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First Business to Acquire Alterra Bank Parent, Will Expand Into Kansas City Market

May 27, 2014, 07:58 AM
Filed Under: Mergers & Acquisitions

First Business Financial Services, Inc. and Aslin Group, Inc. announced the signing of a definitive agreement for First Business to acquire Aslin Group, including Alterra Bank, Aslin Group's wholly owned subsidiary. The cash-and-stock transaction is valued at an estimated $30.1 million.

Together, First Business and Alterra have approximately $1.5 billion in assets. Alterra's competitive position, talented team, focus on commercial clients and complementary limited branch business model will expand the Wisconsin-based First Business' growth into the attractive Kansas City metropolitan market, where First Business already operates its national equipment finance business.

"We are thrilled to welcome the Alterra team, whose expertise in niche lending and underwriting, coupled with a limited branch funding model are a perfect match for First Business," said Corey Chambas, President and Chief Executive Officer of First Business. "Alterra's deep local experience, entrepreneurial approach and impressive track record of growth, including being the number one SBA lender in Kansas City for the past two years, reflect a franchise that complements and provides synergy to First Business in almost every way. We are excited to build on our profitable growth with this strategically and financially compelling acquisition, adding value for our shareholders and clients alike."

Alterra had $223 million in assets, including $182 million in loans, as well as $192 million in deposits, as of March 31, 2014. Like First Business, Alterra operates an entrepreneurial business banking franchise, providing commercial loans and lines of credit, commercial real estate loans and treasury management services to small- to middle-market businesses as well as offering private banking/private wealth management services to individuals. In addition, Alterra is the number one most active U.S. Small Business Administration lender in the Kansas City SBA district, providing First Business with immediate access to talent and platforms in a new area of lending that is highly complementary to its current focus. At the same time, Alterra Bank will be able to offer its commercial clients First Business' specialized product and service offerings, including equipment finance, trust and investment services, factoring and asset based lending.

"We are very excited to join First Business, whose outstanding capital strength, credit quality and proven track record of growth will provide Alterra with even greater resources and products to extend to businesses and individuals in Kansas City," said Pam Berneking, President and CEO of Alterra Bank. "Alterra and First Business share a unique entrepreneurial approach to business banking. Combined, our seasoned teams will be in an even stronger position to serve our local communities."

Upon transaction closing, it is anticipated that Alterra's brand, Overland Park and Leawood offices and Kansas state banking charter will be maintained, with Ms. Berneking joining First Business as President and CEO of Alterra Bank. The parties expect the Alterra Bank subsidiary's board, with a majority of local Kansas directors, to remain substantially intact.

"Alterra, like First Business, is built around talented local bankers and other professionals who have extensive experience at larger institutions. It was important for us to join forces with a team with upside capacity in terms of banking sophistication," Mr. Chambas added. "It is an exciting opportunity to find such a team in Kansas City, which mirrors our home Wisconsin market in many ways economically and demographically."

Under the terms of the Agreement, each outstanding share of common stock of Aslin Group, Inc. will be converted into the right to receive $14,435.59, which will be payable in $6,496.02 in cash and $7,939.57 in First Business common stock. The number of First Business common shares to be issued will be calculated based on First Business's 10 day volume weighted average stock price as of the market close of the third business day prior to the effective date of the transaction. However, the volume weighted average share price cannot exceed approximately $51 per share or fall below approximately $34 per share for purposes of the calculation.

"We are pleased with what the Aslin Group has achieved for its owners since purchasing the bank in 2010, rebranding it and empowering an exceptional team of bankers to build a business-focused bank utilizing the most advanced technology available," explained Mick Aslin, the Chairman of Alterra Bank and Chairman and CEO of Aslin Group. "We see Alterra's clients benefiting from the resources and capabilities that First Business brings to the table, while maintaining local Alterra Bank leadership and decision-making authority right here in Kansas City. With the structure of this transaction, we now look forward to participating in the future of First Business through our continuing ownership."

The boards of directors of both First Business and Alterra parent company Aslin Group unanimously approved the transaction. Transaction closing is anticipated by late 2014, subject to approvals from regulators, Aslin Group stockholders and other customary conditions.

First Business was advised by the investment banking firm of Keefe, Bruyette & Woods, Inc. as well as the law firm of Godfrey & Kahn, S.C. Alterra was advised by the investment banking firm of Macquarie Capital and the law firm of Stinson Leonard Street LLP.

First Business Financial Services is a $1.3 billion Wisconsin-based bank holding company that specializes in focused financial solutions for businesses, key executives and high net worth individuals through its operating companies. It is the second largest Wisconsin-based commercial bank holding company listed on NASDAQ or the New York Stock Exchange. Its companies include: First Business Bank–Madison; First Business Bank–Milwaukee; First Business Bank–Northeast; First Business Trust & Investments; First Business Equipment Finance, LLC; and First Business Capital Corp.

Leawood, Kansas-based Alterra Bank, a wholly owned subsidiary of Aslin Group, has offered commercial banking services in the Kansas City market since 2010, when a group of private investors led by Aslin Opportunity Fund BK, LP recapitalized the bank. Since its first full year of operation in 2011, Alterra has grown its assets at a compound annual rate of over 24% by providing credit to finance the growth of Kansas City-based businesses and organizations. The $223 million bank ranked as Kansas City's number one Small Business Administration lender in 2012 and 2013.

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