QCR Holdings, Inc. (NASDAQ:QCRH) today announced the signing of
definitive agreements to acquire Bates Financial Advisors, Inc.,
Bates Financial Services, Inc., Bates Securities, Inc., and Bates
Financial Group, Inc. (the “Bates Companies”). Established in
1984 by George E. Bates, the Bates Companies are headquartered in
Rockford, Illinois. The acquisition and subsequent merger of
the Bates Companies into Rockford Bank & Trust (“RBT”) will
enhance the wealth management services of RBT, a wholly owned bank
subsidiary of QCRH.
With assets under management of approximately $700 million as of
December 31, 2017, the Bates Companies is one of the longest
tenured financial planning firms in the Rockford area with veteran
and experienced leadership. The synergies between the Bates
Companies’ and RBT’s approach to client service and community
involvement are key components in this in-market
acquisition.
“QCR Holdings believes the Bates Companies acquisition will
provide RBT clients with additional financial services options
while growing RBT’s client base,” commented Douglas M. Hultquist,
President and Chief Executive Officer, “and partnering with a
legacy financial advisor such as the Bates Companies is a good
strategic fit. The values of both organizations focus on
delivering exceptional, local client service.”
Todd A. Gipple, Chief Operating Officer and Chief Financial
Officer of QCR Holdings remarked, “We are pleased to have the
opportunity to partner with the Bates Companies to expand our
services. As one of our key strategies to drive shareholder
value, QCR Holdings seeks to participate as an acquirer to further
boost ROA and increase earnings per share. We believe
acquiring the Bates Companies will add to the value and growth of
our Company.”
George E. Bates, President of the Bates Companies said, “We are
very excited to become part of the Rockford Bank & Trust family
and continue our tradition of providing customized solutions to our
clients to meet their financial goals through disciplined financial
planning and investment management.” Mr. Bates will continue
to serve in his role of President of the Bates Companies and work
with his clients.
Piper Jaffray & Co. served as financial advisor to QCR
Holdings, Inc. and Barack Ferrazzano Kirschbaum & Nagelberg LLP
served as legal counsel. DeWitt Ross & Stevens S.C.
served as legal counsel to the Bates Companies.
Terms of the Transaction
In the acquisition, QCR Holdings, Inc. will acquire 100% of the
Bates Companies’ outstanding common stock for an aggregate
consideration of $3 million cash and up to $3 million of QCR
Holdings, Inc. common stock. In a private placement exempt
from registration with the Securities and Exchange Commission, QCRH
expects to issue upon closing of the transaction approximately
21,528 common shares or $1 million of QCRH stock. Assuming
all future performance based contingent consideration is realized
total stock consideration can reach $3 million, which would result
in QCRH expecting to issue approximately 64,583 common shares based
on its current stock price. In the first full year after the
merger, 2019, the transaction is expected to be 0.3% accretive to
EPS excluding the impact of future consideration and the internal
rate of return is expected to be greater than 15%.
The transaction is subject to regulatory approval and certain
closing conditions. The transaction is expected to close late
in the second quarter or early third quarter of 2018.
About Us
QCR Holdings, Inc., headquartered in Moline, Illinois, is a
relationship-driven, multi-bank holding company, which serves the
Quad City, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and
Rockford communities through its wholly owned subsidiary
banks. Quad City Bank & Trust Company, which is based in
Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids
Bank & Trust Company, which is based in Cedar Rapids, Iowa, and
commenced operations in 2001, Community State Bank, which is based
in Ankeny, Iowa and was acquired by the Company in 2016, and
Rockford Bank & Trust Company, which is based in Rockford,
Illinois, and commenced operations in 2005, provide full-service
commercial and consumer banking and trust and wealth management
services. Quad City Bank & Trust Company also provides
correspondent banking services. In addition, Quad City Bank
& Trust Company engages in commercial leasing through its
wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee,
Wisconsin. Additionally, the Company serves the
Waterloo/Cedar Falls, Iowa community through Community Bank &
Trust, a division of Cedar Rapids Bank & Trust Company.
Special Note Concerning Forward-Looking
Statements This document may contain forward-looking
statements within the meaning of the federal securities laws with
respect to the financial condition, results of operations, plans,
objectives, future performance and business of QCR Holdings and the
Bates Companies. Forward-looking statements, which may
be based upon beliefs, expectations and assumptions of QCR
Holdings’ and the Bates Companies’ management and on information
currently available to management, are generally identifiable by
the use of words such as “believe,” “expect,” “anticipate,” “plan,”
“intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or
other similar expressions. Additionally, all statements
in this document, including forward-looking statements, speak only
as of the date they are made, and neither QCR Holdings nor the
Bates Companies undertakes any obligation to update any statement
in light of new information or future events. A number of factors,
many of which are beyond the ability of QCR Holdings and the Bates
Companies to control or predict, could cause actual results to
differ materially from those in any forward-looking
statements. These factors include, among others, the
following: (i) the possibility that any of the anticipated
benefits of the proposed transaction between QCR Holdings and the
Bates Companies will not be realized or will not be realized within
the expected time period; (ii) the risk that integration of
operations of the Bates Companies with those of QCR Holdings will
be materially delayed or will be more costly or difficult than
expected; (iii) the failure to satisfy other conditions to
completion of the proposed transaction, including receipt of
required regulatory and other approvals; (iv) the failure of
the proposed transaction to close for any other reason;
(v) the effect of the announcement of the transaction on
customer relationships and operating results; (vi) the
possibility that the transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events; (vii) the strength of the local, national and
international economy; (viii) changes in state and federal
laws, regulations and governmental policies concerning QCR
Holdings’ and the Bates Companies’ general business;
(ix) changes in interest rates and prepayment rates of QCR
Holdings’ assets; (x) increased competition in the financial
services sector and the inability to attract new customers;
(xi) changes in technology and the ability to develop and
maintain secure and reliable electronic systems; (xii) the
loss of key executives or employees; (xiii) changes in
consumer spending; (xiv) unexpected outcomes of existing or
new litigation involving QCR Holdings or the Bates Companies;
(xv) the economic impact of any future terrorist threats or
attacks; (xvi) the economic impact of exceptional weather
occurrences such as tornadoes, hurricanes, floods, and blizzards;
and (xvii) changes in accounting policies and practices. These
risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed
on such statements. Additional information concerning QCR Holdings
and its business, including additional factors that could
materially affect QCR Holdings’ financial results, are included in
QCR Holdings’ filings with the Securities and Exchange
Commission.
Contact:Todd A. GippleExecutive Vice
PresidentChief Operating OfficerChief Financial Officer(309)
743-7745
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