Horizon Bancorp, Inc. Reports Fourth Quarter 2024 Results and Successful Execution of Several Key Strategic Initiatives

Rhea-AI Summary

Horizon Bancorp (NASDAQ: HBNC) reported a net loss of $10.9 million ($0.25 per diluted share) for Q4 2024, compared to net income of $18.2 million in Q3 2024. The loss was primarily due to a $39.1 million pre-tax loss on investment securities sale, partially offset by a $5.1 million tax valuation allowance reversal.

Key Q4 2024 highlights include: net interest income increased to $53.1 million, marking the fifth consecutive quarterly increase; net interest margin expanded to 2.97%; total loans reached $4.91 billion, up $108.6 million from Q3; and total deposits declined by $126.4 million to $5.60 billion. Credit quality remained strong with annualized net charge-offs of 0.05%.

The company completed several strategic initiatives, including the repositioning of $332.2 million of available-for-sale securities and the sale of its mortgage warehouse division, effective January 17th, with gains to be recognized in Q1 2025.

Positive

• Net interest income increased for fifth consecutive quarter to $53.1 million
• Net interest margin expanded to 2.97% from 2.66% in Q3
• Commercial loan portfolio showed 22.4% annualized growth rate
• Strong credit quality with low 0.05% annualized net charge-offs
• Non-maturity deposit base grew for third consecutive quarter

Negative

• Q4 net loss of $10.9 million ($0.25 per diluted share)
• $39.1 million pre-tax loss on sale of investment securities
• Total deposits declined by $126.4 million
• Non-performing assets increased 7% to $27.4 million

Insights

Financial Analyst

Horizon Bancorp's Q4 2024 results reflect a strategic transformation that prioritizes long-term profitability over short-term earnings. While the $39.1 million securities sale loss impacted quarterly results, this decisive move serves multiple strategic purposes:

• The securities repositioning has already contributed to margin expansion, with NIM increasing by 31 basis points to 2.97%
• Strong commercial loan growth of 22.4% annualized demonstrates successful execution of the company's core business strategy
• The reduction in time deposits by $131.5 million shows effective high-cost funding management

The company's core franchise health indicators are robust:

• Net interest income rose for the fifth straight quarter to $53.1 million
• Non-maturity deposits grew for the third consecutive quarter
• Credit quality remains excellent with minimal net charge-offs of 0.05% and non-performing assets at just 0.35%

The completion of expense restructuring initiatives and sale of the mortgage warehouse division (closing in Q1 2025) position the bank for improved efficiency and profitability. These moves, combined with the securities repositioning, should drive sustained margin expansion and earnings growth throughout 2025.

MICHIGAN CITY, Ind., Jan. 22, 2025 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three months and year ended December 31, 2024.

“We are very pleased with Horizon’s fourth quarter results, which displayed a significantly more profitable core business model and the successful completion of several major initiatives aimed at continuing this positive trajectory throughout 2025. During the quarter, the team exited lower-yielding securities at a favorable time, and capitalized on the opportunity to redeploy this liquidity into higher yielding loans and to exit higher-cost funding. These actions, combined with an impressive 22.4% annualized growth rate in commercial loans, increased the margin by 31 basis points from the third quarter. Additionally, the team completed its previously communicated fourth quarter initiatives aimed at restructuring its expense base to create greater efficiency in 2025”, President and CEO, Thomas Prame said. “The core franchise continues to have strong momentum, and we are positioned well to create greater returns for our shareholders in 2025.”

Net loss for the three months ended December 31, 2024 was $10.9 million, or a loss of $0.25 per diluted share, compared to net income of $18.2 million, or $0.41, for the third quarter of 2024 and compared to a net loss of $25.2 million, or a loss of $0.58 per diluted share, for the fourth quarter of 2023. Net income for the three months ended December 31, 2024 was negatively impacted by the $39.1 million pre-tax loss on the sale of investment securities, and expenses directly related to the previously announced strategic initiatives. Partially offsetting these items was the reversal of the $5.1 million tax valuation allowance, which served to reduce the Company's tax liability in the fourth quarter of 2024. Net income for the three months ended December 31, 2023 was negatively impacted by the $31.6 million pre-tax loss on the sale of investment securities, tax expense of $8.6 million related to the termination of BOLI policies and the establishment of the tax valuation allowance.

Net income for the twelve months ended December 31, 2024 was $35.4 million or $0.80 per diluted share, compared to net income of $28.0 million, or $0.64, for the twelve months ended December 31, 2023.

Fourth Quarter 2024 Highlights

• Net interest income increased for the fifth consecutive quarter to $53.1 million for the three months ended December 31, 2024, compared to $46.9 million for the three months ended September 30, 2024. The net interest margin, on a fully taxable equivalent ("FTE") basis¹, also expanded for the fifth consecutive quarter, to 2.97% compared with 2.66% for the three months ended September 30, 2024.

