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Horizon Bancorp(HBNC) - 2024 Q1 - Quarterly Results
2024-04-24 20:07
[Performance Highlights](index=1&type=section&id=First%20Quarter%202024%20Highlights) Horizon Bancorp returned to profitability in Q1 2024 with $14.0M net income, driven by net interest margin expansion, strong loan growth, and managed expenses Q1 2024 vs. Q4 2023 Key Metrics | Metric | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Net Income | $14.0M | ($25.2M) | | Diluted EPS | $0.32 | ($0.58) | | Net Interest Margin | 2.50% | 2.43% | | Net Interest Income | $43.3M | $42.3M | - Total loans grew by **18.2% annualized** during the quarter to **$4.62 billion**, driven by strategic deployment of excess liquidity into residential mortgages (**+$94.7 million**) and consumer loans (**+$59.1 million**)[5](index=5&type=chunk) - Commercial loans demonstrated strong growth of **11.2% annualized**, which included **$22.8 million** in new equipment finance production[5](index=5&type=chunk) - Asset quality remained excellent, with net charge-offs at only **0.01%** of average loans and non-performing loans at **0.41%** of total loans[5](index=5&type=chunk) - The company maintained significant flexibility with **$271.1 million** in cash at period end, available for deployment into higher-yielding assets throughout 2024[5](index=5&type=chunk) [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) Q1 2024 saw a significant turnaround to profitability, driven by increased net interest income, reduced non-interest expenses, and robust loan growth [Income Statement Analysis](index=3&type=section&id=Income%20Statement%20Highlights) Q1 2024 net income of $14.0M recovered from Q4 2023's $25.2M loss, driven by non-recurrence of one-time events and expense reductions - The rebound from a **$25.2M net loss** in Q4 2023 to a **$14.0M net income** in Q1 2024 was largely due to the non-recurrence of a **$31.6M net loss** on the sale of securities and an **$8.6M tax effect** from the surrender of bank-owned life insurance in the prior quarter[2](index=2&type=chunk)[8](index=8&type=chunk) - Non-interest expense **decreased by $2.2 million** from the linked quarter, primarily due to lower salaries and employee benefits (**-$1.6 million**), loan expense (**-$626,000**), and other losses (**-$492,000**)[10](index=10&type=chunk) - The effective tax rate for Q1 2024 was **8.6%**, with income tax expense **$5.1 million lower** than the linked quarter, which had included tax associated with the surrender of bank-owned life insurance[11](index=11&type=chunk) [Net Interest Margin (NIM)](index=3&type=section&id=Net%20Interest%20Margin) Net Interest Margin (NIM) expanded for the second consecutive quarter, increasing by 7 basis points to 2.50% in Q1 2024 Net Interest Margin Expansion | Metric | Q1 2024 | Q4 2023 | Change (bps) | | :--- | :--- | :--- | :--- | | Net Interest Margin (NIM) | 2.50% | 2.43% | +7 bps | | Adjusted NIM | 2.50% | 2.42% | +8 bps | [Lending Activity](index=3&type=section&id=Lending%20Activity) Total loans grew robustly by $200.5 million, or 18.3% annualized, reaching $4.62 billion, driven by strategic liquidity deployment Loan Growth by Type (Q1 2024 vs Q4 2023) | Loan Type | Q1 2024 Balance ($M) | QTD $ Change ($M) | Annualized % Change | | :--- | :--- | :--- | :--- | | Commercial | 2,749.8 | +74.8 | 11.2% | | Residential mortgage | 782.1 | +100.9 | 59.6% | | Mortgage warehouse | 56.5 | +11.5 | 102.3% | | Consumer | 1,029.8 | +13.3 | 5.3% | | **Total loans** | **4,618.2** | **+200.5** | **18.3%** | [Deposit Activity](index=4&type=section&id=Deposit%20Activity) Total deposits decreased modestly by 1.5% (6.0% annualized) to $5.58 billion, primarily due to reductions in time and non-interest-bearing deposits Deposit Changes by Type (Q1 2024 vs Q4 2023) | Deposit Type | Q1 2024 Balance ($M) | QTD $ Change ($M) | | :--- | :--- | :--- | | Non-interest bearing | 1,093.1 | (22.9) | | Interest bearing | 3,350.7 | (18.5) | | Time deposits | 1,136.1 | (43.6) | | **Total deposits** | **5,579.9** | **(85.0)** | [Capital and Liquidity](index=4&type=section&id=Capital%20and%20Liquidity) The company maintained strong capital and liquidity, exceeding regulatory standards with a 10.90% CET1 ratio and substantial available liquidity - The capital resources of the Company and the Bank continued to **exceed regulatory capital ratios** for "well capitalized" banks at March 31, 2024[18](index=18&type=chunk)[21](index=21&type=chunk) - Tangible book value per common share (TBVPS) **increased by $0.05** during the first quarter to **$12.65**[19](index=19&type=chunk) - The Bank had significant available liquidity, including approximately **$1.56 billion** in unused credit lines and **$581.1 million** of unpledged investment securities[22](index=22&type=chunk) [Detailed Financial Statements](index=7&type=section&id=Financial%20Highlights) This section provides unaudited