Horizon Bancorp, Inc. · NASDAQ:HBNC
Horizon Bancorp — Investor Presentation (March 2010)
40 slides from Horizon Bancorp's investor presentation, Mar 22, 2010
Slide 1: A NASDAQ Traded Company - Symbol HBNC
A NASDAQ Traded Company - Symbol HBNC March 2010
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward- looking statements regarding financial performance, business prospects, growth and operating strategies. For these statements, Horizon claims the protection of the safe harbor for forward-looking statements contained in the Private Se
Slide 3: Serving the Community Since 1873
HORIZON‘ —_ ©. Serving the Community Since 1873
Slide 4: Corporate Profile
*Based on price at the close of business on March 12, 2010 at $18.76 per share **Total assets and deposits as of December 31, 2009 Corporate Profile • Shares Outstanding 3.29 Million Shares • Market Cap* $61.6 Million • Total Assets** $ 1.4 Billion • Total Deposits** $ 952 Million • Branches 19 • Ow
Slide 5: Current Locations
Current Locations Porter County Elkhart County American Trust Branches to Stay Open American Trust Branch to Close Current Locations
Slide 6: Managing Well Through High Unemployment
Managing Well Through High Unemployment
Slide 7: Change in Unemployment Rate Slowing
Change in Unemployment Rate Slowing
Slide 8: Major Competitors Provide Opportunity
Major Competitors Provide Opportunity • Indiana – Chase – Fifth Third – PNC f/k/a National City – Centier – 1 st Source – La Porte Savings – Harris – First Midwest – Peoples Bank – Citizens Financial • Michigan – Chase – Fifth Third – Chemical – Flag Star – 1 st Source – Edgewater – New Buffalo Savi
Slide 9: Financial Highlights
Financial Highlights
Slide 10: Record Earnings Ten Consecutive Years
Record Earnings Ten Consecutive Years
Slide 11: Improving Net Interest Margin
Improving Net Interest (“NIM”) Margin * Net Interest Income in Millions
Slide 12: Sound NIM Strategies
Sound NIM Strategies • Extend Liabilities – Extend Duration of Retail CDs – Increase Long-Term Brokered CDs – Horizon’s TRUP - SWAP for Fixed Ten-Year Rate – Extend FHLB advances – Long-Term Repurchase Agreements with Imbedded Caps • Shorten Assets – Commercial loan SWAPs Fixed for Variable – Shrink
Slide 13: Challenges to the NIM Strategy
Challenges to the NIM Strategy • In Low Interest Rate Environment – Extending liabilities is more expensive – Shorter term assets have lower yields • Slow Growth in Earning Assets • Increase in Non Earning Assets (non-accrual, OREO, FDIC pre-payment) • Loans with Floors will Reprice at Slower Rate •
Slide 14: Horizon Exceeds Peer Average for Efficiency
Peer Data Source: KBW Report dated February 2010 covering Indiana Publicly Traded Banks; peer data represents a peer average and is as of December 2009 for all periods reviewed. Horizon Exceeds Peer Average for Efficiency
Slide 15: 2009's Expenses Too High & Key Management Focus
2009’s Expenses Too High & Key Management Focus Non Interest Income and Expenses as % of Total Assets
Slide 16: Stock Performance in Line with Indiana Peers
Index Value Stock Performance in Line with Indiana Peers Relative Price Performance 140 —® Horizon Bancorp Indiana Banks —#— Michigan Banks 0 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09
Slide 17: Horizon
HORIZON. _ HORIZON
Slide 18: Steady Asset Growth
Steady Asset Growth CAGR 10.1 %
Slide 19: Steady Core Deposit Growth
(Millions) 2000 Steady Core Deposit Growth 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 20: Good Balance in Loan Portfolio
Commercial 35% Mortgage Warehouse 19% Residential Mortgage 15% December 31, 2004 December 31, 2009 Consumer 31% Good Balance in Loan Portfolio
Slide 21: Low Percentage of Development Loans
“Low Percentage” of Development Loans As a Percent of Total Commercial Loans December 31, 2009 Dollars in Millions
