• Horizon Bancorp, Inc. Announces Fourth Quarter and Full Year 2023 Results, Successfully Executes Balance Sheet Restructuring for Future Earnings Growth

    Source: Nasdaq GlobeNewswire / 24 Jan 2024 16:05:02   America/New_York

    MICHIGAN CITY, Ind., Jan. 24, 2024 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three and twelve months ended December 31, 2023.

    “Horizon had a very positive and productive fourth quarter, led by strong loan growth, consistent core deposit balances, stabilized net interest margin and excellent asset quality,” President and Chief Executive Officer Thomas M. Prame said. “Additionally, we closed out the year with a successful restructure of our balance sheet, providing abundant liquidity to deploy into higher yielding assets and drive meaningful earnings growth in future quarters. Over the quarter, the team made significant progress building out our leasing platform, and we expect to see positive impacts from this effort in the second quarter of 2024. The franchise is experiencing positive momentum in its core business models and we are very optimistic about our position as we enter 2024 and our ability to create value for our shareholders and clients.”

    Fourth Quarter 2023 Highlights

    • Commercial loan growth totaled $85.7 million, increasing by 13.1% annualized during the quarter and 8.4% since December 31, 2022. Total loans were $4.42 billion at period end, increasing by 5.2% annualized during the quarter and 6.1% since December 31, 2022.

    • Deposits remained resilient, totaling $5.7 billion at period end, compared to $5.7 billion on September 30, 2023. Brokered deposits and wholesale borrowing levels were consistent with third quarter balances.

    • Net interest margin increased to 2.43% compared to 2.41% in the linked quarter. Interest income was $42.3 million compared to $42.1 million in the linked quarter.

    • Cash totaled $519.4 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 0.02% of average loans for the quarter, delinquent loans representing 0.38% of total loans at period end and non–performing loans representing 0.44% of total loans at period end, with the increase in provision primarily attributable to loan growth.

    • In December, the Company announced a balance sheet repositioning that included the sale of $382.7 million in lower-yielding securities and the surrender of $112.8 million of bank owned life insurance (“BOLI”) policies. For the quarter, the Company recorded a net loss of $25.2 million, or $0.58 per diluted share. Excluding the $38.7 million after-tax impact of the balance sheet repositioning and approximately $705,000 in extraordinary expenses associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities, adjusted net income was $14.1 million, or $0.33 per diluted share, in the quarter. (See the “Non–GAAP Reconciliation of Net Income” table below.) This compared to third quarter 2023 net income of $16.2 million, or $0.37 per diluted share.

    • Horizon continues to maintain cash at the holding company level representing approximately eight quarters of dividend payments and fixed costs.

    Summary

      For the Three Months Ended
      December 31, September 30, December 31,
    Net Interest Income and Net Interest Margin  2023   2023   2022 
    Net interest income $42,257  $42,090  $48,782 
    Net interest margin  2.43%  2.41%  2.85%
    Adjusted net interest margin  2.42%  2.38%  2.83%


      For the Three Months Ended
      December 31, September 30, December 31,
    Asset Yields and Funding Costs  2023   2023   2022 
    Interest earning assets  4.69%  4.48%  3.88%
    Interest bearing liabilities  2.74%  2.52%  1.29%


      For the Three Months Ended
    Non–interest Income and  December 31, September 30, December 31,
    Mortgage Banking Income  2023   2023   2022 
    Total non–interest income $(20,449) $11,830  $10,674 
    Gain on sale of mortgage loans  951   1,582   1,196 
    Mortgage servicing income net of impairment  724   631   637 


      For the Three Months Ended
      December 31, September 30, December 31,
    Non–interest Expense  2023   2023   2022 
    Total non–interest expense $39,330  $36,168  $35,711 
    Annualized non–interest expense to average assets  1.98%  1.81%  1.84%


      For the Three Months Ended
      December 31, September 30, December 31,
    Credit Quality  2023   2023   2022 
    Allowance for credit losses to total loans  1.13%  1.14%  1.21%
    Non–performing loans to total loans  0.44%  0.45%  0.52%
    Percent of net charge–offs to average loans outstanding for the period  0.02%  0.02%  0.01%
                 


    Allowance for December 31, Net Reserve December 31,
    Credit Losses  2023  4Q23 3Q23 2Q23 1Q23  2022 
    Commercial $29,736  $264  $(882) $(802) $(1,289) $32,445 
    Retail Mortgage  2,503   (291)  (854)  (799)  (1,130)  5,577 
    Warehouse  481   (233)  (179)  95   (222)  1,020 
    Consumer  17,309   590   1,638   1,956   1,703   11,422 
    Allowance for Credit Losses (“ACL”) $50,029  $330  $(277) $450  $(938) $50,464 
    ACL / Total Loans  1.13%          1.21%
    Acquired Loan Discount (“ALD”) $4,790  $(358) $(371) $(639) $(121) $6,279 
                             

    Income Statement Highlights

    Net loss for the fourth quarter of 2023 was $25.2 million, or $0.58 diluted earnings per share, compared to net income of $16.2 million, or $0.37, for the linked quarter and $21.2 million, or $0.48, for the prior year period. The results for the fourth quarter of 2023 when compared to the linked quarter reflect a decrease in non–interest income of $32.3 million due primarily to a $31.6 million net loss on the sale of securities, and increases in credit loss expense of $1.0 million, income tax expense of $5.1 million due to the early surrender of bank owned life insurance, and non–interest expense of $3.2 million including $705,000 of extraordinary items.

    Net interest income was $42.3 million in the fourth quarter of 2023, increasing $167,000 from $42.1 million in the linked quarter.

    Total non–interest income of negative $20.4 million was $32.3 million lower in the fourth quarter of 2023 when compared to the third quarter of 2023, primarily due to a $31.6 million loss on sale of investment securities, a decrease in gain on sale of mortgage loans of $631,000 and a decrease of $397,000 in income from bank owned life insurance.

