Horizon Bancorp(HBNC) - 2022 Q1 - Quarterly Report

Financial Performance - Net income reached a record $23.6 million, up 10.0% from the linked quarter and 15.4% from the prior year period, with diluted EPS of $0.54[168] - Consolidated net income for the three-month period ended March 31, 2022, was $23.6 million, or $0.54 diluted earnings per share, compared to $20.4 million, or $0.46 diluted earnings per share for the same period in 2021[198] - Net income for Q1 2022 was reported at $23.563 million, compared to $21.425 million in Q4 2021, reflecting a positive trend in profitability[227] - Pre-tax income for Q1 2022 was $27.1 million, compared to $25.5 million in Q4 2021 and $23.9 million in Q1 2021, reflecting a year-over-year increase of 13.5%[231] Loan and Asset Quality - Total loans, excluding PPP loans, grew by 2.3% to $3.66 billion, with commercial loans increasing by 3.3% to $2.20 billion and consumer loans rising by 3.7% to $753.9 million[168] - Non-performing loans represented 0.54% of total loans, indicating favorable asset quality, with net charge-offs at 0.00%[172] - Non-performing loans to total loans improved to 0.54% as of March 31, 2022, compared to 0.68% a year earlier[190] - Non-performing loans totaled $20.1 million as of March 31, 2022, reflecting a $1.1 million increase from $19.0 million at December 31, 2021[209] - The allowance for credit losses (ACL) decreased to $52.5 million, representing 1.41% of total loans, down from 1.51% as of December 31, 2021[190] Interest Income and Margin - Reported net interest margin (NIM) was 2.99%, an increase of two basis points from the previous quarter, while adjusted NIM was 2.93%, up seven basis points[168] - Net interest income for the three months ended March 31, 2022, was $48.2 million, an increase of $5.6 million from $42.5 million in the same period in 2021[200] - The net interest margin decreased by 30 basis points to 2.99% for the three-month period ended March 31, 2022, compared to 3.29% for the same period in 2021[202] - The adjusted net interest margin was 2.93% in Q1 2022, compared to 2.86% in Q4 2021, indicating improved profitability on interest-earning assets[233] Expenses and Efficiency - Non-interest expense was $36.6 million, or 2.03% of average assets, down from $39.4 million (2.09%) in the fourth quarter of 2021[168] - Non-interest expense for Q1 2022 was $36.610 million, up $4.438 million (13.8%) from Q1 2021, driven by a $2.864 million increase in salaries and employee benefits[217] - The efficiency ratio improved to 58.74% compared to 62.69% for the fourth quarter of 2021[172] - The annualized non-interest expense to average assets ratio improved to 2.03% in Q1 2022 from 2.20% in Q1 2021[218] Deposits and Capital - Total deposits increased by $48.5 million to $5.9 billion as of March 31, 2022, driven by organic growth[195] - Stockholders' equity decreased to $677.5 million as of March 31, 2022, from $723.2 million at December 31, 2021, primarily due to a $62.1 million decrease in accumulated other comprehensive income[222] - The company maintained approximately $575.3 million in unused credit lines as of March 31, 2022, down from $672.7 million at December 31, 2021[220] Investments and Securities - Investment securities available for sale decreased by $48.3 million to $1.1 billion, while held to maturity investments increased by $453.7 million to $2.0 billion[193] - The steepening yield curve resulted in unrealized losses on available for sale investments of $73.6 million, impacting the tangible capital ratio, which decreased by 67 basis points to 6.94%[168] Management and Governance - Horizon's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of March 31, 2022[245] - There have been no changes in Horizon's internal control over financial reporting that materially affected its financial reporting during the fiscal quarter ended March 31, 2022[246] - Management does not expect any legal proceedings to have a material adverse effect on Horizon's consolidated financial position or results of operations[249] - There have been no material changes in risk factors from those previously disclosed in Horizon's Annual Report for the fiscal year ended December 31, 2021[250]