EX-99.1 2 hbnc-20230630earningsrelea.htm EX-99.1 Document

horizonbancorpinc876_sm-10.jpg
Contact:Mark E. Secor
Chief Financial Officer
Phone:
(219) 873–2611
Fax:
(219) 874–9280
Date:July 26, 2023

FOR IMMEDIATE RELEASE

Horizon Bancorp, Inc. Reports Second Quarter 2023 Results

Michigan City, Indiana, July 26, 2023 (GLOBE NEWSWIRE) – (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three and six months ended June 30, 2023.

“Horizon's favorable second quarter earnings reflect the strength of our diversified business model across our retail, commercial and wealth platforms,” President and Chief Executive Officer Thomas M. Prame said. “Our seasoned and granular deposit base performed well, maintaining a measured approach to funding costs while navigating a highly competitive market and shifting client demand to interest bearing products. These efforts paired well with our strategy of focusing loan production on higher yielding categories, resulting in improved yields and spread income. In the second quarter, we also posted strong non–interest income growth, with the active engagement of our clients in card spending and mortgage banking services. The positive results of our core revenue drivers were complimented by our consistent credit quality strength and our long standing expense management discipline.”

Second Quarter 2023 Highlights

•Increased net income to $18.8 million or $0.43 per diluted share, from $18.2 million or $0.42 in the first quarter of 2023.

•Net interest income of $46.2 million increased from $45.2 million in the linked quarter. Second quarter 2023 net interest income benefited from average total loan and earning asset growth over the linked quarter, as well as a swap termination fee of $1.5 million that contributed approximately $0.02 to diluted earnings per share.

•Non–interest income expanded to $11.0 million from $9.6 million in the linked quarter.

•Continued to manage non–interest expense as a percentage of average assets to less than 1.90% on an annualized basis, totaling $36.3 million, or 1.86%, compared to $34.5 million, or 1.79% in the linked quarter.

•Deposits remained resilient during the quarter, totaling $5.71 billion at period end, compared to $5.70 billion on March 31, 2023.

•Loans grew to $4.27 billion at period end, increasing by 2.2% annualized during the quarter and 5.3% annualized since December 31, 2022.

•Maintained consistent and sound asset quality with 30 to 89 days delinquent loans representing 0.26% of total loans and non–performing loans representing 0.52% of total loans at period end, as well as net charge–offs representing 0.01% of average loans during the quarter.

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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
•Tangible common equity continued to improve to 6.91% of tangible assets on June 30, 2023, an improvement of 4 basis points during the quarter and 35 basis points since December 31, 2022.

•The Bank’s capital position was strong with leverage and risk based capital ratios of 8.72% and 13.03%, respectively.

•Horizon's annualized dividend yield was robust at 6.15% as of June 30, 2023, with cash maintained at the holding company level representing approximately eight quarters of dividend payments and fixed costs.

Summary
For the Three Months Ended
June 30,March 31,June 30,
Net Interest Income and Net Interest Margin202320232022
Net interest income$46,160 $45,237 $52,044 
Net interest margin2.69 %2.67 %3.13 %
Adjusted net interest margin2.57 %2.65 %3.06 %
For the Three Months Ended
June 30,March 31,June 30,
Asset Yields and Funding Costs202320232022
Interest earning assets4.39 %4.17 %3.39 %
Interest bearing liabilities2.10 %1.85 %0.34 %
For the Three Months Ended
Non-interest Income and June 30,March 31,June 30,
Mortgage Banking Income202320232022
Total non–interest income
$10,997 $9,620 $12,434 
Gain on sale of mortgage loans1,005 785 2,501 
Mortgage servicing income net of impairment640 713 319 
For the Three Months Ended
June 30,March 31,June 30,
Non-interest Expense202320232022
Total non–interest expense
$36,262 $34,524 $35,404 
Annualized non–interest expense to average assets
1.86 %1.79 %1.90 %
For the Three Months Ended
June 30,March 31,June 30,
Credit Quality202320232022
Allowance for credit losses to total loans1.17 %1.17 %1.32 %
Non–performing loans to total loans
0.52 %0.47 %0.51 %
Percent of net charge–offs to average loans outstanding for the period
0.01 %0.01 %0.01 %
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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
June 30,Net ReserveDecember 31,
Allowance for Credit Losses20232Q231Q232022
Commercial$30,354 $(802)$(1,289)$32,445 
Retail Mortgage3,648 (799)(1,130)5,577 
Warehouse893 95 (222)1,020 
Consumer15,081 1,956 1,703 11,422 
Allowance for Credit Losses (“ACL”)$49,976 $450 $(938)$50,464 
ACL / Total Loans1.17 %1.21 %
Acquired Loan Discount (“ALD”)$5,519 $(639)$(121)$6,279 

“Horizon's unwavering focus on lending to well qualified commercial and consumer borrowers in our dynamic local markets was reflected in our strong asset quality metrics,” Mr. Prame said. “Our consistent and conservative underwriting practices are expected to outperform relative to the industry, and we believe we are well positioned to navigate potential shifts in the economic outlook.”