    Total non–interest expense was $3.2 million higher in the fourth quarter of 2023 when compared to the third quarter of 2023, primarily due to a $1.8 million increase in salaries and employee benefits, a $835,000 increase in other expense, a $320,000 increase in other losses and a $225,000 increase in loan expense from the linked quarter. The increase in expenses was substantially due to costs associated with previously disclosed staffing restructuring, recruiting costs, the launch of Horizon Equipment Finance and related variable benefits cost.

    Income tax expense was $5.1 million higher in the fourth quarter of 2023 when compared to the third quarter of 2023, primarily attributed to bank owned life insurance tax expense and excise tax of $8.6 million and a tax valuation allowance of $5.2 million recorded during the fourth quarter for the carry forward timing of recognizing capital losses from the previously announced fourth quarter securities sale for tax purposes.

    Net Interest Margin

    Horizon’s net interest margin (“NIM”) was 2.43% for the fourth quarter of 2023 compared to 2.41% for the third quarter of 2023.

    Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.42% for the fourth quarter of 2023, compared to 2.38% 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 $4.42 billion on December 31, 2023 compared to $4.36 billion on September 30, 2023. During the three months ended December 31, 2023, commercial loans increased $85.7 million, and residential mortgage loans increased $5.7 million, offset by a decrease in mortgage warehouse loans of $20.8 million, consumer loans of $12.0 million and loans held for sale of $1.4 million.

    Lending activity in the fourth quarter was led by commercial lending growth. Mortgage banking activities aligned with cyclical client demand in a continuing rising interest rate environment, while the decline in consumer balances was aligned with the announced strategy to reduce exposure in the lower yielding indirect auto lending portfolio. These results reflect the continued strategic shift of the organization to focus on higher yielding assets.

    Loan Growth by Type
    (Dollars in Thousands, Unaudited)
      December 31, September 30, QTD QTD Annualized
       2023   2023  $ Change % Change % Change
    Commercial $2,674,960  $2,589,244  $85,716   3.3%  13.1%
    Residential mortgage  681,136   675,399   5,737   0.8%  3.4%
    Mortgage warehouse  45,078   65,923   (20,845)  (31.6)%  (125.4)%
    Consumer  1,016,456   1,028,436   (11,980)  (1.2)%  (4.6)%
    Total loans  4,417,630   4,359,002   58,628   1.3%  5.3%
    Loans held for sale  1,418   2,828   (1,410)  (49.9)%  (197.8)%
    Total loans and loans held for sale $4,419,048  $4,361,830  $57,218   1.3%  5.2%
                         


    Loan Growth by Type
    (Dollars in Thousands, Unaudited)
      December 31, December 31, YTD YTD
       2023   2022  $ Change % Change
    Commercial $2,674,960  $2,467,422  $207,538   8.4%
    Residential mortgage  681,136   653,292   27,844   4.3%
    Mortgage warehouse  45,078   69,529   (24,451)  (35.2)%
    Consumer  1,016,456   967,755   48,701   5.0%
    Total loans  4,417,630   4,157,998   259,632   6.2%
    Loans held for sale  1,418   5,807   (4,389)  (75.6)%
    Total loans and loans held for sale $4,419,048  $4,163,805  $255,243   6.1%
                     

    Deposit Activity

    Total deposit balances of $5.66 billion on December 31, 2023 decreased 0.6% compared to $5.70 billion on September 30, 2023.

    The deposit mix at the end of the fourth quarter of 2023 represented the demand for clients to earn more interest on their excess funds and consumers spending excess liquidity. Horizon Bank's (the “Bank”) 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)
     December 31, September 30, QTD QTD Annualized
      2023   2023  $ Change % Change % Change
    Non–interest bearing$1,116,005  $1,126,703  $(10,698)  (0.9)%  (3.8)%
    Interest bearing 3,369,149   3,322,788   46,361   1.4%  5.5%
    Time deposits 1,179,739   1,250,606   (70,867)  (5.7)%  (22.5)%
    Total deposits$5,664,893  $5,700,097  $(35,204)  (0.6)%  (2.5)%
                        

    Total deposit balances of $5.66 billion on December 31, 2023 decreased 3.3% compared to $5.86 billion on December 31, 2022.

    Deposit Growth by Type
    (Dollars in Thousands, Unaudited)
     December 31, December 31, YTD YTD
      2023   2022  $ Change % Change
    Non–interest bearing$1,116,005  $1,277,768  $(161,763)  (12.7)%
    Interest bearing 3,369,149   3,582,891   (213,742)  (6.0)%
    Time deposits 1,179,739   997,115   182,624   18.3%
    Total deposits$5,664,893  $5,857,774  $(192,881)  (3.3)%
                    

    Capital

    The capital resources of the Company and the Bank continued to exceed regulatory capital ratios for “well capitalized” banks at December 31, 2023. Stockholders’ equity totaled $718.8 million at December 31, 2023 and the ratio of average stockholders’ equity to average assets was 8.97% for the twelve months ended December 31, 2023.

    Tangible book value, which excludes intangible assets from total equity, per common share (“TBVPS”) was $12.60, increasing $0.60 during the fourth quarter of 2023. The sale of approximately $382.7 million in securities available for sale (“AFS”) in addition to lower long-term interest rates during the fourth quarter of 2023 reduced unrealized net losses on AFS securities and increased accumulated other comprehensive income (“AOCI”) by $56.8 million. TBVPS increased by $1.01 compared to December 31, 2022. Tangible common equity was 7.09% of tangible assets as of December 31, 2023, an increase of 37 basis points during the quarter and 53 basis points since December 31, 2022.

    The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of December 31, 2023.

