HBNC

The headline FY2025 numbers look catastrophic — a $150M net loss, EPS of -$3.24, ROE of -21.9% and a 17.5% shrinkage in total assets to $6.44B — but the MD&A makes clear this is a one-time, self-inflicted reset, not operating deterioration. Management reclassified $1.8B of held-to-maturity securities to available-for-sale (unmasking a $282.6M unrealized loss) and sold $1.4B of bonds for a pre-tax loss of $299.5M, then recycled proceeds into higher-yielding commercial loans. The Q4 run-rate validates the move: net interest income of $63.5M (+19.5% YoY), FTE NIM of 4.29% (vs. 2.97% a year ago, expanding for the ninth consecutive quarter), ROA of 1.63% and ROE of 15.71% — the profile of a healthy community bank, not a distressed one.

Credit quality is the part of the story that genuinely is fine: Q4 annualized net charge-offs of 0.08% and non-performing assets at just 63 bps of total assets are conservative numbers, and organic commercial loan growth of $75.8M (+9.1% annualized) shows the franchise still wins business in its Indiana/Michigan footprint. Funding-side execution is also tracking — interest-bearing liability costs fell another 34 bps in Q4 as management deliberately runs off high-cost transactional deposits. Long-term debt collapsed 79.8% YoY to $249M, consistent with the deleveraging story.