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Horizon Bancorp, Inc. Reports Third Quarter 2023 Results
来源: Nasdaq GlobeNewswire / 25 10月 2023 16:05:02 America/New_York
MICHIGAN CITY, Ind., Oct. 25, 2023 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three and nine months ended September 30, 2023.
“Horizon's third quarter performance demonstrated our diversified lending platform's ability to produce solid growth while successfully continuing to shift our loan mix to higher yielding assets. This strategy paired with the strength of our credit culture will continue to add value over time,” President and Chief Executive Officer Thomas M. Prame said. “Horizon's core deposit funding base remained stable and our business units provided another promising quarter of non–interest income results. Recognizing the near term headwinds facing the banking industry, Horizon remains dedicated to disciplined expense management and prudently deploying resources into new revenue opportunities that can quickly realize positive momentum.”
Third Quarter 2023 Highlights
- Net income was $16.2 million or $0.37 per diluted share. This compared to $18.8 million or $0.43 in the second quarter of 2023, which included an after–tax benefit of approximately $1.1 million, or $0.02 per share on a non–recurring swap termination fee.
- Loans totaled $4.36 billion at period end, increasing by 8.2% annualized during the quarter and 6.4% annualized since December 31, 2022. Commercial loan growth totaled $83.0 million, increasing by 13.1% annualized during the quarter and 6.6% annualized since December 31, 2022.
- Deposits remained resilient, totaling $5.7 billion at period end, compared to $5.7 billion on June 30, 2023. Brokered deposits and wholesale borrowing levels were consistent with second quarter balances.
- Net interest income was $42.1 million. This compared to $46.2 million in the linked quarter, which benefited from the aforementioned non–recurring swap termination fee by $1.5 million.
- Non–interest income expanded to $11.8 million from $11.0 million in the linked quarter, primarily due to higher mortgage–related revenue.
- Well–managed non–interest expense was $36.2 million, or 1.81% of average assets annualized. Results slightly improved from the second quarter, even with an additional $460,000 in FDIC insurance expense.
- Maintained sound asset quality, with 30 to 89 days delinquent loans representing 0.30% of total loans and non–performing loans representing 0.45% of total loans at period end, as well as net charge–offs representing 0.02% of average loans during the quarter.
- Horizon's dividend performance included a 5.99% yield as of September 30, 2023, with cash maintained at the holding company level representing approximately eight quarters of dividend payments and fixed costs.
Summary
For the Three Months Ended September 30, June 30, September 30, Net Interest Income and Net Interest Margin 2023 2023 2022 Net interest income $ 42,090 $ 46,160 $ 51,861 Net interest margin 2.41 % 2.69 % 3.04 % Adjusted net interest margin 2.38 % 2.57 % 2.99 % For the Three Months Ended September 30, June 30, September 30, Asset Yields and Funding Costs 2023 2023 2022 Interest earning assets 4.48 % 4.39 % 3.58 % Interest bearing liabilities 2.52 % 2.10 % 0.69 % For the Three Months Ended Non-interest Income and September 30, June 30, September 30, Mortgage Banking Income 2023 2023 2022 Total non–interest income $ 11,830 $ 10,997 $ 10,188 Gain on sale of mortgage loans 1,582 1,005 1,441 Mortgage servicing income net of impairment 631 640 355 For the Three Months Ended September 30, June 30, September 30, Non-interest Expense 2023 2023 2022 Total non–interest expense $ 36,168 $ 36,262 $ 36,816 Annualized non–interest expense to average assets 1.81 % 1.86 % 1.91 % For the Three Months Ended September 30, June 30, September 30, Credit Quality 2023 2023 2022 Allowance for credit losses to total loans 1.14 % 1.17 % 1.27 % Non–performing loans to total loans 0.45 % 0.52 % 0.47 % Percent of net charge–offs to average loans outstanding for the period 0.02 % 0.01 % 0.00 % September 30, Net Reserve December 31, Allowance for Credit Losses 2023 3Q23 2Q23 1Q23 2022 Commercial $ 29,472 $ (882 ) $ (802 ) $ (1,289 ) $ 32,445 Retail Mortgage 2,794 (854 ) (799 ) (1,130 ) 5,577 Warehouse 714 (179 ) 95 (222 ) 1,020 Consumer 16,719 1,638 1,956 1,703 11,422 Allowance for Credit Losses (“ACL”) $ 49,699 $ (277 ) $ 450 $ (938 ) $ 50,464 ACL / Total Loans 1.14 % 1.21 % Acquired Loan Discount (“ALD”) $ 5,148 $ (371 ) $ (639 ) $ (121 ) $ 6,279 “Our historical conservative credit culture remains a strength of Horizon as displayed by our third quarter asset quality metrics,” Mr. Prame added. “We believe our focus on lending to well–qualified borrowers, the teams' proactive and proven approach to loss mitigation, and our focus on building a diverse portfolio will further position us well to traverse a fluid economic outlook.”
