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 ...

Financial Data and Key Metrics Changes - Horizon Bancorp reported a return on average assets of 1.24% and return on average equity of 13.89% for Q3 2022, with year-to-date figures at 1.29% and 13.97% respectively [8][33] - The adjusted net income decreased by $400,000 compared to Q2 2022, with adjusted earnings per share at $0.55, down $0.01 from the previous quarter but up $0.03 year-over-year [17][33] - The tangible common equity (TCE) declined to 6.25% as of September 30, down from 6.48% at the end of Q2 2022, reflecting a 3.5% decline quarter-over-quarter [13][23] Business Line Data and Key Metrics Changes - Total loan growth for Q3 2022 was 7.8% annualized, with year-to-date growth at 14.5%, driven by commercial loan growth of 13.8% and consumer loan growth of 31.7% [7][33] - Commercial lending generated robust loan growth of $41.8 million or 7.2% annualized, while consumer loan funding increased by $149 million, elevating balances by 23% annualized [27][28] - Mortgage loan production decreased by 27% year-to-date, significantly better than the industry average decline of 46% [29] Market Data and Key Metrics Changes - Horizon operates in attractive Midwest growth markets, benefiting from regional infrastructure improvements and economic stimulus initiatives [9][10] - The company reported strong regulatory capital ratios that exceed the definition for well-capitalized banks, indicating a solid liquidity position [14][23] Company Strategy and Development Direction - Horizon aims to achieve a non-interest expense to average assets ratio of less than 2% for 2022, supported by branch closures and cost-saving measures [6][25] - The company is focused on digital transformation, increasing technology spending on strategic customer and employee-facing applications [11][12] - Horizon's investment strategy includes reallocating resources to more productive areas, particularly in commercial lending, while managing costs in underperforming segments [84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth despite a competitive funding environment, with expectations for moderate growth in Q4 2022 [48][67] - The company is closely monitoring credit quality, with no net charge-offs reported and a solid allowance to total loans at 1.28% [31][89] - Management anticipates that the economic environment may lead to increased pressure on deposit rates, but believes in the strength of their low-cost core deposits [24][60] Other Important Information - Horizon's technology plan includes increasing annual spending to enhance customer experience while offsetting costs through improved efficiencies [13] - The company has a consistent dividend policy, with a recent increase of 6.3% in dividends per share [15][14] Q&A Session Summary Question: Margin trends and expectations - Management noted that while net interest income increased, the margin decreased due to cash flow declines from the investment portfolio and reliance on more expensive borrowed funds [39][40] Question: Branch closure-related costs - All write-downs for branch closures were taken in Q2, with expected cost savings from closures helping to manage inflationary pressures [41] Question: Loan growth funding sources - Management expects to rely on cash flows from securities and retained earnings to fund loan growth, reducing reliance on borrowed funds [48][75] Question: Credit quality outlook - Credit quality metrics remain strong, with no significant deterioration expected, although management is monitoring certain sectors closely [89] Question: Tax rate expectations - The tax rate is expected to normalize between 14% to 15% following the recognition of solar credits [90]

