Horizon Bancorp, Inc. Releases 3rd Quarter 2021 Financial Highlights, Including Net Earnings of $1,590,000 or $0.38 Per Share, and Quarterly Earnings Per Share up 46.15% Over Third Quarter of 2020

Rhea-AI Summary

Horizon Bancorp, Inc. (OTC Pink: HRRB) reported a net income of $1,590,000, or $0.38 per share, for Q3 2021, marking a 14.97% increase from Q2 2021 and a 45.47% rise compared to Q3 2020. Key highlights include a book value per share of $8.87 and improved asset quality with non-performing assets down to 0.16%. However, conventional loan growth decreased by 1.44%. The bank’s allowance for loan loss remains robust at 1.59%. Ralph Tapscott, CEO, noted challenges in loan funding due to supply chain issues and labor shortages, despite ongoing improvements in non-interest income.

Positive

• Net income increased by 14.97% quarter-over-quarter and 45.47% year-over-year.
• Book value per share rose to $8.87, a 3.02% increase over the previous quarter.
• Non-performing assets ratio improved to 0.16%.
• Allowance for loan and lease loss stands strong at 1.59%.

Negative

• Conventional loan growth decreased by 1.44% in the quarter.
• Loan production for the quarter was below expectations at $33,700,000.
• Unfunded construction commitments are slower to fund than anticipated.

LAKE HAVASU CITY, Ariz.--(BUSINESS WIRE)-- Horizon Bancorp, Inc. (OTC Pink: HRRB), the holding company for Horizon Community Bank, announced net income for the quarter ended September 30, 2021 of $1,590,000 or $0.38 per share, up 14.97% over second quarter 2021 earnings, and up 45.47% over earnings for the quarter ended September 30, 2020.

September 30, 2021 highlights include:

• Third quarter 2021 net earnings improvement of 45.47% over same quarter last year
• Book value per share of $8.87, a 3.02% increase over prior quarter and 12.56% over prior year
• Conventional loan growth (excluding PPP) down 1.44% for the quarter
• Improved asset quality with non-performing assets ratio reduction to 0.16%
• Average quarterly cost of funds reduced to 0.15%
• Non-interest demand deposit representing nearly 37% of total deposits

Ralph Tapscott, President and CEO stated, “Overall we are pleased with the quarterly performance. Earnings are strong, asset quality is favorable and trending in the right direction, and our cost of funds is well managed. This quarter’s anomaly was a reduction in non-PPP loan funding, despite a strong second quarter. We were plagued with loan prepayments, through asset or business sales and competitive rate refinances. Additionally, due most to labor shortages and supply chain issues, the pace of our funding of construction financing has slowed over the past 12 months. We are pleased with our generation of non-interest income, and this is largely generated through service charges, treasury management, our SBA department, and our mortgage department. Looking into 2022, we are in-process of renegotiating several major contracts, that we believe will meaningfully reduce non-interest expense. The Arizona economies have performed well throughout the pandemic, but we are now seeing supply chain and personnel related issues. Our allowance for loan and lease loss is more than ample, given our analysis, and this has not required any significant funding this year. We have, however, expensed approximately $455,000 to further write down other real estate.”

“The bank’s strong PPP performance, in both originations and forgiveness, has resulted in all but $14,665,000 yet to be forgiven, or approximately $80,000,000 having been forgiven in the past 15 months. The administrative aspect of this line of business is essentially completed and will continue to reduce through year-end. The quarterly reduction in non-PPP loans was further aggravated during the quarter. Gross loan production for the quarter was $33,700,000, which included $5,300,000 of SBA loans and the guaranteed portion of these were subsequently sold in the secondary market. Our unfunded construction commitments stand at $21,482,000, and these are funding at a slower pace than expected. That being said, we are looking for improved production with a loan pipeline of $78,800,000. Loan pricing, especially in the metro markets, is extremely competitive. We have largely curtailed active deposit seeking, until those liabilities can be effectively deployed into loans.”

Credit quality metrics are shown in the following table and reflect improvement year over year and are favorable relative to our peers. Other real estate has been dramatically reduced through both sales and write downs. The bank maintains an ample allowance for loan and lease loss at 1.59% of total outstanding loans, and this is inclusive of PPP.

		09/30/2021		06/30/2021		09/30/2020
30+ Days Delinquent / Loans		0.19%		0.13%		0.12%
Non-Accrual Loans / Loans		0.22%		0.21%		0.39%
Other Real Estate Owned		$300,809		$465,946		$1,344,296
Net Charge Offs/Loans		-0.002%		0.002%		0.08%
ALLL/Loans		1.59%(1)		1.48%		1.23%

(1)

ALLL/Loans excluding PPP loans outstanding is 1.69

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

		09/30/2021		06/30/21		09/30/2020
Tier 1 Leverage Ratio		8.02%		7.78%		7.04%
Tier 1 Common Equity Ratio		15.08%		14.31%		11.92%
Tier 1 Capital Ratio		15.08%		14.31%		11.92%
Total Capital Ratio		16.34%		15.56%		13.17%

