Horizon Bancorp's Balance Sheet Strategies Yield Significant Progress
Horizon Bancorp Advances with Strategic Balance Sheet Actions
Horizon Bancorp, Inc. (NASDAQ: HBNC), the esteemed parent company of Horizon Bank, recently celebrated noteworthy achievements in its ongoing balance sheet repositioning efforts. This significant progress illustrates the bank's strategic initiative to improve financial performance and stability amidst evolving market conditions.
Successful Stock Offering and Financial Maneuvers
Horizon Bancorp has taken commendable steps to enhance its financial standing. One pivotal action was the successful closing of a public offering, where the company raised approximately $98.6 million by issuing 7,138,050 shares of common stock. This influx of capital is expected to bolster the bank's operational flexibility.
Introduction of New Subordinated Notes
Adding to its robust financial framework, Horizon has also closed on the issuance of $100 million in subordinated notes with a fixed-to-floating rate structure. These notes will initially offer a competitive fixed interest rate of 7.00% until 2030 and switch to a floating rate thereafter. With this maneuver, the company has effectively optimized its cost of capital.
Strategic Redemption and Loss Mitigation
As part of its comprehensive restructuring plan, Horizon has issued notifications to redeem $56.5 million worth of previously outstanding subordinated notes. This decisive action, scheduled for October 1, 2025, aligns with the bank's focus on enhancing shareholder returns. Notably, the anticipated pre-tax penalty of $12.7 million is remarkably lower than earlier expectations.
Portfolio Reallocation and Risk Reduction
In a proactive move following the stock offering, Horizon transformed its held-to-maturity investment securities to available-for-sale holdings. The company successfully sold around $1.7 billion in securities, achieving a lower-than-expected pre-tax loss of $299.1 million. This strategic portfolio reallocation demonstrates Horizon's commitment to risk management while still addressing shareholder interests.
Effective Use of Proceeds for Long-Term Growth
Additionally, Horizon has judiciously utilized proceeds from the securities sale to pre-pay $700 million in FHLB puttable advances. This prepayment aligns with their goals of streamlining liabilities and enhancing overall financial health, demonstrating a disciplined management approach during uncertain economic periods.
Focused Strategy on Non-Core Asset Reduction
The bank has taken steps to divest approximately $190 million worth of indirect auto loans, targeting completion by the end of the month. Minimizing exposure to higher-cost transactional deposits is another priority, with reductions of over $125 million anticipated in the near term.
Focused Leadership and Future Outlook
Thomas Prame, the President and CEO of Horizon, expressed satisfaction with the execution of these initiatives, emphasizing the leadership team's dedication to surpassing market expectations. With these strategic actions, Horizon Bancorp is well-positioned to achieve significant operational goals, ultimately aiming to increase shareholder value and offer a superior performance outlook as they move into future quarters.
About Horizon Bancorp, Inc.
Horizon Bancorp, Inc. plays a pivotal role in the banking landscape, managing $7.7 billion in assets as of mid-2025. The bank operates across various attractive Midwestern markets, delivering diverse banking solutions through both in-person branches and comprehensive digital platforms. Their extensive suite of offerings includes residential lending, personal banking, and business banking services, emphasizing the importance of personalized financial solutions to their customers.
Frequently Asked Questions
What recent actions has Horizon Bancorp taken to reposition its balance sheet?
Horizon has raised significant capital through a public stock offering and issued subordinated notes, streamlining its financial structure.
How much capital was raised from the recent stock offering?
Horizon Bancorp successfully raised approximately $98.6 million from offering 7,138,050 shares of its common stock.
What specific steps are being taken to mitigate losses?
The company executed a strategic sale of securities and is redeeming outstanding subordinated notes to minimize losses and enhance liquidity.
What is Horizon's strategy regarding non-core assets?
Horizon Bancorp is moving to reduce approximately $190 million in indirect auto loans while also cutting down non-core transactional deposit balances.
How does Horizon Bancorp plan to improve its financial performance?
The bank aims to achieve enhanced performance through disciplined execution of its restructuring plan and focused financial management.
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