EX-99.1 2 hbnc-20220331earningsrelea.htm EX-99.1 Document

horizonbancorpinc876_sm-10a.jpg
Contact:Mark E. Secor
Chief Financial Officer
Phone:(219) 873-2611
Fax:(219) 874-9280
Date:April 27, 2022

FOR IMMEDIATE RELEASE

Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54 on Record Profitability,
Higher Fees and Pre–Tax, Pre–Provision Net Income, and
Organic Growth in Total, Commercial and Consumer Loans

Michigan City, Indiana, April 27, 2022 (GLOBE NEWSWIRE) — (NASDAQ GS: HBNC) — Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three months ending March 31, 2022.

“The intentional build out of Horizon’s lending teams, technology, durable customer relationships, and low–cost Midwest deposit franchise is reflected in the Company’s first quarter loan growth, higher fees and pre–tax, pre–provision net income, and record earnings,” Chairman and CEO Craig M. Dwight said. “We believe our asset sensitive balance sheet, strong credit quality and scalable business model will continue to provide an excellent foundation for organic growth in commercial and consumer lending, revenue and profits, along with incremental improvement in operating leverage through 2022.”

First Quarter 2022 Highlights

•Net income grew to a record $23.6 million, up 10.0% from the linked quarter and 15.4% from the prior year period. Diluted earnings per share (“EPS”) of $0.54 was up from $0.49 for the fourth quarter of 2021 and $0.46 for the first quarter of 2021.

•Pre–tax, pre–provision net income grew to $25.7 million, up 9.7% from the linked quarter and 6.1% from the prior year period. This non–GAAP financial measure is utilized by banks to provide a greater understanding of pre–tax profitability before giving effect to credit loss expense. (See the “Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income” table below.) Horizon recorded a provision release of $1.4 million in the quarter and $2.1 million in the linked quarter, as well as provision expense of $367,000 in the prior year period.

•Reported net interest margin (“NIM”) was 2.99% and adjusted NIM was 2.93%, with reported NIM increasing by two basis points and adjusted NIM increasing by seven basis points from the fourth quarter of 2021. (See the “Non-GAAP Reconciliation of Net Interest Margin” table below for the definition of this non–GAAP calculation of adjusted NIM.)

•The Company was asset sensitive as of March 31, 2022 but less than the previous quarter as additional cash was deployed to higher yielding assets. Due to the deployment of cash the base case estimate increased over $10.0 million from last quarter and reduced estimates for parallel rate shocks to the balance sheet, at a 100 basis point shock and 200 basis point shock, to net interest income increases of approximately $2.5 million and $3.8 million, respectively.

•The steepening of the yield curve during the first quarter resulted in unrealized losses on available for sale investments of $73.6 million compared to unrealized gains of $7.2 million at December 31, 2021. The impact to the tangible capital ratio was a decrease of 67 basis points from 7.61% at December 31, 2021 to 6.94% at March 31, 2022, an 8.8% decrease.

•The Bank's capital is still robust with leverage and risk based capital ratios of 9.7% and 15.21%, respectively.

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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
•Total loans, excluding Federal Paycheck Protection Program (“PPP”) loans and sold commercial participation loans, grew by 2.3%, or 9.5% annualized, during the first quarter to $3.66 billion at period end from $3.57 billion on December 31, 2021.

•Commercial loans, excluding PPP loans and sold commercial participation loans, grew by 3.3%, or 13.5% annualized, during the first quarter to a record $2.20 billion from $2.13 billion on December 31, 2021.

•Consumer loans grew by 3.7%, or 14.9% annualized, during the first quarter to a record $753.9 million at period end.

•The decline in residential mortgage loans slowed during the first quarter with a 0.2% reduction to $593.4 million at period end, as refinancing activity decreased and we experienced movement to adjustable rate products which are held on the balance sheet. Gain on sale of mortgage loans and mortgage warehouse income only constituted 4.7% of total revenue in the first quarter of 2022.

•Non–interest expense was $36.6 million in the quarter, or 2.03% of average assets on an annualized basis, compared to $39.4 million, or 2.09%, in the fourth quarter of 2021 and $32.2 million, or 2.20%, in the first quarter of 2021. As previously disclosed, acquisition–related and non–recurring Department of Labor (“DOL”) Employee Stock Ownership Plan (“ESOP“) settlement expenses totaled $2.8 million in the fourth quarter of 2021.
•The efficiency ratio for the period was 58.74% compared to 62.69% for the fourth quarter of 2021 and 57.03% for the first quarter of 2021. The adjusted efficiency ratio was 58.74% compared to 58.25% for the fourth quarter of 2021 and 57.97% for the first quarter of 2021. (See the “Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below.)

•As part of the Company’s annual branch performance review of Horizon Bank’s (the “Bank”) retail network, Horizon’s Board of Directors approved the permanent closure of seven branch locations in the second half of 2022. We expect to incur a one–time charge of approximately $432,000 with an earn–back period of approximately six months.
•Horizon’s in–market consumer and commercial deposit relationships, including those on–boarded as part of its branch acquisition near the end of the third quarter of 2021, combined with strategic pricing moves to manage deposit growth and runoff of higher–priced time deposits, contributed to continued improvement in the cost of interest bearing liabilities, which declined to 0.30% in the quarter, compared to 0.31% in the fourth quarter of 2021 and 0.50% in the first quarter of 2021.

•Asset quality remains favorable as evidenced by non–performing loans at 0.54% of total loans at period end and net charge–offs to average loans represented 0.00% for the first quarter of 2022.


