LONDON, UK / ACCESSWIRE / January 16, 2018 / Active-Investors.com has just released a free research report on Heritage Commerce Corp. (NASDAQ: HTBK). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=HTBK as the Company's latest news hit the wire. On January 11, 2018, the Company, which is the parent Company of Heritage Bank of Commerce, and United American Bank jointly declared the execution of a definitive agreement and plan of merger and reorganization, wherein United American Bank will merge into Heritage Bank of Commerce for approximately $44.2 million. Register today and get access to over 1000 Free Research Reports by joining our site below:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Heritage Commerce most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:
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Strategic Rationale of the Merger
For Heritage Commerce
United American Bank is a full-service California state-chartered commercial bank with branches in San Mateo, Redwood City, and Half Moon Bay, California. The Bank mainly serves businesses and individuals in the county of San Mateo in Northern California. United American Bank had approximately $336.4 million in total assets as on September 30, 2017.
- United American Bank is a good fit for Heritage Commerce, as both their values are aligned with fostering client relationships. Both Banks have complementary business banking models built around strong deposit bases.
- The merger of United American Bank will create growth opportunities from broader product offerings and higher lending limits. It will extend Heritage Commerce's physical presence in San Mateo County and provide improved access to San Francisco County.
- After signing the Tri-Valley Bank agreement at the end of December 2017, acquiring United American Bank was a natural progression for Heritage Commerce.
- Heritage Commerce expects the merger to be accretive to earnings in the first half of 2018, once the transaction costs have been assimilated.
For United American Bank
Heritage Commerce is a multi-community independent bank that offers a full range of commercial banking services to small- and medium-sized businesses and their owners and employees. It operates through 11 full service branch offices located in the counties of Santa Clara, Alameda, Contra Costa, and San Benito, which are in the southern and eastern regions of the general San Francisco Bay Area of California.
Therefore, the merger will create long-term value for United American Bank's shareholders by becoming a part of a larger banking franchise. Their customers will also benefit from a broader product offering, increased lending limits, and an expanded branch delivery system that stretches throughout the San Francisco Bay Area.
Financial Details of the Transaction
- Each shareholder of United American Bank will get 2.1644 shares of Heritage Commerce common stock for each share of United American Bank common stock and each common stock underlying the United American Bank Series D Preferred Stock and Series E Preferred Stock. Moreover, shareholders of the United American Bank Series A Preferred Stock and the Series B Preferred stock will get $1,000 per share in cash.
- This implies that the holders of United American Bank common stock and common stock equivalents will receive a total consideration of $44.2 million, or $33.87 for each of the United American Bank shares of common stock and common stock equivalents. Additionally, the holders of Series A Preferred Stock and Series B Preferred Stock of United American Bank will receive $9.1 million in cash. This value is based on Heritage Commerce's closing price of $15.65 per share, as on January 09, 2018, which was the last trading date before the transaction.
- The exchange ratio is fixed, but the aggregate and per share values will fluctuate between the date of the agreement and the date of completion of the merger.
Ownership Structure after the Merger
- The holders of United American Bank common shares, the Series D Preferred Stock and the Series E Preferred Stock will own about 6.6% of the issued and outstanding Heritage Commerce common stock, on a pro forma basis, post the Heritage Commerce's merger with Tri-Valley Bank and United American Bank.
- ATBancorp, an Iowa-based bank holding Company, wholly-owns two separate bank subsidiaries, and about 83% of United American Bank's common stock and all of its preferred stock. It must be noted that ATBancorp is a party to the agreement and has already agreed to vote all of its shares in favor of the transaction. On a pro forma basis, ATBancorp will own about 5.4% of the issued and outstanding common stock of Heritage Commerce following its merger with Tri-Valley and United American Bank.
Transaction Closing Conditions
- The merger is expected to close in the second quarter of 2018. As of now, the Board of Directors of Heritage Commerce and United American Bank have approved the transaction but it is still subject to the approval of the shareholders of United American Bank and other conditions specified in the agreement. However, Heritage Commerce does not need to obtain its shareholders' approval.
- The transaction is subject to other customary closing conditions such as the approval of state and federal bank regulatory agencies. It also needs approval to be qualified as a tax-free reorganization for US federal income tax purposes, and United American Bank's common stock shareholders are not expected to recognize gain or loss to the extent they receive stock as consideration.
Stock Performance Snapshot
January 12, 2018 - At Friday's closing bell, Heritage Commerce's stock advanced 2.46%, ending the trading session at $16.65.
Volume traded for the day: 258.62 thousand shares, which was above the 3-month average volume of 132.18 thousand shares.
Stock performance in the last month – up 6.66%; previous three-month period – up 13.57%; past twelve-month period – up 16.03%; and year-to-date - up 8.68%
After last Friday's close, Heritage Commerce's market cap was at $627.04 million.
Price to Earnings (P/E) ratio was at 21.51.
The stock has a dividend yield of 2.40%.
The stock is part of the Financial sector, categorized under the Regional - Pacific Banks industry. This sector was up 0.7% at the end of the session.
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