financial tables, including balance sheets, income statements, and credit quality data, for a comprehensive financial overview [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $7.86 billion, driven by cash redeployment into loans, while liabilities decreased and equity slightly increased Key Balance Sheet Items | Item | March 31, 2024 ($M) | Dec 31, 2023 ($M) | | :--- | :--- | :--- | | Total Assets | 7,855.7 | 7,940.5 | | Cash and due from banks | 271.1 | 526.5 | | Loans, net | 4,567.8 | 4,367.6 | | Total Deposits | 5,579.9 | 5,664.9 | | Total Liabilities | 7,134.5 | 7,221.7 | | Total Stockholders' Equity | 721.3 | 718.8 | [Condensed Consolidated Statements of Income](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2024 net income was $14.0M ($0.32 EPS), a significant improvement from Q4 2023's $25.2M loss, driven by higher net interest income Income Statement Summary (Q1 2024 vs Q4 2023) | Item | Q1 2024 ($M) | Q4 2023 ($M) | | :--- | :--- | :--- | | Net Interest Income | 43.3 | 42.3 | | Non-interest Income | 9.9 | (20.4) | | Non-interest Expense | 37.1 | 39.3 | | **Net Income (Loss)** | **14.0** | **(25.2)** | | **Diluted EPS** | **$0.32** | **($0.58)** | [Credit Quality Analysis](index=9&type=section&id=Credit%20Quality%20Analysis) Credit quality improved in Q1 2024, with non-performing loans decreasing to 0.41% and minimal net charge-offs at 0.01% - Total non-performing loans **decreased to $19.2 million** (**0.41%** of total loans) from **$20.3 million** (**0.46%** of total loans) in the linked quarter[31](index=31&type=chunk)[39](index=39&type=chunk) - Net charge-offs for the quarter were **minimal at $426,000**, representing just **0.01%** of average loans outstanding[36](index=36&type=chunk) Allowance for Credit Losses (ACL) | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total ACL | $50.4M | $50.0M | | ACL to Total Loans | 1.09% | 1.13% | [Non-GAAP Financial Measures and Reconciliations](index=14&type=section&id=Use%20of%20Non%E2%80%93GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP measures, clarifying core performance by excluding non-recurring items, with Q1 2024 reported and adjusted figures identical - The company uses non-GAAP measures to provide investors with a clearer view of its business and financial results by excluding the impact of non-recurring items such as acquisition-related adjustments and one-time costs[49](index=49&type=chunk) Adjusted vs. Reported Metrics (Q4 2023) | Metric | Reported | Adjusted | | :--- | :--- | :--- | | Net Income (Loss) | ($25.2M) | $14.1M | | Diluted EPS | ($0.58) | $0.33 | | Efficiency Ratio | 180.35% | 72.36% | | ROAA | (1.27)% | 0.71% | - For Q1 2024, there were **no adjustments made**, so reported figures for net income (**$14.0M**), diluted EPS (**$0.32**), and other key metrics were the same as the adjusted figures[50](index=50&type=chunk)[53](index=53&type=chunk) [Other Information](index=6&type=section&id=Other%20Information) This section provides corporate disclosures, including forward-looking statements, earnings call details, and a profile of Horizon Bancorp's operations [Forward-Looking Statements](index=6&type=section&id=Forward%20Looking%20Statements) This section provides a safe harbor statement, cautioning that forward-looking statements are subject to risks like interest rate changes and economic conditions - The company claims protection under the safe harbor for forward-looking statements, which are **not guarantees of future performance** and are subject to risks and uncertainties[24](index=24&type=chunk) - Key risks that could cause actual results to differ include changes in interest rates, inflation, regulatory actions, cybersecurity threats, and geopolitical conflicts[25](index=25&type=chunk) [About Horizon Bancorp, Inc.](index=20&type=section&id=About%20Horizon%20Bancorp%2C%20Inc.) Horizon Bancorp, Inc. is a $7.9 billion-asset holding company for Horizon Bank, offering diverse banking services across Indiana and Michigan - Horizon Bancorp, Inc. (NASDAQ: HBNC) is a **$7.9 billion-asset** holding company for Horizon Bank, serving markets in Indiana and Michigan[73](index=73&type=chunk) - The bank's business mix includes retail banking, wealth management, treasury management, and equipment financing, with commercial lending representing **over 50%** of total loans[73](index=73&type=chunk) [Earnings Conference Call Information](index=19&type=section&id=Earnings%20Conference%20Call) Horizon will host an earnings conference call on April 25, 2024, at 7:30 a.m. CT, with replay available until May 3, 2024 - The earnings conference call is scheduled for **April 25, 2024**, at **7:30 a.m. CT**. Dial-in information is provided for all participants[71](index=71&type=chunk) - A replay of the conference call will be available through **May 3, 2024**, with the access code **4319315**[72](index=72&type=chunk)
Horizon Bancorp(HBNC) - 2023 Q4 - Annual Report
2024-03-15 17:12