Income Statement Highlights

Net income for the second quarter of 2023 was $18.8 million, or $0.43 diluted earnings per share, compared to $18.2 million, or $0.42, for the linked quarter and $24.9 million, or $0.57, for the prior year period. The change in net income for the second quarter of 2023 when compared to the linked quarter, reflects growth in non–interest income of $1.4 million, improved net interest income of $923,000 and lower income tax expense of $411,000, offset by an increase in non–interest expense of $1.7 million and a modest increase in credit loss expense of $438,000.

Net interest income was $46.2 million in the second quarter of 2023, compared to $45.2 million in the linked quarter, benefiting from growth in average loans receivable and average interest earning assets, as well as a swap termination fee of $1.5 million.

Total non–interest income was $1.4 million higher in the second quarter of 2023 when compared to the first quarter of 2023, primarily due to a $717,000 increase in interchange fees, a $520,000 increase in gain on sale of investment securities and a $220,000 increase in gain on sale of mortgage loans, offset by a decrease of $73,000 in mortgage servicing income net of impairment and a decrease of $28,000 in fiduciary activities.

Total non–interest expense was $1.7 million higher in the second quarter of 2023 when compared to the first quarter of 2023, primarily due to a $1.4 million increase in salaries and employee benefits resulting from merit increases, commission expense and higher variable health care costs, a $300,000 increase in FDIC insurance expense and an increase in loan expenses, offset by a decrease in net occupancy expense and outside services expense from the linked quarter.

Horizon's effective tax rate was 7.2% for the second quarter of 2023, with income tax expense of $1.5 million decreasing $411,000 when compared to the first quarter of 2023.

Net Interest Margin

Horizon’s net interest margin was 2.69% for the second quarter of 2023 compared to 2.67% for the first quarter of 2023. The increase in net interest margin reflects an increase in the yield on interest earning assets of 22 basis points, offset by an increase in the cost of interest bearing liabilities of 25 basis points.

Net interest margin, excluding the aforementioned swap termination fee and acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.57% for the second quarter of 2023, compared to 2.65% for the linked quarter. (See the “Non–GAAP Reconciliation of Net Interest Margin” table below).


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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Lending Activity

Total loan balances and loans held for sale increased to $4.27 billion on June 30, 2023 compared to $4.25 billion on March 31, 2023. During the three months ended June 30, 2023, mortgage warehouse loans increased $29.4 million, residential mortgage loans increased $12.3 million, loans held for sale increased $4.5 million and commercial loans increased $820,000, offset by measured payoffs and pay downs of lower yielding indirect auto loans that were the primary driver of a $23.2 million decrease in consumer loans.

The lending activities for the quarter were well balanced, with mortgage activities increasing with client demand and consumer lending displaying the strategic shift of the organization to focus on higher yielding assets. Commercial lending activity for the quarter was strong but impacted by accelerated large pay downs during the last week of the quarter.

Loan Growth by Type
(Dollars in Thousands, Unaudited)
June 30,March 31,QTDQTDAnnualized
20232023$ Change% Change% Change
Commercial$2,506,279 $2,505,459 $820 0.0%0.1%
Residential mortgage674,751 662,459 12,292 1.9%7.4%
Consumer1,002,885 1,026,076 (23,191)(2.3)%(9.1)%
Subtotal4,183,915 4,193,994 (10,079)(0.2)%(1.0)%
Loans held for sale6,933 2,409 4,524 187.8%753.2%
Mortgage warehouse82,345 52,957 29,388 55.5%222.6%
Total loans and loans held for sale$4,273,193 $4,249,360 $23,833 0.6%2.2%
Deposit Activity

Total deposit balances of $5.71 billion on June 30, 2023 increased 0.13% compared to $5.70 billion on March 31, 2023.

The deposit mix at the end of the second quarter of 2023 represented the demand for clients to earn more interest on their excess funds and consumers spending excess liquidity. Horizon successfully held deposits in the quarter while continuing to prudently manage funding costs as the Bank's long–tenured and granular core deposit relationships remained with the Bank, reflecting the stability of the Bank's in–market deposit portfolio.

Deposit Growth by Type
(Dollars in Thousands, Unaudited)
June 30,March 31,QTDQTDAnnualized
20232023$ Change% Change% Change
Non–interest bearing$1,170,055 $1,231,845 $(61,790)(5.0)%(20.3)%
Interest bearing3,289,474 3,402,525 (113,051)(3.3)%(13.5)%
Time deposits1,249,803 1,067,575 182,228 17.1%69.2%
Total deposits$5,709,332 $5,701,945 $7,387 0.1%0.5%



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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results

Capital

The capital resources of the Company and the Bank continued to exceed regulatory capital ratios for “well capitalized” banks at June 30, 2023. Stockholders’ equity totaled $709.2 million at June 30, 2023 and the ratio of average stockholders’ equity to average assets was 8.97% for the six months ended June 30, 2023.

