MICHIGAN CITY, Ind., April 24, 2024 (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 months ended March 31, 2024. Net income for the first quarter of 2024 was $14.0 million, or $0.32 per diluted share compared to a net loss of $25.2 million, or $0.58, in the linked fourth quarter of 2023. During the fourth quarter of 2023, the Company recognized a net loss on the sale of securities of $31.6 million and the tax effect of the surrender of bank owned life insurance of $8.6 million. "We are very pleased with our positive first quarter results which included a second consecutive quarter of margin and net interest income expansion. Throughout the quarter, we began to strategically leverage our excess liquidity into higher yielding commercial, equipment finance, residential and consumer loan portfolios. These activities were complimented by the resiliency of our deposit portfolio both in terms of balances and cost," President and Chief Executive Officer Thomas M. Prame said. "Horizon's first quarter earnings not only reflect continued improvement in our margin, but highlights our disciplined approach to expenses and positive credit metrics through our active portfolio management and conservative lending approach. Even with the current economic outlook of higher rates for longer, we feel confident in our ability to continue to improve our net interest margin and the financial performance of the organization moving forward. We are encouraged by the positive momentum across our diversified operating model and we are experiencing consistent growth in our relationship banking platforms in our local markets. The team had a solid start to the year, and we feel optimistic about our trajectory as we move into the second quarter." First Quarter 2024 Highlights Net interest margin increased to 2.50% compared to 2.43% in the linked quarter. Net interest income was $43.3 million compared to $42.3 million in the linked quarter. The net interest margin for the month ended March 31, 2024 was 2.53%. Commercial loans grew 11.2% annualized in the quarter, including $22.8 million in new equipment finance production and a $52.0 million increase in other commercial loans. Total loans were $4.62 billion at period end, increasing by 18.2% annualized during the quarter. Balances included the strategic deployment of excess liquidity into higher yielding and excellent credit quality residential mortgages of $94.7 million and consumer loans with credit protection of $59.1 million. Cash totaled $271.1 million at period end, providing significant flexibility to drive future net interest margin growth through deployment into higher yielding assets throughout 2024. Excellent asset quality with net charge-offs representing only 0.01% of average loans, as well as delinquent and non-performing loans representing 0.33% and 0.41%, respectively, at period end. The Company's first quarter credit loss expense of $805,000 was primarily attributable to loan growth and replacement of net charge-offs. Stable deposit base with continued pricing discipline. Deposits totaled $5.58 billion at quarter end, compared to $5.66 billion on December 31, 2023. Modest outflows were primarily attributed to public fund certificates of deposits. Solid fee income results, even with backdrop of lower BOLI income and mortgage seasonality. Expenses were well-managed in the quarter and at the lower end of guidance. Summary     For the Three Months Ended     March 31,   December 31,   March 31, Net Interest Income and Net Interest Margin     2024       2023       2023   Net interest income   $ 43,288     $ 42,257     $ 45,237   Net interest margin     2.50 %     2.43 %     2.67 % Adjusted net interest margin     2.50 %     2.42 %     2.65 %                               For the Three Months Ended     March 31,   December 31,   March 31, Asset Yields and Funding Costs   2024   2023   2023 Interest earning assets   4.82 %   4.69 %   4.17 % Interest bearing liabilities   2.84 %   2.74 %   1.85 %                         For the Three Months Ended Non-interest Income and   March 31,   December 31,   March 31, Mortgage Banking Income   2024     2023     2023 Total non–interest income   $ 9,929   $ (20,449 )   $ 9,620 Gain on sale of mortgage loans     626     951       785 Mortgage servicing income net of impairment     439     724       713                           For the Three Months Ended     March 31,   December 31,   March 31, Non-interest Expense     2024       2023       2023   Total non–interest expense   $ 37,107     $ 39,330     $ 34,524   Annualized non–interest expense to average assets     1.90 %     1.98 %     1.79 %                               For the Three