Highlights of the Announced Transaction
Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company” or
“Midland”) and Alpine Bancorporation, Inc. (“Alpine”) today
announced that they have entered into a definitive agreement under
which Midland will acquire Alpine in a cash and stock transaction
valued at approximately $181.0 million.
Alpine Bancorporation, Inc., the parent company of Alpine Bank
& Trust Co., is headquartered in Belvidere, Illinois and had
total assets of $1.3 billion, gross loans of $830 million and total
deposits of $1.1 billion as of June 30, 2017. Serving its
communities for nearly 110 years, Alpine is a regional,
full-service community bank offering commercial, retail, mortgage
banking and wealth management services. Alpine has 19
locations in northern Illinois and has the leading deposit market
share ranking in the Rockford, IL MSA. As of June 30, 2017,
Alpine’s wealth management business had approximately $1.0 billion
in assets under management.
When completed, this transaction will position Midland as the
fourth largest community bank based in Illinois, with total assets
of approximately $6.0 billion and a wealth management business with
nearly $3.0 billion in assets under administration.
Leon J. Holschbach, President and Chief Executive Officer of
Midland, commented, “Alpine is a very attractive merger partner for
Midland that we believe will significantly enhance the value of our
franchise. I have known Alpine’s Chairman, Rob Funderburg,
for more than 10 years, and during that time, our two banks have
worked together on a number of projects, which has allowed us to
become very familiar with their franchise. Alpine has a
similar commercially-focused community bank model combined with a
wealth management platform, making the company an excellent
strategic and cultural fit with Midland. Through a passionate
commitment to customer service and relationship banking, Alpine has
built a highly attractive core deposit base that will positively
impact our overall liquidity and cost of funds. Earlier in my
banking career, I had the opportunity to work in Rockford and have
always believed it would be a good market for Midland. With
the additional scale and synergies provided by this acquisition, we
expect to see a significant improvement in our level of
profitability and further growth in the contribution from our
wealth management business.”
R. Robert Funderburg, Jr., Chairman of the Board of Alpine,
said, “I am very proud of what we have accomplished at Alpine Bank
and the deep customer relationships we have built throughout the
communities that we serve. We believe that combining with
Midland will enable us to further enhance the banking experience
and capabilities that we can provide to our customers, ranging from
a wider selection of financial products and services to increased
borrowing capacity. With our similar business models and
approach to community banking, we anticipate a smooth transition
for our customers and employees to the Midland franchise.”
John M. Schultz, Chairman of the Board of Midland, added, “I
have known the Funderburg family for decades and have greatly
admired the strong franchise they have built. I am pleased
that Rob Funderburg will be joining the Midland board and look
forward to working with him and the other directors to continue
creating value for our communities and shareholders.”
Expected benefits of the transaction include:
- Increased earnings power driven by earnings accretion and
greater operating scale;
- An expanded base of stable, low-cost deposits;
- Increased liquidity resulting from the addition of a balance
sheet with a 73% loan-to-deposit ratio;
- Greater scale in the wealth management business; and
- Assumption of the #1 deposit market share position in the
Rockford, IL MSA.
Transaction Details
Under the terms of the definitive agreement, upon consummation
of the transaction, Alpine shares, in the aggregate, will be
exchanged for approximately 4.5 million shares of Midland common
stock and $33.3 million in cash. Based upon the closing price
of Midland common stock of $33.10 on October 13, 2017, this
represents transaction value of approximately $181.0
million.
Midland expects the transaction to be approximately 10%
accretive to earnings per share in 2019, the first full year of
combined operations. Midland also expects to incur tangible
book value per share dilution of approximately 6% upon the closing
of the transaction, with an expected earn-back period of
approximately 3.5 years using the “cross-over” method.
The transaction has been approved unanimously by each company’s
board of directors and is expected to close during the first
quarter of 2018, subject to regulatory approvals, the approval of
Alpine’s and Midland’s shareholders, and the satisfaction of
customary closing conditions.
Keefe, Bruyette & Woods, A Stifel Company served as
financial advisor to Midland, and Barack Ferrazzano Kirschbaum
& Nagelberg LLP served as Midland’s legal advisor.
Sheshunoff & Co. served as financial advisor to Alpine,
and Chapman and Cutler LLP served as Alpine’s legal advisor.
Issuance of Subordinated Debt
In connection with the acquisition, Midland announced that it
has completed the private placement of $40 million in aggregate
principal amount of subordinated notes to certain institutional
investors. Midland estimates that the net proceeds from the
sale of the notes will be approximately $39.4 million, and expects
that the notes will qualify as Tier 2 capital for regulatory
purposes. Midland intends to primarily utilize the proceeds
from the subordinated notes to fund the cash consideration payable
in the acquisition of Alpine.
Keefe, Bruyette & Woods, A Stifel Company acted as the lead
placement agent and U.S. Bancorp Investments, Inc. acted as
co-placement agent in the offering.
