Horizon Bancorp Announces Balance Sheet Restructuring Transaction
November 30 2016 - 4:45PM
Business Wire
(NASDAQ: HBNC) – Horizon Bancorp (the “Company” or “Horizon”)
announced a series of balance sheet restructuring transactions that
are expected to improve its overall financial position, including
an increase in net interest margin, return on average assets, and
return on average equity. The transactions include prepaying $106
million of high fixed-rate borrowings with contractual maturities
ranging from June 2017 through September 2020 and repositioning the
investment securities portfolio to replace certain lower yielding
short-term investments consistent with a more normalized strategy
and maturity periods.
Craig Dwight, Chairman and CEO, commented: "This deleveraging
strategy improves key financial metrics for the benefit of
shareholders and strengthens Horizon’s balance sheet by lowering
debt. This strategy is being executed in two steps. First, we used
proceeds from the sale of investment securities to fund the debt
repayment allowing us to monetize gains in our investment portfolio
to partially offset the debt prepayment cost. The second step
consists of repositioning a portion of our investment portfolio by
replacing lower yielding short-term bonds with higher yielding
bonds under a normalized investment strategy.”
The debt prepayment was funded from the sale of
available-for-sale investment securities of $168.0 million. The
Company realized a loss of $4.8 million from the early redemption
of the debt. This loss was partially offset by an expected net gain
on the sale of investment securities of $966,000. The average yield
on the investment securities sold to fund the debt prepayment is
1.94%. The average cost of the fixed rate borrowings that were
repaid was 3.58%. The average yield on the $62.0 million of
purchased securities is expected to be 3.94%. In addition, the
Company estimates that it will add approximately 27 basis points to
its margin related to the repositioning of low-yielding short-term
investments and the debt repayment. This deleveraging strategy is
still in process and is expected to be completed by the end of the
fourth quarter of 2016.
About Horizon
Horizon Bancorp is a locally owned, independent, commercial bank
holding company serving northern and central Indiana and southwest
and central Michigan through its commercial banking subsidiary
Horizon Bank, NA. Horizon also offers mortgage-banking services
throughout the Midwest. Horizon Bancorp may be reached online at
www.horizonbank.com. Its common stock is traded on the NASDAQ
Global Select Market under the symbol HBNC.
Forward Looking Statements
This press release may contain forward-looking statements
regarding the financial performance, business prospects, and growth
and operating strategies of Horizon. For these statements, Horizon
claims the protections 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. 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 risk factors relating to the banking industry and the other
factors detailed from time to time in Horizon’s reports filed with
the Securities and Exchange Commission, including those described
in its Form 10-K. 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20161130006367/en/
Horizon BancorpMark E. SecorChief Financial Officer(219)
873-2611Fax: (219) 874-9280
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