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 Commission file number 0000-10792 Horizon Bancorp, Inc. (Exact name of registrant as specified in its charter) | Indiana | | 35-1562417 | | --- | --- | --- | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | 515 Franklin Street, Michigan C ...
Horizon Bancorp(HBNC) - 2023 Q3 - Quarterly Report
2023-11-09 21:52
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 September 30, 2023 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 ...
Horizon Bancorp(HBNC) - 2023 Q1 - Earnings Call Presentation
2023-10-26 13:37
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 | --- | --- | --- | --- | --- | --- | --- | |-----------------------------------------------|-------|-----------------------------------------|-------|-------|-------|-------| | December 31, September 30, June 30, March 31, | | 2021 2021 2021 2021 | | | | | | | | | | | | | | | | 0.15% 0.19% 0.22% 0.27% | | | | | | | | 4,543,989 3,831,632 3,680,796 3,524,103 | | | | | | | | | | | | | | | | | | | | | | | | 0.11% 0.14% 0.17% 0.21% | | | | | ...
Horizon Bancorp(HBNC) - 2023 Q2 - Quarterly Report
2023-08-08 20:37
PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201%2E%20Financial%20Statements%20%28Unaudited%29) This section presents Horizon Bancorp's unaudited consolidated financial statements, detailing key financial positions and performance metrics [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$7,963,353** | **$7,872,518** | | Cash and due from banks | $228,986 | $123,505 | | Investment securities, available for sale | $905,813 | $997,558 | | Investment securities, held to maturity | $1,983,496 | $2,022,748 | | Loans, net | $4,216,284 | $4,107,534 | | Goodwill | $155,211 | $155,211 | | **Total Liabilities** | **$7,254,110** | **$7,195,143** | | Total deposits | $5,709,332 | $5,857,774 | | Borrowings | $1,352,039 | $1,142,949 | | **Total Stockholders' Equity** | **$709,243** | **$677,375** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $46,160 | $52,044 | $91,397 | $98,875 | | Credit loss expense (recovery) | $680 | $240 | $922 | $(1,146) | | Total non-interest income | $10,997 | $12,434 | $20,617 | $26,589 | | Total non-interest expense | $36,262 | $35,404 | $70,786 | $70,674 | | **Net Income** | **$18,763** | **$24,859** | **$36,991** | **$48,422** | | **Diluted Earnings Per Share** | **$0.43** | **$0.57** | **$0.85** | **$1.11** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) - For the three months ended June 30, 2023, the company reported a **Comprehensive Income of $12.9 million**, consisting of **$18.8 million in Net Income** offset by a **$5.9 million Other Comprehensive Loss**, contrasting with a **Comprehensive Loss of $13.4 million** in 2022 driven by a **$38.3 million Other Comprehensive Loss**[13](index=13&type=chunk) - For the six months ended June 30, 2023, **Comprehensive Income was $45.3 million**, including **$8.3 million in Other Comprehensive Income**, a significant reversal from the **$52.0 million Comprehensive Loss** in 2022, primarily due to a **$100.4 million Other Comprehensive Loss**[13](index=13&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) - Total stockholders' equity increased from **$677.4 million** at the beginning of 2023 to **$709.2 million** as of June 30, 2023, driven by **$37.0 million in net income** and **$8.3 million in other comprehensive income**, partially offset by **$14.2 million in cash dividends paid**[17](index=17&type=chunk) Dividends Per Share | Period | Dividends Per Share | | :--- | :--- | | Three Months Ended June 30, 2023 | $0.16 | | Six Months Ended June 30, 2023 | $0.32 | | Three Months Ended June 30, 2022 | $0.16 | | Six Months Ended June 30, 2022 | $0.31 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $44,114 | $55,449 | | Net cash used in investing activities | $15,609 | $(813,937) | | Net cash provided by financing activities | $45,758 | $273,828 | | **Net Change in Cash and Cash Equivalents** | **$105,481** | **$(484,660)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company revised previously issued financial statements for the three and six months ended June 30, 2022, to correct immaterial errors related to amortization of indirect loan dealer reserve assets and non-cash security transfers, with no impact on net income[29](index=29&type=chunk)[30](index=30&type=chunk) - As of June 30, 2023, the company repurchased **803,349 shares** at an average price of **$16.89 per share** under its authorized stock repurchase program[24](index=24&type=chunk) - The company adopted ASU 2022-02 in Q1 2023, eliminating Troubled Debt Restructuring (TDR) guidance, which had no material impact on financial statements[37](index=37&type=chunk)[38](index=38&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, focusing on net income, margin compression, and capital adequacy - Net income for Q2 2023 was **$18.8 million** (**$0.43/share**), down from **$24.9 