Horizon Bancorp, Inc. Reports Strong Third Quarter 2025 Results and Successful Execution of the Balance Sheet Repositioning

Core Insights - Horizon Bancorp reported a net loss of $222.0 million, or $(4.69) per diluted share, for Q3 2025, a significant decline compared to net income of $20.6 million, or $0.47 per diluted share, in Q2 2025 and $18.2 million, or $0.41 per diluted share, in Q3 2024 [2][3][10] - The company successfully executed a strategic balance sheet repositioning, which is expected to yield top-tier financial outcomes and enhance shareholder value [2][20] - Despite the net loss, the core community banking franchise remains strong, with expanding net interest margins and solid commercial loan growth [2][7] Financial Highlights - Net interest income for Q3 2025 was $58.4 million, up 5.5% from $55.4 million in Q2 2025 and 24.5% from $46.9 million in Q3 2024 [7][10] - The net interest margin expanded to 3.52%, compared to 3.23% in Q2 2025 and 2.66% in Q3 2024, marking the eighth consecutive quarter of growth [7][10] - Total loans held for investment decreased by 13.0% annualized, with organic commercial loan growth of $57.9 million, or 7.0% annualized [7][20] Non-Interest Income and Expenses - Total non-interest loss was $295.3 million in Q3 2025, a decrease from non-interest income of $10.9 million in Q2 2025, primarily due to losses on the sale of investment securities and the indirect auto portfolio [16][21] - Non-interest expenses increased to $53.0 million in Q3 2025 from $39.4 million in Q2 2025, driven by a $12.7 million prepayment penalty related to the payoff of FHLB advances [18][21] Credit Quality - Credit quality remained strong, with annualized net charge-offs of 0.07% of average loans during Q3 2025, compared to 0.02% in Q2 2025 [12][26] - The allowance for credit losses as a percentage of loans held for investment was 1.04% as of September 30, 2025, down from 1.09% at June 30, 2025 [13][25] Balance Sheet Highlights - Total assets decreased by $939.6 million, or 12.3%, to $6.7 billion as of September 30, 2025, primarily due to balance sheet repositioning efforts [20][21] - Total deposits decreased by $178.9 million, or 3.1%, to $5.5 billion, driven by a decline in high-cost transactional deposit balances [21][22] - The ratio of total stockholders' equity to total assets was 9.84% as of September 30, 2025, with a book value per common share of $12.96 [23][24]