Horizon Bancorp of Michigan City announced Friday that it has agreed to acquire Heartland Community Bank of Franklin for about $14 million, or $9.72 per share.
That’s a 170-percent premium over Heartland’s Thursday closing price of $3.60 per share. Heartland shares trade over-the-counter. Volume spiked Friday morning, and the shares opened at $8.25 each.
Horizon has 10 branches in northwest Indiana and five in Michigan. It’s the No. 1 bank in LaPorte County by deposit share. The bank reported $1.5 billion in assets, $1 billion in deposits and $978 million in outstanding loans at the end of 2011.
The deal gives Horizon its first presence in central Indiana, where it will continue to operate under the Heartland name.
“Heartland, which has the No. 1 deposit share in Johnson County, will provide a strong foothold in central Indiana and further establish Horizon’s position as an Indiana-focused financial institution,” said Craig Dwight, Horizon president and CEO.
Heartland, which opened in 1997, employs 98 people and has six branches in Franklin, Greenwood, Bargersville and New Whiteland. The bank has $246 million in assets, $217.9 million in deposits and $137.7 million in outstanding loans.
Co-founders Steve Bechman and Jeffrey Goben will continue to manage the local operations. One member of Heartland’s board of directors will be added to Horizon’s board.
The stock-for-stock transaction is expected to close in the second quarter.
Horizon agreed to issue 0.54 shares of its stock for each of Heartland’s stock outstanding at the merger’s effective date.
Heartland had about 1.44 million shares outstanding. Based on Horizon’s Feb. 8 closing price of $18 per share, the transaction was valued at about $9.72 per share of Heartland’s stock, or about $14 million.
Dwight said he expects to save 25 percent on operating costs by consolidating back-office functions.
Horizon acquired American Trust & Savings Bank of Whiting in 2010 and Alliance Banking Co. in southwest Michigan in 2005.