million** (**$0.57/share**) in Q2 2022, primarily due to a **$5.9 million decline in net interest income**[191](index=191&type=chunk) - Net interest margin compressed to **2.69%** in Q2 2023 from **3.13%** in Q2 2022, as the cost of interest-bearing liabilities rose by **176 basis points**, outpacing the **100 basis point increase** in asset yields[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Total deposits remained stable at **$5.71 billion** at the end of Q2 2023, while total borrowings increased to **$1.4 billion** from **$1.1 billion** at year-end 2022 to manage liquidity[188](index=188&type=chunk)[189](index=189&type=chunk) - Asset quality remains sound, with non-performing loans at **0.52% of total loans** and net charge-offs at **0.01% of average loans** for the quarter[166](index=166&type=chunk)[212](index=212&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=72&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section reports no significant changes in the company's interest rate sensitivity since its 2022 Annual Report on Form 10-K - The company reports no significant changes in its interest rate sensitivity since its 2022 Annual Report on Form 10-K[249](index=249&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to material weaknesses, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of June 30, 2023[250](index=250&type=chunk) - The ineffectiveness stems from material weaknesses in internal control over financial reporting, previously disclosed in the 2022 Form 10-K, regarding loans, investments, cash flow, and reporting timeliness[250](index=250&type=chunk)[251](index=251&type=chunk) - Remediation efforts are in progress, including additional resources and enhanced controls, with estimated completion before the end of fiscal 2023[252](index=252&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=74&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is defending against a putative class action lawsuit alleging materially false and misleading statements, with management believing it is without merit - A putative class action lawsuit was filed against the Company and two officers on April 20, 2023, alleging violations of the Securities Exchange Act of 1934[255](index=255&type=chunk) - The lawsuit claims the company made materially false and misleading statements between March 9, 2022, and March 10, 2023[255](index=255&type=chunk) - Management believes the lawsuit is without merit and has not recorded any liability, concluding a loss is not probable[256](index=256&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A%2E%20Risk%20Factors) This section introduces a new risk factor concerning recent negative developments in the banking industry and their potential impact on the company - A new risk factor addresses the negative impact of recent high-profile bank failures on the banking industry[259](index=259&type=chunk) - These events have eroded customer confidence, caused market volatility, and could adversely affect Horizon's liquidity, funding, net interest margin, and operations due to potential deposit outflows[259](index=259&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales or repurchases of equity securities during the period - The company reports no unregistered sales of equity securities or repurchases of its equity securities for the period[260](index=260&type=chunk) [Item 3. Defaults Upon Senior Securities](index=74&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) This item is reported as not applicable - Not Applicable[260](index=260&type=chunk) [Item 4. Mine Safety Disclosures](index=75&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This item is reported as not applicable - Not Applicable[262](index=262&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205%2E%20Other%20Information) The company reports no adoption or termination of Rule 10b5-1 trading plans by directors or executive officers - During Q2 2023, no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or similar arrangements[262](index=262&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206%2E%20Exhibits) This section lists the exhibits filed with the report, including employment agreements, certifications, and interactive data files - Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and interactive data files[263](index=263&type=chunk)
Horizon Bancorp(HBNC) - 2023 Q2 - Earnings Call Transcript
2023-07-28 00:36
Horizon Bancorp, Inc. (NASDAQ:HBNC) Q2 2023 Earnings Call Transcript July 27, 2023 8:30 AM ET Company Participants Thomas Prame - Chief Executive Officer and President Mark Secor - Executive Vice President and Chief Financial Officer Lynn Kerber - Executive Vice President and Chief Commercial Banking Officer Conference Call Participants Terry McEvoy - Stephens Damon DelMonte - KBW David Long - Raymond James Brian Martin - Janney Montgomery Nathan Race - Piper Sandler Operator Good morning, everyone, and wel ...
