• Horizon Bancorp, Inc. Reports Solid First Quarter 2024 Results Including EPS of $0.32, Net Interest Margin Expansion, Loan Growth and Well-Managed Operating Expenses

    Источник: Nasdaq GlobeNewswire / 24 апр 2024 16:05:01   America/New_York

    MICHIGAN CITY, Ind., April 24, 2024 (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 months ended March 31, 2024.

    Net income for the first quarter of 2024 was $14.0 million, or $0.32 per diluted share compared to a net loss of $25.2 million, or $0.58, in the linked fourth quarter of 2023. During the fourth quarter of 2023, the Company recognized a net loss on the sale of securities of $31.6 million and the tax effect of the surrender of bank owned life insurance of $8.6 million.

    “We are very pleased with our positive first quarter results which included a second consecutive quarter of margin and net interest income expansion. Throughout the quarter, we began to strategically leverage our excess liquidity into higher yielding commercial, equipment finance, residential and consumer loan portfolios. These activities were complimented by the resiliency of our deposit portfolio both in terms of balances and cost,” President and Chief Executive Officer Thomas M. Prame said. “Horizon's first quarter earnings not only reflect continued improvement in our margin, but highlights our disciplined approach to expenses and positive credit metrics through our active portfolio management and conservative lending approach. Even with the current economic outlook of higher rates for longer, we feel confident in our ability to continue to improve our net interest margin and the financial performance of the organization moving forward. We are encouraged by the positive momentum across our diversified operating model and we are experiencing consistent growth in our relationship banking platforms in our local markets. The team had a solid start to the year, and we feel optimistic about our trajectory as we move into the second quarter.”

    First Quarter 2024 Highlights

    • Net interest margin increased to 2.50% compared to 2.43% in the linked quarter. Net interest income was $43.3 million compared to $42.3 million in the linked quarter. The net interest margin for the month ended March 31, 2024 was 2.53%.

    • Commercial loans grew 11.2% annualized in the quarter, including $22.8 million in new equipment finance production and a $52.0 million increase in other commercial loans.

    • Total loans were $4.62 billion at period end, increasing by 18.2% annualized during the quarter. Balances included the strategic deployment of excess liquidity into higher yielding and excellent credit quality residential mortgages of $94.7 million and consumer loans with credit protection of $59.1 million.

    • Cash totaled $271.1 million at period end, providing significant flexibility to drive future net interest margin growth through deployment into higher yielding assets throughout 2024.

    • Excellent asset quality with net charge-offs representing only 0.01% of average loans, as well as delinquent and non-performing loans representing 0.33% and 0.41%, respectively, at period end. The Company's first quarter credit loss expense of $805,000 was primarily attributable to loan growth and replacement of net charge-offs.

    • Stable deposit base with continued pricing discipline. Deposits totaled $5.58 billion at quarter end, compared to $5.66 billion on December 31, 2023. Modest outflows were primarily attributed to public fund certificates of deposits.

    • Solid fee income results, even with backdrop of lower BOLI income and mortgage seasonality. Expenses were well-managed in the quarter and at the lower end of guidance.

    Summary

      For the Three Months Ended
      March 31, December 31, March 31,
    Net Interest Income and Net Interest Margin  2024   2023   2023 
    Net interest income $43,288  $42,257  $45,237 
    Net interest margin  2.50%  2.43%  2.67%
    Adjusted net interest margin  2.50%  2.42%  2.65%
                 


      For the Three Months Ended
      March 31, December 31, March 31,
    Asset Yields and Funding Costs 2024 2023 2023
    Interest earning assets 4.82% 4.69% 4.17%
    Interest bearing liabilities 2.84% 2.74% 1.85%
              


      For the Three Months Ended
    Non-interest Income and  March 31, December 31, March 31,
    Mortgage Banking Income 2024  2023  2023
    Total non–interest income $9,929 $(20,449) $9,620
    Gain on sale of mortgage loans  626  951   785
    Mortgage servicing income net of impairment  439  724   713
               


      For the Three Months Ended
      March 31, December 31, March 31,
    Non-interest Expense  2024   2023   2023 
    Total non–interest expense $37,107  $39,330  $34,524 
    Annualized non–interest expense to average assets  1.90%  1.98%  1.79%
                 


      For the Three Months Ended
      March 31, December 31, March 31,
    Credit Quality 2024 2023 2023
    Allowance for credit losses to total loans 1.09% 1.13% 1.17%
    Non–performing loans to total loans 0.41% 0.46% 0.47%
    Percent of net charge–offs to average loans outstanding for the period 0.01% 0.02% 0.01%
              


