June 9, 2020 | Article | 5 min Newsroom
Phoenix, Arizona June 9, 2020 — Phoenix, AZ-based Arizona Bank & Trust, a division of HTLF Bank (“AB&T”), a wholly-owned subsidiary of Heartland Financial USA, Inc. (“Heartland”) (NASDAQ: HTLF), and Racine, WI-based Johnson Bank, a subsidiary of Johnson Financial Group, Inc. (“JFG”), jointly announced today that they have entered into a purchase and assumption agreement, pursuant to which AB&T will acquire Johnson Bank’s Arizona banking operations, including four branches in Phoenix and Scottsdale, and will assume substantially all of the Arizona deposits and certain other liabilities of Johnson Bank. Johnson Insurance Services is not a part of this transaction.
In connection with the closing of this transaction, Johnson Bank’s four full-service branches in Phoenix and Scottsdale and substantially all of its Arizona banking operations will be acquired by ABT. The Johnson Bank branches had deposits of approximately $362 million and loans of $186 million as of March 31, 2020. The actual amount of deposits assumed and loans acquired will be determined at closing.
AB&T had $866 million in total assets as of March 31, 2020. It currently operates six full-service banking centers in the East Valley of the Phoenix market. When the transaction is complete, AB&T will become Heartland’s eighth bank subsidiary to cross a billion in assets with approximately $1.2 billion and 10 banking centers. AB&T will continue to operate under the Arizona Bank & Trust, a division of HTLF Bank brand.
William Callahan, Arizona Bank & Trust, a division of HTLF Bank’s President and CEO said, “Arizona Bank & Trust, a division of HTLF Bank and Johnson Bank share a common focus of providing excellent service to our customers and leadership for our communities. This transaction will enable us to add an attractive mix of commercial and personal clients, as well as experienced banking talent that we believe will enhance our business development capabilities. We are excited to complete this acquisition, which we believe will be a strong complement to our organic growth.”
“We have tremendous respect for the team at Heartland and their community banking values. Heartland’s culture is very similar to Johnson Financial Group’s culture in the way in which it engages its employees, serves its customers, and supports its communities,” said Jim Popp, JFG’s President and CEO. “We look forward to the successful transition of our business to a local partner. Our Arizona team has been an integral part of the JFG family for more than 30 years. We are thankful to our Arizona associates for building a strong, vibrant, diversified business in one of the most dynamic growth markets in the country.”
The branch transaction is subject to approval by federal and state bank regulators and to customary closing conditions, and is expected to be completed in the fourth quarter of 2020.
Mr. Callahan concluded, “We are increasing our presence and adding scale in Phoenix with a solid and experienced team dedicated to client success. We extend a warm welcome to Johnson Bank’s Arizona customers and employees to our organization.”
About Arizona Bank & Trust, a division of HTLF Bank
Arizona Bank & Trust, a division of HTLF Bank, a wholly-owned subsidiary of Heartland, is a full-service commercial bank with assets of more than $866 million. Arizona Bank & Trust, a division of HTLF Bank operates six banking centers across the vibrant Phoenix market. AB&T blends the intimacy and responsiveness of a community bank with the resources of a large financial services company. For more information, visit www.arizbank.com. AB&T is a member of the FDIC and an Equal Housing Lender.
About Johnson Financial Group, Inc.
Johnson Financial Group, with offices in Wisconsin, Arizona and Minnesota, is a privately owned financial services company offering banking, wealth and insurance solutions through its subsidiaries, Johnson Bank, Johnson Wealth, and Johnson Insurance Services. For more information visit www.johnsonfinancialgroup.com.
About Heartland Financial USA, Inc.
Heartland is a diversified financial services company with assets of $13.29 billion as of March 31, 2020. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 114 banking locations serving 83 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.
This release, and future oral and written statements of Heartland and JFG and their management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about AB&T’s acquisition of Johnson Bank’s Arizona banking operations. These forward-looking statements may include statements about the benefits of the transaction, including anticipated future results, cost savings and accretion to earnings. Risks relating to the acquisition include the following: the businesses of Johnson Bank’s Arizona banking operations and AB&T may not be combined successfully, or such combination may take longer than expected; the cost savings from the acquisition may be less than anticipated; credit and interest rate risks of Johnson Bank’s Arizona banking operations may be greater than anticipated; and various difficulties associated with achieving anticipated future financial results of AB&T after the transaction may occur.
In addition, 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 below and in the risk factors in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained, among others: (i) the strength of the local and national economy, including to the extent that they are affected by the COVID-19 pandemic and related restrictions on business and consumer activities; (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 as they impact the company's general business, including government programs offering relief from the COVID-19 pandemic; (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 potential impact of acquisitions and Heartland's ability to successfully integrate acquired banks; (viii) the loss of key executives or employees; (ix) changes in consumer spending, including changes resulting from the COVID-19 pandemic; (x) unexpected outcomes of existing or new litigation involving the company, including claims resulting from our participation in and execution of government programs related to the COVID-19 pandemic; and (xi) changes in accounting policies and practices.
The COVID-19 pandemic is adversely affecting Heartland and its customers, counterparties, employees and third-party service providers. The pandemic’s severity, its duration and the extent of its impact on Heartland’s business, financial condition, results of operations, liquidity and prospects remain uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect Heartland’s net income and the value of its assets and liabilities, reduce the availability of funding to Heartland, lead to a tightening of credit and increase stock price volatility. Some economists and investment banks also predict that a recession or depression may result from the continued spread of COVID-19 and the economic consequences.
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.