UMB Financial Completes Merger with Heartland Financial USA

The acquisition expands UMB’s market presence, integrates banking operations, and enhances shareholder value.

February 04, 2025

A Major Banking Consolidation Deal Finalized

Kansas City-based UMB Financial Corporation has successfully completed its acquisition of Heartland Financial USA, Inc. (HTLF), finalizing a major regional banking consolidation. The transaction, first announced in April 2024, officially closed on January 31, 2025. UMB acquired all outstanding shares of HTLF in an all-stock transaction valued at approximately 24 million shares of UMB common stock.

The integration involved multiple steps, including the merger of a wholly owned UMB subsidiary with HTLF, followed by the consolidation of HTLF Bank into UMB Bank, National Association. The move is expected to enhance operational efficiencies, expand customer reach, and strengthen UMB’s financial position.

Financial and Stockholder Implications

Under the merger agreement, HTLF shareholders received 0.55 shares of UMB common stock for each share of HTLF common stock. Additionally, HTLF’s 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock was converted into an equivalent UMB-issued preferred stock. Depositary shares linked to HTLF preferred stock were also converted into UMB securities.

The total value of the deal underscores UMB’s strategic focus on long-term growth. The company anticipates enhanced shareholder value through increased market penetration, cost synergies, and financial stability. UMB’s issuance of new shares was registered with the SEC in July 2024, ensuring a smooth regulatory transition.

Operational Consolidation and Leadership Changes

As part of the merger, UMB expanded its board of directors to include five former HTLF board members, bringing the total to 16. These new directors have been assigned to key governance committees, reflecting the company’s commitment to effective corporate oversight.

Beyond governance, operational integration has been a key focus. HTLF Bank has been fully absorbed into UMB Bank, National Association, which continues as the surviving entity. This move positions the combined institution to offer an expanded portfolio of banking services, enhanced digital banking capabilities, and improved financial solutions for businesses and individuals.

Debt Assumption and Financial Obligations

UMB has assumed all of HTLF’s outstanding debt obligations, including a series of junior subordinated debt securities and trust-preferred securities amounting to hundreds of millions of dollars. Additionally, UMB is now responsible for HTLF’s $150 million fixed-to-floating rate subordinated notes due in 2031.

While these obligations are substantial, UMB has expressed confidence in its ability to manage them effectively, citing its increased scale and expected cost savings as key mitigating factors.

Stock Authorization and Corporate Changes

To facilitate the transaction, UMB amended its corporate charter, doubling its authorized common stock from 80 million to 160 million shares. This move provides greater flexibility for future corporate actions, including potential stock-based acquisitions.

Additionally, UMB filed a Certificate of Designation to establish the terms of its new Series A Preferred Stock, ensuring a seamless transition for former HTLF preferred shareholders. These corporate adjustments reinforce the company’s structured equity capital framework.

Regulatory and Market Impact

With the merger finalized, HTLF is no longer a publicly traded entity. UMB has notified Nasdaq of HTLF’s delisting and filed the necessary deregistration documents with the SEC. Trading in HTLF common and preferred shares officially ceased before market open on February 3, 2025.

The regulatory transition has proceeded smoothly, with UMB now benefiting from an expanded balance sheet, greater lending capacity, and a more diversified asset portfolio.

Strategic Growth and Forward-Looking Plans

Looking ahead, UMB plans to capitalize on the merger by expanding its customer base, enhancing banking technology, and improving lending capabilities. The company also expects to realize significant cost savings through operational efficiencies and branch consolidations.

Additionally, UMB is executing a forward sale agreement involving 3.22 million shares of its common stock, expected to generate approximately $231.8 million in net proceeds. These funds will provide additional capital for future growth initiatives.

Conclusion

UMB’s acquisition of HTLF marks a transformative moment in regional banking, creating a stronger and more competitive institution. With an expanded footprint, enhanced financial resources, and a clear strategic vision, UMB is well-positioned to drive long-term shareholder value. As integration continues, the company remains focused on maximizing synergies while delivering high-quality financial services to customers.