KBRA Comments on German American Bancorp, Inc.s Proposed Acquisition of Heartland BancCorp
Summary
NEW YORK--(BUSINESS WIRE)--Jasper, Indiana-based, German American BancCorp, Inc. (NASDAQ: GABC, or "German American") (KBRA senior unsecured debt rating: BBB+ / Stable Outlook) announced on July 29 that it had entered into a merger agreement to acquire Heartland BancCorp (OTCQX: HLAN or " Heartland), based in Whitehall, Ohio. The transaction, valued at $330.2 million (P/TBV: 2.02x), is an all-stock deal consideration and expected to close in 1Q25 pending regulatory approval. The combined company’s financial projections include strong profitability metrics following the close of the transaction, in part, due to the 30% cost-savings expected on HLANs expense base, with 75% of the savings recognized in 2025 and the remainder achieved in the year thereafter. With cost-savings fully realized, the combined institution is expected to generate an ROA of ~1.50% in 2025, though this estimate includes a respectable amount of accretion income given the interest rate marks on the securities and loan portfolios. Regarding credit quality, both institutions have had strong metrics for an extended period of time, with minimal NCO and NPA ratios for the past several years, which is a testament to disciplined underwriting and conservative management teams that have extensive knowledge of their operating markets.