Horizon Bancorp(US:HBNC)2022-08-08 20:34Financial Performance - Net income reached a record $24.9 million, an increase of 5.5% from the previous quarter and 12.1% year-over-year, with diluted earnings per share (EPS) of $0.57[180] - Pre-tax, pre-provision net income grew to $29.1 million, up 13.1% from the linked quarter and 18.9% from the prior year period[180] - Consolidated net income for Q2 2022 was $24.9 million, or $0.57 diluted earnings per share, up from $22.2 million, or $0.50 diluted earnings per share in Q2 2021, reflecting a $10.4 million increase in net interest income[207] - For the six-month period ended June 30, 2022, consolidated net income was $48.4 million, or $1.11 diluted earnings per share, compared to $42.6 million, or $0.97 diluted earnings per share for the same period in 2021[208] - Reported net income for Q2 2022 was $24,859,000, an increase from $23,563,000 in Q1 2022, and $48,422,000 for the first half of 2022 compared to $42,595,000 in the same period of 2021, reflecting a year-over-year growth of 13.5%[250] Loan and Deposit Growth - Total loans, excluding PPP loans, increased by 6.2% during the second quarter, reaching $3.89 billion[180] - Commercial loans grew by 4.9% to a record $2.31 billion, while consumer loans surged by 12.6% to $848.7 million[180] - Net loans increased by $295.1 million to $3.9 billion as of June 30, 2022, with commercial loans (excluding PPP loans) rising by $108 million[203] - Total deposits rose by $42.6 million to $5.8 billion as of June 30, 2022, driven by organic growth[205] Non-Interest Income and Expenses - Total non-interest income decreased by $2,773 thousand to $12,434 thousand for the three months ended June 30, 2022, an 18.2% decline compared to the same period in 2021[232] - Service charges on deposit accounts increased by 31.3% to $2,833 thousand for the three months ended June 30, 2022, compared to $2,157 thousand in 2021[232] - Non-interest expense rose by $3.0 million to $36.4 million for the second quarter of 2022, a 9.7% increase compared to the same quarter in 2021[236] - Total non-interest expense for the six-month period ended June 30, 2022, was $73.0 million, an increase of $7.7 million or 11.7% compared to $65.6 million in 2021[239] Asset Quality and Credit Losses - Non-performing loans stood at 0.51% of total loans, with net charge-offs to average loans at 0.01% for the second quarter[180] - The allowance for credit losses (ACL) was $52.35 million, with an ACL to total loans ratio of 1.33% as of June 30, 2022[185] - The Allowance for Credit Losses (ACL) balance was $52.4 million, or 1.33% of total loans, down from $54.3 million or 1.51% at December 31, 2021, indicating improved asset quality[228] - Non-performing loans totaled $20.2 million as of June 30, 2022, an increase of $1.2 million from $19.0 million at December 31, 2021[229] Capital and Equity - The tangible capital ratio decreased to 6.48%, down 46 basis points from 6.94% at the end of the previous quarter due to unrealized losses on investments[183] - Stockholders' equity decreased to $657.9 million as of June 30, 2022, from $723.2 million at December 31, 2021, primarily due to a $38.3 million decrease in accumulated other comprehensive income[206] - Total stockholders' equity as of June 30, 2022, was $657,865,000, down from $677,450,000 at the end of Q1 2022, a decrease of 2.6%[257] Interest Income and Margin - Net interest income for Q2 2022 was $53.0 million, an increase of $10.4 million from $42.6 million in Q2 2021, with interest income rising to $57.6 million from $47.4 million[212] - The net interest margin increased by five basis points to 3.19% for Q2 2022, compared to 3.14% for Q2 2021, despite a decrease in the yield on interest-earning assets[214] - Average balances of interest-bearing deposits increased by $907.1 million for the six-month period ended June 30, 2022, while average balances of borrowings increased by $208.8 million[219] Efficiency and Profitability Ratios - The efficiency ratio improved to 55.57%, compared to 58.74% in the first quarter of 2022[180] - Return on average assets (ROAA) as reported was 1.33% for the three months ended June 30, 2022, slightly up from 1.31% in the previous quarter[260] - For the three months ended June 30, 2022, the Return on Average Common Equity (ROACE) was reported at 14.72%, an increase from 12.59% in the same period of 2021[263] - The Adjusted Return on Average Tangible Equity (ROATE) for the three months ended June 30, 2022, was 19.86%, up from 16.69% in the same period of 2021[265] Strategic Decisions and Future Outlook - The company approved the permanent closure of seven branch locations, incurring a one-time charge of approximately $380,000[180] - Horizon Bancorp continues to focus on maintaining strong financial performance while navigating acquisition-related expenses and other adjustments, aiming for sustainable growth in the future[250] - Management does not expect any legal proceedings to have a material adverse effect on the consolidated financial position or results of operations[273]