MICHIGAN CITY, Ind., April 26, 2023 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three months ended March 31, 2023.
“Horizon Bank is proud to announce reaching a significant new milestone of our 150th anniversary of continuous banking operations. We have planned celebrations to honor this occasion throughout the year and, as we like to say, we are 150 years strong!” Chairman and Chief Executive Officer Craig M. Dwight said.
“Our enduring relationships with in–market clients and our advisors' focus on serving local businesses, consumers and communities are reflected in Horizon's stable deposits, growing loans and low credit costs in the first quarter,” Mr. Dwight continued. “Our organization's long–standing 150 year commitment to operational excellence and effective technology implementation was also evident in Horizon's first quarter results, including meaningful non–interest expense reductions and earnings per share of $0.42. Given our strong depositor relationships and lending opportunities in attractive Midwest markets, ample sources of liquidity, active balance sheet management, and talented advisors, we believe Horizon is very well positioned for continued success for 2023 and beyond."
First Quarter 2023 Highlights
- Deposits totaled $5.70 billion at period end, declining $155.8 million during the quarter, primarily due to a $122.2 million reduction in balances by municipal and other public depositors that have otherwise largely maintained their banking relationship with Horizon.
- Consumer and commercial deposits totaled $4.28 billion at period end, declining just $33.6 million during the quarter.
- 75% of total deposits at period end were FDIC insured, collateralized, or third–party insured, and the average tenure of all deposit accounts with Horizon exceeded 10 years.
- The average deposit account balance at period end was less than $25,000 for consumer and commercial depositors and less than $195,000 for all accounts including those of large public depositors.
- Horizon's loan–to–deposit ratio was 74.5% at period end, as total loans increased by an annualized rate of 8.3% year–to–date and a rate of 2.1% quarter over quarter, fueled by growth in commercial, consumer and residential balances.
- Asset quality remained solid with total loan delinquency at 0.33% of total loans and net charge–offs to average loans of 0.01% during the quarter.
- Non–interest expense of $34.5 million in the first quarter declined 3.3% from the linked quarter and 2.1% from the prior year period. Non–interest expense in the first quarter represented 1.79% of average assets on an annualized basis, improving from 1.84%, in the linked quarter and 1.95% in the prior year period.
- Net income totaled $18.2 million, compared to $21.2 million in the fourth quarter of 2022 and $23.6 million in the prior year period. Diluted earnings per share (“EPS”) of $0.42 compared to $0.48 for the fourth quarter of 2022 and $0.54 for the first quarter of 2022.
- Deposit betas increased to 51% on total interest bearing deposits in the first quarter compared to a 32% deposit beta during the previous quarter.
- During the first quarter of 2023, unrealized losses on available for sale investments declined to $121.5 million compared to unrealized losses of $140.1 million at December 31, 2022. As a result our tangible capital ratio increased from 6.56% at December 31, 2022 to 6.87% at March 31, 2023.
- Horizon's book value per share and tangible book value per share increased to $16.11 and $12.17 compared to $15.55 and $11.59 in the linked quarter and $15.55 and $11.54 in the first quarter of 2022.
- The Bank’s capital position was still robust with leverage and risk based capital ratios of 8.86% and 13.15%, respectively.
- Horizon's annualized dividend yield was 5.79% as of March 31, 2023.
- On January 17, 2023, Horizon's Board of Directors approved the appointment of Thomas M. Prame to serve as the Chief Executive Officer of both Horizon and Horizon Bank (the “Bank”), effective June 1, 2023. Craig M. Dwight will retain the title of Chief Executive Officer until June 1, 2023 and retire as an employee from Horizon and the Bank effective July 3, 2023. Mr. Dwight will continue as the Chairman of the Board of Directors of both Horizon and the Bank.
Summary
| For the Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| Net Interest Income and Net Interest Margin | 2023 | 2022 | 2022 | |||||||||
| Net interest income | $ | 45,237 | $ | 48,782 | $ | 46,831 | ||||||
| Net interest margin | 2.67 | % | 2.85 | % | 2.90 | % | ||||||
| Adjusted net interest margin | 2.65 | % | 2.83 | % | 2.85 | % | ||||||
| For the Three Months Ended | |||||||||
| March 31, | December 31, | March 31, | |||||||
| Asset Yields and Funding Costs | 2023 | 2022 | 2022 | ||||||
| Interest earning assets | 4.17 | % | 3.88 | % | 3.13 | % | |||
| Interest bearing liabilities | 1.85 | % | 1.29 | % | 0.30 | % | |||
| For the Three Months Ended | |||||||||
| Non-interest Income and | March 31, | December 31, | March 31, | ||||||
| Mortgage Banking Income | 2023 | 2022 | 2022 | ||||||
| Total non–interest income | $ | 9,620 | $ | 10,674 | $ | 14,155 | |||
| Gain on sale of mortgage loans | 785 | 1,196 | 2,027 | ||||||
| Mortgage servicing income net of impairment | 713 | 637 | 3,489 | ||||||
| For the Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| Non-interest Expense | 2023 | 2022 | 2022 | |||||||||
| Total non–interest expense | $ | 34,524 | $ | 35,711 | $ | 35,270 | ||||||
| Annualized non–interest expense to average assets | 1.79 | % | 1.84 | % | 1.95 | % | ||||||
| For the Three Months Ended | |||||||||
| March 31, | December 31, | March 31, | |||||||
| Credit Quality | 2023 | 2022 | 2022 | ||||||
| Allowance for credit losses to total loans | 1.17 | % | 1.21 | % | 1.41 | % | |||
| Non–performing loans to total loans | 0.47 | % | 0.52 | % | 0.54 | % | |||
| Percent of net charge–offs to average loans outstanding for the period | 0.01 | % | 0.01 | % | 0.00 | % | |||
| March 31, | Net Reserve | December 31, | ||||||||||
| Allowance for Credit Losses | 2023 | 1Q23 | 2022 | |||||||||
| Commercial | $ | 31,156 | $ | (1,289 | ) | $ | 32,445 | |||||
| Retail Mortgage | 4,447 | (1,130 | ) | 5,577 | ||||||||
| Warehouse | 798 | (222 | ) | 1,020 | ||||||||
| Consumer | 13,125 | 1,703 | 11,422 | |||||||||
| Allowance for Credit Losses (“ACL”) | $ | 49,526 | $ | (938 | ) | $ | 50,464 | |||||
| ACL / Total Loans | 1.17 | % | 1.21 | % | ||||||||
| Acquired Loan Discount (“ALD”) | $ | 6,158 | $ | (121 | ) | $ | 6,279 | |||||
“Horizon's first quarter profitability metrics included net income of $18.2 million, return on average assets of 0.94% and return on average tangible equity of 14.18%, which were impacted by the effects of industry wide competition for deposits and the rising interest rate environment,” Mr. Dwight said. “Looking ahead, we believe Horizon will continue to benefit from new loan originations replacing lower–yielding payoffs and paydowns, our liquidity position and prudent deposit pricing, continued expense management discipline, relatively low credit costs, and active management of our investment portfolio.”