      Actual Required for Capital Adequacy Purposes Required for Capital Adequacy Purposes with Capital Buffer Well Capitalized
    Under Prompt Corrective Action Provisions
      Amount Ratio Amount Ratio Amount Ratio Amount Ratio
    Total capital (to risk–weighted assets)                
    Consolidated $783,753   14.36% $436,551   8.00% $572,973   10.50%  N/A   N/A 
    Bank  713,767   13.12%  435,086   8.00%  571,051   10.50% $543,858   10.00%
    Tier 1 capital (to risk–weighted assets)                    
    Consolidated  733,724   13.45%  327,413   6.00%  463,836   8.50%  N/A   N/A 
    Bank  663,738   12.20%  326,315   6.00%  462,279   8.50%  435,086   8.00%
    Common equity tier 1 capital (to risk–weighted assets)                    
    Consolidated  619,140   11.35%  245,560   4.50%  381,982   7.00%  N/A   N/A 
    Bank  663,738   12.20%  244,736   4.50%  380,701   7.00%  353,508   6.50%
    Tier 1 capital (to average assets)                    
    Consolidated  733,724   9.60%  305,704   4.00%  305,704   4.00%  N/A   N/A 
    Bank  663,738   8.55%  310,539   4.00%  310,539   4.00%  388,174   5.00%
                                     

    Liquidity

    The Bank maintains a stable base of core deposits provided by long–standing 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 December 31, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.4 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $601.7 million of unpledged investment securities on December 31, 2023.

    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 ongoing conflicts between Russia and Ukraine and Israel and Hamas; 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)
      
     December 31, September 30, June 30, March 31, December 31,
      2023   2023   2023   2023   2022 
    Balance sheet:         
    Total assets$7,931,195  $7,959,434  $7,963,353  $7,897,995  $7,872,518 
    Interest earning deposits & federal funds sold 413,744   76,293   119,637   30,221   12,233 
    Interest earning time deposits 2,205   2,207   2,452   3,098   2,812 
    Investment securities 2,492,889   2,831,651   2,889,309   2,958,978   3,020,306 
    Commercial loans 2,674,960   2,589,244   2,506,279   2,505,459   2,467,422 
    Mortgage warehouse loans 45,078   65,923   82,345   52,957   69,529 
    Residential mortgage loans 681,136   675,399   674,751   662,459   653,292 
    Consumer loans 1,016,456   1,028,436   1,002,885   1,026,076   967,755 
    Total loans 4,417,630   4,359,002   4,266,260   4,246,951   4,157,998 
    Earning assets 7,362,395   7,306,490   7,319,100   7,273,921   7,225,833 
    Non–interest bearing deposit accounts 1,116,005   1,126,703   1,170,055   1,231,845   1,277,768 
    Interest bearing transaction accounts 3,369,149   3,322,788   3,289,474   3,402,525   3,582,891 
    Time deposits 1,179,739   1,250,606   1,249,803   1,067,575   997,115 
    Total deposits 5,664,893   5,700,097   5,709,332   5,701,945   5,857,774 
    Borrowings 1,353,050   1,356,510   1,352,039   1,311,927   1,142,949 
    Subordinated notes 55,543   59,007   58,970   58,933   58,896 
    Junior subordinated debentures issued to capital trusts 57,258   57,201   57,143   57,087   57,027 
    Total stockholders’ equity 718,812   693,369   709,243   702,559   677,375 
                        


    Financial Highlights
    (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
      Three Months Ended
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Income statement:          
    Net interest income $42,257  $42,090  $46,160  $45,237  $48,782 
    Credit loss expense (recovery)  1,274   263   680   242   (69)
    Non–interest income  (20,449)  11,830   10,997   9,620   10,674 
    Non–interest expense  39,330   36,168   36,262   34,524   35,711 
    Income tax expense  6,419   1,284   1,452   1,863   2,649 
    Net income $(25,215) $16,205  $18,763  $18,228  $21,165 
               
    Per share data:          
    Basic earnings per share $(0.58) $0.37  $0.43  $0.42  $0.49 
    Diluted earnings per share  (0.58)  0.37   0.43   0.42   0.48 
    Cash dividends declared per common share  0.16   0.16   0.16   0.16   0.16 
    Book value per common share  16.47   15.89   16.25   16.11   15.55 
    Tangible book value per common share  12.60   12.00   12.34   12.17   11.59 
    Market value – high  14.65   12.68   11.10   16.32   20.00 
    Market value – low $9.33  $9.90  $7.75  $10.31  $14.51 
    Weighted average shares outstanding – Basis  43,649,585   43,646,609   43,639,987   43,583,554   43,574,151 
    Weighted average shares outstanding – Diluted  43,649,585   43,796,069   43,742,588   43,744,721   43,667,953 
               
    Key ratios:          
    Return on average assets  (1.27)%  0.81%  0.96%  0.94%  1.09%
    Return on average common stockholders’ equity  (14.23)  8.99   10.59   10.66   12.72 
    Net interest margin  2.43   2.41   2.69   2.67   2.85 
    Allowance for credit losses to total loans  1.13   1.14   1.17   1.17   1.21 
    Average equity to average assets  8.92   9.03   9.07   8.86   8.55 
    Efficiency ratio  180.35   67.08   63.44   62.93   60.06 
    Annualized non–interest expense to average assets  1.98   1.81   1.86   1.79   1.84 
    Bank only capital ratios:          
    Tier 1 capital to average assets  8.55   8.77   8.72   8.86   8.89 
    Tier 1 capital to risk weighted assets  12.20   12.22   12.12   12.65   12.72 
    Total capital to risk weighted assets  13.12   13.11   13.03   13.56   13.59 
                         


    Financial Highlights
    (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
      Twelve Months Ended
      December 31, December 31,
       2023   2022 
    Income statement:    
    Net interest income $175,744  $199,518 
    Credit loss expense (recovery)  2,459   (1,816)
    Non–interest income  11,998   47,451 
    Non–interest expense  146,284   143,201 
    Income tax expense  11,018   12,176 
    Net income $27,981  $93,408 
         
