Horizon Bancorp, Inc. Announces Completion of $100 Million Subordinated Notes Offering

Rhea-AI Summary

Horizon Bancorp (NASDAQ: HBNC) has successfully completed a $100 million private placement of subordinated notes. The notes, due in 2035, will initially carry a 7.00% fixed interest rate until September 15, 2030, after which they will switch to a floating rate of three-month SOFR plus 360 basis points.

The company plans to use the proceeds for general corporate purposes and to redeem approximately $56.5 million of existing 5.625% subordinated notes due 2030. The new notes qualify as Tier 2 capital for regulatory purposes and include redemption options after September 15, 2030.

Positive

• Secured $100 million in additional capital through subordinated notes offering
• Notes qualify as Tier 2 capital for regulatory purposes
• Opportunity to refinance $56.5 million of existing notes with higher interest rate debt

Negative

• Higher interest rate of 7.00% compared to existing 5.625% notes being redeemed
• Increased debt burden with $100 million notes issuance

Insights

Banking Capital Structure Specialist

Horizon Bancorp strengthens its Tier 2 capital with higher-yielding notes while optimizing its debt structure amid rising interest rates.

Horizon Bancorp's $100 million subordinated notes offering represents a strategic capital management move with several key implications for the bank's financial structure. The bank is issuing these notes at a 7.00% fixed rate through 2030 before switching to a floating rate, while simultaneously planning to redeem approximately $56.5 million of existing notes that carry a lower 5.625% rate.

This transaction demonstrates proactive balance sheet management in the current interest rate environment. By qualifying as Tier 2 capital, these notes strengthen Horizon's regulatory capital position without diluting shareholders through equity issuance. The $43.5 million in additional net proceeds (beyond the redemption amount) provides Horizon with enhanced financial flexibility for what they describe as "potential repositioning" of their balance sheet.

The 7.00% coupon rate, while higher than their existing notes, reflects current market conditions for bank subordinated debt. The built-in redemption option after five years gives Horizon flexibility if interest rates decline. The floating rate structure (SOFR plus 360 basis points) after the initial fixed period creates natural interest rate risk hedging in later years.

This transaction appears designed to optimize Horizon's capital stack while preparing for potential strategic moves or market conditions that may require balance sheet adjustments in the near term.

MICHIGAN CITY, Ind., Aug. 29, 2025 (GLOBE NEWSWIRE) -- Horizon Bancorp, Inc. (NASDAQ: HBNC) (“Horizon”), the parent company of Horizon Bank, today announced the completion of a private placement of $100,000,000 in aggregate principal amount of 7.00% Fixed-to-Floating Rate Subordinated Notes due 2035 (the “Notes”). Horizon intends to use the net proceeds of the private placement for general corporate purposes, including in support of the potential repositioning of its balance sheet, and to redeem approximately $56.5 million in aggregate principal amount of 5.625% Fixed-to-Floating Rate Subordinated Notes due 2030.

The Notes will initially bear interest at a fixed interest rate of 7.00% per annum until September 15, 2030, after which time the interest rate will reset quarterly to a floating rate equal to a benchmark rate, which is expected to be the then current three-month term Secured Overnight Financing Rate (SOFR) plus 360 basis points until the Notes' maturity on September 15, 2035. The Notes are redeemable by Horizon, in whole or in part, on any interest payment date on or after September 15, 2030, and at any time upon the occurrence of certain events. The Notes have been structured to qualify as Tier 2 capital for Horizon for regulatory capital purposes.

Performance Trust Capital Partners, LLC and Keefe, Bruyette & Woods, A Stifel Company acted as joint placement agents for the transaction and were represented by Alston & Bird LLP. Warner Norcross + Judd LLP served as legal counsel to Horizon.

The Notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release is for informational purposes only and shall not constitute an offer to sell, or the solicitation of an offer to buy any security, nor shall there be any sale in any jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The indebtedness evidenced by the Notes is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or fund.

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. (NASDAQ: HBNC) is the $7.7 billion-asset (as of June 30, 2025) commercial bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon’s retail offerings include prime residential and other secured consumer lending to in-market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in-market business banking and treasury management services, as well as equipment financing solutions for customers regionally and nationally, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana’s Michigan City, is available at horizonbank.com and investor.horizonbank.com.

Forward-Looking Statements

This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection 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 (the “SEC”). 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: effects on Horizon’s business resulting from new U.S. domestic or foreign governmental trade measures, including but not limited to tariffs, import and export controls, foreign exchange intervention accomplished to offset the effects of trade policy or in response to currency volatility, and other restrictions on free trade; uncertain conditions within the domestic and international macroeconomic environment, including trade policy, monetary and fiscal policy, and conditions in the investment, credit, interest rate, and derivatives markets, and their impact on Horizon and its customers; current financial conditions within the banking industry; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the aggregate effects of elevated inflation levels in recent years; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict and the Israel and Hamas conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). 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.

Contact:	John R. Stewart, CFA
	EVP, Chief Financial Officer
Phone:	(219) 814-5833

FAQ

What is the size and interest rate of Horizon Bancorp's (HBNC) new subordinated notes offering?

Horizon Bancorp's new subordinated notes offering is $100 million with an initial fixed interest rate of 7.00% until September 15, 2030, after which it switches to a floating rate.

When do Horizon Bancorp's (HBNC) new subordinated notes mature?

The new subordinated notes mature on September 15, 2035.

How will Horizon Bancorp (HBNC) use the proceeds from the subordinated notes offering?

Horizon will use the proceeds for general corporate purposes and to redeem approximately $56.5 million of existing 5.625% subordinated notes due 2030.

What is the floating rate structure of HBNC's new subordinated notes after September 2030?

After September 15, 2030, the notes will reset quarterly to a floating rate equal to the three-month SOFR plus 360 basis points.

Do Horizon Bancorp's (HBNC) new subordinated notes qualify as regulatory capital?

Yes, the notes have been structured to qualify as Tier 2 capital for Horizon for regulatory capital purposes.