Horizon Bancorp, Inc. · NASDAQ:HBNC
Horizon Bancorp — Q1 2024 Earnings Presentation
28 slides from Horizon Bancorp's earnings presentation, Apr 25, 2024
Slide 1: Investor Presentation
Investor Presentation Horizon Bancorp, Inc. (NASDAQ: HBNC) First Quarter 2024 April 24, 2024 Beyond ordinary banking
Slide 2: Important Information
Important Information Forward-Looking Statements This presentation may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon clai
Slide 3: Seasoned Management Team
Seasoned Management Team Kathie A. DeRuiter Todd A. Etzler Lynn M. Kerber EVP & Senior EVP & Corporate Secretary EVP & Chief Commercial Operations Officer & General Counsel Banking Officer • 34 Years of Banking and Operational • 32 Years of Corporate Legal Experience • 33 Years of Banking Experience
Slide 4: First Quarter 2024
First Quarter 2024 HIGHLIGHTS AND DEVELOPMENTS ($000S EXCEPT PER SHARE DATA) 1Q24 4Q23 • Net income $14.0MM INCOME STATEMENT o EPS $0.32 Net interest income $43,288 $42,257 • NIM expansion of 7 bps to 2.50% NIM 2.50% 2.43% o Early benefit of December balance sheet repositioning Provision $805 $1,274
Slide 5: Loan Growth
Loan Growth 1% FIRST QUARTER HIGHLIGHTS Consumer Direct 14% • Total loan growth of $200MM Indirect Auto o Led by Commercial growth of $75MM, 11.2% 8% Total Loans Resi annualized Equipment finance contributed $23MM late in the $4.6B 43% o C&I quarter MRQ end • Deployment of $154MM in balance sheet re
Slide 6: Diversified Commercial Portfolio
Diversified Commercial Portfolio FIRST QUARTER HIGHLIGHTS 7% 4% • Commercial loan portfolio 8% 30% Central Indiana o Grew organically by $75MM, 11.2% annualized Geography West Michigan Southwest Michigan • Commercial pipeline 14% $2.7B Northern Indiana o At $187MM compared to $167MM at 4Q23 end MRQ
Slide 7: Midwest Commercial Lending Strength
Midwest Commercial Lending Strength % OF % OF TOTAL STRONG AND TRADITIONAL COMMERCIAL LOANS BY INDUSTRY ($M) 3/31/24 BALANCE COMMERCIAL LOAN COMMERCIAL LENDING PORTFOLIO PORTFOLIO Lessors – Residential Multi Family $280 10.2% 6.1% Health Care, Educational & Social 249 9.1% 5.4% • Multi-family repres
Slide 8: Well-Managed CRE Maturities
Well-Managed CRE Maturities 2024 Maturities Remaining 2025 Maturities Average Rate 6.35% Average Rate 5.59% Loans Outstanding % of Total Adjusted CRE* Loans Outstanding % of Total Adjusted CRE* 11% 10% $000s $000s 5% 6% $213,000 $188,000 $123,000 $101,000 All rates <7% rates All rates <7% rates Data
Slide 9: Prime Consumer Loans
Prime Consumer Loans FIRST QUARTER HIGHLIGHTS 2% 2% 7% Consumer Direct • Increased ~$52MM, consistent with plan 6% o Includes deployment of $59MM in balance sheet restructuring proceeds into acquisition of consumer portfolio Consumer 48% with 10.65% yield and credit protections $1.0B • YTD net charg
Slide 10: Prime Mortgage Loans
Prime Mortgage Loans FIRST QUARTER HIGHLIGHTS 1% 3% • Portfolio increased by $101MM o Includes deployment of $95MM in balance sheet restructuring proceeds into acquisition of 1-4 family prime jumbo 39% Mortgage residential portfolio with 7.29% yield $782M • Originations aligning with industry and li
Slide 11: Strong Asset Quality Metrics
Strong Asset Quality Metrics 30–89 Days Delinquent (period end) Non-Performing Loans (period end) 0.52% $16,595 $15,154 0.47% 0.45% 0.46% $13,971 0.41% $13,090 $10,913 $22,109 $20,269 $19,797 $19,448 $19,161 $000s $000s 0.38% 0.33% 0.30% 0.33% 0.26% 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24
Slide 12: NIM Expansion
NIM Expansion First Quarter Expansion Continued 2024 Momentum • Driven primarily by loan yields increasing and • 2.50% NIM for the quarter deliberate shift of balance sheet to higher o 2.46% January yielding assets o 2.50% February • Continued disciplined deposit pricing o 2.53% March • Loan fees un
Slide 13: Fee Income
Fee Income FIRST QUARTER HIGHLIGHTS Adjusted Non-interest Income Excluding Securities Gains and Losses* ($000s) • $9.9MM in non-interest income o Seasonal income platform with $11,830 historical growth in subsequent $10,977 $11,123 * quarters $10,120 $2,019 $9,929 o Core service fees particular from
Slide 14: Diligent Expense Management
Diligent Expense Management Adjusted Non-interest Expense FIRST QUARTER HIGHLIGHTS ($000s) • $37.1MM in non-interest expense $38,625* o Well managed expenses across the $37,107 franchise in salaries and third party $36,262 $36,168 $34,524 $17,453 services $16,100 $16,839 $16,110 $15,812 • Operating
Slide 15: Capital Position Provides Flexibility
Capital Position Provides Flexibility TCE/TA Leverage Ratio 8.9% 9.5% 9.4% 9.4% 8.3% 7.2% 7.4% 7.4% 10.0% 9.7% 7.6% 9.2% 9.4% 7.1% 7.2% 6.6% 4.0% 2021 2022 2023 2024 Q1 2021 2022 2023 2024 Q1 CET1 Ratio Total RBC Ratio 14.2% 13.6% 14.0% 14.0% 12.1% 11.6% 11.6% 15.4% 11.4% 14.1% 13.8% 13.4% 12.0% 11.