Tangible book value, which excludes intangible assets from total equity, per common share (“TBVPS”) grew to $12.34, increasing $0.17 during the second quarter of 2023 and $0.75 during the first six months of the year.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of June 30, 2023.
ActualRequired for Capital Adequacy PurposesRequired for Capital Adequacy Purposes with Capital BufferWell Capitalized
Under Prompt Corrective Action Provisions
$Ratio$Ratio$Ratio$Ratio
Total capital (to risk–weighted assets)
Consolidated$806,546 14.35 %$449,624 8.00 %$590,131 10.50 %N/AN/A
Bank732,236 13.03 %449,727 8.00 %590,267 10.50 %$562,159 10.00 %
Tier 1 capital (to risk–weighted assets)
Consolidated755,581 13.44 %337,218 6.00 %477,725 8.50 %N/AN/A
Bank681,271 12.12 %337,295 6.00 %477,835 8.50 %449,727 8.00 %
Common equity tier 1 capital (to risk–weighted assets)
Consolidated635,090 11.30 %252,913 4.50 %393,421 7.00 %N/AN/A
Bank681,271 12.12 %252,971 4.50 %393,511 7.00 %365,403 6.50 %
Tier 1 capital (to average assets)
Consolidated755,581 9.72 %311,026 4.00 %311,026 4.00 %N/AN/A
Bank681,271 8.72 %312,663 4.00 %312,663 4.00 %390,829 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 June 30, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.71 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $650.7 million of unpledged investment securities on June 30, 2023.





5
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
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; economic conditions and their impact on Horizon and its customers, including local and global economic recovery from the pandemic; 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.


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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Financial Highlights
(Dollars in Thousands, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Balance sheet:
Total assets$7,963,353 $7,897,995 $7,872,518 $7,718,695 $7,640,936 
Interest earning deposits & federal funds sold119,637 30,221 12,233 7,302 5,646 
Interest earning time deposits2,452 3,098 2,812 2,814 3,799 
Investment securities2,889,309 2,958,978 3,020,306 3,017,191 3,093,792 
Commercial loans2,506,279 2,505,459 2,467,422 2,403,743 2,363,991 
Mortgage warehouse loans82,345 52,957 69,529 73,690 116,488 
Residential mortgage loans674,751 662,459 653,292 634,901 608,582 
Consumer loans1,002,885 1,026,076 967,755 919,198 866,819 
Total loans4,266,260 4,246,951 4,157,998 4,031,532 3,955,880 
Earning assets7,319,100 7,273,921 7,225,833 7,087,368 7,088,737 
Non–interest bearing deposit accounts1,170,055 1,231,845 1,277,768 1,315,155 1,328,213 
Interest bearing transaction accounts3,289,474 3,402,525 3,582,891 3,736,798 3,760,890 
Time deposits1,249,803 1,067,575 997,115 778,885 756,482 
Total deposits5,709,332 5,701,945 5,857,774 5,830,838 5,845,585 
Borrowings1,352,039 1,311,927 1,142,949 1,048,091 959,222 
Subordinated notes58,970 58,933 58,896 58,860 58,823 
Junior subordinated debentures issued to capital trusts57,143 57,087 57,027 56,966 56,907 
Total stockholders’ equity709,243 702,559 677,375 644,993 657,865 

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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
Three Months Ended
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Income statement:
Net interest income$46,160 $45,237 $48,782 $53,395 $53,008 
Credit loss expense (recovery)680 242 (69)(601)240 
Non–interest income10,997 9,620 10,674 10,188 12,434 
Non–interest expense36,262 34,524 35,711 38,350 36,368 
Income tax expense1,452 1,863 2,649 2,013 3,975 
Net income$18,763 $18,228 $21,165 $23,821 $24,859 
Per share data:
Basic earnings per share$0.43 $0.42 $0.49 $0.55 $0.57 
Diluted earnings per share0.43 0.42 0.48 0.55 0.57 
Cash dividends declared per common share0.16 0.16 0.16 0.16 0.16 
Book value per common share16.25 16.11 15.55 14.80 15.10 
Tangible book value per common share12.34 12.17 11.59 10.82 11.11 
Market value – high11.10 16.32 20.00 20.59 19.21 
Market value – low$7.75 $10.31 $14.51 $16.74 $16.72 
Weighted average shares outstanding – Basis43,639,987 43,583,554 43,574,151 43,573,370 43,572,796 
Weighted average shares outstanding – Diluted43,742,588 43,744,721 43,667,953 43,703,793 43,684,691 
Key ratios:
Return on average assets0.96 %0.94 %1.09 %1.24 %1.33 %
Return on average common stockholders’ equity10.59 10.66 12.72 13.89 14.72 
Net interest margin2.69 2.67 2.85 3.04 3.13 
Allowance for credit losses to total loans1.17 1.17 1.21 1.27 1.32 
Average equity to average assets9.07 8.86 8.55 8.91 9.06 
Efficiency ratio63.44 62.93 60.06 59.33 54.91 
Annualized non–interest expense to average assets1.86 1.79 1.84 1.91 1.90 
Bank only capital ratios:
Tier 1 capital to average assets8.72 8.86 8.89 8.84 8.85 
Tier 1 capital to risk weighted assets12.12 12.65 12.72 12.74 12.87 
Total capital to risk weighted assets13.03 13.56 13.59 13.65 13.83 




