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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 2023
HORIZON BANCORP, INC.
(Exact name of registrant as specified in its charter)
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Indiana | 000-10792 | 35-1562417 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
515 Franklin Street
Michigan City, IN 46360
(Address of principal executive offices, including zip code)
(219) 879-0211
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, no par value | HBNC | The NASDAQ Stock Market, LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On July 26, 2023, Horizon Bancorp, Inc. (the “Company”) issued a press release announcing earnings and other financial results for the three–month period ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.
Item 7.01 Regulation FD Disclosure
Investor Presentation
The Company has prepared presentation materials (the “Investor Presentation”) that management intends to use during its previously announced Earnings Conference Call on Thursday, July 27, 2023 at 7:30 a.m. Central Time, and from time to time thereafter in presentations about the Company’s operations and performance. The Company may use the Investor Presentation, possibly with modifications, in presentations to current and potential investors, analysts, lenders, business partners, acquisition candidates, customers, employees and others with an interest in the Company and its business.
A copy of the Investor Presentation is furnished as Exhibit 99.2 to this report and incorporated here by reference. The Investor Presentation is also available on the Company’s investor website at www.horizonbank.com. Materials on the Company’s investor website are not part of or incorporated by reference into this report.
In accordance with General Instruction B.2 of Form 8–K, the information in this Current Report on Form 8–K, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
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(d) Exhibits | | |
EXHIBIT INDEX |
| Exhibit No. | Description | Location |
| 99.1 | | Attached |
| 99.2 | | Attached |
| 104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document) | Within the Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: | July 26, 2023 | HORIZON BANCORP, INC. |
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| | By: | /s/ Mark E. Secor |
| | | Mark E. Secor, |
| | | Executive Vice President & Chief Financial Officer |
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Contact: | Mark E. Secor |
| Chief Financial Officer |
Phone: | (219) 873–2611 |
Fax: | (219) 874–9280 |
Date: | July 26, 2023 |
FOR IMMEDIATE RELEASE
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Michigan City, Indiana, July 26, 2023 (GLOBE NEWSWIRE) – (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three and six months ended June 30, 2023.
“Horizon's favorable second quarter earnings reflect the strength of our diversified business model across our retail, commercial and wealth platforms,” President and Chief Executive Officer Thomas M. Prame said. “Our seasoned and granular deposit base performed well, maintaining a measured approach to funding costs while navigating a highly competitive market and shifting client demand to interest bearing products. These efforts paired well with our strategy of focusing loan production on higher yielding categories, resulting in improved yields and spread income. In the second quarter, we also posted strong non–interest income growth, with the active engagement of our clients in card spending and mortgage banking services. The positive results of our core revenue drivers were complimented by our consistent credit quality strength and our long standing expense management discipline.”
Second Quarter 2023 Highlights
•Increased net income to $18.8 million or $0.43 per diluted share, from $18.2 million or $0.42 in the first quarter of 2023.
•Net interest income of $46.2 million increased from $45.2 million in the linked quarter. Second quarter 2023 net interest income benefited from average total loan and earning asset growth over the linked quarter, as well as a swap termination fee of $1.5 million that contributed approximately $0.02 to diluted earnings per share.
•Non–interest income expanded to $11.0 million from $9.6 million in the linked quarter.
•Continued to manage non–interest expense as a percentage of average assets to less than 1.90% on an annualized basis, totaling $36.3 million, or 1.86%, compared to $34.5 million, or 1.79% in the linked quarter.
•Deposits remained resilient during the quarter, totaling $5.71 billion at period end, compared to $5.70 billion on March 31, 2023.
•Loans grew to $4.27 billion at period end, increasing by 2.2% annualized during the quarter and 5.3% annualized since December 31, 2022.
•Maintained consistent and sound asset quality with 30 to 89 days delinquent loans representing 0.26% of total loans and non–performing loans representing 0.52% of total loans at period end, as well as net charge–offs representing 0.01% of average loans during the quarter.
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
•Tangible common equity continued to improve to 6.91% of tangible assets on June 30, 2023, an improvement of 4 basis points during the quarter and 35 basis points since December 31, 2022.
•The Bank’s capital position was strong with leverage and risk based capital ratios of 8.72% and 13.03%, respectively.
•Horizon's annualized dividend yield was robust at 6.15% as of June 30, 2023, with cash maintained at the holding company level representing approximately eight quarters of dividend payments and fixed costs.
Summary | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | June 30, | | March 31, | | June 30, |
Net Interest Income and Net Interest Margin | | 2023 | | 2023 | | 2022 |
Net interest income | | $ | 46,160 | | | $ | 45,237 | | | $ | 52,044 | |
Net interest margin | | 2.69 | % | | 2.67 | % | | 3.13 | % |
Adjusted net interest margin | | 2.57 | % | | 2.65 | % | | 3.06 | % |
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| | For the Three Months Ended |
| | June 30, | | March 31, | | June 30, |
Asset Yields and Funding Costs | | 2023 | | 2023 | | 2022 |
Interest earning assets | | 4.39 | % | | 4.17 | % | | 3.39 | % |
Interest bearing liabilities | | 2.10 | % | | 1.85 | % | | 0.34 | % |
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| | For the Three Months Ended |
Non-interest Income and | | June 30, | | March 31, | | June 30, |
Mortgage Banking Income | | 2023 | | 2023 | | 2022 |
Total non–interest income | | $ | 10,997 | | | $ | 9,620 | | | $ | 12,434 | |
Gain on sale of mortgage loans | | 1,005 | | | 785 | | | 2,501 | |
Mortgage servicing income net of impairment | | 640 | | | 713 | | | 319 | |
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| | For the Three Months Ended |
| | June 30, | | March 31, | | June 30, |
Non-interest Expense | | 2023 | | 2023 | | 2022 |
Total non–interest expense | | $ | 36,262 | | | $ | 34,524 | | | $ | 35,404 | |
Annualized non–interest expense to average assets | | 1.86 | % | | 1.79 | % | | 1.90 | % |
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| | For the Three Months Ended |
| | June 30, | | March 31, | | June 30, |
Credit Quality | | 2023 | | 2023 | | 2022 |
Allowance for credit losses to total loans | | 1.17 | % | | 1.17 | % | | 1.32 | % |
Non–performing loans to total loans | | 0.52 | % | | 0.47 | % | | 0.51 | % |
Percent of net charge–offs to average loans outstanding for the period | | 0.01 | % | | 0.01 | % | | 0.01 | % |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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| | June 30, | | | Net Reserve | | December 31, |
Allowance for Credit Losses | | 2023 | | | | 2Q23 | | 1Q23 | | 2022 |
Commercial | | $ | 30,354 | | | | | $ | (802) | | | $ | (1,289) | | | $ | 32,445 | |
Retail Mortgage | | 3,648 | | | | | (799) | | | (1,130) | | | 5,577 | |
Warehouse | | 893 | | | | | 95 | | | (222) | | | 1,020 | |
Consumer | | 15,081 | | | | | 1,956 | | | 1,703 | | | 11,422 | |
Allowance for Credit Losses (“ACL”) | | $ | 49,976 | | | | | $ | 450 | | | $ | (938) | | | $ | 50,464 | |
ACL / Total Loans | | 1.17 | % | | | | | | | | 1.21 | % |
Acquired Loan Discount (“ALD”) | | $ | 5,519 | | | | | $ | (639) | | | $ | (121) | | | $ | 6,279 | |
“Horizon's unwavering focus on lending to well qualified commercial and consumer borrowers in our dynamic local markets was reflected in our strong asset quality metrics,” Mr. Prame said. “Our consistent and conservative underwriting practices are expected to outperform relative to the industry, and we believe we are well positioned to navigate potential shifts in the economic outlook.”
Income Statement Highlights
Net income for the second quarter of 2023 was $18.8 million, or $0.43 diluted earnings per share, compared to $18.2 million, or $0.42, for the linked quarter and $24.9 million, or $0.57, for the prior year period. The change in net income for the second quarter of 2023 when compared to the linked quarter, reflects growth in non–interest income of $1.4 million, improved net interest income of $923,000 and lower income tax expense of $411,000, offset by an increase in non–interest expense of $1.7 million and a modest increase in credit loss expense of $438,000.
Net interest income was $46.2 million in the second quarter of 2023, compared to $45.2 million in the linked quarter, benefiting from growth in average loans receivable and average interest earning assets, as well as a swap termination fee of $1.5 million.
Total non–interest income was $1.4 million higher in the second quarter of 2023 when compared to the first quarter of 2023, primarily due to a $717,000 increase in interchange fees, a $520,000 increase in gain on sale of investment securities and a $220,000 increase in gain on sale of mortgage loans, offset by a decrease of $73,000 in mortgage servicing income net of impairment and a decrease of $28,000 in fiduciary activities.
Total non–interest expense was $1.7 million higher in the second quarter of 2023 when compared to the first quarter of 2023, primarily due to a $1.4 million increase in salaries and employee benefits resulting from merit increases, commission expense and higher variable health care costs, a $300,000 increase in FDIC insurance expense and an increase in loan expenses, offset by a decrease in net occupancy expense and outside services expense from the linked quarter.
Horizon's effective tax rate was 7.2% for the second quarter of 2023, with income tax expense of $1.5 million decreasing $411,000 when compared to the first quarter of 2023.
Net Interest Margin
Horizon’s net interest margin was 2.69% for the second quarter of 2023 compared to 2.67% for the first quarter of 2023. The increase in net interest margin reflects an increase in the yield on interest earning assets of 22 basis points, offset by an increase in the cost of interest bearing liabilities of 25 basis points.
Net interest margin, excluding the aforementioned swap termination fee and acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.57% for the second quarter of 2023, compared to 2.65% for the linked quarter. (See the “Non–GAAP Reconciliation of Net Interest Margin” table below).
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Lending Activity
Total loan balances and loans held for sale increased to $4.27 billion on June 30, 2023 compared to $4.25 billion on March 31, 2023. During the three months ended June 30, 2023, mortgage warehouse loans increased $29.4 million, residential mortgage loans increased $12.3 million, loans held for sale increased $4.5 million and commercial loans increased $820,000, offset by measured payoffs and pay downs of lower yielding indirect auto loans that were the primary driver of a $23.2 million decrease in consumer loans.
The lending activities for the quarter were well balanced, with mortgage activities increasing with client demand and consumer lending displaying the strategic shift of the organization to focus on higher yielding assets. Commercial lending activity for the quarter was strong but impacted by accelerated large pay downs during the last week of the quarter.
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Loan Growth by Type |
(Dollars in Thousands, Unaudited) |
| | June 30, | | March 31, | | QTD | | | | | | QTD | | Annualized |
| | 2023 | | 2023 | | $ Change | | | | | | % Change | | % Change |
Commercial | | $ | 2,506,279 | | | $ | 2,505,459 | | | $ | 820 | | | | | | | 0.0% | | 0.1% |
Residential mortgage | | 674,751 | | | 662,459 | | | 12,292 | | | | | | | 1.9% | | 7.4% |
Consumer | | 1,002,885 | | | 1,026,076 | | | (23,191) | | | | | | | (2.3)% | | (9.1)% |
Subtotal | | 4,183,915 | | | 4,193,994 | | | (10,079) | | | | | | | (0.2)% | | (1.0)% |
Loans held for sale | | 6,933 | | | 2,409 | | | 4,524 | | | | | | | 187.8% | | 753.2% |
Mortgage warehouse | | 82,345 | | | 52,957 | | | 29,388 | | | | | | | 55.5% | | 222.6% |
Total loans and loans held for sale | | $ | 4,273,193 | | | $ | 4,249,360 | | | $ | 23,833 | | | | | | | 0.6% | | 2.2% |
Deposit Activity
Total deposit balances of $5.71 billion on June 30, 2023 increased 0.13% compared to $5.70 billion on March 31, 2023.
The deposit mix at the end of the second quarter of 2023 represented the demand for clients to earn more interest on their excess funds and consumers spending excess liquidity. Horizon successfully held deposits in the quarter while continuing to prudently manage funding costs as the Bank's long–tenured and granular core deposit relationships remained with the Bank, reflecting the stability of the Bank's in–market deposit portfolio.
