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, 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 ...

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]

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, 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 ...

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]

Horizon Bancorp, Inc. (NASDAQ:HBNC) Q4 2022 Earnings Conference Call January 26, 2022 8:30 AM ET Company Participants Craig Dwight - Chairman and Chief Executive Officer Thomas Prame - President Mark Secor - Executive Vice President and Chief Executive Financial Officer 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 David Long - Raymond James ...

BANCORP, INC. 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 ® Important Information This presentation may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, "Horizon"). For these statements, Horizon claims the protection of the safe harbor for forward–looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this pre ...

Capital Adequacy - As of September 30, 2022, Horizon Bancorp's total capital ratio was 14.44%, significantly above the required 8.00% for capital adequacy purposes[168] - The Tier 1 capital ratio for the consolidated entity was 13.54%, exceeding the required 6.00%[168] - Common equity tier 1 capital ratio stood at 11.26%, well above the minimum requirement of 4.50%[168] - Total capital increased from $708.198 million on December 31, 2021, to $760.102 million by September 30, 2022[168] - The bank's Tier 1 capital to average assets ratio was 8.84% as of September 30, 2022, surpassing the required 4.00%[168] - The company is focused on maintaining a strong capital position to support future growth and market expansion[174] Financial Performance - Return on average assets ("ROAA") was 1.29% year-to-date and 1.24% for the third quarter[177] - Net income totaled $23.8 million, down 4.2% from the prior quarter but up 3.3% from the prior year period[177] - Consolidated net income for the three-month period ended September 30, 2022, was $23.8 million, or $0.55 diluted earnings per share, compared to $23.1 million, or $0.52 diluted earnings per share for the same period in 2021[200] - For the nine-month period ended September 30, 2022, consolidated net income was $72.2 million, or $1.65 diluted earnings per share, compared to $65.7 million, or $1.49 diluted earnings per share for the same period in 2021[201] - Net income for the three months ended September 30, 2022, was reported at $23,821,000, an increase from $21,425,000 for the same period in 2021, representing a growth of 11.2%[235] - Net income for the nine months ended September 30, 2022, was $72,243,000, up from $65,666,000 in 2021, indicating an increase of 10.0%[235] Loan and Deposit Growth - Total loans, excluding Federal Paycheck Protection Program ("PPP") loans, grew by an annualized rate of 14.5% year-to-date and 7.8% quarter over quarter[177] - Commercial loans reached a record $2.35 billion, growing by an annualized rate of 13.8% year-to-date[177] - Consumer loans grew by an annualized rate of 31.7% year-to-date to a record $899.9 million[177] - Total deposits increased by $27.8 million to $5.8 billion as of September 30, 2022, driven by organic growth[197] - The bank had approximately $917.6 million in unused credit lines as of September 30, 2022, an increase from $672.7 million at December 31, 2021[230] Interest Income and Expenses - Net interest income increased by $387,000 to $53.4 million during the third quarter compared to the previous quarter[177] - Net interest income for the three months ended September 30, 2022, was $53.4 million, an increase of $6.9 million from $46.5 million in the same period in 2021[203] - Interest income increased by $26.8 million to $172.7 million for the nine months ended September 30, 2022, driven by an increase in average balances of interest earning assets by $1.2 billion[208] - Interest expense increased by $3.9 million to $18.1 million for the nine months ended September 30, 2022, due to higher rates paid on borrowings[209] - The net interest margin decreased by four basis points to 3.13% for the three-month period ended September 30, 2022, compared to 3.17% for the same period in 2021[205] Non-Interest Income and Expenses - Total non-interest income decreased by $2.2 million for the quarter due to lower residential mortgage loan volume[177] - Total non-interest income for the three months ended September 30, 2022, was $10,188 million, a decrease of $5,856 million or 36.5% compared to the same period in 2021[220] - Total non-interest income for the nine months ended September 30, 2022, was $36,777 million, down by $8,347 million or 18.5% compared to the same period in 2021[222] - Total non-interest expense for Q3 2022 was $38.35 million, an increase of $4.8 million or 14.3% compared to Q3 2021[224] - Salaries and employee benefits increased by $1.7 million or 9.2% to $20.61 million in Q3 2022 compared to Q3 2021[224] Tax and Equity - The effective tax rate for the third quarter dropped to 7.8% due to the recognition of solar tax credits[177] - Stockholders' equity decreased to $645.0 million at September 30, 2022, down from $723.2 million at December 31, 2021, primarily due to unrealized losses on available for sale securities[199] - The ratio of average stockholders' equity to average assets was 8.91% for the nine months ended September 30, 2022, down from 10.93% for the twelve months ended December 31, 2021[231] - Horizon declared common stock dividends of $0.47 per share for the first nine months of 2022, compared to $0.41 per share for the same period in 2021[232] Risk Factors - The company anticipates potential risks from economic conditions, including inflation and interest rate changes, which could impact financial performance[171] - Horizon's management believes that ongoing litigation will not materially affect the company's financial position[169] - Horizon believes there have been no significant changes in its interest rate sensitivity since the 2021 Annual Report[250]

BANCORP, INC. A NASDAQ Traded Company - Symbol HBNC INVESTOR PRESENTATION | OCTOBER 26, 2022 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 ® Important Information 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–l ...