Group 1 - Horizon Bancorp, Inc. reported 1Q earnings that were mostly in line with expectations, aside from a one-time gain from the sale of the mortgage warehouse business [1] - The earnings report aligns with the analysis provided in a previous March report [1] Group 2 - No stock, option, or similar derivative positions are held by the analyst in any of the companies mentioned [1] - The article expresses the author's own opinions without receiving compensation from any company mentioned [1]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from________to Commission file number 0-10792 HORIZON BANCORP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or o ...

Core Viewpoint - Horizon Bancorp (HBNC) shares have increased by 6.4% recently, closing at $14.74, with a potential upside indicated by Wall Street analysts' price targets suggesting a mean estimate of $18.50, representing a 25.5% upside [1] Price Targets - The average price targets from analysts range from a low of $17 to a high of $20.50, with a standard deviation of $1.66, indicating a relatively tight clustering of estimates [2] - The lowest estimate suggests a 15.3% increase from the current price, while the highest estimate indicates a 39.1% upside [2] Analyst Sentiment - There is strong agreement among analysts regarding HBNC's ability to report better earnings than previously predicted, which supports the view of potential upside [4] - Recent trends show three earnings estimates have been revised higher in the last 30 days, with no negative revisions, leading to a 5.1% increase in the Zacks Consensus Estimate [12] Zacks Rank - HBNC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating a strong potential for upside in the near term [13]

Financial Performance - Net income increased to $23493 thousand, compared to a loss of $10882 thousand in the previous quarter[9] - Diluted EPS was $054, compared to a loss of $025 in the previous quarter[9] - Net interest margin (NIM) expanded to 304%, a sixth consecutive quarter of expansion[9] - Non-interest income was $16499 thousand, compared to a loss of $28954 thousand in the previous quarter, including a $70 million pre-tax gain from the sale of the mortgage warehouse business[9, 10] Balance Sheet and Loan Growth - Total loans held for investment increased to $4909815 thousand[9] - Total deposits increased to $5765783 thousand[9] - Linked quarter annualized (LQA) loan growth of 5%, with commercial loan growth of 14% LQA[10] - Strategic reduction in borrowings of $330 million[10] Credit Quality - NPA/total assets ratio was 041%[9] - Annualized net charge-offs to average loans was 007%[9] Guidance - Full-year 2025 net interest income is expected to grow in the mid-teens[56] - Period-end total loans HFI to grow mid-single-digits[56]

Financial Data and Key Metrics Changes - Horizon Bancorp reported a net interest margin increase of 8 basis points to 3.04% in Q1 2025, marking the sixth consecutive quarter of margin expansion [26][27] - Noninterest income included a $7 million gain from the sale of the mortgage warehouse business, contributing to overall positive revenue growth [33][34] - Total expenses for Q1 2025 were $39.3 million, reflecting a sequential decline in salaries and benefits and outside services expenses [35][36] Business Line Data and Key Metrics Changes - Total loans held for investment grew by $63 million, with commercial loans increasing by $105 million, representing a 14% annualized growth rate [12][13] - Consumer loan balances decreased by $40 million, primarily due to a reduction in indirect auto lending, while core consumer loans remained flat [16][18] - Credit quality metrics remained strong, with nonperforming loans at 62 basis points of total loans held for investment [19][20] Market Data and Key Metrics Changes - Key markets contributing to loan growth included Troy, Kalamazoo, Grand Rapids, and Midland in Michigan, as well as Northwest Indiana [14] - The company noted stable pipelines and strong engagement with clients regarding potential macroeconomic impacts [15] Company Strategy and Development Direction - The company aims to execute an asset mix strategy focusing on higher-yielding lending portfolios to enhance long-term franchise value [9] - Horizon Bancorp is committed to maintaining a disciplined approach to deposit pricing and leveraging market volatility to improve funding costs [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future, citing strong local market presence and diversified portfolios as competitive advantages [70][72] - The outlook for loan growth remains in the mid-single-digit range, with expectations for deposit growth in the low single digits [39][40] Other Important Information - The company completed the sale of its mortgage warehouse business, which added optionality to its capital position [7][8] - The allowance for credit losses increased by approximately $700,000 to $52.7 million, with a ratio of 1.07% to loans [20][21] Q&A Session Summary Question: Can you unpack the added capital optionality from the warehouse gain and any appetite for share repurchases? - Management indicated that they are pleased with their capital strategy and are considering multiple options, including stock repurchases, to enhance shareholder returns [48][50] Question: What is the yield pickup as you run off indirect and fund commercial loans? - The yield runoff in the indirect auto portfolio is in the mid-3s, while the average weighted rate for the commercial book was approximately 7.15% [58][61] Question: How is the mood of your client base, and what gives you confidence in your positive outlook? - Management noted a strong local presence and diversified portfolio as key factors contributing to their optimistic outlook, despite some caution among clients regarding macroeconomic conditions [68][70] Question: Can you provide an update on deposit pricing and trajectory? - Deposit costs have increased slightly, but management anticipates stability in total deposit costs moving forward, with potential benefits when the Fed changes rates [88][90] Question: How do you weigh efficiency efforts with plans to hire veteran bankers? - The commercial team has remained stable, and management does not foresee a need for wholesale additions of new lenders at this time [102][103]