Summary
For the Three Months Ended
March 31,December 31,March 31,
Net Interest Income and Net Interest Margin202220212021
Net interest income$48,171 $49,976 $42,538 
Net interest margin2.99 %2.97 %3.29 %
Adjusted net interest margin2.93 %2.86 %3.17 %

“Sequential quarter net interest margin expansion begins to illustrate the Company’s asset sensitive balance sheet positioning.” Mr. Dwight said. “We expect to see continued NIM improvement in 2022 driven by both rates and loan volume, along with deposit betas that we believe will remain in line with or better than in–footprint competition, given Horizon’s mix of commercial and retail relationships, strong marketplace positioning and conservative expectations for higher–priced deposit runoff.”

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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
For the Three Months Ended
March 31,December 31,March 31,
Asset Yields and Funding Costs202220212021
Interest earning assets3.22 %3.20 %3.66 %
Interest bearing liabilities0.30 %0.31 %0.50 %
For the Three Months Ended
Non–interest Income and March 31,December 31,March 31,
Mortgage Banking Income202220212021
Total non–interest income$14,155 $12,828 $13,873 
Gain on sale of mortgage loans2,027 4,167 5,296 
Mortgage servicing income net of impairment3,489 300 213 
For the Three Months Ended
March 31,December 31,March 31,
Non–interest Expense202220212021
Total non–interest expense$36,610 $39,370 $32,172 
Annualized non–interest expense to average assets2.03 %2.09 %2.20 %
For the Three Months Ended
March 31,December 31,March 31,
Credit Quality202220212021
Allowance for credit losses to total loans1.41 %1.51 %1.56 %
Non–performing loans to total loans0.54 %0.53 %0.68 %
Percent of net charge–offs to average loans outstanding for the period0.00 %0.04 %0.01 %
Allowance forDecember 31,Net ReserveMarch 31,
Credit Losses20211Q222022
Commercial$40,775 $(2,986)$37,789 
Retail Mortgage3,856 495 4,351 
Warehouse1,059 (4)1,055 
Consumer8,596 717 9,313 
Allowance for Credit Losses (“ACL”)$54,286 $(1,778)$52,508 
ACL / Total Loans1.51 %1.41 %
Acquired Loan Discount (“ALD”)$9,097 $(769)$8,328 

“Our 2.03% annualized non–interest expense to average assets continues to represent an improvement over the prior quarter and the first quarter supports our full–year 2022 target of less than 2% for this performance metric,” Mr. Dwight said. “Even with nationwide wage inflation and the ongoing operating costs associated with our branch acquisition last fall, we believe our scalable and technology–enabled model, along with our disciplined expense management culture and annual branch network review process, will enable us to achieve our target for the full year.”


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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Income Statement Highlights

Net income for the first quarter of 2022 was $23.6 million, or $0.54 diluted earnings per share, compared to $21.4 million, or $0.49, for the linked quarter and $20.4 million, or $0.46, for the prior year period. This represents the highest quarterly net income in the Company’s history.

Adjusted net income for the first quarter of 2022 was $23.6 million, or $0.54 diluted earnings per share, compared to $23.7 million, or $0.54, for the linked quarter and $19.7 million, or $0.44, for the prior year period. Adjusted net income, which is not calculated according to generally accepted accounting principles (“GAAP”), is a measure that Horizon uses to provide a greater understanding of operating profitability. (See the “Non–GAAP Reconciliation of Net Income” table below.)

The increase in net income for the first quarter of 2022 when compared to the fourth quarter of 2021 reflects an increase in non–interest income of $1.3 million, a decrease in non–interest expense of $2.8 million and a decrease in income tax expense of $541,000. These items were offset by a decrease in net interest income of $1.8 million and a decrease in provision release of $685,000 for the first quarter of 2022 when compared to the fourth quarter of 2021.

Interest income includes the recognition of PPP loan interest and net loan processing fees totaling $457,000 in the first quarter of 2022, compared to $2.1 million in the linked quarter. On March 31, 2022, the Company had $141,000 in net deferred PPP loan processing fees outstanding and $6.7 million in PPP loans outstanding. PPP loan net deferred fees and loans outstanding at December 31, 2021 were $561,000 and $25.8 million, respectively.

First quarter 2022 income from the gain on sale of mortgage loans totaled $2.0 million, down from $4.2 million in the linked quarter and down from $5.3 million in the prior year period.

Non–interest expense of $36.6 million in the first quarter of 2022, including ongoing operating expenses associated with the September 2021 acquisition of 14 branches and low–cost deposits to expand Horizon’s Michigan franchise, reflected a $1.8 million decrease in other losses, a $814,000 decrease in salaries and employee benefits, a decrease of $258,000 in loan expenses and a decrease of $224,000 in professional fees, offset by an increase in occupancy expense of $357,000 and an increase in outside services and consultants of $268,000 from the linked quarter. As previously disclosed, acquisition–related and non–recurring DOL ESOP settlement expenses totaled $2.8 million in the fourth quarter of 2021.

The increase in net income for the first quarter of 2022 when compared to the same prior year period reflects an increase in net interest income of $5.6 million, a decrease in credit loss expense of $1.8 million and an increase in non–interest income of $282,000, offset by an increase in non–interest expense of $4.4 million and an increase in income tax expense of $89,000.


