Horizon Bank has Acquired 14 TCF National Bank Branches

On May 25, 2021, Horizon Bank, a wholly owned subsidiary of Horizon Bancorp, Inc. (NASDAQ GS: HBNC) (“Horizon”), has entered into a definitive purchase and assumption agreement to acquire 14 TCF National Bank (“TCF”) branches in 11 Michigan counties with approximately $976 million in deposits and $278 million in associated loans, which are being divested by TCF Financial Corporation in connection with its merger with Huntington Bancshares Incorporated.

The transaction was completed on September 17, 2021. Horizon expects to add over 50,000 primarily retail and small business customer accounts and the entire workforce of the acquired branches.

Horizon Bank agreed to pay 1.75% premium on deposits acquired at closing, or $17.1 million based on deposits outstanding of approximately $976 million at March 31, 2021. Horizon expects the transaction to be in excess of 17% accretive to 2022 earnings per share, excluding non-recurring transaction-related expenses. Tangible book value dilution is expected to be 5.0%, with an earnback of approximately two years. An internal rate of return of approximately 21% is anticipated.

The transaction is expected to expand Horizon’s already low-cost core deposit franchise, even with conservative runoff and attrition assumptions. Deposit accounts to be acquired have an average relationship life of more than 10 years. The 0.08% average cost of acquired deposits is expected to further reduce Horizon’s total deposit cost, which was an average of 0.21% in the first quarter of 2021.

Horizon Bank is also acquiring performing residential mortgage, consumer, and small business loans associated with the branches at a 3.50% discount. Based on due diligence conducted on the portfolio to be acquired, Horizon believes the loan discount is more than sufficient to cover any credit risk exposure. Loans outstanding for the portfolio to be acquired totaled approximately $278 million at March 31, 2021, more than 86% of which were associated with deposit accounts at the 14 branches.