Horizon Bancorp (HBNC) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 rose to $18.2 million ($0.41–$0.42 per share), up from $14.1 million in Q2 2024 and $16.2 million in Q3 2023, driven by higher net interest income, lower effective tax rate, and strong credit quality.

• Achieved fourth consecutive quarter of net interest margin (NIM) expansion, reaching 2.66% in Q3 2024, with strong commercial loan growth and stable deposit base.

• Strategic actions in Q4 include a $325 million securities sale and planned sale of the mortgage warehouse business to optimize the balance sheet and enhance profitability.

• Management remains optimistic about continued momentum, implementing actions to further enhance shareholder value and operating performance into 2025.

• Asset quality remained excellent, with low non-performing assets and minimal net charge-offs.

Financial highlights

• Net interest income for Q3 2024 was $46.9 million, up from $45.3 million in Q2 2024 and $42.1 million in Q3 2023; non-interest income reached $11.5 million, driven by mortgage and treasury management growth.

• Non-interest expense was $39.3 million, impacted by higher salaries, benefits, and consulting for strategic initiatives.

• Total loans held for investment ended at $4.8 billion, with commercial loans up $9.5 million (1.3% annualized) and consumer loan balances decreasing by $43 million due to planned auto loan runoff.

• Allowance for credit losses increased to $52.9 million (1.10% of loans) at September 30, 2024.

• Book value per common share rose to $17.27; tangible book value per share to $13.46.

Outlook and guidance

• NIM expected to expand 15–20 basis points in Q4, driven by securities sales and anticipated rate cuts; net interest income projected to increase in the upper single-digit percentage range.

• Q4 non-interest income expected at $10.5–11.5 million; non-interest expense around $42 million, including episodic items.

• 2025 run rate expenses projected in the $155–160 million range; effective tax rate for 2025 expected to be 10–12%.

• Loan growth in 2025 anticipated to be mid to high single digits, with continued runoff in indirect auto loans.

• Management expects positive momentum through year-end 2024 and into 2025, with strategic actions anticipated to improve profitability.