Horizon Bancorp (HBNC) Q4 2024 earnings summary

Executive summary

• Fourth quarter 2024 saw strong commercial loan growth (22% annualized), margin expansion, and improved credit metrics, but a net loss of $10.9 million due to a $39.1 million pre-tax loss on securities sales and strategic expense actions, partially offset by a $5 million tax valuation allowance reversal.

• Strategic initiatives included expanding core commercial relationships, reducing lower-yielding auto loans, exiting lower-yielding securities, and redeploying liquidity into higher-yielding loans.

• Core deposit stability was maintained, with intentional runoff of higher-cost CDs and investments in treasury management.

• The company completed several key initiatives to strengthen the balance sheet, improve profitability, and simplify the business model.

• Full-year 2024 net income was $35.4 million, up from $28 million in 2023.

Financial highlights

• Net interest margin (FTE) rose 31 basis points sequentially to 2.97% in Q4, with net interest income increasing to $53.1 million from $46.9 million in Q3.

• Total loans (excluding mortgage warehouse) grew $123 million in Q4 (10% annualized), with commercial loans up $164 million (22% annualized); total loans reached $4.91 billion at year-end.

• Non-interest income included a $39.1 million realized loss on securities; excluding this, non-interest income declined slightly due to mortgage seasonality.

• Non-interest expense was $44.9 million, elevated by $2.4 million in accelerated compensation and $0.5 million in strategic outside services.

• Allowance for credit losses to HFI loans was 1.07% at year-end, with annualized net charge-offs at 0.05% of average loans.

Outlook and guidance

• 2025 guidance calls for mid-single-digit loan growth, led by commercial loans, with indirect auto loans expected to decline by about $100 million.

• Deposit balances projected to grow in the low single-digit range, with improved funding mix and reduced borrowings.

• Net interest income for 2025 anticipated to grow in the mid-teens, with sequential NIM improvement.

• Non-interest expense for 2025 expected to be flat to up low single digits versus 2024; effective tax rate guided to the mid-teens.

• Management expects improved efficiency and greater shareholder returns in 2025.