Business Context and Reporting Period
Company: Citizens Community Bancorp, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 20, 2018
Reporting Period: Specific event date (June 20, 2018)
This filing announces two material events: the entry into a definitive agreement to acquire United Bank and a concurrent private placement of preferred stock to fund the transaction.
Key Financial Metrics and Transaction Details
- Acquisition Cost: Approximately $50.7 million in cash to acquire 100% of United Bank's common stock (subject to adjustment).
- Capital Raise (PIPE): Sale of 500,000 shares of 8.00% Series A Mandatorily Convertible Preferred Stock.
- Offer Price: $130 per share of Preferred Stock.
- Gross Proceeds: $65 million.
- Dividend Rate: 8% per annum (non-cumulative), payable semiannually in arrears commencing December 31, 2018, if not converted prior to that date.
- Conversion Terms: Each share of Preferred Stock converts into 10 shares of Common Stock following stockholder approval.
- Liquidation Preference: $130 per share of Preferred Stock.
Material Changes and Strategic Actions
The Company has entered into a Stock Purchase Agreement to acquire United Bank, a Wisconsin-chartered bank. Upon closing, United Bank will become a wholly-owned subsidiary and will merge into Citizens Community Federal, N.A. (CCF Bank). This represents a significant expansion of the Company's footprint and asset base. The transaction is subject to customary closing conditions, including regulatory approvals and the absence of a material adverse effect.
Guidance, Outlook, Risks, and Contingencies
- Regulatory Conditions: Closing is contingent upon receipt of all required regulatory approvals and the expiration of statutory waiting periods.
- Stockholder Approval: A special meeting of stockholders is required to approve the issuance of Common Stock into which the Series A Preferred Stock will convert.
- Termination Rights: The agreement includes termination rights if regulatory approvals are denied, if a material breach is not cured within 30 days, or if the transaction does not close by the 12-month anniversary (extendable by six months).
- Risk Factors: Management highlights risks including integration difficulties, failure to realize expected benefits, regulatory delays, interest rate risk, and the potential for the transaction to negatively impact stock price if not completed.
- Dividend Contingency: If the Preferred Stock is converted to Common Stock on or before December 31, 2018, no dividends will be payable on the Preferred Stock.
Investor Verification Checklist
- Verify the status of regulatory approvals required for the United Bank acquisition.
- Confirm the date and outcome of the special stockholder meeting required to approve the conversion of Series A Preferred Stock.
- Review the full text of the Stock Purchase Agreement (Exhibit 2.1) for specific adjustment mechanisms to the $50.7 million purchase price.
- Assess the dilution impact of the mandatory conversion of 500,000 Preferred shares into 5,000,000 Common shares.
- Monitor the Company's ability to integrate United Bank's operations and realize projected cost savings.