Horizon Bancorp and LaPorte Bancorp, Inc. have announced they have executed a definitive merger agreement pursuant to which Horizon will acquire LaPorte Bancorp, parent company of The LaPorte Savings Bank, in a stock and cash transaction.
Under the terms of the Merger Agreement, shareholders of LaPorte Bancorp will have the option to receive $17.50 per share in cash or 0.629 shares of Horizon common stock, or a combination of both, for each share of LaPorte Bancorp’s common stock, subject to allocation provisions to assure that in aggregate, LaPorte Bancorp shareholders will receive total consideration that consists of 65% stock and 35% cash. Based upon the March 9, 2016 closing price of $24.21 per share of Horizon common stock, the transaction has an implied valuation of approximately $94.1 million. Based on LaPorte Bancorp’s December 31, 2015 financials, this equates to a transaction value to tangible book value of 122%, transaction value to core tangible book value of 140%, transaction value to last-twelve-months earnings of 20.6x and a core deposit premium of 4.9%.
LaPorte Bancorp is a savings and loan holding company headquartered in LaPorte, Indiana with total assets of $543.2 million and tangible common equity of $77.0 million, translating to a tangible common equity to tangible asset ratio of 14.4%, as of December 31, 2015. LaPorte Bancorp’s wholly-owned subsidiary, The LaPorte Savings Bank, was established in 1871 and serves northern Indiana with seven full-service banking locations and one loan production office in southwest Michigan.
Horizon Bancorp is a community bank holding company headquartered in Michigan City, Indiana with total assets of $2.7 billion as of December 31, 2015. Horizon Bancorp’s wholly-owned subsidiary, Horizon Bank, NA (“Horizon Bank”), still operates under its original charter, dating back to 1873, with forty-six offices extending throughout northern and central Indiana and southwestern and central Michigan.
“We are pleased to partner with The LaPorte Savings Bank, which has a rich history within our legacy footprint and is a company that we have known and admired,” stated Horizon’s Chairman and Chief Executive Officer, Craig M. Dwight. “Our familiarity with their experienced leadership team and common market area are what attracted us to this opportunity. This merger is consistent with Horizon’s philosophy of partnering with banks that hold core values similar to ours and a commitment to serving their local communities. We believe this shared philosophy will enhance Horizon’s franchise value and help to ensure that a major and growing community bank remains headquartered in LaPorte County,” continued Dwight.
Lee A. Brady, Chief Executive Officer of LaPorte Bancorp, stated, “We are pleased with the opportunity to join the Horizon Bank family and the increased opportunities this will provide our customers, employees and the communities we serve. Horizon’s demonstrated commitment to preserve true community banking, which means local decision-making, retention of local staff, commitment to community involvement, and personal one-on-one service, will be keys to our joint and future success.”
Mr. Dwight added, “The LaPorte Savings Bank was founded with the goal, ‘to make banking as convenient and straightforward as possible’, which complements Horizon Bank’s value of customers being our #1 focus. Horizon will offer more convenience to The LaPorte Savings Bank’s customers through our extensive branch and ATM locations in Indiana and Michigan, customer service guarantees, extensive product menu and higher lending limits. We believe our complementary product offerings and commitment to engaging the local community is a winning combination for our shareholders, employees, customers and the community at large.”
Due to the shared markets served by both banks, three full service offices and one loan production office will be consolidated upon the completion of the data processing conversion planned for the third quarter of 2016. The offices targeted for consolidation are The LaPorte Savings Bank’s Indiana branches in Michigan City, Chesterton, and The LaPorte Savings Bank’s West side location and its St. Joseph, Michigan loan production office. Each office to be closed is within 1.5 miles of an office that will remain open. As part of this office consolidation, Horizon has committed to retain all retail branch personnel who meet the bank’s hiring standards. This will ensure proper support to assist with customer retention and integration. By 2017, Horizon expects office staffing to be right-sized through normal branch attrition and retirements.
As part of the merger, Horizon will add Michele Thompson, The LaPorte Savings Bank President and Chief Financial Officer, to its board of directors and add two representatives to Horizon’s existing LaPorte County community advisory board.
The merger is expected to be completed in the third quarter of 2016, subject to approval by bank regulatory authorities and the shareholders of LaPorte Bancorp, as well as the satisfaction of other customary closing conditions. Additionally, The LaPorte Savings Bank will be merged with and into Horizon Bank, and the combined operations will be continued under the Horizon Bank name. The other subsidiaries of LaPorte Bancorp and The LaPorte Savings Bank will also be merged with similar Horizon subsidiaries or otherwise consolidated with them.
Dwight concluded, “The LaPorte Savings Bank’s esteemed group of community bankers will help ensure the continuation of a successful and growing community bank headquartered in LaPorte County, Indiana. Combined, we will serve our customers through an extensive branch network, robust online and mobile banking platforms, extensive loan options and a dedication to community involvement and support. We look forward to welcoming The LaPorte Savings Bank’s customers and employees and to the bright future this partnership provides our stakeholders.”