ALTABANCORP The following discussion is intended to provide a more comprehensive review of the Company's operating results and financial condition than can be obtained from reading the Unaudited Consolidated Financial Statements alone. The discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included in "Part I. Item 1. Financial Statements."
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain certain forward-looking
statements within the meaning of Section 27A the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). These forward-looking statements
reflect the Company's current views and are not historical facts. These
statements can generally be identified by use of phrases such as "believe,"
"expect," "will," "seek," "should," "anticipate," "estimate," "intend," "plan,"
"target," "project," "commit" or other words of similar import. Similarly,
statements that describe the Company's future financial condition, results of
operations, objectives, strategies, plans, goals or future performance and
business are also forward-looking statements. Statements that project future
financial conditions, results of operations, and shareholder value are not
guarantees of performance and many of the factors that will determine these
results and values are beyond the Company's ability to control or predict. For
those statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements involve known and unknown risks,
uncertainties and other factors, including, but not limited to, those described
in the "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections in this report and the Company's
Annual Report on Form 10-K for the year ended
• the magnitude and duration of the COVID-19 pandemic and its impact on
the global economy and financial market conditions and the business,
results of operations, and financial condition of the Company and
GBCI;
• changes in general economic conditions, either nationally or in the
Company's local market;
• inflation, changes in interest rates, securities market volatility and
monetary fluctuations;
• increases in competitive pressures among financial institutions and
businesses offering similar products and services;
• higher defaults on the Company's loan portfolio than expected;
• risks associated with the Company's growth and expansion strategy and
related costs;
• ability to raise liquidity, either with deposits or other funding
sources, to support growth in assets;
• risks associated with the integration of current and future acquisitions;
• increased lending risks associated with high concentration of real
estate loans;
• ability to successfully grow business in Utah and neighboring states;
• legislative or regulatory changes or changes in accounting principles,
policies or guidelines;
• risks associated with cyber security;
• technological changes;
• regulatory or judicial proceedings;
• changes in general economic, political, or industry conditions;
• uncertainty in U.S. fiscal and monetary policy, including the interest
rate policies of the Federal Reserve Board ;
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• volatility and disruptions in global capital and credit markets; (v)
movements in interest rates; (vi) reform of LIBOR;
• impacts of existing and increasing governmental regulation and related
costs and liabilities;
• the potential existence of significant deficiencies or material
weakness in the Company's internal control over financial reporting;
• increased competition in the markets of the Company and GBCI;
• the success, impact, and timing of business strategies of the Company
and GBCI;
• the nature, extent, timing, and results of governmental actions,
examinations, reviews, reforms, regulations, and interpretations;
• the failure to obtain necessary regulatory approvals (and the risk
that such approvals may result in the imposition of conditions that
could adversely affect the combined company following the proposed
Holding Company Merger or the expected benefits of the proposed
Holding Company Merger);
• the failure to obtain shareholder approvals or to satisfy any of the
other conditions to the proposed Holding Company Merger on a timely
basis or at all or other delays in completing the proposed Holding
Company Merger;
• the occurrence of any event, change or other circumstances that could
give rise to the right of one or both of the parties to terminate the
Merger Agreement;
• the outcome of any legal proceedings that may be instituted against
the Company or GBCI;
• the possibility that the proposed Holding Company Merger may be less
accretive than expected, or may be dilutive, and the anticipated
benefits of the proposed Holding Company Merger are not realized when
expected or at all, including as a result of the impact of, or
problems arising from, the integration of the two companies or as a
result of the strength of the economy and competitive factors in the
areas where the Company and GBCI do business;
• the possibility that the proposed Holding Company Merger may be more
expensive to complete than anticipated, including as a result of
unexpected factors or events;
• diversion of management's attention from ongoing business operations
and opportunities as a result of the proposed Holding Company Merger;
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the proposed Holding Company Merger;
• the dilution caused by GBCI's issuance of additional shares of its
capital stock in connection with the proposed Holding Company Merger;
• the existence of unforeseen liabilities of the Company or GBCI; and
(xxii) other factors that may affect the future results of the Company
and GBCI; and
• other factors and the risks that are described from time to time in
the Company's and GBCI's respective reports filed with the SEC .
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed.
Please take into account that forward-looking statements speak only as of the date of this Form 10-Q. The Company does not undertake any obligation to release publicly revisions to such forward-looking statements to reflect events or circumstances after the date of this Form 10-Q, except as required by law.
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Overview
ALTA is a
The Bank is the largest community bank in
Results of operations are largely dependent on net interest income. Net interest income is the difference between interest income earned on interest earning assets, which are comprised of loans, investment securities and short-term investments and the interest paid on interest bearing liabilities, which are primarily deposits, and, to a lesser extent, other borrowings. Management strives to match the re-pricing characteristics of the interest earning assets and interest bearing liabilities to protect net interest income from changes in market interest rates and changes in the shape of the yield curve.
The Company measures performance by calculating net interest margin, return on average assets, and return on average equity. Net interest margin is calculated by dividing net interest income, which is the difference between interest income on interest earning assets and interest expense on interest bearing liabilities, by average interest earning assets. Net interest income is the Company's largest source of revenue. Interest rate fluctuations, as well as changes in the amount and type of earning assets and liabilities, combine to affect net interest income. The Company also measures performance by its efficiency ratio, which is calculated by dividing non-interest expense by the sum of net interest income and non-interest income.
Holding Company Merger
On
Consummation of the Holding Company Merger is subject to the receipt of required regulatory approvals, and certain other customary conditions of closing, including, among others (a) approval of the Merger Agreement and the Holding Company Merger by the Company's shareholders, (b) the absence of any actual or threatened action or proceeding to restrain, prohibit or invalidate the Holding Company Merger, (c) subject to certain exceptions, the accuracy of the representations and warranties of the Company, in the case of GBCI, and GBCI, in the case of the Company, (d) performance in all material respects by the Company, in the case of GBCI, and GBCI, in the case of the Company, of its respective obligations under the Merger Agreement, (e) the absence of an event that has had or would reasonably be expected to have a Material Adverse Effect (as defined in the Merger Agreement), on the Company, in the case of GBCI, and GBCI, in the case of the Company, (f) in the case of GBCI's obligation to complete the Holding Company Merger, receipt by GBCI of an opinion from its counsel to the effect that the Holding Company Merger will be a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and (g) in the case of the Company's obligation to complete the Holding Company Merger, the receipt of a similar opinion from its counsel.
The Company expects to complete the Holding Company Merger in the fourth quarter of 2021. However, the transaction could close earlier, following and subject to the satisfaction or waiver of customary closing conditions, including, among others, receipt of regulatory approvals and approval of the Company's shareholders, in each case as further described in the Merger Agreement.
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COVID-19 Pandemic
On
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