    Per share data:    
    Basic earnings per share $0.64  $2.14 
    Diluted earnings per share  0.64   2.14 
    Cash dividends declared per common share  0.64   0.63 
    Book value per common share  16.47   15.55 
    Tangible book value per common share  12.60   11.59 
    Market value – high  16.32   23.45 
    Market value – low $7.75  $14.51 
    Weighted average shares outstanding – Basis  43,623,614   43,568,823 
    Weighted average shares outstanding – Diluted  43,837,333   43,699,115 
         
    Key ratios:    
    Return on average assets  0.36%  1.24%
    Return on average common stockholders’ equity  3.96   13.66 
    Net interest margin  2.55   2.98 
    Allowance for credit losses to total loans  1.13   1.21 
    Average equity to average assets  8.97   9.07 
    Efficiency ratio  77.92   57.98 
    Annualized non–interest expense to average assets  1.86   1.90 
    Bank only capital ratios:    
    Tier 1 capital to average assets  8.55   8.89 
    Tier 1 capital to risk weighted assets  12.20   12.72 
    Total capital to risk weighted assets  13.12   13.59 
             


    Financial Highlights
    (Dollars in Thousands Except Ratios, Unaudited)
       
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Loan data:          
    Substandard loans $49,526  $47,563  $41,484  $49,804  $56,194 
    30 to 89 days delinquent  16,595   13,089   10,913   13,971   10,709 
               
    Non–performing loans:          
    90 days and greater delinquent – accruing interest  548   392   1,313   137   92 
    Trouble debt restructures – accruing interest  —   —   —   —   2,570 
    Trouble debt restructures – non–accrual  —   —   —   —   1,548 
    Non–accrual loans  19,076   19,056   20,796   19,660   17,630 
    Total non–performing loans $19,624  $19,448  $22,109  $19,797  $21,840 
    Non–performing loans to total loans  0.44%  0.45%  0.52%  0.47%  0.52%
                         


    Allocation of the Allowance for Credit Losses
    (Dollars in Thousands, Unaudited)
       
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Commercial $29,736  $29,472  $30,354  $31,156  $32,445 
    Residential mortgage  2,503   2,794   3,648   4,447   5,577 
    Mortgage warehouse  481   714   893   798   1,020 
    Consumer  17,309   16,719   15,081   13,125   11,422 
    Total $50,029  $49,699  $49,976  $49,526  $50,464 


    Net Charge–offs (Recoveries)
    (Dollars in Thousands Except Ratios, Unaudited)
       
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Commercial $233  $142  $101  $104  $(94)
    Residential mortgage  21   (39)  (10)  (6)  (8)
    Mortgage warehouse  —   —   —   —   — 
    Consumer  531   619   183   281   387 
    Total $785  $722  $274  $379  $285 
    Percent of net charge–offs (recoveries) to average loans outstanding for the period  0.02%  0.02%  0.01%  0.01%  0.01%
                         


    Total Non–performing Loans
    (Dollars in Thousands Except Ratios, Unaudited)
       
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Commercial $6,801  $6,969  $8,275  $8,523  $9,330 
    Residential mortgage  8,063   7,777   8,168   6,926   8,123 
    Mortgage warehouse  —   —   —   —   — 
    Consumer  4,761   4,702   5,666   4,348   4,387 
    Total $19,625  $19,448  $22,109  $19,797  $21,840 
    Non–performing loans to total loans  0.44%  0.45%  0.52%  0.47%  0.52%
                         


    Other Real Estate Owned and Repossessed Assets
    (Dollars in Thousands, Unaudited)
       
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Commercial $1,124  $1,287  $1,567  $1,567  $1,881 
    Residential mortgage  182   32   107   203   107 
    Mortgage warehouse  —   —   —   —   — 
    Consumer  205   72   7   78   152 
    Total $1,511  $1,391  $1,681  $1,848  $2,140 
                         


    Average Balance Sheets
    (Dollars in Thousands, Unaudited)
      Three Months Ended Three Months Ended
      December 31, 2023 December 31, 2022
      Average
    Balance    		 Interest Average
    Rate    		 Average
    Balance    		 Interest Average
    Rate
    Assets            
    Interest earning assets            
    Federal funds sold $194,975  $2,736   5.57% $4,023  $34   3.35%
    Interest earning deposits  26,400   271   4.07%  8,233   48   2.31%
    Investment securities – taxable  1,517,572   8,157   2.13%  1,655,728   8,703   2.09%
    Investment securities – non–taxable (1)  1,172,157   6,767   2.90%  1,385,340   7,543   2.73%
    Loans receivable (2) (3)  4,327,930   65,583   6.04%  4,038,656   50,859   5.02%
    Total interest earning assets  7,239,034   83,514   4.69%  7,091,980   67,187   3.88%
    Non–interest earning assets            
    Cash and due from banks  103,255       96,835     
    Allowance for credit losses  (49,586)      (51,323)    
    Other assets  588,113       580,874     
    Total average assets $7,880,816      $7,718,366     
                 
    Liabilities and Stockholders’ Equity            
    Interest bearing liabilities            
    Interest bearing deposits $4,509,268  $27,376   2.41% $4,555,887  $10,520   0.92%
    Borrowings  1,206,462   10,812   3.56%  850,236   5,729   2.67%
    Repurchase agreements  132,524   953   2.85%  141,676   311   0.87%
    Subordinated notes  58,221   870   5.93%  58,874   881   5.94%
    Junior subordinated debentures issued to capital trusts  57,222   1,246   8.64%  56,988   964   6.71%
    Total interest bearing liabilities  5,963,697   41,257   2.74%  5,663,661   18,405   1.29%
    Non–interest bearing liabilities            
    Demand deposits  1,125,164       1,321,139     
    Accrued interest payable and other liabilities  89,162       73,378     
    Stockholders’ equity  702,793       660,188     
    Total average liabilities and stockholders’ equity $7,880,816      $7,718,366     
                 
    Net interest income / spread   $42,257   1.95%   $48,782   2.59%
    Net interest income as a percent of average interest earning assets (1)      2.43%      2.85%
                 
    (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.
     


