Heartland Financial (HTLF) to Acquire Founders Bancorp in $29.1M Deal
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Dubuque, IA-based Heartland Financial USA, Inc. (Nasdaq: HTLF) and San Luis Obispo, CA-based Founders Bancorp (OTC: FBCP) jointly announced today the signing of a definitive merger agreement pursuant to which Heartland will acquire Founders Bancorp in a 70% stock and 30% cash transaction valued at approximately $29.1 million, or $21.87 per share (subject to certain adjustments).
Under terms of the Agreement, which has been unanimously approved by the boards of directors of both companies, the outstanding common shares of Founders Bancorp will be converted into cash, shares of Heartland common stock, or a combination thereof, at the election of the Founders’ shareholders. Simultaneous with closing of the transaction, Founders Community Bank will be merged into Heartland’s California-based subsidiary, Premier Valley Bank, with the Founders Community Bank branches continuing to operate under the Founders Community Bank name. A new Premier Valley Bank branch currently planned in San Luis Obispo will carry the Founders branding.
The transaction is expected to be a tax-free exchange with respect to the stock consideration received by the shareholders of Founders. Heartland expects the transaction to be accretive to its earnings per share within the first full year of combined operations.
The transaction is subject to customary closing conditions, including approvals by Founders Bancorp shareholders and bank regulatory authorities, and is expected to close during the first quarter of 2017, with a systems conversion in the spring of 2017.
Founders Community Bank is an eleven-year-old community bank with approximately $199 million in total assets, $107 million in loans and $180 million in deposits as of September 30, 2016. Founders Bancorp had $18.3 million in total equity as of September 30, 2016. The bank serves clients from four banking centers in the communities of San Luis Obispo, Paso Robles and Morro Bay along with a Small Business Lending Center in Atascadero, CA. The Founders locations will join a full service banking center of Premier Valley Bank in San Luis Obispo scheduled to open early next year. Following the transaction closing, Heartland will have 112 full-service banking locations in its 12-state footprint.
“We are growing our presence in California and we see the San Luis Obispo County market area as an economically strong and vibrant region,” said Lynn B. Fuller, Chairman and CEO of Heartland. “Founders Community Bank is an excellent fit for our community banking business model. We are impressed with the quality of the bank and its people, especially its exceptional credit culture.”
Thomas J. Sherman, President and CEO of Founders Bancorp, added, “As our board of directors considered our strategic direction in today’s complex banking environment, especially the importance of identifying a potential quality merger partner, Heartland stood out as an exceptional opportunity for our customers, employees, community and shareholders. We are pleased to partner with a strong public company with deep resources that is committed to face-to-face customer service and locally-based community banking.”
“This affiliation with the Heartland family of commercial banks will bring a wealth of new banking products to Founders Community Bank, allowing us to bring expanded services to our customers and advance our strategic objectives. We are excited to be able to partner with Heartland and to continue our delivery of exceptional service and value to our customers, shareholders, and San Luis Obispo County,” noted Sherman.
Fuller concluded, “Founders Community Bank brings a solid and experienced team, focused on providing excellent service to its customers and communities, while allowing Premier Valley Bank to expand its presence on the Central Coast of California. Tom Sherman is an outstanding, proven banker in San Luis Obispo County and we are excited he and the rest of the Founders team will be joining our California bank and the Heartland family of banks.”
D. A. Davidson & Co. served as financial advisor to Founders Bancorp and Stuart | Moore served as Founders’ legal advisor. Panoramic Capital Advisors Inc. served as financial advisor to Heartland and Dorsey & Whitney LLP served as Heartland’s legal advisor.
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