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HBNC

Horizon Bancorp NasdaqGS:HBNC Stock Report

Last Price

US$18.45

Market Cap

US$803.9m

7D

-3.4%

1Y

0.9%

Updated

27 Sep, 2022

Data

Company Financials +
HBNC fundamental analysis
Snowflake Score
Valuation6/6
Future Growth1/6
Past Performance4/6
Financial Health6/6
Dividends4/6

HBNC Stock Overview

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that provides a range of commercial and retail banking services.

Horizon Bancorp, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Horizon Bancorp
Historical stock prices
Current Share PriceUS$18.45
52 Week HighUS$23.80
52 Week LowUS$16.53
Beta1.05
1 Month Change-5.19%
3 Month Change5.01%
1 Year Change0.93%
3 Year Change8.28%
5 Year Change-4.21%
Change since IPO2,171.97%

Recent News & Updates

Aug 25

Horizon Bancorp: Strong Loan Growth To Lift Earnings

Summary Robust pipelines, strong regional job markets, and acquisition plans will likely drive loan growth through the end of 2023. Rising interest rates will erode equity book value but at the same time slightly lift net interest income. Provisioning will likely remain higher than normal in the second half of 2022 before normalizing next year. The December 2022 target price suggests a high upside from the current market price. Further, HBNC is offering a decent dividend yield. Earnings of Horizon Bancorp, Inc. (HBNC) will most probably continue to increase this year on the back of extraordinary loan growth. Further, the margin will expand slightly as a result of the significant surge in interest rates, which will support the bottom line. Overall, I'm expecting Horizon Bancorp to report earnings of $2.27 per share for 2022, up 14% year-over-year. Compared to my last report on the company, I've tweaked upwards my earnings estimate because I've revised upwards the loan balance estimate. For 2023, I'm expecting earnings to grow by a further 8% to $2.44 per share. The year-end target price suggests a high upside from the current market price. Therefore, I'm maintaining a buy rating on Horizon Bancorp. Strong Loan Growth Momentum Likely to Continue Horizon Bancorp's loan portfolio surged by 6.2% during the second quarter of 2022, or 24.7% annualized. Thanks to the second quarter’s performance, the loan book is now on track for double-digit loan growth for the year. The management is targeting a 50/50 mix of organic and acquired growth, as mentioned in the earnings presentation. Considering the plans for acquisitions, loan growth can easily reach the mid-teen range. The management mentioned in the latest conference call that the pipelines for consumer and commercial loans were comparable to the same period last year when the portfolio actually grew by 4% (16% annualized). Therefore, loan growth will most probably remain strong in the third quarter of 2022. The management especially appeared optimistic about consumer loan demand in the conference call due to low unemployment in Horizon’s markets. Horizon Bancorp mostly operates in Indiana and Michigan. The unemployment rates for both states are currently near the lowest level in decades. Indiana Unemployment Rate data by YCharts Considering these factors, I'm expecting the loan portfolio to grow by 6% in the second half of 2022, leading to full-year loan growth of 16%. In my last report on Horizon, I estimated loan growth of 9.3% for this year. I've revised upwards my loan estimate because of the second quarter’s performance as well as an improvement in the overall outlook. For 2023, I'm expecting loan growth to return to a more normal level of around 8%. Equity Book Value to Continue to Slip The large balance of available-for-sale securities on Horizon Bancorp’s books will hurt the equity book value in a rising-rate environment. An increase in interest rates will lower the market value of these securities, which will build up unrealized losses. These losses will bypass the income statement to flow directly into the equity account through other comprehensive income. The book value per share has already dropped to $15.10 at the end of June 2022 from $15.55 at the end of December 2021, as mentioned in the 10-Q Filing. I'm expecting further erosion of equity book value in the third quarter because of the 75 basis points hike in the Fed funds rate in July. Moreover, I'm expecting a further 75 basis point hike in the remainder of the year. On the other hand, retained earnings (discussed below) will lift the equity book value. The following table shows my balance sheet estimates. FY18 FY19 FY20 FY21 