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Deposit Growth by Type |
(Dollars in Thousands, Unaudited) |
| June 30, | | March 31, | | QTD | | | | | | QTD | | Annualized |
| 2023 | | 2023 | | $ Change | | | | | | % Change | | % Change |
Non–interest bearing | $ | 1,170,055 | | | $ | 1,231,845 | | | $ | (61,790) | | | | | | | (5.0)% | | (20.3)% |
Interest bearing | 3,289,474 | | | 3,402,525 | | | (113,051) | | | | | | | (3.3)% | | (13.5)% |
Time deposits | 1,249,803 | | | 1,067,575 | | | 182,228 | | | | | | | 17.1% | | 69.2% |
Total deposits | $ | 5,709,332 | | | $ | 5,701,945 | | | $ | 7,387 | | | | | | | 0.1% | | 0.5% |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Capital
The capital resources of the Company and the Bank continued to exceed regulatory capital ratios for “well capitalized” banks at June 30, 2023. Stockholders’ equity totaled $709.2 million at June 30, 2023 and the ratio of average stockholders’ equity to average assets was 8.97% for the six months ended June 30, 2023.
Tangible book value, which excludes intangible assets from total equity, per common share (“TBVPS”) grew to $12.34, increasing $0.17 during the second quarter of 2023 and $0.75 during the first six months of the year.
The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of June 30, 2023.
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| | Actual | | Required for Capital Adequacy Purposes | | Required for Capital Adequacy Purposes with Capital Buffer | | Well Capitalized Under Prompt Corrective Action Provisions |
| | $ | | Ratio | | $ | | Ratio | | $ | | Ratio | | $ | | Ratio |
Total capital (to risk–weighted assets) | | | | | | | | | | | | | | | | |
Consolidated | | $ | 806,546 | | | 14.35 | % | | $ | 449,624 | | | 8.00 | % | | $ | 590,131 | | | 10.50 | % | | N/A | | N/A |
Bank | | 732,236 | | | 13.03 | % | | 449,727 | | | 8.00 | % | | 590,267 | | | 10.50 | % | | $ | 562,159 | | | 10.00 | % |
Tier 1 capital (to risk–weighted assets) | | | | | | | | | | | | | | | | |
Consolidated | | 755,581 | | | 13.44 | % | | 337,218 | | | 6.00 | % | | 477,725 | | | 8.50 | % | | N/A | | N/A |
Bank | | 681,271 | | | 12.12 | % | | 337,295 | | | 6.00 | % | | 477,835 | | | 8.50 | % | | 449,727 | | | 8.00 | % |
Common equity tier 1 capital (to risk–weighted assets) | | | | | | | | | | | | | | | | |
Consolidated | | 635,090 | | | 11.30 | % | | 252,913 | | | 4.50 | % | | 393,421 | | | 7.00 | % | | N/A | | N/A |
Bank | | 681,271 | | | 12.12 | % | | 252,971 | | | 4.50 | % | | 393,511 | | | 7.00 | % | | 365,403 | | | 6.50 | % |
Tier 1 capital (to average assets) | | | | | | | | | | | | | | | | |
Consolidated | | 755,581 | | | 9.72 | % | | 311,026 | | | 4.00 | % | | 311,026 | | | 4.00 | % | | N/A | | N/A |
Bank | | 681,271 | | | 8.72 | % | | 312,663 | | | 4.00 | % | | 312,663 | | | 4.00 | % | | 390,829 | | | 5.00 | % |
Liquidity
The Bank maintains a stable base of core deposits provided by long–standing and new relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayments, investment security cash flows, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the Federal Home Loan Bank of Indianapolis (the “FHLB”). On June 30, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.71 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $650.7 million of unpledged investment securities on June 30, 2023.
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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: current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues; 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 ability of Horizon to remediate its material weaknesses in its internal control over financial reporting; continuing increases in inflation; 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; economic conditions and their impact on Horizon and its customers, including local and global economic recovery from the pandemic; 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; material changes outside the U.S. or in overseas relations, including changes in U.S. trade relations related to imposition of tariffs, Brexit, and the phase out of the London Interbank Offered Rate (“LIBOR”); 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 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.
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Financial Highlights |
(Dollars in Thousands, Unaudited) |
| | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Balance sheet: | | | | | | | | | | |
Total assets | | $ | 7,963,353 | | | $ | 7,897,995 | | | $ | 7,872,518 | | | $ | 7,718,695 | | | $ | 7,640,936 | |
Interest earning deposits & federal funds sold | | 119,637 | | | 30,221 | | | 12,233 | | | 7,302 | | | 5,646 | |
Interest earning time deposits | | 2,452 | | | 3,098 | | | 2,812 | | | 2,814 | | | 3,799 | |
Investment securities | | 2,889,309 | | | 2,958,978 | | | 3,020,306 | | | 3,017,191 | | | 3,093,792 | |
Commercial loans | | 2,506,279 | | | 2,505,459 | | | 2,467,422 | | | 2,403,743 | | | 2,363,991 | |
Mortgage warehouse loans | | 82,345 | | | 52,957 | | | 69,529 | | | 73,690 | | | 116,488 | |
Residential mortgage loans | | 674,751 | | | 662,459 | | | 653,292 | | | 634,901 | | | 608,582 | |
Consumer loans | | 1,002,885 | | | 1,026,076 | | | 967,755 | | | 919,198 | | | 866,819 | |
Total loans | | 4,266,260 | | | 4,246,951 | | | 4,157,998 | | | 4,031,532 | | | 3,955,880 | |
Earning assets | | 7,319,100 | | | 7,273,921 | | | 7,225,833 | | | 7,087,368 | | | 7,088,737 | |
Non–interest bearing deposit accounts | | 1,170,055 | | | 1,231,845 | | | 1,277,768 | | | 1,315,155 | | | 1,328,213 | |
Interest bearing transaction accounts | | 3,289,474 | | | 3,402,525 | | | 3,582,891 | | | 3,736,798 | | | 3,760,890 | |
Time deposits | | 1,249,803 | | | 1,067,575 | | | 997,115 | | | 778,885 | | | 756,482 | |
Total deposits | | 5,709,332 | | | 5,701,945 | | | 5,857,774 | | | 5,830,838 | | | 5,845,585 | |
Borrowings | | 1,352,039 | | | 1,311,927 | | | 1,142,949 | | | 1,048,091 | | | 959,222 | |
Subordinated notes | | 58,970 | | | 58,933 | | | 58,896 | | | 58,860 | | | 58,823 | |
Junior subordinated debentures issued to capital trusts | | 57,143 | | | 57,087 | | | 57,027 | | | 56,966 | | | 56,907 | |
Total stockholders’ equity | | 709,243 | | | 702,559 | | | 677,375 | | | 644,993 | | | 657,865 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Financial Highlights |
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) |
| | Three Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Income statement: | | | | | | | | | | |
Net interest income | | $ | 46,160 | | | $ | 45,237 | | | $ | 48,782 | | | $ | 53,395 | | | $ | 53,008 | |
Credit loss expense (recovery) | | 680 | | | 242 | | | (69) | | | (601) | | | 240 | |
Non–interest income | | 10,997 | | | 9,620 | | | 10,674 | | | 10,188 | | | 12,434 | |
Non–interest expense | | 36,262 | | | 34,524 | | | 35,711 | | | 38,350 | | | 36,368 | |
Income tax expense | | 1,452 | | | 1,863 | | | 2,649 | | | 2,013 | | | 3,975 | |
Net income | | $ | 18,763 | | | $ | 18,228 | | | $ | 21,165 | | | $ | 23,821 | | | $ | 24,859 | |
| | | | | | | | | | |
Per share data: | | | | | | | | | | |
Basic earnings per share | | $ | 0.43 | | | $ | 0.42 | | | $ | 0.49 | | | $ | 0.55 | | | $ | 0.57 | |
Diluted earnings per share | | 0.43 | | | 0.42 | | | 0.48 | | | 0.55 | | | 0.57 | |
Cash dividends declared per common share | | 0.16 | | | 0.16 | | | 0.16 | | | 0.16 | | | 0.16 | |
Book value per common share | | 16.25 | | | 16.11 | | | 15.55 | | | 14.80 | | | 15.10 | |
Tangible book value per common share | | 12.34 | | | 12.17 | | | 11.59 | | | 10.82 | | | 11.11 | |
Market value – high | | 11.10 | | | 16.32 | | | 20.00 | | | 20.59 | | | 19.21 | |
Market value – low | | $ | 7.75 | | | $ | 10.31 | | | $ | 14.51 | | | $ | 16.74 | | | $ | 16.72 | |
Weighted average shares outstanding – Basis | | 43,639,987 | | | 43,583,554 | | | 43,574,151 | | | 43,573,370 | | | 43,572,796 | |
Weighted average shares outstanding – Diluted | | 43,742,588 | | | 43,744,721 | | | 43,667,953 | | | 43,703,793 | | | 43,684,691 | |
| | | | | | | | | | |
Key ratios: | | | | | | | | | | |
Return on average assets | | 0.96 | % | | 0.94 | % | | 1.09 | % | | 1.24 | % | | 1.33 | % |
Return on average common stockholders’ equity | | 10.59 | | | 10.66 | | | 12.72 | | | 13.89 | | | 14.72 | |
Net interest margin | | 2.69 | | | 2.67 | | | 2.85 | | | 3.04 | | | 3.13 | |
Allowance for credit losses to total loans | | 1.17 | | | 1.17 | | | 1.21 | | | 1.27 | | | 1.32 | |
Average equity to average assets | | 9.07 | | | 8.86 | | | 8.55 | | | 8.91 | | | 9.06 | |
Efficiency ratio | | 63.44 | | | 62.93 | | | 60.06 | | | 59.33 | | | 54.91 | |
Annualized non–interest expense to average assets | | 1.86 | | | 1.79 | | | 1.84 | | | 1.91 | | | 1.90 | |
Bank only capital ratios: | | | | | | | | | | |
Tier 1 capital to average assets | | 8.72 | | | 8.86 | | | 8.89 | | | 8.84 | | | 8.85 | |
Tier 1 capital to risk weighted assets | | 12.12 | | | 12.65 | | | 12.72 | | | 12.74 | | | 12.87 | |
Total capital to risk weighted assets | | 13.03 | | | 13.56 | | | 13.59 | | | 13.65 | | | 13.83 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | |
Financial Highlights |
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) |
| | Six Months Ended |
| | June 30, | | June 30, |
| | 2023 | | 2022 |
Income statement: | | | | |
Net interest income | | $ | 91,397 | | | $ | 98,875 | |
Credit loss expense (recovery) | | 922 | | | (1,146) | |
Non–interest income | | 20,617 | | | 26,589 | |
Non–interest expense | | 70,786 | | | 70,674 | |
Income tax expense | | 3,315 | | | 7,514 | |
Net income | | $ | 36,991 | | | $ | 48,422 | |
| | | | |
Per share data: | | | | |
Basic earnings per share | | $ | 0.85 | | | $ | 1.11 | |
Diluted earnings per share | | 0.85 | | | 1.11 | |
Cash dividends declared per common share | | 0.32 | | | 0.31 | |
