By Lisa Kerner
Charlotte, N.C., Sept. 12 - ISB Financial Corp. and MidWestOne Financial Group, Inc. agreed to a merger of equals to create the third-largest independent publicly traded bank holding company based in Iowa.
Both companies' boards of directors approved the merger agreement, which calls for MidWestOne shareholders to receive 0.95 of a share of ISB common stock for each MidWestOne share of common stock.
A termination fee of $1.0 million, plus expenses up to $350,000, is included in the agreement, according to an 8-K filing with the Securities and Exchange Commission.
The merger is slated to close in the first quarter of 2008.
MidWestOne and ISB will consolidate their banking subsidiaries into one state-chartered bank known as MidWestOne Bank, with the resulting holding company operating as MidWestOne Financial Group, Inc. and based in Iowa City.
The newly combined company will include 29 full-service banking offices, total assets of some $1.5 billion and total deposits of more than $1.1 billion.
A 12-member board of directors will govern MidWestOne Financial Group with equal representation from ISB and MidWestOne.
MidWestOne Financial will also be led by:
• W. Richard Summerwill - the current ISB chairman and chief executive officer will become chairman of the board;
• Charles S. Howard - the MidWestOne chairman, president and CEO will become vice chairman of the board;
• Charles N. Funk - the Iowa State Bank & Trust Co. president and CEO will continue in those roles at the resulting holding company;
• David A. Meinert - the MidWestOne chief financial officer will be CFO;
• Kent L. Jehle - the current Iowa State Bank & Trust executive vice president will be chief lending officer of the resulting holding company; and
• John P. Pothoven - the current MidWestOne Bank president will become chief operating officer.
"We see this transaction as a unique opportunity to bring two very compatible companies together in a combined organization that will be stronger than the sum of its parts," Summerwill said in a company news release. "While there is no overlap between our branch networks, we operate in contiguous regions of Iowa."
"We look forward to integrating the companies and creating a strong platform for expanding the combined company's branch network and, if opportunities arise, considering future acquisition opportunities and merger partners," Howard added.
Keefe Bruyette & Woods, Inc. advised ISB and rendered a fairness opinion to its board. MidWestOne was advised by Sandler O'Neill + Partners LP and Howe Barnes Hoefer & Arnett, Inc., both of which rendered a fairness opinion to its board.
ISB is the holding company for Iowa State Bank & Trust in Iowa City, Iowa.
MidWestOne is the holding company for MidWestOne Bank based in Oskaloosa, Iowa.
| Acquirer: | ISB Financial Corp.
|
| Target: | MidWestOne Financial Group, Inc.
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| Price per share: | 0.95 of an ISB share, or about $26.62
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| Announcement date: | Sept. 12
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| Termination fee: | $1.0 million plus expenses up to $350,000
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| Expected closing: | First quarter 2008
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| Stock price for acquirer: | OTC: ISBO.PK: $27.50 on Sept. 11
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| Stock price for target: | Nasdaq: OSKY: $16.99 on Sept. 11
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