German American Bancorp, Inc. and Heartland BancCorp Announce Definitive Merger Agreement
German American Bancorp (GABC) and Heartland BancCorp (HLAN) have announced a definitive merger agreement. Heartland shareholders will receive 3.90 shares of GABC stock for each HLAN share in an all-stock, tax-free exchange. The deal values Heartland at approximately $330.2 million, with an indicated per-share value of $155.37. Post-merger, the combined entity will have over $8.1 billion in assets and a network of nearly 95 branches across Indiana, Kentucky, and Ohio.
The merger will expand GABC's footprint into Columbus and Cincinnati, Ohio. Heartland's CEO, G. Scott McComb, and board member Ronnie Stokes are expected to join GABC's board. The transaction is anticipated to close in Q1 2025, subject to regulatory and shareholder approvals.
- Expansion into vibrant Ohio markets of Columbus and Cincinnati
- Combined entity will have over $8.1 billion in assets
- Expected material accretion to GABC's earnings per share within 12 months post-completion
- Relatively quick tangible book value earn back period anticipated
- GABC's pro forma capital ratios to remain well above regulatory requirements
- Potential integration challenges merging two banking systems
- Shareholder dilution for GABC due to all-stock transaction
- Regulatory approval process could delay or potentially derail the merger
Insights
The merger between German American Bancorp (GABC) and Heartland BancCorp (HLAN) is a significant development in the regional banking sector. Here's a breakdown of the key financial aspects:
- The all-stock transaction is valued at approximately
$330.2 million , with Heartland shareholders receiving 3.90 shares of GABC for each HLAN share. - Post-merger, the combined entity will have over
$8.1 billion in assets, a substantial increase from GABC's current position. - The deal is expected to be materially accretive to GABC's earnings per share within 12 months of completion, suggesting potential value creation for shareholders.
- The relatively quick tangible book value earn-back period indicates efficient use of capital in this acquisition.
From an investor's perspective, this merger appears strategically sound. GABC is expanding into high-growth markets like Columbus and Cincinnati, which could drive future revenue growth. The anticipated earnings accretion and maintained strong capital ratios post-merger are positive indicators for GABC's financial health and growth prospects.
However, investors should be aware that mergers often face integration challenges. The success of this deal will depend on smooth operational integration and realization of projected synergies. The retention of key Heartland executives in regional management roles could help mitigate some integration risks.
Overall, this merger positions GABC for potential enhanced growth and profitability, but investors should monitor the integration process and its impact on financial performance in the coming quarters.
This merger between German American Bancorp and Heartland BancCorp is a strategic move that could significantly alter the competitive landscape in the Midwest banking sector. Let's dissect the market implications:
- The combined entity will have a broader geographical footprint, spanning Southern Indiana, Central and Northern Kentucky and now expanding into Central and Southwest Ohio.
- The merger taps into two of the Midwest's most dynamic markets: Columbus and Cincinnati. These areas are known for their robust economic growth and could provide substantial opportunities for the bank's expansion.
- With nearly 95 branches post-merger, the bank will have an enhanced presence in rural, suburban and urban areas, allowing it to serve a diverse customer base.
From a market perspective, this merger represents a trend of regional banks consolidating to compete more effectively with larger national institutions. The expanded scale could potentially lead to:
- Improved operational efficiencies and cost savings
- Enhanced ability to invest in digital banking technologies
- Greater capacity to meet the lending needs of larger commercial clients
However, the success of this market expansion will largely depend on the bank's ability to maintain its community-oriented approach while scaling up operations. The retention of Heartland's brand in Ohio markets suggests a strategy to preserve local relationships while leveraging the resources of a larger institution.
Investors should watch for potential shifts in market share within the affected regions and any competitive responses from other regional banks. The merger's success in capturing growth opportunities in Columbus and Cincinnati will be important in determining its long-term market impact.