Financial Data and Key Metrics Changes - Horizon's first quarter earnings reflect a sixth consecutive quarter of margin expansion, now above 3% [4] - The net interest margin increased by eight basis points to 3.04% [16] - Total expenses for the quarter were $39.3 million, showing a sequential decline in salaries and benefits [21][22] Business Line Data and Key Metrics Changes - Total loans held for investment grew by $63 million, with commercial loans increasing by $105 million, representing a 14% annualized increase [7][8] - Consumer loan balances decreased by $40 million, primarily due to a reduction in indirect auto lending [9][10] - Non-interest income included a $7 million gain from the sale of the mortgage warehouse business [20] Market Data and Key Metrics Changes - Key markets showing growth included Troy, Kalamazoo, Grand Rapids, and Midland, Michigan, as well as Northwest Indiana [8] - Commercial credit quality metrics remained strong, with past due loans greater than thirty days at 14 basis points and a non-performing loan ratio of 27 basis points [9][11] Company Strategy and Development Direction - The company is focused on executing an asset mix strategy towards higher yielding lending portfolios [6] - Horizon aims to enhance shareholder returns through various options, including stock repurchases and balance sheet repositioning [32] - The outlook for loan growth remains unchanged in the mid-single digit range for the year [24] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive outlook due to strong local market presence and diversified portfolio [48][49] - The company is monitoring macroeconomic trends and their potential impact on the portfolio [13] - Management anticipates continued margin expansion and stable pipelines for commercial loans [17][24] Other Important Information - The allowance for credit losses increased by approximately $700,000 to $52.7 million, with an ACL to loan ratio of 1.07% [12] - The company expects total reported expenses for 2025 to be flat to up low single digits relative to 2024 [25] Q&A Session Summary Question: Can you unpack the capital optionality from the warehouse team and any appetite for share repurchases? - Management noted that they are pleased with their capital strategy and are considering stock repurchases due to attractive price-to-book levels [30][32] Question: What is the yield pickup as you run off indirect auto and fund commercial loans? - The effective yield on the indirect auto portfolio is in the mid-3s, while the average weighted rate for the commercial book was roughly 7-7.15% [37][40] Question: How is the mood of your client base regarding loan growth? - Management indicated a positive outlook, emphasizing strong local market engagement and a diversified portfolio [47][48] Question: What are the dynamics occurring on the funding side regarding deposit growth? - Management noted a shift towards more time deposits and less commercial growth, with competitive dynamics varying by market [82] Question: How do you weigh efficiency efforts with plans to hire veteran bankers? - The commercial team has been stable, with no immediate plans for wholesale additions, focusing instead on maximizing current capacity [75] Question: How do you weigh the worsening economic forecast into reserve levels? - Management acknowledged that economic forecasts could impact the allowance ratio, but specific reserves released masked some of the changes [78]

