Banking & Finance

Horizon Bancorp introduces stock repurchase program

Financial institution offers returning capital to shareholders who want liquidity.

September 13, 2019
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A financial institution has created a new program for its shareholders. 

Horizon Bancorp Inc. (HBNC), the holding company for Horizon Bank, created a stock repurchase program. 

The holding company’s board of directors, which is made up of 11 shareholders, agreed to repurchase up to 2,250,000, or 5%, of its shares on the open market. 

“This stock repurchase program reflects the board’s and management’s commitment to increasing shareholder value,” said Craig M. Dwight, chief executive officer of Horizon. “We believe that at current price levels, Horizon’s shares are an attractive investment and our repurchase program reflects our continuing confidence in Horizon’s financial strength. Given our strong balance sheet, we believe we can implement this program and continue to retain sufficient liquidity to execute upon our business strategy and maintain our well-capitalized status.”

According to Horizon Bancorp’s 2019 Second Quarter and Year-to-Date Net Income report, the net income for the quarter that ended June 30, 2019, was $16.6 million or $0.37 diluted earnings per share, compared to $14.1 million, or $0.37 diluted earnings per share, for the quarter that ended on June 30, 2018. This represents the highest quarterly net income in the company’s history. 

There also was an increase in the net income for the first six months of 2019. Per the report, Horizon Bancorp saw a $27.5 million, or $0.65 diluted earnings per share, compared to $26.9 million, or $0.70 diluted earnings per share, for the first six months of 2018. This represents the highest year-to-date net income as of June 30th in the company’s history. 

At the close of the market on Sept. 11, HBNC traded at $17.33 per share, and Dwight said they trade about 85,000 shares per day.

With the success of the company, Dwight said the repurchase program will increase the earnings per shares for shareholders who do not want to keep their shares.

“It is a way of returning capital to the shareholders who want liquidity,” Dwight said. “It increases shares of the shareholders’ stake in the stock for those who wish to sell in a better market, they can sell their shares. Another reason why we do a stock buyback is if companies do not have any use for excessive cashflow … then they will turn that excess cash over to shareholders in the form of a stock buyback or a high dividend. We have also increased our dividend. So, our earnings are growing faster than our need for the cash flow.”

According to the Indiana-based bank, the shares can be repurchased from time to time at Horizon’s discretion on the open market, through block trades, in privately negotiated transactions, or otherwise, subject to market conditions, applicable legal requirements and other considerations. 

The management at Horizon will determine the timing and amount of any repurchases based on its evaluation of market conditions and other factors. 

The repurchase program does not obligate Horizon to repurchase any specific dollar amount or number of shares, and the program may be terminated, suspended or modified at any time by the board in its sole discretion and without notice.

Horizon Bank has Michigan locations in Battle Creek, Benton Harbor, East Lansing, New Buffalo, Grand Rapids, Okemos, Frankenmuth, Midland, Portage, Schoolcraft, St. Joseph, Three Oaks, Three Rivers and Union.

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