Horizon Bancorp, Inc. Releases 4th Quarter 2020 Financial Highlights, Including Deposit Growth of 39.03% and Earnings Per Share Growth of 30.30% Year-Over-Year

Rhea-AI Summary

Horizon Bancorp, Inc. (OTC Pink: HRRB) reported substantial growth in key financial metrics for the year ending December 31, 2020, with net income increasing 30.30% to $3,770,366 and total deposits rising 39.03%. The bank also experienced 17.60% growth in total loans and a 39.33% share of noninterest demand deposits. The credit quality remains stable, with no loans on payment deferral as of year-end. The bank's capital ratios indicate strong financial health, supporting continued participation in the Paycheck Protection Program.

Positive

• 30.30% increase in net income to $3,770,366
• 39.03% growth in total deposits for 12 months
• 17.60% growth in total loans for 12 months
• Total assets growth of 39.33%
• No loans on payment deferral as of December 31, 2020
• Strong regulatory capital ratios: Tier 1 Capital Ratio at 13.74%

Negative

• Net interest margin decreased by 12.67% to 3.86% for the year
• Credit quality concerns potentially masked by CARES Act liquidity

Horizon Bancorp, Inc. (OTC Pink: HRRB), the holding company for Horizon Community Bank, announced growth in total deposits of 39.03% for the 12-month period ended December 31, 2020. Growth in total loans of 17.60% for the 12-month period ended December 31, 2020. Net income for the 12 months ended December 31, 2020 totaled $3,770,366 compared to net income for the 12 months ended December 31, 2019 of $2,893,555, an increase of 30.30%. Earnings per share increased 30.30% over this same time period.

December 31, 2020 highlights include:

• 30.30% 12-month net income growth
• 39.03% 12-month deposit growth
• 67.85% 12-month noninterest deposit growth
• 33.23% of total deposits are noninterest demand deposits
• 39.33% 12-month total asset growth
• 17.60% 12-month loan growth
• 0.00% of total loan portfolio on payment deferrals at December 31, 2020

“As I stated last quarter, this year has been anything but normal. We have adapted and modified operations to further enhance our strategic initiatives in this unique operating environment. Again, this release will be in an extended format to provide transparency into our operation. We have been challenged to deliver banking in new and different ways and we are blessed that our staff has delivered and remained safe through this period,” stated Horizon Bancorp’s President and CEO, Ralph Tapscott.

“The majority of the regional economy has rebounded nicely. Many clients have reported record revenue and some have faced challenges. Beginning late in the first quarter of 2020, the two largest questions surrounding the banking industry dealt with forward credit quality and margin compression. This release will expand on both of these issues,” Tapscott reported. “I have had the opportunity to call many clients and ask about their interest in participating in round two of the CARES Act recently. Many of these clients have told me they do not qualify and many of these clients had a banner year, despite a large drop in revenue in March and April of 2020. This supports the resiliency of many of our markets and the velocity of the recovery. We funded approximately 680 Paycheck Protection Loans for approximately $67.5 million in the second quarter of 2020. We picked up approximately $100 million in new deposits, and we picked up over 70 new business relationships. I expect we will have continued strong performance in the second round of Paycheck Protection Program participation.

“Credit quality is obviously somewhat masked by CARES Act-infused liquidity. A couple of national analysts have predicted this may not be fully understood until the latter half of 2021 or early 2022. We follow these metrics closely and often compare our metrics to available peer metrics,” stated Tapscott. “In the height of the fear associated with the pandemic, late first quarter and early second quarter of 2020, the Bank had placed $51.6 million, or 22.50% of the loan portfolio, on 90-day payment deferment. That subsided to $6.7 million, or 2.15% of the portfolio by September 30, 2020, and no loans were on payment deferment on December 31, 2020. We believe we have been very proactive in managing credit risk. Our provision this year is almost twice the average of the prior three years,” stated Tapscott.

		12/31/20			9/30/2020			12/31/2019
30+ Days Delinquent / Loans			0.15%			0.12%			0.93%
Non-Accrual Loans / Loans			0.39%			0.39%			0.31%
Other Real Estate Owned		$	1,226,312		$	1,344,296		$	1,600,594
Net Charge Offs / Loans			-0.01%			-0.01%			0.03%
ALLL / Loans		1.43%(1)				1.24%			1.39%

(1) ALLL / Loans excluding PPP loans outstanding is 1.65%

The Bank’s net interest margin rebounded slightly in the fourth quarter, again influenced by the recognition of unamortized lender fees associated with the Paycheck Protection Program forgiveness. The Bank’s net interest margin declined 12.67%, to 3.86%, for the year ended December 31, 2020 compared to this same period of 2019. Management reduced interest expense by 36.32% over this same period. Monthly management reporting reflects interest expense to average earning assets of 0.23% for December of 2020, as compared to 0.97% for December of 2019. “Horizon Community Bank benefits from a strong core deposit base, representing approximately 85% of total deposits, and this is further evident with noninterest demand deposits representing 33% of total deposits,” Tapscott reported.

Horizon Bancorp augmented capital in 2020 through earnings retention and executed a $7.2 million senior debt facility. The Bank remains well capitalized under regulatory guidelines. The Bank’s regulatory capital ratios are further addressed in the following table:

		12/31/2020		09/30/2020		12/31/2019
Tier 1 Leverage Ratio		8.38%		7.04%		8.87%
Tier 1 Common Equity Ratio		13.74%		11.92%		11.47%
Tier 1 Capital Ratio		13.74%		11.92%		11.47%
Total Capital Ratio		14.99%		13.17%		12.72%

“Horizon Bancorp has historically provided limited guidance, but this expanded release format supports a discussion of strategies. We are again participating in round two of the Paycheck Protection Program, and we are expecting application volumes to be between 20%–30% of the initial round. As of year-end, we have received repayment or forgiveness on approximately 40% of the round one Paycheck Protection Program loans and have approximately an additional 20% submitted for and awaiting forgiveness. We believe we are far ahead of most financial institutions in applying for forgiveness. We have a robust pipeline of conventional commercial loans. We continue to develop our bankers and add new talent. 2021 reflects a number of new key performance indicators, and we have added metrics for efficiency and productivity,” stated Tapscott.