Income Statement Highlights
Net income for the third quarter of 2023 was $16.2 million, or $0.37 diluted earnings per share, compared to $18.8 million, or $0.43, for the linked quarter and $23.8 million, or $0.55, for the prior year period. The change in net income for the third quarter of 2023 when compared to the linked quarter, reflects growth in non–interest income of $833,000 and decreases in credit loss expense of $417,000, income tax expense of $168,000 and non–interest expense of $94,000, offset by a decrease in net interest income of $4.1 million.
Net interest income was $42.1 million in the third quarter of 2023, compared to $46.2 million in the linked quarter which benefited from a swap termination fee of $1.5 million.
Total non–interest income of $11.8 million was $833,000 higher in the third quarter of 2023 when compared to the second quarter of 2023, primarily due to a $615,000 increase in other income and a $577,000 increase in gain on sale of mortgage loans, offset by a decrease of $398,000 in interchange fees.
Total non–interest expense was $94,000 lower in the third quarter of 2023 when compared to the second quarter of 2023, primarily due to a $277,000 decrease in loan expense, a $199,000 decrease in outside services and consultants and a $119,000 decrease in other expense, offset by an increase $460,000 increase in FDIC insurance expense from the linked quarter.
Horizon's effective tax rate was 7.3% for the third quarter of 2023, with income tax expense of $1.3 million decreasing $168,000 when compared to the second quarter of 2023.
Net Interest Margin
Horizon’s net interest margin (“NIM”) was 2.41% for the third quarter of 2023. This compared to 2.69% for the second quarter of 2023, when NIM benefited by approximately 0.08% from a non–recurring swap termination fee.
Net interest margin, excluding the aforementioned swap termination fee in the linked quarter and acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.38% for the third quarter of 2023, compared to 2.57% for the linked quarter. (See the “Non–GAAP Reconciliation of Net Interest Margin” table below).
Lending Activity
Total loan balances and loans held for sale increased to $4.36 billion on September 30, 2023 compared to $4.27 billion on June 30, 2023. During the three months ended September 30, 2023, commercial loans increased $83.0 million, consumer loans increased $25.6 million and residential mortgage loans increased $648,000, offset by a decrease in mortgage warehouse loans of $16.4 million and loans held for sale of $4.1 million.
Lending activity in the third quarter was led by strong results of our relationship banking model in commercial lending. Mortgage banking activities aligned with client demand in a continuing rising interest rate environment, while the lift in consumer balances was primarily in home equity loans, which offset a decrease in indirect auto lending. These results reflect the continued strategic shift of the organization to focus on higher yielding assets.
Loan Growth by Type (Dollars in Thousands, Unaudited) September 30, June 30, QTD QTD Annualized 2023 2023 $ Change % Change % Change Commercial $ 2,589,244 $ 2,506,279 $ 82,965 3.3 % 13.1 % Residential mortgage 675,399 674,751 648 0.1 % 0.4 % Mortgage warehouse 65,923 82,345 (16,422 ) (19.9 )% (79.1 )% Consumer 1,028,436 1,002,885 25,551 2.5 % 10.1 % Total loans 4,359,002 4,266,260 92,742 2.6 % 8.6 % Loans held for sale 2,828 6,933 (4,105 ) (59.2 )% (234.9 )% Total loans and loans held for sale $ 4,361,830 $ 4,273,193 $ 88,637 2.5 % 8.2 % Deposit Activity
Total deposit balances of $5.70 billion on September 30, 2023 decreased 0.16% compared to $5.71 billion on June 30, 2023.