      March 31, Net Reserve December 31,
    Allowance for Credit Losses  2024  1Q24  2023 
    Commercial $30,514  $778  $29,736 
    Retail Mortgage  2,655   152   2,503 
    Warehouse  659   178   481 
    Consumer  16,559   (750)  17,309 
    Allowance for Credit Losses (“ACL”) $50,387  $358  $50,029 
    ACL / Total Loans  1.09%    1.13%
    Acquired Loan Discount (“ALD”) $4,660  $(130) $4,790 
                 

    Income Statement Highlights

    Net income for the first quarter of 2024 was $14.0 million, or $0.32 diluted earnings per share. The Company reported a net loss of $25.2 million, or $0.58, for the linked quarter and net income of $18.2 million, or $0.42, for the prior year period. The linked quarter net loss was due primarily to a $31.6 million net loss on the sale of securities resulting from the balance sheet restructuring which occurred in December 2023, income tax expense from the early surrender of bank owned life insurance, extraordinary non-interest expenses associated with staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities. The change in net income for the first quarter of 2024 when compared to the linked quarter, also reflects growth in net-interest income of $1.0 million and decreases in credit loss expense of $469,000, income tax expense of $5.1 million and non-interest expense of $2.2 million.

    Net interest income was $43.3 million in the first quarter of 2024, compared to $42.3 million in the linked quarter.

    Total non–interest income was $9.9 million in the first quarter of 2024, compared to negative $20.4 million in the linked quarter when the Company recorded a $31.6 million pre-tax loss on the sale of investment securities associated with the balance sheet restructuring which occurred in December 2023.

    Total non–interest expense was $2.2 million lower in the first quarter of 2024 when compared to the linked quarter, primarily due to decreases of $1.6 million in salaries and employee benefits, $626,000 in loan expense, $492,000 in other losses, and $478,000 in data processing, partially offset by increases of $965,000 in outside services and consultants, $286,000 in net occupancy expenses, and $120,000 in FDIC insurance expense.

    Horizon's effective tax rate was 8.6% for the first quarter of 2024, with income tax expense of $1.3 million which is $5.1 million lower than the linked quarter when the Company recorded income tax associated with the surrender of bank owned life insurance.

    Net Interest Margin

    Horizon’s net interest margin (“NIM”) was 2.50% for the first quarter of 2024, compared to 2.43% for the fourth quarter of 2023.

    Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.50% for the first quarter of 2024, compared to 2.42% for the linked quarter. (See the “Non–GAAP Reconciliation of Net Interest Margin” table below).

    Lending Activity

    Total loan balances and loans held for sale increased to $4.62 billion on March 31, 2024 compared to $4.42 billion on December 31, 2023. Balances at the end of the first quarter of 2024 included deployment of surplus liquidity into $59.1 million in consumer loans with credit protections and $94.7 million in residential mortgages. During the three months ended March 31, 2024, commercial loans grew organically by $74.8 million, including $22.8 million in equipment finance production. During the first quarter of 2024, consumer loans increased $13.3 million, residential mortgage loans increased $100.9 million, and mortgage warehouse loans increased $11.5 million, offset by a decrease in loans held for sale of $496,000.

    Loan Growth by Type
    (Dollars in Thousands, Unaudited)
      March 31, December 31, QTD QTD Annualized
       2024  2023 $ Change % Change % Change
    Commercial $2,749,766 $2,674,960 $74,806  2.8% 11.2%
    Residential mortgage  782,070  681,136  100,934  14.8% 59.6%
    Mortgage warehouse  56,549  45,078  11,471  25.4% 102.3%
    Consumer  1,029,790  1,016,456  13,334  1.3% 5.3%
    Total loans  4,618,175  4,417,630  200,545  4.3% 18.3%
    Loans held for sale  922  1,418  (496) (35.0)% (140.7)%
    Total loans and loans held for sale $4,619,097 $4,419,048 $200,049  4.3% 18.2%
                     

    Deposit Activity

    Total deposit balances of $5.58 billion on March 31, 2024 decreased 1.50% compared to $5.66 billion on December 31, 2023.

    The deposit mix at the end of the first quarter of 2024 represented the demand for clients to earn more interest on their excess funds and seasonal fluctuation of commercial balances for taxes and distributions. The Bank's tenured and granular core deposit relationships remain steadfast, reflecting the value of Horizon's relationship banking model and local community engagement.