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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results




Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
Six Months Ended
June 30,June 30,
20232022
Income statement:
Net interest income$91,397 $98,875 
Credit loss expense (recovery)922 (1,146)
Non–interest income20,617 26,589 
Non–interest expense70,786 70,674 
Income tax expense3,315 7,514 
Net income$36,991 $48,422 
Per share data:
Basic earnings per share$0.85 $1.11 
Diluted earnings per share0.85 1.11 
Cash dividends declared per common share0.32 0.31 
Book value per common share16.25 15.10 
Tangible book value per common share12.34 11.11 
Market value – high16.32 23.45 
Market value – low$7.75 $16.72 
Weighted average shares outstanding – Basis43,611,926 43,563,804 
Weighted average shares outstanding – Diluted43,757,321 43,711,822 
Key ratios:
Return on average assets0.95 %1.32 %
Return on average common stockholders’ equity10.62 14.01 
Net interest margin2.68 3.02 
Allowance for credit losses to total loans1.17 1.32 
Average equity to average assets8.97 9.43 
Efficiency ratio63.19 56.33 
Annualized non–interest expense to average assets1.82 1.93 
Bank only capital ratios:
Tier 1 capital to average assets8.72 8.85 
Tier 1 capital to risk weighted assets12.12 12.87 
Total capital to risk weighted assets13.03 13.83 
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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Financial Highlights
(Dollars in Thousands Except Ratios, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Loan data:
Substandard loans$41,484 $49,804 $56,194 $57,932 $59,377 
30 to 89 days delinquent10,913 13,971 10,709 6,970 6,739 
Non–performing loans:
90 days and greater delinquent – accruing interest1,313 137 92 193 210 
Trouble debt restructures – accruing interest— — 2,570 2,529 2,535 
Trouble debt restructures – non–accrual— — 1,548 1,665 1,345 
Non–accrual loans20,796 19,660 17,630 14,771 16,116 
Total non–performing loans$22,109 $19,797 $21,840 $19,158 $20,206 
Non–performing loans to total loans0.52 %0.47 %0.52 %0.47 %0.51 %

Allocation of the Allowance for Credit Losses
(Dollars in Thousands, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Commercial $30,354 $31,156 $32,445 $33,806 $34,802 
Residential mortgage3,648 4,447 5,577 5,137 4,422 
Mortgage warehouse893 798 1,020 1,024 1,067 
Consumer15,081 13,125 11,422 11,402 12,059 
Total$49,976 $49,526 $50,464 $51,369 $52,350 
Net Charge–offs (Recoveries)
(Dollars in Thousands Except Ratios, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Commercial $101 $104 $(94)$51 $(75)
Residential mortgage(10)(6)(8)(75)40 
Mortgage warehouse— — — — — 
Consumer183 281 387 162 319 
Total$274 $379 $285 $138 $284 
Percent of net charge–offs (recoveries) to average loans outstanding for the period0.01 %0.01 %0.01 %0.00 %0.01 %
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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Total Non–performing Loans
(Dollars in Thousands Except Ratios, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Commercial $8,275 $8,523 $9,330 $7,199 $8,008 
Residential mortgage8,168 6,926 8,123 8,047 8,469 
Mortgage warehouse— — — — — 
Consumer5,666 4,348 4,387 3,912 3,729 
Total$22,109 $19,797 $21,840 $19,158 $20,206 
Non–performing loans to total loans0.52 %0.47 %0.52 %0.47 %0.51 %
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Commercial $1,567 $1,567 $1,881 $3,206 $1,414 
Residential mortgage107 203 107 22 — 
Mortgage warehouse— — — — — 
Consumer7 78 152 14 58 
Total$1,681 $1,848 $2,140 $3,242 $1,472 
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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Average Balance Sheets
(Dollars in Thousands, Unaudited)
Three Months EndedThree Months Ended
June 30, 2023June 30, 2022
Average
Balance		InterestAverage
Rate		Average
Balance		InterestAverage
Rate
Assets
Interest earning assets
Federal funds sold$30,926 $376 4.88 %$7,083 $17 0.96 %
Interest earning deposits9,002 99 4.41 %15,661 26 0.67 %
Investment securities – taxable1,706,761 8,740 2.05 %1,770,816 8,673 1.96 %
Investment securities – non–taxable (1)
1,240,931 7,059 2.89 %1,374,032 7,307 2.70 %
Loans receivable (2) (3)
4,225,020 60,594 5.78 %3,776,041 40,585 4.33 %
Total interest earning assets7,212,640 76,868 4.39 %6,943,633 56,608 3.39 %
Non–interest earning assets
Cash and due from banks102,935 98,040 
Allowance for credit losses(49,481)(52,525)
Other assets573,932 487,090 
Total average assets$7,840,026 $7,476,238 
Liabilities and Stockholders’ Equity
Interest bearing liabilities
Interest bearing deposits$4,445,074 $18,958 1.71 %$4,540,959 $1,677 0.15 %
Borrowings1,176,702 9,035 3.08 %613,282 1,409 0.92 %
Repurchase agreements140,606 683 1.95 %141,470 41 0.12 %
Subordinated notes58,946 881 5.99 %58,800 881 6.01 %
Junior subordinated debentures issued to capital trusts57,110 1,151 8.08 %56,870 556 3.92 %
Total interest bearing liabilities5,878,438 30,708 2.10 %5,411,381 4,564 0.34 %
Non–interest bearing liabilities
Demand deposits1,186,520 1,335,779 
Accrued interest payable and other liabilities64,115 51,779 
Stockholders’ equity710,953 677,299 
Total average liabilities and stockholders’ equity$7,840,026 $7,476,238 
Net interest income / spread$46,160 2.29 %$52,044 3.05 %
Net interest income as a percent of average interest earning assets (1)
2.69 %3.13 %
(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.