Financial Performance - Net income reached a record $24.9 million, an increase of 5.5% from the previous quarter and 12.1% year-over-year, with diluted earnings per share (EPS) of $0.57[180] - Pre-tax, pre-provision net income grew to $29.1 million, up 13.1% from the linked quarter and 18.9% from the prior year period[180] - Consolidated net income for Q2 2022 was $24.9 million, or $0.57 diluted earnings per share, up from $22.2 million, or $0.50 diluted earnings per share in Q2 2021, reflecting a $10.4 million increase in net interest income[207] - For the six-month period ended June 30, 2022, consolidated net income was $48.4 million, or $1.11 diluted earnings per share, compared to $42.6 million, or $0.97 diluted earnings per share for the same period in 2021[208] - Reported net income for Q2 2022 was $24,859,000, an increase from $23,563,000 in Q1 2022, and $48,422,000 for the first half of 2022 compared to $42,595,000 in the same period of 2021, reflecting a year-over-year growth of 13.5%[250] Loan and Deposit Growth - Total loans, excluding PPP loans, increased by 6.2% during the second quarter, reaching $3.89 billion[180] - Commercial loans grew by 4.9% to a record $2.31 billion, while consumer loans surged by 12.6% to $848.7 million[180] - Net loans increased by $295.1 million to $3.9 billion as of June 30, 2022, with commercial loans (excluding PPP loans) rising by $108 million[203] - Total deposits rose by $42.6 million to $5.8 billion as of June 30, 2022, driven by organic growth[205] Non-Interest Income and Expenses - Total non-interest income decreased by $2,773 thousand to $12,434 thousand for the three months ended June 30, 2022, an 18.2% decline compared to the same period in 2021[232] - Service charges on deposit accounts increased by 31.3% to $2,833 thousand for the three months ended June 30, 2022, compared to $2,157 thousand in 2021[232] - Non-interest expense rose by $3.0 million to $36.4 million for the second quarter of 2022, a 9.7% increase compared to the same quarter in 2021[236] - Total non-interest expense for the six-month period ended June 30, 2022, was $73.0 million, an increase of $7.7 million or 11.7% compared to $65.6 million in 2021[239] Asset Quality and Credit Losses - Non-performing loans stood at 0.51% of total loans, with net charge-offs to average loans at 0.01% for the second quarter[180] - The allowance for credit losses (ACL) was $52.35 million, with an ACL to total loans ratio of 1.33% as of June 30, 2022[185] - The Allowance for Credit Losses (ACL) balance was $52.4 million, or 1.33% of total loans, down from $54.3 million or 1.51% at December 31, 2021, indicating improved asset quality[228] - Non-performing loans totaled $20.2 million as of June 30, 2022, an increase of $1.2 million from $19.0 million at December 31, 2021[229] Capital and Equity - The tangible capital ratio decreased to 6.48%, down 46 basis points from 6.94% at the end of the previous quarter due to unrealized losses on investments[183] - Stockholders' equity decreased to $657.9 million as of June 30, 2022, from $723.2 million at December 31, 2021, primarily due to a $38.3 million decrease in accumulated other comprehensive income[206] - Total stockholders' equity as of June 30, 2022, was $657,865,000, down from $677,450,000 at the end of Q1 2022, a decrease of 2.6%[257] Interest Income and Margin - Net interest income for Q2 2022 was $53.0 million, an increase of $10.4 million from $42.6 million in Q2 2021, with interest income rising to $57.6 million from $47.4 million[212] - The net interest margin increased by five basis points to 3.19% for Q2 2022, compared to 3.14% for Q2 2021, despite a decrease in the yield on interest-earning assets[214] - Average balances of interest-bearing deposits increased by $907.1 million for the six-month period ended June 30, 2022, while average balances of borrowings increased by $208.8 million[219] Efficiency and Profitability Ratios - The efficiency ratio improved to 55.57%, compared to 58.74% in the first quarter of 2022[180] - Return on average assets (ROAA) as reported was 1.33% for the three months ended June 30, 2022, slightly up from 1.31% in the previous quarter[260] - For the three months ended June 30, 2022, the Return on Average Common Equity (ROACE) was reported at 14.72%, an increase from 12.59% in the same period of 2021[263] - The Adjusted Return on Average Tangible Equity (ROATE) for the three months ended June 30, 2022, was 19.86%, up from 16.69% in the same period of 2021[265] Strategic Decisions and Future Outlook - The company approved the permanent closure of seven branch locations, incurring a one-time charge of approximately $380,000[180] - Horizon Bancorp continues to focus on maintaining strong financial performance while navigating acquisition-related expenses and other adjustments, aiming for sustainable growth in the future[250] - Management does not expect any legal proceedings to have a material adverse effect on the consolidated financial position or results of operations[273]

Financial Data and Key Metrics Changes - Horizon Bancorp reported record earnings of $0.57 per share for Q2 2022, a 5.6% increase from $0.54 in Q1 2022 and $0.49 in Q4 2021 [9][10] - The pretax pre-provision net income for the quarter was $29.1 million, reflecting a 13.1% increase over the previous quarter [10] - The efficiency ratio improved to 55.6%, with a return on average assets of 1.33% and a return on average tangible equity of 19.9% [11][12] Business Line Data and Key Metrics Changes - Commercial loans grew by $108 million in Q2 2022, with an annualized growth rate of 19.7%, driven by increased loan officer numbers and demand in various sectors [41] - Consumer loans showed strong growth with an annualized rate of 50.5%, totaling $195 million in Q2 2022, compared to $147 million in Q1 2022 [42] - Mortgage loan production year-to-date decreased by 29% compared to the prior year, but this was better than industry forecasts [44] Market Data and Key Metrics Changes - The company noted strong demand in the Midwest markets, with significant investments in infrastructure and manufacturing, contributing to favorable economic conditions [14][16] - Indiana and Michigan are ranked in the top quartile for manufacturing output, with increased investments in the sector [17] Company Strategy and Development Direction - Horizon plans to close seven offices in 2022 to fund technology investments aimed at enhancing customer experience [8][54] - The company is focused on organic growth opportunities and maintaining a disciplined approach to managing expenses and capital [12][24] - Horizon's compounded annual growth rates from 2002 to 2021 were 13% for total assets and 20% for net income, indicating a strong growth trajectory [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining loan growth and maintaining strong asset quality despite potential economic challenges [41][88] - The company anticipates continued margin expansion due to rising interest rates and effective deposit cost management [32][78] - Horizon's capital position remains strong, allowing for flexibility in pursuing growth strategies and potential M&A opportunities in the future [25][105] Other Important Information - Horizon's technology investments have led to improved productivity, with assets per employee increasing from $5.4 million in 2016 to $8.7 million in 2021 [21] - The company maintains a consistent dividend policy, recently increasing its quarterly dividend by 6.3% [26] Q&A Session Summary Question: Cost savings from branch consolidations - Management indicated that cost savings from branch rationalization will be redirected to technology investments to enhance customer service [54] Question: Deposit beta trends - Management clarified that the deposit beta was 3% for the last quarter, with a target of 20% to 25% for the year as rates continue to rise [55] Question: Loan growth expectations - Management expects comparable loan production in Q3 and Q4, with strong pipelines in both consumer and commercial sectors [60] Question: Credit reserve outlook - Management stated that the reserve levels are appropriate and will be reflective of general macroeconomic conditions [88] Question: Expense outlook for the second half of the year - Management anticipates a slight increase in expenses due to rising salaries and benefits, but overall stability in other categories [91] Question: Effective tax rate expectations - The expected effective tax rate for the second half of the year is projected to be in the 14% to 15% range [95] Question: M&A strategy - Management indicated that M&A is not a priority at the moment, focusing instead on organic growth and optimizing the balance sheet [105]

