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Sep 30, 2022
Horizon Bancorp Q3 2022 Earnings Report
Reported earnings per share of $0.55 and experienced strong loan growth.
Key Takeaways
Horizon Bancorp reported a net income of $23.8 million, with EPS at $0.55. The company saw strong loan growth, particularly in commercial and consumer loans, which helped offset headwinds from lower non-interest income and increased cost of funds.
Return on average assets was 1.24% for the third quarter.
Total loans, excluding PPP loans and sold commercial participation loans, grew by an annualized rate of 7.8% quarter over quarter.
Net interest income increased by $387,000 to $53.4 million during the third quarter compared to the previous quarter.
Non-interest income decreased by $2.2 million due to lower residential mortgage loan volume and wealth management fees.
Horizon Bancorp
Horizon Bancorp
Forward Guidance
Horizon Bancorp anticipates a reduction in non-interest expenses starting Q1 2023 due to branch closings and cost savings initiatives, expecting to maintain the annualized non-interest expense to average assets ratio below 2.00%.
Positive Outlook
- Expect higher expense run rate incurred during Q3 2022 to be greatly reduced starting in Q1 2023.
- Expect to see benefit from a full year of seven additional branch closings and their related cost savings in 2023.
- The Bank’s capital position is still robust with leverage and risk based capital ratios of 8.84% and 13.65%, respectively.
- Solid loan growth.
Challenges Ahead
- Economic environment is challenged by rising inflation and supply chain disruption.
- Non-interest income is down $2.2 million for the quarter due to lower residential mortgage loan volume.
- Deposit betas increased to 23% on total interest bearing deposits in the third quarter compared to a 3% beta during the previous quarter.
- Competitive pressure on deposit pricing is starting to accelerate as we see several smaller banks and credit unions aggressively seeking lower cost deposit funding.
- Current estimates for parallel rate shocks to the balance sheet, at 100 basis points and 200 basis points, decrease net interest income by approximately $3.3 million and $6.7 million, respectively.