Arizona FCU to acquire Horizon Community Bank for $91.4M in cash

Phoenix-based Arizona FCU will acquire substantially all of the assets and assume substantially all of the liabilities of Lake Havasu City, Ariz.-based Horizon Community Bank, a subsidiary of Horizon Bancorp Inc., for $91.4 million in cash, subject to adjustments.

The transaction is expected to be completed by the end of 2022.

After the purchase and assumption transaction, Horizon Bancorp and Horizon Community plan to wind down and dissolve. Horizon Bancorp expects its shareholders to be entitled to receive about $18.91 per share upon liquidation. This is subject to certain adjustments, based on the company's outstanding shares on a fully diluted basis as of Dec. 31, 2021, and after considering the anticipated satisfaction of certain obligations of Horizon Bancorp and Horizon Community excluded from the purchase and assumption transaction, including holding company debt and tax liabilities.

Arizona FCU, which is a $2.8 billion member-owned financial cooperative, also agreed to cover a portion of Horizon Community's expected federal income tax liability connected with the sale of its assets in the transaction.

Following the closing of the deal, the combined organization will have more than $3.3 billion in assets and serve over 155,000 members. Deposits of Arizona FCU will still be federally insured by the National Credit Union Administration.

Horizon Community currently operates six branches in Arizona: Fort Mohave, Kingman, Lake Havasu City, Mesa, Parker and Quartzsite. Arizona FCU is committed to keeping and operating each of the current branches of Horizon Community.

Horizon Community had $539.5 million in total assets, $259.9 million in total loans, $471.7 million in total deposits and $43.4 million in total equity as of Dec. 31, 2021, according to a news release.

At announcement, S&P Global Market Intelligence calculates the deal value to be 210.38% of common equity and of tangible common equity, 19.38% of deposits, 16.94% of assets and 15.44x earnings. The tangible book premium-to-core deposits ratio is 11.10%.

Based on Market Intelligence data, with the completion of the deal, Arizona FCU will enter La Paz County, Ariz., with two branches to be ranked second with a 23.32% share of approximately $431.32 million in total market deposits; will expand in Maricopa County, Ariz., by one branch to be ranked No. 13 with a 1.35% share of approximately $172.34 billion in total market deposits; and will enter Mohave County, Ariz., with three branches to be ranked fifth with a 7.49% share of approximately $4.09 billion in total market deposits.

Market Intelligence valuations for bank and thrift targets in the West region between Mar. 9, 2021, and Mar. 9, 2022, averaged 143.09% of book and 155.46% of tangible book and had a median of 13.18x last-12-months earnings, on an aggregate basis.

Honigman LLP was Arizona FCU's legal counsel, while McQueen Financial was financial adviser. Fenimore Kay Harrison LLP was Horizon Community's legal counsel, and Hovde Group LLC was financial adviser.

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