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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Net Income
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Net income as reported$23,563 $21,425 $23,071 $22,173 $20,422 
Acquisition expenses— 884 799 242 — 
Tax effect— (184)(166)(51)— 
Net income excluding acquisition expenses23,563 22,125 23,704 22,364 20,422 
Credit loss expense acquired loans— — 2,034 — — 
Tax effect— — (427)— — 
Net income excluding credit loss expense acquired loans23,563 22,125 25,311 22,364 20,422 
Gain on sale of ESOP trustee accounts— — (2,329)— — 
Tax effect— — 489 — — 
Net income excluding gain on sale of ESOP trustee accounts23,563 22,125 23,471 22,364 20,422 
DOL ESOP settlement expenses— 1,900 — — — 
Tax effect— (315)— — — 
Net income excluding DOL ESOP settlement expenses23,563 23,710 23,471 22,364 20,422 
(Gain) / loss on sale of investment securities— — — — (914)
Tax effect— — — — 192 
Net income excluding (gain) / loss on sale of investment securities23,563 23,710 23,471 22,364 19,700 
Death benefit on bank owned life insurance (“BOLI”)— — (517)(266)— 
Net income excluding death benefit on BOLI23,563 23,710 22,954 22,098 19,700 
Prepayment penalties on borrowings— — — 125 — 
Tax effect— — — (26)— 
Net income excluding prepayment penalties on borrowings23,563 23,710 22,954 22,197 19,700 
Adjusted net income$23,563 $23,710 $22,954 $22,197 $19,700 
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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Diluted Earnings per Share
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Diluted earnings per share (“EPS”) as reported$0.54 $0.49 $0.52 $0.50 $0.46 
Acquisition expenses— 0.02 0.02 0.01 — 
Tax effect— — — — — 
Diluted EPS excluding acquisition expenses0.54 0.51 0.54 0.51 0.46 
Credit loss expense acquired loans— — 0.05 — — 
Tax effect— — (0.01)— — 
Diluted EPS excluding credit loss expense acquired loans0.54 0.51 0.58 0.51 0.46 
Gain on sale of ESOP trustee accounts— — (0.05)— — 
Tax effect— — 0.01 — — 
Diluted EPS excluding gain on sale of ESOP trustee accounts0.54 0.51 0.54 0.51 0.46 
DOL ESOP settlement expenses— 0.04 — — — 
Tax effect— (0.01)— — — 
Diluted EPS excluding DOL ESOP settlement expenses0.54 0.54 0.54 0.51 0.46 
(Gain) / loss on sale of investment securities— — — — (0.02)
Tax effect— — — — — 
Diluted EPS excluding (gain) / loss on sale of investment securities0.54 0.54 0.54 0.51 0.44 
Death benefit on bank owned life insurance (“BOLI”)— — (0.02)(0.01)— 
Diluted EPS excluding death benefit on BOLI0.54 0.54 0.52 0.50 0.44 
Prepayment penalties on borrowings— — — — — 
Tax effect— — — — — 
Diluted EPS excluding prepayment penalties on borrowings0.54 0.54 0.52 0.50 0.44 
Adjusted diluted EPS$0.54 $0.54 $0.52 $0.50 $0.44 
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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Pre–tax income$27,102 $25,505 $27,127 $25,943 $23,872 
Credit loss expense(1,386)(2,071)1,112 (1,492)367 
Pre–tax, pre–provision net income$25,716 $23,434 $28,239 $24,451 $24,239 
Pre–tax, pre–provision net income$25,716 $23,434 $28,239 $24,451 $24,239 
Acquisition expenses— 884 799 242 — 
Gain on sale of ESOP trustee accounts— — (2,329)— — 
DOL ESOP settlement expenses— 1,900 — — — 
(Gain) / loss on sale of investment securities— — — — (914)
Death benefit on BOLI— — (517)(266)— 
Prepayment penalties on borrowings— — — 125 — 
Adjusted pre–tax, pre–provision net income$25,716 $26,218 $26,192 $24,552 $23,325 

Horizon’s net interest margin increased to 2.99% for the first quarter of 2022 compared to 2.97% for the fourth quarter of 2021. The increase in net interest margin reflects an increase in the yield on interest earning assets of two basis points and a decrease in the cost of interest bearing liabilities of one basis point. Interest income from acquisition–related purchase accounting adjustments was $903,000 lower during the first quarter of 2022 when compared to the fourth quarter of 2021.

Horizon’s net interest margin decreased to 2.99% for the first quarter of 2022 compared to 3.29% for the first quarter of 2021. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 44 basis points offset by a decrease in the cost of interest bearing liabilities of 20 basis points.

The net interest margin was impacted during the first quarter of 2022 and fourth quarter of 2021 by PPP loans that were originated. Horizon estimates that the PPP loans increased the net interest margin by 2 basis points for the first quarter of 2022 and 10 basis points for the fourth quarter of 2021, respectively. This assumes these PPP loans were not included in average interest earning assets or interest income and were primarily funded by the growth in non–interest bearing deposits.

The net interest margin was also impacted during the first quarter of 2022 and fourth quarter of 2021 by excess liquidity carried on the balance sheet through increased deposits. Horizon estimates that the excess liquidity compressed the net interest margin by 11 basis points for the first quarter of 2022 and 32 basis points for the fourth quarter of 2021, respectively. This assumes that the excess liquidity was not included in average interest earning assets or interest income and was excluded from non–interest bearing deposits.
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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Net interest income as reported$48,171 $49,976 $46,544 $42,632 $42,538 
Average interest earning assets6,800,549 6,938,258 6,033,088 5,659,384 5,439,634 
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”)2.99 %2.97 %3.17 %3.14 %3.29 %
Net interest income as reported$48,171 $49,976 $46,544 $42,632 $42,538 
Acquisition–related purchase accounting adjustments (“PAUs”)(916)(1,819)(875)(230)(1,579)
Prepayment penalties on borrowings— — — 125 — 
Adjusted net interest income$47,255 $48,157 $45,669 $42,527 $40,959 
Adjusted net interest margin2.93 %2.86 %3.12 %3.13 %3.17 %

Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.93% for the first quarter of 2021, compared to 2.86% for the linked quarter and 3.17% for the first quarter of 2020. Interest income from acquisition–related purchase accounting adjustments was $916,000, $1.8 million and $1.6 million for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

Lending Activity

Total loan balances were $3.72 billion, or $3.66 billion excluding PPP loans and sold commercial participation loans, on March 31, 2022. Total loans were $3.66 billion, or $3.57 billion excluding PPP loans and sold commercial participation loans, on December 31, 2021. During the three months ended March 31, 2022, commercial loans, excluding PPP loans and sold commercial participation loans, increased $70.9 million and consumer loans increased $26.6 million, offset by decreases in PPP loans of $19.1 million, loans held for sale of $8.8 million, sold commercial participation loans of $6.4 million mortgage warehouse loans of $3.9 million and residential mortgage loans of $1.0 million. PPP loan income was $457,000, $2.1 million and $3.2 million for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

