Horizon Bancorp, Inc. Releases 2nd Quarter 2021 Financial Highlights, Including Net Earnings of $1,383,000 or $0.33 Per Share, Net Loan Growth (Excluding PPP) of $16,652,000, and Improving Asset Quality Metrics

Rhea-AI Summary

Horizon Bancorp, Inc. (OTC Pink: HRRB) reported net income of $1,383,000 or $0.33 per share for Q2 2021, marking a 3.21% increase from Q1 2021 and a significant 50.82% rise year-over-year. Factors contributing to this growth include participation in the PPP program, reduced cost of funds at 0.19%, and strong conventional loan growth of $16,652,000. The company maintains a loan loss allowance of 1.48% and reported non-interest demand deposits making up 40% of total deposits. The bank aims to enhance efficiency and loan production amidst a competitive environment.

Positive

• Net income of $1,383,000 for Q2 2021, up 50.82% YoY.
• Conventional loan growth of $16,652,000.
• Average cost of funds decreased to 0.19%.
• Book value per share increased to $8.61, up 12.84% YoY.
• Non-interest demand deposits represent nearly 40% of total deposits.

Negative

• Dependence on the PPP program; potential impact post-PPP expiration.
• Continuing economic uncertainties, such as labor shortages.

Horizon Bancorp, Inc. (OTC Pink: HRRB), the holding company for Horizon Community Bank, announced net income for the quarter ended June 30, 2021 of $1,383,000 or $0.33 per share, up 3.21% over first quarter 2021 earnings, and 50.82% over earnings for the quarter ended June 30, 2020. Earnings are influenced by the bank’s participation in the PPP program and the robust allowance for loan and lease loss has not required any significant additional loan loss provision. Earnings were also influenced by a further reduction in cost of funds, net commercial loan growth, and the performance of the government guaranteed loan division.

June 30, 2021 highlights include:

• Second quarter 2021 net earnings improvement of 50.82% over same quarter last year
• Book value per share of $8.61, a 6.82% increase over prior quarter and 12.84% over prior year
• Conventional loan growth (excluding PPP) of $16,652,000 for the quarter
• Average quarterly cost of funds reduced to 0.19%
• Non-interest demand deposit representing nearly 40% of total deposits

Ralph Tapscott, President and CEO, stated, “Overall we are very pleased with the quarterly performance. Our primary focus has been on commercial loan production, further reducing the bank’s cost of funds, and enhancing non-interest income. For the first time in most of our careers we were attempting to limit deposits. This is caused by the need to effectively deploy the funds and simultaneously manage our capital position. We have also repaid all but $2 million in Federal Home Loan Bank advances. The economy seems reasonably sound, other than a general shortage of workers in many industry sectors. The resulting asset quality metrics are encouraging. We are vigilant in our continual assessment of economic conditions, the condition and performance of our portfolios, and lingering health concerns with staff and clients.”

The bank utilizes peer group metrics from the Uniform Bank Performance Report (“UBPR”) to measure progress in a number of key areas. Strategic initiatives are in place to enhance rankings in return on average assets, loan yield, cost of funds, past due loan percentages, non-accrual loans, efficiency ratio, and assets per employee. Peer data is not yet available for June 30, 2021, but first quarter results were favorable or moving in a favorable direction relative to all these metrics.

The Paycheck Protection Program (PPP) officially ended on June 30, 2021. The bank’s production in rounds 1.a. and 1.b. of 2020 was 695 loans for $68 million. The 2021 round 2 production resulted in an additional 252 loans for $24.8 million. Thus far, PPP forgiveness has been granted on 88% of round 1.a. and 1.b. borrowers. “Most bank portfolios are experiencing PPP loan forgiveness at the same time we attempt to ramp up business commercial lending. Total loans are up $5,558,000 for second quarter 2021, and $16,652,000 was net non-PPP production, with the remainder being nominal PPP fundings and aggressive PPP forgiveness. What is truly encouraging is the monthly increase in net production, coupled with a current loan pipeline of $74,000,000,” stated Tapscott.

