to Glacier, an opinion addressed to Glacier and FNB, to the effect that the merger will for U.S. federal income tax purposes qualify as a “reorganization” within the meaning of Internal Revenue Code Section 368(a). The opinionopinions will assume that the merger will be completed according to the terms of the merger agreement and that the parties will report the transaction in a manner consistent with the opinion. The opinionopinions will rely on the facts as stated in the merger agreement, the Registration Statement on FormS-4 (of which this proxy statement/prospectus is a part) and certain other documents. The opinionopinions will be based on facts and representations contained in representation letters provided by Glacier and FNBSBC to be delivered at the time of closing and based on customary factual assumptions. If any such assumption is or becomes inaccurate, the U.S. federal income tax consequences of the merger could be adversely affected. The opinionopinions will be based on statutory, regulatory and judicial authority existing as of the date of the opinion, any if which may be changed at any time with retroactive effect. An opinion of counsel represent such counsel’s best legal judgement, but the opinion is not binding on the Internal Revenue Service or the courts. Neither Glacier nor FNBSBC has requested and neither intends to request any ruling from the Internal Revenue Service as to the U.S. federal income tax consequences of the merger. Consequently, no assurance can be given that the Internal Revenue Service will not assert, or that a court will not sustain, a position contrary to any of the tax consequences described below or any of the tax consequences described in the opinion.opinions. Accordingly, each FNBSBC shareholder should consult his or her tax advisor with respect to the particular tax consequences of the merger to such holder.
Tax Consequences of the Merger Generally to Holders of FNBSBC Common Stock.If the merger of FNBSBC with and into Glacier is a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, the tax consequences of the merger to U.S. holders of FNBSBC common stock are as follows (except with respect to any cash received instead of fractional share interests in Glacier common stock, as discussed in the section entitled “Cash Received Instead of a Fractional Share of Glacier Common Stock”):
If an FNB shareholder exchanges all of his, her or its FNBSBC shareholders will exchange their SBC common stock for Glacier common stock in the merger, such shareholder will recognize no gain (or loss) on the exchange;
If an FNB shareholder receives a combination of Glacier common stock and cash such shareholderin the merger. Accordingly, holders of SBC common stock will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the Glacier common stock and cash received by the holder of FNBSBC common stock exceeds such holder’s cost basis in its FNBSBC common stock, and (2) the amount of cash received by such holder of FNBSBC common stock in exchange for such holder’s FNBSBC common stock;
An FNBSBC shareholder’s aggregate tax basis in the Glacier common stock received in the merger will be equal to the shareholder’s aggregate tax basis in such shareholder’s FNBSBC common stock surrendered, decreased by the amount of any cash received (if any) and increased by the amount of any gain recognized (if any); and
The holding period of Glacier common stock received in an exchange for shares of FNBSBC common stock will include the holding period of the FNBSBC common stock for which it is exchanged.
If a U.S. holder of FNBSBC common stock acquired different blocks of FNBSBC common stock at different times or at different prices, any gain or loss will be determined separately with respect to each block of FNBSBC common stock and such holder’s basis and holding period in his, her or its shares of Glacier common stock may be determined with reference to each block of FNBSBC common stock. Any such holders should consult their tax advisors regarding the manner in which cash and Glacier common stock received in the exchange should be allocated among different blocks of FNBSBC common stock and with respect to identifying the bases or holding periods of the particular shares of Glacier common stock received in the merger.
Gain that a U.S. holder of FNBSBC common stock recognizes in connection with the merger generally will constitute capital gain and will constitute long-term capital gain if such holder has held (or is treated as having held) his, her or its FNBSBC common stock for more than one year as of the date of the merger. Long-term capital gain ofnon-corporate holders of FNBSBC common stock is generally taxed at preferential rates. In addition, such gain recognized by individuals, trusts and estates may also be subject to the 3.8% Unearned Income Medicare Contribution Tax on net investment income. Holders of FNBSBC common stock that are individuals, estates, or trusts should consult their tax advisors regarding the applicability of the 3.8% Unearned Income Medicare Contribution Tax to the disposition of their shares pursuant to the merger. In some cases, if a holder actually or constructively owns Glacier stock other than Glacier stock received pursuant to the merger, the recognized gain could be treated as having the effect of a distribution of a dividend under the tests set forth in Internal Revenue Code Section 302, in which case such gain would be treated as dividend income. A dividend from Glacier would generally be treated as a “qualified dividend” and, as such, taxed at the same rates applicable to long-term capital gains so long as the requisite holding period is met. Because the possibility of dividend treatment depends primarily upon each holder’s particular circumstances, including the application of the constructive ownership rules, holders of FNBSBC common stock should consult their tax advisors regarding the application of the foregoing rules to their particular circumstances.
Cash Received Instead of a Fractional Share of Glacier Common Stock.A holder of FNBSBC common stock who receives cash instead of a fractional share of Glacier common stock will generally be treated as having received the fractional share pursuant to the merger and then as having that fractional share of Glacier common stock redeemed for cash. The deemed redemption will generally be treated as a sale or exchange and, as a result, a holder of FNBSBC common stock will generally recognize gain or loss
equal to the difference between the amount of cash received in lieu of the fractional share and the basis in his, her or its fractional share interest as set forth above. Except as described above, this gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for such shares is greater than one year. The deductibility of capital losses is subject to limitations.
Payment of Dividend. If FNB’sSBC’s capital prior to closing of the merger is in excess of a specified minimum amount, FNBSBC may in its discretion declare and pay a special distribution to holders of its common stock in the amount of such excess. FNBSBC intends to treat that special distribution as a distribution in respect of FNBSBC common stock. The Internal Revenue Service may take a contrary position, and to the extent the Internal Revenue Service were to prevail, the amount paid as the special cash dividend would be treated as additional cash received in connection with the merger, and not as a distribution as described in the succeeding sentence. If the distribution is treated as a distribution with respect to FNBSBC common stock, it will be taxable to the extent it exceeds such holder’s basis in his, her or its shares of FNBSBC common stock. Any amount that exceeds such holder’s basis in his, her or its FNBSBC common stock will be treated as gain from the sale or exchange of property (which will generally be capital gain, and will be long-term capital gain if, as of the date of the distribution, the holding period for the shares is greater than one year) and will reduce the holder’s basis in his, her or its FNBSBC common stock.
Backup Withholding and Information Reporting.Payments of cash made to a holder of FNBSBC common stock may, under certain circumstances, be subject to information reporting and backup withholding at a current rate of 24%, unless the holder provides proof of an applicable exemption satisfactory to Glacier and the exchange agent or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from cash payments made to a holder of FNBSBC common stock under the backup withholding rules are not additional tax and will be allowed as a refund or credit against the holder’s U.S. federal income tax liability, if any, provided the required information is furnished to the Internal Revenue Service.
The preceding discussion is intended only as a summary of the material U.S. federal income tax consequences of the merger to U.S, holders of FNBSBC common stock. It is not a complete analysis or discussion of all potential tax effects that may be important to you. Thus, you are strongly encouraged to consult your tax advisor as to the specific tax consequences resulting from the merger, including tax return reporting requirements, the applicability and effect of U.S. federal, state, local, and other tax laws and the effect of any proposed changes in the tax laws.
Accounting Treatment of the Merger
The acquisition of FNBSBC will be accounted for using the acquisition method of accounting by Glacier under accounting principles generally accepted in the United States of America. Accordingly, using the acquisition method of accounting, the assets and liabilities of FNBSBC will be recorded by Glacier at their respective fair values at the time of the merger. The excess of Glacier’s purchase price over the net fair value of assets acquired including identifiable intangible assets and liabilities assumed will be recorded as goodwill. Goodwill will be periodically assessed for impairment but no less frequently than on an annual basis. Prior period financial statements are not restated and results of operation of FNBSBC will be included in Glacier’s consolidated statement of operations after the date of the merger. The identifiable intangible assets with finite lives, other than goodwill, will be amortized against the combined company’s earnings following completion of the merger.
INFORMATION CONCERNING FNB BANCORPSTATE BANK CORP.
General
FNBSBC is an Arizona corporation and a Utah corporation formedregistered bank holding company under the BHC Act. It was incorporated in 1999 for2004 and is the purpose of acquiring the stockbank holding company of the Bank and becoming the holding company for the Bank. FNBSBC has no substantial operations separate or apart from the Bank.
The principal offices of FNB are located at 12 South Main, Layton, Utah 84041.
The Bank is a national banking association, organized under the law of the United States of America,an Arizona state-chartered bank, which commenced operations in 1904. 1991 and is regulated primarily by the Arizona Department of Financial Institutions and the Federal Deposit Insurance Corporation.
The Bank operates through itsBank’s principal office in Layton, Utah, and branchesis located in LaytonLake Havasu City, Arizona and the Bank maintains branch offices in Lake Havasu City (two branches), Bountiful, Clearfield,Kingman (two branches), Prescott (two branches), Prescott Valley, Phoenix, Bullhead City, and Draper, Utah.Cottonwood, all in Arizona.
As of December 31, 2018, FNBJune 30, 2019, SBC had total assets of approximately $334.7$678.6 million, total gross loans of approximately $246.7$413.6 million, total deposits of approximately $285.8$592.0 million and approximately $40.1$70.5 million of shareholders’ equity.
Market Area
FNB’sSBC’s principal market area consists of Layton, UtahMohave, Yavapai and surrounding countiesin Utah.Maricopa Counties in Arizona.
Lending Activities
The Bank’s principal business is to accept deposits from the public and to make loans and other investments. To develop business, the Bank relies to a great extent on the personalized approach of its officers and directors, who have extensive business and personal contacts in the communities served by the Bank. The Bank offers a variety of traditional loan products to its customers, primarily individual consumers and small tomedium-sized businesses. For businesses, the Bank provides term loans, lines of credit, loans for working capital, loans for business expansion and the purchase of equipment and machinery, construction and land development loans for builders and developers, and commercial real estate loans. The Bank also offers mortgage loans, home equity loans, automobile loans and various other consumer installment loans.
At December 31, 2018,June 30, 2019, the Bank’s total gross loan portfolio was approximately $264.7$413.6 million, representing approximately 74%61% of itsSBC’s total assets. As of such date, the Bank’s loan portfolio primarily consisted of 20%14%1-4one- familyto four-family residential real estate secured loans, 52%57% commercial real estate secured loans (excluding construction and land development loans), 6%10% real estate construction and land development loans, 17%5% multi-family loans, 8% commercial loans, 1% agricultural loans secured by farmland, and 4% loans to municipalities6% consumer and other.
Deposit and Banking Services
Customers of the Bank are provided with a full complement of traditional banking and deposit products. The Bank is engaged in substantially all of the business operations customarily conducted by independent financial institutions in Utah,Arizona, including the acceptance of checking accounts, savings accounts, money market accounts and a variety of certificates of deposit accounts.
The Bank doesconducts a substantial amount of business with individuals, as well as with customers in small tomedium-sized businesses. The primary sources of core deposits are residents of the Bank’s primary market area and businesses and their employees located in that area. The Bank also obtains deposits through personal solicitation by the Bank’sits officers and directors and through local advertising. For the convenience of its customers, theThe Bank offersdrive-through banking facilities, internet and telephone
telephone banking, check/ATM cards, direct deposit, night depositories, personalized checks, and merchant bank card processing. The Bank’s services also include cashier’s checks, travelers’ checks, domestic wire transfers, account research, stop payments, and telephone and internet basedinternet-based transfers between accounts.