12
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Average Balance Sheets
(Dollars in Thousands, Unaudited)
Six Months EndedSix Months Ended
June 30, 2023June 30, 2022
Average
Balance		InterestAverage
Rate		Average
Balance		InterestAverage
Rate
Assets
Interest earning assets
Federal funds sold$19,411 $459 4.77 %$121,707 $108 0.18 %
Interest earning deposits8,891 169 3.83 %18,154 50 0.56 %
Investment securities – taxable1,717,008 17,465 2.05 %1,709,014 16,064 1.90 %
Investment securities – non–taxable (1)
1,277,328 14,615 2.92 %1,326,819 14,004 2.69 %
Loans receivable (2) (3)
4,184,347 115,958 5.61 %3,703,857 77,124 4.22 %
Total interest earning assets7,206,985 148,666 4.28 %6,879,551 107,350 3.27 %
Non–interest earning assets
Cash and due from banks103,247 101,340 
Allowance for credit losses(49,907)(53,411)
Other assets574,707 463,868 
Total average assets$7,835,032 $7,391,348 
Liabilities and Stockholders’ Equity
Interest bearing liabilities
Interest bearing deposits$4,472,519 $33,777 1.52 %$4,509,962 $3,173 0.14 %
Borrowings1,115,350 18,303 3.31 %558,867 2,453 0.89 %
Repurchase agreements139,683 1,186 1.71 %140,610 77 0.11 %
Subordinated notes58,928 1,761 6.03 %58,782 1,761 6.04 %
Junior subordinated debentures issued to capital trusts57,079 2,242 7.92 %56,839 1,011 3.59 %
Total interest bearing liabilities5,843,559 57,269 1.98 %5,325,060 8,475 0.32 %
Non–interest bearing liabilities
Demand deposits1,220,917 1,329,316 
Accrued interest payable and other liabilities67,893 39,968 
Stockholders’ equity702,663 697,004 
Total average liabilities and stockholders’ equity$7,835,032 $7,391,348 
Net interest income / spread$91,397 2.30 %$98,875 2.95 %
Net interest income as a percent of average interest earning assets (1)
2.68 %3.02 %
(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.

