Horizon Bancorp, Inc. · NASDAQ:HBNC
Horizon Bancorp — Q1 2020 Earnings Presentation
43 slides from Horizon Bancorp's earnings presentation, Apr 29, 2020
Slide 1: Responding to Unprecedented Public Health and Economic Challenges
A NASDAQ Traded Company - Symbol HBNC Responding to Unprecedented Public Health and Economic Challenges April 29, 2020
Slide 2: Important Information: Forward-Looking Statements
HORIZON: Important Information —_— BANK BANK 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 affiates (collectively, “Horizon”). For these sta
Slide 3: Horizon's Response to these Unprecedented Times
Horizon’s Response to these Unprecedented Times 3
Slide 4: COVID-19 Response
COVID-19 Response Employees Consumers Businesses Communities Safety and well being of All offices remain open by All offices remain open by Increased volunteerism in support employees & families is our first appointment only appointment only of local not-for-profit entities priority Installed nine a
Slide 5: Indiana and Michigan… The Right Side of Chicago
Chicago: High Taxes High Cost of Living Low Credit Rating High Population Density Indiana and Michigan… The Right Side of Chicago 5
Slide 6: Indiana & Michigan Locations
Indiana & Michigan Locations LOCATIONS – 75 COUNTIES – 31 BRANCHES LOAN PRODUCTION OFFICE TOTAL LOANS – MARCH 31, 2020 INDIANA – $2.1 BILLION MICHIGAN – $1.3 BILLION Loan totals do not include Mortgage Warehouse balances 6
Slide 7: Horizon Positioned Well Going Into this National Health & Economic Emergency
Horizon Positioned Well Going Into this National Health & Economic Emergency 7
Slide 8: Seasoned Leadership
HORIZON Seasoned Leadership —_— DRANK BANK * Seasoned leadership that has managed through multiple recessions «+ Executive management team has collectively more than 200 total years’ banking and related field experience «+ Horizon’s middle management team on average has more than 25 years of banking
Slide 9: Multi-Delivery Channels Meeting Customers Needs
Multi-Delivery Channels Meeting Customers Needs 9
Slide 10: Strength of Non-Branch Channels
Strength of Non-Branch Channels • Online, mobile, ITM and telephone customer service/banking more important than ever – 68% of deposit account holders are active users of mobile/online banking 10
Slide 11: Multiple Revenue Streams Diversifies Risk
Multiple Revenue Streams Diversifies Risk Retail Banking Business Banking Mortgage Banking Wealth Management Complementary Revenue Streams that are Counter-Cyclical to Varying Economic Cycles 11
Slide 12: Financial Results, Capital & Liquidity
Financial Results, Capital & Liquidity By Mark E. Secor EVP & Chief Financial Officer 12
Slide 13: Strong Financial Performance
Strong Financial Performance • Footnote Index included in Appendix 13
Slide 14: Stable Net Interest Margin
Stable Net Interest Margin • Footnote Index included in Appendix 14
Slide 15: Deposit Repricing Opportunities
Deposit Repricing Opportunities • Footnote Index included in Appendix 15
Slide 16: Well-Capitalized Based on Regulatory Requirements
Well-Capitalized Based on Regulatory Requirements 16
Slide 17: Strong Liquidity Position
Strong Liquidity Position 17
Slide 18: Well Prepared to Implement CECL
Well Prepared to Implement CECL 18
Slide 19: Asset Quality & Mix
Asset Quality & Mix By James D. Neff, President & Dennis J. Kuhn, EVP Chief Commercial Banking Officer 19
Slide 20: Quality Consumer Loan Portfolio
Quality Consumer Loan Portfolio 20
Slide 21: Prime Mortgage Loan Portfolio
Prime Mortgage Loan Portfolio 21
Slide 22: Diversified Commercial Lending
Diversified Commercial Lending • Focus on in-market sponsors in resilient markets Category at March 31, 2020 • Prudent underwriting standards • Predominantly a secured lender with recourse to owners • Experienced commercial lenders (20+ years on average) Geography at March 31, 2020 22
Slide 23: Commercial Real Estate Mix
Commercial Real Estate Mix Non-Owner Occupied CRE as PercentDe ofce mber 31,O wner2017 Occupied CRE as Percent of Total Total Commercial Loans 54% Commercial Loans 21% 23
Slide 24: Commercial & Industrial Mix
Commercial & Industrial Mix C&I Loans as Percent of Total Commercial Loans 25% 24
Slide 25: Hotel, Restaurant and Retail
Hotel, Restaurant and Retail 25
Slide 26: Payroll Protection Program Round One
Payroll Protection Program Round One 75% of PPP loans in amounts ≤ $150,000 26
Slide 27: Stakeholders Interests are Well Balanced
