Horizon Bancorp (NASDAQ GS: HBNC, "Horizon") and Kosciusko Financial, Inc. (Privately Held "Kosciusko"), today announced they have executed a definitive agreement whereby Horizon will acquire Kosciusko and its wholly-owned subsidiary, Farmers State Bank, an Indiana state chartered bank, through a stock and cash merger.
Under the terms of the merger agreement, shareholders of Kosciusko will have the option to receive $81.75 per share in cash or 3.0122 shares of Horizon common stock for each share of Kosciusko's common stock or a combination thereof, provided the overall shares exchanged consist of 65% stock and 35% cash. Based upon the February 3, 2016, closing price of $23.99 per share of Horizon common stock, the transaction has an implied valuation of approximately $22.5 million.
Established in 1892 and headquartered in Mentone, Indiana, Kosciusko, through its wholly-owned subsidiary Farmers State Bank, serves northeastIndiana with five full-service banking locations. As of December 31, 2015, Kosciusko had total assets of approximately $148.2 million and total equity of $16.5 million, translating to an equity to asset ratio of 11.1%.
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 enthusiastic about this merger, as it 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," said Horizon's Chairman and Chief Executive Officer, Craig M. Dwight. "Farmers State Bank was founded with the goal of People First Banking, which complements Horizon's value of customers being our #1 focus. Horizon will add value to Farmers State Bank's customer base through our customer service guarantees, extensive product menu and on-line banking services. In addition, Farmers State Bank's agricultural, business banking and mortgage lending services align well with Horizon's primary revenue streams. 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."
Dwight further explained that the Kosciuskomerger provides an excellent complement to Horizon's existing branch locations in the vibrant northeast Indiana market. "We believe increasing our presence in this region will provide Horizon with substantial growth opportunities and the ability to attract and retain seasoned bankers, which are key components to our future success," Dwight commented.
"Farmers State Bank's experienced team of community bankers, with a shared philosophy of providing exceptional customer service and commitment to the community, will enhance Horizon's franchise value," continued Dwight. Horizon has a track record of establishing local advisory boards to maintain the pulse of the local community. Dwight indicated that such an advisory board will be established for Kosciusko County following the merger.
Greg Maxwell, President and Chief Executive Officer of Farmers State Bank stated, "We are pleased with the opportunity to partner with the Horizon Bank family and the increased opportunities this provides 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."
The transaction is expected to be completed in the second quarter of 2016, subject to approval by bank regulatory authorities and the shareholders of Kosciusko, as well as the satisfaction of other customary closing conditions. Farmers State Bank will be merged into Horizon Bank, and the combined operations will be continued under the Horizon Bank name.
Horizon Bancorp was advised by Raymond James & Associates, Inc. and the law firm of Barnes & Thornburg, LLP. Kosciusko was advised by Austin Associates, LLC and the law firms of Rockhill Pinnick LLP and Shumaker, Loop & Kendrick, LLP.