• As previously disclosed, the Company completed the repositioning of $332.2 million of available-for-sale securities during the fourth quarter. While the sale resulted in a pre-tax loss of $39.1 million, the Company redeployed the proceeds received into higher-yielding loans and continued to manage down higher cost funding sources.

• Total loans were $4.91 billion at December 31, 2024, up $108.6 million from September 30, 2024 balances. Consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. Loans held for sale (“HFS”) increased $65.5 million as a result of the Company’s transfer of its mortgage warehouse loan balances of $64.8 million at December 31, 2024.

• Total deposits declined by $126.4 million during the quarter, to $5.60 billion at period end, with the majority of the decline in time deposits, which declined by $131.5 million. The Company's non-maturity deposit base continued to display strength, growing for the third consecutive quarter, including another quarter of relatively stable non-interest bearing deposit balances and growth in core relationship consumer and commercial portfolios.

• Credit quality remained strong, with annualized net charge offs of 0.05% of average loans during the fourth quarter. Non-performing assets to total assets of 0.35% remains well within expected ranges, with no material change from the prior quarter. Provision for loan losses of $1.2 million reflects increased provision for unfunded commitments and net growth in commercial loans held for investment ("HFI"), partially offset by the elimination of the reserve associated with mortgage warehouse and the reduction of reserve related to the planned runoff of indirect auto in the current quarter, when compared with the prior quarter.

• Continued the process for the sale of the mortgage warehouse division during the quarter. Sold the business for a gain, effective January 17th, which will be recognized in Q1 2025 results.

________________________
¹ Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios)
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
Income statement:
Net interest income	$	53,127			$	46,910			$	45,279			$	43,288			$	42,257
Credit loss expense		1,171				1,044				2,369				805				1,274
Non-interest (loss) income		(28,954	)			11,511				10,485				9,929				(20,449	)
Non-interest expense		44,935				39,272				37,522				37,107				39,330
Income tax (benefit) expense		(11,051	)			(75	)			1,733				1,314				6,419
Net (loss) income	$	(10,882	)		$	18,180			$	14,140			$	13,991			$	(25,215	)
Per share data:
Basic (loss) earnings per share	$	(0.25	)		$	0.42			$	0.32			$	0.32			$	(0.58	)
Diluted (loss) earnings per share		(0.25	)			0.41				0.32				0.32				(0.58	)
Cash dividends declared per common share		0.16				0.16				0.16				0.16				0.16
Book value per common share		17.46				17.27				16.62				16.49				16.47
Market value - High		18.76				16.57				12.74				14.44				14.65
Market value - Low		14.57				11.89				11.29				11.75				9.33
Weighted average shares outstanding - Basic		43,721,211				43,712,059				43,712,059				43,663,610				43,649,585
Weighted average shares outstanding - Diluted		43,721,211				44,112,321				43,987,187				43,874,036				43,649,585
Common shares outstanding (end of period)		43,722,086				43,712,059				43,712,059				43,726,380				43,652,063
Key ratios:
Return on average assets	(0.55		)%			0.92	%			0.73	%			0.72	%		(1.27		)%
Return on average stockholders' equity		(5.73	)			9.80				7.83				7.76				(14.23	)
Total equity to total assets		9.79				9.52				9.18				9.18				9.06
Total loans to deposit ratio		87.75				83.92				85.70				82.78				78.01
Allowance for credit losses to HFI loans		1.07				1.10				1.08				1.09				1.13
Annualized net charge-offs of average total loans(1)		0.05				0.03				0.05				0.04				0.07
Efficiency ratio		185.89				67.22				67.29				69.73				180.35
Key metrics (Non-GAAP)(2) :
Net FTE interest margin		2.97	%			2.66	%			2.64	%			2.50	%			2.42	%
Return on average tangible common equity		(7.35	)			12.65				10.18				10.11				(18.76	)
Tangible common equity to tangible assets		7.83				7.58				7.22				7.20				7.08
Tangible book value per common share	$	13.68			$	13.46			$	12.80			$	12.65			$	12.60
(1) Average total loans includes loans held for investment and held for sale.
(2) Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures.

Income Statement Highlights

Net Interest Income

Net interest income was $53.1 million in the fourth quarter of 2024, compared to $46.9 million in the third quarter of 2024, driven by strong expansion of the Company's net FTE interest margin, while average interest earning assets increased by $65.9 million, or 0.9% from the prior quarter. Horizon’s net FTE interest margin¹ was 2.97% for the fourth quarter of 2024, compared to 2.66% for the third quarter of 2024, attributable to the favorable mix shift in average interest earning assets toward higher-yielding loans and in the average funding mix toward lower-cost deposit balances, in addition to disciplined pricing strategies on both sides of the balance sheet. The fourth quarter net FTE interest margin did benefit by approximately five basis points related to interest recoveries on specific commercial loans.

