Aimee Miller, Peak to Peak. Denver-based Centennial Bank and Trust, a subsidiary of Heartland Financial USA, Inc. (“Heartland”) (NASDAQ: HTLF), and Aurora-based Citywide Banks, a wholly-owned subsidiary of Citywide Banks of Colorado, Inc. (“Citywide”), jointly announced today that their parent companies have entered into a definitive merger agreement pursuant to which Citywide will merge with and into Heartland in a stock and cash transaction valued at approximately $203 million, or $207.98 per Citywide common share, based on Heartland’s closing common stock price of $45.75 per share as of February 10, 2017, and subject to certain adjustments. Additionally, Citywide’s preferred stock of approximately $5 million will be redeemed for cash before closing.
Citywide Banks is a 53-year-old commercial bank with approximately $1.4 billion in total assets, $1.0 billion in net loans outstanding and $1.2 billion in deposits as of December 31, 2016. The bank operates from 12 banking centers across metro Denver and Boulder.
Citywide Banks will join Centennial Bank and Trust, with assets of $900 million, to create Heartland’s largest bank subsidiary with assets of $2.3 billion in one of the country’s best growth markets. The newly-combined organization will serve clients from 29 Colorado banking centers.
Simultaneously with closing of the transaction, Citywide Banks will be merged into Centennial Bank and Trust, with the resulting institution operating under the Citywide Banks brand name.
The combined Citywide Banks organization will be led by Kevin Quinn as President and CEO. The remainder of the leadership team will be made up of Centennial Bank and Trust and Citywide Banks executives after the banks are merged. Current Centennial Bank and Trust President, Steve Ward, will work closely with Kevin Quinn to blend the credit and operating cultures of the two organizations. Following the systems conversion, Steve will remain with Heartland in an executive role.
Kevin Ahern will remain Chairman of the combined entity and Jim Basey will serve as vice-chair of the board, supporting Kevin Quinn in his expanded role. Marty and Jeff Schmitz will also remain on the board of the combined entity.
Under terms of the definitive merger agreement, which has been unanimously approved by the boards of directors of both companies, Citywide common shareholders will receive 3.300 shares of Heartland common stock and $57.00 in cash for each share of Citywide common stock, subject to certain adjustments as set forth in the definitive merger agreement. The transaction value received by Citywide common shareholders will change with fluctuations in the price of Heartland common stock. Additionally, Citywide’s preferred stock will be redeemed for cash at par concurrent with closing of the transaction.
The transaction is expected to qualify as a tax-free exchange with respect to the stock consideration received by the common shareholders of Citywide. Heartland expects the transaction to be accretive to its earnings per share within the first full year of combined operations. Further information regarding the financial impact of the transaction can be found in the investor presentation filed as an exhibit to Heartland’s Current Report on Form 8-K dated February 13, 2017.
Prospectively, Heartland will hold assets of $9.8 billion, loans of $6.6 billion and deposits of $8.3 billion, with 124 full-service banking locations operating across 12 states after closing the Citywide transaction and the previously announced Founders Bancorp transaction.
Kevin Ahern, Chairman of Centennial Bank and Trust said, “Citywide brings a solid and experienced team, focused on providing excellent service to its customers and leadership for its communities, expanding our current presence in the dynamic Denver market. We know the Schmitz family and President and CEO, Kevin Quinn, quite well and have competed with them over the years. They are excellent bankers and have earned our highest respect. We are excited that the Citywide team will be joining with the Centennial Bank and Trust team.”
Marty Schmitz, Chairman of Citywide, 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 community banks gives us access to products and services offered by larger banks, while retaining our heritage as a locally-managed community bank. The merger will enhance convenience for our customers by adding several banking locations and it will significantly expand our lending capacity. We are excited to be able to partner with Heartland and to continue our delivery of exceptional service and value to our customers, communities and shareholders,” noted Schmitz.
Jim Basey, CEO of Centennial Bank and Trust, concluded, “We are enhancing our presence in the Front Range, an economically strong and rapidly growing market. We are enthusiastic that Citywide Banks is such an excellent fit for our community banking business model and look forward to a productive future with two great banks working together as one.”
The transaction remains subject to customary closing conditions, including approval by shareholders of Citywide and approvals by bank regulatory authorities. The transaction is also subject to Heartland shareholders’ approval of an increase in authorized shares of common stock. The transaction is expected to close early in the third quarter of 2017, with a systems conversion planned for the fall of 2017.
Centennial Bank and Trust Citywide Banks
Aimee Miller Marketing and Communications First Vice President
About Centennial Bank and Trust
Centennial Bank and Trust, a subsidiary of Heartland Financial USA, Inc., (NASDAQ: HTLF), is a state-chartered, community-invested bank with assets of more than $900 million and 17 Banking Centers located in Boulder, Breckenridge, Broomfield, Centennial, Conifer, Downtown Denver, Edwards, Englewood, Erie, Evergreen, Golden, Idaho Springs, Nederland, Steamboat Springs, Thornton, Vail and Winter Park. With a focus on deposit services and business and personal lending, we are dedicated to making Great Things Happen!™ for our customers. Visit www.centennialbanking.com or call 303.460.4718 to learn more. Centennial Bank and Trust is a member of the FDIC and an Equal Housing Lender.
About Citywide Banks
Citywide Banks is a family-owned, Colorado-focused commercial bank with nearly $1.4 billion in assets and 12 branches across Colorado’s Front Range. The bank specializes in commercial lending and treasury management solutions customized for small and midsize businesses based in Colorado.
The bank’s history began when its founder, Vince Schmitz, remodeled the humble remnants of an old tire shop on Colfax Avenue. Citywide Banks opened its doors in 1963 under the name Aurora National Bank. The bank’s founders were determined to set a new standard for business banking in Colorado. With a keen understanding of the small business owner’s financial needs, they set out to create a bank that offered the service, expertise and products often reserved for larger businesses. Additional information about Citywide Banks is available at www.citywidebanks.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services holding company with assets exceeding $8 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 108 banking locations serving 85 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.
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Additional Information about the Merger and Where to Find It
This communication is being made in respect of a proposed merger transaction involving Heartland Financial USA, Inc. and Citywide Banks of Colorado, Inc. In connection with the transaction, Heartland Financial USA, Inc. will file a registration statement with the Securities and Exchange Commission (“SEC”) that will include a proxy statement/prospectus to be used by Citywide Banks of Colorado, Inc. at the special meeting it will call to approve the merger. Shareholders are urged to read the proxy statement/prospectus when it becomes available because it will contain important information about the proposed transaction.
The final proxy statement/prospectus will be mailed to Citywide Banks of Colorado, Inc. shareholders of record at the record date for the special meeting of the shareholders to be held to approve the proposed transaction. In addition, the registration statement on form S-4 that includes the proxy statement/prospectus and other relevant documents will be available free of charge at the SEC’s Internet Web site, www.sec.gov, Heartland’s website www.htlf.com, or by contacting Bryan R. McKeag, Executive Vice President and Chief Financial Officer of Heartland.
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland’s financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland’s management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war, (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.