Following a recent review of commercial participation loan sold agreements, the Company determined that total loan balance amounts must include all commercial participations sold with a corresponding secured borrowing, as they do not qualify for sales treatment based on accounting guidelines. This resulted in revising December 31, 2021 net loan and borrowing line items on the balance sheet with the March 31, 2022 reporting. Net loan and borrowing line items for December 31, 2021 was $56.5 million of commercial participations sold and for March 31, 2022 was $50.5 million of commercial participations sold.
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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
March 31,December 31,AmountQTDAnnualized
20222021Change% Change% Change
Commercial, excluding PPP loans and
sold commercial participation loans		$2,202,568 $2,131,644 $70,924 3.3%13.5%
PPP loans6,705 25,844 (19,139)(74.1)%(300.3)%
Sold commercial participation loans50,054 56,457 (6,403)(11.3)%(46.0)%
Residential mortgage593,372 594,382 (1,010)(0.2)%(0.7)%
Consumer753,900 727,259 26,641 3.7%14.9%
Subtotal3,606,599 3,535,586 71,013 2.0%8.1%
Loans held for sale3,781 12,579 (8,798)(69.9)%(283.7)%
Mortgage warehouse105,118 109,031 (3,913)(3.6)%(14.6)%
Total loans$3,715,498 $3,657,196 $58,302 1.6%6.5%
Total loans, excluding PPP loans and
sold commercial participation loans		$3,658,739 $3,574,895 $83,844 2.3%9.5%
Residential mortgage lending activity for the three months ended March 31, 2022 generated $2.0 million in income from the gain on sale of mortgage loans, decreasing $2.1 million from the fourth quarter of 2021 and $3.3 million from the first quarter of 2021. Total mortgage origination volume for the first quarter of 2022, including loans placed into the portfolio, totaled $118.9 million, representing a decrease of 20.9% from fourth quarter 2021 levels, and a decrease of 23.5% from the first quarter of 2021. As a percentage of total mortgage loan originations, 44% of the volume was from refinancings and 56% was from loans for new home purchases during the first quarter of 2022. Total origination volume of mortgage loans sold to the secondary market totaled $81.3 million, representing a decrease of 15.1% from the fourth quarter of 2021 and a decrease of 35.5% from the first quarter of 2021.

Gain on sale of mortgage loans and mortgage warehousing income was 4.7% of total revenue for the three months ended March 31, 2022, compared to 8.6% for the linked quarter and 13.8% for the three months ended March 31, 2021.

Deposit Activity

Total deposit balances were $5.85 billion on March 31, 2022 compared to $5.80 billion on December 31, 2021, an increase of $48.5 million.

Deposit Growth by Type, Excluding Acquired Deposits
(Dollars in Thousands, Unaudited)
March 31,December 31,Amount QTDAnnualized
20222022Change% Change% Change
Non–interest bearing$1,325,570 $1,360,338 $(34,768)(2.6)%(10.4)%
Interest bearing3,782,644 3,711,767 70,877 1.9%7.7%
Time deposits743,283 730,886 12,397 1.7%6.9%
Total deposits$5,851,497 $5,802,991 $48,506 0.8%3.4%


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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Expense Management
Three Months Ended
March 31,December 31,
20222021Adjusted
Non–interest ExpenseActualAcquisition
&
Non–Recurring Expenses		AdjustedActualAcquisition
&
Non–Recurring Expenses		AdjustedAmount
Change		Percent
Change
Salaries and employee benefits$19,735 $— $19,735 $20,549 $(202)$20,347 $(612)(3.0)%
Net occupancy expenses3,561 — 3,561 3,204 — 3,204 357 11.1%
Data processing2,537 — 2,537 2,672 (1)2,671 (134)(5.0)%
Professional fees314 — 314 562 (45)517 (203)(39.3)%
Outside services and consultants2,525 — 2,525 2,197 (162)2,035 490 24.1%
Loan expense2,545 — 2,545 2,803 (83)2,720 (175)(6.4)%
FDIC insurance expense725 — 725 798 (6)792 (67)(8.5)%
Other losses168 — 168 1,925 (1,904)21 147 700.0%
Other expense4,500 — 4,500 4,660 (381)4,279 221 5.2%
Total non–interest expense$36,610 $— $36,610 $39,370 $(2,784)$36,586 $24 0.1%
Annualized non–interest expense to average assets2.03 %2.03 %2.09 %1.95 %

Total non–interest expense was $2.8 million lower in the first quarter of 2022 when compared to the fourth quarter of 2021. The decrease was primarily due to a decrease in other losses of $1.8 million as a result of the $1.9 million ESOP settlement expense recorded in the fourth quarter of 2021 and a decrease in salaries and employee benefits expense of $814,000. Excluding acquisition–related expenses and non–recurring DOL ESOP settlement expenses, total non–interest expense increased $24,000 in the first quarter of 2022 when compared to the fourth quarter of 2021. (See the “Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below for these non–GAAP calculations.)

