A NASDAQ Traded Company - Symbol HBNC
This presentation may contain forward-looking statements regarding the financial performance, business, and future operations of Horizon Bancorp 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. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future results or performance. As a result, undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions, and although management believes that the expectations reflected in such forward-looking statements are accurate and reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause our actual results to differ materially include those set forth in Horizon’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. Statements in this presentation should be considered in conjunction with such risk factors and the other information publicly available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Horizon does not undertake, and specifically disclaims any obligation, to publicly release any updates to any forward-looking statement to reflect events or circumstances occurring or arising after the date on which the forward-looking statement is made, or to reflect the occurrence of unanticipated events, except to the extent required by law. Forward-Looking Statements
Who We Are *
* Horizon at a Glance * Market data as of December 4, 2015; financial data as of September 30, 2015
Northern Indiana/Southwest Michigan… The Right Side of Chicago
Retail BankingBusiness BankingMortgage BankingWealth Management Complementary Revenue Streams that are Counter-Cyclical to Varying Economic Cycles * Four Key & Consistent Revenue Streams
Horizon’s Story Steady GrowthSuperior ReturnsFinancial StrengthConsistent Performance *
YTD Highlights *
* YTD Growth in Net Income and Diluted EPS Strong Core Banking Results (1) Non-core items consist of one-time merger expenses, gain on sale of securities and death benefit on BOLI, please see Non-GAAP Reconciliation appendix for details Δ Dil. EPS 16% Δ Core 28% Δ GAAP 9%
* Loan Growth Drives Strong Results Loan Type(In Millions) 12/31/14 9/30/15 AcquiredLoans 9/30/15Excl. Acq. Organic Δ Commercial $674 $795 ($67) $728 11% Residential Mtg. 255 431 (137) 294 21% Consumer 320 361 (20) 342 9% Mtg. Warehouse 129 139 --- 139 10% Total Loans $1,379 $1,732 ($224) $1,508 12%
* GAAP Net Interest Margin and Core Net Interest Margin(1) Stable Core Net Interest Margin Δ LQ YOY YTD GAAP -16 bps -8 bps -3 bps Core -7 bps -6 bps -3 bps (1) Core net interest margin excludes acquisition-related purchase accounting adjustments, please see Non-GAAP Reconciliation appendix for details
Peoples Bancorp MergerClosed On July 1, 2015 *
* Peoples financials as of Jun. 30, 2015. Horizon closed Peoples’ Middlebury, IN branch. Peoples’ market cap as of Feb. 18, 2015, the day prior to deal announcement. Map Source: SNL Financial Complementary Footprint and Increased Scale Category Peoples Branches 16 Assets $463 Mil. Loans $229 Mil. Deposits $351 Mil. Assets Under Management $230 Mil. NPAs/ Assets 0.3% Market Cap. $60 Mil.
* Strategic Financial Operational Good Strategic Fit Aligned with plan to expand in Indiana and MichiganContinued revenue diversificationStrong core deposit franchise EPS accretion of 4.5% in 2016, first full yearInitial TBV dilution of $0.65 with five year earn backInternal rate of return over 20.0% Operating leverage through cost savings estimated at 37.0%Revenue synergies through increased product offeringMinimal credit concerns
* Source: SNL Financial; financial data as of December 31, 2014 and market data as of February 18, 2015Nationwide bank and thrift transactions announced after 12/31/2012 with target’s assets between $200 million and $1 billion, tangible common equity to tangible assets between 10.0% and 15%, LTM return on average assets between 0.25% and 1.00% and NPAs/assets less than 1.50%, excluding transactions where pricing information is unavailable Fair Pricing At Announcement HBNC/PBNI ComparableTransactions (1) Price/Tangible Book Value 124% 138% Price/LTM Earnings 21x 21x Core Deposit Premium 4.4% 6.9% Market Premium 22% 33%
Horizon’s Growth Story *