Stakeholders Interests are Well Balanced Employee Shareholder Customer Community 27
Slide 28: Appendix
HORIZON: _HORIZOR BANK Appendix Bex Gib PON Age S'4E R VOINGE te SE NEST Bir JE A DY I € E *28
Slide 29: Locations – Counties – Branches
LOCATIONS – 75 COUNTIES – 31 29
Slide 30: Locations – Counties – Branches
LOCATIONS – 75 COUNTIES – 31 30
Slide 31: Mortgage Contribution
HORIZON cai Mortgage Contribution Mortgage Volume Servicing, net Gain on Sale $11,675 Fa $459,840 > $445,824 ” $7,906 $408,972 $361,463 fag 9205:865 $1,908 $1,583 01 2017 2018 2019 1Q20 2 $000:
Slide 32: Strong Asset Quality Entering 2020
Strong Asset Quality Entering 2020 CECL CECL • Footnote Index included in Appendix 32
Slide 33: Modifications
HORIZON Modifications _HORIZON BANK ¢ Entered the current crisis in very strong credit position * Actively stress testing the entire portfolio ** Rescore the consumer portfolio annually ** Actively managing and monitoring commercial credits by industry and individual borrower . . % of Total No. of B
Slide 34: Footnote Index
_HORIZON: Footnote Index BANK Slide 13 — Core net income and core diluted EPS exclude one-time merger expenses, (gain) /loss on sale of secusities and death benefit on bank owned life insurance, net of tax. (See further in the Appendix for a reconciliation of these non-GAAP amounts to their GAAP cou
Slide 35: Non-GAAP Reconciliation of Net Income
HORIZON: _HORIZON BANK Footnote Index Net income as reported Merger expenses Tax effect Net income excluding merger expenses (Gain)/loss on sale of investment securities Tax effect Net income excluding (gain)/loss on sale of investment securities Death benefit on bank owned life insurance ("BOLT") N
Slide 36: Non-GAAP Reconciliation of Diluted Earnings per Share
HORIZON: _HORIZON Footnote Index BANK Non-GAAP Reconciliation of Diluted Earnings per Share (Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, 2020 2019 2019 2019 2019 Diluted earnings per share ("EPS") as reported $ 0.26 $ O41 $ 0.46 0.37 $ 028 Merger expenses -
Slide 37: Non-GAAP Reconciliation of Pre-Tax, Pre-Provision Income
HORIZON: _HORIZON BANK Footnote Index Non-GAAP Reconciliation of Pre-Tax, Pre-Provision Income (Dollars in Thousands, Unaudited) Pre-tax income Provision for credit losses Pre-tax, pre-provision income Pre-tax, pre-provision income Mexger expenses (Gain)/loss on sale of investment securities Death b
Slide 38: Non-GAAP Reconciliation of Net Interest Margin
HORIZON: _HORIZON BANK Footnote Index Non-GAAP Reconciliation of Net Interest Margin (@ollars in Thousands, Unaudited) Three Months Ended March 31, December31, September 30, June 30, March 31, 2020 2019 2019 2019 2019 Net interest income as reported $ 40925 § 41,519 $ 43463 § 41,529 s | 34,280 Avera
Slide 39: Non-GAAP Reconciliation of Non-interest Income
_HORIZON' Footnote Index BANK Non-GAAP Reconciliation of Non-interest Income @ollars in Thousands, Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, 2020 2019 2019 2019 2019 Non-interest income as reported $ 12,063 $ 11,934 $ 11514 3 10,898 $ 8712 (Gain)/loss on s
Slide 40: Non-GAAP Reconciliation of Non-interest Expense
_HORIZON' Footnote Index BANK Non-GAAP Reconciliation of Non-interest Expense @ollars in Thousands, Unaudited) Three Months Ended Match 31, December 31, September 30, June 30, March 31, 2020 2019 2019 2019 2019 Non-interest expense as reported $ 31,149 $ 30,650 $ 30,060 3 31,584 $ 29,738 Merger expe
Slide 41: Non-GAAP Reconciliation of Cost of Interest Bearing Liabilities
_HORIZON' Footnote Index Non-GAAP Reconciliation of Cost of Interest Bearing Liabilities (Dollars in Thousands, Unaudited) Three Months Twelve Months Ended Ended March 31, December31, December31, December 31, December 31, 2020 2019 2018 2017 2016 Total interest expense as reported $ 10,729 $ 47,541
Slide 42: Non-GAAP Reconciliation of Cost of Deposits
_HORIZON' Footnote Index BANK Non-GAAP Reconciliation of Cost of Deposits (Dollars in Thousands, Unaudited) March 31, March 31, December 31, 2020 2020 2019 Total deposit interest expense as reported $ 2248 «§$ 7.16 = =6§$ 2,938 Average interest bearing deposits 3302328 3,225,323 3395496 Annualized t
Slide 43: Non-GAAP Reconciliation of Allowance for Credit Losses
_HORIZON' Footnote Index BANK Non-GAAP Reconciliation of Allowance for Credit Losses @ollars in Thousands, Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, 2019 Allowance for Credit Losses ("ACL") as reported $ 17,821 Total Loans $ 3,713,544 $ 3640929 § 3,667,685