Horizon Bancorp(HBNC) - 2023 Q2 - Earnings Call Presentation
2023-07-27 18:45
Financial Performance - Net income as reported is $18763 thousand[7], and adjusted net income is $17599 thousand[7] - Diluted EPS as reported is $043[32], and adjusted diluted EPS is $041[32] - The company offers a dividend yield of 62%[1] - Return on average tangible equity is 1394%[32] Loan Portfolio - Gross loans at 6/30/23 totaled $43 billion, with commercial loans comprising 59% ($2506 million), residential mortgages 16% ($675 million), and consumer loans 23% ($1003 million)[3] - Commercial loans constitute 25% of the total portfolio[2] - Non-Owner Occupied CRE represents 51% of total commercial loans, amounting to approximately $13 billion[36] - Owner Occupied CRE accounts for 23% of total commercial loans, totaling around $06 billion[36] Deposit Base - Total deposits at 6/30/23 reached $57 billion[83] - Deposits <$250K, Collateralized and/or Third-Party Insured (eg, IntraFi and Indiana PDIF) account for 79% of total deposits[84] Market Presence - The company operates 76 branches within its franchise[4] - The company has a 553% market share in Michigan City-La Porte, IN, with deposits of $1184 million[4]
Horizon Bancorp(HBNC) - 2023 Q1 - Quarterly Report
2023-05-10 20:39
Financial Performance - Net income for the first quarter 2023 was $18.2 million, down from $21.2 million in the fourth quarter 2022 and $23.6 million in the first quarter 2022[165]. - Diluted earnings per share (EPS) were $0.42, compared to $0.48 for the fourth quarter 2022 and $0.54 for the first quarter 2022[165]. - Total non-interest income for the first quarter was $9.62 million, down from $10.67 million in the fourth quarter 2022 and $14.15 million in the first quarter 2022[167]. - Consolidated net income for the three-month period ended March 31, 2023, was $18.2 million, or $0.42 diluted earnings per share, down from $23.6 million, or $0.54 diluted earnings per share for the same period in 2022[192]. - The decrease in net income was attributed to a $1.6 million decline in net interest income, a $1.6 million increase in credit loss expense, and a $4.5 million decrease in non-interest income[192]. - Net interest income for the three months ended March 31, 2023, was $45.2 million, a decrease of $1.6 million from $46.8 million in the same period of 2022[194]. - The dividend payout ratio increased to 38.1% in Q1 2023 from 27.8% in Q1 2022, with dividends declared at $0.16 per share[216]. - Pre-tax, pre-provision net income for Q1 2023 was $20.333 million, compared to $23.745 million in Q1 2022[224]. - Adjusted diluted earnings per share for Q1 2023 was $0.43, consistent with Q4 2022[222]. Deposits and Loans - Total deposits at the end of the first quarter 2023 were $5.70 billion, a decrease of $155.8 million from the previous quarter, primarily due to a $122.2 million reduction in municipal and public depositors[165]. - Consumer and commercial deposits totaled $4.28 billion, declining by $33.6 million during the quarter[165]. - The loan-to-deposit ratio was 74.5% at the end of the quarter, with total loans increasing at an annualized rate of 8.3% year-to-date and 2.1% quarter-over-quarter[165]. - As of March 31, 2023, Horizon's total assets increased to $7.9 billion, up approximately $25.5 million from December 31, 2022, primarily driven by a growth in net loans of $89.9 million[184]. - Net loans reached $4.2 billion, with commercial loans increasing by $38.0 million, consumer loans by $58.3 million, and residential mortgage loans by $9.2 million since December 31, 2022[186]. - Total deposits decreased by $155.8 million to $5.7 billion, mainly due to a $122.2 million reduction in municipal and public depositors' balances[188]. - Total