Income Statement Highlights
Net income for the first quarter of 2023 was $18.2 million, or $0.42 diluted earnings per share, compared to $21.2 million, or $0.48, for the linked quarter and $23.6 million, or $0.54, for the prior year period.
The change in net income for the first quarter of 2023 when compared to the fourth quarter of 2022 reflects a decrease in non–interest expense of $1.2 million and lower income tax expense of $786,000, offset by a decrease in net interest income of $3.5 million, lower non–interest income of $1.1 million, which included a $500,000 loss on the sale of approximately $64.0 million of investment securities, and an increase in credit loss expense of $311,000.
Non–interest expense of $34.5 million in the first quarter of 2023 reflected a $1.3 million decrease in salaries and employee benefits, a $268,000 decrease in outside services and consultants, a $215,000 decrease in data processing expense and a $163,000 decrease in loan expense, offset by a $369,000 increase in other expense from the linked quarter.
Net income for the first quarter of 2023 compared to the same prior year period reflects a decrease in non–interest income of $4.5 million, a decrease in net interest income of $1.6 million, and an increase in credit loss expense of $1.6 million. These results are offset by a decrease in income tax expense of $1.7 million and a decrease in non–interest expense of $746,000.
Net Interest Margin
Horizon’s net interest margin was 2.67% for the first quarter of 2023 compared to 2.85% for the fourth quarter of 2022. The decrease in net interest margin reflects an increase in the cost of interest bearing liabilities of 56 basis points, offset by an increase in the yield on interest earning assets of 29 basis points. Additionally, interest income from acquisition–related purchase accounting adjustments was $64,000 lower during the first quarter of 2023 when compared to the fourth quarter of 2022.
Net interest margin was 2.67% for the first quarter of 2023 compared to 2.90% for the first quarter of 2022. The decrease in net interest margin reflects an increase in the cost of interest bearing liabilities of 155 basis points, offset by an increase in the yield on interest earning assets of 104 basis points. Additionally, interest income from acquisition–related purchase accounting adjustments was $549,000 lower during the first quarter of 2023 when compared to the first quarter of 2022.
Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.65% for the first quarter of 2023, compared to 2.83% for the linked quarter and 2.85% for the first quarter of 2022. Interest income from acquisition–related purchase accounting adjustments was $367,000, $431,000 and $916,000 for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively. (See the “Non–GAAP Reconciliation of Net Interest Margin” table below).
Lending Activity
Total loan balances and loans held for sale increased to $4.25 billion on March 31, 2023 compared to $4.16 billion on December 31, 2022. During the three months ended March 31, 2023, commercial loans increased $38.0 million, consumer loans increased $58.3 million, and residential mortgage loans increased $9.2 million, offset by decreases in mortgage warehouse loans of $16.6 million and loans held for sale of $3.4 million.
| Loan Growth by Type | |||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||
| March 31, | December 31, | QTD | QTD | Annualized | |||||||||||
| 2023 | 2022 | $ Change | % Change | % Change | |||||||||||
| Commercial | $ | 2,505,459 | $ | 2,467,422 | $ | 38,037 | 1.5 | % | 6.3 | % | |||||
| Residential mortgage | 662,459 | 653,292 | 9,167 | 1.4 | % | 5.7 | % | ||||||||
| Consumer | 1,026,076 | 967,755 | 58,321 | 6.0 | % | 24.4 | % | ||||||||
| Subtotal | 4,193,994 | 4,088,469 | 105,525 | 2.6 | % | 10.5 | % | ||||||||
| Loans held for sale | 2,409 | 5,807 | (3,398 | ) | (58.5 | )% | (237.3 | )% | |||||||
| Mortgage warehouse | 52,957 | 69,529 | (16,572 | ) | (23.8 | )% | (96.7 | )% | |||||||
| Total loans and loans held for sale | $ | 4,249,360 | $ | 4,163,805 | $ | 85,555 | 2.1 | % | 8.3 | % | |||||
Deposit Activity
Total deposit balances of $5.70 billion on March 31, 2023 declined 2.66% compared to $5.86 billion on December 31, 2022.
| Deposit Growth by Type | |||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||
| March 31, | December 31, | QTD | QTD | Annualized | |||||||||||
| 2023 | 2022 | $ Change | % Change | % Change | |||||||||||
| Non–interest bearing | $ | 1,231,845 | $ | 1,277,768 | $ | (45,923 | ) | (3.6 | )% | (14.6 | )% | ||||
| Interest bearing | 3,402,525 | 3,582,891 | (180,366 | ) | (5.0 | )% | (20.4 | )% | |||||||
| Time deposits | 1,067,575 | 997,115 | 70,460 | 7.1 | % | 28.7 | % | ||||||||
| Total deposits | $ | 5,701,945 | $ | 5,857,774 | $ | (155,829 | ) | (2.7 | )% | (10.8 | )% | ||||
Expense Management
| Three Months Ended | ||||||||||||||
| March 31, | December 31, | QTD | QTD | |||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||
| Non–interest Expense | ||||||||||||||
| Salaries and employee benefits | $ | 18,712 | $ | 19,978 | $ | (1,266 | ) | (6.3 | )% | |||||
| Net occupancy expenses | 3,563 | 3,279 | 284 | 8.7 | % | |||||||||
| Data processing | 2,669 | 2,884 | (215 | ) | (7.5 | )% | ||||||||
| Professional fees | 533 | 694 | (161 | ) | (23.2 | )% | ||||||||
| Outside services and consultants | 2,717 | 2,985 | (268 | ) | (9.0 | )% | ||||||||
| Loan expense | 1,118 | 1,281 | (163 | ) | (12.7 | )% | ||||||||
| FDIC insurance expense | 540 | 388 | 152 | 39.2 | % | |||||||||
| Core deposit intangible amortization | 903 | 925 | (22 | ) | (2.4 | )% | ||||||||
| Other losses | 221 | 118 | 103 | 87.3 | % | |||||||||
| Other expense | 3,548 | 3,179 | 369 | 11.6 | % | |||||||||
| Total non–interest expense | $ | 34,524 | $ | 35,711 | $ | (1,187 | ) | (3.4 | )% | |||||
| Annualized non–interest expense to average assets | 1.79 | % | 1.84 | % | ||||||||||
Total non–interest expense was $1.2 million lower in the first quarter of 2023 when compared to the fourth quarter of 2022. The decrease in expenses was primarily due to a decrease in salaries and employee benefits of $1.3 million from lower salary and incentive compensation expense, a decrease in outside services and consultants expense of $268,000 and a decrease in data processing expense of $215,000, offset by an increase in other expense of $369,000 and net occupancy expenses of $284,000.