FY22E FY23E Financial Position Net Loans 2,996 3,619 3,810 3,553 4,122 4,461 Growth of Net Loans 6.3% 20.8% 5.3% (6.7)% 16.0% 8.2% Other Earning Assets 827 1,078 1,325 2,731 3,163 3,291 Deposits 3,139 3,931 4,531 5,803 6,082 6,455 Borrowings and Sub-Debt 588 606 590 791 1,097 1,141 Common equity 492 656 692 723 695 772 Book Value Per Share ($) 12.8 15.1 15.7 16.5 15.9 17.7 Tangible BVPS ($) 9.4 11.0 11.7 12.5 11.9 13.7 Source: SEC Filings, Author's Estimates (In USD million unless otherwise specified) Large Securities Portfolio and Balance of Fixed-Rate Loans to Limit Asset Sensitivity As can be gleaned from the earnings presentation, around 63% of the loan portfolio is based on fixed rates, while only 37% is based on variable rates. Therefore, the loan portfolio’s average yield will have low sensitivity to rate changes this year. Further, Horizon Bancorp has a large balance of investment securities with fixed rates which will also make the average earning-asset yield upward sticky in a rising rate environment. Available-for-sale securities made up 15% of earning assets and held-to-maturity securities made up 29% of earning assets at the end of June 2022. As mentioned in the earnings presentation, the effective duration of the portfolio is quite long at 6.9 years. Therefore, it can be safely assumed that most of the portfolio will not mature this year. The portfolio carried a yield of only 2.26%; hence, it will continue to drag interest income. Moreover, interest-bearing deposits, excluding certificates of deposits, made up a sizable 64% of total deposits at the end of June 2022. These deposits will re-price soon after every rate hike and thus keep the deposit beta elevated. The results of the management's interest-rate sensitivity analysis given in the presentation showed that a 200-basis points hike in interest rates could boost the net income by only around 6% over twelve months. Please note that this model used a deposit beta of 35%, while the actual deposit beta in the second quarter was just 3%, as mentioned in the conference call. The management successfully kept the sensitivity subdued during the quarter due to time lag. As a result, in my opinion, the deposit beta will get closer to 35% in the second half of this year as deposit costs will catch up to market interest rates. Historically as well, the net interest margin hasn't been too closely related to interest rate movement. 2Q 2022 Earnings Presentation Considering these factors, I'm expecting the margin to grow by six basis points in the second half of 2022 and remain unchanged in 2023. Higher-than-Normal Provision Expense Likely for the Second Half of 2023 Non-performing loans made up 0.51% of total loans, while allowances made up 1.33% of total loans at the end of June 2022. This provisioning cover appears a bit tight considering borrowers are likely to face financial stress soon due to heightened inflation. High interest rates will further add to the misery of those borrowers who are on variable rates. Further, the possibility of a recession will encourage banks to maintain a large buffer for anticipated losses. Therefore, I'm expecting provisioning to be slightly higher than the historical mean for the second half of 2022. However, due to the large reserve release in the first quarter of 2022, the average provisioning for this year will likely remain below the historical average. For 2023, I'm expecting provisioning to revert to the historical mean. Expecting Earnings to Grow by 14% The anticipated surge in the loan book and slight margin expansion will likely drive earnings this year. On the other hand, slightly higher provision expenses will likely restrict earnings growth. Overall, I'm expecting Horizon Bancorp to report earnings of $2.27 per share for 2022, up 14% year-over-year. For 2023, I'm expecting earnings to grow by a further 8% to $2.44 per share. The following table shows my income statement estimates. FY18 FY19 FY20 FY21 FY22E FY23E Income Statement Net interest income 135 161 171 182 214 236 Provision for loan losses 3 2 21 (2) 1 4 Non-interest income 34 43 60 58 52 50 Non-interest expense 103 122 131 139 149 157 Net income - Common Sh. 53 67 68 87 99 107 EPS - Diluted ($) 1.38 1.53 1.55 1.98 2.27 2.44 Source: SEC Filings, Author's Estimates (In USD million unless otherwise specified)

Aug 16
Horizon Bancorp (NASDAQ:HBNC) Ticks All The Boxes When It Comes To Earnings Growth

Horizon Bancorp (NASDAQ:HBNC) Ticks All The Boxes When It Comes To Earnings Growth

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story...

