German American Bancorp, Inc. (Nasdaq: GABC) (“German American”)
and Citizens Union Bancorp of Shelbyville, Inc. (“CUB”) announced
today that they have entered into a definitive agreement to merge
CUB into German American. Upon completion of the transaction, CUB’s
subsidiary bank, Citizens Union Bank of Shelbyville, Inc., will be
merged into German American’s subsidiary bank, German American
Bank.
Under terms of the definitive agreement, CUB
common shareholders will receive a fixed exchange ratio of 0.7739
shares of German American common stock for each share of CUB in a
tax-free exchange, and a cash payment of $13.44 per CUB share.
Based on the number of CUB common shares expected to be outstanding
at closing, German American would issue approximately 2.9 million
shares of its common stock, and pay approximately $49.8 million
cash, for all of the issued and outstanding common shares of CUB.
German American has also agreed, upon completion of the merger, to
make a cash payment in cancellation of CUB’s unexercised stock
options, which payment is currently estimated to total
approximately $0.9 million, if none of the outstanding options were
to be exercised before closing.
Based upon the $35.99 per share volume-weighted
average price of German American’s common shares over the 10-day
trading period ended September 17, 2021, the transaction has an
aggregate indicated value of approximately $154.0 million, with the
total merger consideration being split between stock and cash on an
approximate 67:33 basis. Upon consummation of the transaction,
German American and CUB will have combined assets of approximately
$6.4 billion, based upon June 30, 2021 financials. Giving effect to
the merger today, the combined company would have 83 banking
offices in 19 counties in Indiana and 15 counties in Kentucky.
Mark A. Schroeder, Chairman and CEO of German
American, stated, “This merger with Citizens Union represents
another important, strategic opportunity for German American, and
enhances our presence in the vibrant Louisville, Kentucky
metropolitan market area. Our combined operations in the broader
Louisville market area places us in a top 10 market share position
in the largest metropolitan market area in the Commonwealth of
Kentucky. CUB has built a solid community banking franchise in each
of the Kentucky markets they serve giving German American an
opportunity to provide our extensive offerings of banking,
insurance and investment products and services to CUB’s current and
prospective clients. We are excited to welcome the Citizens Union
customers, employees, communities and shareholders to the German
American family.”
Schroeder continued, “We expect that this
strategic transaction will be materially accretive to German
American’s earnings per share during the twelve months following
completion of the transaction, and will have a relatively quick
tangible book value earn back period of less than three years.
German American’s pro forma capital ratios will continue to
significantly exceed regulatory well-capitalized levels, enabling
us to continue to take advantage of future growth opportunities
throughout our markets in Kentucky, as well as within and adjacent
to our existing Southern Indiana market area.”
David M. Bowling, Chief Executive Officer of
CUB, stated, “This strategic partnership with German American, one
of the best performing community banking organizations in the
nation, will enable us to deepen and broaden the financial services
offerings we provide in all our markets. Strategically and
culturally, we are exceptionally well aligned with German
American’s commitment to their community banking business model
centered on delivering exceptional customer service and on a
willingness to invest in the local communities they serve. German
American’s reputation, financial strength and operational
capabilities will provide tremendous value to our customers,
employees, communities and shareholders.”
The transaction is expected to close in the
first quarter of 2022. Completion of the transaction is subject to
approval by regulatory authorities and by holders of a majority of
the issued and outstanding common shares of CUB, as well as certain
other closing conditions. In connection with the definitive
agreement, German American entered into a voting agreement with
each of the members of the CUB board of directors and with certain
other CUB shareholders, who collectively hold approximately 60% of
the outstanding shares of CUB common stock. Subject to the terms
and conditions of the voting agreement, the shareholders who are
parties to the agreement have agreed to vote their shares in favor
of the transactions contemplated by the definitive agreement.
Piper Sandler & Co. served as financial
advisor on the transaction to German American and Dentons Bingham
Greenebaum LLP served as legal counsel.
ProBank Austin served as financial advisor on
the transaction to CUB and Frost Brown Todd LLC served as legal
advisor.
Additional Information
Communications in this press release do not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any proxy vote or approval. The
proposed merger will be submitted to the CUB shareholders for their
consideration. In connection with the proposed merger, German
American will file a Registration Statement on Form S-4 with the
Securities and Exchange Commission (“SEC”) that will include a
proxy statement for CUB and a prospectus for German American and
other relevant documents concerning the proposed merger. INVESTORS
ARE URGED TO READ THE REGISTRATION STATEMENT AND THE CORRESPONDING
PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT
BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS TO THOSE
DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. You will be
able to obtain a copy of the proxy statement/prospectus once filed,
as well as other filings containing information about German
American, without charge, at the SEC’s website (http://www.sec.gov)
or by accessing German American’s website
(http://www.germanamerican.com) under the tab “Investor Relations”
and then under the heading “Financial Information”. Copies of the
proxy statement/prospectus and the filings with the SEC that will
be incorporated by reference in the proxy statement/prospectus can
also be obtained, without charge, by directing a request to Terri
A. Eckerle, Shareholder Relations, German American Bancorp, Inc.,
711 Main Street, Box 810, Jasper, Indiana 47546, telephone
812-482-1314 or to David M. Bowling, Chief Executive Officer,
Citizens Union Bancorp of Shelbyville, Inc., 1854 Midland Trail,
Shelbyville, Kentucky 40065, telephone 866-633-4450.
