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MICHIGAN CITY, Ind. - Horizon Bancorp, Inc. (NASDAQ:HBNC), a $816 million market cap regional bank currently trading at 13.85 times earnings, announced Monday it has completed key elements of its previously announced balance sheet restructuring initiative, with results exceeding initial projections. According to InvestingPro analysis, the company appears fairly valued based on its comprehensive Fair Value model.
The $7.7 billion-asset bank holding company reported it closed a common stock offering on August 22, raising $98.6 million in net proceeds through the sale of approximately 7.1 million shares. The company also completed a $100 million subordinated notes offering on August 29, with a fixed interest rate of 7.00% through September 2030, lower than the initially projected 7.50%.
Following these capital raises, Horizon transferred its held-to-maturity securities to available-for-sale status and sold approximately $1.7 billion of securities, realizing a pre-tax loss of $299.1 million, which was better than the initially expected $309.1 million loss.
The company used proceeds to prepay $700 million in Federal Home Loan Bank advances, incurring a $12.7 million prepayment penalty, which was lower than the $15.6 million originally anticipated.
Horizon has also redeployed approximately $600 million into new investment securities yielding 5.27% on a tax-equivalent basis and has signed non-binding letters of intent to sell about $190 million of indirect auto loans by the end of September.
Additionally, the company plans to redeem $56.5 million in outstanding subordinated notes on October 1 and is working to reduce more than $125 million in non-core deposit balances during the third quarter.
"We are very pleased with the significant accomplishments achieved in a very short window after successful equity and debt raises," said Thomas Prame, President and CEO of Horizon, according to the press release statement. InvestingPro data shows analysts maintain a positive outlook, with price targets ranging from $18 to $22, suggesting potential upside. Subscribers can access 5 additional ProTips and detailed analysis in the comprehensive Pro Research Report.
Horizon Bank serves customers in Indiana and Michigan markets through digital tools and branch locations, with commercial lending representing over half of its total loans. The bank maintains a solid 3.94% dividend yield and has consistently paid dividends for 39 consecutive years, demonstrating strong shareholder commitment.
In other recent news, Horizon Bancorp has completed a significant common stock offering, raising approximately $103.5 million in gross proceeds. This offering involved the sale of 7,138,050 shares at $14.50 per share, which included additional shares sold through the underwriters’ fully exercised option. Prior to this, Horizon Bancorp had announced the pricing of its public offering, initially aiming to raise around $90 million. The company plans to use the net proceeds for general corporate purposes, including potential balance sheet repositioning.
In terms of strategic actions, Keefe, Bruyette & Woods upgraded Horizon Bancorp’s stock rating from Market Perform to Outperform, citing efforts to unlock earnings power and improve liquidity. Furthermore, Stephens raised its price target for Horizon Bancorp to $22.00 from $19.00, maintaining an Overweight rating. This adjustment is attributed to Horizon’s recent moves to strengthen its balance sheet and enhance profitability. These developments reflect Horizon Bancorp’s ongoing efforts to optimize its financial standing and support future growth.
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