HORIZON BANCORP INC /IN/ Q1 FY2025 earnings call

• Horizon's first quarter earnings reflect sixth consecutive quarter of margin expansion above 3%, 5% annualized loan growth (14% commercial), $7M gain from mortgage warehouse sale, and expense run rate step down.
• Commercial loans grew $105M, 14% annualized, with 58% commercial real estate and 42% commercial and industrial. Consumer loans decreased $40M due to indirect auto wind down.
• Commercial credit metrics strong; consumer/mortgage credit quality satisfactory, net charge-offs low at $874,000.
• Core deposits stable, disciplined deposit pricing, leveraging funding options in local markets.

Commercial Lending: Total loans held for investment grew $63 million, with commercial loans specifically growing $105 million, representing a 14% annualized increase for the quarter. This was composed of 58% commercial real estate and 42% commercial and industrial. Consumer Lending: Consumer loan balances decreased $40 million during the quarter, reflective of continued wind down in indirect auto lending. Excluding indirect auto lending, core consumer loans remained flat with primary activity in residential mortgage and home equity lending. Deposit Portfolio: Horizon's core relationship balances were stable within the quarter, with noninterest-bearing deposits up modestly. The organization remained disciplined in deposit pricing and leveraged multiple funding options.

• Full year net interest income growth expected in the mid-teens.
• Noninterest income growth forecasted in the low single digits (excluding one-time items).
• Full year 2025 expense growth expected flat to low single digits.
• Loan growth expected in the mid-single digits, deposit growth in low single digits with different mix (more time deposits).

• Macroeconomic trends and tariffs may impact the portfolio, potentially requiring additional credit allocations.
• Deposit costs and loan repricing risks due to market volatility.
• Economic forecast and credit trends affecting the allowance for credit losses.

Q: Unpack capital optionality and share repurchase appetite.

A: Thomas Prame mentions multiple capital strategies including stock repurchases, noting favorable price to book levels and intention to actively consider share buybacks.

Q: Loan growth and market impact.

A: John Stewart and Lynn Kerber discuss loan growth drivers, commercial loan yield pickup, and market diversification to avoid concentration risks.

Q: Deposit pricing and trajectory.

A: John Stewart talks about deposit cost dynamics by market and category, expecting stable deposit costs with mix impact, and CD book repricing ability.

Q: C&I growth and market diversification.

A: Lynn Kerber comments on C&I growth being driven by Equipment Finance division, well-diversified across sectors and states with no major concentrations.