Provision for Credit Losses

During the fourth quarter of 2024, the Company recorded a provision for credit losses of $1.2 million. This compares to a provision for credit losses of $1.0 million during the third quarter of 2024, and $1.3 million during the fourth quarter of 2023. The increase in the provision for credit losses during the fourth quarter of 2024 when compared with the third quarter of 2024 was primarily attributable to increased provision for unfunded commitments and net growth in commercial loans, partially offset by the elimination of the reserve associated with mortgage warehouse balances moved to HFS and the reduction of reserve related to the planned runoff of indirect auto in the current quarter, when compared with the prior quarter.

For the fourth quarter of 2024, the allowance for credit losses included net charge-offs of $0.6 million, or an annualized 0.05% of average loans outstanding, compared to net charge-offs of $0.4 million, or an annualized 0.03% of average loans outstanding for the third quarter of 2024, and net charge-offs of $0.8 million, or an annualized 0.07% of average loans outstanding, in the fourth quarter of 2023.

The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.07% at December 31, 2024, compared to 1.10% at September 30, 2024 and 1.13% at December 31, 2023.

Non-Interest Income

For the Quarter Ended	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in Thousands)	2024			2024			2024			2024			2023
Non-interest Income
Service charges on deposit accounts	3,276			3,320			3,130			3,214			3,092
Wire transfer fees	124			123			113			101			103
Interchange fees	3,353			3,511			3,826			3,109			3,224
Fiduciary activities	1,313			1,394			1,372			1,315			1,352
Loss on sale of investment securities	(39,140	)		—			—			—			(31,572	)
Gain on sale of mortgage loans	1,071			1,622			896			626			951
Mortgage servicing income net of impairment	376			412			450			439			724
Increase in cash value of bank owned life insurance	335			349			318			298			658
Other income	338			780			380			827			1,019
Total non-interest (loss) income	(28,954	)		11,511			10,485			9,929			(20,449	)

Total non-interest loss was $29.0 million in the fourth quarter of 2024, compared to non-interest income of $11.5 million in the third quarter of 2024. As previously disclosed, the Company completed the repositioning of $332.2 million of available-for-sale securities during the quarter resulting in a pre-tax loss on sale of investment securities of $39.1 million.

Non-Interest Expense

For the Quarter Ended	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in Thousands)	2024			2024			2024			2024			2023
Non-interest Expense
Salaries and employee benefits	25,564			21,829			20,583			20,268			21,877
Net occupancy expenses	3,431			3,207			3,192			3,546			3,260
Data processing	2,841			2,977			2,579			2,464			2,942
Professional fees	736			676			714			607			772
Outside services and consultants	4,470			3,677			3,058			3,359			2,394
Loan expense	1,285			1,034			1,038			719			1,345
FDIC insurance expense	1,193			1,204			1,315			1,320			1,200
Core deposit intangible amortization	843			844			844			872			903
Other losses	371			297			515			16			508
Other expense	4,201			3,527			3,684			3,936			4,129
Total non-interest expense	44,935			39,272			37,522			37,107			39,330

Total non-interest expense was $44.9 million in the fourth quarter of 2024, compared with $39.3 million in the third quarter of 2024. The increase in non-interest expense during the fourth quarter of 2024 was primarily driven by a $3.7 million increase in salaries and employee benefits expense, which is mainly attributable to the acceleration of stock compensation expense and the expenses related to the termination of a legacy benefits program, in addition to increased incentive compensation accruals and higher medical benefit claims expense. Outside services and consultants expense increased by $793 thousand related to direct expenses for strategic initiatives executed in the fourth quarter and additional expense accruals.

Income Taxes

Horizon recorded a net tax benefit for the fourth quarter of 2024, which is reflective of the reduction to full-year pre-tax income, attributable to the realized securities loss, and the reversal of the $5.1 million tax valuation allowance.

Balance Sheet Highlights

Total assets decreased by $126.3 million, or 1.6%, to $7.80 billion as of December 31, 2024, from $7.93 billion as of September 30, 2024. The decrease in total assets is primarily due to proceeds from the sale of investment securities being partially utilized to pay down higher-cost time deposits, as the remaining proceeds from the sale were either reinvested in commercial loans or held in interest-bearing cash accounts.

Total investment securities decreased by $328.2 million, or 13.5%, to $2.1 billion as of December 31, 2024, from $2.4 billion as of September 30, 2024. As previously disclosed, the Company sold $332.2 million in book value of available-for-sale securities during the fourth quarter at a loss of $39.1 million. There were no purchases of investment securities during the fourth quarter of 2024.

Total loans were $4.91 billion at December 31, 2024, up $108.6 million from September 30, 2024 balances. Consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. Loans held for sale (“HFS”) increased $65.5 million as a result of the Company’s transfer of its mortgage warehouse loan balances of $64.8 million at December 31, 2024.

Total deposits decreased by $126.4 million, or 2.2%, to $5.6 billion as of December 31, 2024 when compared to balances as of September 30, 2024. Non-interest bearing deposits were relatively unchanged during the quarter, while savings and money market accounts grew by $25.9 million, or 0.8%. Time deposits declined by $131.5 million, or 10.8%, as the Company elected to use certain proceeds from the sale of investment securities to reduce higher-cost balances.

