Core Viewpoint - Horizon Bancorp (HBNC) has underperformed in the past year, with a loss of approximately 10% in share value, but the company is implementing significant changes to improve its balance sheet positioning [1] Group 1: Company Performance - Shares of Horizon Bancorp have decreased by about 10% over the last year [1] Group 2: Strategic Actions - The company is taking transformative actions to alter its balance sheet positioning [1]

Core Viewpoint - Horizon Bancorp (HBNC) has underperformed in the past year, with a loss of approximately 10% in value, but the company is implementing transformative actions to improve its balance sheet positioning [1] Group 1 - Horizon Bancorp's stock has decreased by about 10% over the last year [1] - The company is taking significant steps to alter its balance sheet [1]

Financial Performance - Net income for the three months ended September 30, 2025, decreased to a net loss of $222.0 million, or $(4.69) per diluted share, compared to net income of $18.2 million, or $0.41 per diluted share for the same period in 2024[178]. - For the nine months ended September 30, 2025, net income decreased to a net loss of $177.4 million, or $(3.94) per diluted share, compared to net income of $46.3 million, or $1.05 per share for the same period in 2024[179]. - Non-interest income decreased by $306.8 million during the three months ended September 30, 2025, primarily due to a loss on sale of investment securities amounting to $299.1 million[178]. - Non-interest income decreased by $306.8 million, resulting in a net loss of $295.3 million for the three months ended September 30, 2025, compared to a gain of $11.5 million in 2024[186]. - Total non-interest expense for the nine months ended September 30, 2025, was $131.7 million, an increase of $17.8 million compared to $113.9 million in 2024[192]. Interest Income and Expenses - Net interest income increased by $11.5 million, or 24.5%, to $58.4 million for the three months ended September 30, 2025, despite a decrease in average earning assets[180]. - For the nine months ended September 30, 2025, net interest income increased by $30.5 million to $166.0 million, with the net FTE interest margin rising by 66 basis points to 3.26%[180]. - The increase in interest income for the three months ended September 30, 2025, was $1.9 million, while interest expense decreased by $9.5 million[178]. - Total interest income for the three months ended September 30, 2025, was $1,528 million, a decrease of $1,499 million compared to the same period in 2024[185]. Asset and Liability Management - Total assets decreased by $1.1 billion, or 14.0%, to $6.7 billion as of September 30, 2025, primarily due to balance sheet repositioning efforts[201]. - Total investment securities decreased by $1.2 billion, or 58.0%, to $0.9 billion as of September 30, 2025, following the movement of the entire held-to-maturity securities portfolio to available-for-sale[202]. - Total loans HFI decreased by $23.4 million to $4.8 billion as of September 30, 2025, due to the sale of approximately $176 million of the indirect auto portfolio[203]. - Total deposit balances decreased by $79.8 million, or 1.4%, to $5.5 billion as of September 30, 2025, driven by a decline in high-cost transactional deposits[204]. - Total borrowings decreased by $985.1 million, or 79.9%, to $247.2 million as of September 30, 2025, due to the payoff of $700 million in FHLB advances[205]. Credit Quality and Losses - As of September 30, 2025, the allowance for credit losses (ACL) on loans was $50.2 million, or 1.04% of period-end loans held for investment (HFI), compared to $52.0 million, or 1.07% at December 31, 2024[211]. - The company recorded a benefit for credit losses on loans of $3.4 million for the three months ended September 30, 2025, compared to a provision of $1.0 million for the same period in 2024[196]. - Net loan charge-offs increased by $0.5 million to $0.8 million for the three months ended September 30, 2025, compared to $0.4 million during the same period in 2024[197]. - Total non-performing assets increased by $8.3 million, or 30%, from December 31, 2024, to 0.53% of total assets as of September 30, 2025[212]. - The allowance for credit losses decreased to $50,178,000 as of September 30, 2025, compared to $51,980,000 at December 31, 2024, a decline of 3.5%[213]. Equity and Capital Management - Stockholders' equity totaled $660.8 million as of September 30, 2025, down from $763.6 million at December 31, 2024, a decrease of 13.5%[217]. - The ratio of total stockholders' equity to total assets was 9.84% as of September 30, 2025, compared to 9.62% at December 31, 2024[218]. - Tangible common equity totaled $497.7 million at September 30, 2025, down from $588.5 million at September 30, 2024, a decrease of 15.4%[227]. Future Outlook and Risks - The company faces risks from macroeconomic conditions, including trade policy and interest rate volatility, which could impact future performance[172]. - The Company projected a $6,013,000 decrease in net interest income with a 200 basis points decline in interest rates, representing a 2.3% change[231].