Book value per common share | | 16.25 | | | 15.10 | |
Tangible book value per common share | | 12.34 | | | 11.11 | |
Market value – high | | 16.32 | | | 23.45 | |
Market value – low | | $ | 7.75 | | | $ | 16.72 | |
Weighted average shares outstanding – Basis | | 43,611,926 | | | 43,563,804 | |
Weighted average shares outstanding – Diluted | | 43,757,321 | | | 43,711,822 | |
| | | | |
Key ratios: | | | | |
Return on average assets | | 0.95 | % | | 1.32 | % |
Return on average common stockholders’ equity | | 10.62 | | | 14.01 | |
Net interest margin | | 2.68 | | | 3.02 | |
Allowance for credit losses to total loans | | 1.17 | | | 1.32 | |
Average equity to average assets | | 8.97 | | | 9.43 | |
Efficiency ratio | | 63.19 | | | 56.33 | |
Annualized non–interest expense to average assets | | 1.82 | | | 1.93 | |
Bank only capital ratios: | | | | |
Tier 1 capital to average assets | | 8.72 | | | 8.85 | |
Tier 1 capital to risk weighted assets | | 12.12 | | | 12.87 | |
Total capital to risk weighted assets | | 13.03 | | | 13.83 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Highlights |
(Dollars in Thousands Except Ratios, Unaudited) |
| | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Loan data: | | | | | | | | | | |
Substandard loans | | $ | 41,484 | | | $ | 49,804 | | | $ | 56,194 | | | $ | 57,932 | | | $ | 59,377 | |
30 to 89 days delinquent | | 10,913 | | | 13,971 | | | 10,709 | | | 6,970 | | | 6,739 | |
| | | | | | | | | | |
Non–performing loans: | | | | | | | | | | |
90 days and greater delinquent – accruing interest | | 1,313 | | | 137 | | | 92 | | | 193 | | | 210 | |
Trouble debt restructures – accruing interest | | — | | | — | | | 2,570 | | | 2,529 | | | 2,535 | |
Trouble debt restructures – non–accrual | | — | | | — | | | 1,548 | | | 1,665 | | | 1,345 | |
Non–accrual loans | | 20,796 | | | 19,660 | | | 17,630 | | | 14,771 | | | 16,116 | |
Total non–performing loans | | $ | 22,109 | | | $ | 19,797 | | | $ | 21,840 | | | $ | 19,158 | | | $ | 20,206 | |
Non–performing loans to total loans | | 0.52 | % | | 0.47 | % | | 0.52 | % | | 0.47 | % | | 0.51 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allocation of the Allowance for Credit Losses |
(Dollars in Thousands, Unaudited) |
| | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Commercial | | $ | 30,354 | | | $ | 31,156 | | | $ | 32,445 | | | $ | 33,806 | | | $ | 34,802 | |
Residential mortgage | | 3,648 | | | 4,447 | | | 5,577 | | | 5,137 | | | 4,422 | |
Mortgage warehouse | | 893 | | | 798 | | | 1,020 | | | 1,024 | | | 1,067 | |
Consumer | | 15,081 | | | 13,125 | | | 11,422 | | | 11,402 | | | 12,059 | |
Total | | $ | 49,976 | | | $ | 49,526 | | | $ | 50,464 | | | $ | 51,369 | | | $ | 52,350 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Charge–offs (Recoveries) |
(Dollars in Thousands Except Ratios, Unaudited) |
| | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Commercial | | $ | 101 | | | $ | 104 | | | $ | (94) | | | $ | 51 | | | $ | (75) | |
Residential mortgage | | (10) | | | (6) | | | (8) | | | (75) | | | 40 | |
Mortgage warehouse | | — | | | — | | | — | | | — | | | — | |
Consumer | | 183 | | | 281 | | | 387 | | | 162 | | | 319 | |
Total | | $ | 274 | | | $ | 379 | | | $ | 285 | | | $ | 138 | | | $ | 284 | |
Percent of net charge–offs (recoveries) to average loans outstanding for the period | | 0.01 | % | | 0.01 | % | | 0.01 | % | | 0.00 | % | | 0.01 | % |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Non–performing Loans |
(Dollars in Thousands Except Ratios, Unaudited) |
| | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Commercial | | $ | 8,275 | | | $ | 8,523 | | | $ | 9,330 | | | $ | 7,199 | | | $ | 8,008 | |
Residential mortgage | | 8,168 | | | 6,926 | | | 8,123 | | | 8,047 | | | 8,469 | |
Mortgage warehouse | | — | | | — | | | — | | | — | | | — | |
Consumer | | 5,666 | | | 4,348 | | | 4,387 | | | 3,912 | | | 3,729 | |
Total | | $ | 22,109 | | | $ | 19,797 | | | $ | 21,840 | | | $ | 19,158 | | | $ | 20,206 | |
Non–performing loans to total loans | | 0.52 | % | | 0.47 | % | | 0.52 | % | | 0.47 | % | | 0.51 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Real Estate Owned and Repossessed Assets |
(Dollars in Thousands, Unaudited) |
| | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Commercial | | $ | 1,567 | | | $ | 1,567 | | | $ | 1,881 | | | $ | 3,206 | | | $ | 1,414 | |
Residential mortgage | | 107 | | | 203 | | | 107 | | | 22 | | | — | |
Mortgage warehouse | | — | | | — | | | — | | | — | | | — | |
Consumer | | 7 | | | 78 | | | 152 | | | 14 | | | 58 | |
Total | | $ | 1,681 | | | $ | 1,848 | | | $ | 2,140 | | | $ | 3,242 | | | $ | 1,472 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average Balance Sheets |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Three Months Ended |
| | June 30, 2023 | | June 30, 2022 |
| | Average Balance | | Interest | | Average Rate | | Average Balance | | Interest | | Average Rate |
Assets | | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | | |
Federal funds sold | | $ | 30,926 | | | $ | 376 | | | 4.88 | % | | $ | 7,083 | | | $ | 17 | | | 0.96 | % |
Interest earning deposits | | 9,002 | | | 99 | | | 4.41 | % | | 15,661 | | | 26 | | | 0.67 | % |
Investment securities – taxable | | 1,706,761 | | | 8,740 | | | 2.05 | % | | 1,770,816 | | | 8,673 | | | 1.96 | % |
Investment securities – non–taxable (1) | | 1,240,931 | | | 7,059 | | | 2.89 | % | | 1,374,032 | | | 7,307 | | | 2.70 | % |
Loans receivable (2) (3) | | 4,225,020 | | | 60,594 | | | 5.78 | % | | 3,776,041 | | | 40,585 | | | 4.33 | % |
Total interest earning assets | | 7,212,640 | | | 76,868 | | | 4.39 | % | | 6,943,633 | | | 56,608 | | | 3.39 | % |
Non–interest earning assets | | | | | | | | | | | | |
Cash and due from banks | | 102,935 | | | | | | | 98,040 | | | | | |
Allowance for credit losses | | (49,481) | | | | | | | (52,525) | | | | | |
Other assets | | 573,932 | | | | | | | 487,090 | | | | | |
Total average assets | | $ | 7,840,026 | | | | | | | $ | 7,476,238 | | | | | |
| | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | |
Interest bearing liabilities | | | | | | | | | | | | |
Interest bearing deposits | | $ | 4,445,074 | | | $ | 18,958 | | | 1.71 | % | | $ | 4,540,959 | | | $ | 1,677 | | | 0.15 | % |
Borrowings | | 1,176,702 | | | 9,035 | | | 3.08 | % | | 613,282 | | | 1,409 | | | 0.92 | % |
Repurchase agreements | | 140,606 | | | 683 | | | 1.95 | % | | 141,470 | | | 41 | | | 0.12 | % |
Subordinated notes | | 58,946 | | | 881 | | | 5.99 | % | | 58,800 | | | 881 | | | 6.01 | % |
Junior subordinated debentures issued to capital trusts | | 57,110 | | | 1,151 | | | 8.08 | % | | 56,870 | | | 556 | | | 3.92 | % |
Total interest bearing liabilities | | 5,878,438 | | | 30,708 | | | 2.10 | % | | 5,411,381 | | | 4,564 | | | 0.34 | % |
Non–interest bearing liabilities | | | | | | | | | | | | |
Demand deposits | | 1,186,520 | | | | | | | 1,335,779 | | | | | |
Accrued interest payable and other liabilities | | 64,115 | | | | | | | 51,779 | | | | | |
Stockholders’ equity | | 710,953 | | | | | | | 677,299 | | | | | |
Total average liabilities and stockholders’ equity | | $ | 7,840,026 | | | | | | | $ | 7,476,238 | | | | | |
| | | | | | | | | | | | |
Net interest income / spread | | | | $ | 46,160 | | | 2.29 | % | | | | $ | 52,044 | | | 3.05 | % |
Net interest income as a percent of average interest earning assets (1) | | | | | | 2.69 | % | | | | | | 3.13 | % |
| | | | | | | | | | | | |
(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. |
(2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. |
(3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis. |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average Balance Sheets |
(Dollars in Thousands, Unaudited) |
| | Six Months Ended | | Six Months Ended |
| | June 30, 2023 | | June 30, 2022 |
| | Average Balance | | Interest | | Average Rate | | Average Balance | | Interest | | Average Rate |
Assets | | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | | |
Federal funds sold | | $ | 19,411 | | | $ | 459 | | | 4.77 | % | | $ | 121,707 | | | $ | 108 | | | 0.18 | % |
Interest earning deposits | | 8,891 | | | 169 | | | 3.83 | % | | 18,154 | | | 50 | | | 0.56 | % |
Investment securities – taxable | | 1,717,008 | | | 17,465 | | | 2.05 | % | | 1,709,014 | | | 16,064 | | | 1.90 | % |
Investment securities – non–taxable (1) | | 1,277,328 | | | 14,615 | | | 2.92 | % | | 1,326,819 | | | 14,004 | | | 2.69 | % |
Loans receivable (2) (3) | | 4,184,347 | | | 115,958 | | | 5.61 | % | | 3,703,857 | | | 77,124 | | | 4.22 | % |
Total interest earning assets | | 7,206,985 | | | 148,666 | | | 4.28 | % | | 6,879,551 | | | 107,350 | | | 3.27 | % |
Non–interest earning assets | | | | | | | | | | | | |
Cash and due from banks | | 103,247 | | | | | | | 101,340 | | | | | |
Allowance for credit losses | | (49,907) | | | | | | | (53,411) | | | | | |
Other assets | | 574,707 | | | | | | | 463,868 | | | | | |
Total average assets | | $ | 7,835,032 | | | | | | | $ | 7,391,348 | | | | | |
| | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | |
Interest bearing liabilities | | | | | | | | | | | | |
Interest bearing deposits | | $ | 4,472,519 | | | $ | 33,777 | | | 1.52 | % | | $ | 4,509,962 | | | $ | 3,173 | | | 0.14 | % |
Borrowings | | 1,115,350 | | | 18,303 | | | 3.31 | % | | 558,867 | | | 2,453 | | | 0.89 | % |
Repurchase agreements | | 139,683 | | | 1,186 | | | 1.71 | % | | 140,610 | | | 77 | | | 0.11 | % |
Subordinated notes | | 58,928 | | | 1,761 | | | 6.03 | % | | 58,782 | | | 1,761 | | | 6.04 | % |
Junior subordinated debentures issued to capital trusts | | 57,079 | | | 2,242 | | | 7.92 | % | | 56,839 | | | 1,011 | | | 3.59 | % |
Total interest bearing liabilities | | 5,843,559 | | | 57,269 | | | 1.98 | % | | 5,325,060 | | | 8,475 | | | 0.32 | % |
Non–interest bearing liabilities | | | | | | | | | | | | |