    Average Balance Sheets
    (Dollars in Thousands, Unaudited)
      Twelve Months Ended Twelve Months Ended
      December 31, 2023 December 31, 2022
      Average
    Balance    		 Interest Average
    Rate    		 Average
    Balance    		 Interest Average
    Rate
    Assets            
    Interest earning assets            
    Federal funds sold $82,865  $4,442   5.36% $62,211  $165   0.27%
    Interest earning deposits  12,930   525   4.06%  13,596   141   1.04%
    Investment securities – taxable  1,658,160   34,410   2.08%  1,700,418   33,202   1.95%
    Investment securities – non–taxable (1)  1,236,607   28,384   2.91%  1,356,045   29,025   2.71%
    Loans receivable (2) (3)  4,244,893   244,544   5.79%  3,845,137   173,500   4.53%
    Total interest earning assets  7,235,455   312,305   4.44%  6,977,407   236,033   3.50%
    Non–interest earning assets            
    Cash and due from banks  102,535       99,885     
    Allowance for credit losses  (49,774)      (52,606)    
    Other assets  581,412       509,229     
    Total average assets $7,869,628      $7,533,915     
                 
    Liabilities and Stockholders’ Equity            
    Interest bearing liabilities            
    Interest bearing deposits $4,498,588  $85,857   1.91% $4,513,668  $17,809   0.39%
    Borrowings  1,154,714   39,514   3.42%  696,584   11,938   1.71%
    Repurchase agreements  137,153   2,964   2.16%  141,048   527   0.37%
    Subordinated notes  58,764   3,511   5.97%  58,819   3,522   5.99%
    Junior subordinated debentures issued to capital trusts  57,137   4,715   8.25%  56,899   2,719   4.78%
    Total interest bearing liabilities  5,906,356   136,561   2.31%  5,467,018   36,515   0.67%
    Non–interest bearing liabilities            
    Demand deposits  1,181,233       1,332,937     
    Accrued interest payable and other liabilities  75,765       50,330     
    Stockholders’ equity  706,274       683,630     
    Total average liabilities and stockholders’ equity $7,869,628      $7,533,915     
                 
    Net interest income / spread   $175,744   2.13%   $199,518   2.83%
    Net interest income as a percent of average interest earning assets (1)      2.55%      2.98%
                 
    (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.
     


    Condensed Consolidated Balance Sheets
    (Dollars in Thousands)
         
      December 31,
    2023    		 December 31,
    2022
      (Unaudited)  
    Assets    
    Cash and due from banks $519,360  $123,505 
    Interest earning time deposits  2,205   2,812 
    Investment securities, available for sale  547,251   997,558 
    Investment securities, held to maturity (fair value $1,668,601 and $1,681,309)  1,945,638   2,022,748 
    Loans held for sale  1,418   5,807 
    Loans, net of allowance for credit losses of $50,029 and $50,464  4,367,601   4,107,534 
    Premises and equipment, net  94,583   92,677 
    Federal Home Loan Bank stock  34,509   26,677 
    Goodwill  155,211   155,211 
    Other intangible assets  13,626   17,239 
    Interest receivable  38,710   35,294 
    Cash value of life insurance  36,157   146,175 
    Other assets  174,926   139,281 
    Total assets $7,931,195  $7,872,518 
         
    Liabilities    
    Deposits    
    Non–interest bearing $1,116,005  $1,277,768 
    Interest bearing  4,548,888   4,580,006 
    Total deposits  5,664,893   5,857,774 
    Borrowings  1,353,050   1,142,949 
    Subordinated notes  55,543   58,896 
    Junior subordinated debentures issued to capital trusts  57,258   57,027 
    Interest payable  22,249   5,380 
    Other liabilities  59,390   73,117 
    Total liabilities  7,212,383   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 44,106,174 and 43,937,889 shares    		  —   — 
    Additional paid–in capital  356,400   354,188 
    Retained earnings  429,021   429,385 
    Accumulated other comprehensive income  (66,609)  (106,198)
    Total stockholders’ equity  718,812   677,375 
    Total liabilities and stockholders’ equity $7,931,195  $7,872,518 
             


    Condensed Consolidated Statements of Income
    (Dollars in Thousands Except Per Share Data, Unaudited)
      Three Months Ended
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Interest income          
    Loans receivable $65,583  $63,003  $60,594  $55,364  $50,859 
    Investment securities – taxable  8,157   8,788   8,740   8,725   8,702 
    Investment securities – non–taxable  6,767   7,002   7,059   7,556   7,543 
    Other  3,007   1,332   475   153   83 
    Total interest income  83,514   80,125   76,868   71,798   67,187 
    Interest expense          
    Deposits  27,376   24,704   18,958   14,819   10,520 
    Borrowed funds  11,765   11,224   9,718   9,771   6,040 
    Subordinated notes  870   880   881   880   881 
    Junior subordinated debentures issued to capital trusts  1,246   1,227   1,151   1,091   964 
    Total interest expense  41,257   38,035   30,708   26,561   18,405 
    Net interest income  42,257   42,090   46,160   45,237   48,782 
    Credit loss expense (recovery)  1,274   263   680   242   (69)
    Net interest income after credit loss expense (recovery)  40,983   41,827   45,480   44,995   48,851 
    Non–interest Income          
    Service charges on deposit accounts  3,092   3,086   3,021   3,028   2,947 
    Wire transfer fees  103   120   116   109   118 
    Interchange fees  3,224   3,186   3,584   2,867   2,951 
    Fiduciary activities  1,352   1,206   1,247   1,275   1,270 
    Gains / (losses) on sale of investment securities  (31,572)  —   20   (500)  — 
    Gain on sale of mortgage loans  951   1,582   1,005   785   1,196 
    Mortgage servicing income net of impairment  724   631   640   713   637 
    Increase in cash value of bank owned life insurance  658   1,055   1,015   981   751 
    Other income  1,019   964   349   362   804 
    Total non–interest income  (20,449)  11,830   10,997   9,620   10,674 
    Non–interest expense          
    Salaries and employee benefits  21,877   20,058   20,162   18,712   19,978 
    Net occupancy expenses  3,260   3,283   3,249   3,563   3,279 
    Data processing  2,942   2,999   3,016   2,669   2,884 
    Professional fees  772   707   633   533   694 
    Outside services and consultants  2,394   2,316   2,515   2,717   2,985 
    Loan expense  1,345   1,120   1,397   1,118   1,281 
    FDIC insurance expense  1,200   1,300   840   540   388 
    Core deposit intangible amortization  903   903   903   903   925 
    Other losses  508   188   134   221   118 
    Other expenses  4,129   3,294   3,413   3,548   3,179 
    Total non–interest expense  39,330   36,168   36,262   34,524   35,711 
    Income before income taxes  (18,796)  17,489   20,215   20,091   23,814 
    Income tax expense  6,419   1,284   1,452   1,863   2,649 
    Net income $(25,215) $16,205  $18,763  $18,228  $21,165 
    Basic earnings per share $(0.58) $0.37  $0.43  $0.42  $0.49 
    Diluted earnings per share  (0.58)  0.37   0.43   0.42   0.48 
                         