FNBSBC Summary Financial Information
The following selected financial information for the fiscal years ended December 31, 2018, 2017 and 2016 (audited) is derived from financial statements of FNB:SBC. Historical data as of June 30, 2019 and for the six months ended June 30, 2019 and 2018 are based upon unaudited financial statements and include, in the opinion of SBC management, all normal recurring adjustments considered necessary to present fairly the results of operations and financial condition of SBC.
FNBSBC
Balance Sheet
$000’s
Year Ended December 31, | June 30, | Year Ended December 31, | ||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||||||||
Cash and Due from Banks | 24,147 | 12,376 | 11,615 | $ | 50,101 | $ | 26,129 | $ | 25,503 | $ | 63,407 | |||||||||||||||||
Federal Funds Sold | 191 | 68 | 13 | |||||||||||||||||||||||||
Investment Securities(1) | 51,457 | 45,576 | 68,329 | |||||||||||||||||||||||||
Investment Securities | $ | 176,068 | $ | 179,586 | $ | 206,138 | $ | 147,576 | ||||||||||||||||||||
Gross Loans | 246,724 | 248,486 | 220,328 | $ | 413,636 | $ | 409,639 | $ | 351,350 | $ | 329,079 | |||||||||||||||||
Allowance for Loan Loss | (3,874 | ) | (3,886 | ) | (3,986 | ) | $ | (4,546 | ) | $ | (3,824 | ) | $ | (3,306 | ) | $ | (3,058 | ) | ||||||||||
Net Loans | 242,850 | 244,600 | 216,342 | $ | 409,090 | $ | 405,815 | $ | 348,044 | $ | 326,021 | |||||||||||||||||
Premises & Fixed Assets | 4,516 | 6,252 | 6,562 | $ | 15,093 | $ | 14,315 | $ | 14,561 | $ | 15,071 | |||||||||||||||||
Other Assets | 11,548 | 11,539 | 11,570 | $ | 28,218 | $ | 29,492 | $ | 26,391 | $ | 31,092 | |||||||||||||||||
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Total Assets | 334,709 | 320,411 | 314,431 | $ | 678,570 | $ | 655,337 | $ | 620,637 | $ | 583,167 | |||||||||||||||||
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Deposits | 285,752 | 274,047 | 270,216 | $ | 591,989 | $ | 557,832 | $ | 549,396 | $ | 516,498 | |||||||||||||||||
Fed Funds & Repos | 1,528 | 2,538 | 2,007 | |||||||||||||||||||||||||
Trust Preferred Securities | 6,000 | 6,000 | 7,000 | |||||||||||||||||||||||||
Securities Sold Under Repurchase Agreements | $ | 6,260 | $ | 5,001 | $ | 3,616 | $ | 4,188 | ||||||||||||||||||||
Federal Home Loan Bank Advances | $ | — | $ | 18,000 | $ | — | $ | — | ||||||||||||||||||||
Subordinated Debentures | $ | 6,806 | $ | 7,045 | $ | 7,360 | $ | 7,336 | ||||||||||||||||||||
Other Liabilities | 1,367 | 1,809 | 1,470 | $ | 3,001 | $ | 3,085 | $ | 1,608 | $ | 1,366 | |||||||||||||||||
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Total Liabilities | 294,647 | 284,394 | 280,693 | $ | 608,056 | $ | 590,963 | $ | 561,980 | $ | 529,388 | |||||||||||||||||
Equity | 40,062 | 36,017 | 33,738 | |||||||||||||||||||||||||
Total Liabilities and Shareholder Equity | 334,709 | 320,411 | 314,431 | |||||||||||||||||||||||||
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Shareholders’ Equity | $ | 70,514 | $ | 64,374 | $ | 58,657 | $ | 53,779 | ||||||||||||||||||||
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Total Liabilities and Shareholders’ Equity | $ | 678,570 | $ | 655,337 | $ | 620,637 | $ | 583,167 | ||||||||||||||||||||
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FNBSBC
Income Statement
$000’s, Except Per Share
Year Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Interest Income | 17,227 | 15,629 | 13,459 | |||||||||
Interest Expense | 933 | 789 | 706 | |||||||||
Net Interest Income | 16,294 | 14,840 | 12,753 | |||||||||
Loan Loss Provision | 45 | (100 | ) | 270 | ||||||||
Non-interest Income | 3,822 | 1,885 | 2,543 | |||||||||
Non-interest Expense | 11,556 | 11,252 | 10,608 | |||||||||
Pre-Tax Income | 8,515 | 5,573 | 4,418 | |||||||||
Taxes | 0 | 0 | 0 | |||||||||
Net Income | 8,515 | 5,573 | 4,418 |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||
2019 | 2018 | 2018 | 2017 | 2016 | ||||||||||||||||
Interest Income | $ | 13,904 | $ | 12,074 | $ | 25,285 | $ | 22,754 | $ | 16,897 | ||||||||||
Interest Expense | $ | 1,737 | $ | 683 | $ | 1,669 | $ | 1,137 | $ | 1,051 | ||||||||||
Net Interest Income | $ | 12,167 | $ | 11,391 | $ | 23,616 | $ | 21,617 | $ | 15,846 | ||||||||||
Loan Loss Provision | $ | 350 | $ | 193 | $ | 490 | $ | (290 | ) | $ | — | |||||||||
Non-interest Income | $ | 2,662 | $ | 2,772 | $ | 5,644 | $ | 5,205 | $ | 3,650 | ||||||||||
Non-interest Expense | $ | 9,290 | $ | 8,757 | $ | 17,907 | $ | 17,208 | $ | 13,391 | ||||||||||
Pre-Tax Income | $ | 5,189 | $ | 5,213 | $ | 10,863 | $ | 9,904 | $ | 6,105 | ||||||||||
Taxes | $ | 1,112 | $ | 1,227 | $ | 2,282 | $ | 3,610 | $ | 2,330 | ||||||||||
Net Income | $ | 4,077 | $ | 3,986 | $ | 8,581 | $ | 6,294 | $ | 3,775 | ||||||||||
Basic Earnings Per Share | $ | 0.50 | $ | 0.49 | $ | 1.06 | $ | 0.78 | $ | 0.56 | ||||||||||
Diluted Earnings Per Share | $ | 0.50 | $ | 0.49 | $ | 1.06 | $ | 0.78 | $ | 0.56 |
Competition
FNBSBC experiences competition in both lending and attracting funds from other commercial banks, savings banks, savings and loan associations, credit unions, finance companies, pension trusts, mutual funds, insurance companies, mortgage bankers and brokers, brokerage and investment banking firms,asset-basednon-bank lenders, government agencies and certain othernon-financial institutions, including retail stores, which may offer more favorable financing alternatives than FNB.SBC.
FNBSBC also competes with companies located outside of its primary market that provide financial services to persons within its primary market. Some of FNB’sSBC’s current and potential competitors have larger customer bases, greater brand recognition, and significantly greater financial, marketing and other resources than FNBSBC and some of them are not subject to the same degree of regulation as FNB.SBC.
Employees
As of December 31, 2018, FNBJune 30, 2019, SBC and the Bank had 65116 full-time and 2212 part-time employees. FNBSBC believes that it has a good working relationship with its employees and the employees are not represented by a collective bargaining agreement.
Properties
FNB’sSBC’s principal office is located in Layton, Utah.Lake Havasu City, Arizona. In addition to its principal office, FNBSBC operates, through the Bank,branch offices in LaytonLake Havasu City (two branches), Bountiful, ClearfieldKingman (two branches), Phoenix, Bullhead City, Prescott Valley, and Draper, Utah.Cottonwood, all in Arizona. All properties and buildings are owned, except the land thatbranch located In Phoenix, which is leased for the Draper, Utah branch and the portion of the land that is leased for the Bountiful, Utah branch.leased.
Legal Proceedings
From time to time, litigation arises in the normal conduct of FNB’sSBC’s business. FNB,SBC, however, is not currently involved in any litigation that management of FNBSBC believes, either individually or in the aggregate, could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.
Share Ownership of Principal Shareholders, Management and Directors of FNBSBC
The following table shows, as of February 1,September 30, 2019, the beneficial ownership of FNBSBC common stock by(i) each person known by FNBSBC to be the beneficial owner of more than 5% of FNB’sSBC’s outstanding common stock,(ii) each of FNB’sSBC’s directors and executive officers; and(iii) all of FNB’sSBC’s directors and officers as a group. Except as otherwise noted in the footnotes to the table, each individual has sole investment and voting power with respect to the shares of common stock set forth. The table below excludes 5,404 unvested restricted shares.
Name | Shares Beneficially Owned(1) | Percentage of Class | ||||||
Directors and Executive Officers | ||||||||
Kevin S. Garn(1) | 526,603 | 16.66 | % | |||||
Catherine W. Smith(2) | 386,021 | 12.21 | % | |||||
Michael N. Schultz(3) | 124,818 | 3.95 | % | |||||
Sharman R. Stevenson(4) | 85,000 | 2.69 | % |
Name | Shares Beneficially Owned(1) | Percentage of Class | ||||||
Peter K. Ellison | 65,000 | 2.06 | % | |||||
Ralph W. Firth(5) | 44,907 | 1.42 | % | |||||
David E. Simmons | 34,351 | 1.09 | % | |||||
Noall J. Bennett(6) | 33,245 | 1.05 | % | |||||
Gregory N. Vidrine | 30,500 | * | ||||||
K. John Jones(7) | 16,630 | * | ||||||
Nicolas H. Bement | 6,750 | * | ||||||
Shelly Holt(8) | 2,000 | * | ||||||
Bradley R. Wilson | 1,780 | * | ||||||
All Directors and Officers as a group | 1,359,105 | 42.95 | % |
Name | Shares Beneficially Owned(1) | Percentage of Class | ||||||
Directors and Executive Officers | ||||||||
Jason R. Anderson (1) | 82,074 | 1.01 | % | |||||
James E. Baker (2) | 369,940 | 4.57 | ||||||
Charles Casson (3) | 118,578 | 1.47 | ||||||
Brad Fain (4) | 126,600 | 1.56 | ||||||
Mark S. Nexsen (5) | 25,300 | 0.31 | ||||||
Brian M. Riley (6) | 146,906 | 1.82 | ||||||
Randy L. Austin (7) | 16,899 | 0.21 | ||||||
Peter Hill (8) | 16,972 | 0.21 | ||||||
Craig Wenner | 55,044 | 0.68 | ||||||
All Directors and Officers as a group | 958,013 | 11.84 | % | |||||
5% Owners | ||||||||
Ben Andre (9) | 483,624 | 6.00 | % | |||||
Don Nelson, MD (10) | 619,306 | 7.65 | % |
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Includes |
Includes |
4 | Includes 126,500 shares in a family trust where Mr. Fain is a beneficiary. |
5 | Includes 8,000 shares held jointly with his wife and 16,000 held in a retirement account. |
6 | Includes 67,675 shares held jointly with his wife, 10,000 shares held in a family trust and 49,400 shares held in a retirement account. |
7 | Includes 12,700 shares held in a retirement account and 700 shares held with a family member. |
8 | Includes 13,839 shares held in a retirement account. |
9 | All shares are held in a trust. |
10 | All shares are held in a trust for |
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DESCRIPTION OF GLACIER’S CAPITAL STOCK
Glacier’s authorized capital stock consists of 117,187,500 shares of common stock, $0.01par value per share, and 1,000,000 shares of preferred stock, $0.01 par value per share. As of the date of this proxy statement/prospectus, Glacier had no shares of preferred stock issued. The Glacier board of directors is authorized, without further shareholder action, to issue preferred stock shares with such designations, preferences and rights as the Glacier board of directors may determine.
