Horizon Bancorp (HBNC)

A. Company Overview

Horizon Bancorp, Inc. is a registered bank holding company that holds its principal operations under Horizon Bank. Incorporated in Indiana and based in Michigan City, Indiana, Horizon provides a comprehensive suite of banking services spread across northern and central Indiana and southern and central Michigan. The company operates primarily through its commercial banking segment and has been publicly traded on the NASDAQ Global Select Market under the symbol HBNC.

Founded in 1873 as a national association, Horizon Bank transitioned to an Indiana commercial bank on June 23, 2017. The bank serves the needs of both commercial and retail customers by offering a wide variety of financial services, including corporate and individual trust services, as well as other banking-related services.

Business Segments

Horizon operates as a single segment focused on commercial banking. The Bank offers full-service commercial and retail banking services to cater to individual customers and businesses alike. This includes personal checking and savings accounts, business loans, mortgage products, and investment services, among others.

As of December 31, 2023, Horizon Bank managed total assets of approximately $7.9 billion and total deposits of around $5.7 billion. The institution boasts a robust presence with 71 full-service offices strategically located in its market areas.

Geographical Coverage and Expansion

Initially focused on northwest Indiana, Horizon Bancorp has significantly broadened its operational footprint over the past two decades. This expansion has been facilitated through both organic growth and strategic mergers and acquisitions. The company's efforts led to its establishment in new markets spanning southern and central Michigan, along with northeastern and central Indiana.

A notable achievement in its growth strategy occurred on September 17, 2021, when Horizon Bank acquired 14 former TCF National Bank branches across 11 counties in Michigan. The deal involved a net cash consideration of $618.2 million, yielding an infusion of customer deposits amounting to $846.4 million.

Subsidiaries and Other Entities

Horizon Bancorp oversees various wholly-owned direct and indirect subsidiaries that complement its banking operations. These include:

• Horizon Investments, Inc.: Responsible for managing the investment portfolio of the Bank.
• Horizon Properties, Inc.: Engages in the management of the Bank's real estate investment trust.
• Horizon Insurance Services, Inc.: Facilitates life insurance product sales through a third party within the Company’s Wealth Management division.
• Horizon Grantor Trust: Holds title to certain company-owned life insurance policies.
• Wolverine Commercial Holdings, LLC: Currently holds minimal properties without significant business activities.

Over the years, Horizon has also engaged in pooled trust preferred securities offerings through capital trusts established in 2004 and 2006.

Revenue Composition

As per the latest disclosed data, the revenue breakdown in 2023 indicated that approximately 75.4% of total consolidated revenue was derived from loans, while revenues from investment securities accounted for about 19.4%. This diversified revenue structure underscores the Bank's robust lending operations, which drive its financial performance.

Regulatory Landscape

As a bank holding company, Horizon Bancorp is subject to extensive regulatory scrutiny, primarily conducted by the Federal Reserve, which oversees compliance with the Bank Holding Company Act. Furthermore, Horizon Bank is regulated by the Indiana Department of Financial Institutions (DFI) along with the Federal Deposit Insurance Corporation (FDIC). This regulatory framework is designed to ensure the safety and soundness of the Bank's operations, which are critical to protecting depositors and promoting financial stability.

Horizon is categorized as a financial holding company, allowing engagement in a broader spectrum of financial services beyond traditional banking activities. This designation provides flexibility for the Company to navigate the evolving financial landscape and adapt to market changes.

Competitive Landscape

Horizon Bancorp operates in a competitive market, encountering fierce rivalry from a diverse array of financial institutions including regional and national banks, credit unions, and fintech companies. The primary market area comprises various counties in Indiana and Michigan, where Horizon holds a competitive position as one of the leading institutions in several locales. In some regions, such as LaPorte and Johnson Counties in Indiana, Horizon ranks as the largest or among the top competitors, reflecting its established presence.