(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 |
|
AverageBalance |
|
Interest |
|
AverageRate |
|
AverageBalance |
|
Interest |
|
AverageRate |
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 |
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