Horizon Bancorp Completes $100 Million Subordinated Notes Deal
Horizon Bancorp Completes $100 Million Subordinated Notes Offering
Horizon Bancorp, Inc. (NASDAQ: HBNC), the holding company for Horizon Bank, has recently finalized a significant financial maneuver aimed at bolstering its capital structure. This move involves the successful completion of a private placement that raised an impressive $100 million through 7.00% Fixed-to-Floating Rate Subordinated Notes due 2035. These funds are intended to enhance Horizon's general corporate objectives, including strategic balance sheet repositioning and the redemption of existing subordinated notes.
Utilization of Proceeds
The net proceeds from this offering are set to support a variety of corporate purposes. Notably, Horizon plans to utilize approximately $56.5 million of these funds to redeem its currently outstanding 5.625% Fixed-to-Floating Rate Subordinated Notes due 2030. Such strategic financial planning underscores Horizon's commitment to optimizing its capital structure, aligning with regulatory requirements and enhancing shareholder value.
Details of the Subordinated Notes
The new subordinated notes will kick off with a fixed interest rate of 7.00% until September 15, 2030. Following this period, the interest will fluctuate based on a benchmark rate—anticipated to be the prevailing three-month Term Secured Overnight Financing Rate (SOFR) plus a margin of 360 basis points. This innovative structure not only offers competitive rates to investors but also qualifies as Tier 2 capital for regulatory compliance.
Redemption Features
Horizon has designed these notes to be redeemable in full or in part beginning September 15, 2030, or upon certain triggering events. This flexibility presents a beneficial feature for Horizon, positioning it well within the evolving financial landscape.
About Horizon Bancorp, Inc.
Horizon Bancorp, Inc. stands tall as a $7.7 billion-asset commercial bank holding entity for Horizon Bank. Serving a broad geographic area, Horizon Bank employs a mix of innovative digital tools and traditional branch services located in Michigan and Indiana. Their diverse offerings cater not only to individual clients but also encompass business banking and wealth management solutions.
Focus on Community Banking
This strong financial institution prides itself on its commitment to both community engagement and customer-centric services. Offering a range of residential loans, personal banking solutions, and comprehensive treasury management services, Horizon aims to meet the needs of customers from various economic backgrounds. The bank is particularly noted for its expertise in commercial lending, which constitutes a significant portion of its total loan portfolio.
Strategic Partnerships and Legal Counsel
Performance Trust Capital Partners, LLC and Keefe, Bruyette & Woods, a Stifel Company, played pivotal roles as joint placement agents in facilitating this transaction. Their expertise ensures that Horizon successfully navigates the complex financial landscape. Additionally, legal counsel for this offering was provided by Alston & Bird LLP, with Warner Norcross + Judd LLP advising Horizon in various legal matters.
Frequently Asked Questions
What was the purpose of the $100 million offering?
The offering aimed to support general corporate purposes, including balance sheet repositioning and redeeming existing subordinated notes.
What is the interest rate on the new subordinated notes?
The new subordinated notes initially bear a fixed interest rate of 7.00% until September 15, 2030, after which it will shift to a floating rate.
Who managed the placement of the subordinated notes?
Performance Trust Capital Partners, LLC and Keefe, Bruyette & Woods served as joint placement agents for the offering.
How does Horizon Bancorp ensure compliance with regulations?
The notes are structured to qualify as Tier 2 capital, complying with regulatory capital requirements.
What services does Horizon Bank provide?
Horizon Bank offers personal and business banking services, including loans, treasury management, and wealth management solutions.
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