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Financial Data and Key Metrics Changes - Horizon Bancorp Inc. reported net interest margin expansion for the eighth consecutive quarter, with an exit run rate in September above 4% [5][16] - The net interest margin increased by 29 basis points to 3.52% for the quarter, with expectations to expand further in Q4 to a range of 4.15%-4.25% [19][26] - The allowance for credit losses decreased to $50.2 million, representing an allowance to credit loss to loans held for investment of 1.04% [11] Business Line Data and Key Metrics Changes - Net loan total for investment decreased to $162 million, primarily due to a $210 million impact from the runoff and sale of indirect auto loans, while commercial loans grew by $58 million [9][10] - The combined relationship-based fee income categories of service charges, card, and mortgage income increased from the third quarter [5] Market Data and Key Metrics Changes - The core relationship balances in the deposit portfolio remained resilient, with planned outflows in higher-cost non-core transactional accounts [14] - The company anticipates a decline in deposit balances in Q4, primarily due to the targeted reduction of high-cost non-relationship balances [26] Company Strategy and Development Direction - The company is focused on profitable loan growth and maintaining excellent credit quality as a cornerstone of its success [7] - Horizon Bancorp Inc. aims to create durable returns and sustainable long-term value for shareholders through disciplined capital management and potential M&A opportunities [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering superior community banking performance and capital generation metrics moving into 2026 [6][30] - The company is optimistic about growth opportunities in Michigan and Indiana, leveraging its strong brand reputation and community banking model [40][60] Other Important Information - The company has seen a significant positive increase in performance in September, indicating strong momentum heading into Q4 [7] - Non-interest income was materially impacted by balance sheet actions, including a $299 million loss in the sale of securities [22] Q&A Session Summary Question: Update on the new narrative for Horizon Bancorp Inc. and strategic emphasis - Management highlighted a focus on positive capital stewardship and a more efficient, de-risked balance sheet that will generate capital at a greater pace [36] Question: Potential outlets for capital outside of organic loan growth and M&A - Management indicated that M&A will focus on franchises that add to the current profitable franchise, with potential targets in Michigan and Indiana [39][40] Question: Balance sheet being rate neutral - Management clarified that while the balance sheet is modestly asset-sensitive, they do not expect significant impacts from rate changes [45] Question: Trends in credit quality and areas of stress - Management noted that non-performing loans increased slightly, but overall credit quality remains satisfactory with no significant areas of concern [70][74] Question: Loan growth outlook for 2026 - Management expects mid-single-digit growth primarily from organic commercial growth, without the need for significant additional headcount [87] Question: Capital accretion and buybacks - Management stated that while buybacks are an option for creating shareholder value, they are not a priority in the near term following recent capital raises [91]

Financial Data and Key Metrics Changes - Horizon Bancorp Inc. reported net interest margin expansion for the eighth consecutive quarter, with an exit run rate in September above 4% [5][16] - The net interest margin increased by 29 basis points to 3.52% for the quarter, with expectations to expand further in Q4 to a range of 4.15% to 4.25% [19][26] - The allowance for credit losses decreased to $50.2 million, representing an allowance to credit loss to loans held for investment of 1.04% [11][12] Business Line Data and Key Metrics Changes - Net loan total for investment decreased to $162 million, primarily due to a $210 million impact from the runoff and sale of indirect auto loans, while commercial loans grew by $58 million [9][10] - The combined relationship-based fee income categories of service charges, card, and mortgage income increased from the previous quarter [5] Market Data and Key Metrics Changes - The core relationship balances in the deposit portfolio remained resilient despite planned outflows from higher-rate transactional accounts [14] - The company anticipates a decline in deposit balances in Q4, primarily due to the targeted reduction of high-cost non-relationship balances [26] Company Strategy and Development Direction - The company is focused on creating durable returns and sustainable long-term value for shareholders through disciplined capital management and profitable loan growth [6][30] - Horizon Bancorp Inc. is considering M&A opportunities that are accretive to its community banking platform, with a focus on franchises that enhance profitability [37][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering superior community banking performance and capital generation metrics moving into 2026 [6][30] - The company is monitoring economic conditions closely, with future provision expenses driven by anticipated loan growth and credit quality trends [12] Other Important Information - The company executed a balance sheet restructuring that exceeded initial expectations, optimizing securities and loan portfolios [4][6] - Non-interest income was impacted by a $299 million loss in the sale of securities and a $7.7 million loss on the sale of the indirect auto loan portfolio [22] Q&A Session Summary Question: What is the new narrative for Horizon Bancorp Inc.? - Management indicated that the company is positioned to generate capital at a greater pace and will focus on measured deployment strategies for growth, including potential M&A opportunities [35][36] Question: Are there any other potential outlets for capital outside of organic loan growth and M&A? - Management confirmed that M&A will be a focus, targeting franchises that add to the current profitable platform, with potential sizes ranging from $300 million to several billion dollars [38][40] Question: How does the company support its rate-neutral position? - Management explained that while the balance sheet is modestly asset-sensitive, they do not expect significant impacts from rate changes due to their deposit positioning [44][45] Question: What are the trends in credit quality? - Management noted that non-performing loans increased slightly, but overall credit quality remains satisfactory, with no significant areas of stress identified [70][74] Question: What is the outlook for loan growth in 2026? - Management anticipates mid-single-digit growth primarily from organic commercial growth, with no immediate need for significant headcount increases [87][88]