The deposit mix at the end of the third quarter of 2023 represented the demand for clients to earn more interest on their excess funds and consumers spending excess liquidity. The Bank's tenured and granular core deposit relationships remain steadfast, reflecting the value of Horizon's relationship banking model and local community engagement.
Deposit Growth by Type (Dollars in Thousands, Unaudited) September 30, June 30, QTD QTD Annualized 2023 2023 $ Change % Change % Change Non–interest bearing $ 1,126,703 $ 1,170,055 $ (43,352 ) (3.7 )% (15.0 )% Interest bearing 3,322,788 3,289,474 33,314 1.0 % 4.1 % Time deposits 1,250,606 1,249,803 803 0.1 % 0.3 % Total deposits $ 5,700,097 $ 5,709,332 $ (9,235 ) (0.2 )% (0.7 )% Capital
The capital resources of the Company and the Bank continued to exceed regulatory capital ratios for “well capitalized” banks at September 30, 2023. Stockholders’ equity totaled $693.4 million at September 30, 2023 and the ratio of average stockholders’ equity to average assets was 8.99% for the nine months ended September 30, 2023.
Tangible book value, which excludes intangible assets from total equity, per common share (“TBVPS”) was $12.00, decreasing $0.34 during the third quarter of 2023, as meaningfully higher interest rates led to unrealized net losses on securities available for sale (“AFS”) of $2.83 per common share, reducing accumulated other comprehensive income (“AOCI”) by $25.5 million in the three months ending September 30, 2023. TBVPS increased by $0.41 during the first nine months of the year. Tangible common equity was changed modestly to 6.72% of tangible assets as of September 30, 2023, a decrease of 19 basis points during the quarter but still elevated by 16 basis points since December 31, 2022.
The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of September 30, 2023.
Actual Required for Capital Adequacy Purposes Required for Capital Adequacy Purposes with Capital Buffer Well Capitalized
Under Prompt Corrective Action Provisions$ Ratio $ Ratio $ Ratio $ Ratio Total capital (to risk–weighted assets) Consolidated $ 812,586 14.55 % $ 446,920 8.00 % $ 586,582 10.50 % N/A N/A Bank 741,748 13.28 % 446,733 8.00 % 586,337 10.50 % $ 558,416 10.00 % Tier 1 capital (to risk–weighted assets) Consolidated 762,887 13.66 % 335,190 6.00 % 474,852 8.50 % N/A N/A Bank 692,049 12.39 % 335,050 6.00 % 474,654 8.50 % 446,733 8.00 % Common equity tier 1 capital (to risk–weighted assets) Consolidated 646,716 11.58 % 251,392 4.50 % 391,055 7.00 % N/A N/A Bank 692,049 12.39 % 251,287 4.50 % 390,891 7.00 % 362,971 6.50 % Tier 1 capital (to average assets) Consolidated 762,887 9.98 % 305,700 4.00 % 305,700 4.00 % N/A N/A Bank 692,049 8.94 % 309,532 4.00 % 309,532 4.00 % 386,915 5.00 % Liquidity
The Bank maintains a stable base of core deposits provided by long–standing and new relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayments, investment security cash flows, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the Federal Home Loan Bank of Indianapolis (the “FHLB”). On September 30, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.64 billion in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Bank. The Bank had approximately $622.9 million of unpledged investment securities on September 30, 2023.
Forward Looking Statements
This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward–looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission (the “SEC”). Forward–looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward–looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.
