On March 10, Phoenix-based Arizona FCU announced that it would acquire Lake Havasu City, Ariz.-based Horizon Community Bank, marking the fifth credit union-bank acquisition announced in less than three weeks, according to S&P Global Market Intelligence data.
Horizon Bancorp's shares soar on deal news
Shares of Horizon Bancorp Inc., Horizon Community Bank's very thinly traded parent company, soared on Friday, March 11, closing at $17.80 per share, a 71% gain for the day. According to the merger press release, Horizon Bancorp expects that its shareholders will receive roughly $18.91 per share in cash once the acquisition closes and the remaining assets in the holding company are liquidated.
Arizona FCU and Arizona both enter two-timers club
This is Arizona FCU's second bank acquisition following its purchase and assumption of substantially all of Scottsdale, Ariz.-based Pinnacle Bank's assets and deposits in 2019. Pinnacle was less than half the size of Horizon Community Bank, reporting only $236.4 million in total assets the quarter before the deal announcement.
Credit unions have now announced or completed whole-bank or franchise deals in 17 U.S. states since 2015, but so far, Arizona FCU has been the only credit union to acquire an Arizona bank.
Rapid asset growth and a changing loan book
Arizona FCU projects that once its acquisition of Horizon Community Bank is completed by the end of 2022, it will have $3.3 billion in assets, which is more than double the assets the credit union reported at the end of 2018.
In addition, real estate-secured commercial loans and lines of credit accounted for 34% of Arizona FCU's loan book at the end of 2021, up from 6% at the end of 2018. That commercial real estate tilt is likely to continue following the Horizon acquisition as roughly 52% of the bank's loans were tied to nonfarm, nonresidential commercial real estate at year-end 2021.
Bank targets continue to trend larger in 2022
At the end of 2021, Horizon Community Bank reported $539.5 million in total assets, making it the ninth-largest bank target for any credit union-bank deal announced since the beginning of 2015. This year's five bank targets reported an average $513 million in assets prior to deal announcement, up from 2021's average $459 million in assets spread among 13 deals.
