Horizon Bancorp Posts $222M Loss After Massive Securities Sale

Ticker: HBNC · Form: 10-Q · Filed: Nov 10, 2025 · CIK: 706129

Horizon Bancorp INC /In/ 10-Q Filing Summary
FieldDetail
CompanyHorizon Bancorp INC /In/ (HBNC)
Form Type10-Q
Filed DateNov 10, 2025
Risk Levelhigh
Pages16
Reading Time19 min
Sentimentbearish

Sentiment: bearish

Topics: Regional Banking, Investment Securities, Net Loss, Balance Sheet Repositioning, Earnings Per Share, Asset Sales, Interest Rate Risk, Capital Raise

Related Tickers: HBNC, KRE, XLF

TL;DR

**HBNC just took a huge hit selling off underwater bonds, signaling a painful but necessary balance sheet reset.**

AI Summary

Horizon Bancorp Inc. (HBNC) reported a significant net loss of $221.99 million for the three months ended September 30, 2025, a stark contrast to the net income of $18.18 million in the same period of 2024. This substantial loss was primarily driven by a $299.13 million loss on the sale of investment securities, following a strategic reclassification of $1.8 billion in held-to-maturity securities to available-for-sale in August 2025. Total assets decreased by 14% from $7.80 billion at December 31, 2024, to $6.71 billion at September 30, 2025. Net interest income, however, improved to $58.39 million for the three months ended September 30, 2025, up from $46.91 million in the prior year, largely due to a decrease in interest expense on deposits and borrowings. Basic earnings per share plummeted to a loss of $4.69, compared to a gain of $0.42 in Q3 2024. The company also saw an increase in additional paid-in capital by $97.95 million from the issuance of 7,138,050 common shares.

Why It Matters

This filing reveals a significant strategic shift by Horizon Bancorp, reclassifying and selling a substantial portion of its investment portfolio, resulting in a massive loss. For investors, this indicates a major balance sheet repositioning, potentially to improve liquidity or manage interest rate risk, but at a steep cost to current profitability. Employees might face uncertainty given the financial hit, while customers could see impacts on lending rates or services as the bank adjusts. Competitively, this move could either strengthen HBNC's long-term position by shedding underwater assets or weaken it by eroding capital, potentially making it a more vulnerable target or less aggressive competitor in the regional banking market.

Risk Assessment

Risk Level: high — The company incurred a pre-tax loss of $299.5 million from the sale of investment securities in Q3 2025, directly leading to a net loss of $221.99 million. This significant loss, coupled with a 14% decrease in total assets from $7.80 billion to $6.71 billion, indicates substantial financial strain and a high-risk environment for the company's near-term profitability and capital position.

Analyst Insight

Investors should closely monitor Horizon Bancorp's subsequent quarters for signs of stabilization and the effectiveness of its balance sheet repositioning strategy. While the immediate impact is negative, the move could be a long-term positive if it improves asset-liability management. Consider holding if you believe in the long-term strategy, but new investments should be approached with caution until profitability trends improve.

Financial Highlights

debt To Equity
0.37
revenue
$92.84M
operating Margin
N/A
total Assets
$6.71B
total Debt
$401.18M
net Income
-$221.99M
eps
-$4.69
gross Margin
N/A
cash Position
$458.26M
revenue Growth
+2.1%

Revenue Breakdown

SegmentRevenueGrowth
Interest and fees on loans$79.56M+5.4%
Investment securities - taxable$6.63M-18.4%
Investment securities - tax exempt$4.58M-27.4%
Other interest income$2.06M+115.6%

Key Numbers

Key Players & Entities

FAQ

Why did Horizon Bancorp report a net loss of $221.99 million in Q3 2025?

Horizon Bancorp reported a net loss of $221.99 million for the three months ended September 30, 2025, primarily due to a $299.13 million loss on the sale of investment securities. This loss resulted from the reclassification and subsequent sale of $1.4 billion in securities from its held-to-maturity portfolio.

What was the impact of the investment securities reclassification on Horizon Bancorp's balance sheet?