Although management believes that the expectations reflected in such forward–looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the ability of Horizon to remediate its material weaknesses in its internal control over financial reporting; continuing increases in inflation; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; economic conditions and their impact on Horizon and its customers, including local and global economic recovery from the pandemic; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; material changes outside the U.S. or in overseas relations, including changes in U.S. trade relations related to imposition of tariffs, Brexit, and the phase out of the London Interbank Offered Rate (“LIBOR”); the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward–looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10–K, Quarterly Reports on Form 10–Q, and Current Reports on Form 8–K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward–looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.
Financial Highlights (Dollars in Thousands, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Balance sheet: Total assets $ 7,959,434 $ 7,963,353 $ 7,897,995 $ 7,872,518 $ 7,718,695 Interest earning deposits & federal funds sold 76,293 119,637 30,221 12,233 7,302 Interest earning time deposits 2,207 2,452 3,098 2,812 2,814 Investment securities 2,831,651 2,889,309 2,958,978 3,020,306 3,017,191 Commercial loans 2,589,244 2,506,279 2,505,459 2,467,422 2,403,743 Mortgage warehouse loans 65,923 82,345 52,957 69,529 73,690 Residential mortgage loans 675,399 674,751 662,459 653,292 634,901 Consumer loans 1,028,436 1,002,885 1,026,076 967,755 919,198 Total loans 4,359,002 4,266,260 4,246,951 4,157,998 4,031,532 Earning assets 7,306,490 7,319,100 7,273,921 7,225,833 7,087,368 Non–interest bearing deposit accounts 1,126,703 1,170,055 1,231,845 1,277,768 1,315,155 Interest bearing transaction accounts 3,322,788 3,289,474 3,402,525 3,582,891 3,736,798 Time deposits 1,250,606 1,249,803 1,067,575 997,115 778,885 Total deposits 5,700,097 5,709,332 5,701,945 5,857,774 5,830,838 Borrowings 1,356,510 1,352,039 1,311,927 1,142,949 1,048,091 Subordinated notes 59,007 58,970 58,933 58,896 58,860 Junior subordinated debentures issued to capital trusts 57,201 57,143 57,087 57,027 56,966 Total stockholders’ equity 693,369 709,243 702,559 677,375 644,993 Financial Highlights (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Income statement: Net interest income $ 42,090 $ 46,160 $ 45,237 $ 48,782 $ 51,861 Credit loss expense (recovery) 263 680 242 (69 ) (601 ) Non–interest income 11,830 10,997 9,620 10,674 10,188 Non–interest expense 36,168 36,262 34,524 35,711 36,816 Income tax expense 1,284 1,452 1,863 2,649 2,013 Net income $ 16,205 $ 18,763 $ 18,228 $ 21,165 $ 23,821 Per share data: Basic earnings per share $ 0.37 $ 0.43 $ 0.42 $ 0.49 $ 0.55 Diluted earnings per share 0.37 0.43 0.42 0.48 0.55 Cash dividends declared per common share 0.16 0.16 0.16 0.16 0.16 Book value per common share 15.89 16.25 16.11 15.55 14.80 Tangible book value per common share 12.00 12.34 12.17 11.59 10.82 Market value – high 12.68 11.10 16.32 20.00 20.59 Market value – low $ 9.90 $ 7.75 $ 10.31 $ 14.51 $ 16.74 Weighted average shares outstanding – Basis 43,646,609 43,639,987 43,583,554 43,574,151 43,573,370 Weighted average shares outstanding – Diluted 43,796,069 43,742,588 43,744,721 43,667,953 43,703,793 Key ratios: Return on average assets 0.81 % 0.96 % 0.94 % 1.09 % 1.24 % Return on average common stockholders’ equity 8.99 10.59 10.66 12.72 13.89 Net interest margin 2.41 2.69 2.67 2.85 3.04 Allowance for credit losses to total loans 1.14 