Demand deposits | | 1,220,917 | | | | | | | 1,329,316 | | | | | |
Accrued interest payable and other liabilities | | 67,893 | | | | | | | 39,968 | | | | | |
Stockholders’ equity | | 702,663 | | | | | | | 697,004 | | | | | |
Total average liabilities and stockholders’ equity | | $ | 7,835,032 | | | | | | | $ | 7,391,348 | | | | | |
| | | | | | | | | | | | |
Net interest income / spread | | | | $ | 91,397 | | | 2.30 | % | | | | $ | 98,875 | | | 2.95 | % |
Net interest income as a percent of average interest earning assets (1) | | | | | | 2.68 | % | | | | | | 3.02 | % |
| | | | | | | | | | | | |
(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. |
(2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. |
(3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis. |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | |
Condensed Consolidated Balance Sheets |
(Dollars in Thousands) |
| | | | |
| | June 30, 2023 | | December 31, 2022 |
| | (Unaudited) | | |
Assets | | | | |
Cash and due from banks | | $ | 228,986 | | | $ | 123,505 | |
Interest earning time deposits | | 2,452 | | | 2,812 | |
Investment securities, available for sale | | 905,813 | | | 997,558 | |
Investment securities, held to maturity (fair value $1,668,229 and $1,681,309) | | 1,983,496 | | | 2,022,748 | |
Loans held for sale | | 6,933 | | | 5,807 | |
Loans, net of allowance for credit losses of $49,976 and $50,464 | | 4,216,284 | | | 4,107,534 | |
Premises and equipment, net | | 95,053 | | | 92,677 | |
Federal Home Loan Bank stock | | 34,509 | | | 26,677 | |
Goodwill | | 155,211 | | | 155,211 | |
Other intangible assets | | 15,433 | | | 17,239 | |
Interest receivable | | 37,536 | | | 35,294 | |
Cash value of life insurance | | 148,171 | | | 146,175 | |
Other assets | | 133,476 | | | 139,281 | |
Total assets | | $ | 7,963,353 | | | $ | 7,872,518 | |
| | | | |
Liabilities | | | | |
Deposits | | | | |
Non–interest bearing | | $ | 1,170,055 | | | $ | 1,277,768 | |
Interest bearing | | 4,539,277 | | | 4,580,006 | |
Total deposits | | 5,709,332 | | | 5,857,774 | |
Borrowings | | 1,352,039 | | | 1,142,949 | |
Subordinated notes | | 58,970 | | | 58,896 | |
Junior subordinated debentures issued to capital trusts | | 57,143 | | | 57,027 | |
Interest payable | | 12,739 | | | 5,380 | |
Other liabilities | | 63,887 | | | 73,117 | |
Total liabilities | | 7,254,110 | | | 7,195,143 | |
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 Issued and outstanding 44,112,816 and 43,937,889 shares | | — | | | — | |
Additional paid–in capital | | 354,953 | | | 354,188 | |
Retained earnings | | 452,209 | | | 429,385 | |
Accumulated other comprehensive income (loss) | | (97,919) | | | (106,198) | |
Total stockholders’ equity | | 709,243 | | | 677,375 | |
Total liabilities and stockholders’ equity | | $ | 7,963,353 | | | $ | 7,872,518 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Condensed Consolidated Statements of Income |
(Dollars in Thousands Except Per Share Data, Unaudited) |
| | Three Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Interest income | | | | | | | | | | |
Loans receivable | | $ | 60,594 | | | $ | 55,364 | | | $ | 50,859 | | | $ | 45,517 | | | $ | 40,585 | |
Investment securities – taxable | | 8,740 | | | 8,725 | | | 8,702 | | | 8,436 | | | 8,673 | |
Investment securities – non–taxable | | 7,059 | | | 7,556 | | | 7,543 | | | 7,478 | | | 7,307 | |
Other | | 475 | | | 153 | | | 83 | | | 65 | | | 43 | |
Total interest income | | 76,868 | | | 71,798 | | | 67,187 | | | 61,496 | | | 56,608 | |
Interest expense | | | | | | | | | | |
Deposits | | 18,958 | | | 14,819 | | | 10,520 | | | 4,116 | | | 1,677 | |
Borrowed funds | | 9,718 | | | 9,771 | | | 6,040 | | | 3,895 | | | 1,450 | |
Subordinated notes | | 881 | | | 880 | | | 881 | | | 880 | | | 881 | |
Junior subordinated debentures issued capital trusts | | 1,151 | | | 1,091 | | | 964 | | | 744 | | | 556 | |
Total interest expense | | 30,708 | | | 26,561 | | | 18,405 | | | 9,635 | | | 4,564 | |
Net interest income | | 46,160 | | | 45,237 | | | 48,782 | | | 51,861 | | | 52,044 | |
Credit loss expense (recovery) | | 680 | | | 242 | | | (69) | | | (601) | | | 240 | |
Net interest income after credit loss expense | | 45,480 | | | 44,995 | | | 48,851 | | | 52,462 | | | 51,804 | |
Non–interest Income | | | | | | | | | | |
Service charges on deposit accounts | | 3,021 | | | 3,028 | | | 2,947 | | | 3,023 | | | 2,833 | |
Wire transfer fees | | 116 | | | 109 | | | 118 | | | 148 | | | 170 | |
Interchange fees | | 3,584 | | | 2,867 | | | 2,951 | | | 3,089 | | | 3,582 | |
Fiduciary activities | | 1,247 | | | 1,275 | | | 1,270 | | | 1,203 | | | 1,405 | |
Gain (loss) on sale of investment securities | | 20 | | | (500) | | | — | | | — | | | — | |
Gain on sale of mortgage loans | | 1,005 | | | 785 | | | 1,196 | | | 1,441 | | | 2,501 | |
Mortgage servicing income net of impairment | | 640 | | | 713 | | | 637 | | | 355 | | | 319 | |
Increase in cash value of bank owned life insurance | | 1,015 | | | 981 | | | 751 | | | 814 | | | 519 | |
Death benefit on bank owned life insurance | | — | | | — | | | — | | | — | | | 644 | |
Other income | | 349 | | | 362 | | | 804 | | | 115 | | | 461 | |
Total non–interest income | | 10,997 | | | 9,620 | | | 10,674 | | | 10,188 | | | 12,434 | |
Non–interest expense | | | | | | | | | | |
Salaries and employee benefits | | 20,162 | | | 18,712 | | | 19,978 | | | 20,613 | | | 19,957 | |
Net occupancy expenses | | 3,249 | | | 3,563 | | | 3,279 | | | 3,293 | | | 3,190 | |
Data processing | | 3,016 | | | 2,669 | | | 2,884 | | | 2,539 | | | 2,607 | |
Professional fees | | 633 | | | 533 | | | 694 | | | 552 | | | 283 | |
Outside services and consultants | | 2,515 | | | 2,717 | | | 2,985 | | | 2,855 | | | 2,485 | |
Loan expense | | 1,397 | | | 1,118 | | | 1,281 | | | 1,392 | | | 1,533 | |
FDIC insurance expense | | 840 | | | 540 | | | 388 | | | 670 | | | 775 | |
Core deposit intangible amortization | | 903 | | | 903 | | | 925 | | | 926 | | | 925 | |
Other losses | | 134 | | | 221 | | | 118 | | | 398 | | | 362 | |
Other expenses | | 3,413 | | | 3,548 | | | 3,179 | | | 3,578 | | | 3,287 | |
Total non–interest expense | | 36,262 | | | 34,524 | | | 35,711 | | | 36,816 | | | 35,404 | |
Income before income taxes | | 20,215 | | | 20,091 | | | 23,814 | | | 25,834 | | | 28,834 | |
Income tax expense | | 1,452 | | | 1,863 | | | 2,649 | | | 2,013 | | | 3,975 | |
Net income | | $ | 18,763 | | | $ | 18,228 | | | $ | 21,165 | | | $ | 23,821 | | | $ | 24,859 | |
Basic earnings per share | | $ | 0.43 | | | $ | 0.42 | | | $ | 0.49 | | | $ | 0.55 | | | $ | 0.57 | |
Diluted earnings per share | | 0.43 | | | 0.42 | | | 0.48 | | | 0.55 | | | 0.57 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Condensed Consolidated Statements of Income |
(Dollars in Thousands Except Per Share Data, Unaudited) |
| | Six Months Ended |
| | June 30, | | June 30, |
| | 2023 | | 2022 |
Interest income | | | | |
Loans receivable | | $ | 115,958 | | | $ | 77,124 | |
Investment securities – taxable | | 17,465 | | | 16,064 | |
Investment securities – non–taxable | | 14,615 | | | 14,004 | |
Other | | 628 | | | 158 | |
Total interest income | | 148,666 | | | 107,350 | |
Interest expense | | | | |
Deposits | | 33,777 | | | 3,173 | |
Borrowed funds | | 19,489 | | | 2,530 | |
Subordinated notes | | 1,761 | | | 1,761 | |
Junior subordinated debentures issued capital trusts | | 2,242 | | | 1,011 | |
Total interest expense | | 57,269 | | | 8,475 | |
Net interest income | | 91,397 | | | 98,875 | |
Credit loss expense (recovery) | | 922 | | | (1,146) | |
Net interest income after credit loss expense | | 90,475 | | | 100,021 | |
Non–interest Income | | | | |
Service charges on deposit accounts | | 6,049 | | | 5,628 | |
Wire transfer fees | | 225 | | | 329 | |
Interchange fees | | 6,451 | | | 6,362 | |
Fiduciary activities | | 2,522 | | | 2,908 | |
Gain (loss) on sale of investment securities | | (480) | | | — | |
Gain on sale of mortgage loans | | 1,790 | | | 4,528 | |
Mortgage servicing income net of impairment | | 1,353 | | | 3,808 | |
Increase in cash value of bank owned life insurance | | 1,996 | | | 1,029 | |
Death benefit on bank owned life insurance | | — | | | 644 | |
Other income | | 711 | | | 1,353 | |
Total non–interest income | | 20,617 | | | 26,589 | |
Non–interest expense | | | | |
Salaries and employee benefits | | 38,874 | | | 39,692 | |
Net occupancy expenses | | 6,812 | | | 6,751 | |
Data processing | | 5,685 | | | 5,144 | |
Professional fees | | 1,166 | | | 597 | |
Outside services and consultants | | 5,232 | | | 5,010 | |
Loan expense | | 2,515 | | | 2,738 | |
FDIC insurance expense | | 1,380 | | | 1,500 | |
Core deposit intangible amortization | | 1,806 | | | 1,851 | |
Other losses | | 355 | | | 530 | |
Other expenses | | 6,961 | | | 6,861 | |
Total non–interest expense | | 70,786 | | | 70,674 | |
Income before income taxes | | 40,306 | | | 55,936 | |
Income tax expense | | 3,315 | | | 7,514 | |
Net income | | $ | 36,991 | | | $ | 48,422 | |
Basic earnings per share | | $ | 0.85 | | | $ | 1.11 | |
Diluted earnings per share | | 0.85 | | | 1.11 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Use of Non–GAAP Financial Measures
Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non–GAAP financial measures relating to net income, diluted earnings per share, pre–tax, pre–provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non–recurring and have excluded them. We believe that this shows the impact of such events as acquisition–related purchase accounting adjustments and swap termination fees, among others we have identified in our reconciliations. Horizon believes these non–GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one–time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non–GAAP information identified herein and its most comparable GAAP measures.