    Condensed Consolidated Statements of Income
    (Dollars in Thousands Except Per Share Data, Unaudited)
      Twelve Months Ended
      December 31, December 31,
       2023   2022 
    Interest income    
    Loans receivable $244,544  $173,500 
    Investment securities – taxable  34,410   33,202 
    Investment securities – non–taxable  28,384   29,025 
    Other  4,967   306 
    Total interest income  312,305   236,033 
    Interest expense    
    Deposits  85,857   17,809 
    Borrowed funds  42,478   12,465 
    Subordinated notes  3,511   3,522 
    Junior subordinated debentures issued to capital trusts  4,715   2,719 
    Total interest expense  136,561   36,515 
    Net interest income  175,744   199,518 
    Credit loss expense (recovery)  2,459   (1,816)
    Net interest income after credit loss expense (recovery)  173,285   201,334 
    Non–interest Income    
    Service charges on deposit accounts  12,227   11,598 
    Wire transfer fees  448   595 
    Interchange fees  12,861   12,402 
    Fiduciary activities  5,080   5,381 
    Gains / (losses) on sale of investment securities  (32,052)  — 
    Gain on sale of mortgage loans  4,323   7,165 
    Mortgage servicing income net of impairment  2,708   4,800 
    Increase in cash value of bank owned life insurance  3,709   2,594 
    Death benefit on bank owned life insurance  —   644 
    Other income  2,694   2,272 
    Total non–interest income  11,998   47,451 
    Non–interest expense    
    Salaries and employee benefits  80,809   80,283 
    Net occupancy expenses  13,355   13,323 
    Data processing  11,626   10,567 
    Professional fees  2,645   1,843 
    Outside services and consultants  9,942   10,850 
    Loan expense  4,980   5,411 
    FDIC insurance expense  3,880   2,558 
    Core deposit intangible amortization  3,612   3,702 
    Other losses  1,051   1,046 
    Other expenses  14,384   13,618 
    Total non–interest expense  146,284   143,201 
    Income before income taxes  38,999   105,584 
    Income tax expense  11,018   12,176 
    Net income $27,981  $93,408 
    Basic earnings per share $0.64  $2.14 
    Diluted earnings per share  0.64   2.14 
             

    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 income, net interest margin, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity and the 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 a balance sheet restructuring that included the sale of certain lower-yielding securities and the surrender of certain bank owned life insurance policies, extraordinary expenses associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities, 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 Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Net income (loss) as reported $(25,215) $16,205  $18,763  $18,228  $21,165  $27,981  $93,408 
    Swap termination fee  —   —   (1,453)  —   —   (1,453)  — 
    Tax effect  —   —   305   —   —   305   — 
    Net income (loss) excluding swap termination fee  (25,215)  16,205   17,615   18,228   21,165   26,833   93,408 
    (Gain) / loss on sale of investment securities  31,572   —   (20)  500   —   32,052   — 
    Tax effect  (6,630)  —   4   (105)  —   (6,731)  — 
    Tax valuation reserve  5,201   —   —   —   —   5,201   — 
    Net income (loss) excluding (gain) / loss on sale of investment securities  4,928   16,205   17,599   18,623   21,165   57,355   93,408 
    Death benefit on bank owned life insurance (“BOLI”)  —   —   —   —   —   —   (644)
    Net income (loss) excluding death benefit on BOLI  4,928   16,205   17,599   18,623   21,165   57,355   92,764 
    Extraordinary expenses (1)  705   —   —   —   —   705   — 
    Tax effect  (148)  —   —   —   —   (148)  — 
    Net income excluding extraordinary expenses  5,485   16,205   17,599   18,623   21,165   57,912   92,764 
    BOLI tax expense and excise tax  8,597   —   —   —   —   8,597   — 
    Net income excluding BOLI tax expense and excise tax  14,082   16,205   17,599   18,623   21,165   66,509   92,764 
    Adjusted net income $14,082  $16,205  $17,599  $18,623  $21,165   66,509  $92,764 
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     