Credit quality metrics are shown in the following table and reflect improvements quarter over quarter and year over year in nonaccrual loans and nonperforming assets. The bank maintains an ample allowance for loan and lease loss at 1.48% of total outstanding loans, and this is inclusive of PPP.

	06/30/2021	03/31/2021	06/30/2020
30+ Days Delinquent / Loans	0.13%	0.15%	0.81%
Non-Accrual Loans / Loans	0.21%	0.31%	0.33%
Other Real Estate Owned	$465,946	$904,657	$1,370,267
Net Charge Offs/Loans	0.002%	-0.01%	0.055%
ALLL/Loans	1.48%(1)	1.51%	1.20%
(1) ALLL/Loans excluding PPP loans outstanding is 1.66%

The Bank remains well capitalized under regulatory guidelines. The Bank’s regulatory capital ratios are further addressed in the following table –

	06/30/2021	03/31/2021	06/30/2020
Tier 1 Leverage Ratio	7.78%	8.15%	7.45%
Tier 1 Common Equity Ratio	14.31%	14.39%	12.09%
Tier 1 Capital Ratio	14.31%	14.39%	12.09%
Total Capital Ratio	15.56%	15.64%	13.34%

“In addition to monitoring the environment, our focus is on our core business, slowing deposit growth, enhancing loan and fee production, further developing our treasury platform, and using technology to further enhance efficiencies,” stated Tapscott.

About the Company

Horizon Bancorp, Inc. (OTC: HRRB), the holding company for Horizon Community Bank has $532 million in total assets as of June 30, 2021 and is headquartered in Lake Havasu City, Arizona. It owns, as its sole subsidiary, Horizon Community Bank, a locally owned and operated bank with branches in Fort Mohave, Kingman, Lake Havasu City, Phoenix Metro, Parker and Quartzsite, Arizona, plus loan offices in Goodyear and Phoenix, Arizona. The Bank has 89 employees that provide high-touch, customized financial services to largely small business and commercial clients. The Bank operates a mortgage operation and is a leader in government guaranteed lending. Consumer services are also offered in the communities the bank serves. FDIC insured. Learn more at http://www.horizoncommunitybank.com.

Forward Looking Statements

This press release may include forward-looking statements about Horizon Bancorp, Inc. and Horizon Community Bank. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: Annualized, proforma and projected or estimated numbers in this release are illustrative only, are not forecasts and may not reflect actual results. All forward-looking statements are based on information available at the time of this release, and Horizon Bancorp, Inc. and Horizon Community Bank assume no obligation to update any forward-looking statements.

Unaudited Financial Information follows.