13
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
June 30,
2023		December 31,
2022
(Unaudited)
Assets
Cash and due from banks$228,986 $123,505 
Interest earning time deposits2,452 2,812 
Investment securities, available for sale905,813 997,558 
Investment securities, held to maturity (fair value $1,668,229 and $1,681,309)
1,983,496 2,022,748 
Loans held for sale6,933 5,807 
Loans, net of allowance for credit losses of $49,976 and $50,464
4,216,284 4,107,534 
Premises and equipment, net95,053 92,677 
Federal Home Loan Bank stock34,509 26,677 
Goodwill155,211 155,211 
Other intangible assets15,433 17,239 
Interest receivable37,536 35,294 
Cash value of life insurance148,171 146,175 
Other assets133,476 139,281 
Total assets$7,963,353 $7,872,518 
Liabilities
Deposits
Non–interest bearing$1,170,055 $1,277,768 
Interest bearing4,539,277 4,580,006 
Total deposits5,709,332 5,857,774 
Borrowings1,352,039 1,142,949 
Subordinated notes58,970 58,896 
Junior subordinated debentures issued to capital trusts57,143 57,027 
Interest payable12,739 5,380 
Other liabilities63,887 73,117 
Total liabilities7,254,110 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 44,112,816 and 43,937,889 shares
— — 
Additional paid–in capital354,953 354,188 
Retained earnings452,209 429,385 
Accumulated other comprehensive income (loss)(97,919)(106,198)
Total stockholders’ equity709,243 677,375 
Total liabilities and stockholders’ equity$7,963,353 $7,872,518 
14
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
Three Months Ended
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Interest income
Loans receivable$60,594 $55,364 $50,859 $45,517 $40,585 
Investment securities – taxable8,740 8,725 8,702 8,436 8,673 
Investment securities – non–taxable7,059 7,556 7,543 7,478 7,307 
Other475 153 83 65 43 
Total interest income76,868 71,798 67,187 61,496 56,608 
Interest expense
Deposits18,958 14,819 10,520 4,116 1,677 
Borrowed funds9,718 9,771 6,040 3,895 1,450 
Subordinated notes881 880 881 880 881 
Junior subordinated debentures issued capital trusts1,151 1,091 964 744 556 
Total interest expense30,708 26,561 18,405 9,635 4,564 
Net interest income46,160 45,237 48,782 51,861 52,044 
Credit loss expense (recovery)680 242 (69)(601)240 
Net interest income after credit loss expense45,480 44,995 48,851 52,462 51,804 
Non–interest Income
Service charges on deposit accounts3,021 3,028 2,947 3,023 2,833 
Wire transfer fees116 109 118 148 170 
Interchange fees3,584 2,867 2,951 3,089 3,582 
Fiduciary activities1,247 1,275 1,270 1,203 1,405 
Gain (loss) on sale of investment securities20 (500)— — — 
Gain on sale of mortgage loans1,005 785 1,196 1,441 2,501 
Mortgage servicing income net of impairment640 713 637 355 319 
Increase in cash value of bank owned life insurance1,015 981 751 814 519 
Death benefit on bank owned life insurance— — — — 644 
Other income349 362 804 115 461 
Total non–interest income10,997 9,620 10,674 10,188 12,434 
Non–interest expense
Salaries and employee benefits20,162 18,712 19,978 20,613 19,957 
Net occupancy expenses3,249 3,563 3,279 3,293 3,190 
Data processing3,016 2,669 2,884 2,539 2,607 
Professional fees633 533 694 552 283 
Outside services and consultants2,515 2,717 2,985 2,855 2,485 
Loan expense1,397 1,118 1,281 1,392 1,533 
FDIC insurance expense840 540 388 670 775 
Core deposit intangible amortization903 903 925 926 925 
Other losses134 221 118 398 362 
Other expenses3,413 3,548 3,179 3,578 3,287 
Total non–interest expense36,262 34,524 35,711 36,816 35,404 
Income before income taxes20,215 20,091 23,814 25,834 28,834 
Income tax expense1,452 1,863 2,649 2,013 3,975 
Net income$18,763 $18,228 $21,165 $23,821 $24,859 
Basic earnings per share$0.43 $0.42 $0.49 $0.55 $0.57 
Diluted earnings per share0.43 0.42 0.48 0.55 0.57 
15
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
Six Months Ended
June 30,June 30,
20232022
Interest income
Loans receivable$115,958 $77,124 
Investment securities – taxable17,465 16,064 
Investment securities – non–taxable14,615 14,004 
Other628 158 
Total interest income148,666 107,350 
Interest expense
Deposits33,777 3,173 
Borrowed funds19,489 2,530 
Subordinated notes1,761 1,761 
Junior subordinated debentures issued capital trusts2,242 1,011 
Total interest expense57,269 8,475 
Net interest income91,397 98,875 
Credit loss expense (recovery)922 (1,146)
Net interest income after credit loss expense90,475 100,021 
Non–interest Income
Service charges on deposit accounts6,049 5,628 
Wire transfer fees225 329 
Interchange fees6,451 6,362 
Fiduciary activities2,522 2,908 
Gain (loss) on sale of investment securities(480)— 
Gain on sale of mortgage loans1,790 4,528 
Mortgage servicing income net of impairment1,353 3,808 
Increase in cash value of bank owned life insurance1,996 1,029 
Death benefit on bank owned life insurance— 644 
Other income711 1,353 
Total non–interest income20,617 26,589 
Non–interest expense
Salaries and employee benefits38,874 39,692 
Net occupancy expenses6,812 6,751 
Data processing5,685 5,144 
Professional fees1,166 597 
Outside services and consultants5,232 5,010 
Loan expense2,515 2,738 
FDIC insurance expense1,380 1,500 
Core deposit intangible amortization1,806 1,851 
Other losses355 530 
Other expenses6,961 6,861 
Total non–interest expense70,786 70,674 
Income before income taxes40,306 55,936 
Income tax expense3,315 7,514 
Net income$36,991 $48,422 
Basic earnings per share$0.85 $1.11 
Diluted earnings per share0.85 1.11 
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Horizon Bancorp, Inc. Reports Second Quarter 2023 Results