| Three Months Ended | ||||||||||||||
| March 31, | March 31, | QTD | QTD | |||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||
| Non–interest Expense | ||||||||||||||
| Salaries and employee benefits | $ | 18,712 | $ | 19,735 | $ | (1,023 | ) | (5.2 | )% | |||||
| Net occupancy expenses | 3,563 | 3,561 | 2 | 0.1 | % | |||||||||
| Data processing | 2,669 | 2,537 | 132 | 5.2 | % | |||||||||
| Professional fees | 533 | 314 | 219 | 69.7 | % | |||||||||
| Outside services and consultants | 2,717 | 2,525 | 192 | 7.6 | % | |||||||||
| Loan expense | 1,118 | 1,205 | (87 | ) | (7.2 | )% | ||||||||
| FDIC insurance expense | 540 | 725 | (185 | ) | (25.5 | )% | ||||||||
| Core deposit intangible amortization | 903 | 926 | (23 | ) | (2.5 | )% | ||||||||
| Other losses | 221 | 168 | 53 | 31.5 | % | |||||||||
| Other expense | 3,548 | 3,574 | (26 | ) | (0.7 | )% | ||||||||
| Total non–interest expense | $ | 34,524 | $ | 35,270 | $ | (746 | ) | (2.1 | )% | |||||
| Annualized non–interest expense to average assets | 1.79 | % | 1.95 | % | ||||||||||
Total non–interest expense was $746,000 lower in the first quarter of 2023 when compared to the first quarter of 2022 primarily due to an decrease in salaries and incentive compensation expense of $1.0 million and a decrease in FDIC insurance expense of $185,000, offset by an increase in professional fees of $219,000 and outside services and consultants expense of $192,000.
Annualized non–interest expense as a percent of average assets was 1.79%, 1.84% and 1.95% for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
Income tax expense totaled $1.9 million for the first quarter of 2023, a decrease of $786,000 when compared to the fourth quarter of 2022 and a decrease of $1.7 million when compared to the first quarter of 2022.
Capital
The capital resources of the Company and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2023. Stockholders’ equity totaled $702.6 million at March 31, 2023 and the ratio of average stockholders’ equity to average assets was 8.86% for the three months ended March 31, 2023.
Tangible book value, which excludes intangible assets from total equity, per common share (“TBVPS”) increased $0.58 during the three months ended March 31, 2023 to $12.17.
The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of March 31, 2023.
| Actual | Required for Capital Adequacy Purposes | Required for Capital Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||
| $ | Ratio | $ | Ratio | $ | Ratio | $ | Ratio | ||||||||||||||||
| Total capital (to risk–weighted assets) | |||||||||||||||||||||||
| Consolidated | $ | 791,701 | 13.97 | % | $ | 453,270 | 8.00 | % | $ | 594,917 | 10.50 | % | N/A | N/A | |||||||||
| Bank | 736,730 | 13.15 | % | 448,323 | 8.00 | % | 588,425 | 10.50 | % | $ | 560,404 | 10.00 | % | ||||||||||
| Tier 1 capital (to risk–weighted assets) | |||||||||||||||||||||||
| Consolidated | 742,175 | 13.10 | % | 339,952 | 6.00 | % | 481,599 | 8.50 | % | N/A | N/A | ||||||||||||
| Bank | 687,204 | 12.26 | % | 336,243 | 6.00 | % | 476,344 | 8.50 | % | 448,323 | 8.00 | % | |||||||||||
| Common equity tier 1 capital (to risk–weighted assets) | |||||||||||||||||||||||
| Consolidated | 621,647 | 10.97 | % | 254,964 | 4.50 | % | 396,611 | 7.00 | % | N/A | N/A | ||||||||||||
| Bank | 687,241 | 12.26 | % | 252,182 | 4.50 | % | 392,283 | 7.00 | % | 364,263 | 6.50 | % | |||||||||||
| Tier 1 capital (to average assets) | |||||||||||||||||||||||
| Consolidated | 742,175 | 10.06 | % | 295,058 | 4.00 | % | 295,058 | 4.00 | % | N/A | N/A | ||||||||||||
| Bank | 687,204 | 8.86 | % | 310,127 | 4.00 | % | 310,127 | 4.00 | % | 387,658 | 5.00 | % | |||||||||||
Liquidity
The Bank maintains a stable base of core deposits provided by long–standing and new relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayments, investment security cash flows, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the Federal Home Loan Bank of Indianapolis (the “FHLB”). On March 31, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.65 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $666.3 million of unpledged investment securities on March 31, 2023.
Forward Looking Statements
This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward–looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission (the “SEC”). Forward–looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward–looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.