borrowings rose to $1.3 billion as of March 31, 2023, from $1.1 billion as of December 31, 2022, primarily due to the decrease in total deposits[190]. Expenses and Efficiency - Non-interest expense for the first quarter was $34.5 million, a decline of 3.3% from the linked quarter and 2.1% from the prior year period[165]. - Total non-interest expense decreased by $746,000 to $34.524 million in Q1 2023 compared to Q1 2022, primarily due to a $1.0 million reduction in salaries and employee benefits[209]. - Salaries and employee benefits expense decreased by 5.2% from $19.735 million in Q1 2022 to $18.712 million in Q1 2023[209]. - The annualized non-interest expense as a percentage of average assets was 1.79% for Q1 2023, down from 1.95% in Q1 2022[210]. - Adjusted efficiency ratio improved to 62.37% for the three months ended March 31, 2023, compared to 60.06% in the previous quarter[231]. Capital and Equity - Stockholders' equity increased to $702.6 million at March 31, 2023, compared to $677.4 million at December 31, 2022, driven by a decrease in accumulated other comprehensive loss and net income generation[191]. - Total stockholders' equity increased to $702,559,000 as of March 31, 2023, up from $677,375,000 at December 31, 2022, representing a growth of 3.5%[229]. - Tangible stockholders' equity rose to $531,012,000, compared to $504,925,000 at December 31, 2022, reflecting an increase of 5.2%[229]. - Book value per common share increased to $16.11, up from $15.55 in the previous quarter, marking a rise of 3.6%[229]. - Average common equity rose to $693,472,000, up from $660,188,000 in the previous quarter, representing a growth of 5.0%[235]. Credit Quality - The allowance for credit losses to total loans was 1.17%, compared to 1.21% at December 31, 2022[167]. - Credit loss expense totaled $242,000 for the three months ended March 31, 2023, compared to a recovery of $1.4 million for the same period in 2022[202]. - The Allowance for Credit Losses (ACL) balance was $49.5 million, or 1.17% of total loans, as of March 31, 2023, down from 1.21% at December 31, 2022[203]. - Non-performing loans decreased by $2.0 million to $19.8 million as of March 31, 2023, compared to $21.8 million at December 31, 2022[204]. Regulatory and Legal Matters - Horizon's disclosure controls and procedures were found to be ineffective as of March 31, 2023, due to material weaknesses in internal control over financial reporting[241]. - Horizon identified material weaknesses in internal control over financial reporting, particularly regarding loans, investments, and cash flow disclosures[242]. - Remediation efforts are ongoing, with an estimated completion date prior to the end of fiscal 2023[243]. - A putative class action lawsuit was filed against Horizon on April 20, 2023, alleging materially false statements and failure to disclose adverse facts[246]. - Management believes the lawsuit is without merit and intends to defend against it vigorously[247]. - Recent high-profile bank failures have negatively impacted customer confidence in regional banks, potentially affecting Horizon's liquidity and results of operations[249].
Horizon Bancorp(HBNC) - 2023 Q1 - Earnings Call Transcript
2023-04-29 09:28
Horizon Bancorp, Inc. (NASDAQ:HBNC) Q1 2023 Earnings Conference Call April 27, 2023 8:30 AM ET Company Participants Craig Dwight - Chairman and CEO Thomas Prame - President Mark Secor - Executive Vice President and CFO Lynn Kerber - Executive Vice President and Chief Commercial Banking Officer Noe Najera - Executive Vice President and Senior Retail and Mortgage Lending Officer Conference Call Participants Terry McEvoy - Stephens Nathan Race - Piper Sandler Damon DelMonte - KBW David Long - Raymond James Bri ...