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 and swap termination fees, 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 EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Net income as reported$18,763 $18,228 $21,165 $23,821 $24,859 $36,991 $48,422 
Swap termination fee(1,453)— — — — (1,453)— 
Tax effect305 — — — — 305 — 
Net income excluding swap termination fee17,615 18,228 21,165 23,821 24,859 35,843 48,422 
(Gain) / loss on sale of investment securities(20)500 — — — 480 — 
Tax effect4 (105)— — — (101)— 
Net income excluding (gain) / loss on sale of investment securities17,599 18,623 21,165 23,821 24,859 36,222 48,422 
Death benefit on bank owned life insurance (“BOLI”)— — — — (644)— (644)
Net income excluding death benefit on BOLI17,599 18,623 21,165 23,821 24,215 36,222 47,778 
Adjusted net income$17,599 $18,623 $21,165 $23,821 $24,215 $36,222 $47,778 

17
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Non–GAAP Reconciliation of Diluted Earnings per Share
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Diluted earnings per share (“EPS”) as reported$0.43 $0.42 $0.48 $0.55 $0.57 $0.85 $1.11 
Swap termination fee(0.03)— — — — (0.03)— 
Tax effect0.01 — — — — 0.01 — 
Diluted EPS excluding swap termination fee0.41 0.42 0.48 0.55 0.57 0.83 1.11 
(Gain) / loss on sale of investment securities— 0.01 — — — 0.01 — 
Tax effect— — — — — — — 
Diluted EPS excluding (gain) / loss on sale of investment securities0.41 0.43 0.48 0.55 0.57 0.84 1.11 
Death benefit on bank owned life insurance (“BOLI”)— — — — (0.01)— (0.01)
Diluted EPS excluding death benefit on BOLI0.41 0.43 0.48 0.55 0.56 0.84 1.10 
Adjusted diluted EPS$0.41 $0.43 $0.48 $0.55 $0.56 $0.84 $1.10 
Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Pre–tax income$20,215 $20,091 $23,814 $25,834 $28,834 $40,306 $55,936 
Credit loss expense (recovery)680 242 (69)(601)240 922 (1,146)
Pre–tax, pre–provision net income$20,895 $20,333 $23,745 $25,233 $29,074 $41,228 $54,790 
Pre–tax, pre–provision net income$20,895 $20,333 $23,745 $25,233 $29,074 $41,228 $54,790 
Swap termination fee(1,453)— — — — (1,453)— 
(Gain) / loss on sale of investment securities(20)500 — — — 480 — 
Death benefit on BOLI— — — — (644)— (644)
Adjusted pre–tax, pre–provision net income$19,422 $20,833 $23,745 $25,233 $28,430 $40,255 $54,146 

18
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Non–GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Net interest income as reported$46,160 $45,237 $48,782 $51,861 $52,044 $91,397 $98,875 
Average interest earning assets7,212,640 7,201,266 7,091,980 7,056,208 6,943,633 7,206,985 6,879,551 
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”)2.69 %2.67 %2.85 %3.04 %3.13 %2.68 %3.02 %
Net interest income as reported$46,160 $45,237 $48,782 $51,861 $52,044 $91,397 $98,875 
Acquisition–related purchase accounting adjustments (“PAUs”)(651)(367)(431)(906)(1,223)(1,018)(2,139)
Swap termination fee(1,453)— — — — (1,453)— 
Adjusted net interest income$44,056 $44,870 $48,351 $50,955 $50,821 $88,926 $96,736 
Adjusted net interest margin2.57 %2.65 %2.83 %2.99 %3.06 %2.61 %2.96 %

Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands, Unaudited)
June 30,March 31,December 31,September 30,June 30,
20232023202220222022
Total stockholders’ equity$709,243 $702,559 $677,375 $644,993 $657,865 
Less: Intangible assets170,644 171,547 172,450 173,375 173,662 
Total tangible stockholders’ equity$538,599 $531,012 $504,925 $471,618 $484,203 
Common shares outstanding43,645,216 43,621,422 43,574,151 43,574,151 43,572,796 
Book value per common share$16.25 $16.11 $15.55 $14.80 $15.10 
Tangible book value per common share$12.34 $12.17 $11.59 $10.82 $11.11 