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Non–GAAP Reconciliation of Net Income |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Net income as reported | | $ | 18,763 | | | $ | 18,228 | | | $ | 21,165 | | | $ | 23,821 | | | $ | 24,859 | | | $ | 36,991 | | | $ | 48,422 | |
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Swap termination fee | | (1,453) | | | — | | | — | | | — | | | — | | | (1,453) | | | — | |
Tax effect | | 305 | | | — | | | — | | | — | | | — | | | 305 | | | — | |
Net income excluding swap termination fee | | 17,615 | | | 18,228 | | | 21,165 | | | 23,821 | | | 24,859 | | | 35,843 | | | 48,422 | |
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(Gain) / loss on sale of investment securities | | (20) | | | 500 | | | — | | | — | | | — | | | 480 | | | — | |
Tax effect | | 4 | | | (105) | | | — | | | — | | | — | | | (101) | | | — | |
Net income excluding (gain) / loss on sale of investment securities | | 17,599 | | | 18,623 | | | 21,165 | | | 23,821 | | | 24,859 | | | 36,222 | | | 48,422 | |
Death benefit on bank owned life insurance (“BOLI”) | | — | | | — | | | — | | | — | | | (644) | | | — | | | (644) | |
Net income excluding death benefit on BOLI | | 17,599 | | | 18,623 | | | 21,165 | | | 23,821 | | | 24,215 | | | 36,222 | | | 47,778 | |
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Adjusted net income | | $ | 17,599 | | | $ | 18,623 | | | $ | 21,165 | | | $ | 23,821 | | | $ | 24,215 | | | $ | 36,222 | | | $ | 47,778 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Non–GAAP Reconciliation of Diluted Earnings per Share |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Diluted earnings per share (“EPS”) as reported | | $ | 0.43 | | | $ | 0.42 | | | $ | 0.48 | | | $ | 0.55 | | | $ | 0.57 | | | $ | 0.85 | | | $ | 1.11 | |
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Swap termination fee | | (0.03) | | | — | | | — | | | — | | | — | | | (0.03) | | | — | |
Tax effect | | 0.01 | | | — | | | — | | | — | | | — | | | 0.01 | | | — | |
Diluted EPS excluding swap termination fee | | 0.41 | | | 0.42 | | | 0.48 | | | 0.55 | | | 0.57 | | | 0.83 | | | 1.11 | |
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(Gain) / loss on sale of investment securities | | — | | | 0.01 | | | — | | | — | | | — | | | 0.01 | | | — | |
Tax effect | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Diluted EPS excluding (gain) / loss on sale of investment securities | | 0.41 | | | 0.43 | | | 0.48 | | | 0.55 | | | 0.57 | | | 0.84 | | | 1.11 | |
Death benefit on bank owned life insurance (“BOLI”) | | — | | | — | | | — | | | — | | | (0.01) | | | — | | | (0.01) | |
Diluted EPS excluding death benefit on BOLI | | 0.41 | | | 0.43 | | | 0.48 | | | 0.55 | | | 0.56 | | | 0.84 | | | 1.10 | |
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Adjusted diluted EPS | | $ | 0.41 | | | $ | 0.43 | | | $ | 0.48 | | | $ | 0.55 | | | $ | 0.56 | | | $ | 0.84 | | | $ | 1.10 | |
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Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Pre–tax income | | $ | 20,215 | | | $ | 20,091 | | | $ | 23,814 | | | $ | 25,834 | | | $ | 28,834 | | | $ | 40,306 | | | $ | 55,936 | |
Credit loss expense (recovery) | | 680 | | | 242 | | | (69) | | | (601) | | | 240 | | | 922 | | | (1,146) | |
Pre–tax, pre–provision net income | | $ | 20,895 | | | $ | 20,333 | | | $ | 23,745 | | | $ | 25,233 | | | $ | 29,074 | | | $ | 41,228 | | | $ | 54,790 | |
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Pre–tax, pre–provision net income | | $ | 20,895 | | | $ | 20,333 | | | $ | 23,745 | | | $ | 25,233 | | | $ | 29,074 | | | $ | 41,228 | | | $ | 54,790 | |
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Swap termination fee | | (1,453) | | | — | | | — | | | — | | | — | | | (1,453) | | | — | |
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(Gain) / loss on sale of investment securities | | (20) | | | 500 | | | — | | | — | | | — | | | 480 | | | — | |
Death benefit on BOLI | | — | | | — | | | — | | | — | | | (644) | | | — | | | (644) | |
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Adjusted pre–tax, pre–provision net income | | $ | 19,422 | | | $ | 20,833 | | | $ | 23,745 | | | $ | 25,233 | | | $ | 28,430 | | | $ | 40,255 | | | $ | 54,146 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Non–GAAP Reconciliation of Net Interest Margin |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Net interest income as reported | | $ | 46,160 | | | $ | 45,237 | | | $ | 48,782 | | | $ | 51,861 | | | $ | 52,044 | | | $ | 91,397 | | | $ | 98,875 | |
Average interest earning assets | | 7,212,640 | | | 7,201,266 | | | 7,091,980 | | | 7,056,208 | | | 6,943,633 | | | 7,206,985 | | | 6,879,551 | |
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”) | | 2.69 | % | | 2.67 | % | | 2.85 | % | | 3.04 | % | | 3.13 | % | | 2.68 | % | | 3.02 | % |
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Net interest income as reported | | $ | 46,160 | | | $ | 45,237 | | | $ | 48,782 | | | $ | 51,861 | | | $ | 52,044 | | | $ | 91,397 | | | $ | 98,875 | |
Acquisition–related purchase accounting adjustments (“PAUs”) | | (651) | | | (367) | | | (431) | | | (906) | | | (1,223) | | | (1,018) | | | (2,139) | |
Swap termination fee | | (1,453) | | | — | | | — | | | — | | | — | | | (1,453) | | | — | |
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Adjusted net interest income | | $ | 44,056 | | | $ | 44,870 | | | $ | 48,351 | | | $ | 50,955 | | | $ | 50,821 | | | $ | 88,926 | | | $ | 96,736 | |
Adjusted net interest margin | | 2.57 | % | | 2.65 | % | | 2.83 | % | | 2.99 | % | | 3.06 | % | | 2.61 | % | | 2.96 | % |
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Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share |
(Dollars in Thousands, Unaudited) |
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| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 |
Total stockholders’ equity | | $ | 709,243 | | | $ | 702,559 | | | $ | 677,375 | | | $ | 644,993 | | | $ | 657,865 | |
Less: Intangible assets | | 170,644 | | | 171,547 | | | 172,450 | | | 173,375 | | | 173,662 | |
Total tangible stockholders’ equity | | $ | 538,599 | | | $ | 531,012 | | | $ | 504,925 | | | $ | 471,618 | | | $ | 484,203 | |
Common shares outstanding | | 43,645,216 | | | 43,621,422 | | | 43,574,151 | | | 43,574,151 | | | 43,572,796 | |
Book value per common share | | $ | 16.25 | | | $ | 16.11 | | | $ | 15.55 | | | $ | 14.80 | | | $ | 15.10 | |
Tangible book value per common share | | $ | 12.34 | | | $ | 12.17 | | | $ | 11.59 | | | $ | 10.82 | | | $ | 11.11 | |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Non–interest expense as reported | | $ | 36,262 | | | $ | 34,524 | | | $ | 35,711 | | | $ | 36,816 | | | $ | 35,404 | | | $ | 70,786 | | | $ | 70,674 | |
Net interest income as reported | | 46,160 | | | 45,237 | | | 48,782 | | | 51,861 | | | 52,044 | | | 91,397 | | | 98,875 | |
Non–interest income as reported | | $ | 10,997 | | | $ | 9,620 | | | $ | 10,674 | | | $ | 10,188 | | | $ | 12,434 | | | $ | 20,617 | | | $ | 26,589 | |
Non–interest expense / (Net interest income + Non–interest income) (“Efficiency Ratio”) | | 63.44 | % | | 62.93 | % | | 60.06 | % | | 59.33 | % | | 54.91 | % | | 63.19 | % | | 56.33 | % |
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Non–interest expense as reported | | $ | 36,262 | | | $ | 34,524 | | | $ | 35,711 | | | $ | 36,816 | | | $ | 35,404 | | | $ | 70,786 | | | $ | 70,674 | |
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Net interest income as reported | | 46,160 | | | 45,237 | | | 48,782 | | | 51,861 | | | 52,044 | | | 91,397 | | | 98,875 | |
Swap termination fee | | (1,453) | | | — | | | — | | | — | | | — | | | (1,453) | | | — | |
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Net interest income excluding swap termination fee | | 44,707 | | | 45,237 | | | 48,782 | | | 51,861 | | | 52,044 | | | 89,944 | | | 98,875 | |
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Non–interest income as reported | | 10,997 | | | 9,620 | | | 10,674 | | | 10,188 | | | 12,434 | | | 20,617 | | | 26,589 | |
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(Gain) / loss on sale of investment securities | | (20) | | | 500 | | | — | | | — | | | — | | | 480 | | | — | |
Death benefit on BOLI | | — | | | — | | | — | | | — | | | (644) | | | — | | | (644) | |
Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI | | $ | 10,977 | | | $ | 10,120 | | | $ | 10,674 | | | $ | 10,188 | | | $ | 11,790 | | | $ | 21,097 | | | $ | 25,945 | |
Adjusted efficiency ratio | | 65.12 | % | | 62.37 | % | | 60.06 | % | | 59.33 | % | | 55.46 | % | | 63.75 | % | | 56.62 | % |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Non–GAAP Reconciliation of Return on Average Assets |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Average assets | | $ | 7,840,026 | | | $ | 7,831,106 | | | $ | 7,718,366 | | | $ | 7,635,102 | | | $ | 7,476,238 | | | $ | 7,835,032 | | | $ | 7,391,348 | |
Return on average assets (“ROAA”) as reported | | 0.96 | % | | 0.94 | % | | 1.09 | % | | 1.24 | % | | 1.33 | % | | 0.95 | % | | 1.32 | % |
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Swap termination fee | | (0.07) | | | — | | | — | | | — | | | — | | | (0.04) | | | — | |
Tax effect | | 0.02 | | | — | | | — | | | — | | | — | | | 0.01 | | | — | |
ROAA excluding swap termination fee | | 0.91 | | | 0.94 | | | 1.09 | | | 1.24 | | | 1.33 | | | 0.92 | | | 1.32 | |
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(Gain) / loss on sale of investment securities | | — | | | 0.03 | | | — | | | — | | | — | | | 0.01 | | | — | |
Tax effect | | — | | | (0.01) | | | — | | | — | | | — | | | — | | | — | |
ROAA excluding (gain) / loss on sale of investment securities | | 0.91 | | | 0.96 | | | 1.09 | | | 1.24 | | | 1.33 | | | 0.93 | | | 1.32 | |
Death benefit on BOLI | | — | | | — | | | — | | | — | | | (0.03) | | | — | | | (0.02) | |
ROAA excluding death benefit on BOLI | | 0.91 | | | 0.96 | | | 1.09 | | | 1.24 | | | 1.30 | | | 0.93 | | | 1.30 | |
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Adjusted ROAA | | 0.91 | % | | 0.96 | % | | 1.09 | % | | 1.24 | % | | 1.30 | % | | 0.93 | % | | 1.30 | % |
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Non–GAAP Reconciliation of Return on Average Common Equity |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Average common equity | | $ | 710,953 | | | $ | 693,472 | | | $ | 660,188 | | | $ | 680,376 | | | $ | 677,299 | | | $ | 702,663 | | | $ | 697,004 | |
Return on average common equity (“ROACE”) as reported | | 10.59 | % | | 10.66 | % | | 12.72 | % | | 13.89 | % | | 14.72 | % | | 10.62 | % | | 14.01 | % |
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Swap termination fee | | (0.82) | | | — | | | — | | | — | | | — | | | (0.41) | | | — | |
Tax effect | | 0.17 | | | — | | | — | | | — | | | — | | | 0.09 | | | — | |
ROACE excluding swap termination fee | | 9.94 | | | 10.66 | | | 12.72 | | | 13.89 | | | 14.72 | | | 10.30 | | | 14.01 | |
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(Gain) / loss on sale of investment securities | | (0.01) | | | 0.29 | | | — | | | — | | | — | | | 0.14 | | | — | |
Tax effect | | — | | | (0.06) | | | — | | | — | | | — | | | (0.03) | | | — | |
ROACE excluding (gain) / loss on sale of investment securities | | 9.93 | | | 10.89 | | | 12.72 | | | 13.89 | | | 14.72 | | | 10.41 | | | 14.01 | |
Death benefit on BOLI | | — | | | — | | | — | | | — | | | (0.38) | | | — | | | (0.19) | |
ROACE excluding death benefit on BOLI | | 9.93 | | | 10.89 | | | 12.72 | | | 13.89 | | | 14.34 | | | 10.41 | | | 13.82 | |
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Adjusted ROACE | | 9.93 | % | | 10.89 | % | | 12.72 | % | | 13.89 | % | | 14.34 | % | | 10.41 | % | | 13.82 | % |
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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Non–GAAP Reconciliation of Return on Average Tangible Equity |
(Dollars in Thousands, Unaudited) |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | June 30, | | June 30, |
| | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | 2023 | | 2022 |
Average common equity | | $ | 710,953 | | | $ | 693,472 | | | $ | 660,188 | | | $ | 680,376 | | | $ | 677,299 | | | $ | 702,663 | | | $ | 697,004 | |
Less: Average intangible assets | | 171,177 | | | 172,139 | | | 173,050 | | | 173,546 | | | 175,321 | | | 171,655 | | | 175,836 | |
Average tangible equity | | $ | 539,776 | | | $ | 521,333 | | | $ | 487,138 | | | $ | 506,830 | | | $ | 501,978 | | | $ | 531,008 | | | $ | 521,168 | |
Return on average tangible equity (“ROATE”) as reported | | 13.94 | % | | 14.18 | % | | 17.24 | % | | 18.65 | % | | 19.86 | % | | 14.05 | % | | 18.74 | % |
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Swap termination fee | | (1.08) | | | — | | | — | | | — | | | — | | | (0.55) | | | — | |
Tax effect | | 0.23 | | | — | | | — | | | — | | | — | | | 0.12 | | | — | |
ROATE excluding swap termination fee | | 13.09 | | | 14.18 | | | 17.24 | | | 18.65 | | | 19.86 | | | 13.62 | | | 18.74 | |
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(Gain) / loss on sale of investment securities | | (0.01) | | | 0.39 | | | — | | | — | | | — | | | 0.18 | | | — | |
Tax effect | | — | | | (0.08) | | | — | | | — | | | — | | | (0.04) | | | — | |
ROATE excluding (gain) / loss on sale of investment securities | | 13.08 | | | 14.49 | | | 17.24 | | | 18.65 | | | 19.86 | | | 13.76 | | | 18.74 | |
Death benefit on BOLI | | — | | | — | | | — | | | — | | | (0.51) | | | — | | | (0.25) | |
ROATE excluding death benefit on BOLI | | 13.08 | | | 14.49 | | | 17.24 | | | 18.65 | | | 19.35 | | | 13.76 | | | 18.49 | |
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Adjusted ROATE | | 13.08 | % | | 14.49 | % | | 17.24 | % | | 18.65 | % | | 19.35 | % | | 13.76 | % | | 18.49 | % |
Earnings Conference Call
As previously announced, Horizon will host a conference call to review its second quarter financial results and operating performance.