Although management believes that the expectations reflected in such forward–looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the ability of Horizon to remediate its material weaknesses in its internal control over financial reporting; continuing increases in inflation; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; continuing risks and uncertainties relating to the COVID–19 pandemic and government responses thereto; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; material changes outside the U.S. or in overseas relations, including changes in U.S. trade relations related to imposition of tariffs, Brexit, and the phase out of the London Interbank Offered Rate (“LIBOR”); the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward–looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10–K, Quarterly Reports on Form 10–Q, and Current Reports on Form 8–K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward–looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.
| Financial Highlights | ||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
| Balance sheet: | ||||||||||||||
| Total assets | $ | 7,897,995 | $ | 7,872,518 | $ | 7,718,695 | $ | 7,640,936 | $ | 7,420,328 | ||||
| Interest earning deposits & federal funds sold | 30,221 | 12,233 | 7,302 | 5,646 | 20,827 | |||||||||
| Interest earning time deposits | 3,098 | 2,812 | 2,814 | 3,799 | 4,046 | |||||||||
| Investment securities | 2,958,978 | 3,020,306 | 3,017,191 | 3,093,792 | 3,118,641 | |||||||||
| Commercial loans | 2,505,459 | 2,467,422 | 2,403,743 | 2,363,991 | 2,259,327 | |||||||||
| Mortgage warehouse loans | 52,957 | 69,529 | 73,690 | 116,488 | 105,118 | |||||||||
| Residential mortgage loans | 662,459 | 653,292 | 634,901 | 608,582 | 593,372 | |||||||||
| Consumer loans | 1,026,076 | 967,755 | 919,198 | 866,819 | 768,854 | |||||||||
| Total loans | 4,246,951 | 4,157,998 | 4,031,532 | 3,955,880 | 3,726,671 | |||||||||
| Earning assets | 7,273,921 | 7,225,833 | 7,087,368 | 7,088,737 | 6,898,208 | |||||||||
| Non–interest bearing deposit accounts | 1,231,845 | 1,277,768 | 1,315,155 | 1,328,213 | 1,325,570 | |||||||||
| Interest bearing transaction accounts | 3,402,525 | 3,582,891 | 3,736,798 | 3,760,890 | 3,782,644 | |||||||||
| Time deposits | 1,067,575 | 997,115 | 778,885 | 756,482 | 743,283 | |||||||||
| Total deposits | 5,701,945 | 5,857,774 | 5,830,838 | 5,845,585 | 5,851,497 | |||||||||
| Borrowings | 1,311,927 | 1,142,949 | 1,048,091 | 959,222 | 728,664 | |||||||||
| Subordinated notes | 58,933 | 58,896 | 58,860 | 58,823 | 58,786 | |||||||||
| Junior subordinated debentures issued to capital trusts | 57,087 | 57,027 | 56,966 | 56,907 | 56,850 | |||||||||
| Total stockholders’ equity | 702,559 | 677,375 | 644,993 | 657,865 | 677,450 | |||||||||
| Financial Highlights | |||||||||||||||||||
| (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Income statement: | |||||||||||||||||||
| Net interest income | $ | 45,237 | $ | 48,782 | $ | 53,395 | $ | 53,008 | $ | 48,171 | |||||||||
| Credit loss expense (recovery) | 242 | (69 | ) | (601 | ) | 240 | (1,386 | ) | |||||||||||
| Non–interest income | 9,620 | 10,674 | 10,188 | 12,434 | 14,155 | ||||||||||||||
| Non–interest expense | 34,524 | 35,711 | 38,350 | 36,368 | 36,610 | ||||||||||||||
| Income tax expense | 1,863 | 2,649 | 2,013 | 3,975 | 3,539 | ||||||||||||||
| Net income | $ | 18,228 | $ | 21,165 | $ | 23,821 | $ | 24,859 | $ | 23,563 | |||||||||
| Per share data: | |||||||||||||||||||
| Basic earnings per share | $ | 0.42 | $ | 0.49 | $ | 0.55 | $ | 0.57 | $ | 0.54 | |||||||||
| Diluted earnings per share | 0.42 | 0.48 | 0.55 | 0.57 | 0.54 | ||||||||||||||
| Cash dividends declared per common share | 0.16 | 0.16 | 0.16 | 0.16 | 0.15 | ||||||||||||||
| Book value per common share | 16.11 | 15.55 | 14.80 | 15.10 | 15.55 | ||||||||||||||
| Tangible book value per common share | 12.17 | 11.59 | 10.82 | 11.11 | 11.54 | ||||||||||||||
| Market value – high | 16.32 | 20.00 | 20.59 | 19.21 | 23.54 | ||||||||||||||
| Market value – low | $ | 10.31 | $ | 14.51 | $ | 16.74 | $ | 16.72 | $ | 18.67 | |||||||||
| Weighted average shares outstanding – Basis | 43,583,554 | 43,574,151 | 43,573,370 | 43,572,796 | 43,554,713 | ||||||||||||||
| Weighted average shares outstanding – Diluted | 43,744,721 | 43,667,953 | 43,703,793 | 43,684,691 | 43,734,556 | ||||||||||||||
| Key ratios: | |||||||||||||||||||
| Return on average assets | 0.94 | % | 1.09 | % | 1.24 | % | 1.33 | % | 1.31 | % | |||||||||
| Return on average common stockholders’ equity | 10.66 | 12.72 | 13.89 | 14.72 | 13.34 | ||||||||||||||
| Net interest margin | 2.67 | 2.85 | 3.04 | 3.13 | 2.90 | ||||||||||||||
| Allowance for credit losses to total loans | 1.17 | 1.21 | 1.27 | 1.32 | 1.41 | ||||||||||||||
| Average equity to average assets | 8.86 | 8.55 | 8.91 | 9.06 | 9.79 | ||||||||||||||
| Efficiency ratio | 62.93 | 60.06 | 59.33 | 54.91 | 57.83 | ||||||||||||||
| Annualized non–interest expense to average assets | 1.74 | 1.84 | 1.91 | 1.90 | 1.95 | ||||||||||||||
| Bank only capital ratios: | |||||||||||||||||||
| Tier 1 capital to average assets | 8.86 | 8.89 | 8.84 | 8.85 | 8.83 | ||||||||||||||
| Tier 1 capital to risk weighted assets | 12.26 | 12.72 | 12.74 | 12.87 | 13.23 | ||||||||||||||
| Total capital to risk weighted assets | 13.15 | 13.59 | 13.65 | 13.83 | 14.25 | ||||||||||||||
| Financial Highlights | |||||||||||||||||||
| (Dollars in Thousands Except Ratios, Unaudited) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Loan data: | |||||||||||||||||||
| Substandard loans | $ | 49,804 | $ | 56,194 | $ | 57,932 | $ | 59,377 | $ | 57,928 | |||||||||
| 30 to 89 days delinquent | 13,971 | 10,709 | 6,970 | 6,739 | 6,358 | ||||||||||||||
| Non–performing loans: | |||||||||||||||||||
| 90 days and greater delinquent – accruing interest | 137 | 92 | 193 | 210 | 107 | ||||||||||||||
