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Horizon Community Bank to Combine with Arizona Federal Credit Union

Horizon Community Bank to Combine with Arizona Federal Credit Union

Horizon Community Bank, an Arizona state-chartered bank headquartered in Lake Havasu City, Arizona and wholly-owned subsidiary of Horizon Bancorp, Inc., announced that it has entered into a definitive agreement for Arizona Federal Credit Union (“Arizona Federal”) to acquire Horizon Community pursuant to a purchase and assumption transaction. Horizon Community was founded in 2002 and currently operates six branches in Fort Mohave, Kingman, Lake Havasu City, Mesa, Parker and Quartzsite, Arizona. As of December 31, 2021, Horizon Community reported $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.

“Arizona Federal has demonstrated their competency and commitment to community banking and they will be a great partner for our bank”

Arizona Federal, a $2.8 billion member-owned financial cooperative, will benefit by expanding into new market areas in western Arizona, further diversifying its assets, and adding talent and expertise. The acquisition will also help the credit union continue investments in new products and services and help fund the expansion of services to additional new markets throughout Arizona.

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The 12,000 clients of Horizon Community will benefit by gaining access to Arizona Federal’s full suite of financial services, including consumer loans, insurance, credit cards, investments, small business services, SBA and commercial loans, and more.

After successfully acquiring and integrating the operations of Pinnacle Bank in 2019, Arizona Federal’s board of directors endorsed acquisition opportunities as a component of the credit union’s future growth strategy. “We believe that quality growth and diversification is essential to continued success in our industry, and we intend to achieve it both organically and through mergers or acquisitions,” explained Ronald L. Westad, President and CEO of Arizona Federal.

That strategy aligned well with Horizon Community as they explored future options for their organization. “Arizona Federal has demonstrated their competency and commitment to community banking and they will be a great partner for our bank,” said Ralph Tapscott, President and CEO of Horizon Community. “I’m excited for Horizon employees to join together with Arizona Federal employees to bring additional financial services and resources to the communities we serve,” he added.

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The credit union is committed to keeping and operating each of the existing Horizon Community branches. “We’re excited to welcome Horizon Community Bank clients as new members,” Westad added. “We believe this will create significant long-term value for all stakeholders.”

The transaction, which is subject to regulatory and shareholder approval, has been approved by the Boards of Directors of both institutions and is expected to be completed by the end of 2022.

After the completion of the proposed transaction, the combined organization will have more than $3.3 billion in assets and serve over 155,000 members at 21 locations throughout Arizona. Deposits of Arizona Federal will continue to be federally insured by the National Credit Union Administration.

Subject to the terms and conditions of the definitive agreement, Arizona Federal will acquire substantially all of the assets and assume substantially all of the liabilities of Horizon Community for cash consideration of $91.4 million, subject to certain adjustments. Following the purchase and assumption transaction, Horizon Bancorp and Horizon Community intend to wind down and dissolve. Based on Horizon Bancorp’s outstanding shares on a fully-diluted basis as of December 31, 2021, and after taking into consideration the anticipated satisfaction of certain obligations of Horizon Bancorp and Horizon Community excluded from the purchase and assumption transaction, including holding company indebtedness and tax liabilities, Horizon Bancorp expects that its shareholders would be entitled to receive approximately $18.91 per share upon liquidation, subject to certain adjustments. Arizona Federal has also agreed to cover a portion of Horizon Community’s expected federal income tax liability associated with the sale of its assets in the transaction.

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