Horizon Bancorp, Inc. Announces Balance Sheet Repositioning
13 December 2023 - 8:05AM
(NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the
“Company”), the parent company of Horizon Bank (the “Bank”),
announced the execution of a balance sheet repositioning related to
its investment securities portfolio and bank owned life insurance
policies.
The Company sold $382.7 million in
available-for-sale (“AFS”) securities, composed of treasury,
agency, corporate, and municipal securities with a weighted average
book yield of 2.01% and average duration of 3.4 years.
Additionally, Horizon surrendered $112.8 million in bank owned life
insurance. These transactions are designed to immediately improve
net interest income and provide significant flexibility to the
company’s go-forward funding strategies. The proceeds are expected
to be re-deployed in the first half of 2024 into higher yielding
loans and other liquid assets.
Fourth quarter and full year 2023 net income is
expected to reflect an after-tax impact of $32.7 million, including
a $31.6 million pre-tax loss on the sale of securities. Horizon
expects the results of these activities to be meaningfully
accretive, with estimated annual contributions of $13 million to
net income and $0.30 to earnings per share.
The Company's regulatory capital ratios remain
above well capitalized levels after the transactions, with total
capital to risk weighted assets at 13.7%, tier 1 capital at 12.8%
and common equity tier 1 at 10.7% on a pro forma basis as of
September 30, 2023. The transactions are expected to be neutral to
tangible common equity and stockholders’ equity, while enhancing
the efficiency of the Bank’s balance sheet.
“We believe this is a well-timed repositioning
with a conservative payback estimate of approximately 2.75 years.
It accelerates our communicated strategy to shift Horizon’s balance
sheet towards higher yielding assets and improves the flexibility
of our funding strategies,” President and Chief Executive Officer
Thomas Prame said. “Our local bankers have proven their ability to
generate high quality loan growth with improved yields that can
leverage the liquidity provided by this transaction. Additionally,
the anticipated volume of higher yielding assets from our newly
launched Horizon Equipment Finance Division should also benefit
from the added liquidity.”
Prame added, “Horizon has a history of a strong
operating model with a stable and growing capital base, allowing
the company to be nimble in executing strategic initiatives that
continue to improve our earnings performance. This transaction
provides significant earnings accretion and further positions the
organization to remain flexible, as market conditions warrant, to
consider additional strategies that create long term shareholder
value.”
About Horizon Bancorp, Inc.
Celebrating 150 years, Horizon Bancorp, Inc.
(NASDAQ GS: HBNC) is the $8.0 billion–asset commercial bank holding
company for Horizon Bank, which serves customers across diverse and
economically attractive Midwestern markets through convenient
digital and virtual tools, as well as its Indiana and Michigan
branches. Horizon Bank’s retail offerings include prime
residential, indirect auto, and other consumer lending to in–market
customers, as well as a range of personal banking and wealth
management solutions. Horizon also provides a comprehensive array
of in-market business banking and treasury management services,
with commercial lending representing over half of total loans. More
information on Horizon, headquartered in Northwest Indiana’s
Michigan City, is available at horizonbank.com and
investor.horizonbank.com.
Forward Looking Statements
This press release may contain forward–looking
statements regarding the financial performance, business prospects,
growth and operating strategies of Horizon Bancorp, Inc. and its
affiliates (collectively, “Horizon”). For these statements, Horizon
claims the protection of the safe harbor for forward–looking
statements contained in the Private Securities Litigation Reform
Act of 1995. Statements in this press release should be considered
in conjunction with the other information available about Horizon,
including the information in the filings we make with the
Securities and Exchange Commission (the “SEC”). Forward–looking
statements provide current expectations or forecasts of future
events and are not guarantees of future performance. The
forward–looking statements are based on management’s expectations
and are subject to a number of risks and uncertainties. We have
tried, wherever possible, to identify such statements by using
words such as “anticipate,” “estimate,” “project,” “intend,”
“plan,” “believe,” “will” and similar expressions in connection
with any discussion of future operating or financial performance.
Although management believes that the expectations reflected in
such forward–looking statements are reasonable, actual results may
differ materially from those expressed or implied in such
statements. Risks and uncertainties that could cause actual results
to differ materially include those risks and uncertainties that are
discussed in Horizon’s reports (such as the Annual Report on Form
10–K, Quarterly Reports on Form 10–Q, and Current Reports on Form
8–K) filed with the SEC and available at the SEC’s website
(www.sec.gov). Undue reliance should not be placed on the
forward–looking statements, which speak only as of the date hereof.
Horizon does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions that
may be made to update any forward–looking statement to reflect the
events or circumstances after the date on which the forward–looking
statement is made, or reflect the occurrence of unanticipated
events, except to the extent required by law.
Contact: |
Mark E. Secor |
|
Chief Financial Officer |
Phone: |
(219) 873-2611 |
Fax: |
(219) 874-9280 |
Date: |
December 12, 2023 |
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