1.17 1.17 1.21 1.27 Average equity to average assets 9.03 9.07 8.86 8.55 8.91 Efficiency ratio 67.08 63.44 62.93 60.06 59.33 Annualized non–interest expense to average assets 1.81 1.86 1.79 1.84 1.91 Bank only capital ratios: Tier 1 capital to average assets 8.94 8.72 8.86 8.89 8.84 Tier 1 capital to risk weighted assets 12.39 12.12 12.65 12.72 12.74 Total capital to risk weighted assets 13.28 13.03 13.56 13.59 13.65 Financial Highlights (Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) Nine Months Ended September 30, September 30, 2023 2022 Income statement: Net interest income $ 133,487 $ 150,736 Credit loss expense (recovery) 1,185 (1,747 ) Non–interest income 32,447 36,777 Non–interest expense 106,954 107,490 Income tax expense 4,599 9,527 Net income $ 53,196 $ 72,243 Per share data: Basic earnings per share $ 1.22 $ 1.66 Diluted earnings per share 1.21 1.65 Cash dividends declared per common share 0.32 0.47 Book value per common share 16.25 14.80 Tangible book value per common share 12.34 10.82 Market value – high 16.32 23.45 Market value – low $ 7.75 $ 16.72 Weighted average shares outstanding – Basis 43,611,926 43,567,028 Weighted average shares outstanding – Diluted 43,757,321 43,699,035 Key ratios: Return on average assets 0.90 % 1.29 % Return on average common stockholders’ equity 10.06 13.97 Net interest margin 2.59 3.02 Allowance for credit losses to total loans 1.14 1.27 Average equity to average assets 8.99 9.25 Efficiency ratio 64.46 57.32 Annualized non–interest expense to average assets 1.82 1.92 Bank only capital ratios: Tier 1 capital to average assets 8.94 8.84 Tier 1 capital to risk weighted assets 12.39 12.74 Total capital to risk weighted assets 13.28 13.65 Financial Highlights (Dollars in Thousands Except Ratios, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Loan data: Substandard loans $ 47,624 $ 41,484 $ 49,804 $ 56,194 $ 57,932 30 to 89 days delinquent 13,089 10,913 13,971 10,709 6,970 Non–performing loans: 90 days and greater delinquent – accruing interest 392 1,313 137 92 193 Trouble debt restructures – accruing interest — — — 2,570 2,529 Trouble debt restructures – non–accrual — — — 1,548 1,665 Non–accrual loans 19,056 20,796 19,660 17,630 14,771 Total non–performing loans $ 19,448 $ 22,109 $ 19,797 $ 21,840 $ 19,158 Non–performing loans to total loans 0.45 % 0.52 % 0.47 % 0.52 % 0.47 % Allocation of the Allowance for Credit Losses (Dollars in Thousands, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Commercial $ 29,472 $ 30,354 $ 31,156 $ 32,445 $ 33,806 Residential mortgage 2,794 3,648 4,447 5,577 5,137 Mortgage warehouse 714 893 798 1,020 1,024 Consumer 16,719 15,081 13,125 11,422 11,402 Total $ 49,699 $ 49,976 $ 49,526 $ 50,464 $ 51,369 Net Charge–offs (Recoveries) (Dollars in Thousands Except Ratios, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Commercial $ 142 $ 101 $ 104 $ (94 ) $ 51 Residential mortgage (39 ) (10 ) (6 ) (8 ) (75 ) Mortgage warehouse — — — — — Consumer 619 183 281 387 162 Total $ 722 $ 274 $ 379 $ 285 $ 138 Percent of net charge–offs (recoveries) to average loans outstanding for the period 0.02 % 0.01 % 0.01 % 0.01 % 0.00 % Total Non–performing Loans (Dollars in Thousands Except Ratios, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Commercial $ 6,969 $ 8,275 $ 8,523 $ 9,330 $ 7,199 Residential mortgage 7,777 8,168 6,926 8,123 8,047 Mortgage warehouse — — — — — Consumer 4,702 5,666 4,348 4,387 3,912 Total $ 19,448 $ 22,109 $ 19,797 $ 21,840 $ 19,158 Non–performing loans to total loans 0.45 % 0.52 % 0.47 % 0.52 % 0.47 % Other Real Estate Owned and Repossessed Assets (Dollars in Thousands, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Commercial $ 1,287 $ 1,567 $ 1,567 $ 1,881 $ 3,206 Residential mortgage 32 107 203 107 22 Mortgage warehouse — — — — — Consumer 72 7 78 152 14 Total $ 1,391 $ 1,681 $ 1,848 $ 2,140 $ 3,242 Average Balance Sheets (Dollars in Thousands, Unaudited) Three Months Ended Three Months Ended September 30, 2023 September 30, 2022 Average