Participants may access the live conference call on July 27, 2023 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833–974–2379 from the United States, 866–450–4696 from Canada or 1–412–317–5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.
A telephone replay of the call will be available approximately one hour after the end of the conference through August 3, 2023. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 1–412–317–0088 from other international locations, and entering the access code 8537822.
About Horizon Bancorp, Inc.
Celebrating 150 years, Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $8.0 billion–asset commercial bank holding company for Horizon Bank, which serve customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon Bank’s retail offerings include prime residential, indirect auto, 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, 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.
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® A NASDAQ Traded Company - Symbol HBNC INVESTOR PRESENTATION JULY 26, 2023
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Forward-Looking Statements This presentation 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 presentation 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: current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues; 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 ability of Horizon to remediate its material weaknesses in its internal control over financial reporting; continuing increases in inflation; 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; economic conditions and their impact on Horizon and its customers, including local and global economic recovery from the pandemic; 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; material changes outside the U.S. or in overseas relations, including changes in U.S. trade relations related to imposition of tariffs, Brexit, and the phase out of the London Interbank Offered Rate (“LIBOR”); 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 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. Non-GAAP Measures Certain non-GAAP financial measures are presented herein. Horizon believes they are useful to investors and provide a greater understanding of Horizon’s business without giving effect to non-recurring costs and non-core items. For each non-GAAP financial measure, we have presented comparable GAAP measures and reconciliations of the non-GAAP measures to those GAAP measures in the Appendix to this presentation. Please see slides 30-36. Important Information 2
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 3 Mark E. Secor EVP & Chief Financial Officer • 35 Years of Banking and Public Accounting Experience • 15 Years with Horizon as CFO and EVP of Horizon Kathie A. DeRuiter EVP & Senior Operations Officer • 34 Years of Banking and Operational Experience • 23 Years as Senior Bank Operations Officer Todd A. Etzler EVP & Corporate Secretary & General Counsel • 32 Years of Corporate Legal Experience and 13 years of General Counsel Experience • 6 Years as General Counsel Seasoned Management Team Lynn M. Kerber EVP & Chief Commercial Banking Officer • 33 Years of Banking Experience • 6 Years with Horizon as Senior Commercial Credit Officer Noe S. Najera EVP, Senior Retail & Mortgage Lending Officer • 22 Years of Banking Experience • 8 Years with Horizon, 4 Years as SVP Retail Lending Thomas M. Prame President & Chief Executive Officer • 29 Years of Banking Experience • 21 Years in Executive Leadership Roles
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 4 4 Home for Major Brands Some of the largest national and global companies in industries such as medical devices, pharmaceuticals, agribusiness, automotive/mobility, alternative energy, and high-tech manufacturing have headquarters/major facilities in our markets. Additionally, there are flourishing ecosystems of supporting suppliers, professional services firms, and spin-offs. Our branch network serves the thriving communities that are home to renowned universities including the University of Notre Dame, Purdue University, Indiana University, University of Michigan, Michigan State University and Grand Valley State University. Most-recent-quarter-end balances for IN and MI, with loans excluding mortgage warehouse and purchased HELOCs Loans $2.9B Loans $1.8B Our Indiana & Michigan Markets Chicago Highly Attractive We serve some of the most economically attractive Midwest markets through more than 70 strategically located, full-service branchess in Indiana and Michigan. Our markets have desirable business and investment environments, lower taxes, affordable housing, infrastructure and quality of life that attract new companies and households. Northwest Indiana, where Horizon is headquartered, will benefit from the new South Shore Line commuter rail and increasingly easy access to nearby Chicago. Diverse In-Market Opportunities Horizon is a well recognized community banking partner across its footprint. Our lead business lines of Commercial and Retail Banking are complimented by well developed platforms in Treasury Management, Wealth, Mortgage Banking and consumer lending, expanding our client value proposition and revenue streams. Horizon’s core deposit franchise is grounded in the long tenure of its clients, significant market share, and density of the bank’s in-market deposit relationships. Deposits $1.8B Deposits $4.0B
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 5 2Q23 Highlights Profitability • Solid net income of $18.8 million* / adjusted $17.6 million** • NIM of 2.69%* / adjusted 2.57%** • Increase in non-interest income of 14% from Q1 • Continued disciplined operating model with 1.86% of non-interest expense/average assets, annualized • Diluted EPS of $0.43* / adjusted $0.41** Stable Core Deposits • Total deposits consistent, continued shift in mix • Consumer & Commercial portfolios modestly down - $109MM • Public portfolio increased $118MM • Diligent oversight of pricing and funding costs Loan Growth • Total loans up 2.2% annualized Q2 and 5.3% annualized YTD, with expected full-year growth of 6-8% for 2023 • Portfolio yields increased through growth in higher yielding loans replacing low yielding assets • Excellent credit metrics, reflective of discipline and sound operating model * Includes favorable impact of $1.45 million swap termination fee ** See Footnote Index and non-GAAP reconciliations in Appendix. ($000s except per share data) 2Q23 Change % vs. 1Q23 Income Statement Pre-tax, pre-provision net income** $20,895 2.76% Reported net income $18,763 2.94% Diluted EPS $0.43 2.38% Annualized non-interest exp. / avg. assets 1.86% 7 bps Return on average assets 0.96% 2 bps Return on average common equity 10.59% (7) bps Return on average tangible equity** 13.94% (24) bps Balance Sheet Total loans $4,273,193 0.6% Total deposits $5,709,332 0.1% Credit Quality NPA / total assets ratio 0.30% 3 bps Net charge-offs to avg. loans for the period 0.01% 0 bps
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® • Commercial loan portfolio increased by ~$820,000, 0.1% annualized • Net funding of $128 million for Q2 compared to $109 million for Q1 • Q2 loan growth distribution • 28% C&I • 21% owner occupied CRE • 51% non-owner occupied CRE - disbursed across major sub-sectors • Commercial pipeline at $118 million compared to $130 million at the end of Q1 • YTD net charge-offs of 1 basis point • New production yield ~1.76% higher on average than total commercial portfolio yield Diversified Commercial Loans By Geography & Mix 6 Northern Indiana, 13% Central Indiana, 31% Other, 4% Southwest Michigan, 17% Northern Michigan, 9% East Michigan, 7% West Michigan, 19% Geographic Dispersion Non- Owner Occupied Real Estate, 48% C&I, 25% Owner Occ. Real Estate, 23% Ag Loans, 2% Develop./Land, 1% Res. Spec. Homes, 1% Portfolio Composition Quarter Highlights Note: Data as of 6/30/23
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 1% 2% 3% 3% 3% 4% 6% 6% 6% 6% 10% Farm Land Mini Storage All Others Medical Office Lessors - Residential 1-4 Lessors Student Housing Retail Motel Warehouse/Industrial Office (except medical) Lessors - Residential Multi Note: Data as of 6/30/23. All percentages are of total commercial loans. 1% 1% 1% 1% 2% 2% 2% 2% 3% 3% 5% Wholesale Trade Professional & Technical Services Construction All Others Restaurants Leisure and Hospitality Manufacturing Retail Trade Real Estate Rental & Leasing Individuals and Other Services Health Care, Edu. Social Assist. 1% 1% 1% 1% 1% 1% 2% 2% 3% 3% 3% 3% 5% Agriculture Professional & Technical Services Restaurants Transportation & Warehousing Retail Trade All Others Real Estate Rental & Leasing Construction Government Manufacturing Health Care, Educational Social Assist. Individuals and Other Services Finance & Insurance 7 Non-Owner Occupied CRE – 51% of Total Commercial Loans ~$1.3 Billion Owner Occupied CRE – 23% of Total Commercial Loans ~$0.6 Billion C&I Loans – 26% of Total Commercial Loans ~$0.6 Billion Diversified Commercial Loans By Industry Commercial Loans - $2.506 Billion
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 8 Note: Data as of 6/30/23. CRE Category Diversity 27% 27% 13% 7% 6% 5% 4% 4% 3% 2% 1% Greater Indianapolis Grand Rapids / Holland Greater Kalamazoo Greater Lansing Southeast MI NW Indiana SWMI / NCI Midland Greater Lafayette Fort Wayne Northern MI Office CRE 27% 16% 14% 11% 11% 6% 5% 4% 3% 1% 1% Southeast MI Greater Kalamazoo NW Indiana Grand Rapids / Holland Greater Indianapolis Greater Lansing Northern MI SWMI / NCI Midland Fort Wayne Greater Lafayette Retail CRE Southeast MI $43,865 Greater Kalamazoo $25,063 NW Indiana $22,416 Grand Rapids / Holland $17,942 Greater Indianapolis $17,209 Greater Lansing $10,356 Northern MI $8,164 SWMI / NCI $6,642 Midland $4,007 Fort Wayne $2,351 Greater Lafayette $2,057 $160,071 Average Loan $777 30-89 Days Delinquent / Total Outstanding 0% Non-Accrual / Total Outstanding 0% Greater Indianapolis $43,684 Grand Rapids / Holland $43,322 Greater Kalamazoo $21,921 Greater Lansing $12,038 Southeast MI $9,789 NW Indiana $8,420 SWMI / NCI $6,875 Midland $6,436 Greater Lafayette $5,246 Fort Wayne $2,939 Northern MI $1,795 $162,464 Average Loan $1,113 30-89 Days Delinquent / Total Outstanding 0% Non-Accrual / Total Outstanding 0% $ 0 0 0 s $ 0 0 0 s
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 9 Note: Data as of 6/30/23 4% of portfolio matures in 2H23 $ 0 0 0 s 2023 Maturities Remaining Average Rate 6.66% $ 0 0 0 s 2024 Maturities Average Rate 6.02% $178,709 $91,134 10% 5% All rates <6.00% rate Balance % of Total Adjusted CRE* $77,829 $36,619 4% 2% All rates <6.00% rate Balance % of Total Adjusted CRE* *Adjusted CRE excludes loans closed, non-accrual and matured prior to 2023 Well-Managed CRE Maturities
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 10 Prime Consumer Loans Consumer Direct • Increased ~$2 million, consistent with plan • YTD net recovery of 1 basis points • New production yield ~1.18% higher on average than total consumer direct portfolio yield Quarter Highlights Direct Auto, 2.4% Home Equity Term, 6.2% HELOCs, 41.4% RV & Boat, 2.6% Secured Other, 0.4% Unsecured Other, 0.4% Indirect Auto, 46.6% Total Consumer Outstanding $1.0B Period-End Weighted Average Portfolio Metrics Direct Consumer Indirect Auto Credit Score 753 742 Debt-to-Income 41% 27% Loan-to-value 72% 89% Note: Data as of 6/30/23 Indirect Auto • Decreased ~ $25MM, consistent with strategy • YTD net charge-offs of 10 basis points • New production yield ~3.81% higher on average than total indirect auto portfolio yield • Short portfolio duration at 2.4 years provides flexibility for ALCO strategies