Months Ended     March 31,   December 31,   March 31, Credit Quality   2024   2023   2023 Allowance for credit losses to total loans   1.09 %   1.13 %   1.17 % Non–performing loans to total loans   0.41 %   0.46 %   0.47 % Percent of net charge–offs to average loans outstanding for the period   0.01 %   0.02 %   0.01 %                         March 31,   Net Reserve   December 31, Allowance for Credit Losses     2024     1Q24     2023   Commercial   $ 30,514     $ 778     $ 29,736   Retail Mortgage     2,655       152       2,503   Warehouse     659       178       481   Consumer     16,559       (750 )     17,309   Allowance for Credit Losses ("ACL")   $ 50,387     $ 358     $ 50,029   ACL / Total Loans     1.09 %         1.13 % Acquired Loan Discount ("ALD")   $ 4,660     $ (130 )   $ 4,790                             Income Statement Highlights Net income for the first quarter of 2024 was $14.0 million, or $0.32 diluted earnings per share. The Company reported a net loss of $25.2 million, or $0.58, for the linked quarter and net income of $18.2 million, or $0.42, for the prior year period. The linked quarter net loss was due primarily to a $31.6 million net loss on the sale of securities resulting from the balance sheet restructuring which occurred in December 2023, income tax expense from the early surrender of bank owned life insurance, extraordinary non-interest expenses associated with staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities. The change in net income for the first quarter of 2024 when compared to the linked quarter, also reflects growth in net-interest income of $1.0 million and decreases in credit loss expense of $469,000, income tax expense of $5.1 million and non-interest expense of $2.2 million. Net interest income was $43.3 million in the first quarter of 2024, compared to $42.3 million in the linked quarter. Total non–interest income was $9.9 million in the first quarter of 2024, compared to negative $20.4 million in the linked quarter when the Company recorded a $31.6 million pre-tax loss on the sale of investment securities associated with the balance sheet restructuring which occurred in December 2023. Total non–interest expense was $2.2 million lower in the first quarter of 2024 when compared to the linked quarter, primarily due to decreases of $1.6 million in salaries and employee benefits, $626,000 in loan expense, $492,000 in other losses, and $478,000 in data processing, partially offset by increases of $965,000 in outside services and consultants, $286,000 in net occupancy expenses, and $120,000 in FDIC insurance expense. Horizon's effective tax rate was 8.6% for the first quarter of 2024, with income tax expense of $1.3 million which is $5.1 million lower than the linked quarter when the Company recorded income tax associated with the surrender of bank owned life insurance. Net Interest Margin Horizon's net interest margin ("NIM") was 2.50% for the first quarter of 2024, compared to 2.43% for the fourth quarter of 2023. Net interest margin, excluding acquisition–related purchase accounting adjustments ("adjusted net interest margin"), was 2.50% for the first quarter of 2024, compared to 2.42% for the linked quarter. (See the "Non–GAAP Reconciliation of Net Interest Margin" table below). Lending Activity Total loan balances and loans held for sale increased to $4.62 billion on March 31, 2024 compared to $4.42 billion on December 31, 2023. Balances at the end of the first quarter of 2024 included deployment of surplus liquidity into $59.1 million in consumer loans with credit protections and $94.7 million in residential mortgages. During the three months ended March 31, 2024, commercial loans grew organically by $74.8 million, including $22.8 million in equipment finance production. During the first quarter of 2024, consumer loans increased $13.3 million, residential mortgage loans increased $100.9 million, and mortgage warehouse loans increased $11.5 million, offset by a decrease in loans held for sale of $496,000. Loan Growth by Type (Dollars in Thousands, Unaudited)     March 31,   December 31,   QTD   QTD   Annualized      2024    2023   $ Change   % Change   % Change Commercial   $ 2,749,766   $ 2,674,960   $ 74,806     2.8 %   11.2 % Residential mortgage     782,070     681,136     100,934     14.8 %   59.6 % Mortgage warehouse     56,549     45,078     11,471     25.4 %   102.3 % Consumer     1,029,790     1,016,456     13,334     1.3 %   5.3 % Total loans     4,618,175     4,417,630     200,545     4.3 %   18.3 % Loans held for sale     922     1,418     (496 )   (35.0 )%   (140.7 )% Total loans and loans held for sale   $ 4,619,097   $ 4,419,048   $ 