Slide 22: Stable Core Funding
$1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Stable Core Funding 2005 2006 2007 2008 2009 Non interest-bearing mNOW Money market Savings mConsumer CD's Business Investment Checking
Slide 23: Multiple Sources - Funding Growth
Multiple Sources - Funding Growth
Slide 24: Horizon
HORIZON. _ HORIZON
Slide 25: Good Credit Culture
Good Credit Culture • Team of Seasoned Underwriters – Average Tenure > 20 years • Primarily an In Market and Full Recourse Lender • Predominately a Secured Lender • Retail & Small Business Focus – Average Commercial Loan Size Approximately $250,000 • We Manage Lending Limits – House Limit $10 millio
Slide 26: Increase in Non-Performing Loans
Increase in Non-Performing Loans as a % of Capital As of December 31, 2009, non-performing loans includes OREO, Non-accrual & Impaired Loans
Slide 27: Good Diversity in Non-Performing & Real Estate Owned
Good Diversity in Non-Performing & Real Estate Owned Non Performing and REO By Classification December 31, 2009 Dollars in Millions
Slide 28: Horizon Outperforms Peer Group
Horizon Outperforms Peer Group Non-Performing Loans Plus OREO to Gross Loans Plus OREO Source: Custom group of 23 publicly traded banks headquartered in the state of Indiana from FDIC Uniform Bank Performance Reports
Slide 29: Loan Charge-Offs Comparable to Peer
Loan Charge-Offs Comparable to Peer Source: Custom group of 18 publicly traded banks headquartered in the state of Indiana from FDIC Uniform Bank Performance Reports
Slide 30: Consumer Loans Lead in Dollars Charged-off
Consumer Loans Lead in Dollars Charged-off Charge-offs by Type
Slide 31: Horizon Out-Performs National Averages
Horizon Out-Performs National Averages For Consumer Indirect Installment Net Charge-Offs
Slide 32: Net Charge Offs and Allowance
Thousands $16,015 $11,410 $9,791 $6568 $8,738 $8,998 $5,949) $649 $535 $853 2005 2006 2007 2008 2009 Hi Net Charge Offs B Allowance
Slide 33: Horizon
HORIZON. _ HORIZON
Slide 34: Third Party - Testimonials
Third Party - Testimonials • Nine out of Ten Customers - Would Refer a Friend • Best Bank - The News Dispatch Readers Poll - Nine out of Last Ten Years • Best Trust Company - Northwest Indiana Times - Readers Poll • Family Friendly Work Policies - Clarian Award • Ranked in the Top 200 Community Bank
Slide 35: Horizon Does Things Right
Horizon Does Things Right • We Understand Fiduciary Responsibility to Employees, Depositors & Shareholders • Expense Control - Before it Became Popular – No Executive Cars – Annual Report Cost Reduction • Bonus Plans Aligned with Shareholders – We Pay Shareholders First – No bonuses if earnings fall
Slide 36: Stable Performance & Growth
Stable Performance & Growth • Earnings Growth for Ten Consecutive Years • Diversified Revenue Streams • Efficient Operations • Lake Michigan Corridor Primed for Growth • Super Regional Banks Cutting Back - Market Share Opportunities • Opportunities Increasing for Healthy Banks
Slide 37: American Trust & Savings Acquisition
American Trust & Savings Acquisition • Purchase & Assumption – Assets ≈ $110 million – Deposits ≈ $99 million • Financial – Accretive to earnings – Payback is less than three years – Low risk - asset quality and core deposits
Slide 38: Horizon is an Attractive Value
Horizon Bancorp Avg. - Indiana Banks Dividend Yield (as of 03/12/10) 3.62% 2.1% Price to Book (HBNC - Price as of 03/12/10 & Book Value as of Year-end 12/31/10) 68.3% 73.8% Price to Tangible Book (HBNC - Price as of 03/12/10 & Tangible Book Value as of Year-end 12/31/10) 74.2% 80.2% Price to Earning
Slide 39: Horizon Outperforms Bank Index - One Year
Horizon Outperforms Bank Index - One Year
Slide 40: Horizon Outperforms Bank Index - Ten Years
Horizon Outperforms Bank Index - Ten Years