In closing, the Bank has successfully navigated a challenging year and successfully grew earnings, asset size, and new client relationships. We thank our bankers, our clients, and our shareholders for their continued faith.

About the Company

Horizon Bancorp, Inc. (OTC Pink: HRRB), the holding company for Horizon Community Bank, has $476 million in assets 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, Mesa, Parker, and Quartzsite, Arizona, plus loan offices in Goodyear and Phoenix, Arizona. It has 92 employees and provides high-touch, customized commercial financial services to those in the healthcare, transportation, construction, manufacturing, real estate, and technology industries, as well as general commercial and consumer services. 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, pro forma 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 Quarter Ended								For the Year Ended
			12/31/20				12/31/19				12/31/20				12/31/19
Summary Income Data:
Interest Income		$	4,762			$	4,320			$	17,641			$	16,729
Interest Expense			342				838				2,072				3,254
Net Interest Income			4,420				3,482				15,569				13,475
Provision for loans losses			275				95				930				494
Non-interest Income			1,046				926				4,030				4,174
Non-interest expense			3,744				3,261				13,904				13,447
Income (loss) before income taxes			1,447				1,052				4,766				3,708
Provision(benefit) for income taxes			308				248				995				815
Net Income		$	1,139			$	804			$	3,770			$	2,893
Per Share Data:
Shares outstanding end-of-period			4,131				4,131				4,131				4,131
Earnings per common share		$	0.28			$	0.19			$	0.91			$	0.70
Total shareholder's equity		$	33,760			$	29,379			$	33,760			$	29,379
Book Value per share		$	8.17			$	7.11			$	8.17			$	7.11
Selected Balance Sheet Data:
Total assets		$	475,720			$	341,423			$	475,720			$	341,423
Securities available-for-sale			103,558				27,822				103,558				27,822
Loans			293,220				249,340				293,220				249,340
Allowance for loan losses			4,179				3,469				4,179				3,469
Deposits			413,888				297,707				413,888				297,707
Other borrowings			15,615				8,427				15,615				8,427
Shareholder's Equity			33,760				29,379				33,760				29,379
Performance Ratios:
Return on average assets (annualized) (%)			0.99	%			0.94	%			0.88	%			0.89	%
Return on average shareholder's equity (annualized) (%)			14.30	%			11.48	%			12.03	%			10.52	%
Shareholder's equity to assets (%)			7.10	%			8.60	%			7.10	%			8.60	%
Net interest margin (%)			3.93	%			4.35	%			3.86	%			4.42	%
Cost of funds			0.30	%			1.05	%			0.51	%			1.07	%
Average assets		$	461,911			$	340,355			$	427,840			$	326,749
Efficiency ratio (%)			68.50	%			73.98	%			70.94	%			76.19	%
Asset Quality Data:
Nonaccrual loans		$	1,130			$	772			$	1,130			$	772
Troubled debt restructurings		$	1,593			$	1,772			$	1,593			$	1,772
Other real estate		$	1,226			$	1,601			$	1,226			$	1,601
Nonperforming assets		$	2,356			$	2,373			$	2,356			$	2,373
Nonperforming assets to total assets (%)			0.50	%			0.70	%			0.50	%			0.70	%
Nonperforming loans to total loans (%)			0.39	%			0.31	%			0.39	%			0.31	%
Reserve for loan losses to total loans (%)			1.43	%			1.39	%			1.43	%			1.39	%
Reserve for loan losses to nonperforming loans (%)			369.82	%			449.35	%			369.82	%			449.35	%
Reserve for loan losses to nonperforming assets (%)			177.38	%			146.19	%			177.38	%			146.19	%
Net charge-offs for period			(15	)			(11	)			220				76
Average Loans		$	309,123			$	237,743			$	290,674			$	234,183
Ratio of net charge-offs to average loans (%)			-0.01	%			-0.01	%			0.08	%			0.03	%
CARES Act - Temporary loan payment relief (#)			0				n/a				0				n/a
CARES Act - Temporary loan payment relief ($)		$	0				n/a			$	0				n/a
Regulatory Capital Ratios
Horizon Community Bank:
Tier 1 leverage ratio (%)			8.38	%			8.87	%			8.38	%			8.87	%
Common Equity Tier 1 ratio (%)			13.74	%			11.47	%			13.74	%			11.47	%
Tier 1 risk-based capital ratio (%)			13.74	%			11.47	%			13.74	%			11.47	%
Total risk-based capital ratio (%)			14.99	%			12.72	%			14.99	%			12.72	%

 

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FAQ

What were Horizon Bancorp's earnings for the year ended December 31, 2020?

Horizon Bancorp reported net income of $3,770,366 for the year ended December 31, 2020.

How much did Horizon Bancorp's total deposits grow in 2020?

Total deposits grew by 39.03% for the 12-month period ended December 31, 2020.

What is Horizon Bancorp's stock symbol?

Horizon Bancorp is traded under the symbol HRRB.

What is the loan growth percentage for Horizon Bancorp in 2020?

Horizon Bancorp experienced 17.60% growth in total loans for the 12 months ended December 31, 2020.

Did Horizon Bancorp participate in the Paycheck Protection Program?

Yes, Horizon Bancorp funded approximately 680 Paycheck Protection Loans totaling around $67.5 million in 2020.