An American financial services holding company announced it is acquiring a financial institution with a large Dubuque presence.
UMB Financial said it will acquire HTLF, the parent company of Dubuque Bank & Trust, in an all-stock deal valued at about $2 billion, according to a press release issued Monday.
Founded in 1981 in Dubuque, HTLF has $19.4 billion in assets, $16.2 billion in total deposits and $12.1 billion in total loans, as of March 31. Last year, HTLF relocated its headquarters from Dubuque to Denver, Colo. as part of a push to consolidate the company’s 11 charters into a single location.
Based in Kansas City, Mo., UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. HTLF’s banks serve communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin.
John Schmidt, the Dubuque-based chairman of the HTLF board of directors, said UMB submitted an unsolicited offer for HTLF, formerly known as Heartland Financial USA. The offer was accepted.
“If you look at the transaction, it is a very positive result for stockholders,” Schmidt said. “We would hope that it positions our employees as well to succeed with the combined entity.”
The release states that under the terms of the deal, HTLF shareholders will get a fixed exchange ratio of 0.55 shares of UMB common stock for each share of HTLF common stock. The value is $45.74 per share, based on UMB’s closing price of $83.17 on Friday.
The deal is expected to be the largest in UMB’s history and will lead to UMB Financial having $64.5 billion in assets. UMB reported net first-quarter income of $110.3 million Monday, compared to a net income of $70.9 million in the fourth quarter of 2023.
Schmidt said HTLF officials had been focused on a strategic plan called “HTLF 3.0” before receiving UMB’s offer. The HTLF plan included investment in talent acquisition and expansion of treasury management products, among other initiatives.
“We had done well with HTLF, but we looked at HTLF 3.0 as a reinvigoration,” he said. “A lot of the things we were hoping to get done with HTLF 3.0, (UMB) has already accomplished.”
Schmidt said UMB is a large bank with no historical loan issues.
“They have a very positive revenue stream,” said Schmidt, who added that UMB’s financial operations make the bank less likely to be impacted by fluctuating interest rates.
“I don’t diminish anything we did with HTLF, but UMB is just a bigger organization with a lot of capacity,” Schmidt said. “Our customers should be very excited.”
After the closing of the deal, former HTLF stockholders are expected to collectively hold about 31% of the combined company. Schmidt said HTLF representatives will have five seats on a newly expanded board of UMB, although additional details remain in discussion.
Mariner Kemper is the chairman and CEO of UMB. In a conference call with shareholders Monday morning, Kemper said UMB has a strong history of growth in multiple financial sectors, but one area where the company has “underpenetrated” is consumer banking franchises.
“Our search for the right fit has been elusive, but we found the right unicorn in Heartland, a bank that understands that a key part of the value of a franchise is in its deposits,” he said.
Kemper said the acquisition will create a nearly $65 billion bank with a 13-state footprint, including a top-10 market share in five of those states.
Kemper touted the recent work done by HTLF to increase revenue, efficiency, return on assets and capital allocation, along with the consolidation of the company’s charters.
“With our more sophisticated treasury management products … we can penetrate deeper into (HTLF’s) existing client base and drive new business in their markets … (and) we are looking forward to leveraging their small business capabilities in our existing markets,” Kemper said.
When asked about public criticism and concerns about HTLF’s future that were raised by former longtime executives and shareholders in 2022, Kemper said that “those issues are well behind them.”
“We see all that they’ve been going through over the last couple years as a great opportunity,” he said. “They’ve been plowing the field and planting the seeds, and we basically get to harvest. They have done a lot of heavy lifting, and … a lot of great work to mimic the kind of company we are.”
Kemper succeeded his father, R. Crosby Kemper, as president, chairman and CEO of UMB at age 31, making him a fifth-generation banker and the sixth Kemper leader at the bank, which was founded by his great-grandfather in 1913.
“It is a family bank, and the Kemper family has been a part of that organization for a long time,” Schmidt said. “Mariner has a keen interest in Dubuque.”
Schmidt said Kemper is planning to visit Dubuque on Thursday, May 2, to meet with employees and customers.
Schmidt said the transaction is pending regulatory approval and expects it to be completed in the first quarter of 2025.