Horizon Bancorp(US:HBNC)2024-08-09 20:06Financial Performance - Net income for Q2 2024 decreased by $4.6 million to $14.1 million, or $0.32 per share, compared to $18.8 million, or $0.43 per share, in Q2 2023[155] - For the six months ended June 30, 2024, net income declined by $8.9 million to $28.1 million, or $0.64 per share, from $37.0 million, or $0.85 per share, in the same period of 2023[156] - Non-interest expenses grew significantly, impacting overall profitability compared to the previous year[156] - The company reported a net interest income of $88.6 million, down from $91.4 million in the previous year[161] - Total non-interest income decreased by $0.5 million to $10.485 million for the three months ended June 30, 2024, compared to the same period in 2023[168] - Non-interest expense increased by $1.3 million to $37.522 million for the three months ended June 30, 2024, primarily due to higher expenses in outside services and consultants, FDIC insurance, and salaries[170] Interest Income and Expenses - Net interest income for Q2 2024 decreased by $0.9 million to $45.3 million, with a net FTE interest margin of 2.64%, down 5 basis points from the previous year[157] - Average loans receivable increased to $4.66 billion in Q2 2024, generating interest income of $72.2 million at an average rate of 6.23%[158] - Total interest-bearing liabilities increased to $5.89 billion, with interest expense rising to $41.7 million, reflecting an average rate of 2.85%[159] - Net interest income decreased by $2.8 million to $88.6 million for the six months ended June 30, 2024, compared to the same period in 2023[161] - The net FTE interest margin decreased by 11 basis points to 2.57% for the six months ended June 30, 2024, compared to the prior year[161] - Interest expense on interest bearing deposits increased to $32.7 million, with an average rate of 1.98%[165] Loan and Credit Quality - The provision for loan losses increased due to loan growth, contributing to the decline in net income[155] - The provision for credit losses on loans was $2.415 million for the three months ended June 30, 2024, compared to $0.741 million in the same period of 2023, reflecting loan growth[173] - Total loans held for investment (HFI) increased by $403.0 million, or 9.2%, to $4.8 billion as of June 30, 2024, led by organic commercial loan growth[179] - The allowance for credit losses as a percentage of period-end loans HFI was 1.08% at June 30, 2024, down from 1.17% at June 30, 2023[175] - Total non-accrual loans decreased by $1.4 million, or 7.3%, to $18.3 million, representing 0.38% of total loans HFI as of June 30, 2024[184] - The ratio of non-performing assets to total assets decreased slightly to 0.26% compared to 0.27% at December 31, 2023[184] Assets and Equity - Total assets decreased by $28.0 million, or 0.4%, to $7.872 billion as of June 30, 2024, primarily due to a $380.4 million decrease in cash and cash equivalents[178] - Total average assets were $7.81 billion, with stockholders' equity at $725.9 million[163] - Stockholders' equity totaled $726.7 million as of June 30, 2024, an increase from $718.8 million at December 31, 2023[186] - The ratio of average stockholders' equity to average assets increased to 9.30% for the six months ended June 30, 2024, compared to 8.97% for the twelve months ended December 31, 2023[186] - Tangible common equity totaled $559.5 million at June 30, 2024, with a tangible common equity to tangible assets ratio of 7.22%[186] Tax and Regulatory - The company's income tax expense for the second quarter of 2024 was $1.7 million, resulting in an effective tax rate of 10.9%, up from 7.2% in the same period of 2023[176] - The company does not undertake to update any forward-looking statements, which are subject to various risks and uncertainties[152] - Management has identified critical accounting estimates related to credit losses and goodwill, which are essential for portraying the company's financial condition[153] Market and Economic Conditions - The company continues to face risks from economic conditions, interest rate volatility, and competition from alternative payment platforms[150] - The company projected a 10.4% decrease in net interest income with a 200 basis points rise in interest rates, indicating sensitivity to interest rate changes[196] Miscellaneous - The company had approximately $1.76 billion in unused credit lines with various money center banks as of June 30, 2024, up from $1.41 billion at December 31, 2023[185] - The dividend payout ratio was 50.0% for the first six months of 2024, compared to 37.7% for the same period in 2023[186] - The average balance of investment securities was $2.46 billion, generating $29.3 million in interest income[163] - The average rate on federal funds sold was 5.47%, with an average balance of $184.9 million[163] - Future outlook and performance guidance were not mentioned in the available content[203] - New product and technology development details were not included in the documents[203] - Market expansion and acquisition strategies were not discussed in the provided content[203] - Other new strategies were not highlighted in the available information[203]