| Trouble debt restructures – accruing interest | — | 2,570 | 2,529 | 2,535 | 2,372 | ||||||||||||||
| Trouble debt restructures – non–accrual | — | 1,548 | 1,665 | 1,345 | 1,501 | ||||||||||||||
| Non–accrual loans | 19,660 | 17,630 | 14,771 | 16,116 | 16,133 | ||||||||||||||
| Total non–performing loans | $ | 19,797 | $ | 21,840 | $ | 19,158 | $ | 20,206 | $ | 20,113 | |||||||||
| Non–performing loans to total loans | 0.47 | % | 0.52 | % | 0.47 | % | 0.51 | % | 0.54 | % | |||||||||
| Allocation of the Allowance for Credit Losses | ||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
| Commercial | $ | 31,156 | $ | 32,445 | $ | 33,806 | $ | 34,802 | $ | 37,789 | ||||
| Residential mortgage | 4,447 | 5,577 | 5,137 | 4,422 | 4,351 | |||||||||
| Mortgage warehouse | 798 | 1,020 | 1,024 | 1,067 | 1,055 | |||||||||
| Consumer | 13,125 | 11,422 | 11,402 | 12,059 | 9,313 | |||||||||
| Total | $ | 49,526 | $ | 50,464 | $ | 51,369 | $ | 52,350 | $ | 52,508 | ||||
| Net Charge–offs (Recoveries) | |||||||||||||||||||
| (Dollars in Thousands Except Ratios, Unaudited) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Commercial | $ | 104 | $ | (94 | ) | $ | 51 | $ | (75 | ) | $ | 38 | |||||||
| Residential mortgage | (6 | ) | (8 | ) | (75 | ) | 40 | (10 | ) | ||||||||||
| Mortgage warehouse | — | — | — | — | — | ||||||||||||||
| Consumer | 281 | 387 | 162 | 319 | 108 | ||||||||||||||
| Total | $ | 379 | $ | 285 | $ | 138 | $ | 284 | $ | 136 | |||||||||
| Percent of net charge–offs (recoveries) to average loans outstanding for the period | 0.01 | % | 0.01 | % | 0.00 | % | 0.01 | % | 0.00 | % | |||||||||
| Total Non–performing Loans | |||||||||||||||||||
| (Dollars in Thousands Except Ratios, Unaudited) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Commercial | $ | 8,523 | $ | 9,330 | $ | 7,199 | $ | 8,008 | $ | 7,844 | |||||||||
| Residential mortgage | 6,926 | 8,123 | 8,047 | 8,469 | 8,584 | ||||||||||||||
| Mortgage warehouse | — | — | — | — | — | ||||||||||||||
| Consumer | 4,348 | 4,387 | 3,912 | 3,729 | 3,685 | ||||||||||||||
| Total | $ | 19,797 | $ | 21,840 | $ | 19,158 | $ | 20,206 | $ | 20,113 | |||||||||
| Non–performing loans to total loans | 0.47 | % | 0.52 | % | 0.47 | % | 0.51 | % | 0.54 | % | |||||||||
| Other Real Estate Owned and Repossessed Assets | ||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
| Commercial | $ | 1,567 | $ | 1,881 | $ | 3,206 | $ | 1,414 | $ | 2,245 | ||||
| Residential mortgage | 203 | 107 | 22 | — | 170 | |||||||||
| Mortgage warehouse | — | — | — | — | — | |||||||||
| Consumer | 78 | 152 | 14 | 58 | 5 | |||||||||
| Total | $ | 1,848 | $ | 2,140 | $ | 3,242 | $ | 1,472 | $ | 2,420 | ||||
| Average Balance Sheets | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||
| March 31, 2023 | March 31, 2022 | ||||||||||||||||||
| Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||
| Assets | |||||||||||||||||||
| Interest earning assets | |||||||||||||||||||
| Federal funds sold | $ | 7,767 | $ | 83 | 4.33 | % | $ | 237,605 | $ | 91 | 0.16 | % | |||||||
| Interest earning deposits | 8,780 | 70 | 3.23 | % | 20,673 | 24 | 0.47 | % | |||||||||||
| Investment securities – taxable | 1,727,369 | 8,725 | 2.05 | % | 1,646,525 | 7,391 | 1.82 | % | |||||||||||
| Investment securities – non–taxable (1) | 1,314,129 | 7,556 | 2.95 | % | 1,279,082 | 6,697 | 2.69 | % | |||||||||||
| Loans receivable (2) (3) | 4,143,221 | 55,364 | 5.44 | % | 3,630,871 | 36,539 | 4.10 | % | |||||||||||
| Total interest earning assets | 7,201,266 | 71,798 | 4.17 | % | 6,814,756 | 50,742 | 3.13 | % | |||||||||||
| Non–interest earning assets | |||||||||||||||||||
| Cash and due from banks | 103,563 | 104,676 | |||||||||||||||||
| Allowance for credit losses | (50,337 | ) | (54,307 | ) | |||||||||||||||
| Other assets | 576,614 | 454,550 | |||||||||||||||||
| Total average assets | $ | 7,831,106 | $ | 7,319,675 | |||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||
| Interest bearing liabilities | |||||||||||||||||||
| Interest bearing deposits | $ | 4,502,199 | $ | 14,819 | 1.33 | % | $ | 4,478,621 | $ | 1,496 | 0.14 | % | |||||||
| Borrowings | 1,053,317 | 9,268 | 3.57 | % | 503,846 | 1,043 | 0.84 | % | |||||||||||
| Repurchase agreements | 138,749 | 503 | 1.47 | % | 139,742 | 37 | 0.11 | % | |||||||||||
| Subordinated notes | 58,910 | 880 | 6.06 | % | 58,763 | 880 | 6.07 | % | |||||||||||
| Junior subordinated debentures issued to capital trusts | 57,048 | 1,091 | 7.76 | % | 56,807 | 455 | 3.25 | % | |||||||||||
| Total interest bearing liabilities | 5,810,223 | 26,561 | 1.85 | % | 5,237,779 | 3,911 | 0.30 | % | |||||||||||
| Non–interest bearing liabilities | |||||||||||||||||||
| Demand deposits | 1,255,697 | 1,322,781 | |||||||||||||||||
| Accrued interest payable and other liabilities | 71,714 | 42,774 | |||||||||||||||||
| Stockholders’ equity | 693,472 | 716,341 | |||||||||||||||||
| Total average liabilities and stockholders’ equity | $ | 7,831,106 | $ | 7,319,675 | |||||||||||||||
| Net interest income / spread | $ | 45,237 | 2.32 | % | $ | 46,831 | 2.83 | % | |||||||||||
| Net interest income as a percent of average interest earning assets (1) | 2.67 | % | 2.90 | % | |||||||||||||||
| (1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. | |||||||||||||||||||
| (2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. | |||||||||||||||||||
| (3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis. | |||||||||||||||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Dollars in Thousands) | |||||||
| March 31, 2023 | December 31, 2022 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Cash and due from banks | $ | 134,722 | $ | 123,505 | |||
| Interest earning time deposits | 3,098 | 2,812 | |||||
| Investment securities, available for sale | 943,441 | 997,558 | |||||
| Investment securities, held to maturity (fair value $1,709,392 and $1,681,309) | 2,015,537 | 2,022,748 | |||||
| Loans held for sale | 2,409 | 5,807 | |||||
