QCR Holdings has announced the signing of a definitive agreement to acquire Community State Bank (CSB), headquartered in Ankeny, Iowa, from Van Diest Investment Company.

CSB is an Iowa-chartered bank that operates ten banking locations throughout the Des Moines metropolitan area. With a population increase of 6.5% in 2015, Ankeny, Iowa is ranked the third fastest growing city in the U.S., according to the US Census Bureau.

The Des Moines Metropolitan Statistical Area (MSA) is ranked 4th in the Top 25 MSAs in Iowa and Illinois by deposits. The Des Moines MSA features a strong economic climate that is home to significant insurance, health care, professional, information technology and manufacturing businesses.

Since its formation in 1902, CSB has served its communities with exceptional customer service and comprehensive financial solutions, including banking, investments, insurance and mortgage services. As of March 31, 2016, CSB had $595m in assets, $421m in loans and $482m in deposits.

QCR Holdings president and chief executive officer Douglas M. Hultquist stated: "We are extremely honored to welcome the clients and employees of CSB to the QCR Holdings family. CSB and QCR Holdings were built based upon their communities’ needs for a bank that could deliver local, customized financial products and solutions.

"This transaction provides the opportunity for QCR Holdings to expand our footprint in Iowa by partnering with a proven organization that has over a one-hundred year history of providing premier customer service."

QCR Holdings chief operating officer and chief financial officer Todd A. Gipple said: "We believe CSB is an excellent fit for our locally-focused, community banking model. We plan to operate CSB as a separate bank charter and maintain its local focus and decision-making.

"As one of our key strategies to drive shareholder value, QCR Holdings seeks to participate as an acquirer to further boost ROAA, to improve our efficiency ratio and to increase earnings per share. We believe CSB’s strong financial position coupled with its deeply rooted community ties and responsive local decision-making autonomy will add significantly to the value and growth of our Company."

Van Diest Investment Company chairman, president and chief executive officer Robert Van Diest said: "CSB and QCR Holdings share a similar culture as well as a shared vision of community banking, with an emphasis on going the extra mile for the customer and striving to exceed the customer’s needs with every interaction."

CSB president and chief executive officer Ronald M. Nagel said: "The opportunity for CSB to team up with an organization the quality of QCR Holdings doesn’t happen often and fits well with our goals of extending our long commitment of service to customers as a true community banking organization.

"QCR Holdings has the size and scale that will allow CSB to continue growing and meeting the challenges of the complex banking environment we face today. This is clearly a win for the employees and the customers. Frankly, the community will simply get more of the same benefits CSB strives to deliver through its ‘Redefining Simple’ principles."

Raymond James & Associates, Inc. served as financial advisor to QCR Holdings on the acquisition and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal counsel. Belin McCormick, P.C. served as legal counsel for Van Diest Investment Company.

Terms of the Transaction

In the acquisition, QCR Holdings will acquire from Van Diest Investment Company 100% of the outstanding common stock of CSB for cash consideration of $80m. The transaction is subject to regulatory approval by banking regulators and certain customary closing conditions. The transaction is expected to close in the fall of 2016.
Common Stock Offering

In connection with the acquisition, QCR Holdings announced today that it sold 1,215,000 shares of its common stock at a price of $24.75 per share, for approximate gross proceeds of $30m, before deducting anticipated expenses. The shares were offered to institutional investors in a registered direct offering conducted without an underwriter or placement agent. The offering closed on May 23, 2016.

QCR Holdings plans to use the net proceeds of the offering to help finance the purchase price for the pending acquisition of CSB. The securities were offered pursuant to a shelf registration statement (File No. 333-206622), which was declared effective by the United States Securities and Exchange Commission (the SEC) on October 5, 2015. A prospectus supplement relating to the registered direct offering has been filed by QCR Holdings with the SEC.