Heartland reworks AIM Bancshares deal to reflect Fed concerns

Heartland Financial USA in Dubuque, Iowa, has amended its merger agreement with AIM Bancshares in Levelland, Texas, to address concerns raised by the Federal Reserve.

The $15.6 billion-asset Heartland said in a press release Monday that after discussions with the Fed the companies agreed “they could better serve the goals of the transaction and more easily address regulatory concerns if they adopted two sequential mergers.”

Heartland, which agreed to buy AIM in February, did not disclose the specific issues raised by the Fed as part of its review of the transaction.

Heartland said the first merger will involve the $1.9 billion-asset AIM merging into AimBank, which would then be absorbed by Heartland’s First Bank & Trust.

The companies also agreed to adjust the cash component of the merger consideration to reflect an increase in AIM’s adjusted tangible common equity. Heartland said AIM’s adjustable tangible common equity rose because of gains in its available-for-sale securities and held-to-maturity securities portfolios and an increase in retained earnings.

The new agreement also includes a holdback provision tied to certain litigation proceedings. Heartland disclosed in August that the closing of the deal would be delayed, in part because of pending litigation against AIM tied to the bankruptcy of one of its clients.

The deal is expected to close in the fourth quarter.

Heartland also disclosed that its banks plan to close six branches in early 2021. The move resulted in $1.2 million of fixed-asset write-downs.