    Non–GAAP Reconciliation of Diluted Earnings per Share
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Diluted earnings per share (“EPS”) as reported $(0.58) $0.37  $0.43  $0.42  $0.48  $0.64  $2.14 
    Swap termination fee  —   —   (0.03)  —   —   (0.03)  — 
    Tax effect  —   —   0.01   —   —   0.01   — 
    Diluted EPS excluding swap termination fee  (0.58)  0.37   0.41   0.42   0.48   0.62   2.14 
    (Gain) / loss on sale of investment securities  0.72   —   —   0.01   —   0.73   — 
    Tax effect  (0.15)  —   —   —   —   (0.15)  — 
    Tax valuation reserve  0.12   —   —   —   —   0.12   — 
    Diluted EPS excluding (gain) / loss on sale of investment securities  0.11   0.37   0.41   0.43   0.48   1.32   2.14 
    Death benefit on bank owned life insurance (“BOLI”)  —   —   —   —   —   —   (0.01)
    Diluted EPS excluding death benefit on BOLI  0.11   0.37   0.41   0.43   0.48   1.32   2.13 
    Extraordinary expenses(1)  0.02   —   —   —   —   0.02   — 
    Tax effect  —   —   —   —   —   —   — 
    Diluted EPS excluding extraordinary expenses  0.13   0.37   0.41   0.43   0.48   1.34   2.13 
    BOLI tax expense and excise tax  0.20   —   —   —   —   0.20   — 
    Diluted EPS excluding BOLI tax expense and excise tax  0.33   0.37   0.41   0.43   0.48   1.54   2.13 
    Adjusted diluted EPS $0.33  $0.37  $0.41  $0.43  $0.48  $1.54  $2.13 
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     


    Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Income
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Pre–tax income (loss) $(18,796) $17,489  $20,215  $20,091  $23,814  $38,999  $105,584 
    Credit loss expense  1,274   263   680   242   (69)  2,459   (1,816)
    Pre–tax, pre–provision income (loss) $(17,522) $17,752  $20,895  $20,333  $23,745  $41,458  $103,768 
                   
    Pre–tax, pre–provision income (loss) $(17,522) $17,752  $20,895  $20,333  $23,745  $41,458  $103,768 
    Swap termination fee  —   —   (1,453)  —   —   (1,453)  — 
    (Gain) / loss on sale of investment securities  31,572   —   (20)  500   —   32,052   — 
    Death benefit on BOLI  —   —   —   —   —   —   (644)
    Extraordinary expenses(1)  705   —   —   —   —   705   — 
    Adjusted pre–tax, pre–provision income $14,755  $17,752  $19,422  $20,833  $23,745  $72,762  $103,124 
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     


    Non–GAAP Reconciliation of Net Interest Margin
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Net interest income as reported $42,257  $42,090  $46,160  $45,237  $48,782  $175,744  $199,518 
    Average interest earning assets  7,239,034   7,286,611   7,212,640   7,201,266   7,091,980   7,235,455   6,977,407 
    Net interest income as a percentage of average interest earning assets (“Net Interest Margin”)  2.43%  2.41%  2.69%  2.67%  2.85%  2.55%  2.98%
                   
    Net interest income as reported $42,257  $42,090  $46,160  $45,237  $48,782  $175,744  $199,518 
    Acquisition–related purchase accounting adjustments (“PAUs”)  (175)  (435)  (651)  (367)  (431)  (1,628)  (3,476)
    Swap termination fee  —   —   (1,453)  —   —   (1,453)  — 
    Adjusted net interest income $42,082  $41,655  $44,056  $44,870  $48,351  $172,663  $196,042 
    Adjusted net interest margin  2.42%  2.38%  2.57%  2.65%  2.83%  2.51%  2.93%
                                 


    Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
    (Dollars in Thousands, Unaudited)
       
      December 31, September 30, June 30, March 31, December 31,
       2023   2023   2023   2023   2022 
    Total stockholders’ equity $718,812  $693,369  $709,243  $702,559  $677,375 
    Less: Intangible assets  168,837   169,741   170,644   171,547   172,450 
    Total tangible stockholders’ equity $549,975  $523,628  $538,599  $531,012  $504,925 
    Common shares outstanding  43,652,063   43,648,501   43,645,216   43,621,422   43,574,151 
    Book value per common share $16.47  $15.89  $16.25  $16.11  $15.55 
    Tangible book value per common share $12.60  $12.00  $12.34  $12.17  $11.59 
                         


    Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Non–interest expense as reported $39,330  $36,168  $36,262  $34,524  $35,711  $146,284  $143,201 
    Net interest income as reported  42,257   42,090   46,160   45,237   48,782   175,744   199,518 
    Non–interest income as reported $(20,449) $11,830  $10,997  $9,620  $10,674  $11,998  $47,451 
    Non–interest expense / (Net interest income + Non–interest income) (“Efficiency Ratio”)  180.35%  67.08%  63.44%  62.93%  60.06%  77.92%  57.98%
                   
    Non–interest expense as reported $39,330  $36,168  $36,262  $34,524  $35,711  $146,284  $143,201 
    Extraordinary expenses(1)  (705)  —   —   —   —   (705)  — 
    Non–interest expense excluding extraordinary expenses  38,625   36,168   36,262   34,524   35,711   145,579   143,201 
    Net interest income as reported  42,257   42,090   46,160   45,237   48,782   175,744   199,518 
    Swap termination fee  —   —   (1,453)  —   —   (1,453)  — 
    Net interest income excluding swap termination fee  42,257   42,090   44,707   45,237   48,782   174,291   199,518 
    Non–interest income as reported  (20,449)  11,830   10,997   9,620   10,674   11,998   47,451 
    (Gain) / loss on sale of investment securities  31,572   —   (20)  500   —   32,052   — 
    Death benefit on BOLI  —   —   —   —   —   —   (644)
    Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI $11,123  $11,830  $10,977  $10,120  $10,674  $44,050  $46,807 
    Adjusted efficiency ratio  72.36%  67.08%  65.12%  62.37%  60.06%  66.68%  58.13%
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     