Horizon Bancorp, Inc.
Financial Information - Unaudited
In thousands - except per share data
			For the Three Months								For the Six Months
			ended June 30								ended June 30								Year-End
			6/30/21				6/30/20				6/30/21				6/30/20				12/31/20
Summary Income Data:
Interest Income		$	4,200			$	4,285			$	8,763			$	8,479			$	17,641
Interest Expense			248				545				549				1,289				2,072
Net Interest Income			3,952				3,740				8,214				7,190				15,569
Provision for loans losses			0				295				75				430				930
Non-interest Income			1,560				953				2,467				1,887				4,030
Non-interest expense			3,679				3,194				6,998				6,640				13,904
Income (loss) before income taxes			1,834				1,204				3,608				2,007				4,766
Provision (benefit) for income taxes			451				287				885				470				995
Net Income		$	1,383			$	917			$	2,723			$	1,537			$	3,770
Per Share Data:
Shares outstanding end-of-period			4,132				4,131				4,132				4,131				4131
Earnings per common share		$	0.33			$	0.22			$	0.66			$	0.37			$	0.91
Total shareholder's equity		$	35,588			$	31,533			$	35,588			$	31,533			$	33,760
Book Value per share		$	8.61			$	7.63			$	8.61			$	7.63			$	8.17
Selected Balance Sheet Data:
Total assets		$	532,518			$	462,385			$	532,518			$	462,385			$	475,720
Securities available-for-sale			131,152				33,907				131,152				33,907				103,558
Loans			288,395				308,613				288,395				308,613				293,220
Allowance for loan losses			4,260				3,702				4,260				3,702				4,179
Deposits			469,660				398,632				469,660				398,632				413,888
Other borrowings			14,428				26,613				14,428				26,613				15,615
Shareholder's Equity			35,588				31,533				35,588				31,533				33,760
Performance Ratios:
Return on average assets (annualized) (%)			1.03	%			0.86	%			1.05	%			0.77	%			0.88	%
Return on average shareholder's equity
(annualized) (%)			16.16	%			11.88	%			15.91	%			10.16	%			12.03	%
Shareholder's equity to assets (%)			6.68	%			6.82	%			6.68	%			6.82	%			7.10	%
Net interest margin (%)			3.07	%			3.74	%			3.31	%			3.96	%			3.86	%
Cost of funds			0.19	%			0.55	%			0.22	%			0.71	%			0.51	%
Average assets		$	538,714			$	425,451			$	520,050			$	397,951			$	427,840
Efficiency ratio (%)			66.74	%			68.06	%			65.52	%			73.15	%			70.94	%
Asset Quality Data:
Nonaccrual loans		$	616			$	1,020			$	616			$	1,020			$	1,130
Troubled debt restructurings		$	1,553			$	1,648			$	1,553			$	1,648			$	1,593
Other real estate		$	466			$	1,370			$	466			$	1,370			$	1,226
Nonperforming assets		$	1,082			$	2,390			$	1,082			$	2,390			$	2,356
Nonperforming assets to total assets (%)			0.20	%			0.52	%			0.20	%			0.52	%			0.50	%
Nonperforming loans to total loans (%)			0.21	%			0.33	%			0.21	%			0.33	%			0.39	%
Reserve for loan losses to total loans (%)			1.48	%			1.20	%			1.48	%			1.20	%			1.43	%
Reserve for loan losses to nonperforming loans (%)			691.48	%			362.94	%			691.48	%			362.94	%			369.82	%
Reserve for loan losses to nonperforming assets (%)			393.67	%			154.90	%			393.67	%			154.90	%			177.38	%
Net charge-offs for period			5				161				(6	)			196				220
Average Loans		$	286,385			$	295,408			$	286,986			$	273,172			$	290,674
Ratio of net charge-offs to average loans (%)			0.002	%			0.055	%			-0.002	%			0.072	%			0.080	%
CARES Act - Temporary loan payment relief (#)			0				134				0				134				0
CARES Act - Temporary loan payment relief ($)		$	0				60,188			$	0			$	60,188			$	0
Regulatory Capital Ratios
Horizon Community Bank:
Tier 1 leverage ratio (%)			7.78	%			7.45	%			7.78	%			7.45	%			8.38	%
Common Equity Tier 1 ratio (%)			14.31	%			12.09	%			14.31	%			12.09	%			13.74	%
Tier 1 risk-based capital ratio (%)			14.31	%			12.09	%			14.31	%			12.09	%			13.74	%
Total risk-based capital ratio (%)			15.56	%			13.34	%			15.56	%			13.34	%			14.99	%

 

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FAQ

What were Horizon Bancorp's earnings results for Q2 2021?

Horizon Bancorp reported net income of $1,383,000 or $0.33 per share for Q2 2021, a 50.82% increase compared to the same quarter last year.

How much did Horizon Bancorp's conventional loan portfolio grow in Q2 2021?

The conventional loan portfolio grew by $16,652,000 during Q2 2021.

What is Horizon Bancorp's average cost of funds as of June 30, 2021?

Horizon Bancorp's average cost of funds was reduced to 0.19% as of June 30, 2021.

What are the key financial metrics for Horizon Bancorp as of June 30, 2021?

Key metrics include a book value per share of $8.61 and a loan loss allowance of 1.48% of total outstanding loans.

What challenges does Horizon Bancorp face following the end of the PPP?

Post-PPP, Horizon Bancorp faces challenges including potential impacts on loan production and ongoing economic uncertainties, particularly labor shortages.