Horizon Bancorp (HBNC) Q4 2024 Earnings Transcript

Core Insights - The company is optimistic about its financial positioning heading into 2025, driven by positive loan growth and quality credit metrics [1][4][30] - Strategic initiatives completed in the quarter have restructured the cost base, leading to a more efficient operation moving forward [1][4][22] Financial Performance - The fourth quarter showed strong results with a net interest margin increase of 31 basis points to 2.97%, driven by strategic cash redeployment and a reduction in higher-cost deposits [14][16] - Total loans held for investment, excluding mortgage warehouse, grew by $123 million, representing a 10% annualized growth, primarily in core commercial lending segments [5][6] - The company reported a net loan growth of $408 million for the year, reflecting a 9% increase for 2024 [5] Credit Quality - Commercial credit quality metrics are performing well, with past due loans greater than 30 days at 10 basis points and a non-performing loan ratio declining to 19 basis points [7][10] - The allowance for credit losses decreased by approximately $900,000 to $52 million, resulting in an ACL-to-loan ratio of 1.07% [11] Deposit Trends - The deposit portfolio showed stability, with core deposits remaining flat and a strategic reduction in higher-cost CDs to improve profitability [2][12] - The company anticipates low single-digit growth in deposit balances, subject to typical seasonality [25] Strategic Initiatives - The company executed several key initiatives aimed at strengthening the balance sheet and improving long-term profitability, including the sale of its mortgage warehouse division [22][23] - The company plans to focus on organic growth in its core commercial lending segments, with expectations for continued loan growth in 2025 [30][66] Outlook for 2025 - The company expects loan growth to be in the mid-single-digit range for the full year, with a continued runoff of lower-yielding indirect auto loans [24][25] - Full-year 2025 net interest income is projected to grow in the mid-teens, primarily driven by net interest margin expansion [26][27] - The effective tax rate for 2025 is expected to be in the mid-teens, reflecting a stronger outlook for pre-tax income [28]