Core Viewpoint - Horizon Bancorp reported quarterly earnings of $0.54 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, and showing an increase from $0.32 per share a year ago, representing a 35% earnings surprise [1][2] Financial Performance - The company posted revenues of $68.77 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 8.81%, compared to $53.22 million in the same quarter last year [2] - Over the last four quarters, Horizon Bancorp has exceeded consensus EPS estimates three times and has topped consensus revenue estimates three times as well [2] Stock Performance and Outlook - Horizon Bancorp shares have declined approximately 13.5% since the beginning of the year, while the S&P 500 has decreased by 10.1% [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $65.43 million, and for the current fiscal year, it is $1.78 on revenues of $262.7 million [7] Industry Context - The Zacks Industry Rank for Banks - Northeast places it in the top 23% of over 250 Zacks industries, indicating that the industry is performing relatively well [8]

Financial Performance - Net income for Q1 2025 was $23.9 million, or $0.54 per diluted share, compared to a net loss of $10.9 million in Q4 2024 and $14.0 million in Q1 2024[5]. - Non-interest income totaled $16.5 million in Q1 2025, a significant recovery from a non-interest loss of $29.0 million in Q4 2024[14]. - Net income for Q1 2025 was $23,943,000, compared to a net loss of $10,882,000 in Q4 2024, marking a significant recovery[40]. - Basic earnings per share for Q1 2025 was $0.55, compared to a loss of $0.25 in Q4 2024[32]. - Return on average tangible common equity (ROACE) for Q1 2025 was 15.79%, a significant improvement from -7.35% in Q4 2024[40]. Loan and Deposit Growth - Total loans held for investment increased by 5% linked quarter annualized, with organic commercial loan growth of $103.3 million, or 14% annualized[7]. - Core deposits grew by $62.5 million during the period, representing a 24% annualized increase in non-interest-bearing balances[7]. - Total loans held for investment increased to $4,909,815 thousand, a 1% increase from Q4 2024 and a 6% increase from Q1 2024[35]. - Total deposits rose to $5,765,783 thousand, reflecting a 3% increase from Q4 2024 and Q1 2024[35]. - Commercial real estate loans grew by 3% from Q4 2024 to $2,262,910 thousand and by 14% compared to Q1 2024[35]. Interest Income and Margin - Total interest income for Q1 2025 was $89,175,000, a decrease of 4.1% from $93,350,000 in Q4 2024[32]. - Net interest income after credit loss expense was $50,891,000, compared to $51,956,000 in Q4 2024, reflecting a decline of 2.1%[32]. - The net FTE interest margin (non-GAAP) improved to 3.04% in Q1 2025, up from 2.97% in Q4 2024[39]. - Total interest-earning assets averaged $7,234,724 thousand with a net interest margin of 5.11% for Q1 2025[36]. - Net interest income for Q1 2025 was reported at $52,267 thousand, compared to $43,288 thousand in Q1 2024[36]. Asset and Equity Changes - Total assets decreased by $175.5 million, or 2.2%, to $7.6 billion as of March 31, 2025, primarily due to the sale of the mortgage warehouse portfolio[18]. - Stockholders' equity increased to $776,061,000 from $763,582,000 in Q4 2024, an increase of 1.3%[34]. - The ratio of total stockholders' equity to total assets was 10.18% as of March 31, 2025, with book value per common share increasing to $17.72[21]. - Total tangible common equity (non-GAAP) rose to $611,443 million, compared to $598,148 million in the previous quarter, reflecting a quarter-over-quarter increase of 1.08%[43]. - Tangible book value per common share (non-GAAP) reached $13.96, an increase from $13.68 in the prior quarter, indicating a growth of 2.05%[43]. Expense Management - The efficiency ratio improved to 57.16% in Q1 2025 from 185.89% in Q4 2024, reflecting a more efficient expense base[8]. - Total non-interest expense was $39.3 million in Q1 2025, down from $44.9 million in Q4 2024, primarily due to a $3.2 million decrease in salaries and employee benefits[16]. - The provision for loan losses was $1,376,000, up from $1,171,000 in Q4 2024, indicating a rise of 17.5%[32]. Credit Quality - The company recorded a provision for credit losses of $1.4 million in Q1 2025, compared to $1.2 million in Q4 2024[11]. - Annualized net charge-offs were 0.07% of average loans in Q1 2025, compared to 0.05% in Q4 2024[12]. - Total non-accrual loans increased by $3.0 million, or 12%, to 0.59% of total loans HFI as of March 31, 2025[22]. - Total non-performing assets rose to $31,427,000, reflecting a 14.8% increase from the previous quarter and a 55% increase year-over-year[37]. - The allowance for credit losses increased to $52,654,000, a 1% increase from the previous quarter[37]. Company Overview - Horizon Bancorp, Inc. is a commercial bank holding company with $8 billion in assets, serving customers through digital tools and branches in Indiana and Michigan[27].

