Horizon Bancorp, Inc. · NASDAQ:HBNC
Horizon Bancorp — Investor Day (December 2021)
44 slides from Horizon Bancorp's investor day presentation, Dec 1, 2021
Slide 1: Virtual Investor Day, December 2, 2021
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® A NASDAQ Traded Company - Symbol HBNC VIRTUAL INVESTOR DAY | DECEMBER 2, 2021
Slide 2: Forward-Looking Statements
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Forward-Looking Statements This presentation and any prerecorded commentary may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and
Slide 3: Submit your questions
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 3 Submit your questions at any time during presentations and Q&A sessions Trouble with this form? Send your questions to HBNC@lambert.com.
Slide 4: Craig M. Dwight, Chairman & CEO
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Craig M. Dwight Chairman & CEO 4
Slide 5: Multiple Revenue Streams Diversifies Risk; Diversified & Attractive Footprint
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Multiple Revenue Streams Diversifies Risk Diversified & Attractive Footprint E X C E P T I O N A L S E R V I C E • Q U A L I T Y A D V I C E ® 5 Retail Banking Business Banking Mortgage Banking Wealth Management Complementary Revenu
Slide 6: 2022 Goals
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 2022 Goals E X C E P T I O N A L S E R V I C E • Q U A L I T Y A D V I C E ® 6 10% ANNUAL COMMERCIAL LOAN GROWTH Excluding PPP loans <2.00% ANNUAL EXPENSES TO AVERAGE ASSETS RATIO >1.20% ROAA >12.5% ROAE NET INTEREST INCOME $ GROWTH
Slide 7: Agenda
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Agenda 7 Welcome Craig M. Dwight, Chairman & Chief Executive Officer The Retail Franchise Mark E. Secor, Executive Vice President & Chief Financial Officer Kathie A. DeRuiter, Executive Vice President & Senior Operations Officer Liv
Slide 8: Mark E. Secor, EVP & CFO
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Mark E. Secor EVP & CFO 8
Slide 9: Enhancing Branch Network Efficiency
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 9 Enhancing Branch Network Efficiency 1 New Gary, IN branch in 2021, as part of commitment to improving access to financial services to minorities in cities that have been underserved 10 Permanent consolidation of 9 Indiana branches
Slide 10: Branch Acquisition Summary
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 10 Branch Acquisition Summary 14 branches, $846M of deposits and $215M of loans Attractive Pricing 1.75% premium on deposits with 14 TCF National Bank branches in Michigan Low-Cost Core Deposits ~0.05% average cost of deposits Low-C
Slide 11: Branches Acquired: Logical Market Extension
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Branches Acquired Logical Market Extension 11 0.05% Av. Deposit Cost >10 years Av. Deposit Account Tenure Familiar and respected local competitor with culture of commitment to longstanding community banking relationships with their
Slide 12: Low-Cost Core Deposit Franchise Enhanced with New Branches
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Non-interest bearing 21% Interest bearing ex CDs 67% CDs 12% Non-interest bearing 23% Interest bearing ex CDs 65% CDs 12% Non-interest bearing 23% Interest bearing ex CDs 65% CDs 12% 12 2Q21 Average Deposit Cost* HBNC Acquired Pro F
Slide 13: Mortgage, Consumer & Small Biz Loans Acquired
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Commercial, 49% Resi Mortgage, 26% Consumer, 25% Commercial, 59% Resi Mortgage, 16% Consumer, 19% Mortgage Warehouse, 6% Held For Sale, 0% Commercial, 60% Resi Mortgage, 16% Consumer, 18% Mortgage Warehouse, 6% Held For Sale, 0% 13
Slide 14: Accretion Upside of Liquidity Deployment
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 14 Accretion Upside of Liquidity Deployment Note: Chart is for illustrative purposes only. Actual accretion will be dependent upon timing of liquidity deployment, loan mix and yields. 17.1% 28.6% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 0
Slide 15: Kathie A. DeRuiter, EVP & Senior Operations Officer
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Kathie A. DeRuiter EVP & Senior Operations Officer 15
Slide 16: A History of Profitable Growth
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® A History of Profitable Growth Extensive and Diligent M&A Expertise Supplements Organic Growth $0.7 $0.8 $0.9 $1.1 $1.2 $1.3 $1.3 $1.4 $1.4 $1.5 $1.8 $1.8 $2.1 $2.7 $3.1 $4.0 $4.2 $5.2 $5.9 $7.5 $5 $7 $7 $7 $7 $8 $9 $9 $10 $13 $20 $
Slide 17: Digital Transformation
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 17 Digital Transformation History of Optimizing and Diversifying Customer Channels 2021 PROGRESS & IMPACT FUTURE INITIATIVES & OUTLOOK Multi-channel delivery to meet customers needs • Serving customers through convenient digital and
Slide 18: Q&A Session
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Q&A Session 18
Slide 19: Dennis J. Kuhn, EVP & Chief Commercial Banking Officer
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Dennis J. Kuhn EVP & Chief Commercial Banking Officer 19
Slide 20: Accelerating Commercial Loan Growth
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Northern Indiana, 21% Central Indiana, 29% Other, 3% Michigan, 47% Geography at 9/30/21 Non-Owner Occupied Real Estate, 47.0% C&I, 26.3% Owner Occ. Real Estate, 22.1% Agriculture, 2.7% Develop./Land, 1.5% Res. Spec. Homes, 0.5% Cate
Slide 21: Lynn Kerber, EVP & Senior Commercial Credit Officer
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Lynn Kerber EVP & Senior Commercial Credit Officer 21
Slide 22: Diversified & Granular Loan Portfolio