Glacier common stock is listed for trading on The NASDAQ Global Select Market under the symbol “GBCI.”
Glacier’s shareholders do not have preemptive rights to subscribe to any additional securities that may be issued. Each share of Glacier common stock has the same relative rights and is identical in all respects to every other share of Glacier common stock. If Glacier is liquidated, the holders of Glacier common stock are entitled to share, on a pro rata basis, Glacier’s remaining assets after provision for liabilities.
For additional information concerning Glacier’s capital stock, see “Comparison of Certain Rights of Holders of Glacier and FNBSBC Common Stock” below.
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF
GLACIER AND FNBSBC COMMON STOCK
Montana law, Glacier’s articles and Glacier’s bylaws govern the rights of Glacier’s shareholders and will govern the rights of FNB’sSBC’s shareholders, who will become shareholders of Glacier as a result of the merger. The rights of FNB’sSBC’s shareholders are currently governed by UtahArizona law, FNB’sSBC’s articles and FNB’sSBC’s bylaws. The following is a brief summary of certain differences between the rights of Glacier and FNBSBC shareholders. This summary is not intended to provide a comprehensive discussion of each company’s governing documents. This summary is qualified by the documents referenced and the laws of Montana and Utah.Arizona. See also “Where You Can Find More Information.”
General
Under Glacier’s articles, Glacier’s authorized capital stock consists of 117,187,500 shares of common stock, $0.01 par value per share, and 1,000,000 shares of preferred stock, $0.01 par value per share. No shares of preferred stock are currently outstanding.
Under FNB’sSBC’s articles, FNB’sSBC’s authorized capital stock consists of 4,000,00020,000,000 shares of common stock.stock, no par value per share.
The following is a more detailed description of Glacier’s and FNB’s capital stock.
Common Stock
As of December 31, 2018,[], 2019, there were 84,521,692[] shares of Glacier common stock issued and outstanding, in addition to 181,983[] shares of unvested restricted stock awards and 26,167[] outstanding stock options under Glacier’s employee and directorequity compensation plans.
As of December 31, 2018,[], 2019, there were 3,160,969[] shares of FNBSBC common stock issued and outstanding.outstanding, [] of which were unvested restricted share awarded under SBC’s equity compensation plan.
Preferred Stock
As of the date of this proxy statement/prospectus, Glacier had no shares of preferred stock issued. The Glacier board of directors is authorized, without further shareholder action, to issue preferred stock shares with such designations, preferences and rights as the Glacier board of directors may determine.
FNB’sSBC’s articles of incorporation do not provide for the authorization andor issuance of preferred stock.
Dividend Rights
Dividends may be paid on Glacier common stock as and when declared by the Glacier board of directors out of funds legally available for the payment of dividends. The Glacier board of directors may issue preferred stock that is entitled to such dividend rights as the board of directors may determine, including priority over the common stock in the payment of dividends.
The ability of Glacier to pay dividends depends on the amount of dividends paid to it by its subsidiaries. The payment of dividends is subject to government regulation, in that regulatory authorities may prohibit banks and bank holding companies from paying dividends in a manner that would constitute an unsafe or unsound banking practice. In addition, a bank may not pay cash dividends if doing so would
reduce the amount of its capital below that necessary to meet minimum applicable regulatory capital requirements. State laws also limit a bank’s ability to pay dividends. Accordingly, the dividend restrictions imposed on the subsidiaries by statute or regulation effectively may limit the amount of dividends Glacier can pay.
Dividends may be paid on FNB common stock as and when declared by the FNB Board out of funds legally available for the payment of dividends. FNB has historically declared and paid dividends based upon assumed marginal state and federal income tax rates on FNB income pass through to its shareholders as well as payout ratios of earnings from operations. The ability of FNBSBC to pay dividends to its shareholders, and the ability of the Bank to pay dividends to FNB,SBC is limited under state and federal laws applicable to banks and bank holding companies. SBC’s payment of dividends is generally subject to the same considerations described above with respect to Glacier.
Voting Rights
All voting rights are currently vested in the holders of Glacier common stock and FNBSBC common stock, with each share being entitled to one vote.
Both Glacier hasand SBC have issued shares of restricted stock pursuant to itstheir respective equity compensation plans, which do not have voting rights prior to vesting.
Glacier’s articles provide that shareholders do not have cumulative voting rights in the election of directors.
FNB’sSBC’s articles do not provide that eachshareholders with cumulative voting rights in the election of directors.
Required Vote for Authorization of Certain Actions
In accordance with the Montana Business Corporation Act (“MBCA”), atwo-thirds vote is generally required for approval of mergers or share exchanges, except as otherwise provided in Glacier’s articles of incorporation (see “Potential ‘Anti-Takeover’ Provisions,” below).
Under Arizona law, a plan of merger, interest exchange, conversion, domestication or division generally must be approved by the company’s shareholders entitled to vote on the plan, unless a greater vote is entitled to oneotherwise required by Arizona law or a company’s articles of incorporation. SBC’s articles have no higher vote upon matters submitted torequirement for the approval of a vote at a meetingplan of shareholders other thanmerger, interest exchange, conversion, domestication or division.
Board Vacancies
Glacier’s articles state that any vacancy occurring in the election of director. With respect to the electionboard of directors, FNB shareholders are entitled to cumulative voting, meaning that a shareholder is entitled to as many votes as equals the numberincluding any vacancy created by reason of his or her shares, multiplied byan increase in the number of directors, tomay be filled by a majority vote of the directors then in office, whether or not a quorum is present, or by a sole remaining director, and any director so chosen will hold office until the next annual meeting of shareholders and until such director’s successor shall have been elected and qualified.
SBC’s bylaws state that vacancies and newly created directorships resulting from any increase in each class.authorized number of directors may be filled by the affirmative vote of the remaining directors then in office, though not less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election or until their successors are duly elected and qualified, unless sooner displaced.
Removal of Directors
Glacier’s articles state that a director may be removed from office only for cause at a duly constituted meeting of shareholders called expressly for such purpose.
Under Arizona law, the shareholders of a corporation may remove one or more directors with or without cause unless the corporation’s articles of incorporation provide that directors may be removed only for cause. Neither SBC’s articles nor SBC’s bylaws address the removal of directors.
Preemptive Rights
Neither Glacier’s nor FNB’sSBC’s shareholders have preemptive rights to subscribe to any additional securities that may be issued.
Liquidation Rights
If Glacier is liquidated, the holders of Glacier common stock are entitled to share, on a pro rata basis, Glacier’s remaining assets after provision for liabilities. The Glacier board of directors is authorized to determine the liquidation rights of any preferred stock that may be issued.
If FNB is liquidated, the holders of FNB common stock are entitled to share, on a pro rata basis, FNB’s remaining assets after provision for liabilities.
Assessments
All outstanding shares of Glacier common stock are, and the shares to be issued in the merger will be, fully paid and nonassessable. All outstanding shares of FNBSBC common stock are fully paid and nonassessable.
Amendment of Articles and Bylaws
The Montana Business Corporation Act (“MBCA”) authorizes a corporation’s board of directors to make various changes of an administrative nature to its articles of incorporation. Other amendments to a corporation’s articles of incorporation must be recommended to the shareholders by the board of directors, unless the board determines that because of a conflict of interest or other special circumstances it should make no recommendation, and must be approved by a majority of all votes entitled to be cast by each voting group that has a right to vote on the amendment.
The Glacier board of directors may, by a majority vote, amend Glacier’s bylaws. Glacier’s bylaws also may be amended by the holders of a majority of votes cast at an annual or special meeting of shareholders.
The FNB Board may, subjectprovisions pf the ABCA regarding the amendment of a corporation’s articles of incorporation are substantially similar to specified limitations,those of the MBCA described above. Authority to make, amend, or repeal or adopt FNB’s bylaws. FNB’s articles also provide that FNB’s shareholders may alter or amendSBC’s bylaws is vested in the bylaws.
Board of Directors – Number of DirectorsSBC Board.
Glacier’s articles provide that the number of directors may not be less than 7 or more than 17. Glacier’s board currently consists of 10 members, all of whom serve annual terms.
FNB’sSBC’s bylaws provide that the number of directors may not be fewer than 5 nor more than 15.11. The FNBSBC Board currently consists of 10 members. Nine6 members, all of the directors (Classes A, B and C)whom serve three-yearannual terms. One of the directors (Class D) serves aone-year term.
Indemnification and Limitation of Liability
Under the MBCA, indemnification of directors and officers is authorized to cover judgments, amounts paid in settlement, and expenses arising out of actions where the director or officer acted in good faith and in or not opposed to the best interests of the corporation, and in criminal cases, where the director or officer had no reasonable cause to believe that his or her conduct was unlawful. Unless limited by the corporation’s articles of incorporation, Montana law requires indemnification if the director or officer is wholly successful on the merits of the action. Glacier’s bylaws provide that Glacier shall indemnify its directors and officers to the fullest extent not prohibited by law, including indemnification for payments in actions brought against a director or officer in the name of the corporation, commonly referred to as a derivative action.
Glacier’s articles provide that the personal liability of directors and officers for monetary damages shall be eliminated to the fullest extent permitted by the MBCA.
FNB’sUnder the ABCA, indemnification of directors and officers is authorized to cover judgments, amounts paid in settlement, and expenses arising out of proceedings where the director or officer acted in good faith and in or not opposed to the best interests of the corporation, and in criminal cases, where the director or officer had no reasonable cause to believe that his or her conduct was unlawful. Unless limited by the corporation’s articles of incorporation, Arizona law requires indemnification if the director or officer prevails in a proceeding, whether on the merits or otherwise. Neither SBC’s articles nor SBC’s bylaws address indemnification of directors and officers.
SBC’s articles provide that no director shall be liable to the fullest extent permitted by the URBCA, a director shall have no personal liability to FNBcorporation or its shareholdersstockholders for monetarymoney damages for any action taken or any failure to take any action as a director. FNB’s articles also provide thatdirector, except liability for (a) financial benefits to which the fullest extent permitted bydirector was not entitled; (b) intentional infliction of harm on the URBCA, FNB shall indemnify directors from any obligation arising outcorporation or its shareholders; (c) violation of the directors’ positions as such.Arizona statute imposing liability for unlawful distributions; and (d) any intentional violation of criminal law.
Potential “Anti-Takeover” Provisions
Glacier’s articles contain a provision requiring that specified transactions with an “interested shareholder” be approved by 80% of the voting power of the then outstanding shares unless it is(i) approved by Glacier’s board of directors, or(ii) certain price and procedural requirements are satisfied. An “interested shareholder” is broadly defined to include the right, directly or indirectly, to acquire or to control the voting or disposition of 10% or more of Glacier’s voting stock.
In addition, the authorization of preferred stock, which is intended primarily as a financing tool and not as a defensive measure against takeovers, may potentially be used by management to make more difficult uninvited attempts to acquire control of Glacier (for example, by diluting the ownership interest of a substantial shareholder, increasing the amount of consideration necessary for such shareholder to obtain control, or selling authorized but unissued shares to friendly third parties).
