Horizon Bancorp (HBNC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $14.1 million ($0.32 per share), stable sequentially but down from $18.8 million ($0.43) in Q2 2023, mainly due to higher loan loss provisions and increased non-interest expenses.

• Net interest income rose 4.6% sequentially to $45.3 million, with net interest margin expanding to 2.64% from 2.50% in Q1 2024, driven by loan growth and margin expansion.

• Robust loan growth, especially in commercial lending, with annualized loan growth of 17.8% and commercial loans up $155 million; deposits increased 0.9% to $5.6 billion.

• Credit quality remained strong, with non-performing loans stable at $19.3 million (0.4% of total loans), annualized net charge-offs at 0.05%, and allowance for credit losses at 1.08% of loans.

• Capital ratios remain well above regulatory requirements, supporting ongoing growth and dividends.

Financial highlights

• Net interest margin (FTE, non-GAAP) for Q2 2024 was 2.64%, up 14 bps sequentially but down 5 bps year-over-year.

• Fee income reached $10.5 million, near the upper end of guidance, driven by seasonal increases in interchange fees and mortgage gain on sale.

• Non-interest expense was $37.5 million, with annualized non-interest expense to average assets below 2%.

• Book value per share rose to $16.62, and tangible book value per share increased to $12.80.

• Total assets were $7.91 billion at June 30, 2024.

Outlook and guidance

• Loan and asset growth expected to moderate to low-to-mid single digits in the second half of 2024, with a continued shift to higher-yielding commercial loans.

• Net interest income projected to grow in the upper single-digit range for H2 2024 compared to H1, with modest further NIM expansion anticipated.

• Fee income expected to run at $10.5–$11 million per quarter for the remainder of the year; non-interest expense to remain under 2% of average assets.

• Full-year effective tax rate estimated at 9.5–10%.

• Management remains committed to enhancing financial performance through profitable asset mix and expense management.