Conference Call, Webcast and Presentation
The Company will host a conference call and webcast at 8:00 a.m.
Central Time on Tuesday, October 17, 2017 to discuss this
transaction. The call can be accessed via telephone at (877)
516-3531, conference ID: 99482866. A recorded replay can be
accessed through October 24, 2017 by (855) 859-2056, conference ID:
99482866.
A slide presentation relating to the transaction and the webcast
of the conference call can be accessed on the Webcasts and
Presentations page of the Company’s investor relations website.
About Midland States Bancorp, Inc.
Midland States Bancorp, Inc. is a
community-based financial holding company headquartered in
Effingham, Illinois, and is the sole shareholder of Midland States
Bank. As of June 30, 2017, the Company had total assets of
$4.5 billion and its Wealth Management Group had assets under
administration of approximately $1.9 billion. Midland
provides a full range of commercial and consumer banking products
and services, merchant credit card services, trust and investment
management, and insurance and financial planning services. In
addition, commercial equipment leasing services are provided
through Heartland Business Credit, and multi-family and healthcare
facility FHA financing is provided through Love Funding, Midland’s
non-bank subsidiaries. For additional information, visit
www.midlandsb.com or follow Midland on LinkedIn at
https://www.linkedin.com/company/midland-states-bank.
Forward-Looking Statements
Readers should note that in addition to the historical
information contained herein, this press release includes
"forward-looking statements," including but not limited to
statements about Midland’s expected loan production, operating
expenses future earnings levels and other projections relating to
the proposed transaction. These statements are subject to
many risks and uncertainties, including (i) the possibility that
any of the anticipated benefits of the proposed transaction will
not be realized within the expected time period or at all; (ii) the
risk that integration of Alpine’s operations will be materially
delayed or will be more costly or difficult than expected; (iii)
the failure of the proposed transaction to close; (iv) the effect
of the announcement of the transaction on customer relationships
and operating results; (v) the possibility that the transaction may
be more expensive to complete than anticipated, including as a
result of unexpected factors or events; and (vi) other risks
detailed from time to time in filings made by Midland with the
Securities and Exchange Commission (the “SEC”). Readers should note
that the forward-looking statements included in this press release
are not a guarantee of future events, and that actual events may
differ materially from those made in or suggested by the
forward-looking statements. Forward-looking statements generally
can be identified by the use of forward-looking terminology such as
"will," "propose," "may," "plan," "seek," "expect," "intend,"
"estimate," "anticipate," "believe" or "continue," or similar
terminology. Any forward-looking statements presented herein are
made only as of the date of this press release, and we do not
undertake any obligation to update or revise any forward-looking
statements to reflect changes in assumptions, the occurrence of
unanticipated events, or otherwise.
Additional Information
This disclosure is being made in respect of the Merger and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval.
Midland will file a registration statement on Form S-4 with the
Securities and Exchange Commission (“SEC”) in connection with the
proposed transaction. The registration statement will include a
joint proxy statement of Midland and Alpine that will also
constitute a prospectus of Midland, which will be sent to Midland’s
and Alpine’s respective shareholders. Shareholders are advised to
read the joint proxy statement/prospectus and other documents filed
with the SEC when they become available because they will contain
important information about Midland, Alpine and the proposed
transaction. When filed, this document and other documents relating
to the Merger filed by Midland can be obtained free of charge from
the website maintained by the SEC at www.sec.gov. These documents
also can be obtained free of charge by accessing Midland’s website
at www.midlandsb.com under “Investors” and then under the “SEC
Filings” tab. Alternatively, once they become available any of
these filed documents can be obtained free of charge upon written
request to Midland States Bancorp, Inc., Corporate Secretary, 1201
Network Centre Drive, Effingham, Illinois 62401, by calling (217)
342-7321 or by emailing corpsec@midlandsb.com.
Participants in this
Transaction
Midland, Alpine and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from shareholders in connection with
the proposed transaction under applicable SEC rules. Information
about Midland and its directors and executive officers may be found
in Midland’s annual report on Form 10-K for the year ended December
31, 2016, filed with the SEC on March 10, 2017, and Midland’s
definitive proxy statement for its 2017 annual meeting of
shareholders, filed with the SEC on March 17, 2017. These documents
can be obtained free of charge from the sources indicated above.
Information regarding Alpine and its directors and executive
officers may be found in the joint proxy statement/prospectus when
it becomes available. Additional information regarding the
interests of these participants will also be included in the joint
proxy statement/prospectus regarding the proposed transaction when
it becomes available.
CONTACTS:
For Midland:Jeffrey G. Ludwig, Exec. V.P., at
jludwig@midlandsb.com or (217) 342-7321
For Alpine:Lesly K. Couper, SVP, Marketing and
Communications, at Lesly.couper@bankalpine.com or (815)
231-1797
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