Horizon Bancorp(HBNC) - 2022 Q4 - Annual Report
2023-03-15 21:29
Financial Performance and Assets - Horizon Bank completed the purchase and assumption of certain assets and liabilities of 14 former TCF National Bank branches, receiving net cash of $618.2 million, with customer deposit balances recorded at $846.4 million[23] - Horizon Bank had total assets of $7.9 billion and total deposits of $5.9 billion as of December 31, 2022[24] - Revenues from loans accounted for 61.2% of total consolidated revenue, while revenues from investment securities accounted for 22.0% in 2022[27] - Horizon Bank completed the purchase of 14 former TCF National Bank branches, receiving net cash of $618.2 million, with customer deposit balances recorded at $846.4 million and goodwill of $4.0 million generated in the transaction[23] - As of December 31, 2022, Horizon Bank had total assets of $7.9 billion and total deposits of $5.9 billion, operating 71 full-service offices[24] - In 2022, revenues from loans accounted for 61.2% of total consolidated revenue, while revenues from investment securities accounted for 22.0%[27] Market Presence and Competition - Horizon Bank operates 71 full-service offices and employs 852 full-time and 71 part-time employees as of December 31, 2022[24][29] - The Bank faces competition from commercial banks, savings and loan associations, credit unions, FinTech startups, and other non-bank financial service providers[30] - Horizon Bank's primary market includes northern and central Indiana and southern and central Michigan, competing with Chicago money center banks and other financial institutions[30] - Horizon holds a 55.34% market share in La Porte County, Indiana, making it the largest of eight bank and thrift institutions in the area[32] - In Carroll County, Indiana, Horizon has a 24.41% market share, ranking as the largest of six institutions[32] - Horizon is the second largest of seven bank and thrift institutions in Midland County, Michigan[33] - Horizon faces competition from 20 financial institutions in Allen County, Indiana, with a market share of 0.82%, and 4 institutions in Arenac County, Michigan, with a market share of 31.40%[32] - Horizon was the largest of the eight bank and thrift institutions in La Porte County, Indiana, with a market share of 55.34%[32] - Horizon was the second largest of the seven bank and thrift institutions in Midland County, Michigan[33] Regulatory Compliance and Capital Requirements - Horizon is subject to extensive regulation by the Federal Reserve Board and must file annual reports and undergo examinations[34] - The Bank is regulated by the Indiana Department of Financial Institutions and the FDIC, which provides deposit insurance[36] - Horizon is required to act as a source of financial strength to its subsidiary bank under the Dodd-Frank Act[42] - The Bank's deposits are insured up to $250,000 per account title by the FDIC's Deposit Insurance Fund[49] - The FDIC's reserve ratio for the Deposit Insurance Fund reached 1.36% by September 2018, exceeding the statutory minimum of 1.35%[54] - Horizon must comply with risk-based capital guidelines, including maintaining sufficient capital for risk-weighted asset and leverage ratio tests[58] - The FDIC may terminate deposit insurance if an institution engages in unsafe practices or violates regulations[56] - Horizon and the Bank met all capital adequacy requirements under Basel III as of December 31, 2022[66] - Basel III increased the minimum common equity Tier 1 capital ratio to 4.5%, Tier 1 capital ratio to 6.0%, and total capital ratio to 8.0%[60] - The capital conservation buffer requirement effectively raises the minimum required common equity Tier 1 capital ratio to 7.0%, Tier 1 capital ratio to 8.5%, and total capital ratio to 10.5%[62] - Horizon's consolidated total capital ratio was 14.37%, Tier 1 capital ratio was 13.51%, and common equity Tier 1 capital ratio was 11.28% as of December 31, 2022[70] - The Bank's total capital ratio was 13.59%, Tier 1 capital ratio was 12.72%, and common equity Tier 1 capital ratio was 12.72% as of December 31, 2022[70] - The Community Bank Leverage Ratio was established at 9% for qualifying community banking organizations[64] - Horizon's consolidated Tier 1 capital to average assets ratio was 10.03%, exceeding the minimum requirement of 4.0%[70] - The Bank was categorized as "well capitalized" with a total risk-based capital ratio exceeding 10%, Tier 1 risk-based capital ratio exceeding 8%, and common equity Tier 1 risk-based capital ratio exceeding 6.5%[77] - The capital simplification rules effective for 2020 increased the individual regulatory limit for mortgage servicing assets and certain deferred tax assets[65] - Horizon is subject to the USA PATRIOT Act and the Bank Secrecy Act, requiring anti-money laundering and financial transparency measures[79][80] - The Dodd-Frank Act has increased Horizon's operating costs, and the company expects these higher costs to continue in the foreseeable future[96] - Horizon adopted the CECL accounting standard effective January 1, 2020, impacting the measurement of expected credit losses on financial assets[114] - The CFPB has examination and enforcement authority over depository institutions with $10 billion or more in assets, while smaller institutions like Horizon are subject to CFPB rules but supervised