    Deposit Growth by Type
    (Dollars in Thousands, Unaudited)
     March 31, December 31, QTD QTD Annualized
     2024 2023 $ Change % Change % Change
    Non–interest bearing$1,093,076 $1,116,005 $(22,929) (2.1)% (8.3)%
    Interest bearing 3,350,673  3,369,149  (18,476) (0.5)% (2.2)%
    Time deposits 1,136,121  1,179,739  (43,618) (3.7)% (14.9)%
    Total deposits$5,579,870 $5,664,893 $(85,023) (1.5)% (6.0)%
                    

    Capital

    The capital resources of the Company and the Bank continued to exceed regulatory capital ratios for “well capitalized” banks at March 31, 2024. Stockholders’ equity totaled $721.3 million at March 31, 2024, and the ratio of average stockholders’ equity to average assets was 9.25% for the three months ended March 31, 2024.

    Tangible book value, which excludes intangible assets from total equity, per common share (“TBVPS”) was $12.65, increasing $0.05 during the first quarter of 2024. Tangible common equity increased to 7.20% of tangible assets as of March 31, 2024, an increase of 11 basis points during the quarter.

    The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of March 31, 2024.

      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 $793,832 13.82% $459,403 8.00% $602,967 10.50% N/A N/A
    Bank  721,280 12.59%  458,163 8.00%  601,338 10.50% $572,703 10.00%
    Tier 1 capital (to risk–weighted assets)                
    Consolidated  742,695 12.93%  344,553 6.00%  488,116 8.50% N/A N/A
    Bank  670,143 11.70%  343,622 6.00%  486,798 8.50%  458,163 8.00%
    Common equity tier 1 capital (to risk–weighted assets)                
    Consolidated  625,965 10.90%  258,414 4.50%  401,978 7.00% N/A N/A
    Bank  670,143 11.70%  257,716 4.50%  400,892 7.00%  372,257 6.50%
    Tier 1 capital (to average assets)                
    Consolidated  742,695 9.68%  306,779 4.00%  306,779 4.00% N/A N/A
    Bank  670,143 8.63%  310,602 4.00%  310,602 4.00%  388,253 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 March 31, 2024, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.56 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $581.1 million of unpledged investment securities on March 31, 2024.

    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; the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict and the Israel and Hamas conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward–looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10–K, Quarterly Reports on Form 10–Q, and Current Reports on Form 8–K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward–looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

    Financial Highlights
    (Dollars in Thousands, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
      2024 2023 2023 2023 2023
    Balance sheet:          
    Total assets $7,855,707 $7,931,195 $7,959,434 $7,963,353 $7,897,995
    Interest earning deposits & federal funds sold  170,882  413,744  76,293  119,637  30,221
    Interest earning time deposits  1,715  2,205  2,207  2,452  3,098
    Investment securities  2,461,044  2,492,889  2,831,651  2,889,309  2,958,978
    Commercial loans  2,749,766  2,674,960  2,589,244  2,506,279  2,505,459
    Mortgage warehouse loans  56,549  45,078  65,923  82,345  52,957
    Residential mortgage loans  782,070  681,136  675,399  674,751  662,459
    Consumer loans  1,029,790  1,016,456  1,028,436  1,002,885  1,026,076
    Total loans  4,618,175  4,417,630  4,359,002  4,266,260  4,246,951
    Earning assets  7,306,564  7,362,395  7,306,490  7,319,100  7,273,921
    Non–interest bearing deposit accounts  1,093,076  1,116,005  1,126,703  1,170,055  1,231,845
    Interest bearing transaction accounts  3,350,673  3,369,149  3,322,788  3,289,474  3,402,525
    Time deposits  1,136,121  1,179,739  1,250,606  1,249,803  1,067,575
    Total deposits  5,579,870  5,664,893  5,700,097  5,709,332  5,701,945
    Borrowings  1,359,121  1,353,050  1,356,510  1,352,039  1,311,927
    Subordinated notes  55,634  55,543  59,007  58,970  58,933
    Junior subordinated debentures issued to capital trusts  57,315  57,258  57,201  57,143  57,087
    Total stockholders’ equity  721,250  718,812  693,369  709,243  702,559
                    


    Financial Highlights
    (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Income statement:          
    Net interest income $43,288  $42,257  $42,090  $46,160  $45,237 
    Credit loss expense (recovery)  805   1,274   263   680   242 
    Non–interest income  9,929   (20,449)  11,830   10,997   9,620 
    Non–interest expense  37,107   39,330   36,168   36,262   34,524 
    Income tax expense  1,314   6,419   1,284   1,452   1,863 
    Net income $13,991  $(25,215) $16,205  $18,763  $18,228 
               
