Horizon Bancorp(US:HBNC)2022-11-09 21:24Capital Adequacy - As of September 30, 2022, Horizon Bancorp's total capital ratio was 14.44%, significantly above the required 8.00% for capital adequacy purposes[168] - The Tier 1 capital ratio for the consolidated entity was 13.54%, exceeding the required 6.00%[168] - Common equity tier 1 capital ratio stood at 11.26%, well above the minimum requirement of 4.50%[168] - Total capital increased from $708.198 million on December 31, 2021, to $760.102 million by September 30, 2022[168] - The bank's Tier 1 capital to average assets ratio was 8.84% as of September 30, 2022, surpassing the required 4.00%[168] - The company is focused on maintaining a strong capital position to support future growth and market expansion[174] Financial Performance - Return on average assets ("ROAA") was 1.29% year-to-date and 1.24% for the third quarter[177] - Net income totaled $23.8 million, down 4.2% from the prior quarter but up 3.3% from the prior year period[177] - Consolidated net income for the three-month period ended September 30, 2022, was $23.8 million, or $0.55 diluted earnings per share, compared to $23.1 million, or $0.52 diluted earnings per share for the same period in 2021[200] - For the nine-month period ended September 30, 2022, consolidated net income was $72.2 million, or $1.65 diluted earnings per share, compared to $65.7 million, or $1.49 diluted earnings per share for the same period in 2021[201] - Net income for the three months ended September 30, 2022, was reported at $23,821,000, an increase from $21,425,000 for the same period in 2021, representing a growth of 11.2%[235] - Net income for the nine months ended September 30, 2022, was $72,243,000, up from $65,666,000 in 2021, indicating an increase of 10.0%[235] Loan and Deposit Growth - Total loans, excluding Federal Paycheck Protection Program ("PPP") loans, grew by an annualized rate of 14.5% year-to-date and 7.8% quarter over quarter[177] - Commercial loans reached a record $2.35 billion, growing by an annualized rate of 13.8% year-to-date[177] - Consumer loans grew by an annualized rate of 31.7% year-to-date to a record $899.9 million[177] - Total deposits increased by $27.8 million to $5.8 billion as of September 30, 2022, driven by organic growth[197] - The bank had approximately $917.6 million in unused credit lines as of September 30, 2022, an increase from $672.7 million at December 31, 2021[230] Interest Income and Expenses - Net interest income increased by $387,000 to $53.4 million during the third quarter compared to the previous quarter[177] - Net interest income for the three months ended September 30, 2022, was $53.4 million, an increase of $6.9 million from $46.5 million in the same period in 2021[203] - Interest income increased by $26.8 million to $172.7 million for the nine months ended September 30, 2022, driven by an increase in average balances of interest earning assets by $1.2 billion[208] - Interest expense increased by $3.9 million to $18.1 million for the nine months ended September 30, 2022, due to higher rates paid on borrowings[209] - The net interest margin decreased by four basis points to 3.13% for the three-month period ended September 30, 2022, compared to 3.17% for the same period in 2021[205] Non-Interest Income and Expenses - Total non-interest income decreased by $2.2 million for the quarter due to lower residential mortgage loan volume[177] - Total non-interest income for the three months ended September 30, 2022, was $10,188 million, a decrease of $5,856 million or 36.5% compared to the same period in 2021[220] - Total non-interest income for the nine months ended September 30, 2022, was $36,777 million, down by $8,347 million or 18.5% compared to the same period in 2021[222] - Total non-interest expense for Q3 2022 was $38.35 million, an increase of $4.8 million or 14.3% compared to Q3 2021[224] - Salaries and employee benefits increased by $1.7 million or 9.2% to $20.61 million in Q3 2022 compared to Q3 2021[224] Tax and Equity - The effective tax rate for the third quarter dropped to 7.8% due to the recognition of solar tax credits[177] - Stockholders' equity decreased to $645.0 million at September 30, 2022, down from $723.2 million at December 31, 2021, primarily due to unrealized losses on available for sale securities[199] - The ratio of average stockholders' equity to average assets was 8.91% for the nine months ended September 30, 2022, down from 10.93% for the twelve months ended December 31, 2021[231] - Horizon declared common stock dividends of $0.47 per share for the first nine months of 2022, compared to $0.41 per share for the same period in 2021[232] Risk Factors - The company anticipates potential risks from economic conditions, including inflation and interest rate changes, which could impact financial performance[171] - Horizon's management believes that ongoing litigation will not materially affect the company's financial position[169] - Horizon believes there have been no significant changes in its interest rate sensitivity since the 2021 Annual Report[250]