Waving the White Flag at a Family-Owned Bank

By Paul Davis May 17, 2016, 2:09 p.m. EDT 2 Min Read

Estate planning spurred the decision to sell Home State Bancorp in Loveland, Colo.

Home State, a $874 million-asset family-owned bank, agreed in March to sell itself to Guaranty Bancorp in Denver. Home State's sale will end more than 45 years of ownership by the Devereaux family.

Four family members, including Harry Devereaux, Home State's president, own or control two-thirds of the company's shares, or a stake worth nearly $90 million based on the deal price.

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Serious discussions about selling the company began early last year as family members considered ways to monetize some of their holdings, based on documents filed in conjunction with the merger. The decision was a big change for the family; in 2010 they declared that Home State would "remain an independent locally owned bank."

Home State's investment bank contacted several institutions last September; five parties, including Guaranty, signed nondisclosure agreements and received confidential information.

Guaranty was one of four institutions to make an offer. Guaranty, which had long been interested in Home State due to the bank's presence in northern Colorado, initially offered to pay $135 million, with three-fourths of the consideration involving stock.

Home State's board decided to meet with Guaranty and another, unnamed institution, because they made the highest initial offers. Each bank was asked to provide its best offer; in early December Guaranty raised its offer to $140 million while the other institution held firm with its original amount.

As a result, Home State's board opted to negotiate exclusively with Guaranty, and a deal was reached on March 16. The acquisition is expected to close during the third quarter.

Home State, meanwhile, employed at least six professional firms at various stages of its sale process, the filing disclosed.

KPMG was Home State's investment bank; Lewis Roca Rothgerber Christie provided legal counsel. The company also hired Bent St. Vrain & Co. for financial advice and Sheshunoff for a fairness opinion. In addition, Fortner, Bayens, Levkulich & Garrison provided Home State with tax and accounting analysis, and an unnamed firm conducted reverse due diligence on Guaranty.

The filing did not disclose how much Home State paid for professional services; efforts to reach Harry Devereaux were unsuccessful.

Four Home State executives will join Guaranty. Devereaux, who is set to become president of Guaranty's northern Colorado market, will receive a $275,000 annual salary, based on his employment agreement.

Paul Davis