German American and CUB and certain of their
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the shareholders of CUB in
connection with the proposed merger. Information about the
directors and executive officers of German American is set forth in
the proxy statement for German American’s 2021 annual meeting of
shareholders, as filed with the SEC on Schedule 14A on March 30,
2021, which information has been updated by German American from
time to time in subsequent filings with the SEC. Information about
the directors and executive officers of CUB will be set forth in
the proxy statement/prospectus relating to the proposed merger.
Additional information about the interests of those participants
and other persons who may be deemed participants in the transaction
may also be obtained by reading the proxy statement/prospectus
relating to the proposed merger when it becomes available. Free
copies of this document may be obtained as described above.
Forward-Looking Statements
This press release contains forward-looking
statements made pursuant to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements can often, but not always, be identified
by the use of words like “believe”, “continue”, “pattern”,
“estimate”, “project”, “intend”, “anticipate”, “expect” and similar
expressions or future or conditional verbs such as “will”, would”,
“should”, “could”, “might”, “can”, “may”, or similar expressions.
These forward-looking statements include, but are not limited to,
statements relating to the expected timing and benefits of the
proposed merger (the “Merger”) between German American and CUB,
including future financial and operating results, cost savings,
enhanced revenues, and accretion/dilution to reported earnings that
may be realized from the Merger, as well as other statements of
expectations regarding the Merger, and other statements of German
American’s goals, intentions and expectations; statements regarding
German American’s business plan and growth strategies; statements
regarding the asset quality of German American’s loan and
investment portfolios; and estimates of German American’s risks and
future costs and benefits, whether with respect to the Merger or
otherwise.
These forward-looking statements are subject to
significant risks, assumptions and uncertainties that may cause
results to differ materially from those set forth in
forward-looking statements, including, among other things: the risk
that the businesses of German American and CUB will not be
integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; expected revenue synergies
and cost savings from the Merger may not be fully realized or
realized within the expected time frame; revenues following the
Merger may be lower than expected; customer and employee
relationships and business operations may be disrupted by the
Merger; the ability to obtain required regulatory approvals or the
approval of CUB’s shareholders, and the ability to complete the
Merger on the expected timeframe; the costs and effects of
litigation and the possible unexpected or adverse outcomes of such
litigation; the ability of German American to complete integration
and attract new customers; possible changes in economic and
business conditions; the severity and duration of the COVID-19
pandemic and its impact on general economic and financial market
conditions and our business, results of operations and financial
condition; the existence or exacerbation of general geopolitical
instability and uncertainty; possible changes in monetary and
fiscal policies, and laws and regulations; the effects of easing
restrictions on participants in the financial services industry;
the cost and other effects of legal and administrative cases;
possible changes in the creditworthiness of customers and the
possible impairment of collectability of loans; fluctuations in
market rates of interest; competitive factors in the banking
industry; changes in the banking legislation or regulatory
requirements of federal and state agencies applicable to bank
holding companies and banks like German American’s affiliate bank;
continued availability of earnings and excess capital sufficient
for the lawful and prudent declaration of dividends; changes in
market, economic, operational, liquidity, credit and interest rate
risks associated with German American’s business; and other risks
and factors identified in German American’s filings with the
Securities and Exchange Commission. Neither German American nor CUB
undertakes any obligation to update any forward-looking statement,
whether written or oral, relating to the matters discussed in this
press release. In addition, German American’s and CUB’s past
results of operations do not necessarily indicate either of their
anticipated future results, whether the Merger is effectuated or
not.
About German American
German American Bancorp, Inc. is a Nasdaq-traded
(symbol: GABC) financial holding company based in Jasper, Indiana.
German American, through its banking subsidiary German American
Bank, operates 68 banking offices in 19 contiguous southern Indiana
counties and eight counties in Kentucky. The Company also owns an
investment brokerage subsidiary (German American Investment
Services, Inc.) and a full line property and casualty insurance
agency (German American Insurance, Inc.). At June 30, 2021, German
American reported total assets of approximately $5.3 billion, total
loans (net of allowance) of approximately $3.0 billion, and total
deposits of approximately $4.4 billion.
About CUB
Citizens Union Bancorp of Shelbyville, Inc. is a
bank holding company headquartered in Shelbyville, Kentucky. CUB
has branch offices located in Shelby, Jefferson, Spencer, Bullitt,
Oldham, Owen, Gallatin and Hardin counties in Kentucky. At June 30,
2021, CUB reported total assets of approximately $1.1 billion,
total loans (net of allowance) of approximately $707.5 million, and
total deposits of approximately $889.2 million.
For additional information, contact:Mark
A. Schroeder, Chairman and Chief Executive
OfficerD. Neil Dauby, President and Chief
Operating OfficerBradley M. Rust, Senior Executive
Vice President and Chief Financial Officer(812) 482-1314
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