19
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Non–interest expense as reported$36,262 $34,524 $35,711 $36,816 $35,404 $70,786 $70,674 
Net interest income as reported46,160 45,237 48,782 51,861 52,044 91,397 98,875 
Non–interest income as reported$10,997 $9,620 $10,674 $10,188 $12,434 $20,617 $26,589 
Non–interest expense / (Net interest income + Non–interest income)
(“Efficiency Ratio”)		63.44 %62.93 %60.06 %59.33 %54.91 %63.19 %56.33 %
Non–interest expense as reported$36,262 $34,524 $35,711 $36,816 $35,404 $70,786 $70,674 
Net interest income as reported46,160 45,237 48,782 51,861 52,044 91,397 98,875 
Swap termination fee(1,453)— — — — (1,453)— 
Net interest income excluding swap termination fee44,707 45,237 48,782 51,861 52,044 89,944 98,875 
Non–interest income as reported10,997 9,620 10,674 10,188 12,434 20,617 26,589 
(Gain) / loss on sale of investment securities(20)500 — — — 480 — 
Death benefit on BOLI— — — — (644)— (644)
Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI$10,977 $10,120 $10,674 $10,188 $11,790 $21,097 $25,945 
Adjusted efficiency ratio65.12 %62.37 %60.06 %59.33 %55.46 %63.75 %56.62 %

20
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Non–GAAP Reconciliation of Return on Average Assets
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Average assets$7,840,026 $7,831,106 $7,718,366 $7,635,102 $7,476,238 $7,835,032 $7,391,348 
Return on average assets (“ROAA”) as reported0.96 %0.94 %1.09 %1.24 %1.33 %0.95 %1.32 %
Swap termination fee(0.07)— — — — (0.04)— 
Tax effect0.02 — — — — 0.01 — 
ROAA excluding swap termination fee0.91 0.94 1.09 1.24 1.33 0.92 1.32 
(Gain) / loss on sale of investment securities— 0.03 — — — 0.01 — 
Tax effect— (0.01)— — — — — 
ROAA excluding (gain) / loss on sale of investment securities0.91 0.96 1.09 1.24 1.33 0.93 1.32 
Death benefit on BOLI— — — — (0.03)— (0.02)
ROAA excluding death benefit on BOLI0.91 0.96 1.09 1.24 1.30 0.93 1.30 
Adjusted ROAA0.91 %0.96 %1.09 %1.24 %1.30 %0.93 %1.30 %

Non–GAAP Reconciliation of Return on Average Common Equity
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Average common equity$710,953 $693,472 $660,188 $680,376 $677,299 $702,663 $697,004 
Return on average common equity (“ROACE”) as reported10.59 %10.66 %12.72 %13.89 %14.72 %10.62 %14.01 %
Swap termination fee(0.82)— — — — (0.41)— 
Tax effect0.17 — — — — 0.09 — 
ROACE excluding swap termination fee9.94 10.66 12.72 13.89 14.72 10.30 14.01 
(Gain) / loss on sale of investment securities(0.01)0.29 — — — 0.14 — 
Tax effect— (0.06)— — — (0.03)— 
ROACE excluding (gain) / loss on sale of investment securities9.93 10.89 12.72 13.89 14.72 10.41 14.01 
Death benefit on BOLI— — — — (0.38)— (0.19)
ROACE excluding death benefit on BOLI9.93 10.89 12.72 13.89 14.34 10.41 13.82 
Adjusted ROACE9.93 %10.89 %12.72 %13.89 %14.34 %10.41 %13.82 %

21
Horizon Bancorp, Inc. Reports Second Quarter 2023 Results
Non–GAAP Reconciliation of Return on Average Tangible Equity
(Dollars in Thousands, Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,June 30,
2023202320222022202220232022
Average common equity$710,953 $693,472 $660,188 $680,376 $677,299 $702,663 $697,004 
Less: Average intangible assets171,177 172,139 173,050 173,546 175,321 171,655 175,836 
Average tangible equity$539,776 $521,333 $487,138 $506,830 $501,978 $531,008 $521,168 
Return on average tangible equity (“ROATE”) as reported13.94 %14.18 %17.24 %18.65 %19.86 %14.05 %18.74 %
Swap termination fee(1.08)— — — — (0.55)— 
Tax effect0.23 — — — — 0.12 — 
ROATE excluding swap termination fee13.09 14.18 17.24 18.65 19.86 13.62 18.74 
(Gain) / loss on sale of investment securities(0.01)0.39 — — — 0.18 — 
Tax effect— (0.08)— — — (0.04)— 
ROATE excluding (gain) / loss on sale of investment securities13.08 14.49 17.24 18.65 19.86 13.76 18.74 
Death benefit on BOLI— — — — (0.51)— (0.25)
ROATE excluding death benefit on BOLI13.08 14.49 17.24 18.65 19.35 13.76 18.49 
Adjusted ROATE13.08 %14.49 %17.24 %18.65 %19.35 %13.76 %18.49 %


Earnings Conference Call

As previously announced, Horizon will host a conference call to review its second quarter financial results and operating performance.

Participants may access the live conference call on July 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 August 3, 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 8537822.

About Horizon Bancorp, Inc.

Celebrating 150 years, Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $8.0 billion–asset commercial bank holding company for Horizon Bank, which serve 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.
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