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 11 Prime Mortgage Loans • Mortgage portfolio increased $12MM, consisting of higher yielding jumbo loans • ~70% of YTD production is saleable • Results aligning with industry Q2: $68MM orig., $1.0M fee income Q1: $30MM orig., $785,000 fee income • YTD net charge-offs of 0 basis points • Consistent higher quality borrowers, significant capacity to pay and low LTV • Portfolio production yield ~2.70% higher on average than total mortgage portfolio yield Mortgage Portfolio Weighted Metrics Credit Score 759 Debt-to-Income 33% Loan-to-value 69% Jumbo, 49.1% Rental, 1.0% Conforming, 42.9% Construction, 7.0% Total Outstanding $675M Quarter Highlights Note: Data as of 6/30/23
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® $284 $138 $285 $379 $274 0.01% 0.00% 0.01% 0.01% 0.01% 2Q22 3Q22 4Q22 1Q23 2Q23 Net Charge Offs Commercial Resi Real Estate Consumer Total NCOs/Average Loans $ 0 0 0 s $20,206 $19,158 $21,840 $19,797 $22,109 0.51% 0.48% 0.52% 0.47% 0.52% 2Q22 3Q22 4Q22 1Q23 2Q23 Non-Performing Loans (period end) Commercial Resi Real Estate Consumer Total NPLs/Loans $ 0 0 0 s 12 CECL $52,350 $51,369 $50,464 $49,526 $49,976 1.32% 1.27% 1.21% 1.17% 1.17% 2Q22 3Q22 4Q22 1Q23 2Q23 ACL ACL/Loans Strong Asset Quality Metrics Allowance for Credit Losses (period end) $ 0 0 0 s 30-89 Days Delinquent (period end) $ 0 0 0 s $6,739 $6,970 $10,709 $13,971 $10,913 0.16% 0.16% 0.25% 0.33% 0.26% 2Q22 3Q22 4Q22 1Q23 2Q23 39 to 89 days delinquent Delinquencies/Loans
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 HBNC U.S. commercial banks¹ Net charge offs as a % of average loans 0.15% 0.50 0.41% 0.01% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 HBNC U.S. commercial banks¹ Nonperforming assets as % of assets 0.20% 0.39% 0.31% 0.27% Source: SNL Financial Note: Financial data as of March 31, 2023; ¹ Based on regulatory financials for all U.S. commercial banks as defined by SNL Financial banking industry aggregates Proven Credit Quality Through Cycles 13
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 14 Note: Data as of 6/30/23 Seasoned, Core Deposit Base • Consumer: $14K avg. account balance 11 year avg. tenure • Commercial: $80K avg. account balance 10 year avg. tenure • Public: $910K avg. account balance 11 year avg. tenure 50% of Balances in Checking Accounts • Daily operating accounts of clients • Long tenured relationships of 11 years 79% of Balances Insured/Collateralized • Significant portion of deposits covered by FDIC, Collateralized or IntraFi • Additional coverage through Indiana Public Deposit Insurance Fund (PDIF) Granular and Tenured Deposits 52% 27% 21% FDIC Insured <$250K, Collateralized and/or Third-Party Insured (e.g., IntraFi and Indiana PDIF) 79% Total Deposits at 6/30/23 $5.7B
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Note: Data as of 6/30/23 15 Deposit Stability & Strength Cyclical Balance Fluctuation • Public Funds $118MM • Retained relationships • Larger in size, fluid environment. • Aligning pricing and terms with ALCO strategies Stability in Core Relationships • Cons/Comm Portfolio ($109MM) • Combined Changed (2.54%) • Consumer portfolio ($55MM)/(2.14%) • Commercial portfolio ($54MM)/(3.17%) • Movement between deposit classes Borrowings • +40MM • Attractive funding cost at ~50-75 bpts lower than Public • Income accretive decisions • Significant liquidity capacity • $116M in Fed Funds sold Savings $3,000 $2,500 $2,000 $1,500 $1,000 $500 Checking CD $2,575 $2,520 1Q23 2Q23 Consumer $1,706 $1,652 1Q23 2Q23 Commercial $1,420 $1,538 1Q23 2Q23 Public $1,312 $1,352 1Q23 2Q23 Borrowings Dollar amounts in thousands.
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Ample Available Liquidity 16 Sources of Liquidity $2,741 $363 $400 $1,542 $436 Total Unsecured Lines/Other Brokered Deposits Capacity Available Lines Cash/Marketable Investments March 31, 2023 $2,879 $437 $399 $1,523 $520 Total Unsecured Lines/Other Brokered Deposits Capacity Available Lines Cash/Marketable Investments June 30, 2023 $millions $millions Available Liquidity • >$1.5B of immediately available secured borrowings at June 30, 2023 • ~ $650M of unpledged securities at June 30, 2023 Term Borrowings • $1.2B of term borrowings at June 30, 2023 at a weighted average fixed rate of 3.47% and an expected duration of ~ 9 months • $500M of borrowings at June 30, 2023 are a 10 year fixed rate putable with under a 1 year lock at a rate of 2.66%
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 17 Fee Income Rebuild Non-interest Income ($000s) $12,434 $10,188 $10,674 $9,620 $10,997 $0 $2,500 $5,000 $7,500 $10,000 $12,500 $15,000 2Q22 3Q22 4Q22 1Q23 2Q23 Service fees Fiduciary activities Mortgage related income All Other • Continuing to rebuild fee income following contributions from cyclical mortgage production in 2021 and early 2022 • Diversified growth from the linked quarter reflected increases of: o 28.0% in gain on sale of mortgage loans o 11.9% in account service, wire transfer and interchange fees o 3.5% in BOLI cash value • Growth trending upward Quarter Highlights Note: Data as of 6/30/23
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 18 Hallmark Focus on Expense Management $35,404 $36,816 $35,711 $34,524 $36,262 1.90% 1.91% 1.84% 1.79% 1.86% $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2Q22 3Q22 4Q22 1Q23 2Q23 All Other Non-interest Expense Salaries & Employee Benefits Non-interest Expense ($000s) • Non-interest expense to average assets annualized o 1.86% for 2Q23 o 1.82% for YTD23 o On track with <1.90% expectation for FY23 • Reflects merit, commission and variable benefit increases with salaries and benefits increasing 7.7% from 1Q23 and 1.0% from 2Q22 • Other non-interest expense remained consistent Quarter Highlights Note: Data as of 6/30/23
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Disciplined Pricing & Stabilizing Costs 19 $3.8 $3.6 $3.5 $3.6 $3.6 $3.8 $3.9 $4.0 $4.1 $4.2 $4.6 $4.8 $5.0 $5.9 $5.8 $5.9 $5.8 $5.9 $5.8 $5.6 4.22% 4.25% 4.38% 4.34% 4.10% 4.33% 4.61% 5.02% 5.44% 5.78% 0.21% 0.17% 0.14% 0.11% 0.10% 0.11% 0.28% 0.71% 1.04% 1.35% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Loan Yields and Deposit Costs Total Average Loans ($B) Total Average Deposits ($B) Average Loan Yield Average Cost of Total Deposits(1) (1) See Footnote Index and non-GAAP reconciliations in Appendix.
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Fed Agy CMO, 3% State and Muni, 51% Fed Agy MBS, 18% Private labeled MBS, 1% U.S. Treasury, 19% Corp, 8% Total Investments at 6/30/23 $2.9B 20 Investment portfolio cash flows are helping to fund higher yielding loans • Book yield of 2.22%, effective duration of 6.41 years • Positive spread over total cost of funds • $41 million of cash flows during Q2 • Estimated $60 million of cash flows expected through the end of 2023, not including sales • Run off yield in 2023 is 2.49% • Sold ~ $25 million in securities in the second quarter with a slight gain Investment Portfolio Securities Portfolio Detail Security Type ($000s) 2Q 2023 Amortized Cost 1Q 2023 Amortized Cost QoQ Change 1Q 2023 Duration (yrs) U.S. Treasury and federal agencies $582 $589 $(7) 4.45 Mortgage-backed 652 667 (15) 5.05 Corporate securities 245 246 (1) 4.92 State and municipal 1,538 1,578 (40) 8.23 Total Securities $3,017 $3,080 $(63) 6.41
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 11.6% 12.0% 11.3% 12.0% 11.3% 11.3% 11.6% 12.0% 11.9% 12.1% 11.4% 11.2% 2018 2019 2020 2021 2022 2Q23 10.1% 10.5% 10.7% 9.2% 10.2% 9.7% 9.9% 9.9% 9.0% 8.9% 9.5% 9.3% 2018 2019 2020 2021 2022 2Q23 13.4% 14.0% 14.9% 15.4% 13.4% 14.4% 13.5% 13.5% 14.3% 14.2% 13.6% 13.7% 2018 2019 2020 2021 2022 2Q23 Source: S&P Global Market Intelligence. Note: Company closed the acquisition of Salin Bancshares, Inc. in March 2019. TCE / TA (%) Leverage Ratio (%) Total RBC Ratio (%) 4.0% Adequate + Buffer 7.0% KBW Regional Bank Index Median - MRQ Solid Regulatory Capital 10.5% HBNC Ratio 8.8% 9.3% 9.1% 7.6% 6.6% 6.9% 9.1% 9.3% 8.6% 8.3% 7.2% 7.2% 2018 2019 2020 2021 2022 2Q23 CET1 Ratio (%) 21
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 22 Improving Tangible Common Equity 6.5% 6.3% 6.6% 6.9% 6.9%$11.11 $10.82 $11.59 $12.17 $12.34 2Q22 3Q22 4Q22 1Q23 2Q23 TCE / TA TBV / Share $93,064 $123,121 $106,198 $92,032 $97,919 2Q22 3Q22 4Q22 1Q23 2Q23 Accumulated Other Comprehensive Loss Note: Data as of period end; dollars in thousands except per share data TCE/TA continues to grow 100bp parallel shock to AFS investments over the next quarter, the TCE ratio would be an estimated 6.6% Accumulated Other Comprehensive Income metrics increased slightly • We have the intent and ability to hold the investments to maturity • Retained earnings and investments moving down the curve would earnback capital loss • No impact to regulatory capital ratios
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 23 Productive Use of Capital Long-standing Dividend • Investing to leverage capital through organic loan growth • Opportunistic acquisitions with focus on lease models • Stock buyback on pause until interest rates stabilize Deploying CapitalStrong Cash Position • 30+ years of uninterrupted quarterly cash dividend • Quarterly dividend increase of 6.3% to $0.16 per share in second quarter of 2022, resulting in tenth dividend increase in the last 11 years • As of June 30, 2023, implied annualized dividend yield of 6.2% • Targeted dividend payout ratio of 30-40% and aligned with capital retention strategy • Currently represents approximately 8 quarters of the current dividend plus fixed costs • Strong cash position provides significant flexibility in managing the bank’s balance sheet and capital while providing flexibility for opportunistic investments
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Total Loan Growth 2.6% 6-8% Net Interest Margin 2.68% 2.55-2.65% Net Interest Income $91M $175-$185 M Non-Interest Income $21M $42-$45 M Annual Expenses to Average Assets 1.82% <1.90% ROAA 0.95% 0.93%-0.97% ROAE 10.62% 10.50%-10.90% TCE / TA (period end) 6.9% >7.0% Updated 2023 Expectations Actual 2023 YTD 24 Full-year 2023 expectations are as of July 26, 2023, based on assumptions including but not limited to one Federal Funds Target Rate increase in the second half of 2023. YTD 2023 actuals through June 30, 2023. FY 2023 Expectation
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Very attractive Midwest markets Solid loan growth with low credit risk profile Tenured and stable deposit base with significant liquidity Disciplined operating culture Compelling value supported by commitment to dividend 1.82% operating expenses/average assets in 1H23 Proven credit metrics that have historically outperformed the market 25 Why Horizon? A High-Performing Operator in Growth Markets Stable, granular deposit base with average account tenure over 10 years and majority of balances in transactional checking accounts Significant liquidity with $2.9 billion in availability and 79% deposits insured/collateralized Actively managing funding cost to create shareholder value Attractive Midwest Markets with strategic branch distribution throughout key growth areas and university towns Significant inflow of businesses and households due to desirable economic environment, quality of life, significant investment in infrastructure, and major industries of manufacturing, healthcare, education and high tech Flourishing ecosystem of suppliers, professional service firms and vendor partners 92% P/TBV and 6.7x P/E (TTM) 6.2% dividend yield 30-year record of uninterrupted quarterly cash dividends to shareholders Well balanced annualized loan growth of 5.3% in 1H23 across multiple segments and markets, with very limited concentration risk Continued significant opportunity within the portfolio through reinvestment into higher yielding loans and expand interest income A proven history of excellent credit metrics: 1 basis points charge-offs, 1.17% allowance for credit losses Price multiples as of 7/21/2023
