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MidWestOne to acquire ATBancorp in $170.3M cash-and-stock deal

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MidWestOne to acquire ATBancorp in $170.3M cash-and-stock deal

Iowa City, Iowa-based MidWestOne Financial Group Inc. is acquiring Dubuque, Iowa-based ATBancorp in a cash-and-stock deal valued at approximately $170.3 million, based on the buyer's Aug. 20 closing price of $32.92 per share.

The aggregate deal consideration will consist of stock consideration at an exchange ratio of 117.5500x and $34.8 million in cash.

SNL valuations for bank and thrift targets in the Midwest region between Aug. 22, 2017, and Aug. 22, 2018, averaged 160.35% of book, 167.12% of tangible book and had a median of 20.57x last-12-months earnings, on an aggregate basis.

MidWestOne expects the deal to be more than 15% accretive to its earnings per share in 2019 and 2020, excluding one-time transaction costs. The deal is expected to close in the first quarter of 2019.

On an aggregate basis, SNL calculates that the deal value is 150.4% of book, 155.8% of tangible book and 6.3x earnings. It is also 12.84% of assets, 16.03% of deposits and the tangible book premium-to-core deposits ratio is 6.83%.

Upon closing, the combined company will have about $4.7 billion in assets and more than 60 branches throughout Iowa, Minnesota, Wisconsin, Florida and Colorado.

MidWestOne will also add two directors to its board. There are no planned changes to the company's current executive management team.

As of June 30, MidWestOne, the parent company of MidWestOne Bank, had approximately $3.3 billion in assets, 24 branches in Iowa, 13 branches in Minnesota, four branches in Wisconsin, two branches in Florida and one branch in Colorado.

Meanwhile, ATBancorp, the parent company of American Trust & Savings Bank, had approximately $1.4 billion in assets, $1.1 billion in deposits and $1.1 billion in loans. It has 12 branches in Iowa and five branches in Southwest Wisconsin. It also has more than $1.1 billion in trust assets under administration, which will be acquired pursuant to the deal.

MidWestOne will enter Dubuque County, Iowa, with 10 branches to be ranked second with a 29.5% share of approximately $2.85 billion in total market deposits. It will enter Grant County, Wis., with five branches to be ranked fifth with a 10.57% share of approximately $1.20 billion in total market deposits. It will enter Polk County, Iowa, with one branch for a share of approximately $14.92 billion in total market deposits, and it will enter Dallas County, Iowa, with one branch to be ranked 10th with a 3.53% share of approximately $1.26 billion in total market deposits.

The agreement contains termination provisions, including a termination fee of $7.6 million, payable by ATBancorp to MidWestOne under certain conditions.

Piper Jaffray & Co. served as financial adviser to MidWestOne, while Shapiro Bieging Barber Otteson LLP served as its legal adviser. Sandler O'Neill & Partners LP served as financial adviser to ATBancorp, while Barack Ferrazzano Kirschbaum & Nagelberg LLP served as its legal adviser.

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