Total borrowings remained essentially unchanged during the quarter, at $1.1 billion as of December 31, 2024, while balances subject to repurchase agreements declined by $32.5 million, to $89.9 million.

________________________
¹ Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

Capital

The following table presents the consolidated regulatory capital ratios of the Company for the previous three quarters, and the Company’s preliminary estimate of its consolidated regulatory capital ratios for the quarter ended December 31, 2024:

For the Quarter Ended		December 31,			September 30,			June 30,			March 31,
		2024*			2024			2024			2024**
Consolidated Capital Ratios
Total capital (to risk-weighted assets)		13.84	%		13.45	%		13.41	%		13.75	%
Tier 1 capital (to risk-weighted assets)		11.96	%		11.63	%		11.59	%		11.89	%
Common equity tier 1 capital (to risk-weighted assets)		10.96	%		10.68	%		10.63	%		10.89	%
Tier 1 capital (to average assets)		8.87	%		9.02	%		9.02	%		8.91	%
*Preliminary estimate - may be subject to change
** Prior period was previously revised (see disclosure in Form 10-Q for the quarterly period ending June 30, 2024)

As of December 31, 2024, the ratio of total stockholders’ equity to total assets is 9.79%. Book value per common share was $17.46, increasing $0.19 during the fourth quarter of 2024.

Tangible common equity¹ totaled $598.1 million at December 31, 2024, and the ratio of tangible common equity to tangible assets¹ was 7.83% at December 31, 2024, up from 7.58% at September 30, 2024. Tangible book value, which excludes intangible assets from total equity, per common share¹ was $13.68, increasing $0.22 during the fourth quarter of 2024 behind the growth in retained earnings, excluding the securities loss that was previously in accumulated other comprehensive income, the recovery of the tax valuation allowance and a credit to additional paid-in capital from the closing out of the previously noted legacy benefits program.

Credit Quality

As of December 31, 2024, total non-accrual loans increased by $2.2 million, or 9%, from September 30, 2024, to 0.53% of total loans HFI. Total non-performing assets increased $1.8 million, or 7%, to $27.4 million, compared to $25.6 million as of September 30, 2024. The ratio of non-performing assets to total assets increased to 0.35% compared to 0.32% as of September 30, 2024.

As of December 31, 2024, net charge-offs increased by $243 thousand to $621 thousand, compared to $378 thousand as of September 30, 2024 and remain just 0.05% annualized of average loans.

________________________
¹ Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

Earnings Conference Call

As previously announced, Horizon will host a conference call to review its fourth quarter financial results and operating performance.

Participants may access the live conference call on January 23, 2025 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833-974-2379 from the United States, 866-450-4696 from Canada or 1-412-317-5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.

A telephone replay of the call will be available approximately one hour after the end of the conference through February 1, 2025. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 1–412–317-0088 from other international locations, and entering the access code 9847279.

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.8 billion-asset commercial bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon's retail offerings include prime residential and other secured consumer lending to in-market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in-market business banking and treasury management services, as well as equipment financing solutions for customers regionally and nationally, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana's Michigan City, is available at horizonbank.com and investor.horizonbank.com.

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures relating to net income, diluted earnings per share, pre-tax, pre-provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them. We believe that this shows the impact of such events as acquisition-related purchase accounting adjustments and swap termination fees, among others we have identified in our reconciliations. Horizon believes these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP information identified herein and its most comparable GAAP measures.

Forward Looking Statements

This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission (the “SEC”). Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: current financial conditions within the banking industry; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the aggregate effects of elevated inflation levels in recent years; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; macroeconomic conditions and their impact on Horizon and its customers; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict and the Israel and Hamas conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