| Loans, net of allowance for credit losses of $49,526 and $50,464 | 4,197,425 | 4,107,534 | |||||
| Premises and equipment, net | 91,814 | 92,677 | |||||
| Federal Home Loan Bank stock | 32,264 | 26,677 | |||||
| Goodwill | 155,211 | 155,211 | |||||
| Other intangible assets | 16,336 | 17,239 | |||||
| Interest receivable | 36,428 | 35,294 | |||||
| Cash value of life insurance | 147,156 | 146,175 | |||||
| Other assets | 122,154 | 139,281 | |||||
| Total assets | $ | 7,897,995 | $ | 7,872,518 | |||
| Liabilities | |||||||
| Deposits | |||||||
| Non–interest bearing | $ | 1,231,845 | $ | 1,277,768 | |||
| Interest bearing | 4,470,100 | 4,580,006 | |||||
| Total deposits | 5,701,945 | 5,857,774 | |||||
| Borrowings | 1,311,927 | 1,142,949 | |||||
| Subordinated notes | 58,933 | 58,896 | |||||
| Junior subordinated debentures issued to capital trusts | 57,087 | 57,027 | |||||
| Interest payable | 5,922 | 5,380 | |||||
| Other liabilities | 59,622 | 73,117 | |||||
| Total liabilities | 7,195,436 | 7,195,143 | |||||
| Commitments and contingent liabilities | |||||||
| Stockholders’ equity | |||||||
| Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares | — | — | |||||
| Common stock, no par value, Authorized 99,000,000 shares Issued and outstanding 44,041,213 and 43,937,889 shares | — | — | |||||
| Additional paid–in capital | 354,035 | 354,188 | |||||
| Retained earnings | 440,556 | 429,385 | |||||
| Accumulated other comprehensive income (loss) | (92,032 | ) | (106,198 | ) | |||
| Total stockholders’ equity | 702,559 | 677,375 | |||||
| Total liabilities and stockholders’ equity | $ | 7,897,995 | $ | 7,872,518 | |||
| Condensed Consolidated Statements of Income | ||||||||||||||||||
| (Dollars in Thousands Except Per Share Data, Unaudited) | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
| Interest income | ||||||||||||||||||
| Loans receivable | $ | 55,364 | $ | 50,859 | $ | 45,517 | $ | 40,585 | $ | 36,539 | ||||||||
| Investment securities – taxable | 8,725 | 8,702 | 8,436 | 8,673 | 7,391 | |||||||||||||
| Investment securities – non–taxable | 7,556 | 7,543 | 7,478 | 7,307 | 6,697 | |||||||||||||
| Other | 153 | 83 | 65 | 43 | 115 | |||||||||||||
| Total interest income | 71,798 | 67,187 | 61,496 | 56,608 | 50,742 | |||||||||||||
| Interest expense | ||||||||||||||||||
| Deposits | 14,819 | 10,520 | 4,116 | 1,677 | 1,496 | |||||||||||||
| Borrowed funds | 9,771 | 6,040 | 3,895 | 1,450 | 1,080 | |||||||||||||
| Subordinated notes | 880 | 881 | 880 | 881 | 880 | |||||||||||||
| Junior subordinated debentures issued capital trusts | 1,091 | 964 | 744 | 556 | 455 | |||||||||||||
| Total interest expense | 26,561 | 18,405 | 9,635 | 4,564 | 3,911 | |||||||||||||
| Net interest income | 45,237 | 48,782 | 51,861 | 52,044 | 46,831 | |||||||||||||
| Credit loss expense (recovery) | 242 | (69 | ) | (601 | ) | 240 | (1,386 | ) | ||||||||||
| Net interest income after credit loss expense | 44,995 | 48,851 | 52,462 | 51,804 | 48,217 | |||||||||||||
| Non–interest Income | ||||||||||||||||||
| Service charges on deposit accounts | 3,028 | 2,947 | 3,023 | 2,833 | 2,795 | |||||||||||||
| Wire transfer fees | 109 | 118 | 148 | 170 | 159 | |||||||||||||
| Interchange fees | 2,867 | 2,951 | 3,089 | 3,582 | 2,780 | |||||||||||||
| Fiduciary activities | 1,275 | 1,270 | 1,203 | 1,405 | 1,503 | |||||||||||||
| Losses on sale of investment securities | (500 | ) | — | — | — | — | ||||||||||||
| Gain on sale of mortgage loans | 785 | 1,196 | 1,441 | 2,501 | 2,027 | |||||||||||||
| Mortgage servicing income net of impairment | 713 | 637 | 355 | 319 | 3,489 | |||||||||||||
| Increase in cash value of bank owned life insurance | 981 | 751 | 814 | 519 | 510 | |||||||||||||
| Death benefit on bank owned life insurance | — | — | — | 644 | — | |||||||||||||
| Other income | 362 | 804 | 115 | 461 | 892 | |||||||||||||
| Total non–interest income | 9,620 | 10,674 | 10,188 | 12,434 | 14,155 | |||||||||||||
| Non–interest expense | ||||||||||||||||||
| Salaries and employee benefits | 18,712 | 19,978 | 20,613 | 19,957 | 19,735 | |||||||||||||
| Net occupancy expenses | 3,563 | 3,279 | 3,293 | 3,190 | 3,561 | |||||||||||||
| Data processing | 2,669 | 2,884 | 2,539 | 2,607 | 2,537 | |||||||||||||
| Professional fees | 533 | 694 | 552 | 283 | 314 | |||||||||||||
| Outside services and consultants | 2,717 | 2,985 | 2,855 | 2,485 | 2,525 | |||||||||||||
| Loan expense | 1,118 | 1,281 | 1,392 | 1,533 | 1,205 | |||||||||||||
| FDIC insurance expense | 540 | 388 | 670 | 775 | 725 | |||||||||||||
| Core deposit intangible amortization | 903 | 925 | 926 | 925 | 926 | |||||||||||||
| Other losses | 221 | 118 | 398 | 362 | 168 | |||||||||||||
| Other expenses | 3,548 | 3,179 | 3,578 | 3,287 | 3,574 | |||||||||||||
| Total non–interest expense | 34,524 | 35,711 | 36,816 | 35,404 | 35,270 | |||||||||||||
| Income before income taxes | 20,091 | 23,814 | 25,834 | 28,834 | 27,102 | |||||||||||||
| Income tax expense | 1,863 | 2,649 | 2,013 | 3,975 | 3,539 | |||||||||||||
| Net income | $ | 18,228 | $ | 21,165 | $ | 23,821 | $ | 24,859 | $ | 23,563 | ||||||||
| Basic earnings per share | $ | 0.42 | $ | 0.49 | $ | 0.55 | $ | 0.57 | $ | 0.54 | ||||||||
| Diluted earnings per share | 0.42 | 0.48 | 0.55 | 0.57 | 0.54 | |||||||||||||
Use of Non–GAAP Financial Measures
Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non–GAAP financial measures relating to net income, diluted earnings per share, pre–tax, pre–provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non–recurring and have excluded them. We believe that this shows the impact of such events as acquisition–related purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes these non–GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one–time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non–GAAP information identified herein and its most comparable GAAP measures.