The “supermajority” approval requirement for certain business transactions and the availability of Glacier’s preferred stock for issuance without shareholder approval, may have the effect of lengthening the time required for a person to acquire control of Glacier through a tender offer, proxy contest or otherwise, and may deter any potentially unfriendly offers or other efforts to obtain control of Glacier. This could deprive Glacier’s shareholders of opportunities to realize a premium for their Glacier common stock, even in circumstances where such action is favored by a majority of Glacier’s shareholders.
FNB’sSBC’s articles provide for the division of the board of directors into four classes, three of which classes (Classes A, B and C) serve a three-year term and one of which (Class D) serves aone-year term. Under this structure, referred to as a “staggered” board, onlyone-third of the board of directors, plusdo not contain provisions that could potentially deter any director serving as a Class D director, are elected in any particular year. A staggered board arrangement may deter a proxy contestpotentially unfriendly offer or other effortefforts to obtain control of FNB.SBC.
The validity of the Glacier common stock to be issued in the merger will be passed upon for Glacier by its special counsel, Moore, Cockrell, Goicoechea & Johnson, P.C., Kalispell, Montana.
The consolidated financial statements of Glacier Bancorp, Inc. as of December 31, 2018 and 2017 and for each of the years in the three-year period ended December 31, 2018 have been incorporated by reference herein and in the registration statement in reliance upon the reports of BKD, LLP, independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Glacier
The SEC allows Glacier to “incorporate by reference” information into this proxy statement/prospectus, which means that Glacier can disclose important information to you by referring you to another document filed separately by Glacier with the SEC. The information incorporated by reference is deemed to be part of this proxy statement/prospectus, except for any information superseded by any information in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set forth below that Glacier has previously filed with the SEC. These documents contain important information about Glacier and its finances:
Annual Report on Form10-K for the year ended December 31, 2018;
• | Annual Report onForm10-K for the year ended December 31, 2018; |
Proxy Statement for Glacier’s 2019 Annual Meeting of Shareholders;
• | Quarterly Reports on Form10-Q for the quarters endedMarch 31, 2019 andJune 30, 2019; |
Current Report on Form8-K filed January 17, 2019 (other than the portion of the document not deemed to be filed); and
• | Proxy Statement for Glacier’s2019 Annual Meeting of Shareholders; |
• | Current Reports on Form8-K filedJanuary 17, 2019,April 4, 2019,April 30, 2019,May 1, 2019,August 1, 2019,and October 1, 2019, (other than the portions of those documents not deemed to be filed); and |
The description of Glacier’s common stock contained in the Current Report on Form8-K filed with the SEC on October 31, 2012, and any amendments or reports filed for the purpose of updating such description.
• | The description of Glacier’s common stock contained in the Current Report onForm8-K filed with the SEC on October 31, 2012, and any amendments or reports filed for the purpose of updating such description. |
In addition, Glacier is incorporating by reference additional documents that Glacier files with the SEC between the date of this proxy statement/prospectus and the date of the special meeting of FNB,SBC, provided, however, that Glacier is not incorporating by reference any information furnished (but not filed), except as otherwise specified therein.
Glacier files annual, quarterly and special reports, proxy statements and other business and financial information with the SEC. You may obtain the information incorporated by reference and any other materials Glacier may file with the SEC without charge by following the instructions in the section entitled “References to Additional Information” in the forepart of this document.
FNBSBC
FNBSBC does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not file documents or reports with the SEC.
If you have questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, would like copies of FNB’sSBC’s articles of incorporation or bylaws, or would like copies of FNB’sSBC’s historical consolidated financial statements or need help voting your shares, please contact:
FNB BancorpState Bank Corp.
12 South Main1771 McCulloch Boulevard
Layton, Utah 84041Lake Havasu City, Arizona 86403
ATTN: Nic BementKaren Gibbs, Corporate Secretary
(801)(928)813-1600302-5165
You should rely only on the information contained or incorporated by reference in this proxy statement/prospectus in deciding how to vote on the merger. We have not authorized anyone to provide you with information other than what is contained in this proxy statement/prospectus. This proxy statement/prospectus is dated March 13,[], 2019. You should not assume that information contained in this proxy statement/prospectus is accurate as of any other date, and neither the mailing of this proxy statement/prospectus to FNBSBC shareholders nor the issuance of Glacier common stock in the merger will create any implication to the contrary.
TABLE OF CONTENTS
ARTICLE 1 | |||||||
1.1 | |||||||
1.2 | |||||||
1.3 | |||||||
1.4 | A-12 | ||||||
1.5 | Certificates | A-12 | |||||
1.6 | A-13 | ||||||
1.7 | Absence of Control | A-14 | |||||
ARTICLE 2 | A-14 | ||||||
2.1 | A-14 | ||||||
2.2 | A-14 | ||||||
2.3 | A-14 | ||||||
ARTICLE 3 | REPRESENTATIONS AND WARRANTIES | A-15 | |||||
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3.1 | A-15 | ||||||
3.2 | |||||||
ARTICLE 4 | |||||||
4.1 | Conduct of | ||||||
4.2 | A-41 | ||||||
4.3 | Submission to Regulatory Authorities | A-42 | |||||
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4.6 | |||||||
4.7 | |||||||
4.8 | A-44 | ||||||
4.9 | Listing | A-44 | |||||
4.10 | A-44 | ||||||
4.11 | Tax Matters | A-44 | |||||
4.12 | SBC Closing Capital | A-44 | |||||
4.13 | Transaction Related Expenses | A-45 | |||||
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| A-45 | |||||
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| A-46 | ||||||
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A-i
TABLE OF CONTENTS
(continued)
A-ii
TABLE OF CONTENTS
List of Schedules and Exhibits
PLAN AND AGREEMENT OF MERGER AMONG GLACIER BANCORP, INC., GLACIER BANK,
This Plan and Agreement of Merger PREAMBLE The boards of directors of GBCI and Capitalized terms used in this Agreement but not immediately defined are used with the meanings given under the heading “Definitions” below. A. The Parties. (1) GBCI is a corporation duly organized and validly existing under (2) Glacier Bank is a duly organized and validly existing Montana state-chartered bank and a wholly owned subsidiary of GBCI. Glacier Bank maintains its principal office in Kalispell, Montana, and currently operates (3) (4) The Bank is B. The Transactions. On the Effective Date, C. Board Approvals. The respective boards of directors of GBCI, Glacier Bank, D.
AGREEMENT In consideration of the mutual agreements set forth in this Agreement, GBCI, Glacier Bank, The following capitalized terms used in this Agreement will have the following meanings: “ABCA” means the Arizona Business Corporations Act, as amended. “Acquisition Event” means any of the following: (a) a merger, consolidation, share exchange, or similar transaction involving
A - 2 “Acquisition Proposal” has the meaning assigned to such term in Section 4.1.10. “
“ALLL” means allowance for possible loan and lease losses. “Anticipated Closing Date” has the meaning “Appraisal Laws” means “Asset Classification” has the meaning assigned to such term in Section “Bank” has the meaning assigned to it in the first paragraph, as supplemented “Bank Financial Statements” means the Bank’s (a) unaudited balance sheets as of December 31, “Bank Merger” has the meaning assigned to such term in Recital B. “Bank Merger Agreement” means the bank merger agreement by and between Glacier Bank and the Bank to be entered “ “BHC Act” has the meaning assigned to such term in Recital A(1). “Break-Up Fee” has the meaning assigned to such term in Section 7.5. “Business Day” means any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions located in the State of Montana are required by law to remain closed. “
“Claim” has the meaning set forth “Closing” means the closing of the Merger contemplated by this Agreement, as more fully specified in Section 2.2. “Closing Capital Differential” means the positive or negative differential between the A - 3 “Closing Capital Requirement” means “Compensation Plans” has the meaning assigned to such term in Section “Daily Closing Price” “Determination Date” means the tenth day immediately preceding the Effective Date. “DisclosureSchedule” has the meaning assigned to such term in Section 3.1. “Dissenting Shares” means the shares of
“Effective Date” means the date on which the Effective Time occurs. “Effective Time” means the time the Merger becomes effective under the MBCA and “Employees” has the meaning assigned to such term in Section “Environmental Laws” has the meaning assigned to such term in Section “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder. “ERISA Affiliate” means, with respect to any Person, any other entity that is considered one employer with such Person under Section 4001 of ERISA or IRC Section 414. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. “Exchange Agent” means American Stock Transfer & Trust Company, “Exchange Fund” has the meaning assigned to such term in Section 1.4. “Execution Date” means the date of this Agreement. “Executive Officers” means, (a) with respect to GBCI and/or Glacier Bank Randall M. Chesler, Ronald J. Copher, and Donald J. Chery, and (b) with respect to “Fairness Opinion” has the meaning assigned to such term in Section A - 4 “FDIC” means the Federal Deposit Insurance Corporation. “Federal Reserve” means the Board of Governors of the Federal Reserve System. “Final Transaction Related Expenses” has the meaning assigned to such term in Section
“GAAP” means United States generally accepted accounting principles. “GBCI” has the meaning assigned to it in the first paragraph, as supplemented by the first sentence of Recital A(1). “GBCI 401(k) Plan” means the Glacier Bancorp, Inc., Profit Sharing and 401(k) Plan, as amended. “GBCI Average Closing Price” means the average Daily Closing Price of GBCI Common Stock for the 20 Trading Days immediately preceding the Determination Date. “GBCI Common Stock” means the shares of GBCI common stock, $0.01 par value per share, issued and outstanding from time to time. “GBCI Contracts” has the meaning assigned to such term in Section 3.2.2. “GBCI Financial Statements” means GBCI’s (a) audited consolidated balance sheets as of December 31, of income, cash flows, and changes in shareholders’ equity for each of the years then ended; “GBCI Preferred Stock” means the shares of GBCI preferred stock, $0.01 par value per share. “GBCI Regulatory Reports” has the meaning assigned to such term in Section 3.2.4(a). “GBCI SEC Reports” has the meaning assigned to such term in Section 3.2.4(b). “GBCI Shares” means the shares of GBCI Common Stock to be issued to the holders of
“Governmental Authority” means any federal, state, local ornon-U.S. government or subdivision thereof or any other governmental, administrative, judicial, taxing, arbitral, legislative, executive, regulatory or self-regulatory authority, instrumentality, agency, commission or body. A - 5 “Hazardous Substances” has the meaning assigned to such term in Section “Independent Accountants” has the meaning assigned to such term in Section “IRC” means the Internal Revenue Code of 1986, as amended. “Knowledge” or any similar knowledge qualification in this Agreement has the following meanings: (a) “Laws” has the meaning assigned to such term in Section 3.1.2. “ “Leased Real Estate” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real property, including approved and unopened branch offices,off-premises ATM locations and other facilities, held by “Letter of Transmittal” has the meaning assigned to such term in Section 1.5.1. “Liens” means, collectively, liens, pledges, security interests, claims, preemptive or subscriptive rights or other encumbrances or restrictions of any kind. “Material Adverse Effect” with respect to a Person means an effect that: (a) is materially adverse to the business, financial condition, results of operations or prospects of the Person and its Subsidiaries taken as a whole; or (b) A - 6 changes to valuation policies and practices in connection with the Transactions or restructuring charges taken in connection with the Transactions, in each case in accordance with GAAP; (iv) any modifications or changes made by “Material Contract” has the meaning assigned to such term in Section “Maximum Transaction Expense Amount” means “MBCA” means the Montana Business Corporations Act, as amended. “Merger” has the meaning assigned to such term in Recital B. “Merger Consideration” means the “ “Notice Period” has the “Objection Notice” has the meaning assigned to such term in Section 4.1.11. “Outside Date” has the meaning assigned to such term in Section 7.1. “Owned Real Estate” means all land, together with all buildings, structures, fixtures, and improvements located thereon and all easements, rights of way, and appurtenances relating thereto, including approved and unopened branch offices,off-premises ATM locations and other facilities, owned by “Pension Plan” has the meaning assigned to such term in Section “Per Share Cash Consideration” means $1.69 per share, which is subject to adjustment pursuant to Section 7.3.2, further decreased in the event the Closing Capital Differential is a negative number by an amount “Per Share Stock Consideration” means A - 7 effects a stock dividend, reclassification, recapitalization,split-up, combination, exchange