Federal suit filed against proposed HTLF-UMB merger

A federal lawsuit has been filed against the proposed merger of a national financial services company and a banking institution with a large Dubuque presence.

UMB Financial executives in April announced their intention to acquire HTLF, the parent company of Dubuque Bank & Trust, in a roughly $2 billion, all-stock deal expected to close in early 2025 pending regulatory approval.

Shareholder Mary Michenzie, of Massachusetts, recently filed a lawsuit against HTLF in U.S. District Court of Colorado in response to the announcement, alleging the company failed to provide its shareholders with adequate information about the merger.

“The registration statement is materially deficient (and) deprives the plaintiff of the information necessary to make an intelligent, informed and rational decision of whether to vote in favor of the proposed transaction,” the lawsuit states.

The suit argues shareholders received insufficient information about how the earnings-per-share price was calculated, as well as details necessary to see if that figure represented a fair exchange.

Michenzie also alleges that the deal with UMB was structured to disproportionately benefit a select few HTLF leaders and not the company’s stockholders.

HTLF has yet to file a response to the lawsuit, per federal court records, though a scheduling conference in the case is set for Aug. 21. Company shareholders are expected to vote on the merger Aug. 6, barring an injunction.

HTLF Director of Corporate Communication Ryan Lund declined to comment on the suit while UMB Financial CEO Mariner Kemper issued a brief statement via email.

“It is UMB’s practice to not comment on active litigation,” Kemper wrote. “However, we feel strongly that this merger is a benefit to both companies, our shareholders and the communities we serve and do not agree with the arguments raised in this suit.”

HTLF Board Chairman John Schmidt — named as a defendant in Michenzie’s lawsuit — said he could not speak on the case in detail but that board members are “confident” they have provided shareholders with the quantity and quality of information necessary to make an informed decision.

As part of the deal approved by the boards of both financial institutions, HTLF shareholders will get a fixed exchange ratio of 0.55 shares of UMB common stock for each share of HTLF common stock. Five HTLF representatives also will assume roles on the UMB board of directors.

Since the announcement of the proposed merger, the average HTLF stock price has increased by roughly 50%. As of Thursday afternoon, the average stock price was roughly $53.73 — up from $35.72 in late April.

“The best evidence here is how the market has responded to and appreciated the overall potential of this transaction,” Schmidt said. “When shareholders vote (in August), we look forward to very positive results.”