Horizon Bancorp Inc. /IN/ (NASDAQ:HBNC), a state commercial bank headquartered in Michigan City, Indiana with a market capitalization of approximately $720 million, announced on Monday an update to its executive compensation structure. According to InvestingPro data, the bank's shares currently trade at $16.48, having gained over 40% in the past six months despite recent market volatility.
The Board of Directors of Horizon Bancorp has adopted the Horizon Bancorp Nonqualified Deferred Compensation Plan, effective January 1, 2025. This plan will replace and consolidate the Horizon Bancorp 2005 Supplemental Executive Retirement Plan (SERP), as well as make amendments to supporting agreements.
These benefits are intended to compensate for limitations imposed by tax-qualified retirement plans under the Internal Revenue Code. Notably, Horizon Bancorp has maintained a strong track record of shareholder returns, with InvestingPro data showing 38 consecutive years of dividend payments and a current dividend yield of nearly 4%. Eligible participants will have the option to defer up to 90% of their base salary and performance-based bonuses. The Compensation Committee may also match the deferred amounts.
Under the Deferred Compensation Plan, participants' accounts will accrue investment returns based on a selection of investment funds, excluding Horizon common shares. Distributions from these accounts will occur upon separation from service, death, disability, or an unforeseeable emergency. Notably, a change in control of the company does not qualify as a distribution event.
The SERP will no longer accept new participants, and existing participants' accounts as of January 1, 2025, will continue to accrue interest and be distributed according to the terms of the SERP without Horizon common shares as an investment option.
This update was disclosed in a current report on Form 8-K filed with the U.S. Securities and Exchange Commission, based on a press release statement. The company also issued forward-looking statements cautioning that actual results could differ materially from expectations due to various risks and uncertainties.
Horizon Bancorp emphasized that forward-looking statements should be considered with caution and are not guarantees of future performance. Factors that could cause actual outcomes to differ include economic conditions, regulatory changes, technological advancements, cybersecurity risks, and other challenges facing the banking industry.
According to InvestingPro analysis, while the company trades at a relatively high P/E ratio of 33.9x, analysts remain optimistic about its prospects, with net income expected to grow this year. For deeper insights into Horizon Bancorp's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Horizon Bancorp has reported a positive trajectory in its Q3 2024 earnings. The company has seen growth in net income, primarily due to a 10% annual increase in average loans and expansions in net interest income and fee income. Despite a strategic reduction in consumer loans, specifically in indirect auto lending, the company has experienced strong deposit growth. Furthermore, Horizon Bancorp has made strategic decisions, including the sale of $325 million in securities and the planned divestiture of the mortgage warehouse business, which are expected to contribute to future profitability and streamline operations.
The company's commercial loan portfolio has grown by $9.5 million, while a decrease in consumer loans was observed due to a shift in strategy. The net interest margin improved to 2.66%, with an expected increase of 15 to 20 basis points in Q4. Management anticipates stable loan balances and growth in net interest income moving into 2025.
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