Financial Data and Key Metrics Changes - Horizon Bancorp's net interest margin expanded for the eighth consecutive quarter, reaching 3.52% in Q3, with an exit run rate above 4% in September [5][17][20] - The company reported a net loan total for investment of $162 million, with a $210 million impact from the runoff and sale of indirect auto loans [10][12] - The allowance for credit losses decreased to $50.2 million, representing 1.04% of loans held for investment, with a net release of $3.6 million in provisions [12][25] Business Line Data and Key Metrics Changes - Commercial loans grew by $58 million in Q3, representing a 7% annualized increase, while residential mortgage lending volumes remained flat [10][11] - The combined relationship-based fee income categories, including service charges and card income, showed an increase from the previous quarter [5][24] Market Data and Key Metrics Changes - The company experienced predicted outflows in higher-cost non-core transactional accounts as part of its balance sheet restructuring plan [5][14] - Non-interest income was impacted by a $299 million loss in the sale of securities and a $7.7 million loss on the sale of the indirect auto loan portfolio [21][22] Company Strategy and Development Direction - Horizon Bancorp is focused on creating durable returns and sustainable long-term value for shareholders through disciplined capital management and profitable growth strategies [6][30] - The company plans to pursue M&A opportunities that are accretive to its community banking platform, with a focus on franchises that enhance profitability [35][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering superior community banking performance and capital generation metrics moving into 2026 [6][30] - The outlook for Q4 includes expectations for net interest margin expansion to 4.15% to 4.25%, with total reported expenses approximating $40 million [27][28] Other Important Information - The company has made significant improvements in its deposit portfolio, enhancing growth and stability in core client relationships [14][15] - The effective tax rate for Q4 is expected to be in the range of 18% to 20%, reflecting stronger pre-tax income [28] Q&A Session Summary Question: Update on the new narrative for Horizon Bancorp Inc. - Management indicated that the company is positioned to generate capital at a greater pace and will focus on measured deployment strategies for profitable growth [34][35] Question: Criteria for potential M&A opportunities - M&A will focus on franchises that add to the current profitable franchise, with potential targets in Michigan and Indiana [36][39] Question: Balance sheet's rate neutrality - Management acknowledged a modest asset sensitivity but emphasized that the balance sheet is designed to be rate neutral [42] Question: Trends in credit quality and areas of stress - Non-performing loans increased slightly, but management noted that the overall credit profile remains strong, with no significant areas of concern [58][61] Question: Loan growth outlook for 2026 - The company anticipates mid-single-digit loan growth driven primarily by commercial lending, with no immediate need for significant headcount increases [70][71]