BalanceInterest Average
RateAverage
BalanceInterest Average
RateAssets Interest earning assets Federal funds sold $ 92,305 $ 1,247 5.36 % $ 4,201 $ 24 2.27 % Interest earning deposits 8,018 85 4.21 % 9,994 41 1.63 % Investment securities – taxable 1,684,590 8,788 2.07 % 1,728,197 8,436 1.94 % Investment securities – non–taxable (1) 1,220,998 7,002 2.88 % 1,384,249 7,478 2.71 % Loans receivable (2) (3) 4,280,700 63,003 5.86 % 3,929,567 45,517 4.61 % Total interest earning assets 7,286,611 80,125 4.48 % 7,056,208 61,496 3.58 % Non–interest earning assets Cash and due from banks 100,331 99,221 Allowance for credit losses (49,705 ) (52,303 ) Other assets 587,514 531,976 Total average assets $ 7,924,751 $ 7,635,102 Liabilities and Stockholders’ Equity Interest bearing liabilities Interest bearing deposits $ 4,538,698 $ 24,704 2.16 % $ 4,478,741 $ 4,116 0.36 % Borrowings 1,180,452 10,399 3.50 % 813,873 3,756 1.83 % Repurchase agreements 136,784 825 2.39 % 141,283 139 0.39 % Subordinated notes 58,983 880 5.92 % 58,836 880 5.93 % Junior subordinated debentures issued to capital trusts 57,166 1,227 8.52 % 56,928 744 5.19 % Total interest bearing liabilities 5,972,083 38,035 2.52 % 5,549,661 9,635 0.69 % Non–interest bearing liabilities Demand deposits 1,159,241 1,351,857 Accrued interest payable and other liabilities 77,942 53,208 Stockholders’ equity 715,485 680,376 Total average liabilities and stockholders’ equity $ 7,924,751 $ 7,635,102 Net interest income / spread $ 42,090 1.96 % $ 51,861 2.89 % Net interest income as a percent of average interest earning assets (1) 2.41 % 3.04 % (1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. (2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. (3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis. Average Balance Sheets (Dollars in Thousands, Unaudited) Nine Months Ended Nine Months Ended September 30, 2023 September 30, 2022 Average
BalanceInterest Average
RateAverage
BalanceInterest Average
RateAssets Interest earning assets Federal funds sold $ 43,976 $ 1,706 5.19 % $ 82,667 $ 131 0.21 % Interest earning deposits 8,597 254 3.95 % 15,404 93 0.81 % Investment securities – taxable 1,706,083 26,253 2.06 % 1,715,478 24,499 1.91 % Investment securities – non–taxable (1) 1,258,345 21,617 2.91 % 1,346,173 21,482 2.70 % Loans receivable (2) (3) 4,216,817 178,961 5.70 % 3,779,921 122,641 4.36 % Total interest earning assets 7,233,818 228,791 4.35 % 6,939,643 168,846 3.37 % Non–interest earning assets Cash and due from banks 102,264 100,067 Allowance for credit losses (49,839 ) (53,038 ) Other assets 579,203 486,862 Total average assets $ 7,865,446 $ 7,473,534 Liabilities and Stockholders’ Equity Interest bearing liabilities Interest bearing deposits $ 4,494,821 $ 58,481 1.74 % $ 4,499,441 $ 7,289 0.22 % Borrowings 1,137,289 28,702 3.37 % 644,803 6,209 1.29 % Repurchase agreements 138,706 2,011 1.94 % 140,837 216 0.21 % Subordinated notes 58,947 2,641 5.99 % 58,800 2,641 6.01 % Junior subordinated debentures issued to capital trusts 57,108 3,469 8.12 % 56,869 1,755 4.13 % Total interest bearing liabilities 5,886,871 95,304 2.16 % 5,400,750 18,110 0.45 % Non–interest bearing liabilities Demand deposits 1,200,133 1,336,912 Accrued interest payable and other liabilities 71,280 44,343 Stockholders’ equity 707,162 691,529 Total average liabilities and stockholders’ equity $ 7,865,446 $ 7,473,534 Net interest income / spread $ 133,487 2.19 % $ 150,736 2.92 % Net interest income as a percent of average interest earning assets (1) 2.59 % 3.02 % (1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. (2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. (3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis. Condensed Consolidated Balance Sheets (Dollars in Thousands) September 30,