In August 2025, Horizon Bancorp reclassified its $1.8 billion held-to-maturity investment portfolio to available-for-sale. Following this, the company sold $1.4 billion of these securities, leading to a $299.5 million pre-tax loss and a significant reduction in total assets from $7.80 billion at December 31, 2024, to $6.71 billion at September 30, 2025.

How did Horizon Bancorp's net interest income change in Q3 2025 compared to Q3 2024?

Horizon Bancorp's net interest income increased to $58.39 million for the three months ended September 30, 2025, up from $46.91 million in the same period of 2024. This improvement was largely driven by a decrease in interest expense on deposits and borrowings.

What were Horizon Bancorp's basic earnings per share for the three and nine months ended September 30, 2025?

For the three months ended September 30, 2025, Horizon Bancorp reported a basic earnings per share loss of $4.69. For the nine months ended September 30, 2025, the basic earnings per share loss was $3.94.

Did Horizon Bancorp issue new common stock during the period?

Yes, Horizon Bancorp issued 7,138,050 shares of common stock, net of expenses, during the nine months ended September 30, 2025. This issuance contributed $97.95 million to additional paid-in capital.

What is the current status of Horizon Bancorp's stock repurchase program?

As of September 30, 2025, Horizon Bancorp had repurchased a total of 803,349 shares at an average price per share of $16.89 under its stock repurchase program authorized on July 16, 2019, for up to 2,250,000 shares.

How has Horizon Bancorp's total liabilities changed?

Total liabilities for Horizon Bancorp decreased significantly from $7.04 billion at December 31, 2024, to $6.05 billion at September 30, 2025. This was largely due to a reduction in short and long-term borrowings from $1.23 billion to $247.17 million.

What was the credit loss (benefit) expense for Horizon Bancorp in Q3 2025?

For the three months ended September 30, 2025, Horizon Bancorp reported a credit loss benefit expense of ($3,572) thousand, compared to a credit loss expense of $1,044 thousand in the same period of 2024.

What is the primary business of Horizon Bancorp?

Horizon Bancorp, Inc. operates as a commercial bank through its wholly-owned subsidiary, Horizon Bank. It primarily offers retail banking and private wealth management services from North America, managing its business activities on a consolidated basis.

What was the change in Horizon Bancorp's cash and cash equivalents?

Horizon Bancorp's cash and cash equivalents increased by $164.82 million during the nine months ended September 30, 2025, rising from $293.43 million at the beginning of the period to $458.26 million at the end.

Risk Factors

Industry Context

Horizon Bancorp operates in the highly competitive U.S. regional banking sector. The industry is characterized by increasing regulatory scrutiny, evolving customer preferences towards digital banking, and sensitivity to interest rate movements. Regional banks like HBNC face pressure from larger national institutions and fintech challengers, necessitating strategic agility in product offerings and operational efficiency.

Regulatory Implications

The significant net loss and balance sheet adjustments may attract increased regulatory attention regarding capital adequacy and risk management practices. Changes in investment portfolio strategy and the substantial realized loss could prompt reviews by banking supervisors to ensure compliance with capital and liquidity requirements.

What Investors Should Do

  1. Monitor the impact of the investment securities reclassification and sale on future earnings and capital ratios.
  2. Analyze the sustainability of improved net interest income in the context of potential future interest rate changes.
  3. Evaluate the strategic rationale and long-term implications of the common stock issuance.
  4. Assess the company's ability to manage credit risk given the current economic environment and the slight decrease in the allowance for credit losses.
  5. Observe management's strategy for asset reduction and balance sheet optimization.