Three Months Ended
March 31,March 31,
20222021
Non–interest ExpenseActualActualAmount
Change		Percent
Change
Salaries and employee benefits$19,735 $16,871 $2,864 17.0%
Net occupancy expenses3,561 3,318 243 7.3%
Data processing2,537 2,376 161 6.8%
Professional fees314 544 (230)(42.3)%
Outside services and consultants2,525 1,702 823 48.4%
Loan expense2,545 2,822 (277)(9.8)%
FDIC insurance expense725 800 (75)(9.4)%
Other losses168 283 (115)(40.6)%
Other expense4,500 3,456 1,044 30.2%
Total non–interest expense$36,610 $32,172 $4,438 13.8%
Annualized non–interest expense to average assets2.03 %2.20 %

Total non–interest expense was $4.4 million higher in the first quarter of 2022 when compared to the first quarter of 2021. The increases in expenses was primarily due to an increase in salaries and employee benefits of $2.9 million, an increase in other expense of $1.0 million, an increase in outside services and consultants of $823,000 and an increase in net occupancy expenses of $243,000, offset by a decrease of $277,000 in loan expense and a decrease of $230,000 in professional fees.
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Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Annualized non–interest expense as a percent of average assets was 2.03%, 2.09% and 2.20% for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively. Annualized non–interest expense, excluding acquisition expenses and non–recurring DOL ESOP settlement expenses, as a percent of average assets was 2.03%, 1.95% and 2.20% for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively. (See the “Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below for these non–GAAP calculations.)

Income tax expense totaled $3.5 million for the first quarter of 2022, a decrease of $541,000 when compared to the fourth quarter of 2021 and an increase of $89,000 when compared to the first quarter of 2021.

Capital

The capital resources of the Company and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2022. Stockholders’ equity totaled $677.5 million at March 31, 2022 and the ratio of average stockholders’ equity to average assets was 9.79% for the three months ended March 31, 2022.

Tangible book value per common share (“TBVPS”) declined $1.03 in the first quarter of 2022 to $11.55 at period end, as unrealized net losses on securities available for sale (“AFS”) of $1.48 per common share reduced other comprehensive income (“OCI”) by $64.3 million in the first three months of this year. Fluctuations in the fair market value of AFS are widely expected to be recorded by banks in the first quarter of 2022.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of March 31, 2022.
ActualRequired for Capital Adequacy PurposesRequired for Capital Adequacy Purposes with Capital BufferWell Capitalized
Under Prompt Corrective Action Provisions
AmountRatioAmountRatioAmountRatioAmountRatio
Total capital (to risk–weighted assets)
Consolidated$733,695 15.21 %$385,869 8.00 %$506,452 10.50 %N/AN/A
Bank685,676 14.22 %385,665 8.00 %506,186 10.50 %$482,082 10.00 %
Tier 1 capital (to risk–weighted assets)
Consolidated679,232 14.08 %289,401 6.00 %409,985 8.50 %N/AN/A
Bank631,214 13.09 %289,249 6.00 %409,769 8.50 %385,665 8.00 %
Common equity tier 1 capital (to risk–weighted assets)
Consolidated541,696 11.64 %217,051 4.50 %337,635 7.00 %N/AN/A
Bank631,214 13.09 %216,937 4.50 %337,457 7.00 %313,353 6.50 %
Tier 1 capital (to average assets)
Consolidated679,232 9.70 %280,233 4.00 %280,233 4.00 %N/AN/A
Bank631,214 9.03 %279,627 4.00 %279,627 4.00 %349,534 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 repayment, investment security sales and maturities, 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”). At March 31, 2022, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $575.3 million in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Discount Window. The Bank had approximately $2.3 billion of unpledged investment securities at March 31, 2022.
11
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54



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, net interest margin, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average equity and pre–tax, pre–provision net income. 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, 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 Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Total stockholders’ equity$677,450 $723,209 $708,542 $710,374 $689,379 
Less: Intangible assets174,588 175,513 183,938 172,398 173,296 
Total tangible stockholders’ equity$502,862 $547,696 $524,604 $537,976 $516,083 
Common shares outstanding43,572,796 43,547,942 43,520,694 43,950,720 43,949,189 
Book value per common share$15.56 $16.61 $16.28 $16.16 $15.69 
Tangible book value per common share$11.55 $12.58 $12.05 $12.24 $11.74 

12
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Non–interest expense as reported$36,610 $39,370 $34,349 $33,388 $32,172 
Net interest income as reported48,171 49,976 46,544 42,632 42,538 
Non–interest income as reported$14,155 $12,828 $16,044 $15,207 $13,873 
Non–interest expense / (Net interest income + Non–interest income)
(“Efficiency Ratio”)		58.74 %62.69 %54.88 %57.73 %57.03 %
Non–interest expense as reported$36,610 $39,370 $34,349 $33,388 $32,172 
Acquisition expenses— (884)(799)(242)— 
DOL ESOP settlement expenses— (1,900)— — — 
Non–interest expense excluding acquisition and DOL ESOP settlement expenses36,610 36,586 33,550 33,146 32,172 
Net interest income as reported48,171 49,976 46,544 42,632 42,538 
Prepayment penalties on borrowings— — — 125 — 
Net interest income excluding prepayment penalties on borrowings48,171 49,976 46,544 42,757 42,538 
Non–interest income as reported14,155 12,828 16,044 15,207 13,873 
Gain on sale of ESOP trustee accounts— — (2,329)— — 
(Gain) / loss on sale of investment securities— — — — (914)
Death benefit on BOLI— — (517)(266)— 
Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI$14,155 $12,828 $13,198 $14,941 $12,959 
Adjusted efficiency ratio58.74 %58.25 %56.16 %57.45 %57.97 %