Financial Performance - Net income reached a record $23.6 million, up 10.0% from the linked quarter and 15.4% from the prior year period, with diluted EPS of $0.54[168] - Consolidated net income for the three-month period ended March 31, 2022, was $23.6 million, or $0.54 diluted earnings per share, compared to $20.4 million, or $0.46 diluted earnings per share for the same period in 2021[198] - Net income for Q1 2022 was reported at $23.563 million, compared to $21.425 million in Q4 2021, reflecting a positive trend in profitability[227] - Pre-tax income for Q1 2022 was $27.1 million, compared to $25.5 million in Q4 2021 and $23.9 million in Q1 2021, reflecting a year-over-year increase of 13.5%[231] Loan and Asset Quality - Total loans, excluding PPP loans, grew by 2.3% to $3.66 billion, with commercial loans increasing by 3.3% to $2.20 billion and consumer loans rising by 3.7% to $753.9 million[168] - Non-performing loans represented 0.54% of total loans, indicating favorable asset quality, with net charge-offs at 0.00%[172] - Non-performing loans to total loans improved to 0.54% as of March 31, 2022, compared to 0.68% a year earlier[190] - Non-performing loans totaled $20.1 million as of March 31, 2022, reflecting a $1.1 million increase from $19.0 million at December 31, 2021[209] - The allowance for credit losses (ACL) decreased to $52.5 million, representing 1.41% of total loans, down from 1.51% as of December 31, 2021[190] Interest Income and Margin - Reported net interest margin (NIM) was 2.99%, an increase of two basis points from the previous quarter, while adjusted NIM was 2.93%, up seven basis points[168] - Net interest income for the three months ended March 31, 2022, was $48.2 million, an increase of $5.6 million from $42.5 million in the same period in 2021[200] - The net interest margin decreased by 30 basis points to 2.99% for the three-month period ended March 31, 2022, compared to 3.29% for the same period in 2021[202] - The adjusted net interest margin was 2.93% in Q1 2022, compared to 2.86% in Q4 2021, indicating improved profitability on interest-earning assets[233] Expenses and Efficiency - Non-interest expense was $36.6 million, or 2.03% of average assets, down from $39.4 million (2.09%) in the fourth quarter of 2021[168] - Non-interest expense for Q1 2022 was $36.610 million, up $4.438 million (13.8%) from Q1 2021, driven by a $2.864 million increase in salaries and employee benefits[217] - The efficiency ratio improved to 58.74% compared to 62.69% for the fourth quarter of 2021[172] - The annualized non-interest expense to average assets ratio improved to 2.03% in Q1 2022 from 2.20% in Q1 2021[218] Deposits and Capital - Total deposits increased by $48.5 million to $5.9 billion as of March 31, 2022, driven by organic growth[195] - Stockholders' equity decreased to $677.5 million as of March 31, 2022, from $723.2 million at December 31, 2021, primarily due to a $62.1 million decrease in accumulated other comprehensive income[222] - The company maintained approximately $575.3 million in unused credit lines as of March 31, 2022, down from $672.7 million at December 31, 2021[220] Investments and Securities - Investment securities available for sale decreased by $48.3 million to $1.1 billion, while held to maturity investments increased by $453.7 million to $2.0 billion[193] - The steepening yield curve resulted in unrealized losses on available for sale investments of $73.6 million, impacting the tangible capital ratio, which decreased by 67 basis points to 6.94%[168] Management and Governance - Horizon's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of March 31, 2022[245] - There have been no changes in Horizon's internal control over financial reporting that materially affected its financial reporting during the fiscal quarter ended March 31, 2022[246] - Management does not expect any legal proceedings to have a material adverse effect on Horizon's consolidated financial position or results of operations[249] - There have been no material changes in risk factors from those previously disclosed in Horizon's Annual Report for the fiscal year ended December 31, 2021[250]

BANCORP, INC. A NASDAQ Traded Company - Symbol HBNC INVESTOR PRESENTATION | APRIL 27, 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 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-look ...