2023December 31,
2022(Unaudited) Assets Cash and due from banks $ 175,137 $ 123,505 Interest earning time deposits 2,207 2,812 Investment securities, available for sale 865,168 997,558 Investment securities, held to maturity (fair value $1,556,845 and $1,681,309) 1,966,483 2,022,748 Loans held for sale 2,828 5,807 Loans, net of allowance for credit losses of $49,699 and $50,464 4,309,303 4,107,534 Premises and equipment, net 94,716 92,677 Federal Home Loan Bank stock 34,509 26,677 Goodwill 155,211 155,211 Other intangible assets 14,530 17,239 Interest receivable 37,850 35,294 Cash value of life insurance 149,212 146,175 Other assets 152,280 139,281 Total assets $ 7,959,434 $ 7,872,518 Liabilities Deposits Non–interest bearing $ 1,126,703 $ 1,277,768 Interest bearing 4,573,394 4,580,006 Total deposits 5,700,097 5,857,774 Borrowings 1,356,510 1,142,949 Subordinated notes 59,007 58,896 Junior subordinated debentures issued to capital trusts 57,201 57,027 Interest payable 16,281 5,380 Other liabilities 76,969 73,117 Total liabilities 7,266,065 7,195,143 Commitments and contingent liabilities Stockholders’ equity Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares — — Common stock, no par value, Authorized 99,000,000 shares
Issued and outstanding 44,116,739 and 43,937,889 shares— — Additional paid–in capital 355,478 354,188 Retained earnings 461,325 429,385 Accumulated other comprehensive income (loss) (123,434 ) (106,198 ) Total stockholders’ equity 693,369 677,375 Total liabilities and stockholders’ equity $ 7,959,434 $ 7,872,518 Condensed Consolidated Statements of Income (Dollars in Thousands Except Per Share Data, Unaudited) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Interest income Loans receivable $ 63,003 $ 60,594 $ 55,364 $ 50,859 $ 45,517 Investment securities – taxable 8,788 8,740 8,725 8,702 8,436 Investment securities – non–taxable 7,002 7,059 7,556 7,543 7,478 Other 1,332 475 153 83 65 Total interest income 80,125 76,868 71,798 67,187 61,496 Interest expense Deposits 24,704 18,958 14,819 10,520 4,116 Borrowed funds 11,224 9,718 9,771 6,040 3,895 Subordinated notes 880 881 880 881 880 Junior subordinated debentures issued capital trusts 1,227 1,151 1,091 964 744 Total interest expense 38,035 30,708 26,561 18,405 9,635 Net interest income 42,090 46,160 45,237 48,782 51,861 Credit loss expense (recovery) 263 680 242 (69 ) (601 ) Net interest income after credit loss expense 41,827 45,480 44,995 48,851 52,462 Non–interest Income Service charges on deposit accounts 3,086 3,021 3,028 2,947 3,023 Wire transfer fees 120 116 109 118 148 Interchange fees 3,186 3,584 2,867 2,951 3,089 Fiduciary activities 1,206 1,247 1,275 1,270 1,203 Gain (loss) on sale of investment securities — 20 (500 ) — — Gain on sale of mortgage loans 1,582 1,005 785 1,196 1,441 Mortgage servicing income net of impairment 631 640 713 637 355 Increase in cash value of bank owned life insurance 1,055 1,015 981 751 814 Other income 964 349 362 804 115 Total non–interest income 11,830 10,997 9,620 10,674 10,188 Non–interest expense Salaries and employee benefits 20,058 20,162 18,712 19,978 20,613 Net occupancy expenses 3,283 3,249 3,563 3,279 3,293 Data processing 2,999 3,016 2,669 2,884 