13
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Return on Average Assets
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Average assets$7,319,675 $7,461,343 $6,507,673 $6,142,507 $5,936,149 
Return on average assets (“ROAA”) as reported1.31 %1.14 %1.41 %1.45 %1.40 %
Acquisition expenses— 0.05 0.05 0.02 — 
Tax effect— (0.01)(0.01)— — 
ROAA excluding acquisition expenses1.31 1.18 1.45 1.47 1.40 
Credit loss expense acquired loans— — 0.12 — — 
Tax effect— — (0.03)— — 
ROAA excluding credit loss expense on acquired loans1.31 1.18 1.54 1.47 1.40 
Gain on sale of ESOP trustee accounts— — (0.14)— — 
Tax effect— — 0.03 — — 
ROAA excluding gain on sale of ESOP trustee accounts1.31 1.18 1.43 1.47 1.40 
DOL ESOP settlement expenses— 0.10 — — — 
Tax effect— (0.02)— — — 
ROAA excluding DOL ESOP settlement expenses1.31 1.26 1.43 1.47 1.40 
(Gain) / loss on sale of investment securities— — — — (0.06)
Tax effect— — — — 0.01 
ROAA excluding (gain) / loss on sale of investment securities1.31 1.26 1.43 1.47 1.35 
Death benefit on BOLI— — (0.03)(0.02)— 
ROAA excluding death benefit on BOLI1.31 1.26 1.40 1.45 1.35 
Prepayment penalties on borrowings— — — 0.01 — 
Tax effect— — — — — 
ROAA excluding prepayment penalties on borrowings1.31 1.26 1.40 1.46 1.35 
Adjusted ROAA1.31 %1.26 %1.40 %1.46 %1.35 %

14
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Return on Average Common Equity
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Average common equity$716,341 $719,643 $724,412 $706,652 $697,401 
Return on average common equity (“ROACE”) as reported13.34 %11.81 %12.64 %12.59 %11.88 %
Acquisition expenses— 0.49 0.44 0.14 — 
Tax effect— (0.10)(0.09)(0.03)— 
ROACE excluding acquisition expenses13.34 12.20 12.99 12.70 11.88 
Credit loss expense acquired loans— — 1.11 — — 
Tax effect— — (0.23)— — 
ROACE excluding credit loss expense acquired loans13.34 12.20 13.87 12.70 11.88 
Gain on sale of ESOP trustee accounts— — (1.28)— — 
Tax effect— — 0.27 — — 
ROACE excluding gain on sale of ESOP trustee accounts13.34 12.20 12.86 12.70 11.88 
DOL ESOP settlement expenses— 1.05 — — — 
Tax effect— (0.17)— — — 
ROACE excluding DOL ESOP settlement expenses13.34 13.08 12.86 12.70 11.88 
(Gain) / loss on sale of investment securities— — — — (0.53)
Tax effect— — — — 0.11 
ROACE excluding (gain) / loss on sale of investment securities13.34 13.08 12.86 12.70 11.46 
Death benefit on BOLI— — (0.28)(0.15)— 
ROACE excluding death benefit on BOLI13.34 13.08 12.58 12.55 11.46 
Prepayment penalties on borrowings— — — 0.07 — 
Tax effect— — — (0.01)— 
ROACE excluding prepayment penalties on borrowings13.34 %13.08 %12.58 %12.61 %11.46 %
Adjusted ROACE13.34 %13.08 %12.58 %12.61 %11.46 %

15
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Non–GAAP Reconciliation of Return on Average Tangible Equity
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Average common equity$716,341 $719,643 $724,412 $706,652 $697,401 
Less: Average intangible assets176,356 179,594 174,920 173,905 174,785 
Average tangible equity$539,985 $540,049 $549,492 $532,747 $522,616 
Return on average tangible equity (“ROATE”) as reported17.70 %15.74 %16.66 %16.69 %15.85 %
Acquisition expenses— 0.65 0.58 0.18 — 
Tax effect— (0.14)(0.12)(0.04)— 
ROATE excluding acquisition expenses17.70 16.25 17.12 16.83 15.85 
Credit loss expense acquired loans— — 1.47 — — 
Tax effect— — (0.31)— — 
ROATE excluding credit loss expense acquired loans17.70 16.25 18.28 16.83 15.85 
Gain on sale of ESOP trustee accounts— — (1.68)— — 
Tax effect— — 0.35 — — 
ROATE excluding gain on sale of ESOP trustee accounts17.70 16.25 16.95 16.83 15.85 
DOL ESOP settlement expenses— 1.40 — — — 
Tax effect— (0.23)— — — 
ROATE excluding DOL ESOP settlement expenses17.70 17.42 16.95 16.83 15.85 
(Gain) / loss on sale of investment securities— — — — (0.71)
Tax effect— — — — 0.15 
ROATE excluding (gain) / loss on sale of investment securities17.70 17.42 16.95 16.83 15.29 
Death benefit on BOLI— — (0.37)(0.20)— 
ROATE excluding death benefit on BOLI17.70 17.42 16.58 16.63 15.29 
Prepayment penalties on borrowings— — — 0.09 — 
Tax effect— — — (0.02)— 
ROATE excluding prepayment penalties on borrowings17.70 %17.42 %16.58 %16.70 %15.29 %
Adjusted ROATE17.70 %17.42 %16.58 %16.70 %15.29 %

Earnings Conference Call

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

Participants may access the live conference call on April 28, 2022 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 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 May 5, 2022. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 412–317–0088 from other international locations, and entering the access code 7430984.


16
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.4 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, 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.


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. 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 risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in Horizon’s Annual Report on Form 10–K and its quarterly reports on Form 10–Q. Further, statements about the effects of the COVID–19 pandemic on our business, operations, financial performance, and prospects may constitute forward–looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward–looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties, and us. 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.