by federal banking regulators[91] - The CFPB has implemented regulations impacting the mortgage industry, including ability-to-repay rules and mortgage servicing requirements[94] - Horizon is required to maintain stock in the FHLB of Indianapolis equal to at least 1% of its aggregate unpaid residential mortgage loans[102] - The Regulatory Relief Act of 2018 introduced the Community Bank Leverage Ratio, simplifying regulatory capital calculations for community banks[97] - Horizon is a well-capitalized institution, allowing it to accept brokered deposits without restrictions under FDIC regulations[104] - The CFPB amended Regulation C, adding new information collection and reporting requirements for financial institutions effective January 1, 2018[95] - Horizon continues to monitor privacy and data security laws, including the EU's GDPR and California's Consumer Privacy Act, for their impact on business operations[110] - The company is subject to regulation and supervision by the Federal Reserve Board as a bank holding company and financial holding company[34] - Horizon's common stock is listed on the NASDAQ Global Select Market under the trading symbol "HBNC"[38] - Horizon has elected to be treated as a financial holding company, allowing it to engage in a broader range of financial activities[40] - Horizon must maintain a minimum common equity Tier 1 capital ratio of 4.5%, Tier 1 capital ratio of 6.0%, and total capital ratio of 8.0% under Basel III rules[60] - Horizon's deposits are insured by the FDIC up to the statutory limit of $250,000 per account title[49] - The FDIC's reserve ratio for the Deposit Insurance Fund (DIF) is set at no less than 1.35% under the Dodd-Frank Act[50] - Horizon's initial base assessment rates for deposit insurance premiums ranged from 5 to 9 basis points for small Risk Category I banks[51] - Horizon's regulatory capital requirements include a leverage ratio of 4.0% and a capital conservation buffer of 2.5% of risk-weighted assets[62] - Horizon met all capital adequacy requirements under Basel III as of December 31, 2022[66] - Horizon's regulatory capital framework includes Tier I and Tier II capital, with specific requirements for risk-weighted assets and leverage ratios[58] - Consolidated total capital ratio is 14.37% with an amount of $776,390 million, exceeding the required 8.00% for capital adequacy purposes[70] - Bank's Tier 1 capital ratio is 12.72% with an amount of $679,784 million, exceeding the required 6.00% for capital adequacy purposes[70] - Bank's common equity Tier 1 capital ratio is 12.72% with an amount of $679,784 million, exceeding the required 4.50% for capital adequacy purposes[70] - Bank is categorized as "well capitalized" with a total risk-based capital ratio exceeding 10%, Tier 1 risk-based capital ratio exceeding 8%, and common equity Tier 1 risk-based capital ratio exceeding 6.5%[77] - Bank's leverage ratio exceeds 5%, and it is not subject to any regulatory order or agreement to meet specific capital levels[77] - Bank must maintain a Tier 1 leverage ratio above 7.5% to avoid DFI pre-approval for dividend payments[71] - Federal Reserve expects bank holding companies to consult before declaring dividends not supported by earnings or involving a material increase in the dividend rate[73] - Dodd-Frank Act imposes new capital requirements on bank and thrift holding companies, affecting Horizon's operating environment and increasing compliance costs[90][96] - Regulatory Relief Act of 2019 introduced a "Community Bank Leverage Ratio" to simplify regulatory capital calculations for community banks[97] - Horizon Bank has not elected to opt into the Community Bank Leverage Ratio framework[98] Subsidiaries and Business Operations - The Bank's subsidiaries include Horizon Investments, Horizon Properties, Horizon Insurance Services, Horizon Grantor Trust, and Wolverine Commercial Holdings[24] - Horizon's business is not seasonal, and no material part of its business depends on a single or small group of customers[27] - Horizon expanded its geographic reach through organic growth and mergers, including acquisitions in southern and central Michigan and northeastern and central Indiana[22] - The Bank recorded a core deposit intangible of $1.6 million and goodwill of $4.0 million from the TCF National Bank branch acquisition[23] - Horizon's business is not seasonal, and no material part of its business is dependent on a single or small group of customers[27] - The company has expanded its geographic reach and experienced financial growth through organic expansion and mergers and acquisitions over the last 20 years[22] Investments and Dividends - Horizon's investment in FHLB of Indianapolis stock was $26.7 million at December 31, 2022, with dividends totaling $1.0 million at an annualized rate of 4.0%[102] - The Bank's investment in stock of the FHLB of Indianapolis was $26.7 million at December 31, 2022[102] - Dividends paid by the FHLB of Indianapolis to the Bank totaled approximately $1.0 million for the year ended December 31, 2022, with an annualized dividend rate of 4.0%[102] - The FHLB limits certain types of real estate-related collateral to 30% of a member's capital[100] - The Bank is required to purchase and maintain stock in the FHLB of Indianapolis equal to at least 1% of its aggregate unpaid residential mortgage loans[102]