| Non–GAAP Reconciliation of Net Income | ||||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||
| Net income as reported | $ | 18,228 | $ | 21,165 | $ | 23,821 | $ | 24,859 | $ | 23,563 | ||||||
| (Gain) / loss on sale of investment securities | 500 | — | — | — | — | |||||||||||
| Tax effect | (105 | ) | — | — | — | — | ||||||||||
| Net income excluding (gain) / loss on sale of investment securities | 18,623 | 21,165 | 23,821 | 24,859 | 23,563 | |||||||||||
| Death benefit on bank owned life insurance (“BOLI”) | — | — | — | (644 | ) | — | ||||||||||
| Net income excluding death benefit on BOLI | 18,623 | 21,165 | 23,821 | 24,215 | 23,563 | |||||||||||
| Adjusted net income | $ | 18,623 | $ | 21,165 | $ | 23,821 | $ | 24,215 | $ | 23,563 | ||||||
| Non–GAAP Reconciliation of Diluted Earnings per Share | |||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| Diluted earnings per share (“EPS”) as reported | $ | 0.42 | $ | 0.48 | $ | 0.55 | $ | 0.57 | $ | 0.54 | |||||
| (Gain) / loss on sale of investment securities | 0.01 | — | — | — | — | ||||||||||
| Tax effect | — | — | — | — | — | ||||||||||
| Diluted EPS excluding (gain) / loss on sale of investment securities | 0.43 | 0.48 | 0.55 | 0.57 | 0.54 | ||||||||||
| Death benefit on bank owned life insurance (“BOLI”) | — | — | — | (0.01 | ) | — | |||||||||
| Adjusted diluted EPS | $ | 0.43 | $ | 0.48 | $ | 0.55 | $ | 0.56 | $ | 0.54 | |||||
| Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income | ||||||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
| Pre–tax income | $ | 20,091 | $ | 23,814 | $ | 25,834 | $ | 28,834 | $ | 27,102 | ||||||||
| Credit loss expense (recovery) | 242 | (69 | ) | (601 | ) | 240 | (1,386 | ) | ||||||||||
| Pre–tax, pre–provision net income | $ | 20,333 | $ | 23,745 | $ | 25,233 | $ | 29,074 | $ | 25,716 | ||||||||
| Pre–tax, pre–provision net income | $ | 20,333 | $ | 23,745 | $ | 25,233 | $ | 29,074 | $ | 25,716 | ||||||||
| (Gain) / loss on sale of investment securities | 500 | — | — | — | — | |||||||||||||
| Death benefit on BOLI | — | — | — | (644 | ) | — | ||||||||||||
| Adjusted pre–tax, pre–provision net income | $ | 20,833 | $ | 23,745 | $ | 25,233 | $ | 28,430 | $ | 25,716 | ||||||||
| Non–GAAP Reconciliation of Net Interest Margin | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Net interest income as reported | $ | 45,237 | $ | 48,782 | $ | 51,861 | $ | 52,044 | $ | 46,831 | |||||||||
| Average interest earning assets | 7,201,266 | 7,091,980 | 7,056,208 | 6,943,633 | 6,814,756 | ||||||||||||||
| Net interest income as a percentage of average interest earning assets (“Net Interest Margin”) | 2.67 | % | 2.85 | % | 3.04 | % | 3.13 | % | 2.90 | % | |||||||||
| Net interest income as reported | $ | 45,237 | $ | 48,782 | $ | 51,861 | $ | 52,044 | $ | 46,831 | |||||||||
| Acquisition–related purchase accounting adjustments (“PAUs”) | (367 | ) | (431 | ) | (906 | ) | (1,223 | ) | (916 | ) | |||||||||
| Adjusted net interest income | $ | 44,870 | $ | 48,351 | $ | 50,955 | $ | 50,821 | $ | 45,915 | |||||||||
| Adjusted net interest margin | 2.65 | % | 2.83 | % | 2.99 | % | 3.06 | % | 2.85 | % | |||||||||
| Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share | ||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
| Total stockholders’ equity | $ | 702,559 | $ | 677,375 | $ | 644,993 | $ | 657,865 | $ | 677,450 | ||||
| Less: Intangible assets | 171,547 | 172,450 | 173,375 | 173,662 | 174,588 | |||||||||
| Total tangible stockholders’ equity | $ | 531,012 | $ | 504,925 | $ | 471,618 | $ | 484,203 | $ | 502,862 | ||||
| Common shares outstanding | 43,621,422 | 43,574,151 | 43,574,151 | 43,572,796 | 43,572,796 | |||||||||
| Book value per common share | $ | 16.11 | $ | 15.55 | $ | 14.80 | $ | 15.10 | $ | 15.55 | ||||
| Tangible book value per common share | $ | 12.17 | $ | 11.59 | $ | 10.82 | $ | 11.11 | $ | 11.54 | ||||
| Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Non–interest expense as reported | $ | 34,524 | $ | 35,711 | $ | 36,816 | $ | 35,404 | $ | 35,270 | |||||||||
| Net interest income as reported | 45,237 | 48,782 | 51,861 | 52,044 | 46,831 | ||||||||||||||
| Non–interest income as reported | $ | 9,620 | $ | 10,674 | $ | 10,188 | $ | 12,434 | $ | 14,155 | |||||||||
| Non–interest expense / (Net interest income + Non–interest income) (“Efficiency Ratio”) | 62.93 | % | 60.06 | % | 59.33 | % | 54.91 | % | 57.83 | % | |||||||||
| Non–interest expense as reported | $ | 34,524 | $ | 35,711 | $ | 36,816 | $ | 35,404 | $ | 35,270 | |||||||||
| Net interest income as reported | 45,237 | 48,782 | 51,861 | 52,044 | 46,831 | ||||||||||||||