17
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Financial Highlights
(Dollars in Thousands, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Balance sheet:
Total assets$7,420,328 $7,374,903 $7,534,240 $6,109,227 $6,055,528 
Interest earning deposits & federal funds sold20,827 502,364 872,540 209,304 444,239 
Interest earning time deposits4,046 4,782 5,767 6,994 7,983 
Investment securities3,118,641 2,713,255 2,438,874 1,844,470 1,423,825 
Commercial loans2,259,327 2,176,959 2,173,200 2,104,627 2,177,858 
Mortgage warehouse loans105,118 109,031 169,909 205,311 266,246 
Residential mortgage loans593,372 594,382 603,540 559,437 581,929 
Consumer loans753,900 727,259 713,432 650,144 638,403 
Earning assets6,883,254 6,865,051 7,006,513 5,610,538 5,571,304 
Non–interest bearing deposit accounts1,325,570 1,360,338 1,324,757 1,102,950 1,133,412 
Interest bearing transaction accounts3,782,644 3,711,767 3,875,882 3,105,328 2,947,438 
Time deposits743,283 730,886 779,260 573,348 640,966 
Borrowings728,664 675,753 670,753 439,094 481,488 
Subordinated notes58,786 58,750 58,713 58,676 58,640 
Junior subordinated debentures issued to capital trusts56,850 56,785 56,722 56,662 56,604 
Total stockholders’ equity677,450 723,209 708,542 710,374 689,379 

18
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
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,
20222021202120212021
Income statement:
Net interest income$48,171 $49,976 $46,544 $42,632 $42,538 
Credit loss expense (recovery)(1,386)(2,071)1,112 (1,492)367 
Non–interest income14,155 12,828 16,044 15,207 13,873 
Non–interest expense36,610 39,370 34,349 33,388 32,172 
Income tax expense3,539 4,080 4,056 3,770 3,450 
Net income$23,563 $21,425 $23,071 $22,173 $20,422 
Per share data:
Basic earnings per share$0.54 $0.49 $0.53 $0.50 $0.46 
Diluted earnings per share0.54 0.49 0.52 0.50 0.46 
Cash dividends declared per common share0.15 0.15 0.15 0.13 0.13 
Book value per common share15.56 16.61 16.28 16.16 15.69 
Tangible book value per common share11.55 12.58 12.05 12.24 11.74 
Market value – high23.45 21.14 18.47 19.13 19.94 
Market value – low$18.67 $18.01 $15.83 $16.98 $15.43 
Weighted average shares outstanding – Basis43,554,713 43,534,298 43,810,729 43,950,501 43,919,549 
Weighted average shares outstanding – Diluted43,734,556 43,733,416 43,958,870 44,111,103 44,072,581 
Key ratios:
Return on average assets1.31 %1.14 %1.41 %1.45 %1.40 %
Return on average common stockholders’ equity13.34 11.81 12.64 12.59 11.88 
Net interest margin2.99 2.97 3.17 3.14 3.29 
Allowance for credit losses to total loans1.41 1.51 1.55 1.58 1.56 
Average equity to average assets9.79 9.64 11.13 11.50 11.75 
Efficiency ratio58.74 62.69 54.88 57.73 57.03 
Annualized non–interest expense to average assets2.03 2.09 2.09 2.18 2.20 
Bank only capital ratios:
Tier 1 capital to average assets9.03 8.50 8.38 8.79 8.81 
Tier 1 capital to risk weighted assets13.09 13.69 11.86 12.80 12.71 
Total capital to risk weighted assets14.22 14.72 12.97 14.09 13.86 


19
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Financial Highlights
(Dollars in Thousands Except Ratios, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Loan data:
Substandard loans$57,928 $56,968 $91,317 $82,488 $86,472 
30 to 89 days delinquent6,358 8,536 3,997 3,336 5,099 
Non–performing loans:
90 days and greater delinquent – accruing interest107 145 200 — 267 
Trouble debt restructures – accruing interest2,372 2,391 2,433 1,853 1,828 
Trouble debt restructures – non–accrual1,501 1,521 1,604 2,294 2,271 
Non–accrual loans16,133 14,962 25,137 18,175 20,700 
Total non–performing loans$20,113 $19,019 $29,374 $22,322 $25,066 
Non–performing loans to total loans0.54 %0.53 %0.80 %0.63 %0.68 %

Allocation of the Allowance for Credit Losses
(Dollars in Thousands, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Commercial $37,789 $40,775 $43,121 $41,766 $42,980 
Residential mortgage4,351 3,856 3,737 4,108 4,229 
Mortgage warehouse1,055 1,059 1,054 1,155 1,163 
Consumer9,313 8,596 8,867 8,620 8,814 
Total$52,508 $54,286 $56,779 $55,649 $57,186 
Net Charge–offs (Recoveries)
(Dollars in Thousands Except Ratios, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Commercial $38 $926 $(25)$40 $158 
Residential mortgage(10)126 (29)(23)(65)
Mortgage warehouse— — — — — 
Consumer108 360 36 22 115 
Total$136 $1,412 $(18)$39 $208 
Percent of net charge–offs (recoveries) to average loans outstanding for the period0.00 %0.04 %0.00 %0.00 %0.01 %
20
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Total Non–performing Loans
(Dollars in Thousands Except Ratios, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Commercial $7,844 $7,509 $16,121 $10,345 $12,802 
Residential mortgage8,584 8,005 8,641 7,841 7,916 
Mortgage warehouse— — — — — 
Consumer3,685 3,505 4,612 4,136 4,348 
Total$20,113 $19,019 $29,374 $22,322 $25,066 
Non–performing loans to total loans0.54 %0.53 %0.80 %0.63 %0.68 %
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Commercial $2,245 $2,861 $2,861 $1,400 $1,696 
Residential mortgage170 695 117 37 37 
Mortgage warehouse— — — — — 
Consumer5 5 29 46 — 
Total$2,420 $3,561 $3,007 $1,483 $1,733 
21
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Average Balance Sheets
(Dollars in Thousands, Unaudited)
Three Months EndedThree Months Ended
March 31, 2022March 31, 2021
Average
Balance		InterestAverage
Rate		Average
Balance		InterestAverage
Rate
Assets
Interest earning assets
Federal funds sold$237,605 $91 0.16 %$267,241 $66 0.10 %
Interest earning deposits20,673 24 0.47 %25,527 31 0.49 %
Investment securities – taxable1,646,525 7,391 1.82 %410,063 1,451 1.44 %
Investment securities – non–taxable (1)
1,279,082 6,697 2.69 %956,464 5,223 2.80 %
Loans receivable (2) (3)
3,616,664 37,879 4.26 %3,780,339 40,818 4.39 %
Total interest earning assets6,800,549 52,082 3.22 %5,439,634 47,589 3.66 %
Non–interest earning assets
Cash and due from banks104,676 85,269 
Allowance for credit losses(54,307)(57,779)
Other assets468,757 469,025 
Total average assets$7,319,675 $5,936,149 
Liabilities and Stockholders’ Equity
Interest bearing liabilities
Interest bearing deposits$4,478,621 $1,496 0.14 %$3,524,103 $2,343 0.27 %
Borrowings503,846 1,043 0.84 %365,586 1,231 1.37 %
Repurchase agreements139,742 37 0.11 %111,692 38 0.14 %
Subordinated notes58,763 880 6.07 %58,616 880 6.09 %
Junior subordinated debentures issued to capital trusts56,807 455 3.25 %56,571 559 4.01 %
Total interest bearing liabilities5,237,779 3,911 0.30 %4,116,568 5,051 0.50 %
Non–interest bearing liabilities
Demand deposits1,322,781 1,063,268 
Accrued interest payable and other liabilities42,774 58,912 
Stockholders’ equity716,341 697,401 
Total average liabilities and stockholders’ equity$7,319,675 $5,936,149 
Net interest income / spread$48,171 2.92 %$42,538 3.16 %
Net interest income as a percent of average interest earning assets (1)
2.99 %3.29 %
(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.