Core Viewpoint - Horizon Bancorp, Inc. reported strong financial results for the first quarter of 2025, showcasing continued growth in key metrics, including net income and loan growth, alongside effective cost management strategies [2][3]. Financial Performance - Net income for Q1 2025 was $23.9 million, or $0.54 per diluted share, a significant improvement from a net loss of $10.9 million in Q4 2024 and an increase from $14.0 million in Q1 2024 [3][10]. - Net interest income was $52.3 million, slightly down from $53.1 million in Q4 2024, while the net interest margin expanded to 3.04%, up from 2.97% in the previous quarter [12][9]. - Total non-interest income was $16.5 million, a recovery from a loss of $29.0 million in Q4 2024, primarily due to a pre-tax gain from the sale of the mortgage warehouse business [17][9]. Loan and Deposit Growth - Total loans held for investment increased by 5% on an annualized basis, with organic commercial loan growth of $103.3 million, or 14% annualized [9]. - Total deposits rose by $165.1 million, or 2.9%, to $5.8 billion, with time deposits increasing by 14.3% during the quarter [25]. Expense Management - Non-interest expenses decreased to $39.3 million from $44.9 million in Q4 2024, driven by lower salaries and employee benefits expenses [19][21]. - The efficiency ratio improved to 57.16%, reflecting the company's commitment to cost management [10]. Credit Quality - Credit quality remained strong, with annualized net charge-offs at 0.07% of average loans, and non-performing assets increased slightly to 0.41% of total assets [29][30]. - The allowance for credit losses was stable at 1.07% of loans held for investment [16]. Capital Position - As of March 31, 2025, the total capital ratio was 14.28%, and the book value per common share increased to $17.72 [27][28]. - Tangible common equity totaled $611.4 million, with a tangible common equity to tangible assets ratio of 8.20% [28].

Core Viewpoint - Horizon Bancorp, Inc. will host a conference call on April 24, 2025, to discuss its first quarter 2025 financial results, with the news release published on April 23, 2025 [1]. Group 1: Conference Call Details - The conference call is scheduled for 7:30 a.m. CT (8:30 a.m. ET) on April 24, 2025, and participants can join by dialing specific numbers based on their location [2]. - A telephone replay of the call will be available approximately one hour after the call ends, accessible through designated numbers until May 2, 2025 [3]. Group 2: Company Overview - Horizon Bancorp, Inc. is a commercial bank holding company with $7.8 billion in assets, serving customers in the Midwest through digital tools and physical branches in Indiana and Michigan [4]. - The company offers a range of retail banking services, including secured consumer lending and wealth management solutions, with commercial lending making up over half of its total loans [4].