    Non–GAAP Reconciliation of Return on Average Assets
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Average assets $7,880,816  $7,924,751  $7,840,026  $7,831,106  $7,718,366  $7,869,628  $7,533,915 
    Return on average assets (“ROAA”) as reported (1.27)%  0.81%  0.96%  0.94%  1.09%  0.36%  1.24%
    Swap termination fee  —   —   (0.07)  —   —   (0.02)  — 
    Tax effect  —   —   0.02   —   —   —   — 
    ROAA excluding swap termination fee  (1.27)  0.81   0.91   0.94   1.09   0.34   1.24 
    (Gain) / loss on sale of investment securities  1.59   —   —   0.03   —   0.41   — 
    Tax effect  (0.33)  —   —   (0.01)  —   (0.09)  — 
    Tax valuation reserve  0.26   —   —   —   —   0.07   — 
    ROAA excluding (gain) / loss on sale of investment securities  0.25   0.81   0.91   0.96   1.09   0.73   1.24 
    Death benefit on BOLI  —   —   —   —   —   —   (0.01)
    ROAA excluding death benefit on BOLI  0.25   0.81   0.91   0.96   1.09   0.73   1.23 
    Extraordinary expenses(1)  0.04   —   —   —   —   0.01   — 
    Tax effect  (0.01)  —   —   —   —   —   — 
    ROAA excluding extraordinary expenses  0.28   0.81   0.91   0.96   1.09   0.74   1.23 
    BOLI tax expense and excise tax  0.43%  —%  —%  —%  —%  0.11%  —%
    ROAA excluding BOLI tax expense and excise tax  0.71%  0.81%  0.91%  0.96%  1.09%  0.85%  1.23%
    Adjusted ROAA  0.71%  0.81%  0.91%  0.96%  1.09%  0.85%  1.23%
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     


    Non–GAAP Reconciliation of Return on Average Common Equity
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Average common equity $702,793  $715,485  $710,953  $693,472  $660,188  $706,274  $683,630 
    Return on average common equity (“ROACE”) as reported (14.23)%  8.99%  10.59%  10.66%  12.72%  3.96%  13.66%
    Swap termination fee  —   —   (0.82)  —   —   (0.21)  — 
    Tax effect  —   —   0.17   —   —   0.04   — 
    ROACE excluding swap termination fee  (14.23)  8.99   9.94   10.66   12.72   3.79   13.66 
    (Gain) / loss on sale of investment securities  17.82   —   (0.01)  0.29   —   4.54   — 
    Tax effect  (3.74)  —   —   (0.06)  —   (0.95)  — 
    Tax valuation reserve  2.94   —   —   —   —   0.74   — 
    ROACE excluding (gain) / loss on sale of investment securities  2.79   8.99   9.93   10.89   12.72   8.12   13.66 
    Death benefit on BOLI  —   —   —   —   —   —   (0.09)
    ROACE excluding death benefit on BOLI  2.79   8.99   9.93   10.89   12.72   8.12   13.57 
    Extraordinary expenses(1)  0.40   —   —   —   —   0.10   — 
    Tax effect  (0.08)  —   —   —   —   (0.02)  — 
    ROACE excluding extraordinary expenses  3.11   8.99   9.93   10.89   12.72   8.20   13.57 
    BOLI tax expense and excise tax  4.85   —   —   —   —   1.22   — 
    ROACE excluding BOLI tax expense and excise tax  7.96   8.99   9.93   10.89   12.72   9.42   13.57 
    Adjusted ROACE  7.96%  8.99%  9.93%  10.89%  12.72%  9.42%  13.57%
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     


    Non–GAAP Reconciliation of Return on Average Tangible Equity
    (Dollars in Thousands, Unaudited)
      Three Months Ended Twelve Months Ended
      December 31, September 30, June 30, March 31, December 31, December 31, December 31,
       2023   2023   2023   2023   2022   2023   2022 
    Average tangible equity $702,793  $715,485  $710,953  $693,472  $660,188  $706,274  $683,630 
    Less: Average intangible assets  169,401   170,301   171,177   172,139   173,050   170,745   174,003 
    Average tangible equity $533,392  $545,184  $539,776  $521,333  $487,138  $535,529  $509,627 
    Return on average tangible equity (“ROATE”) as reported (18.76)%  11.79%  13.94%  14.18%  17.24%  5.22%  18.33%
    Swap termination fee  —   —   (1.08)  —   —   (0.27)  — 
    Tax effect  —   —   0.23   —   —   0.06   — 
    ROATE excluding swap termination fee  (18.76)  11.79   13.09   14.18   17.24   5.01   18.33 
    (Gain) / loss on sale of investment securities  23.48   —   (0.01)  0.39   —   5.99   — 
    Tax effect  (4.93)  —   —   (0.08)  —   (1.26)  — 
    Tax valuation reserve  3.87   —   —   —   —   0.97   — 
    ROATE excluding (gain) / loss on sale of investment securities  3.66   11.79   13.08   14.49   17.24   10.71   18.33 
    Death benefit on BOLI  —   —   —   —   —   —   (0.13)
    ROATE excluding death benefit on BOLI  3.66   11.79   13.08   14.49   17.24   10.71   18.20 
    Extraordinary expenses(1)  0.52   —   —   —   —   0.13   — 
    Tax effect  (0.11)  —   —   —   —   (0.03)  — 
    ROATE excluding extraordinary expenses  4.07   11.79   13.08   14.49   17.24   10.81   18.20 
    BOLI tax expense and excise tax  6.39   —   —   —   —   1.61   — 
    ROATE excluding BOLI tax expense and excise tax  10.46   11.79   13.08   14.49   17.24   12.42   18.20 
    Adjusted ROATE  10.46%  11.79%  13.08%  14.49%  17.24%  12.42%  18.20%
                   
    (1) Extraordinary expenses include costs associated with previously disclosed staffing changes, the launch of Horizon Equipment Finance and the expansion of the Bank's treasury management capabilities.
     

    Earnings Conference Call

    As previously announced, Horizon will host a conference call to review its fourth quarter and full year 2023 financial results and operating performance.

    Participants may access the live conference call on January 25, 2024 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 February 2, 2024. 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 5158700.

    About Horizon Bancorp, Inc.

    Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.9 billion–asset bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon'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, as well as equipment financing solutions for customers regionally and nationally, 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.

    Contact:   Mark E. Secor
      Chief Financial Officer
    Phone: (219) 873-2611
    Fax: (219) 874-9280
       

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