Financial Data and Key Metrics Changes - Horizon Bancorp's net interest margin expanded for the eighth consecutive quarter, with an exit run rate in September above 4% [5][16] - The net interest margin increased by 29 basis points to 3.52% for Q3, with expectations for further expansion in Q4 to a range of 4.15% to 4.25% [17][19] - Net loans held for investment decreased by $162 million, primarily due to the runoff and sale of the indirect auto loan portfolio [10] - The allowance for credit losses decreased to $50.2 million, representing an allowance to credit loss to loans held for investment of 1.04% [12] Business Line Data and Key Metrics Changes - Commercial loans increased by $58 million, representing a 7% annualized growth for the linked quarter [10] - The combined relationship-based fee income categories, including service charges, wealth, card, and mortgage income, performed well and increased from the previous quarter [6] - Noninterest income was impacted by a $299 million loss in the sale of securities and a $7.7 million loss on the sale of the indirect auto portfolio [21] Market Data and Key Metrics Changes - The core relationship balances in the deposit portfolio remained resilient, with planned outflows in higher-cost non-core transactional accounts [14] - The deposit portfolio is expected to decline in Q4 due to the targeted reduction of high-cost non-relationship balances [27] Company Strategy and Development Direction - The company aims to deliver durable returns and sustainable long-term value for shareholders through a disciplined operating model and focus on profitable growth [31] - Horizon plans to pursue logical and accretive M&A opportunities that enhance its community banking platform [37][40] - The company is focused on maintaining a strong credit profile while pursuing steady, diversified growth [11][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering superior community banking performance and peer-leading capital generation metrics moving into 2026 [7][31] - The company is monitoring economic conditions, with future provision expenses driven by anticipated loan growth and credit quality trends [13] Other Important Information - The company has made significant improvements in its securities portfolio, reducing credit risk and increasing liquidity [20] - The effective tax rate for Q4 is expected to be in the range of 18% to 20% due to stronger pretax income [28] Q&A Session Summary Question: Update on the new narrative for Horizon and strategic emphasis - Management highlighted a new focus on positive capital stewardship and a well-positioned balance sheet for capital generation [36][37] Question: Potential outlets for capital outside of organic loan growth and M&A - Management indicated that M&A opportunities would focus on franchises that add to the current profitable franchise, with a size range of $300 million to several billion dollars [39][40] Question: Trends in credit quality and areas of stress - Management noted that nonperforming loans increased slightly, but overall credit quality remains satisfactory, with no significant areas of concern [68][70] Question: Loan growth outlook for 2026 - Management anticipates mid-single-digit growth primarily from commercial lending, with no immediate need for significant additional headcount [88][89] Question: Capital accretion and buybacks - Management confirmed that buybacks are considered a potential option for creating shareholder value but are not the immediate focus [92]

Financial Performance - Net income experienced a significant decline, moving from a profit of $20644000 in Q2 2025 to a loss of $221990000 in Q3 2025[6] - Diluted EPS decreased substantially from $047 in Q2 2025 to $(469) in Q3 2025[6] - Net interest income increased from $55355000 in Q2 2025 to $58386000 in Q3 2025[6] - The net interest margin (NIM) on a fully taxable equivalent (FTE) basis expanded to 352% in Q3 2025, up from 323% in Q2 2025[6] Balance Sheet Transformation - The company completed the sale of $17 billion in investment securities and redeployed $580 million at a yield of 527%[8] - $700 million in FHLB puttable advances were prepaid[8] - $176 million of indirect auto loans were sold near the end of September[8] - Non-core, higher-cost transactional deposits were reduced by approximately $275 million[8] Loan Portfolio - Total loans decreased by $162 million, a 325% linked quarter decline[14] - Commercial loans grew 70% LQA[20] - Indirect auto loans declined by $210 million due to the intentional run-off and sale of $176 million in the quarter[25] Deposits - Total deposits decreased from $5699757000 in Q2 2025 to $5520901000 in Q3 2025[6] - Loans to deposits ratio is 874%[37]

Core Insights - Horizon Bancorp reported revenue of $62.18 million for Q3 2025, a year-over-year increase of 6.4%, but fell short of the Zacks Consensus Estimate of $67 million, resulting in a surprise of -7.19% [1] - The company's EPS for the quarter was $0.30, down from $0.41 a year ago, with an EPS surprise of -34.78% compared to the consensus estimate of $0.46 [1] Financial Performance Metrics - Efficiency Ratio was reported at -22.4%, significantly better than the three-analyst average estimate of 58.5% [4] - Net Interest Margin stood at 3.5%, matching the three-analyst average estimate [4] - Annualized net charge-offs of average total loans were 0.1%, consistent with the two-analyst average estimate [4] - Average Balance of Total Interest Earning Assets was $6.77 billion, exceeding the $6.6 billion estimate by two analysts [4] - Net Interest Income was $58.39 million, surpassing the average estimate of $56.86 million based on three analysts [4] - Gain on Sale of Mortgage Loans was $1.21 million, slightly below the three-analyst average estimate of $1.28 million [4] - Interchange Fees totaled $3.51 million, slightly below the two-analyst average estimate of $3.54 million [4] - Other Income reported a loss of $6.56 million, significantly worse than the $1.03 million average estimate based on two analysts [4] - Mortgage Servicing Income net of impairment was $0.35 million, slightly below the two-analyst average estimate of $0.4 million [4] - Service Charges on Deposit Accounts were $3.47 million, exceeding the $3.24 million estimate by two analysts [4] - Fiduciary Activities generated $1.36 million, slightly above the $1.29 million average estimate based on two analysts [4] - Increase in Cash Value of Bank Owned Life Insurance was $0.38 million, above the two-analyst average estimate of $0.33 million [4] Stock Performance - Horizon Bancorp's shares have returned -3.2% over the past month, contrasting with the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]