    Per share data:          
    Basic earnings per share $0.32  $(0.58) $0.37  $0.43  $0.42 
    Diluted earnings per share  0.32   (0.58)  0.37   0.43   0.42 
    Cash dividends declared per common share  0.16   0.16   0.16   0.16   0.16 
    Book value per common share  16.49   16.47   15.89   16.25   16.11 
    Tangible book value per common share  12.65   12.60   12.00   12.34   12.17 
    Market value – high  14.44   14.65   12.68   11.10   16.32 
    Market value – low $11.75  $9.33  $9.90  $7.75  $10.31 
    Weighted average shares outstanding – Basis  43,663,610   43,649,585   43,646,609   43,639,987   43,583,554 
    Weighted average shares outstanding – Diluted  43,874,036   43,649,585   43,796,069   43,742,588   43,744,721 
               
    Key ratios:          
    Return on average assets  0.72% (1.27)        %  0.81%  0.96%  0.94%
    Return on average common stockholders’ equity  7.76   (14.23)  8.99   10.59   10.66 
    Net interest margin  2.50   2.43   2.41   2.69   2.67 
    Allowance for credit losses to total loans  1.09   1.13   1.14   1.17   1.17 
    Average equity to average assets  9.25   8.92   9.03   9.07   8.86 
    Efficiency ratio  69.73   180.35   67.08   63.44   62.93 
    Annualized non–interest expense to average assets  1.90   1.98   1.81   1.86   1.79 
    Bank only capital ratios:          
    Tier 1 capital to average assets  8.63   8.41   8.77   8.72   8.86 
    Tier 1 capital to risk weighted assets  11.70   11.96   12.22   12.12   12.65 
    Total capital to risk weighted assets  12.59   12.87   13.11   13.03   13.56 
                         


    Financial Highlights
    (Dollars in Thousands Except Ratios, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Loan data:          
    Substandard loans $43,672  $49,526  $47,563  $41,484  $49,804 
    30 to 89 days delinquent  15,272   16,595   13,089   10,913   13,971 
               
    Non–performing loans:          
    90 days and greater delinquent – accruing interest  108   559   392   1,313   137 
    Non–accrual loans  19,053   19,710   19,056   20,796   19,660 
    Total non–performing loans $19,161  $20,269  $19,448  $22,109  $19,797 
    Non–performing loans to total loans  0.41%  0.46%  0.45%  0.52%  0.47%
                         


    Allocation of the Allowance for Credit Losses
    (Dollars in Thousands, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
      2024 2023 2023 2023 2023
    Commercial $30,514 $29,736 $29,472 $30,354 $31,156
    Residential mortgage  2,655  2,503  2,794  3,648  4,447
    Mortgage warehouse  659  481  714  893  798
    Consumer  16,559  17,309  16,719  15,081  13,125
    Total $50,387 $50,029 $49,699 $49,976 $49,526
                    


    Net Charge–offs (Recoveries)
    (Dollars in Thousands Except Ratios, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Commercial $(57) $233  $142  $101  $104 
    Residential mortgage  (5)  21   (39)  (10)  (6)
    Mortgage warehouse  —   —   —   —   — 
    Consumer  488   531   619   183   281 
    Total $426  $785  $722  $274  $379 
    Percent of net charge–offs (recoveries) to average loans outstanding for the period  0.01%  0.02%  0.02%  0.01%  0.01%
                         


    Total Non–performing Loans
    (Dollars in Thousands Except Ratios, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Commercial $5,493  $7,362  $6,969  $8,275  $8,523 
    Residential mortgage  8,725   8,058   7,777   8,168   6,926 
    Mortgage warehouse  —   —   —   —   — 
    Consumer  4,943   4,849   4,702   5,666   4,348 
    Total $19,161  $20,269  $19,448  $22,109  $19,797 
    Non–performing loans to total loans  0.41%  0.46%  0.45%  0.52%  0.47%
                         


    Other Real Estate Owned and Repossessed Assets
    (Dollars in Thousands, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
      2024 2023 2023 2023 2023
    Commercial $1,124 $1,124 $1,287 $1,567 $1,567
    Residential mortgage  —  182  32  107  203
    Mortgage warehouse  —  —  —  —  —
    Consumer  50  205  72  7  78
    Total $1,174 $1,511 $1,391 $1,681 $1,848
                    


    Average Balance Sheets
    (Dollars in Thousands, Unaudited)
     