of shares, “Per Share Stock Consideration Value” means the product obtained by multiplying (a) the Per Share Stock Consideration by (b) the GBCI “Permitted Exceptions” has the meaning assigned to such term in Section 4.1.11. “Person” includes an individual, corporation, partnership, association, limited liability company, bank, trust or unincorporated organization. “Plan” “Post-Signing Return” has the meaning assigned to such term in Section “Properties,” with respect to any party to this Agreement, means properties or other assets owned or leased by such party or any of its Subsidiaries, whether tangible or “Proposed Dissenting Shares” means those shares of “Prospectus/Proxy Statement” has the meaning assigned to such term in Section 4.2.1(a). “Real Property” has the meaning assigned to such term in Section “Registration Statement” has the meaning assigned to such term in Section 4.2.1(a). “Requisite Regulatory Approvals” has the meaning assigned to such term in Section 4.3. “Response Notice” has the meaning assigned to such term in Section 4.1.11. “SBC” has the meaning assigned to it in the first paragraph, as supplemented by the first sentence of Recital A(3). “SBC 401(k) Plan” means the State Bank of Arizona 401(k) Plan. “SBC Capital” means SBC’s capital stock, surplus and retained earnings determined in accordance with GAAP on a consolidated basis, net of goodwill and other intangible assets, calculated in the same manner in which SBC’s consolidated tangible equity capital at December 31, 2018, and June 30, 2019, was calculated, after giving effect to adjustments, calculated in accordance with GAAP, for accumulated other comprehensive income or loss as reported on SBC’s or the Bank’s balance sheet and after taking into account any A - 8 additional adjustments as agreed. For purposes of determining SBC Closing Capital, purchase accounting adjustments and the Final Transaction Related Expenses of up to the Maximum Transaction Expense Amount will not be taken into account. To the extent Final Transaction Related Expenses exceed the Maximum Transaction Expense Amount, the difference, on anafter-tax basis (applying an effective tax rate of 21.0 percent to the extent a particular item is deductible under applicable Tax laws), will be treated as a reduction of SBC Capital for purposes of determining SBC Closing Capital (regardless of whether such amounts are required to be expensed in accordance with GAAP). “SBC Closing Capital” has the meaning assigned to such term in Section 4.12. “SBC Financial Statements” means SBC’s (a) audited consolidated balance sheets as of December 31, 2016, 2017 and 2018, and the related statements of income, cash flows and changes in shareholders’ equity for each of the years then ended; and (b) unaudited financial statements as of June 30, 2019, and the related statements of income, cash flows and changes in shareholders’ equity for each of the periods then ended, together with the Subsequent SBC Financial Statements. “SBC Indebtedness” means that certain term loan in the original principal amount of $7,500,000 payable to Bell Bank. “SBC Meeting” has the meaning assigned in Section 4.2.2. “SBC Reports” has the meaning assigned to such term in Section 3.1.4(c). “SBC Securities” has the meaning assigned in Section 3.1.3(d). “SBC Stock” means the shares of SBC common stock, no par value per share, issued and outstanding from time to time. “SEC” means the United States Securities and Exchange Commission. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder. “Securities Laws” has the meaning assigned to such term in Section
“Subject Property” has the meaning assigned to such term in Section “Subsequent Bank Financial Statements” means the Bank’s unaudited balance sheets and related unaudited statements of income and changes in shareholder’s equity for each month after the Execution Date and before Closing or the Termination Date, as the case may be, prepared in accordance with Section 4.1.8. “Subsequent A - 9 “Subsidiary” with respect to any party to this Agreement means any Person in which such party, directly or indirectly, “Superior Proposal” means, with respect to “Takeover Laws” and “Takeover Provisions” each has the meaning assigned to such terms in Section “Taxes” means all federal, state, local,non-U.S. and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments, or charges imposed by a Governmental Authority in the nature of a tax of any kind whatsoever, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties. “Tax Returns” means any return, declaration, report, claim for refund, information return or statement or other document required to be filed with or provided to any taxing authority in respect of Taxes, including any schedule or attachment thereto, and including any amendment thereof. “Termination Date” means the date on which termination of this Agreement takes place under Article 7, if any. “ “ “Title Companies” has the meaning assigned to such term in Section 4.1.11. “Total
A - 10 “Trading Day” means a day on which GBCI Common Stock is traded on the NASDAQ Global Select Market. “
“ “Treasury Regulations” means any Treasury Regulations (including temporary regulations) promulgated by the United States Department of the Treasury with respect to the IRC, as amended.
TERMS OF TRANSACTION 1.1 Effect of Merger. Upon Closing of the Merger, pursuant to the provisions of the MBCA and 1.2 Merger Consideration. Subject to the provisions of this Agreement, including Section 1.3, as of the Effective 1.2.1 Outstanding GBCI Common Stock. The shares of GBCI Common Stock issued and outstanding immediately prior to the Effective Time will remain as issued and outstanding. 1.2.2 Outstanding 1.3 No Fractional Shares. No fractional shares of GBCI Common Stock will be issued in the Merger. In lieu of fractional shares, if any, each holder of A - 11 cash equal to the product of such fractional share multiplied by the GBCI Average Closing Price. Such fractional share interests will not include the right to vote or receive dividends or any interest on dividends. 1.4 Deposit of Cash and Shares. On or before the Effective Date, GBCI will deposit, or will cause to be deposited, with the Exchange Agent, for the benefit of the holders of 1.5.1 Letter of Transmittal. GBCI will use its reasonable best efforts to cause the Exchange Agent, within five Business Days following the Effective Date, to mail to each holder of record of a certificate evidencing shares of 1.5.2 Surrender of Certificates. Subject to the application of the Appraisal Laws with respect to any Proposed Dissenting Shares, each Certificate will, from and after the Effective Date, be deemed for all corporate purposes to represent and evidence only the right to receive the 1.5.3 Issuance of Certificates in Other Names. Any Person requesting that any certificate evidencing GBCI Shares be issued in a name other than the name in which the surrendered Certificate is registered must: (a) establish to GBCI’s satisfaction the right to receive the certificate evidencing GBCI Shares and (b) either pay to GBCI any applicable transfer or other Taxes or establish to GBCI’s satisfaction that all applicable Taxes have been paid or are not A - 12 1.5.4 Lost, Stolen, and Destroyed Certificates. With respect to a Certificate that has been lost, stolen or destroyed, the Exchange Agent will be authorized to issue or pay the holder’s 1.5.5 Rights to Dividends and Distributions. After the Effective Time, no holder of any Certificate will be entitled to receive any dividends or other distributions otherwise payable to holders of record of GBCI Common Stock on any date on or after the Effective Date, unless the holder has surrendered in accordance with this Agreement his, her or its Certificates (or has met the requirements of Section 1.5.4) in exchange for certificates representing GBCI Shares or evidence of GBCI stock ownership. Surrender of Certificates will not deprive the holder of any dividends or distributions that the holder is entitled to receive as a record holder of 1.5.6 Checks in Other Names. Any Person requesting that a check for any cash to be received in the Merger or cash in lieu of fractional shares be 1.5.7 Undelivered Certificates. Any portion of the Exchange Fund that remains unclaimed by shareholders of 1.6 Withholding Rights. Each of the parties and the Exchange Agent, as applicable, shall be entitled to deduct and withhold from the Merger Consideration (and any other consideration otherwise payable pursuant to this Agreement or deemed paid for tax purposes), such amounts as it may be required to deduct and withhold with respect to such payments under the IRC, and the rules and regulations promulgated thereunder, or any provision of state, local or foreign Law. Any such amounts so deducted and withheld shall be paid over to the applicable Governmental Authority in accordance with applicable Law and shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. A - 13 1.7 Absence of Control. It is the intent of the parties to this Agreement that neither GBCI nor Glacier Bank by reason of this Agreement shall be deemed (until consummation of the transactions contemplated herein) to control, directly or indirectly, SBC or the Bank and neither GBCI nor Glacier Bank shall exercise or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of SBC or the Bank. CLOSING OF TRANSACTION 2.1 Effective Date. The Merger shall be consummated at the Effective Time by the filing with and acceptance by the Montana Secretary of State and the 2.2 Events of Closing. Subject to the terms and conditions of this Agreement, unless otherwise agreed, the Merger shall be effective month-end occurring not less than 2.3 Manner and Time of Closing. The Closing will take place remotely via the electronic exchange of documents and signatures on such date as the A - 14 REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of 3.1.1 Organization and Good (a) (b) The Bank is duly organized, validly existing, and in good standing as a Insurance Fund (as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950) to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to the Knowledge of SBC, threatened. The Bank is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on
A - 15 3.1.2 No Breach or Violation. Assuming the 3.1.3 Capital Stock. (a) The authorized capital stock of (b) The authorized capital stock of the Bank consists of (c) Schedule 3.1.3 sets forth a true and complete list of all Subsidiaries of (d) Except as A - 16 agreements, proxies or other agreements or understandings in effect to which (e) All outstanding shares of 3.1.4 Reports and Financial Statements
(a) Since January 1, (b) (c) The reports and other documents referred to in
A - 17 (d) Each of SBC’s and the Bank’s balance sheets included in the SBC Financial Statements and the Bank Financial Statements, respectively, fairly presents in all material respects (or, in the case of such financial statements for periods ending on a date following the Execution Date, will fairly present in all material respects) the financial position of SBC and the Bank as of the date of such balance sheet. Each of the statements of income, cash flows and changes in shareholders’ equity included in the SBC Financial Statements and the Bank Financial Statements fairly presents in all material respects the results of operations, cash flows and changes in shareholders’ equity, as the case may be, of SBC and the Bank for the periods set forth in these statements (subject, in the case of unaudited statements, to normalyear-end audit adjustments and the absence of footnotes), in each case in accordance with GAAP, except as may be noted in these statements. (e) SBC maintains a system of internal accounting controls sufficient to comply with all legal and accounting requirements applicable to the businesses of SBC and the Bank. Since January 1, 2016, SBC has not identified any significant deficiencies or material weaknesses in the design or operation of its internal control over financial reporting, and SBC has not effected any material change in its internal control over financial reporting. (f) Since January 1, 2016, neither SBC nor the Bank, nor, to the Knowledge of SBC, any director, officer, or auditor of SBC or the Bank, has received or otherwise obtained knowledge of any material complaint, allegation, or claim regarding (i) the accounting or auditing practices or procedures (including with respect to loan loss reserves, write-downs, charge-offs and accruals) of SBC or the Bank, including any material complaint, allegation, or claim that SBC or the Bank has engaged in questionable accounting or auditing practices, or (ii) any material violation of securities laws, breach of fiduciary duty or similar violation by SBC or the Bank or any of their respective officers, directors, employees or agents. (g) The books and records of SBC and the Bank have been accurately maintained in all material respects, and in accordance with the business practices customary in the banking industry, and they fairly reflect the substance of events and transactions included therein. Such books and records comply in all material respects with applicable legal, regulatory, accounting and banking requirements in effect at the time they were produced. (h) Schedule 3.1.4(h) lists all investments (except investments in the Bank and securities issued by a Governmental Authority) owned by SBC or the Bank as of August 31, 2019. All such investments comply with all applicable Laws, including without limitation the BHC Act. 3.1.5 Properties. (a) A - 18 (b) Schedule (c) The Owned Real Estate identified inSchedule (d) (e) than Liens for Taxes not yet delinquent,non-monetary Liens on the tangible personal property that do not adversely affect the use or value of the tangible personal property in any material respect, pledges to secure deposits and other security provided in the ordinary course of business including, without limitation, security for Federal Home Loan Bank borrowings, federal funds and repurchase agreements).