JASPER, Ind. and WHITEHALL, Ohio, July 29, 2024 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (Nasdaq: GABC) (“German American”) and Heartland BancCorp (OTCQX: HLAN) (“Heartland”) jointly announced today that they have entered into a definitive agreement to merge Heartland into German American. Upon completion of the transaction, Heartland’s subsidiary bank, Heartland Bank, will be merged into German American’s subsidiary bank, German American Bank, and operate under a co-branded name within the Ohio markets.
Under the terms of the definitive agreement, Heartland shareholders, other than the Heartland retirement plan, will receive 3.90 shares of German American common stock for each share of Heartland common stock in an all-stock, tax-free exchange. The shares held by the Heartland retirement plan will be exchanged for an equivalent cash payment. Based on the number of Heartland common shares expected to be outstanding at closing, German American would issue approximately 7.66 million shares of its common stock. With a
As of June 30, 2024, Heartland operated 20 full-service banking offices and had approximately
“This strategic partnership will bring together two high-performing, community-oriented organizations and expand German American’s footprint into Columbus and Cincinnati, Ohio, two of the most vibrant and fastest-growing markets in the Midwest,” stated D. Neil Dauby, Chairman and CEO of German American. “We share the same culture and commitment to serving our customers and our communities with a relationship-based approach. We are excited to welcome Heartland’s customers, employees, communities and shareholders to the German American family.”
Dauby continued, “We expect this strategic transaction will be materially accretive to German American’s earnings per share during the twelve months following completion of the transaction with a relatively quick tangible book value earn back period. German American’s pro forma capital ratios will continue to significantly exceed regulatory well-capitalized levels providing ongoing financial strength and future growth opportunities.”
G. Scott McComb, Chairman, President and CEO of Heartland stated, “This strategic partnership allows us to partner with another like-minded, larger community bank that enables us to continue our strong brand and growth trajectory within the markets we serve. It will also allow us to deepen and broaden our current and prospective customer relationships with enhanced financial service offerings. Strategically and culturally, Heartland and German American are exceptionally well-aligned with a strong commitment to the community banking business model. That model, centered on delivering the exceptional customer experience and willingness to invest in local communities that Ohio has come to know and love from Heartland, will propel our future success.”
McComb is expected to join the German American and German American Bank boards of directors while members of the Heartland executive and senior teams are expected to stay on as regional management to provide local leadership and decision making.
In addition to Scott McComb, Ronnie Stokes, a current Heartland board member, is also expected to join the German American and German American Bank boards of directors.
The all-stock transaction has been unanimously approved by each company’s board of directors and is expected to close in the first quarter of 2025, subject to regulatory approval, approval by both German American and Heartland shareholders and completion of other customary closing conditions.
Keefe, Bruyette & Woods, Inc., A Stifel Company served as financial advisor on the transaction to German American and Dentons Bingham Greenebaum LLP served as legal counsel.
Raymond James & Associates, Inc. served as the financial advisor on the transaction to Heartland and Hunton Andrews Kurth LLP served as legal counsel.
A slide presentation relating to the transaction can be accessed under the investor relations section of German American’s website at www.germanamerican.com and Heartland Bank’s website at www.heartland.bank. In addition, the presentation is included as an exhibit to the Form 8-K filed with the Securities and Exchange Commission announcing the transaction.
Additional Information
Communications in this press release do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The proposed merger will be submitted to both the German American and Heartland shareholders for their consideration. In connection with the proposed merger, German American will file a Registration Statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”) that will include a joint proxy statement for German American and Heartland and a prospectus for German American and other relevant documents concerning the proposed merger. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE CORRESPONDING JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS TO THOSE DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain a copy of the joint proxy statement/prospectus once filed, as well as other filings containing information about German American, without charge, at the SEC’s website (http://www.sec.gov) or by accessing German American’s website (http://www.germanamerican.com) under the tab “Investor Relations” and then under the heading “Financial Information”. Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Bradley C. Arnett, Investor Relations, German American Bancorp, Inc., 711 Main Street, Box 810, Jasper, Indiana 47546, telephone 812-482-1314 or to Jennifer Eckert, Investor Relations, Heartland BancCorp, 430 North Hamilton Road, Whitehall, Ohio 43213, telephone 614-337-4600.