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 26 Appendix
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Commercial, $2,506M, 59% Residential Mortgage, $675M, 16% Consumer, $1,003M, 23% Mortgage Warehouse, $82M, 2% Held For Sale, $7M, 0% 27 Gross Loans at 6/30/23 $4.3B Commercial Loans by Industry ($M) 6/30/23 Balance % of Commercial Portfolio % of Total Loan Portfolio Lessors – Residential Multi Family $249 9.9% 5.8% Health Care, Educational & Social 204 8.1% 4.8% Individual and Other Services 162 6.5% 3.8% Office (except medical) 159 6.3% 3.7% Warehouse/Industrial 159 6.3% 3.7% Hotel 156 6.2% 3.7% Retail 155 6.2% 3.6% Real Estate Rental & Leasing 130 5.2% 3.0% Finance & Insurance 123 4.9% 2.9% Manufacturing 122 4.9% 2.9% Lessors – Student Housing 109 4.3% 2.6% Construction 88 3.5% 2.1% Retail Trade 83 3.3% 1.9% Lessors – Residential 1–4 Family 73 2.9% 1.7% Government 64 2.6% 1.5% Medical Office 63 2.5% 1.5% Restaurants 59 2.4% 1.4% Mini Storage 58 2.3% 1.4% Leisure and Hospitality 49 2.0% 1.1% Professional & Technical Services 44 1.8% 1.0% Transportation & Warehousing 37 1.5% 0.9% Farm Land 34 1.3% 0.8% Wholesale Trade 34 1.4% 0.8% Agriculture 20 0.8% 0.5% Other 72 2.9% 1.7% Total $2,506 100.0% 58.8% Diversified & Granular Loan Portfolio
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 28 Leader In Our Core Markets Source: S&P Global Market Intelligence. Deposit data as of 6/30/22, estimated pro forma for recent or pending transactions per S&P Global Market Intelligence MSA HBNC Rank HBNC Branches HBNC Market Share Deposits in Market ($M) Michigan City-La Porte, IN 1 8 55.3% $1,184 Indianapolis-Carmel-Anderson, IN 16 8 1.0% 791 Chicago-Naperville-Elgin, IL-IN-WI 47 10 0.1% 709 Lafayette-West Lafayette, IN 4 5 7.1% 344 Lansing-East Lansing, MI 12 4 2.4% 278 Niles, MI 4 5 12.0% 275 Detroit-Warren-Dearborn, MI 22 1 0.1% 224 Midland, MI 2 2 19.0% 219 Cadillac, MI 2 3 29.0% 219 Grand Rapids-Kentwood, MI 18 2 0.6% 192 Logansport, IN 3 1 17.5% 163 Columbus, IN 6 1 6.4% 118 Fort Wayne, IN 13 3 1.2% 114 Auburn, IN 3 2 11.9% 114 Warsaw, IN 5 2 5.1% 101 Kalamazoo-Portage, MI 9 1 2.0% 94 Big Rapids, MI 4 1 11.5% 80 Marion, IN 6 1 7.0% 68 Sturgis, MI 5 1 5.9% 62 Kokomo, IN 7 1 3.0% 47 Elkhart-Goshen, IN 10 1 0.9% 44 Kendallville, IN 5 1 4.8% 39 Saginaw, MI 12 1 0.8% 21 South Bend-Mishawaka, IN-MI 15 1 0.3% 17 Total Franchise 76 $5,900
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 29 Slide 5 • Adjusted net income and adjusted diluted EPS excludes swap termination fee and gain/(loss) on sale of investment securities, net of tax and death benefit on bank owned life insurance. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP counterparts.) • Adjusted net interest income and adjusted net interest margin exclude acquisition-related purchase accounting adjustments and swap termination fees. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP counterparts.) • Return on average tangible equity excludes average intangible assets from average equity. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP counterparts.) • Pre-tax, pre-provision income excludes income tax expense and credit loss expense. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP counterparts.) Slide 18 • Average cost of average total deposits includes average balances of non-interest bearing deposits. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP counterparts.) Slides 30-36 Use of Non-GAAP Financial Measures • Certain information set forth in the presentation materials refers to financial measures determined by methods other than in accordance with GAAP. Horizon believes these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to purchase accounting impacts, one-time acquisition and other non-recurring costs and non-core items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 30 Footnote Index June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Net income as reported 18,763$ 18,228$ 21,165$ 23,821$ 24,859$ Swap termination fee (1,453) - - - - Tax effect 305 - - - - Net income excluding swap termination fee 17,615 18,228 21,165 23,821 24,859 (Gain)/loss on sale of investment securities (20) 500 - - - Tax effect 4 (105) - - - Net income excluding (gain)/loss on sale of investment securities 17,599 18,623 21,165 23,821 24,859 Death benefit on bank owned life insurance ("BOLI") - - - - (644) Net income excluding death benefit on BOLI 17,599 18,623 21,165 23,821 24,215 Adjusted net income 17,599$ 18,623$ 21,165$ 23,821$ 24,215$ June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Diluted EPS as reported 0.43$ 0.42$ 0.48$ 0.55$ 0.57$ Swap termination fee (0.03) - - - - Tax effect 0.01 - - - - Diluted EPS excluding swap termination fee 0.41 0.42 0.48 0.55 0.57 (Gain)/loss on sale of investment securities - 0.01 - - - Tax effect - - - - - Diluted EPS excluding (gain)/loss on sale of investment securities 0.41 0.43 0.48 0.55 0.57 Death benefit on bank owned life insurance ("BOLI") - - - - (0.01) Diluted EPS excluding death benefit on BOLI 0.41 0.43 0.48 0.55 0.56 Adjusted diluted EPS 0.41$ 0.43$ 0.48$ 0.55$ 0.56$ Three Months Ended Three Months Ended Non-GAAP Reconciliation of Net Income (Dollars in Thousands, Unaudited) Non-GAAP Reconciliation of Diluted Earnings per Share (Dollars in Thousands, Unaudited)
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 31 Footnote Index June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Net interest income as reported 46,160$ 45,237$ 48,782$ 51,861$ 52,044$ Average interest earning assets 7,212,640 7,201,266 7,091,980 7,056,208 6,943,633 Net interest income as a percentage of average interest earning assets ("Net Interest Margin") 2.69% 2.67% 2.85% 3.04% 3.13% Net interest income as reported 46,160$ 45,237$ 48,782$ 51,861$ 52,044$ Acquisition-related purchase accounting adjustments ("PAU") (651) (367) (431) (906) (1,223) Swap termination fee (1,453) - - - - Adjusted net interest income 44,056$ 44,870$ 48,351$ 50,955$ 50,821$ Adjusted net interest margin 2.57% 2.65% 2.83% 2.99% 3.06% Non-GAAP Reconciliation of Net Interest Margin (Dollars in Thousands, Unaudited) Three Months Ended
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 32 Footnote Index June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Average common equity 710,953$ 693,472$ 660,188$ 680,376$ 677,299$ Less: Average intangible assets 171,177 172,139 173,050 173,546 175,321 Average tangible equity 539,776$ 521,333$ 487,138$ 506,830$ 501,978$ Return on average tangible equity ("ROATE") as reported 13.94% 14.18% 17.24% 18.65% 19.86% Swap termination fee (1.08) - - - - Tax effect 0.23 - - - - ROATE excluding swap termination fee 13.09 14.18 17.24 18.65 19.86 (Gain)/loss on sale of investment securities (0.01) 0.39 - - - Tax effect - (0.08) - - - ROATE excluding (gain)/loss on sale of investment securities 13.08 14.49 17.24 18.65 19.86 Death benefit on bank owned life insurance ("BOLI") - - - - (0.51) ROATE excluding death benefit on BOLI 13.08 14.49 17.24 18.65 19.35 Adjusted ROATE 13.08% 14.49% 17.24% 18.65% 19.35% Non-GAAP Reconciliation of Return on Average Tangible Equity (Dollars in Thousands, Unaudited) Three Months Ended
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 33 Footnote Index June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Pre-tax income 20,215$ 20,091$ 23,814$ 25,834$ 28,834$ Provision for credit losses 680 242 (69) (601) 240 Pre-tax, pre-provision net income 20,895$ 20,333$ 23,745$ 25,233$ 29,074$ Pre-tax, pre-provision net income 20,895$ 20,333$ 23,745$ 25,233$ 29,074$ Swap termination fee (1,453) (Gain)/loss on sale of investment securities (20) 500 - - - Death benefit on bank owned life insurance - - - - (644) Adjusted pre-tax, pre-provision net income 19,422$ 20,833$ 23,745$ 25,233$ 28,430$ Average common equity 710,953$ 693,472$ 660,188$ 680,376$ 677,299$ Unadjusted pre-tax, pre-provision ROACE 11.79% 11.89% 14.27% 14.71% 17.22% Adjusted pre-tax, pre-provision ROACE 10.96% 12.18% 14.27% 14.71% 16.84% Non-GAAP Reconciliation of Pre-Tax, Pre-Provision Net Income (Dollars in Thousands, Unaudited) Three Months Ended
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 34 Footnote Index June 30, March 31, 2023 2023 Total deposit interest expense as reported 18,958$ 14,819$ Average interest bearing deposits 4,445,074 4,502,199 Annualized total deposit interest expense as a percentage of average interest bearing deposits ("Cost of Interest Bearing Deposits") 1.71% 1.33% Average interest bearing deposits 4,445,074 4,502,199 Average non-interest bearing deposits 1,186,520 1,255,697 Average total deposits 5,631,594$ 5,757,896$ Annualized deposit interest expense as a percentage of average total deposits ("Cost of Total Deposits") 1.35% 1.04% Non-GAAP Reconciliation of Cost of Deposits (Dollars in Thousands, Unaudited) Three Months Ended
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 35 Footnote Index December 31, September 30, June 30, March 31, 2022 2022 2022 2022 Total deposit interest expense as reported 10,520$ 4,116$ 1,677$ 1,496$ Average interest bearing deposits 4,555,887 4,478,741 4,540,959 4,478,621 Annualized total deposit interest expense as a percentage of average interest bearing deposits ("Cost of Interest Bearing Deposits") 0.92% 0.36% 0.15% 0.14% Average interest bearing deposits 4,555,887 4,478,741 4,540,959 4,478,621 Average non-interest bearing deposits 1,321,139 1,351,857 1,335,779 1,322,781 Average total deposits 5,877,026$ 5,830,598$ 5,876,738$ 5,801,402$ Annualized deposit interest expense as a percentage of average total deposits ("Cost of Total Deposits") 0.71% 0.28% 0.11% 0.10% Three Months Ended Non-GAAP Reconciliation of Cost of Deposits (Dollars in Thousands, Unaudited)
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 36 Footnote Index December 31, September 30, June 30, March 31, 2021 2021 2021 2021 Total deposit interest expense as reported 1,663$ 1,808$ 2,053$ 2,343$ Average interest bearing deposits 4,543,989 3,831,632 3,680,796 3,524,103 Annualized total deposit interest expense as a percentage of average interest bearing deposits ("Cost of Interest Bearing Deposits") 0.15% 0.19% 0.22% 0.27% Average interest bearing deposits 4,543,989 3,831,632 3,680,796 3,524,103 Average non-interest bearing deposits 1,366,621 1,180,890 1,139,068 1,063,268 Average total deposits 5,910,610$ 5,012,522$ 4,819,864$ 4,587,371$ Annualized deposit interest expense as a percentage of average total deposits ("Cost of Total Deposits") 0.11% 0.14% 0.17% 0.21% Three Months Ended Non-GAAP Reconciliation of Cost of Deposits (Dollars in Thousands, Unaudited)
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Investor Relations Contact 37 Mark E. Secor Executive Vice President and Chief Financial Officer Horizon Bancorp, Inc. 515 Franklin Street Michigan City, IN 46360 219-873–2611 Investor.HorizonBank.com
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Horizon Bancorp (NASDAQ:HBNC)
過去 株価チャート
から 4 2024 まで 5 2024
Horizon Bancorp (NASDAQ:HBNC)
過去 株価チャート
から 5 2023 まで 5 2024