The leader of Community Financial Group will defer most compensation tied to the Spokane, Wash., company’s pending sale to Glacier Bancorp in hopes of increasing the odds of its shareholders getting a special dividend.
The $27.5 billion-asset Glacier, which is based in Kalispell, Mont., agreed on Aug. 8 to buy the $754 million-asset parent of Wheatland Bank for $80.6 million in stock.
Glacier disclosed in a regulatory filing that Susan Horton, Wheatland’s president and CEO, deferred most of her payments to occur after closing. The goal is to reduce Community Financial’s transaction costs and maximize the possibility of a pre-closing dividend.
Under the terms of the merger agreement, Community Financial could pay shareholders a special dividend if its capital exceeds $49.2 million at closing. Glacier said it is currently not modeling in such a dividend.
Horton, who will serve as president and CEO of Glacier’s Wheatland Bank division, will receive a $680,000 lump-sum payment at closing. She will receive a $500,000 base salary in 2024, with increases set for the next two years. She is eligible for $235,000 of incentive bonuses to be paid from 2024 to 2026 if she stays with Glacier.
Glacier agreed to pay Horton a roughly $1.1 million retention bonus in 2024. In exchange for agreeing to three-year noncompete and nonsolication covenants, she will receive $1.8 million, payable in $300,000 installments twice a year. She is also eligible for restricted stock awards.
The deal, expected to close in the fourth quarter, valued Community Financial at 161% of its tangible book value.
“Wheatland’s footprint complements our current presence in eastern Washington, a market which has been experiencing tremendous growth,” banks,” Randy Chesler, Glacier’s president and CEO, said in a press release announcing the acquisition.
The deal is expected to be 3.4% accretive to Glacier’s 2024 earnings per share. It should take less than a year for Glacier to earn back any dilution to its tangible book value.
Glacier plans to cut about a fifth of Community Financial’s annual operating expenses. It expects to incur $7.3 million of merger-related expenses.