“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 $550 million in total assets as of September 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 88 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 Nine Months
						ended September 30							ended September 30							Year-End
						9/30/21				9/30/20			9/30/21			9/30/20				12/31/20
Summary Income Data:
Interest Income					$	4,629			$	4,400		$	13,392		$	12,879		$		17,641
Interest Expense						193				441			742			1,730				2,072
Net Interest Income						4,436				3,959			12,650			11,149				15,569
Provision for loans losses						0				225			75			655				930
Non-interest Income						1,539				1,097			4,006			2,984				4,030
Non-interest expense						3,862				3,520			10,860			10,160				13,904
Income (loss) before income taxes						2,112				1,311			5,721			3,318				4,766
Provision(benefit) for income taxes						522				218			1,407			688				995
Net Income					$	1,590			$	1,093		$	4,314		$	2,630		$		3,770
Per Share Data:
Shares outstanding end-of-period						4,132				4,131			4,132			4,131				4131
Earnings per common share					$	0.38			$	0.26		$	1.04		$	0.64		$		0.91
Total shareholder's equity					$	36,654			$	32,566		$	36,654		$	32,566		$		33,760
Book Value per share					$	8.87			$	7.88		$	8.87		$	7.88		$		8.17
Selected Balance Sheet Data:
Total assets					$	549,935			$	454,633		$	549,935		$	454,633		$		475,720
Securities available-for-sale						149,010				33,907			149,010			33,907				103,558
Loans						267,519				312,868			267,519			312,868				293,220
Allowance for loan losses						4,264				3,889			4,264			3,889				4,179
Deposits						485,470				401,409			485,470			401,409				413,888
Other borrowings						14,093				15,680			14,093			15,680				15,615
Shareholder's Equity						36,654				32,566			36,654			32,566				33,760
Performance Ratios:
Return on average assets (annualized) (%)						1.18%				0.95%			1.09%			0.85%				0.88%
Return on average shareholder's equity
(annualized) (%)						17.53%				13.71%			16.47%			11.39%				12.03%
Shareholder's equity to assets (%)						6.67%				7.16%			6.67%			7.16%				7.10%
Net interest margin (%)						3.43%				3.62%			3.35%			3.83%				3.86%
Cost of funds						0.15%				0.40%			0.20%			0.59%				0.51%
Average assets					$	539,412			$	460,817		$	527,048		$	412,489		$		427,840
Efficiency ratio (%)						64.65%				69.62%			65.20%			71.89%				70.94%
Asset Quality Data:
Nonaccrual loans					$		581		$	1,230		$	581		$	1,230		$	1,130
Troubled debt restructurings					$		1,015		$	1,625		$	1,015		$	1,625		$	1,593
Other real estate					$		301		$	1,345		$	301		$	1,345		$	1,226
Nonperforming assets					$		882		$	2,575		$	882		$	2,575		$	2,356
Nonperforming assets to total assets (%)							0.16%			0.57%			0.16%			0.57%			0.50%
Nonperforming loans to total loans (%)							0.22%			0.39%			0.22%			0.39%			0.39%
Reserve for loan losses to total loans (%)							1.59%			1.24%			1.59%			1.24%			1.43%
Reserve for loan losses to nonperforming loans (%)							733.90%			316.18%			733.90%			316.18%			369.82%
Reserve for loan losses to nonperforming assets (%)							483.44%			151.03%			483.44%			151.03%			177.38%
Net charge-offs for period							(4)			39			(10)			234			220
Average Loans					$		284,075		$	309,123		$	286,005		$	285,243		$	290,674
Ratio of net charge-offs to average loans (%)							-0.001%			0.013%			-0.003%			0.082%			0.080%
CARES Act - Temporary loan payment relief (#)							0			6			0			6			0
CARES Act - Temporary loan payment relief ($)					$		0			6,755		$	0		$	6,755		$	0
Regulatory Capital Ratios
Horizon Community Bank:
Tier 1 leverage ratio (%)							8.02%			7.04%			8.02%			7.04%			8.38%
Common Equity Tier 1 ratio (%)							15.08%			11.92%			15.08%			11.92%			13.74%
Tier 1 risk-based capital ratio (%)							15.08%			11.92%			15.08%			11.92%			13.74%
Total risk-based capital ratio (%)							16.34%			13.17%			16.34%			13.17%			14.99%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211101005970/en/

Ralph Tapscott, President/CEO, ralpht@horizoncommunitybank.com

Ross Johnson, EVP/CFO, rossj@horizoncommunitybank.com

Source: Horizon Bancorp, Inc.

FAQ

What were Horizon Bancorp's Q3 2021 earnings?

Horizon Bancorp reported net income of $1,590,000, or $0.38 per share, for Q3 2021.

How much did Horizon Bancorp's earnings grow compared to last year?

Earnings for Q3 2021 grew by 45.47% compared to Q3 2020.

What challenges did Horizon Bancorp face in Q3 2021?

The company faced challenges in loan funding due to labor shortages and supply chain issues.

What is Horizon Bancorp's allowance for loan loss as of Q3 2021?

The allowance for loan and lease loss is 1.59% of total outstanding loans as of Q3 2021.

How has the asset quality improved for Horizon Bancorp?

Horizon Bancorp improved its non-performing assets ratio to 0.16% in Q3 2021.