A - 19 (f) Schedule 3.1.5(f) lists all of the Bank’s existing branches and offices, alloff-site ATMs, and all new branches or offices that the Bank has applied to establish or purchase, along with the estimated cost to establish or purchase those new branches. 3.1.6 Environmental Matters. (a) For purposes of this (i) ”Subject Property” with respect to (ii) ”Environmental Laws” means all federal, state and local environmental, health, and safety laws, regulations, orders, authorizations, common law and agency requirements relating to: (A) the protection or restoration of the environment, health and safety as it relates to exposures to Hazardous Substances or natural resource damages, (B) the handling, use, transportation, treatment, storage, presence, disposal, release or threatened release of, or exposure to, any Hazardous Substance, or (C) noise, odor, wetlands, indoor air quality, pollution, contamination or any injury or threat of injury to persons or property from exposure to any Hazardous Substance, including without limitation the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, and the Federal Clean Air Act, each as amended, and including their respective state counterparts. (iii) ”Hazardous Substances” means any substance, material or waste that is (A) defined as a “hazardous substance,” “pollutant or contaminant,” or “hazardous waste” or otherwise regulated pursuant to any Environmental Law, or (B) petroleum or a petroleum product orby-product, asbestos-containing material, lead-containing paint or plumbing, or any other substance defined as “hazardous,” “dangerous,” or “toxic” under any Environmental Law. (b) A - 20 (c) None of the following exists, and to the Knowledge of (i) an asserted liability of (ii) the handling, storage, use, transportation, removal, release or disposal of Hazardous Substances; (iii) the actual or threatened discharge, release or emission of Hazardous Substances from, on or under or within Subject Property into the air, water, surface water, ground water, land surface, or subsurface strata; or (iv) personal injuries or damage to the Subject Property related to or arising out of the release, use or disposal of Hazardous Substances. (d) (e) (f) To the Knowledge of
A - 21
(a)
A - 22 (g) Tax Rulings.
A - 23 (o) IRC Section 6662.
(q) Tax Attributes.Schedule 3.1.7(q) sets forth the following information with respect to each of SBC and the Bank as of the most recent practicable date: (i) the basis in its assets; (ii) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax credit, or excess charitable contribution; (iii) the amount of any deferred gain or loss arising out of any intercompany transaction; and (iv) the amount of any excess loss account in the stock of a Subsidiary.
(a) Since January 1, (b) (c) Each of A - 24 (d) unlawful contributions, payments, expenditures or gifts, (iv)
(a) Except for arrangements which may be made after the date and in accordance with the terms of this Agreement, (i) contains anon-compete or client or customernon-solicit requirement or any other provisions that materially restricts the conduct of, or the manner (ii) obligates (iii) grants any right of first refusal, right of first offer or similar right with respect to any assets, rights, or Properties of (iv) limits the payment of dividends by (v) relates to a joint venture, partnership, limited liability company agreement or other similar agreement or arrangement with any third party, or to the formation, creation or operation, management or control of any partnership or joint venture with any third parties; (vi) provides for payments to be made by A - 25 (vii) provides for indemnification by (viii) is a consulting agreement or data processing, software programming or licensing contract involving the payment of more than (ix) involves capital expenditures in excess of $50,000 per project or series of related projects, or $100,000 in the aggregate; (x) beneficiary of (except with respect to loans to, or deposit or asset management accounts of, directors, officers and employees entered into in the ordinary course of business and in accordance with all applicable regulatory requirements with respect to it); (xi) would prevent, materially delay or materially impede (xii) contains a put, call or similar right pursuant to which (xiii) is otherwise not entered into in the ordinary course of the business of (b) (i) Each Material Contract is a valid and legally binding agreement of
A - 26 3.1.10 Compliance. Each of
(a) Schedule (b)
A - 27 the transactions contemplated by, this Agreement).Schedule
(a) Neither strike involving (b)
(a) For purposes of this Agreement, (b) Schedule A - 28 for fringe, retirement, death, disability or medical benefits or other employee benefits or remuneration of any kind, whether written or unwritten, funded or unfunded that is Statement No. 106 relating to such Compensation Plans), including (c) All of the Compensation Plans have been maintained, and are in material compliance (both in form and operation) with any applicable laws, including ERISA. Each Plan that is an “employee pension benefit plan” within the meaning of ERISA Section 3(2) (“Pension Plan”) and that is intended to be qualified under IRC Section 401(a), has either received a favorable determination letter from the Internal Revenue Service or consists of a master, prototype, or volume submitter plan which has received an opinion or advisory letter from the Internal Revenue Service upon which (d) All contributions required to be made under the terms of any Compensation Plans have been timely made and, if material, have been reflected in the (e) Except (f) No provision of the documents governing any Compensation Plan contains restrictions on the rights of A - 29 (g) Except as disclosed inSchedule (h) Except as disclosed inSchedule (i) All required reports and descriptions (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the IRC with respect to each Plan. (j) Each Compensation Plan that is subject to IRC Section 409A has been operated in compliance with, and is in documentary compliance with, such section and all applicable regulations and regulatory guidance (including, without limitation, proposed regulations, notices, and rulings).
(a) The affirmative vote of the holders of a majority of the outstanding shares of (b)
A - 30 3.1.20 Broker’s or Finder’s Fees. Except for the fees of
3.2 Representations and Warranties of GBCI and Glacier Bank. Except as disclosed in a Schedule to this Agreement, each of GBCI and Glacier Bank represents and warrants to 3.2.1 Organization and Good Standing. GBCI is a corporation duly organized, validly existing and in good standing under the 3.2.2 Corporate Authority. Its execution, delivery and performance (assuming all Requisite Regulatory Approvals are duly made and/or obtained) of this Agreement does not and will not, and its consummation (assuming all Requisite Regulatory Approvals are duly made and/or obtained) of the Transactions will not, constitute or result in: (a) a material breach or violation of, or a material default under, its articles of incorporation or bylaws; (b) a breach or violation of, or a default under, or the acceleration of or the creation of a Lien (with or without the giving of notice, the lapse of time or both) under any provision of any material agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation by which it is bound or to which it is a party (collectively, the “GBCI Contracts”), other than any breach, violation, default, acceleration, or creation of a Lien that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on GBCI; (c) a material violation of any law, rule, ordinance or regulation or judgment, decree, order, award, or governmental ornon-governmental permit or license to which it is subject; or (d) any material change in the rights or obligations of any party under any of the GBCI Contracts. No other corporate proceedings or action is required to be taken by it relating to the performance by it of this Agreement or the consummation of the Transaction. A - 31 3.2.3 Capital Stock. The authorized capital stock of GBCI consists of 1,000,000 shares of GBCI Preferred Stock and 117,187,500 shares of GBCI Common Stock. No shares of GBCI Preferred Stock are outstanding, and as of 3.2.4 Reports and Financial Statements. (a) Regulatory Filing of Reports. Since January 1, (b) (c) Financial Statements. Each of GBCI’s balance sheets included in the GBCI Financial Statements have been prepared in conformity with GAAP and fairly presents in all material respects (or, in the case of GBCI Financial Statements for periods ending on a date following the Execution Date, will fairly present) the financial position of GBCI and its Subsidiaries as of the date of A - 32 case of GBCI Financial Statements to be prepared and filed with the SEC pursuant to GBCI’s reporting obligations under the Exchange Act for periods ending on a date following the Execution Date, will fairly present) the results of operations, shareholders’ equity and cash flows, as the case may be, of GBCI and its Subsidiaries for the periods set forth in these statements, in each case in accordance with GAAP, except as may be noted in these statements. 3.2.5 Financing and Shares Available. GBCI has, and at the Effective Time will have, (a) sufficient cash and cash equivalents on hand to pay 3.2.6 Regulatory Matters. (a) Since January 1, 2015, GBCI Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Real Estate Settlement Procedures Act and Regulation X, and any other (b) To GBCI’s Knowledge, as of the date of this Agreement, there is no fact or circumstance that would reasonably be expected to result in any of the Requisite Regulatory Approvals not being received in order to permit consummation of the Transactions on a timely basis. 3.2.7 Litigation. Except as disclosed in A - 33 3.2.8 No Material Adverse Effect. Since December 31, 3.2.9 Taxes. All material Tax Returns and reports required by law to be filed by GBCI and its Subsidiaries have been duly filed, and all Taxes upon GBCI or any of its Subsidiaries or upon any of their respective properties, assets, income or franchises that are shown as due and payable on such Tax Returns have been paid. The federal income portion of such taxes have been paid in full as indicated in the federal income tax returns of GBCI and its Subsidiaries for the past three years or adequate provision has been made for any such Taxes on its balance sheet in accordance with GAAP. No material objections to returns or claims for additional Taxes are being asserted with respect to federal or state income tax returns of GBCI and its Subsidiaries for any prior years, except for such audits, objections or claims which are being contested in good faith, by appropriate proceedings and with establishment of appropriate reserves. 3.2.10 Completeness of Representations. No representation or warranty made by or with respect to GBCI or its Subsidiaries in this Agreement (or in the Schedules to this Agreement) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in this Agreement (or in such Schedules) or in such representation or warranty not misleading. ADDITIONAL AGREEMENTS 4.1 Conduct of 4.1.1 Availability of Books, Records, and Properties. (a) Upon reasonable prior written notice to A - 34 (b) Upon prior written reasonable request by GBCI, 4.1.2 Ordinary and Usual Course. Without the prior written consent of GBCI (which consent shall not be unreasonably withheld, conditioned or delayed under subparagraphs (a) issue, sell, or otherwise permit to become outstanding, or dispose of or encumber or pledge, or authorize or propose the creation of, any additional (b) directly or indirectly adjust, split, combine, redeem, reclassify, purchase, or otherwise acquire, any (c) other than (i) as permitted by this Agreement or (ii) as otherwise consistent with past practices with respect to timing and amounts, declare or pay any dividend, or make any other distribution, either directly or indirectly, with respect to (d) solicit or accept deposit accounts of a different type from accounts previously accepted by the Bank or at rates materially in excess of prevailing interest rates, or incur, or increase the principal amount of, any indebtedness for borrowed money (excluding Fed Funds and Federal Home Loan Bank borrowings); (e) offer or make loans or other extensions of credit of a different type, or apply different underwriting standards, from those previously offered or applied by the Bank, or offer or make a new loan or extension of credit (other than with respect to commitments existing as of the date hereof) in an amount greater than (f) make any negative provisions to the Bank’s ALLL (g) fail to maintain an adequate reserve for loan and lease losses (determined in accordance with GAAP and existing regulatory guidance);
A - 35 (h) amend its articles of incorporation, bylaws, or other formation agreements, or convert its charter or form of entity;
A - 36 4.1.3 (a) Take all action necessary to satisfy any contractual notice or similar requirements under, and use their respective commercially reasonable efforts to obtain any consents required by, the Material Contracts arising from the Transactions, or that will arise out of completion of the Transactions. (b) Except as otherwise provided in this Agreement and as permitted by applicable Law, (i) terminate or suspend by all necessary and appropriate actions of the boards of directors of (c) Take such corporate or other actions as may be reasonably requested by GBCI in connection with the termination of the SBC 401(k) Plan (if the of the (d) Satisfy the notice and consent requirements under IRC Section 101(j) with respect to any Bank-owned life insurance policies or similar plans and related agreements. A - 37 (e)