Key Dates

Glossary

Held-to-Maturity Securities
Debt securities that an investor has the intent and ability to hold until maturity. They are typically accounted for at amortized cost. (The reclassification of $1.8 billion of these securities to available-for-sale led to a significant realized loss.)
Available-for-Sale Securities
Debt or equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value, with unrealized gains and losses included in other comprehensive income. (The reclassification implies these securities are now subject to market value fluctuations impacting equity.)
Additional Paid-in Capital
The amount of capital shareholders have paid to the corporation in excess of the par value of the stock. (Increased by $97.95 million due to the issuance of new common shares.)
Net Interest Income
The difference between interest income generated by a bank's assets (loans, investments) and the interest paid out on its liabilities (deposits, borrowings). (Improved to $58.39 million in Q3 2025, driven by lower interest expenses.)
Allowance for Credit Losses
An estimate of the amount of loan principal that is expected to be uncollectible. (Slightly decreased to $50.18 million, indicating management's current assessment of loan portfolio risk.)
Accumulated Other Comprehensive Income (Loss)
A component of equity that includes unrealized gains and losses on certain investments and foreign currency translations that have not been realized into net income. (Stood at a loss of $34.28 million as of September 30, 2025.)
Subordinated Notes
Debt instruments that rank below other debt in the event of liquidation. Often used as Tier 2 capital for banks. (Interest expense on these notes increased, and the principal amount outstanding also rose.)

Year-Over-Year Comparison

Compared to Q3 2024, Horizon Bancorp has experienced a dramatic downturn in financial performance, reporting a net loss of $221.99 million versus a net income of $18.18 million. This shift is primarily attributed to a large realized loss on investment securities, which overshadowed an improvement in net interest income. Total assets have contracted by 14% from $7.80 billion to $6.71 billion, and earnings per share have fallen from $0.42 to a loss of $4.69, reflecting the severe impact of the investment sale on profitability.

Filing Stats: 4,785 words · 19 min read · ~16 pages · Grade level 17 · Accepted 2025-11-10 16:07:28

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Comprehensive Income (Loss) 5 Condensed Consolidated Statements of Stockholders' Equity 6 Condensed Consolidated Statements of Cash Flows 8 Notes to Condensed Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 52 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 67 Item 4.

Controls and Procedures

Controls and Procedures 67

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 69 Item 1A.

Risk Factors

Risk Factors 69 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 69 Item 3. Defaults Upon Senior Securities 69 Item 4. Mine Safety Disclosures 69 Item 5. Other Information 69 Item 6. Exhibits 69 Index to Exhibits 69

Signatures

Signatures 71 2 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

– FINANCIAL STATEMENTS

ITEM 1 – FINANCIAL STATEMENTS HORIZON BANCORP, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollar Amounts in Thousands) September 30, 2025 December 31, 2024 Assets Cash and due from banks $ 76,395 $ 92,300 Interest-bearing deposits in banks 381,860 201,131 Total cash and cash equivalents 458,255 293,431 Interest earning time deposits — 735 Investment securities, held for trading 598 — Investment securities, available for sale 883,242 233,677 Investment securities, held to maturity (fair value of $ 0 and $ 1,566,268 ) — 1,867,690 Loans held for sale 1,921 67,597 Loans, net of allowance for credit losses of $ 50,178 and $ 51,980 4,773,491 4,795,060 Premises and equipment, net 93,413 93,864 Federal Home Loan Bank stock 45,713 53,826 Goodwill 155,211 155,211 Other intangible assets 7,886 10,223 Interest receivable 28,758 39,747 Cash value of life insurance 37,762 37,450 Other assets 226,247 152,635 Total assets $ 6,712,497 $ 7,801,146 Liabilities Deposits Non-interest bearing $ 1,122,888 $ 1,064,818 Interest bearing 4,398,013 4,535,834 Total deposits 5,520,901 5,600,652 Short and long term borrowings 247,172 1,232,252 Subordinated notes 154,011 55,738 Junior subordinated debentures issued to capital trusts 57,636 57,477 Interest payable 12,395 11,137 Other liabilities 59,611 80,308 Total liabilities 6,051,726 7,037,564 Commitments and contingent liabilities Stockholders' Equity Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares — — Common stock, no par value, Authorized 99,000,000 shares — — 51,217,433 and 44,226,819 shares issued at September 30, 2025 and December 31, 2024, respectively Additional paid-in capital 458,734 363,761 Retained earnings 236,312 436,122 Accumulated other comprehensive income (loss) ( 34,275 ) ( 36,301 ) Total stockholders' equity 660,771 763,582 Total liabilities and stockholders' equity $ 6,712,497 $ 7,801,146 See accompanying Notes to Condensed Consolidated Fin

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