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Commercial Loans by Market Commercial, $2,173M, 59% Residential Mortgage, $604M, 17% Consumer, $713M, 19% Mortgage Warehouse, $170M, 5% Held For Sale, $5M, 0% 22 Gross Loans at 9/30/21 $3.7B Diversified & Granular Loan Portfolio Com
Slide 23: Commercial Asset Quality Strength
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® $488 $23 $158 $40 0.02% 0.01% 3Q20 4Q20 1Q21 2Q21 3Q21 Commercial Net Charge Offs Comml NCOs Comml NCOs/Average Comml Loans $ 0 0 0 s $16,169 $14,348 $12,802 $10,345 $16,121 0.70% 0.65% 0.59% 0.49% 0.74% 3Q20 4Q20 1Q21 2Q21 3Q21 Non
Slide 24: James D. Neff, President
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® James D. Neff President 24
Slide 25: Residential Mortgage Portfolio
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 25 Jumbo, 42.5% Rental, 1.1% Conforming, 52.6% Construction, 3.8% Total Outstanding at 9/30/21 $603M • 73% of production sold YTD • Predominantly in-market lender • Portfolio mortgages • Underwriting to Fannie Mae guidelines • Full
Slide 26: Noe Najera, SVP, Retail Lending
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Noe Najera SVP, Retail Lending 26
Slide 27: Consumer Loan Portfolio Positioned for Growth
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 27 • 99.5% secured consumer loans • 95.6% prime, with credit scores ≥700 for 85.6% of portfolio and <640 for 4.4% • Rescored annually • HELOC combined LTV limited to 89.9% • Low delinquency at 0.38% and YTD net charge-offs at 4 basi
Slide 28: Indirect Lending Program Five Credit Tiers
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Indirect Lending Program Five Credit Tiers September 2021 Indirect Approved 421 79.9% 86 16.3% 8 1.5% 8 1.5% 4 0.8% September 2021 Indirect Cashed Tier I: 730+ Tier II: 729-700 Tier III: 699-670 Tier IV: 669-640 Tier V: 639-below 3.
Slide 29: Q&A Session
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® Q&A Session 29
Slide 30: Why Horizon? A High-Performing Operator in Growth Markets
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 30 Disciplined operating culture Compelling value supported by commitment to dividend Well-established long-term growth goals Very attractive Midwest markets Deliberate mix of businesses delivers very strong operational performance
Slide 31: Virtual Investor Day, December 2, 2021
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® A NASDAQ Traded Company - Symbol HBNC VIRTUAL INVESTOR DAY | DECEMBER 2, 2021
Slide 32: Appendix
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 32 Appendix
Slide 33: Historical Financials
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 33 (1) As calculated by S&P Global Market Intelligence. Historical Financials ($M except per share data) 2015 2016 2017 2018 2019 2020 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 Balance Sheet: Total Assets $2,652 $3,141 $3,964 $4,247
Slide 34: Use of Non-GAAP Financial Measures; Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 34 Slide 12 • Average cost of average total deposits includes average balances of non-interest bearing deposits. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP counterparts.) Slides 35-44 U
Slide 35: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 35 Footnote Index September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Pre-tax income 27,127$ 25,943$ 23,872$ 23,860$ 24,638$ Provision for credit losses 1,112 (1,492) 367 3,042 2,052 Pre-tax, pre-pro
Slide 36: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 36 Footnote Index September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Net income as reported 23,071$ 22,173$ 20,422$ 21,893$ 20,312$ Acquisition expenses 799 242 - - - Tax effect (166) (51) - - - Net
Slide 37: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 37 Footnote Index September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Diluted EPS as reported 0.52$ 0.50$ 0.46$ 0.50$ 0.46$ Acquisition expenses 0.02 0.01 - - - Tax effect - - - - - Diluted EPS exclu
Slide 38: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 38 Footnote Index September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Average assets 6,507,673$ 6,142,507$ 5,936,149$ 5,864,086$ 5,768,691$ Return on average assets ("ROAA") as reported 1.41% 1.45% 1
Slide 39: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 39 Footnote Index September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2021 2021 2021 2020 2020 2020 2020 Net interest income as reported 46,544$ 42,632$ 42,538$ 43,622$ 43,397$ 42,996$ 40,925$ Average inte
Slide 40: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 40 Footnote Index December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2019 2019 2019 2019 2018 2018 2018 2018 Net interest income as reported 41,519$ 43,463$ 41,529$ 34,280$ 33,836$ 33,772$ 33
Slide 41: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 41 Footnote Index December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2017 2017 2017 2017 2016 2016 2016 2016 Net interest income as reported 31,455$ 27,879$ 27,198$ 25,568$ 20,939$ 24,410$ 20
Slide 42: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 42 Footnote Index September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2021 2021 2021 2020 2020 2020 2020 Total interest expense as reported 4,324$ 4,788$ 5,051$ 9,612$ 6,749$ 7,348$ 10,729$ Average interes
Slide 43: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 43 Footnote Index December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2019 2019 2019 2019 2018 2018 2018 2018 Total interest expense as reported 11,879$ 12,248$ 12,321$ 11,093$ 9,894$ 8,499$ 7
Slide 44: Footnote Index
E X C E P T I O N A L S E R V I C E • S E N S I B L E A D V I C E ® 44 Footnote Index December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2017 2017 2017 2017 2016 2016 2016 2016 Total interest expense as reported 5,319$ 4,191$ 3,607$ 3,266$ 8,450$ 4,552$ 3,781