Slide 16: Outlook
Outlook FULL YEAR EXPECTATIONS 1Q 2024 2Q 2024 • Continued Quality Loan Growth Actual Expectations o Q2 led by commercial and leasing o Reinvesting cash flows from lower yielding assets into higher quality loans Total Loan Growth Annualized 18.2% 8 - 10% • Momentum in Net Interest Income and Margin
Slide 17: Why Horizon? Distribution in Excellent Growth Markets
Why Horizon? DISTRIBUTION IN EXCELLENT GROWTH MARKETS Economically Major Brands Diverse Attractive Opportunities Horizon’s markets are Horizon’s branches are home to multi-national Horizon’s Commercial and Loans located strategically in companies, flourishing Retail Banking offerings $1.8B markets w
Slide 18: Why Horizon? Proven Operator
Why Horizon? PROVEN OPERATOR Consistent and Tenured And Stable Disciplined Compelling Value Strong loan growth Deposit Base Operating Culture Supported By with Low Credit Risk With Significant Commitment To Profile Liquidity Dividend Positive momentum with Stable, granular deposit Disciplined expens
Slide 19: Appendix
Appendix
Slide 20: Diversified Commercial Loans By Industry
Diversified Commercial Loans By Industry COMMERCIAL LOANS – $ 2.750 BILLION Non-Owner Occupied CRE – Owner Occupied CRE – C&I Loans – 50% of Total Commercial Loans 22% of Total Commercial Loans 28% of Total Commercial Loans ~$1.4 Billion ~$0.6 Billion ~$0.8 Billion Lessors: Residential Health Care,
Slide 21: Granular and Tenured Deposits
Granular and Tenured Deposits Seasoned, Core Deposit Base • Consumer: $7K avg. account balance 11 year avg. tenure • Commercial: $50K avg. account balance 10 year avg. tenure 23% • Public: $782K avg. account balance 11 year avg. tenure Total Deposits 80% 51% of Balances in Checking Accounts 57% $5.6
Slide 22: Proven Credit Quality Through Cycles
Proven Credit Quality Through Cycles Net charge offs as a % of average loans 4.0% HBNC U.S. commercial banks¹ 3.0% 2.0% 1.0% 0.50% 0.63% 0.15% 0.0% 0.02% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Nonperforming assets as % of assets 3.0% HBNC 2.5% U.S. comme
Slide 23: High-Quality Investment Securities
High-Quality Investment Securities • Book yield continues to increase • Cash flows to support funding of higher yielding loans SCHEDULED NEXT SCHEDULED NEXT 12 1Q23 2Q23 3Q23 4Q23 1Q24 QUARTER* MONTHS* ROLL-OFF/CASH FLOW $25,000 $41,000 $26,000 $28,000 $27,000 $28,000 $103,000 SALES $65,000 $24,000
Slide 24: Footnote Index
Footnote Index Slides Footnote 13 • Adjusted non-interest income excludes gain/(loss) on sale of investment securities. (See further in the Appendix for a reconciliation of these non- GAAP amounts to their GAAP counterparts.) 14 • Adjusted non-interest expense excludes extraordinary expenses, includ
Slide 25: Non-GAAP Reconciliation of Non-Interest Income
Footnote Index Non-GAAP Reconciliation of Non-Interest Income (Dollars in Thousands, Unaudited) Three Months Ended March 31 December 31 September 30 June 30 March 31 2024 2023 2023 2023 2023 Non-interest Income Service charges on deposit accounts $ 3,214 $ 3,092 $ 3,086 $ 3,021 $ 3,028 Wire transfer
Slide 26: Non-GAAP Reconciliation of Non-Interest Expense
Footnote Index Non-GAAP Reconciliation of Non-Interest Expense (Dollars in Thousands, Unaudited) Three Months Ended March 31 December 31 2024 2023 Extraordinary Extraordinary Actual Expenses Adjusted Actual Expenses Adjusted Non-interest Expense Salaries and employee benefits $ 20,268 $ - $ 20,268 $
Slide 27: Non-GAAP Reconciliation of Non-Interest Expense
Footnote Index Non-GAAP Reconciliation of Non-Interest Expense (Dollars in Thousands, Unaudited) Three Months Ended September 30 June 30 March 31 2023 2023 2023 Extraordinary Extraordinary Extraordinary Actual Expenses Adjusted Actual Expenses Adjusted Actual Expenses Adjusted Non-interest Expense S
Slide 28: Thank you
Thank you Mark E. Secor Executive Vice President and Chief Financial Officer 515 Franklin Street, Michigan City, IN 46360 219-873–2611 Investor.HorizonBank.com