200,049     4.3 %   18.2 %                                   Deposit Activity Total deposit balances of $5.58 billion on March 31, 2024 decreased 1.50% compared to $5.66 billion on December 31, 2023. The deposit mix at the end of the first quarter of 2024 represented the demand for clients to earn more interest on their excess funds and seasonal fluctuation of commercial balances for taxes and distributions. The Bank's tenured and granular core deposit relationships remain steadfast, reflecting the value of Horizon's relationship banking model and local community engagement. Deposit Growth by Type (Dollars in Thousands, Unaudited)   March 31,   December 31,   QTD   QTD   Annualized   2024   2023   $ Change   % Change   % Change Non–interest bearing $ 1,093,076   $ 1,116,005   $ (22,929 )   (2.1 )%   (8.3 )% Interest bearing   3,350,673     3,369,149     (18,476 )   (0.5 )%   (2.2 )% Time deposits   1,136,121     1,179,739     (43,618 )   (3.7 )%   (14.9 )% Total deposits $ 5,579,870   $ 5,664,893   $ (85,023 )   (1.5 )%   (6.0 )%                                 Capital The capital resources of the Company and the Bank continued to exceed regulatory capital ratios for "well capitalized" banks at March 31, 2024. Stockholders' equity totaled $721.3 million at March 31, 2024, and the ratio of average stockholders' equity to average assets was 9.25% for the three months ended March 31, 2024. Tangible book value, which excludes intangible assets from total equity, per common share ("TBVPS") was $12.65, increasing $0.05 during the first quarter of 2024. Tangible common equity increased to 7.20% of tangible assets as of March 31, 2024, an increase of 11 basis points during the quarter. The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of March 31, 2024.     Actual   Required for Capital Adequacy Purposes   Required for Capital Adequacy Purposes with Capital Buffer   Well Capitalized Under Prompt Corrective Action Provisions     $   Ratio   $   Ratio   $   Ratio   $   Ratio Total capital (to risk–weighted assets)                                 Consolidated   $ 793,832   13.82 %   $ 459,403   8.00 %   $ 602,967   10.50 %   N/A   N/A Bank     721,280   12.59 %     458,163   8.00 %     601,338   10.50 %   $ 572,703   10.00 % Tier 1 capital (to risk–weighted assets)                                 Consolidated     742,695   12.93 %     344,553   6.00 %     488,116   8.50 %   N/A   N/A Bank     670,143   11.70 %     343,622   6.00 %     486,798   8.50 %     458,163   8.00 % Common equity tier 1 capital (to risk–weighted assets)                                 Consolidated     625,965   10.90 %     258,414   4.50 %     401,978   7.00 %   N/A   N/A Bank     670,143   11.70 %     257,716   4.50 %     400,892   7.00 %     372,257   6.50 % Tier 1 capital (to average assets)                                 Consolidated     742,695   9.68 %     306,779   4.00 %     306,779   4.00 %   N/A   N/A Bank     670,143   8.63 %     310,602   4.00 %     310,602   4.00 %     388,253   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 March 31, 2024, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.56 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $581.1 million of unpledged investment securities on March 31, 2024. 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; 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 the Israel and Hamas 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. Financial Highlights (Dollars in Thousands, Unaudited)           March 31,   December 31,   September 30,   June 30,   March 31,     2024   2023   2023   2023   2023 Balance sheet:                     Total assets   $ 7,855,707   $ 7,931,195   $ 7,959,434   $ 7,963,353   $ 7,897,995 Interest earning deposits & federal funds sold     170,882     413,744     76,293     119,637     30,221 Interest earning time deposits     1,715     2,205     2,207     2,452     3,098 Investment securities     2,461,044     2,492,889     2,831,651     2,889,309     2,958,978 Commercial loans     2,749,766     2,674,960     2,589,244     2,506,279     2,505,459 Mortgage warehouse loans     56,549     45,078     65,923     82,345     52,957 Residential mortgage loans     782,070     681,136     675,399     674,751     662,459 Consumer loans     1,029,790     1,016,456     1,028,436     1,002,885     1,026,076 Total loans     4,618,175     4,417,630     4,359,002     4,266,260     4,246,951 Earning assets     7,306,564     7,362,395     7,306,490     7,319,100     7,273,921 Non–interest bearing deposit accounts     1,093,076     1,116,005     1,126,703     1,170,055     1,231,845 Interest bearing transaction accounts     3,350,673     3,369,149     