Heartland announces proposed merger of Heartland Bank & TSB

• Heartland to merge with TSB creating a regional challenger bank
• Expected to increase competition and choice for New Zealanders
• Anticipated material synergies and earnings accretion for Heartland shareholders

Heartland Group Holdings Limited (Heartland) has announced a proposed merger with TSB Bank Limited (TSB) to create a New Zealand challenger bank of scale with a regional focus. The merger, which is expected to complete in December 2026, will combine Heartland Bank's specialist product expertise with TSB's cost-effective funding platform and transactional banking capabilities. The new entity, TSB Heartland Bank, will be a full-service capable bank differentiated by its specialist product offerings, with a lower risk-weighted product portfolio. Material synergies are expected to be progressively realized over a three-year period post-completion, delivering an ongoing ~$34 million p.a. benefit to profit before tax. Heartland will acquire all TSB shares on issue for an aggregate consideration of $620 million, representing 76% of TSB's book value. The merger is subject to satisfaction of various conditions, including community consultation, Heartland shareholder approval, and regulatory approvals.

Expected material normalized EPS accretion in excess of 20% in the first year post-completion

The merger is expected to create a New Zealand challenger bank of scale with a regional focus, increasing banking competition and choice for New Zealanders. It will also enhance Heartland's ability to serve customers throughout their financial lifecycle and deliver improved financial returns.