Jul 27

Horizon Bancorp Non-GAAP EPS of $0.57 beats by $0.05, revenue of $65.44M beats by $1.71M

Horizon Bancorp press release (NASDAQ:HBNC): Q2 Non-GAAP EPS of $0.57 beats by $0.05. Revenue of $65.44M (+13.1% Y/Y) beats by $1.71M. Net income grew to a record $24.9 million, up 5.5% from the linked quarter and 12.1% from the prior year period. Diluted earnings per share (“EPS”) of $0.57 was up from $0.54 for the first quarter of 2022 and $0.50 for the second quarter of 2021. Pre–tax, pre–provision net income grew to $29.1 million, up 13.1% from the linked quarter and 18.9% 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 expense of $240,000 in the quarter compared to a provision release of $1.4 million in the linked quarter, and a provision release of $1.5 million in the prior year period. Reported net interest margin (“NIM”) was 3.19% and adjusted NIM was 3.12%, with reported NIM increasing by 20 basis points and adjusted NIM increasing by 19 basis points from the first quarter of 2022. (See the “Non-GAAP Reconciliation of Net Interest Margin” table below for the definition of this non–GAAP calculation of adjusted NIM.) Total loans, excluding Federal Paycheck Protection Program (“PPP”) loans and sold commercial participation loans, grew by 6.2%, or 25.1% annualized, during the second quarter to $3.89 billion at period end compared to $3.66 billion on March 31, 2022. Commercial loans, excluding PPP loans and sold commercial participation loans, grew by 4.9%, or 19.7% annualized, during the second quarter to a record $2.31 billion from $2.20 billion on March 31, 2022. Consumer loans grew by 12.6%, or 50.5% annualized, during the second quarter to a record $848.7 million at period end.

Shareholder Returns

HBNCUS BanksUS Market
7D-3.4%-8.2%-5.8%
1Y0.9%-24.8%-22.1%

Return vs Industry: HBNC exceeded the US Banks industry which returned -24.9% over the past year.

Return vs Market: HBNC exceeded the US Market which returned -23.7% over the past year.

Price Volatility

Is HBNC's price volatile compared to industry and market?
HBNC volatility
HBNC Average Weekly Movement3.2%
Banks Industry Average Movement3.4%
Market Average Movement6.9%
10% most volatile stocks in US Market15.7%
10% least volatile stocks in US Market2.8%

Stable Share Price: HBNC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: HBNC's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1873878Craig Dwighthttps://www.horizonbank.com

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that provides a range of commercial and retail banking services. The company offers various deposits. It also provides commercial, residential real estate, mortgage warehouse, and consumer loans.

Horizon Bancorp, Inc. Fundamentals Summary

How do Horizon Bancorp's earnings and revenue compare to its market cap?
HBNC fundamental statistics
Market CapUS$803.92m
Earnings (TTM)US$92.92m
Revenue (TTM)US$250.78m

8.7x

P/E Ratio

1.2x

P/B Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HBNC income statement (TTM)
RevenueUS$250.78m
Cost of RevenueUS$0
Gross ProfitUS$250.78m
Other ExpensesUS$157.86m
EarningsUS$92.92m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)2.13
Gross Margin100.00%
Net Profit Margin37.05%
Debt/Equity Ratio167.1%

How did HBNC perform over the long term?

See historical performance and comparison

Dividends

3.5%

Current Dividend Yield

29%

Payout Ratio

Does HBNC pay a reliable dividends?

See HBNC dividend history and benchmarks
When do you need to buy HBNC by to receive an upcoming dividend?
Horizon Bancorp dividend dates
Ex Dividend DateOct 06 2022
Dividend Pay DateOct 21 2022
Days until Ex dividend8 days
Days until Dividend pay date23 days

Does HBNC pay a reliable dividends?

See HBNC dividend history and benchmarks