3,322,788     3,289,474     3,402,525 Time deposits     1,136,121     1,179,739     1,250,606     1,249,803     1,067,575 Total deposits     5,579,870     5,664,893     5,700,097     5,709,332     5,701,945 Borrowings     1,359,121     1,353,050     1,356,510     1,352,039     1,311,927 Subordinated notes     55,634     55,543     59,007     58,970     58,933 Junior subordinated debentures issued to capital trusts     57,315     57,258     57,201     57,143     57,087 Total stockholders' equity     721,250     718,812     693,369     709,243     702,559                                 Financial Highlights (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)       Three Months Ended     March 31,   December 31,   September 30,   June 30,   March 31,       2024       2023       2023       2023       2023   Income statement:                     Net interest income   $ 43,288     $ 42,257     $ 42,090     $ 46,160     $ 45,237   Credit loss expense (recovery)     805       1,274       263       680       242   Non–interest income     9,929       (20,449 )     11,830       10,997       9,620   Non–interest expense     37,107       39,330       36,168       36,262       34,524   Income tax expense     1,314       6,419       1,284       1,452       1,863   Net income   $ 13,991     $ (25,215 )   $ 16,205     $ 18,763     $ 18,228                         Per share data:                     Basic earnings per share   $ 0.32     $ (0.58 )   $ 0.37     $ 0.43     $ 0.42   Diluted earnings per share     0.32       (0.58 )     0.37       0.43       0.42   Cash dividends declared per common share     0.16       0.16       0.16       0.16       0.16   Book value per common share     16.49       16.47       15.89       16.25       16.11   Tangible book value per common share     12.65       12.60       12.00       12.34       12.17   Market value – high     14.44       14.65       12.68       11.10       16.32   Market value – low   $ 11.75     $ 9.33     $ 9.90     $ 7.75     $ 10.31   Weighted average shares outstanding – Basis     43,663,610       43,649,585       43,646,609       43,639,987       43,583,554   Weighted average shares outstanding – Diluted     43,874,036       43,649,585       43,796,069       43,742,588       43,744,721                         Key ratios:                     Return on average assets     0.72 %   (1.27)        %     0.81 %     0.96 %     0.94 % Return on average common stockholders' equity     7.76       (14.23 )     8.99       10.59       10.66   Net interest margin     2.50       2.43       2.41       2.69       2.67   Allowance for credit losses to total loans     1.09       1.13       1.14       1.17       1.17   Average equity to average assets     9.25       8.92       9.03       9.07       8.86   Efficiency ratio     69.73       180.35       67.08       63.44       62.93   Annualized non–interest expense to average assets     1.90       1.98       1.81       1.86       1.79   Bank only capital ratios:                     Tier 1 capital to average assets     8.63       8.41       8.77       8.72       8.86   Tier 1 capital to risk weighted assets     11.70       11.96       12.22       12.12       12.65   Total capital to risk weighted assets     12.59       12.87       13.11       13.03       13.56                                             Financial Highlights (Dollars in Thousands Except Ratios, Unaudited)           March 31,   December 31,   September 30,   June 30,   March 31,       2024       2023       2023       2023       2023   Loan data:                     Substandard loans   $ 43,672     $ 49,526     $ 47,563     $ 41,484     $ 49,804   30 to 89 days delinquent     15,272       16,595       13,089       10,913       13,971                         Non–performing loans:                     90 days and greater delinquent – accruing interest     108       559       392       1,313       137   Non–accrual loans     19,053       19,710       19,056       20,796       19,660   Total non–performing loans   $ 19,161     $ 20,269     $ 19,448     $ 22,109     $ 19,797   Non–performing loans to total loans     0.41 %     0.46 %     0.45 %     0.52 %     0.47 %                                           Allocation of the Allowance for Credit Losses (Dollars in Thousands, Unaudited)           March 31,   December 31,   September 30,   June 30,   March 31,     2024   2023   2023   2023   2023 Commercial   $ 30,514   $ 29,736   $ 29,472   $ 30,354   $ 31,156 Residential mortgage     2,655     2,503     2,794     3,648     4,447 Mortgage warehouse     659     481     714     893     798 Consumer     16,559     17,309     16,719     15,081     13,125 Total   $ 50,387   $ 50,029