	Condensed Consolidated Statements of Income
	(Dollars in Thousands Except Per Share Data, Unaudited)
	Three Months Ended																				Year Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2024				2024				2024				2024				2023				2024				2023
Interest Income
Loans receivable	$	76,747			$	75,488			$	71,880			$	66,954			$	65,583			$	291,069			$	244,544
Investment securities - taxable		6,814				8,133				7,986				7,362				8,157				30,295				34,410
Investment securities - tax-exempt		6,301				6,310				6,377				6,451				6,767				25,439				28,384
Other		3,488				957				738				4,497				3,007				9,680				4,967
Total interest income		93,350				90,888				86,981				85,264				83,514				356,483				312,305
Interest Expense
Deposits		27,818				30,787				28,447				27,990				27,376				115,042				85,857
Borrowed funds		10,656				11,131				11,213				11,930				11,765				44,930				42,478
Subordinated notes		829				830				829				831				870				3,319				3,511
Junior subordinated debentures issued to capital trusts		920				1,230				1,213				1,225				1,246				4,588				4,715
Total interest expense		40,223				43,978				41,702				41,976				41,257				167,879				136,561
Net Interest Income		53,127				46,910				45,279				43,288				42,257				188,604				175,744
Provision for loan losses		1,171				1,044				2,369				805				1,274				5,389				2,459
Net Interest Income after Provision for Loan Losses		51,956				45,866				42,910				42,483				40,983				183,215				173,285
Non-interest Income
Service charges on deposit accounts		3,276				3,320				3,130				3,214				3,092				12,940				12,227
Wire transfer fees		124				123				113				101				103				461				448
Interchange fees		3,353				3,511				3,826				3,109				3,224				13,799				12,861
Fiduciary activities		1,313				1,394				1,372				1,315				1,352				5,394				5,080
Loss on sale of investment securities		(39,140	)			—				—				—				(31,572	)			(39,140	)			(32,052	)
Gain on sale of mortgage loans		1,071				1,622				896				626				951				4,215				4,323
Mortgage servicing income net of impairment		376				412				450				439				724				1,677				2,708
Increase in cash value of bank owned life insurance		335				349				318				298				658				1,300				3,709
Other income		338				780				380				827				1,019				2,325				2,694
Total non-interest (loss) income		(28,954	)			11,511				10,485				9,929				(20,449	)			2,971				11,998
Non-interest Expense
Salaries and employee benefits		25,564				21,829				20,583				20,268				21,877				88,244				80,809
Net occupancy expenses		3,431				3,207				3,192				3,546				3,260				13,376				13,355
Data processing		2,841				2,977				2,579				2,464				2,942				10,861				11,626
Professional fees		736				676				714				607				772				2,733				2,645
Outside services and consultants		4,470				3,677				3,058				3,359				2,394				14,564				9,942
Loan expense		1,285				1,034				1,038				719				1,345				4,076				4,980
FDIC insurance expense		1,193				1,204				1,315				1,320				1,200				5,032				3,880
Core deposit intangible amortization		843				844				844				872				903				3,403				3,612
Other losses		371				297				515				16				508				1,199				1,051
Other expense		4,201				3,527				3,684				3,936				4,129				15,348				14,384
Total non-interest expense		44,935				39,272				37,522				37,107				39,330				158,836				146,284
(Loss) Income Before Income Taxes		(21,933	)			18,105				15,873				15,305				(18,796	)			27,350				38,999
Income tax (benefit) expense		(11,051	)			(75	)			1,733				1,314				6,419				(8,079	)			11,018
Net (Loss) Income	$	(10,882	)		$	18,180			$	14,140			$	13,991			$	(25,215	)		$	35,429			$	27,981
Basic (Loss) Earnings Per Share	$	(0.25	)		$	0.42			$	0.32			$	0.32			$	(0.58	)		$	0.81			$	0.64
Diluted (Loss) Earnings Per Share		(0.25	)			0.41				0.32				0.32				(0.58	)			0.80				0.64

	Condensed Consolidated Balance Sheet
	(Dollar in Thousands)
	December 31, 2024				September 30, 2024				June 30, 2024				March 31, 2024				December 31, 2023
Assets
Interest earning assets
Federal funds sold	$	—			$	—			$	453			$	—			$	215
Interest earning deposits		201,131				126,019				38,957				170,882				413,528
Interest earning time deposits		735				735				1,715				1,715				2,205
Federal Home Loan Bank stock		53,826				53,826				53,826				53,826				34,509
Investment securities, available for sale		233,677				541,170				527,054				535,319				547,251
Investment securities, held to maturity		1,867,690				1,888,379				1,904,281				1,925,725				1,945,638
Loans held for sale		67,597				2,069				2,440				922				1,418
Gross loans held for investment (HFI)		4,847,040				4,803,996				4,822,840				4,618,175				4,417,630
Total Interest earning assets		7,271,696				7,416,194				7,351,566				7,306,564				7,362,394
Non-interest earning assets
Allowance for credit losses		(51,980	)			(52,881	)			(52,215	)			(50,387	)			(50,029	)
Cash		92,300				108,815				106,691				100,206				112,772
Cash value of life insurance		37,450				37,115				36,773				36,455				36,157
Other assets		152,635				119,026				165,656				160,593				177,061
Goodwill		155,211				155,211				155,211				155,211				155,211
Other intangible assets		10,223				11,067				11,910				12,754				13,626
Premises and equipment, net		93,864				93,544				93,695				94,303				94,583
Interest receivable		39,747				39,366				43,240				40,008				38,710
Total non-interest earning assets		529,450				511,263				560,961				549,143				578,091
Total assets	$	7,801,146			$	7,927,457			$	7,912,527			$	7,855,707			$	7,940,484
Liabilities
Savings and money market deposits	$	3,446,681			$	3,420,827			$	3,364,726			$	3,350,673			$	3,369,149
Time deposits		1,089,153				1,220,653				1,178,389				1,136,121				1,179,739
Borrowings		1,142,340				1,142,744				1,229,165				1,219,812				1,217,020
Repurchase agreements		89,912				122,399				128,169				139,309				136,030
Subordinated notes		55,738				55,703				55,668				55,634				55,543
Junior subordinated debentures issued to capital trusts		57,477				57,423				57,369				57,315				57,258
Total interest earning liabilities		5,881,301				6,019,749				6,013,486				5,958,864				6,014,739
Non-interest bearing deposits		1,064,818				1,085,535				1,087,040				1,093,076				1,116,005
Interest payable		11,137				11,400				11,240				7,853				22,249
Other liabilities		80,308				55,951				74,096				74,664				68,680
Total liabilities	$	7,037,564			$	7,172,635			$	7,185,862			$	7,134,457			$	7,221,673
Stockholders’ Equity
Preferred stock	$	—			$	—			$	—			$	—			$	—
Common stock		—				—				—				—				—
Additional paid-in capital		363,761				358,453				357,673				356,599				356,400
Retained earnings		436,122				454,050				442,977				435,927				429,021
Accumulated other comprehensive (loss)		(36,301	)			(57,681	)			(73,985	)			(71,276	)			(66,609	)
Total stockholders’ equity	$	763,582			$	754,822			$	726,665			$	721,250			$	718,812
Total liabilities and stockholders’ equity	$	7,801,146			$	7,927,457			$	7,912,527			$	7,855,707			$	7,940,485