| Non–interest income as reported | 9,620 | 10,674 | 10,188 | 12,434 | 14,155 | ||||||||||||||
| (Gain) / loss on sale of investment securities | 500 | — | — | — | — | ||||||||||||||
| Death benefit on BOLI | — | — | — | (644 | ) | — | |||||||||||||
| Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI | $ | 10,120 | $ | 10,674 | $ | 10,188 | $ | 11,790 | $ | 14,155 | |||||||||
| Adjusted efficiency ratio | 62.37 | % | 60.06 | % | 59.33 | % | 55.46 | % | 57.83 | % | |||||||||
| Non–GAAP Reconciliation of Return on Average Assets | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Average assets | $ | 7,831,106 | $ | 7,718,366 | $ | 7,635,102 | $ | 7,476,238 | $ | 7,319,675 | |||||||||
| Return on average assets (“ROAA”) as reported | 0.94 | % | 1.09 | % | 1.24 | % | 1.33 | % | 1.31 | % | |||||||||
| (Gain) / loss on sale of investment securities | 0.03 | — | — | — | — | ||||||||||||||
| Tax effect | (0.01 | ) | — | — | — | — | |||||||||||||
| ROAA excluding (gain) / loss on sale of investment securities | 0.96 | 1.09 | 1.24 | 1.33 | 1.31 | ||||||||||||||
| Death benefit on BOLI | — | — | — | (0.03 | ) | — | |||||||||||||
| ROAA excluding death benefit on BOLI | 0.96 | 1.09 | 1.24 | 1.30 | 1.31 | ||||||||||||||
| Adjusted ROAA | 0.96 | % | 1.09 | % | 1.24 | % | 1.30 | % | 1.31 | % | |||||||||
| Non–GAAP Reconciliation of Return on Average Common Equity | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Average common equity | $ | 693,472 | $ | 660,188 | $ | 680,376 | $ | 677,299 | $ | 716,341 | |||||||||
| Return on average common equity (“ROACE”) as reported | 10.66 | % | 12.72 | % | 13.89 | % | 14.72 | % | 13.34 | % | |||||||||
| (Gain) / loss on sale of investment securities | 0.29 | — | — | — | — | ||||||||||||||
| Tax effect | (0.06 | ) | — | — | — | — | |||||||||||||
| ROACE excluding (gain) / loss on sale of investment securities | 10.89 | 12.72 | 13.89 | 14.72 | 13.34 | ||||||||||||||
| Death benefit on BOLI | — | — | — | (0.38 | ) | — | |||||||||||||
| ROACE excluding death benefit on BOLI | 10.89 | 12.72 | 13.89 | 14.34 | 13.34 | ||||||||||||||
| Adjusted ROACE | 10.89 | % | 12.72 | % | 13.89 | % | 14.34 | % | 13.34 | % | |||||||||
| Non–GAAP Reconciliation of Return on Average Tangible Equity | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Average common equity | $ | 693,472 | $ | 660,188 | $ | 680,376 | $ | 677,299 | $ | 716,341 | |||||||||
| Less: Average intangible assets | 172,139 | 173,050 | 173,546 | 175,321 | 176,356 | ||||||||||||||
| Average tangible equity | $ | 521,333 | $ | 487,138 | $ | 506,830 | $ | 501,978 | $ | 539,985 | |||||||||
| Return on average tangible equity (“ROATE”) as reported | 14.18 | % | 17.24 | % | 18.65 | % | 19.86 | % | 17.70 | % | |||||||||
| (Gain) / loss on sale of investment securities | 0.39 | — | — | — | — | ||||||||||||||
| Tax effect | (0.08 | ) | — | — | — | — | |||||||||||||
| ROATE excluding (gain) / loss on sale of investment securities | 14.49 | 17.24 | 18.65 | 19.86 | 17.70 | ||||||||||||||
| Death benefit on BOLI | — | — | — | (0.51 | ) | — | |||||||||||||
| ROATE excluding death benefit on BOLI | 14.49 | 17.24 | 18.65 | 19.35 | 17.70 | ||||||||||||||
| Adjusted ROATE | 14.49 | % | 17.24 | % | 18.65 | % | 19.35 | % | 17.70 | % | |||||||||
Earnings Conference Call
As previously announced, Horizon will host a conference call to review its first quarter financial results and operating performance.
Participants may access the live conference call on April 27, 2023 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833–974–2379 from the United States, 866–450–4696 from Canada or 1–412–317–5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.
A telephone replay of the call will be available approximately one hour after the end of the conference through May 4, 2023. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 1–412–317–0088 from other international locations, and entering the access code 6349380.
About Horizon Bancorp, Inc.
Celebrating 150 years, Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.9 billion–asset commercial bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon Bank’s retail offerings include prime residential, indirect auto, and other secured consumer lending to in–market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in–market business banking and treasury management services, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana’s Michigan City, is available at horizonbank.com and investor.horizonbank.com.
| Contact: | Mark E. Secor |
| Chief Financial Officer | |
| Phone: | (219) 873–2611 |
| Fax: | (219) 874–9280 |
| Date: | April 26, 2023 |