      Three Months Ended Three Months Ended
      March 31, 2024 March 31, 2023
      Average
    Balance    		 Interest Average
    Rate    		 Average
    Balance    		 Interest Average
    Rate
    Assets            
    Interest earning assets            
    Federal funds sold $322,058  $4,387 5.48% $7,767  $83 4.33%
    Interest earning deposits  9,025   110 4.90%  8,780   70 3.23%
    Investment securities – taxable  1,364,195   7,362 2.17%  1,727,369   8,725 2.05%
    Investment securities – non–taxable (1)  1,149,957   6,451 2.86%  1,314,129   7,556 2.95%
    Loans receivable (2) (3)  4,448,324   66,954 6.09%  4,143,221   55,364 5.44%
    Total interest earning assets  7,293,559   85,264 4.82%  7,201,266   71,798 4.17%
    Non–interest earning assets            
    Cash and due from banks  105,795       103,563     
    Allowance for credit losses  (49,960)      (50,337)    
    Other assets  486,652       576,614     
    Total average assets $7,836,046      $7,831,106     
                 
    Liabilities and Stockholders’ Equity            
    Interest bearing liabilities            
    Interest bearing deposits $4,500,148  $27,990 2.50% $4,502,199  $14,819 1.33%
    Borrowings  1,200,728   10,904 3.65%  1,053,317   9,268 3.57%
    Repurchase agreements  138,052   1,026 2.99%  138,749   503 1.47%
    Subordinated notes  55,558   831 6.02%  58,910   880 6.06%
    Junior subordinated debentures issued to capital trusts  57,279   1,225 8.60%  57,048   1,091 7.76%
    Total interest bearing liabilities  5,951,765   41,976 2.84%  5,810,223   26,561 1.85%
    Non–interest bearing liabilities            
    Demand deposits  1,077,183       1,255,697     
    Accrued interest payable and other liabilities  82,015       71,714     
    Stockholders’ equity  725,083       693,472     
    Total average liabilities and stockholders’ equity $7,836,046      $7,831,106     
                 
    Net interest income / spread   $43,288 1.98%   $45,237 2.32%
    Net interest income as a percent of average interest earning assets (1)     2.50%     2.67%
                 
    (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.
     


    Condensed Consolidated Balance Sheets
    (Dollars in Thousands)
         
      March 31,
    2024    		 December 31,
    2023
      (Unaudited)  
    Assets    
    Cash and due from banks $271,088  $526,515 
    Interest earning time deposits  1,715   2,205 
    Investment securities, available for sale  535,319   547,251 
    Investment securities, held to maturity (fair value $1,627,853 and $1,668,758)  1,925,725   1,945,638 
    Loans held for sale  922   1,418 
    Loans, net of allowance for credit losses of $50,387 and $50,029  4,567,788   4,367,601 
    Premises and equipment, net  94,303   94,583 
    Federal Home Loan Bank stock  53,826   34,509 
    Goodwill  155,211   155,211 
    Other intangible assets  12,754   13,626 
    Interest receivable  40,008   38,710 
    Cash value of life insurance  36,455   36,157 
    Other assets  160,593   177,061 
    Total assets $7,855,707  $7,940,485 
         
    Liabilities    
    Deposits    
    Non–interest bearing $1,093,076  $1,116,005 
    Interest bearing  4,486,794   4,548,888 
    Total deposits  5,579,870   5,664,893 
    Borrowings  1,359,121   1,353,050 
    Subordinated notes  55,634   55,543 
    Junior subordinated debentures issued to capital trusts  57,315   57,258 
    Interest payable  7,853   22,249 
    Other liabilities  74,664   68,680 
    Total liabilities  7,134,457   7,221,673 
    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 44,115,840 and 44,106,174 shares    		  —   — 
    Additional paid–in capital  356,599   356,400 
    Retained earnings  435,927   429,021 
    Accumulated other comprehensive income (loss)  (71,276)  (66,609)
    Total stockholders’ equity  721,250   718,812 
    Total liabilities and stockholders’ equity $7,855,707  $7,940,485 
             