	Loans and Deposits
	(Dollars in Thousands)
	December 31,				September 30,				June 30,				March 31,				December 31,				% Change
		2024				2024				2024				2024				2023			Q4'24 vs Q3'24			Q4'24 vs Q4'23
Commercial:
Commercial real estate	$	2,202,858			$	2,105,459			$	2,117,772			$	1,984,723			$	1,962,097			5	%		12	%
Commercial & Industrial		875,297				808,600				786,788				765,043				712,863			8	%		23	%
Total commercial		3,078,155				2,914,059				2,904,560				2,749,766				2,674,960			6	%		15	%
Residential Real estate		802,909				801,356				797,956				782,071				681,136			—	%		18	%
Mortgage warehouse		—				80,437				68,917				56,548				45,078			(100	)%		(100	)%
Consumer		965,976				1,008,144				1,051,407				1,029,790				1,016,456			(4	)%		(5	)%
Total loans held for investment		4,847,040				4,803,996				4,822,840				4,618,175				4,417,630			1	%		10	%
Loans held for sale		67,597				2,069				2,440				922				1,418			3167	%		4667	%
Total loans		4,914,637				4,806,065				4,825,280				4,619,097				4,419,048			2	%		11	%
Deposits:
Interest bearing deposits
Savings and money market deposits	$	3,446,681			$	3,420,827			$	3,364,726			$	3,350,673			$	3,369,149			1	%		2	%
Time deposits	$	1,089,153			$	1,220,653			$	1,178,389			$	1,136,121			$	1,179,739			(11	)%		(8	)%
Total Interest bearing deposits		4,535,834				4,641,480				4,543,115				4,486,794				4,548,888			(2	)%		—	%
Non-interest bearing deposits
Non-interest bearing deposits	$	1,064,818			$	1,085,535			$	1,087,040			$	1,093,076			$	1,116,005			(2	)%		(5	)%
Total deposits	$	5,600,652			$	5,727,015			$	5,630,155			$	5,579,870			$	5,664,893			(2	)%		(1	)%

	Average Balance Sheet
	(Dollars in Thousands, Unaudited)
	Three Months Ended
	December 31, 2024							September 30, 2024							December 31, 2023
	Average Balance(8)			Interest(4)(6)		Average Rate(4)		Average Balance(8)			Interest(4)(6)		Average Rate(4)		Average Balance(8)			Interest(4)(6)		Average Rate(4)
Assets
Interest earning assets
Interest earning deposits (incl. Fed Funds Sold)	$	290,693		$	3,488	4.77	%	$	73,524		$	957	5.18	%		221,375			3,007	5.39	%
Federal Home Loan Bank stock		53,826			1,516	11.20	%		53,826			1,607	11.88	%		34,509			719	8.27	%
Investment securities - taxable (1)		1,079,377			5,298	1.95	%		1,301,830			6,526	1.99	%		1,517,572			7,438	1.94	%
Investment securities - non-taxable (1)		1,129,622			7,976	2.81	%		1,125,295			7,987	2.82	%		1,172,157			8,566	2.90	%
Total investment securities		2,208,999			13,274	2.39	%		2,427,125			14,513	2.38	%		2,689,729			16,004	6.04	%
Loans receivable (2) (3)		4,842,660			77,142	6.34	%		4,775,788			75,828	6.32	%		4,327,930			65,897	6.04	%
Total interest earning assets		7,396,178			95,420	5.13	%		7,330,263			92,905	5.04	%		7,273,543			85,627	4.67	%
Non-interest earning assets
Cash and due from banks		85,776							108,609							103,255
Allowance for credit losses		(52,697	)						(52,111	)						(49,586	)
Other assets		409,332							471,259							553,604
Total average assets	$	7,838,589						$	7,858,020						$	7,880,816
Liabilities and Stockholders' Equity
Interest bearing liabilities
Interest bearing deposits	$	3,417,610		$	16,197	1.89	%	$	3,386,177		$	18,185	2.14	%		3,303,469			15,116	1.82	%
Time deposits		1,160,527			11,621	3.98	%		1,189,148			12,602	4.22	%		1,205,799			12,260	4.03	%
Borrowings		1,130,301			10,138	3.57	%		1,149,952			10,221	3.54	%		1,206,462			10,812	3.56	%
Repurchase agreements		91,960			518	2.24	%		123,524			910	2.93	%		132,524			953	2.85	%
Subordinated notes		55,717			829	5.92	%		55,681			830	5.93	%		58,221			870	5.93	%
Junior subordinated debentures issued to capital trusts		57,443			920	6.37	%		57,389			1,230	8.53	%		57,222			1,246	8.64	%
Total interest bearing liabilities		5,913,558			40,223	2.71	%		5,961,871			43,978	2.93	%		5,963,697			41,257	2.74	%
Non-interest bearing liabilities
Demand deposits		1,099,574							1,083,214							1,125,164
Accrued interest payable and other liabilities		70,117							74,563							89,162
Stockholders' equity		755,340							738,372							702,793
Total average liabilities and stockholders' equity	$	7,838,589						$	7,858,020						$	7,880,816
Net FTE interest income (non-GAAP) (5)				$	55,197						$	48,927						$	44,370
Less FTE adjustments (4)					2,070							2,017							2113
Net Interest Income				$	53,127						$	46,910						$	42,257
Net FTE interest margin (Non-GAAP) (4)(5)						2.97	%						2.66	%						2.42	%
(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities.
(2) Includes fees on loans held for sale and held for investment. The inclusion of loan fees does not have a material effect on the average interest rate.
(3) Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.
(4) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate.
(5) Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
(6) Includes dividend income on Federal Home Loan Bank stock

