MICHIGAN CITY, Ind.--(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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Horizon Bancorp
Mark E. Secor
Chief Financial Officer
(219)
873-2611
Fax: (219) 874-9280
Source: Horizon Bancorp