    Condensed Consolidated Statements of Income
    (Dollars in Thousands Except Per Share Data, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
      2024  2023  2023 2023  2023 
    Interest income          
    Loans receivable $66,954 $65,583  $63,003 $60,594 $55,364 
    Investment securities – taxable  7,362  8,157   8,788  8,740  8,725 
    Investment securities – non–taxable  6,451  6,767   7,002  7,059  7,556 
    Other  4,497  3,007   1,332  475  153 
    Total interest income  85,264  83,514   80,125  76,868  71,798 
    Interest expense          
    Deposits  27,990  27,376   24,704  18,958  14,819 
    Borrowed funds  11,930  11,765   11,224  9,718  9,771 
    Subordinated notes  831  870   880  881  880 
    Junior subordinated debentures issued capital trusts  1,225  1,246   1,227  1,151  1,091 
    Total interest expense  41,976  41,257   38,035  30,708  26,561 
    Net interest income  43,288  42,257   42,090  46,160  45,237 
    Credit loss expense (recovery)  805  1,274   263  680  242 
    Net interest income after credit loss expense  42,483  40,983   41,827  45,480  44,995 
    Non–interest Income          
    Service charges on deposit accounts  3,214  3,092   3,086  3,021  3,028 
    Wire transfer fees  101  103   120  116  109 
    Interchange fees  3,109  3,224   3,186  3,584  2,867 
    Fiduciary activities  1,315  1,352   1,206  1,247  1,275 
    Gain (loss) on sale of investment securities  —  (31,572)  —  20  (500)
    Gain on sale of mortgage loans  626  951   1,582  1,005  785 
    Mortgage servicing income net of impairment  439  724   631  640  713 
    Increase in cash value of bank owned life insurance  298  658   1,055  1,015  981 
    Other income  827  1,019   964  349  362 
    Total non–interest income  9,929  (20,449)  11,830  10,997  9,620 
    Non–interest expense          
    Salaries and employee benefits  20,268  21,877   20,058  20,162  18,712 
    Net occupancy expenses  3,546  3,260   3,283  3,249  3,563 
    Data processing  2,464  2,942   2,999  3,016  2,669 
    Professional fees  607  772   707  633  533 
    Outside services and consultants  3,359  2,394   2,316  2,515  2,717 
    Loan expense  719  1,345   1,120  1,397  1,118 
    FDIC insurance expense  1,320  1,200   1,300  840  540 
    Core deposit intangible amortization  872  903   903  903  903 
    Other losses  16  508   188  134  221 
    Other expenses  3,936  4,129   3,294  3,413  3,548 
    Total non–interest expense  37,107  39,330   36,168  36,262  34,524 
    Income before income taxes  15,305  (18,796)  17,489  20,215  20,091 
    Income tax expense  1,314  6,419   1,284  1,452  1,863 
    Net income $13,991 $(25,215) $16,205 $18,763 $18,228 
    Basic earnings per share $0.32 $(0.58) $0.37 $0.43 $0.42 
    Diluted earnings per share  0.32  (0.58)  0.37  0.43  0.42 
                      

    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.

    Non–GAAP Reconciliation of Net Income
    (Dollars in Thousands, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
      2024  2023  2023  2023   2023 
    Net income as reported $13,991 $(25,215) $16,205 $18,763  $18,228 
    Swap termination fee  —  —   —  (1,453)  — 
    Tax effect  —  —   —  305   — 
    Net income excluding swap termination fee  13,991  (25,215)  16,205  17,615   18,228 
    (Gain) / loss on sale of investment securities  —  31,572   —  (20)  500 
    Tax effect  —  (6,630)  —  4   (105)
    Tax valuation reserve  —  5,201   —  —   — 
    Net income excluding (gain) / loss on sale of investment securities  13,991  4,928   16,205  17,599   18,623 
    Extraordinary expenses  —  705   —  —   — 
    Tax effect  —  (148)  —  —   — 
    Net income excluding extraordinary expenses  13,991  5,485   16,205  17,599   18,623 
    BOLI tax expense and excise tax  —  8,597   —  —   — 
    Net income excluding BOLI tax expense and excise tax  13,991  14,082   16,205  17,599   18,623 
    Adjusted net income $13,991 $14,082  $16,205 $17,599  $18,623 
                       


    Non–GAAP Reconciliation of Diluted Earnings per Share
    (Dollars in Thousands, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
      2024  2023  2023  2023  2023
    Diluted earnings per share (“EPS”) as reported $0.32 $(0.58) $0.37 $0.43  $0.42
    Swap termination fee  —  —   —  (0.03)  —
    Tax effect  —  —   —  0.01   —
    Diluted EPS excluding swap termination fee  0.32  (0.58)  0.37  0.41   0.42
    (Gain) / loss on sale of investment securities  —  0.72   —  —   0.01
    Tax effect  —  (0.15)  —  —   —
    Tax valuation reserve  —  0.12   —  —   —
    Diluted EPS excluding (gain) / loss on sale of investment securities  0.32  0.11   0.37  0.41   0.43
    Extraordinary expenses  —  0.02   —  —   —
    Tax effect  —  —   —  —   —
    Diluted EPS excluding extraordinary expenses  0.32  0.13   0.37  0.41   0.43
    BOLI tax expense and excise tax  —  0.20   —  —   —
    Diluted EPS excluding BOLI tax expense and excise tax  0.32  0.33   0.37  0.41   0.43
    Adjusted diluted EPS $0.32 $0.33  $0.37 $0.41  $0.43
                      


    Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income
    (Dollars in Thousands, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
      2024  2023  2023  2023  2023
    Pre–tax income $15,305 $(18,796) $17,489 $20,215  $20,091
    Credit loss expense (recovery)  805  1,274   263  680   242
    Pre–tax, pre–provision net income $16,110 $(17,522) $17,752 $20,895  $20,333
               
    Pre–tax, pre–provision net income $16,110 $(17,522) $17,752 $20,895  $20,333
    Swap termination fee  —  —   —  (1,453)  —
    (Gain) / loss on sale of investment securities  —  31,572   —  (20)  500
    Extraordinary expenses  —  705   —  —   —
    Adjusted pre–tax, pre–provision net income $16,110 $14,755  $17,752 $19,422  $20,833
                      


    Non–GAAP Reconciliation of Net Interest Margin
    (Dollars in Thousands, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Net interest income as reported $43,288  $42,257  $42,090  $46,160  $45,237 
    Average interest earning assets  7,293,559   7,239,034   7,286,611   7,212,640   7,201,266 
    Net interest income as a percentage of average interest earning assets (“Net Interest Margin”)  2.50%  2.43%  2.41%  2.69%  2.67%
               
    Net interest income as reported $43,288  $42,257  $42,090  $46,160  $45,237 
    Acquisition–related purchase accounting adjustments (“PAUs”)  (13)  (175)  (435)  (651)  (367)
    Swap termination fee  —   —   —   (1,453)  — 
    Adjusted net interest income $43,275  $42,082  $41,655  $44,056  $44,870 
    Adjusted net interest margin  2.50%  2.42%  2.38%  2.57%  2.65%
                         


    Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
    (Dollars in Thousands, Unaudited)
       
      March 31, December 31, September 30, June 30, March 31,
      2024 2023 2023 2023 2023
    Total stockholders’ equity $721,250 $718,812 $693,369 $709,243 $702,559
    Less: Intangible assets  167,965  168,837  169,741  170,644  171,547
    Total tangible stockholders’ equity $553,285 $549,975 $523,628 $538,599 $531,012
    Common shares outstanding  43,726,380  43,652,063  43,648,501  43,645,216  43,621,422
    Book value per common share $16.49 $16.47 $15.89 $16.25 $16.11
    Tangible book value per common share $12.65 $12.60 $12.00 $12.34 $12.17
                    


    Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
    (Dollars in Thousands, Unaudited)
     
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Non–interest expense as reported $37,107  $39,330  $36,168  $36,262  $34,524 
    Net interest income as reported  43,288   42,257   42,090   46,160   45,237 
    Non–interest income as reported $9,929  $(20,449) $11,830  $10,997  $9,620 
    Non–interest expense / (Net interest income + Non–interest income)
    (“Efficiency Ratio”)    		  69.73%  180.35%  67.08%  63.44%  62.93%
               
    Non–interest expense as reported $37,107  $39,330  $36,168  $36,262  $34,524 
    Extraordinary expenses  —   (705)  —   —   — 
    Non–interest expense excluding extraordinary expenses  37,107   38,625   36,168   36,262   34,524 
               
    Net interest income as reported  43,288   42,257   42,090   46,160   45,237 
    Swap termination fee  —   —   —   (1,453)  — 
    Net interest income excluding swap termination fee  43,288   42,257   42,090   44,707   45,237 
               
    Non–interest income as reported  9,929   (20,449)  11,830   10,997   9,620 
    (Gain) / loss on sale of investment securities  —   31,572   —   (20)  500 
    Non–interest income excluding (gain) / loss on sale of investment securities $9,929  $11,123  $11,830  $10,977  $10,120 
    Adjusted efficiency ratio  69.73%  72.36%  67.08%  65.12%  62.37%
                         