(g) Satisfy in full the SBC Indebtedness not later than the Business Day prior to the Effective Date, and obtain a release of all liens securing such SBC Indebtedness, with evidence of such pending release reasonably acceptable to GBCI provided at least 10 Business Days prior to the Effective Date if not paid in full prior to that time. 4.1.4 Maintenance of Properties. 4.1.5 Preservation of Business Organization. Each of 4.1.6 Senior Management. Except as otherwise provided in this Agreement and excluding resignations, without prior consultation with GBCI, 4.1.7 Compensation. 4.1.8 Updates of Financial Statements. A - 38 extent then applicable; and 4.1.9 Update Schedules. From the Execution Date until Closing, 4.1.10 Acquisition Proposal. confidentiality agreement with GBCI. A - 39 4.1.11 Status of Title. 4.1.12 Directors’ and Officers’ Liability. Before the Effective Date, 4.1.13 Review of Loans. credit quality and the adequacy of the Bank’s ALLL and to establish appropriate accounting adjustments under Financial Accounting Standards No. 141R published by the Financial Accounting Standards Board. GBCI and its advisors will have continued access to the Bank’s loans through Closing to update its examination. At GBCI’s reasonable request, the Bank will provide GBCI with current reports updating the information set forth inSchedule 4.1.14 Continuing Representation and Warranties. Neither A - 40 4.2 Registration 4.2.1 Preparation of Registration Statement. (a) GBCI will use its commercially reasonable efforts to prepare and file a Registration Statement onForm S-4 (together with any amendments or supplements, the “Registration Statement”) with the SEC within 45 days after the Execution Date for registration of the GBCI Shares to be issued in the Merger, and the parties will prepare a related prospectus/proxy statement (the “Prospectus/Proxy Statement”) to be mailed, together with any amendments and supplements thereto, to (b) The parties will cooperate with each other in preparing the Registration Statement and Prospectus/Proxy Statement, and will use their commercially reasonable efforts to obtain the clearance of the SEC, if required, any appropriate state securities regulators and any other required regulatory approvals, to issue the Prospectus/Proxy Statement. (c) Nothing will be included in the Registration Statement or the Prospectus/Proxy Statement or any proxy solicitation materials with respect to any party to this Agreement unless approved by that party, which approval will not be unreasonably withheld, conditioned, or delayed. When the Registration Statement becomes effective, and at all times subsequent to such effectiveness (up to and including the date of the (d) GBCI will pay all fees and costs associated with the preparation by GBCI’s counsel (and other professional advisors) and the filing of the Registration Statement. Statement and the Prospectus/Proxy Statement, with all such fees and costs to be included as and in the calculation of Transaction Related Expenses. A - 41 4.2.2 Submission to Shareholders. 4.3 Submission to Regulatory Authorities. GBCI will use its commercially reasonable efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, and to obtain all permits, approvals, consents, authorizations, waivers, clearances, and orders of Governmental State of Montana and A - 42 4.4 Public Announcements. Subject to advice of legal counsel with respect to legal requirements relating to public disclosure of matters related to this Agreement and its subject matter, the timing and content of any announcements, press releases or other public statements concerning the Merger will occur upon, and be determined by, the mutual consent of 4.5 Consents. Each party to this Agreement will use its commercially reasonable efforts to obtain the timely consent or approval of any other Person whose consent or approval is necessary or appropriate in order to permit GBCI or 4.6
or proceeding against it by or before any court or Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to it. In addition, A - 43
A - 44
estimated as of the Anticipated Closing Date (unadjusted for any delay that may have been caused by the Independent Accountants’ review of the matter(s) in dispute), and such determinations shall be final, binding and conclusive unless GBCI and
4.14.1 Payment ofDividend. If the A - 45 4.14.2 Adjustment to Cash Consideration. If the
APPROVALS AND CONDITIONS 5.1 Required Approvals. The obligations of the parties to this Agreement are subject to the 5.2 Conditions to Obligations of GBCI. All obligations of GBCI pursuant to this Agreement are subject to satisfaction of the following conditions at or before Closing: 5.2.1 Representations and Warranties. The representations and warranties of A - 46 5.2.2 Compliance. 5.2.3 Continued Effectiveness of Agreements. (a) Agreements entered into as described in Recital E shall continue in full force and effect. (b) The individuals listed onSchedule 5.2.3(b) shall have entered into agreements with GBCI or Glacier Bank as described in Recital F and such agreements shall continue in full force and effect. 5.2.4 Closing Capital and Financial Statements. 5.2.5 Transaction Related Expenses. 5.2.6 Dissenting Shares. Proposed Dissenting Shares must not represent more than 10 percent of the outstanding shares of 5.2.7 No Material Adverse Effect. Since 5.2.8Financial Condition. In the opinion of the Executive Officers of SBC and the Bank, the Bank’s ALLL is adequate to absorb the Bank’s anticipated loan losses. 5.2.9 No Governmental Proceedings. No Governmental Authority will have commenced, any action or proceeding
A - 47 5.2.10 Tax Opinion. GBCI will have obtained from
5.2.15 No Change in Loan Review. SBC will have provided to GBCI the reports reasonably requested by GBCI under Section 4.1.13, and neither these reports nor any examinations conducted by GBCI under Section 4.1.13 will have revealed a change in either: (a) the information set forth inSchedule 3.1.14 or (b) information revealed during GBCI’s previous examinations of the Bank’s loans, in either case which change constitutes a Material Adverse Effect. 5.2.16 Payment of SBC Indebtedness. SBC shall have satisfied in full the requirements of Section 4.1.3(g). 5.3 Conditions to Obligations of 5.3.1 Representations and Warranties. The representations and warranties of GBCI and Glacier Bank contained in this Agreement or in any certificate or other instrument delivered in connection with this Agreement that are not qualified as to materiality will be true and correct in all material respects at Closing (other than the representations and warranties contained in Sections 3.2.1, 3.2.2(a), and A - 48 which case such representations and warranties will be true and correct, or true and correct in all material respects, 5.3.2 Compliance. GBCI and Glacier Bank will have performed and complied, in all material respects, with all terms, covenants and conditions of this Agreement on or before Closing. GBCI and Glacier Bank will have delivered to 5.3.3 No Governmental Proceedings. No Governmental Authority will have commenced any action or proceeding 5.3.4 No Material Adverse Effect. Since 5.3.5
5.3.6 Tax Opinion. SBC will have obtained from Hogan Lovells US LLP and delivered to GBCI, an opinion addressed to SBC (subject to reasonable limitations, conditions and assumptions) to the effect that on the basis of facts, representations and assumptions set forth in such opinion, the Merger will be a reorganization within the meaning of IRC Section 368(a). 5.3.7 Payments to the Exchange Agent. GBCI will have deposited the Exchange Fund with the Exchange Agent. 5.3.8 Approval of
A - 49 DIRECTORS, OFFICERS AND EMPLOYEES 6.1 Director, Executive Officer and 6.2.1 Comparability of Benefits. GBCI’s and Glacier Bank’s personnel policies will apply to any current Employees who are retained after the Effective Time. Such retained Employees will be eligible to participate in all of the benefit plans of GBCI that are generally available to similarly situated employees of GBCI and/or Glacier Bank in accordance with and subject to the terms of such plans. 6.2.2 Treatment of Past Service. For purposes of such participation, current Employees’ prior service with 6.2.3 No Contract Created. Nothing in this Agreement will give any Employee a right to employment or continuing employment. 6.2.4 SeveranceEligibility. Any current Employees (a) who are not entitled to severance, change in control, or other payments at or in connection with Closing under the Compensation Plans set forth inSchedule A - 50 6.3 Indemnification of Directors and Executive Officers. For a period of six years from and after the Effective Date, GBCI will indemnify and defend each present and former director and officer of TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION 7.1 Termination by Reason of Lapse of Time. If Closing does not occur on or before 7.1.1 the terminating party’s board of directors decides to terminate by a majority vote of all of its members; and 7.1.2 the terminating party delivers to the other party written notice that its board of directors has voted in favor of termination; provided that, if as of such Outside Date, the condition to Closing set forth in Section 5.1 shall not have been satisfied, then the Outside Date will be extended to on or before to the Outside Date of its election to extend the Outside Date; and provided, further that, the right to terminate this Agreement pursuant to this Section 7.1 shall not be available to any party whose failure to perform or observe the covenants and agreements of such party set forth in this Agreement resulted in the failure of the Merger to be completed by the applicable Outside Date. 7.2 Termination Due to GBCI Average Closing Price Greater Than 7.2.1 GBCI’s Right to Terminate. By specific action of its board of directors, A - 51 7.2.2 7.2.3 Effect of SBC Election. If 7.3 Termination Due to GBCI Average Closing Price Less Than 7.3.1 7.3.2 GBCI’s Right to Adjust Consideration. If (a) In the event of a termination pursuant to Section 7.3.1(a), adjust the (b) In the event of a termination by SBC pursuant to Section 7.3.1(b), adjust the
A - 52 7.3.3 Effect of GBCI Election. If GBCI makes 7.4 Other Grounds for Termination. This Agreement and the Merger may be terminated at any time before Closing (whether before or after applicable approval of this Agreement by 7.4.1 Mutual Consent. By mutual consent of 7.4.2 No Regulatory Approvals. By 7.4.3 Breach of Representation. By 7.4.4 Breach of Covenant. By A - 53 qualified as to materiality) if there has been a material breach of any of the covenants or agreements set forth in this Agreement that are not qualified as to materiality or a breach of any of the covenants or agreements set forth in this Agreement that are qualified as to materiality on the part of the other party, which breach is not cured within 30 days following written notice to the party committing such breach, or which breach, by its nature, cannot be cured prior to the end of such30-day period. 7.4.5 Failure to Recommend or Obtain Shareholder Approval. By GBCI (provided that GBCI is not then in material breach of any of its representations, warranties, covenants or other agreements in this Agreement), if (a) 7.4.6 Dissenting Shares. By GBCI, if holders of more than 10 percent 7.4.7 Superior Proposal—Termination by 7.4.8 Superior Proposal—Termination by GBCI. By GBCI upon written notice to 7.5 Break-Up Fee. If this Agreement is terminated pursuant to Section 7.4.5(a), Section 7.4.7, or Section 7.4.8, then A - 54 7.6 Cost Allocation such overdue amounts (for the period commencing as of the date that such overdue amount was originally required to be paid and ending on the date that such overdue amount is actually paid in full) at a rate per annum equal to the prime rate published inThe Wall Street Journal on the date such payment was required to be made, plus 2 percent. MISCELLANEOUS 8.1 Notices. Any notice, request, instruction or other document to be given under this Agreement will be in writing and will be delivered personally, sent electronic mail or sent by registered or certified mail or overnight Federal Express service, postage prepaid, addressed as follows:
A - 55