German American and Heartland and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of German American and Heartland in connection with the proposed merger. Information about the directors and executive officers of German American is set forth in the proxy statement for German American’s 2024 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 21, 2024, which information has been updated by German American from time to time in subsequent filings with the SEC. Information about the directors and executive officers of Heartland will be set forth in the joint proxy statement/prospectus relating to the proposed merger. Additional information about the interests of those participants and other persons who may be deemed participants in the transaction may also be obtained by reading the joint proxy statement/prospectus relating to the proposed merger when it becomes available. Free copies of this document may be obtained as described above.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These forward-looking statements include, but are not limited to, statements relating to the expected timing and benefits of the proposed merger (the “Merger”) between German American and Heartland, including future financial and operating results, cost savings, enhanced revenues, and accretion/dilution to reported earnings that may be realized from the Merger, as well as other statements of expectations regarding the Merger, and other statements of German American’s goals, intentions and expectations; statements regarding German American’s business plan and growth strategies; statements regarding the asset quality of German American’s loan and investment portfolios; and estimates of German American’s risks and future costs and benefits, whether with respect to the Merger or otherwise.
These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things:
- the risk that the businesses of German American and Heartland will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;
- expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame;
- revenues following the Merger may be lower than expected;
- customer and employee relationships and business operations may be disrupted by the Merger;
- the ability to obtain required regulatory approvals or the approval of Heartland’s or German American’s shareholders, and the ability to complete the Merger on the expected timeframe;
- the costs and effects of litigation and the possible unexpected or adverse outcomes of such litigation;
- the ability of German American to complete integration and attract new customers;
- possible changes in economic and business conditions;
- the impacts of epidemics, pandemics or other infectious disease outbreaks;
- the existence or exacerbation of general geopolitical instability and uncertainty;
- possible changes in monetary and fiscal policies, and laws and regulations;
- possible changes in the creditworthiness of customers and the possible impairment of collectability of loans;
- fluctuations in market rates of interest;
- competitive factors in the banking industry;
- changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like German American’s affiliate bank;
- continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;
- changes in market, economic, operational, liquidity, credit and interest rate risks associated with German American’s business; and
- other risks and factors identified in German American’s cautionary language included under the headings “Forward-Looking Statements and Associated Risk” and “Risk Factors” in German American’s Annual Report on Form 10-K for the year ended December 31, 2023, and other documents subsequently filed by German American with the U.S. Securities and Exchange Commission.
Neither German American nor Heartland undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, German American’s and Heartland’s past results of operations do not necessarily indicate either of their anticipated future results, whether the Merger is effectuated or not.
About German American
German American Bancorp, Inc. is a Nasdaq-listed (symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bank, operates 74 banking offices in 20 contiguous southern Indiana counties and 14 counties in Kentucky. The Company also owns an investment brokerage subsidiary (German American Investment Services, Inc.)
About Heartland
Heartland BancCorp is an OTCQX-traded (symbol: HLAN) registered Ohio financial holding company and the parent of Heartland Bank, which operates 20 full-service banking offices in Central Ohio and Greater Cincinnati. Heartland Bank, founded in 1911, provides full-service commercial, small business, and consumer banking services; professional financial planning services; and other financial products and services.
Media Contacts:
German American Bancorp, Inc.
D. Neil Dauby, Chairman and Chief Executive Officer
Bradley M. Rust, President and Chief Financial Officer
(812) 482-1314
Heartland BancCorp
G. Scott McComb
Chairman, President and Chief Executive Officer
(614) 337-4600
FAQ
What is the exchange ratio for Heartland BancCorp (HLAN) shares in the merger with German American Bancorp (GABC)?
What is the total value of the merger between German American Bancorp (GABC) and Heartland BancCorp (HLAN)?
When is the merger between German American Bancorp (GABC) and Heartland BancCorp (HLAN) expected to close?
How will the merger affect German American Bancorp's (GABC) earnings per share?