    Non–GAAP Reconciliation of Return on Average Assets
    (Dollars in Thousands, Unaudited)
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Average assets $7,836,046  $7,880,816  $7,924,751  $7,840,026  $7,831,106 
    Return on average assets (“ROAA”) as reported  0.72% (1.27)%  0.81%  0.96%  0.94%
    Swap termination fee  —   —   —   (0.07)  — 
    Tax effect  —   —   —   0.02   — 
    ROAA excluding swap termination fee  0.72   (1.27)  0.81   0.91   0.94 
    (Gain) / loss on sale of investment securities  —   1.59   —   —   0.03 
    Tax effect  —   (0.33)  —   —   (0.01)
    Tax valuation reserve  —   0.26   —   —   — 
    ROAA excluding (gain) / loss on sale of investment securities  0.72   0.25   0.81   0.91   0.96 
    Extraordinary expenses  —   0.04   —   —   — 
    Tax effect  —   (0.01)  —   —   — 
    ROAA excluding extraordinary expenses  0.72   0.28   0.81   0.91   0.96 
    BOLI tax expense and excise tax  —   0.43   —   —   — 
    ROAA excluding BOLI tax expense and excise tax  0.72   0.71   0.81   0.91   0.96 
    Adjusted ROAA  0.72%  0.71%  0.81%  0.91%  0.96%
                         


    Non–GAAP Reconciliation of Return on Average Common Equity
    (Dollars in Thousands, Unaudited)
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Average common equity $725,083  $702,793  $715,485  $710,953  $693,472 
    Return on average common equity (“ROACE”) as reported  7.76% (14.23)%  8.99%  10.59%  10.66%
    Swap termination fee  —   —   —   (0.82)  — 
    Tax effect  —   —   —   0.17   — 
    ROACE excluding swap termination fee  7.76   (14.23)  8.99   9.94   10.66 
    (Gain) / loss on sale of investment securities  —   17.82   —   (0.01)  0.29 
    Tax effect  —   (3.74)  —   —   (0.06)
    Tax valuation reserve  —   2.94   —   —   — 
    ROACE excluding (gain) / loss on sale of investment securities  7.76   2.79   8.99   9.93   10.89 
    Extraordinary expenses  —   0.40   —   —   — 
    Tax effect  —   (0.08)  —   —   — 
    ROACE excluding extraordinary expenses  7.76   3.11   8.99   9.93   10.89 
    BOLI tax expense and excise tax  —   4.85   —   —   — 
    ROACE excluding BOLI tax expense and excise tax  7.76   7.96   8.99   9.93   10.89 
    Adjusted ROACE  7.76%  7.96%  8.99%  9.93%  10.89%
                         


    Non–GAAP Reconciliation of Return on Average Tangible Equity
    (Dollars in Thousands, Unaudited)
      Three Months Ended
      March 31, December 31, September 30, June 30, March 31,
       2024   2023   2023   2023   2023 
    Average common equity $725,083  $702,793  $715,485  $710,953  $693,472 
    Less: Average intangible assets  168,519   169,401   170,301   171,177   172,139 
    Average tangible equity $556,564  $533,392  $545,184  $539,776  $521,333 
    Return on average tangible equity (“ROATE”) as reported  10.11% (18.76)        %  11.79%  13.94%  14.18%
    Swap termination fee  —   —   —   (1.08)  — 
    Tax effect  —   —   —   0.23   — 
    ROATE excluding swap termination fee  10.11   (18.76)  11.79   13.09   14.18 
    (Gain) / loss on sale of investment securities  —   23.48   —   (0.01)  0.39 
    Tax effect  —   (4.93)  —   —   (0.08)
    Tax valuation reserve  —   3.87   —   —   — 
    ROATE excluding (gain) / loss on sale of investment securities  10.11   3.66   11.79   13.08   14.49 
    Extraordinary expenses  —   0.52   —   —   — 
    Tax effect  —   (0.11)  —   —   — 
    ROATE excluding extraordinary expenses  10.11   4.07   11.79   13.08   14.49 
    BOLI tax expense and excise tax  —   6.39   —   —   — 
    ROATE excluding BOLI tax expense and excise tax  10.11   10.46   11.79   13.08   14.49 
    Adjusted ROATE  10.11%  10.46%  11.79%  13.08%  14.49%

    Earnings Conference Call

    As previously announced, Horizon will host a conference call to review its first quarter financial results and operating performance.

    Participants may access the live conference call on April 25, 2024 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 May 3, 2024. 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 4319315.

    About Horizon Bancorp, Inc.

    Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.9 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'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, as well as equipment financing solutions for customers regionally and nationally, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana's Michigan City, is available at horizonbank.com and investor.horizonbank.com.

    Contact:Mark E. Secor
     Chief Financial Officer
    Phone:(219) 873–2611
    Fax:(219) 874–9280
    Date:April 24, 2024


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