or to such other address or Person as any party may designate by written notice to the other given under this Section 8.1. 8.2 Waivers and Extensions. Subject to Article 9, any party may grant waivers or extensions to the other parties, but only through a written instrument executed by the President and/or CEO of the party granting the waiver or extension. Waivers or extensions that do not comply with the preceding sentence are not effective. In accordance with this Section 8.2, a party may extend the time for the performance of any of the obligations or other acts of any other party, and may waive: 8.2.1 any inaccuracies of any other party in the representations and warranties contained in this Agreement or in any document delivered in connection with this Agreement; 8.2.2 compliance with any of the covenants of any other party; and 8.2.3 any other party’s performance of any obligations under this Agreement and any other condition precedent set out in Article 5. 8.3 Construction and Execution in Counterparts. Except as otherwise expressly provided in this Agreement, this Agreement: (a) covers the entire understanding of the parties, and no modification or amendment of its terms or conditions will be effective unless in writing and signed by the parties or their respective duly authorized agents; (b) will not be interpreted by reference to any of the titles or headings to the sections or subsections of this Agreement, which have been inserted for convenience only and are not deemed a substantive part of this Agreement; (c) is deemed to include all amendments to this Agreement, each of which is made a part of this Agreement by this reference; and (d) may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same document. References in this Agreement to Recitals, Sections, Subsections, or Schedules are references to the Recitals, Sections, Subsections, and Schedules of and to this Agreement unless expressly stated otherwise. 8.4 Survival of Representations, Warranties, and Covenants. Except as set forth below, the representations, warranties, agreements and covenants set forth in this Agreement will not survive the Effective Time or termination of this Agreement, except that (a) Section A - 56 8.5 Attorneys’ Fees and Costs. In the event of any dispute, claim, arbitration or litigation arising out of or in connection with, or relating to, this Agreement or any breach or alleged breach of this Agreement (“Claim”), the substantially prevailing party on any such Claim will be entitled to reimbursement from the other party of its costs and expenses, including reasonable attorneys’ fees. 8.6 Arbitration. At either party’s request, the parties must submit any Claim to arbitration under the American Arbitration Association’s Commercial Arbitration Rules then in effect (or under any other form of arbitration mutually acceptable to the parties); provided that a party shall not be prevented from seeking injunctive relief in accordance with Sections 8.7 and 8.10 below to enforce this Agreement. A single arbitrator agreed on by the parties will conduct any arbitration. If the parties cannot agree on a single arbitrator within 15 days after service of the demand for arbitration, Claims shall be heard by a panel of three arbitrators, selected as follows: each party shall select one person to act as arbitrator and the two selected shall select a third arbitrator within ten days of their appointment; if the arbitrators selected by the parties fail to select or are unable to agree on the third arbitrator, the third arbitrator shall be selected by the American Arbitration Association. The arbitration decision is final (except as otherwise specifically provided by law) and binds the parties, and either party may request any court having jurisdiction to enter a judgment and to enforce the arbitrator’s decision. The arbitrator will provide the parties with a written decision naming the substantially prevailing party in the action. Any arbitration or related proceedings will take place in Kalispell, Montana. 8.7 Governing Law and Venue. This Agreement will be governed by and construed in accordance with the laws of the State of Montana, except to the extent that federal law may govern certain matters. Subject to the arbitration provisions set forth in Section 8.6, the parties must bring any legal proceeding arising out of this Agreement in the federal district courts of the Missoula Division for the State of Montana. Each party consents to and submits to the jurisdiction of any such federal court. 8.8 Severability. If a court determines that any term of this Agreement is invalid or unenforceable under applicable law, the remainder of this Agreement will not be affected thereby, and each remaining term will continue to be valid and enforceable to the fullest extent permitted by law. 8.9 No Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Except as otherwise expressly provided, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to confer upon any Person other than the parties any rights or remedies under this Agreement. A - 57 8.10 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity. AMENDMENTS Subject to applicable law, this Agreement and the form of any attached Exhibit or Schedule may be amended upon authorization of the boards of directors of the parties, whether before or after the [ A - 58 This Plan and Agreement of Merger is dated as of the date first written above.
[Signature Page to Plan and Agreement of Merger] Form of Transaction-Related Expenses
As provided in the Plan and Agreement of Merger,
Article 2 – Procedure for Exercise of Dissenters’ Rights Sections10-1320 through10-1328; and Article 3 – Judicial Appraisal of Shares Sections10-1330 and10-1331 Article 1 – Dissent and Payment for Shares
B - 1 7. “Shareholder” means the record shareholder or the beneficial shareholder.
4. An amendment of the articles of incorporation that materially and
(a) Alters or abolishes a preferential right of the shares. (b) Creates, alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares. (c) Alters or abolishes a preemptive right of the holder of the shares to acquire shares or other (d) Excludes or (e) Reduces the number of shares owned by the 5. Any corporate action taken pursuant to
B - 2 6. An election of the
7. Consummation of
8. Consummation of a plan of
C. This section does not apply to the D. Unless the articles of incorporation of the corporation provide otherwise, this section does not apply to the holders of shares of a class or series if the shares of the class or series were registered on a national securities exchange, were listed on the national market systems of the national association of securities dealers automated quotation system or were held of record by at least two thousand shareholders on the date fixed to determine the shareholders entitled to vote on the proposed corporate action.
B - 3 B. A beneficial shareholder may assert dissenters’ rights as to shares held on
Article 2 – Procedure for Exercise of
B. If corporate action creating dissenters’ rights under section10-1302 is taken without a vote of shareholders, the 10-1321.Notice of intent to
B - 4
5. Be accompanied by a copy of this article. 10-1323.Duty to demand payment A. A shareholder sent a dissenters’ notice described in section10-1322 shall demand payment, certify whether the shareholder acquired beneficial ownership of the shares before the date required to be set forth in the dissenters’ notice pursuant to section10-1322, subsection B, paragraph 3 and deposit the shareholder’s certificates in accordance with the terms of the notice. B. A shareholder who demands payment
B - 5
3. An explanation of how the
B. If after returning deposited certificates and
B - 6
B. To the extent the corporation elects to withhold payment under subsection A of this section, after taking the proposed corporate action,
Article 3 – Judicial Appraisal of Shares
B - 7 B. The corporation shall commence the proceeding
B - 8 2. Against the dissenter and in favor of the corporation if the court finds that the fair value does not materially exceed the amount offered by the corporation pursuant to sections
B -
Board of Directors
Capitalized terms used herein without definition have the respective meanings ascribed to them in the Agreement. You have requested our opinion as to the fairness, from a financial point of view, of the Merger Consideration to be paid to the holders of
In connection with
Investment Banking 611 Anton Boulevard • Suite 600 • Costa Mesa, CA 92626 • (714) 327-8800 • FAX (714) 327-8700 www.dadavidson.com/Investment-Banking
In connection with our engagement, we have been authorized to solicit, and have solicited expressions of interest from parties with respect to a sale of the In With respect to the financial projections and estimates (including information relating to the amounts and timing of the merger costs, cost savings, and revenue enhancements) provided to or otherwise reviewed by or for or discussed with us, we have been advised by management of the Company, and have assumed with your consent, that such projections and estimates were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of the Company as to the future financial performance of the Company and the other matters covered thereby, and that the financial results reflected in such projections and estimates will be realized in the amounts and at the times projected. We assume no responsibility for and do not express an We are not experts in the evaluation of loan and lease portfolios, classified loans or other real estate owned or in assessing the adequacy of the allowance for loan losses with respect thereto, and we C - 2 securing assets or the liabilities (contingent or otherwise) of
We have We have assumed in all respects material to our analysis that Our opinion is limited to the fairness, from We do not express a view as to, and our opinion does not address, the We do not express We have not evaluated the solvency or fair value of the Company or Parent under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. This opinion is not a solvency opinion and does not in any way address the solvency or financial condition of the Company or Parent. We do not express an opinion as to the impact of the Transaction on the solvency or viability of the Company or Parent or the ability of the Company or Parent to pay their respective obligations when they come due. C - 3
Please be advised that during the two years preceding the date of this letter, neither we nor our affiliates have had any other material financial advisory or other material commercial or investment banking relationships with the Company. Please be advised that during the two years preceding the date of this letter, we have provided investment banking and other financial services to Parent for which we have received customary compensation. Such services during such period have included representing Parent on M&A transactions. During the two years preceding the date of this letter, we have also provided investment banking and other financial services to Heritage Bancorp, and Columbine Capital Corporation, in their respective acquisitions by Parent, for which we have received customary compensation. In the ordinary course of our business, D.A. Davidson & Co. and its affiliates may actively trade or hold securities of the Company or Parent for our own accounts or for the accounts of our customers and, accordingly, may at any time hold long or short positions in such securities. We may seek to provide investment banking or other financial services to the Company or Parent in the future for which we would expect to receive compensation. This fairness opinion was reviewed and approved by a D.A. Davidson & Co. Fairness Opinion Committee. This opinion is solely for the information of the Board of Directors of the Company (solely in its capacity as such) in connection with its consideration of the merger and shall not be relied upon by any other party or disclosed, referred to, published or otherwise used (in whole or in part), nor shall any public references to us be made, without our prior written consent. Our opinion is necessarily based on
opinion. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration
C - 4 PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Sections35-1-451 through35-1-459 of the Montana Business Corporation Act (“MBCA”) contain specific provisions relating to indemnification of directors and officers of Montana corporations. In general, the statute provides that(i) a corporation must indemnify a director or officer who is wholly successful in his defense of a proceeding to which he is a party because of his status as such, unless limited by the articles of incorporation, and(ii) a corporation may indemnify a director or officer if he is not wholly successful in such defense, if it is determined as provided in the statute that the director meets a certain standard of conduct, provided that when a director is liable to the corporation, the corporation may not indemnify him. The statute also permits a director or officer of a corporation who is a party to a proceeding to apply to the courts for indemnification or advance of expenses, unless the articles of incorporation provide otherwise, and the court may order indemnification or advancement of expenses under certain circumstances set forth in the statute. The statute further provides that a corporation may in its articles of incorporation or bylaws or by resolution provide indemnification in addition to that provided by statute, subject to certain conditions set forth in the statute. Glacier’s articles provide, among other things, that the personal liability of the directors and officers of the corporation for monetary damages shall be eliminated to the fullest extent permitted by the MBCA. Glacier’s bylaws provide that the corporation shall indemnify its directors and officers to the fullest extent not prohibited by law, including indemnification for payments in settlement of actions brought against a director or officer in the name of the corporation.
(a) The exhibits are listed below under the caption “Exhibit Index.” (b) Financial Statement Schedules. None.
(a) The undersigned registrant hereby undertakes: (1) To file, during any period in which it offers or sells securities, a post-effective amendment to this registration (i) (ii)
(iii) II - 1 (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 the securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (c) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (d) (1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (d)(1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes 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. (e) 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 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 or not such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II - 2 (d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 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. (e) The undersigned registrant hereby undertakes 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.
II - EXHIBIT INDEX
II - Pursuant to the requirements of the Securities Act of 1933, the
Each person whose individual signature appears below hereby authorizes and appoints Randall M. Chesler and Ron J. Copher, and each of them, with full power of substitution and full power to act without the other, as his true and lawfulattorney-in-fact and agent to act in his name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Registration Statement, including any and all post-effective amendments. Pursuant to the requirements of the Securities Act of 1933, this
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