	Credit Quality
	(Dollars in Thousands Except Ratios)
	Quarter Ended
	December 31,				September 30,				June 30,				March 31,				December 31,				% Change
		2024				2024				2024				2024				2023			4Q24 vs 3Q24			4Q24 vs 4Q23
Non-accrual loans
Commercial		5,658			$	6,830			$	4,321			$	5,493			$	7,362			(17	)%		(23	)%
Residential Real estate		11,215				9,529				8,489				8,725				8,058			18	%		39	%
Mortgage warehouse		—				—				—				—				—			—	%		—	%
Consumer		8,919				7,208				5,453				4,835				4,290			24	%		108	%
Total non-accrual loans	$	25,792			$	23,567			$	18,263			$	19,053			$	19,710			9	%		31	%
90 days and greater delinquent - accruing interest		1,166			$	819			$	1,039				108				559			42	%		109	%
Total non-performing loans	$	26,958			$	24,386			$	19,302			$	19,161			$	20,269			11	%		33	%
Other real estate owned
Commercial		407			$	1,158			$	1,111			$	1,124			$	1,124			(65	)%		(64	)%
Residential Real estate		—				—				—				—				182			—	%		(100	)%
Mortgage warehouse		—				—				—				—				—			—	%		—	%
Consumer		17				36				57				50				205			(52	)%		(92	)%
Total other real estate owned	$	424			$	1,194			$	1,168			$	1,174			$	1,511			(64	)%		(72	)%
Total non-performing assets	$	27,382			$	25,580			$	20,470			$	20,335			$	21,780			7	%		26	%
Loan data:
Accruing 30 to 89 days past due loans		23,075				18,087			$	19,785			$	15,154			$	16,595			28	%		39	%
Substandard loans		43,235				59,775				51,221				47,469				49,526			(28	)%		(13	)%
Net charge-offs (recoveries)
Commercial		(37	)			(52	)			57				(57	)			233			(29	)%		(116	)%
Residential Real estate		(10	)			(9	)			(4	)			(5	)			21			11	%		(148	)%
Mortgage warehouse		—				—				—				—				—			—	%		—	%
Consumer		668				439				534				488				531			52	%		26	%
Total net charge-offs	$	621			$	378			$	587			$	426			$	785			64	%		(21	)%
Allowance for credit losses
Commercial		31,029				32,854				31,941				30,514				29,736			(6	)%		4	%
Residential Real estate		3,115				2,675				2,588				2,655				2,503			16	%		24	%
Mortgage warehouse		—				862				736				659				481			(100	)%		(100	)%
Consumer		17,837				16,490				16,950				16,559				17,309			8	%		3	%
Total allowance for credit losses	$	51,981			$	52,881			$	52,215			$	50,387			$	50,029			(2	)%		4	%
Credit quality ratios
Non-accrual loans to HFI loans		0.53	%			0.49	%			0.38	%			0.41	%			0.45	%
Non-performing assets to total assets		0.35	%			0.32	%			0.26	%			0.26	%			0.27	%
Annualized net charge-offs of average total loans		0.05	%			0.03	%			0.05	%			0.04	%			0.07	%
Allowance for credit losses to HFI loans		1.07	%			1.10	%			1.08	%			1.09	%			1.13	%

Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin
(Dollars in Thousands, Unaudited)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2024				2024				2024				2024				2023
Interest income (GAAP)	(A)	$	93,350			$	90,888			$	86,981			$	85,264			$	83,514
Taxable-equivalent adjustment:
Investment securities - tax exempt (1)			1,675			$	1,677			$	1,695			$	1,715			$	1,799
Loan receivable (2)			395			$	340			$	328			$	353			$	314
Interest income (non-GAAP)	(B)		95,420			$	92,905			$	89,004			$	87,332			$	85,627
Interest expense (GAAP)	(C)		40,223			$	43,978			$	41,702			$	41,976			$	41,257
Net interest income (GAAP)	(D) =(A) - (C)		53,127			$	46,910			$	45,279			$	43,288			$	42,257
Net FTE interest income (non-GAAP)	(E) = (B) - (C)		55,197			$	48,927			$	47,302			$	45,356			$	44,370
Average interest earning assets	(F)		7,396,178				7,330,263				7,212,788				7,293,559				7,239,034
Net FTE interest margin (non-GAAP)	(G) = (E*) / (F)		2.97	%			2.66	%			2.64	%			2.50	%			2.43	%
(1) The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity
(2) The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment
*Annualized

Non–GAAP Reconciliation of Return on Average Tangible Common Equity
(Dollars in Thousands, Unaudited)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2024				2024				2024				2024				2023
Net income (loss) (GAAP)	(A)	$	(10,882	)		$	18,180			$	14,140			$	13,991			$	(25,215	)
Average stockholders' equity	(B)	$	755,340			$	738,372			$	726,332			$	725,083			$	702,793
Average intangible assets	(C)		165,973				166,819				167,659				168,519				169,401
Average tangible equity (Non-GAAP)	(D) = (B) - (C)	$	589,367			$	571,553			$	558,673			$	556,564			$	533,392
Return on average tangible common equity ("ROACE") (non-GAAP)	(E) = (A*) / (D)	(7.35		)%			12.65	%			10.18	%			10.11	%		(18.76		)%
*Annualized

Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets
(Dollars in Thousands, Unaudited)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2024				2024				2024				2024				2023
Total stockholders' equity (GAAP)	(A)	$	763,582			$	754,822			$	726,665			$	721,250			$	718,812
Intangible assets (end of period)	(B)		165,434				166,278				167,121				167,965				168,837
Total tangible common equity (non-GAAP)	(C) = (A) - (B)	$	598,148			$	588,544			$	559,544			$	553,285			$	549,975
Total assets (GAAP)	(D)		7,801,146				7,927,457				7,912,527				7,855,707				7,940,485
Intangible assets (end of period)	(B)		165,434				166,278				167,121				167,965				168,837
Total tangible assets (non-GAAP)	(E) = (D) - (B)	$	7,635,712			$	7,761,179			$	7,745,406			$	7,687,742			$	7,771,648
Tangible common equity to tangible assets (Non-GAAP)	(G) = (C) / (E)		7.83	%			7.58	%			7.22	%			7.20	%			7.08	%

Non–GAAP Reconciliation of Tangible Book Value Per Share
(Dollars in Thousands, Unaudited)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2024				2024				2024				2024				2023
Total stockholders' equity (GAAP)	(A)	$	763,582			$	754,822			$	726,665			$	721,250			$	718,812
Intangible assets (end of period)	(B)		165,434				166,278				167,121				167,965				168,837
Total tangible common equity (non-GAAP)	(C) = (A) - (B)	$	598,148			$	588,544			$	559,544			$	553,285			$	549,975
Common shares outstanding	(D)		43,722,086				43,712,059				43,712,059				43,726,380				43,652,063
Tangible book value per common share (non-GAAP)	(E) = (C) / (D)	$	13.68			$	13.46			$	12.80			$	12.65			$	12.60

Contact:	John R. Stewart, CFA
	EVP, Chief Financial Officer
Phone:	(219) 814–5833
Fax:	(219) 874–9280
Date:	January 22, 2025

FAQ

What caused Horizon Bancorp's Q4 2024 net loss of $10.9 million?

The net loss was primarily due to a $39.1 million pre-tax loss on investment securities sale, partially offset by a $5.1 million tax valuation allowance reversal.

How much did HBNC's net interest margin improve in Q4 2024?

HBNC's net interest margin expanded by 31 basis points to 2.97% in Q4 2024, compared to 2.66% in Q3 2024.

What was HBNC's commercial loan growth rate in Q4 2024?

HBNC achieved a 22.4% annualized growth rate in commercial loans during Q4 2024.

How much did HBNC's total deposits change in Q4 2024?

Total deposits declined by $126.4 million to $5.60 billion, with the majority of the decline in time deposits.

What was HBNC's credit quality performance in Q4 2024?

Credit quality remained strong with annualized net charge-offs of 0.05% and non-performing assets to total assets ratio of 0.35%.