Assets $721mm $2.6b Loans $548mm $1.7b Deposits $489mm $1.9b Branches 7 46 Horizon: A Company on the Move OrganicExpans.(7) St. JosephSouth BendElkhart Lake County Kalamazoo Indianapolis Carmel M&A(7) Anchor Mortgage Alliance Bank American Trust Heartland 1st MortgageSummitPeoples * 11% CAGR 11% CAGR 12% CAGR
Growth Opportunities in All Directions * Kalamazoo, Lansing & St. JosephPopulation: 883,000Deposits: $10 billion South Bend, Elkhart & Fort WaynePopulation: 835,000Deposits: $12 billion Indianapolis & Johnson CountyPopulation: 1.4 millionDeposits: $32 billion Lake & Porter CountiesPopulation: 657,000Deposits: $11 billion LEGACYLa Porte CountyPopulation: 111,000Deposits: $1.6 billion N E S W Note: Data by primary counties for each market
In Millions Net Income History * Solid Historical Earnings 2004 – 2014 CAGR: 10%
* Investing in Commercial LendersCreates Growth Commercial Loan Balances CLO: Commercial Loan Officer
* Balanced Risk In Commercial Portfolio Commercial Loan Composition as of September 30, 2015
Kalamazoo and Indianapolis Loan Balances * Growth Markets Thriving Δ 2014 43% Δ YTD Ann. 26%
September 30, 2015 December 31, 2008 In Millions 2008 3Q15 CAGR Commercial $311 $795 15% Real Estate $291 $570 10% Consumer $280 $361 4% Total $882 $1,726 10% * Shift to Commercial Lending
December 31, 2008 September 30, 2015 Strong Low Cost Deposit Growth * In Millions 2008 3Q15 CAGR NIB $84 $338 23% IB Trans. $429 $1,165 16% CDs $329 $409 3% Total $842 $1,913 13%
* NPLs/ Loans Disciplined Credit Culture
* Why Invest In Horizon
Consistent, Well Executed and Disciplined Business Strategy Horizon is a Growth Story10-year Asset and Net Income CAGR of 9% and 10%, RespectivelySeven Acquisitions and Seven Market Expansions Since 2000Capacity to Take Additional Market ShareHistorical Financial Performance Illustrates Ability to ExecuteTotal Shareholder Return Above Major Indices * Strategic Execution Leads to Strong Stock Performance Total Return HBNC SNL U.S. Bank S&P 500 5-Year Period (1) 173% 84% 90% As of December 3, 2015
Shareholder Value Plan - Since 2001 Steady Growth in Net Book Value & Earnings Per ShareIncreased Liquidity Through Stock Splits and MergersUninterrupted Dividends for More than 25 YearsAdded to Nasdaq Community Bank Index in 2014Russell 2000 Index Since 2012 *
Highly Regarded For Financial Performance *
Highly Regarded In Our Communities * Community Relations Award Urban League of Northwest Indiana, Inc.Nine out of Ten Customers Would Refer a FriendIndependent SurveyBest Bank - Thirteen out of Last Fourteen YearsThe News Dispatch Readers PollBest Bank for Obtaining a Business LoanNorthwest Indiana Business Quarterly Family Friendly Work PoliciesIU Health / Clarian Award
Horizon Outperforms the MarketFor Total Shareholder Return As of December 3, 2015; 2016 estimated EPS of $2.43 is the mean estimate from 3rd party research analystsSNL U.S. Bank: Includes all Major Exchange Banks in SNL's coverage universe. * Horizon Bancorp: 5-Year Total Return Comparison HBNC Multiples HBNC Multiples P/2016 E 11.5x P/TBV 171% Div. Yield 2.1%
Thank Youfor Your Investment inHorizon Bancorp
A NASDAQ Traded Company - Symbol HBNC
* Appendix
* Non-GAAP Reconciliations
* Non-GAAP Reconciliations
* Based on Horizon’s closing price of $23.02 as of February 18, 2015 Peoples Merger Summary Horizon Bancorp Acquiring Peoples Bancorp Horizon Bancorp Acquiring Peoples Bancorp Deal Price per Share (1) $31.62 Consideration Structure 0.95 HBNC shares for each outstanding PBNI share; $9.75 in cash for each outstanding PBNI share Aggregate Deal Value (1) $73.1 million Consideration Mix (1) 69% stock, 31% cash Termination Fee $3.5 million Closing Date July 1, 2015 Social Issues Maurice Winkler, III, Peoples CEO, to serve on Horizon Bancorp and Horizon Bank’s board of directorsRetention of Jeffrey Gatton, Peoples COO, to lead Michigan branch operations, training and sales efforts
* Peoples Transaction Assumptions Category Assumption Cost saves 37% 1x after-tax charges $4.9 million Loan mark $3.5 million or 1.5% of total loans Core deposit intangibles $2.3 million or 1.0% of core deposits Branches Closings Middlebury, Indiana