22
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
March 31,
2022		December 31,
2021
(Unaudited)
Assets
Cash and due from banks$120,954 $593,508 
Interest earning time deposits4,046 4,782 
Investment securities, available for sale1,112,512 1,160,812 
Investment securities, held to maturity (fair value $1,827,845 and $1,559,991)
2,006,129 1,552,443 
Loans held for sale3,781 12,579 
Loans, net of allowance for credit losses of $52,508 and $54,286
3,659,209 3,590,331 
Premises and equipment, net93,075 93,441 
Federal Home Loan Bank stock24,242 24,440 
Goodwill154,572 154,572 
Other intangible assets20,016 20,941 
Interest receivable27,476 26,137 
Cash value of life insurance97,660 97,150 
Other assets96,656 80,753 
Total assets$7,420,328 $7,411,889 
Liabilities
Deposits
Non–interest bearing$1,325,570 $1,360,338 
Interest bearing4,525,927 4,442,653 
Total deposits5,851,497 5,802,991 
Borrowings728,664 712,739 
Subordinated notes58,786 58,750 
Junior subordinated debentures issued to capital trusts56,850 56,785 
Interest payable1,420 2,235 
Other liabilities45,661 55,180 
Total liabilities6,742,878 6,688,680 
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 43,874,763 and 43,766,931 shares,
   Outstanding 43,572,796 and 43,547,942 shares
— — 
Additional paid–in capital351,522 352,122 
Retained earnings380,700 363,742 
Accumulated other comprehensive income(54,772)7,345 
Total stockholders’ equity677,450 723,209 
Total liabilities and stockholders’ equity$7,420,328 $7,411,889 
23
Horizon Bancorp, Inc. Reports First Quarter 2022 EPS of $0.54
Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Interest income
Loans receivable$37,879 $41,171 $40,392 $39,236 $40,818 
Investment securities – taxable7,506 6,491 4,565 2,528 1,548 
Investment securities – non–taxable6,697 6,456 5,911 5,656 5,223 
Total interest income52,082 54,118 50,868 47,420 47,589 
Interest expense
Deposits1,496 1,663 1,808 2,053 2,343 
Borrowed funds1,080 1,061 1,075 1,296 1,269 
Subordinated notes880 881 880 881 880 
Junior subordinated debentures issued to capital trusts455 537 561 558 559 
Total interest expense3,911 4,142 4,324 4,788 5,051 
Net interest income48,171 49,976 46,544 42,632 42,538 
Credit loss expense (recovery)(1,386)(2,071)1,112 (1,492)367 
Net interest income after credit loss expense (recovery)49,557 52,047 45,432 44,124 42,171 
Non–interest Income
Service charges on deposit accounts2,795 2,510 2,291 2,157 2,234 
Wire transfer fees159 205 210 222 255 
Interchange fees2,780 3,082 2,587 2,892 2,340 
Fiduciary activities1,503 1,591 2,124 1,961 1,743 
Gains / (losses) on sale of investment securities— — — — 914 
Gain on sale of mortgage loans2,027 4,167 4,088 5,612 5,296 
Mortgage servicing income net of impairment3,489 300 336 1,503 213 
Increase in cash value of bank owned life insurance510 547 534 502 511 
Death benefit on bank owned life insurance— — 517 266 — 
Other income892 426 3,357 92 367 
Total non–interest income14,155 12,828 16,044 15,207 13,873 
Non–interest expense
Salaries and employee benefits19,735 20,549 18,901 17,730 16,871 
Net occupancy expenses3,561 3,204 2,935 3,084 3,318 
Data processing2,537 2,672 2,526 2,388 2,376 
Professional fees314 562 522 588 544 
Outside services and consultants2,525 2,197 2,330 2,220 1,702 
Loan expense2,545 2,803 2,645 3,107 2,822 
FDIC insurance expense725 798 279 500 800 
Other losses168 1,925 69 6 283 
Other expenses4,500 4,660 4,142 3,765 3,456 
Total non–interest expense36,610 39,370 34,349 33,388 32,172 
Income before income taxes27,102 25,505 27,127 25,943 23,872 
Income tax expense3,539 4,080 4,056 3,770 3,450 
Net income$23,563 $21,425 $23,071 $22,173 $20,422 
Basic earnings per share$0.54 $0.49 $0.53 $0.50 $0.46 
Diluted earnings per share0.54 0.49 0.52 0.50 0.46 
24