2,539 Professional fees 707 633 533 694 552 Outside services and consultants 2,316 2,515 2,717 2,985 2,855 Loan expense 1,120 1,397 1,118 1,281 1,392 FDIC insurance expense 1,300 840 540 388 670 Core deposit intangible amortization 903 903 903 925 926 Other losses 188 134 221 118 398 Other expenses 3,294 3,413 3,548 3,179 3,578 Total non–interest expense 36,168 36,262 34,524 35,711 36,816 Income before income taxes 17,489 20,215 20,091 23,814 25,834 Income tax expense 1,284 1,452 1,863 2,649 2,013 Net income $ 16,205 $ 18,763 $ 18,228 $ 21,165 $ 23,821 Basic earnings per share $ 0.37 $ 0.43 $ 0.42 $ 0.49 $ 0.55 Diluted earnings per share 0.37 0.43 0.42 0.48 0.55 Condensed Consolidated Statements of Income (Dollars in Thousands Except Per Share Data, Unaudited) Nine Months Ended September 30, September 30, 2023 2022 Interest income Loans receivable $ 178,961 $ 122,641 Investment securities – taxable 26,253 24,500 Investment securities – non–taxable 21,617 21,482 Other 1,960 223 Total interest income 228,791 168,846 Interest expense Deposits 58,481 7,289 Borrowed funds 30,713 6,425 Subordinated notes 2,641 2,641 Junior subordinated debentures issued capital trusts 3,469 1,755 Total interest expense 95,304 18,110 Net interest income 133,487 150,736 Credit loss expense (recovery) 1,185 (1,747 ) Net interest income after credit loss expense 132,302 152,483 Non–interest Income Service charges on deposit accounts 9,135 8,651 Wire transfer fees 345 477 Interchange fees 9,637 9,451 Fiduciary activities 3,728 4,111 Gain (loss) on sale of investment securities (480 ) — Gain on sale of mortgage loans 3,372 5,969 Mortgage servicing income net of impairment 1,984 4,163 Increase in cash value of bank owned life insurance 3,051 1,843 Death benefit on bank owned life insurance — 644 Other income 1,675 1,468 Total non–interest income 32,447 36,777 Non–interest expense Salaries and employee benefits 58,932 60,305 Net occupancy expenses 10,095 10,044 Data processing 8,684 7,683 Professional fees 1,873 1,149 Outside services and consultants 7,548 7,865 Loan expense 3,635 4,130 FDIC insurance expense 2,680 2,170 Core deposit intangible amortization 2,709 2,777 Other losses 543 928 Other expenses 10,255 10,439 Total non–interest expense 106,954 107,490 Income before income taxes 57,795 81,770 Income tax expense 4,599 9,527 Net income $ 53,196 $ 72,243 Basic earnings per share $ 1.22 $ 1.66 Diluted earnings per share 1.21 1.65 Use of Non–GAAP Financial Measures
Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non–GAAP financial measures relating to net income, diluted earnings per share, pre–tax, pre–provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non–recurring and have excluded them. We believe that this shows the impact of such events as acquisition–related purchase accounting adjustments and swap termination fees, among others we have identified in our reconciliations. Horizon believes these non–GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one–time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non–GAAP information identified herein and its most comparable GAAP measures.
Non–GAAP Reconciliation of Net Income (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Net income as reported $ 16,205 $ 18,763 $ 18,228 $ 21,165 $ 23,821 $ 53,196 $ 72,243 Swap termination fee — (1,453 ) — — — (1,453 ) — Tax effect — 305 — — — 305 — Net income excluding swap termination fee 16,205 17,615 18,228 21,165 23,821 52,048 72,243 (Gain) / loss on sale of investment securities — (20 ) 500 — — 480 — Tax effect — 4 (105 ) — — (101 ) — Net income excluding (gain) / loss on sale of investment securities 16,205 17,599 18,623 21,165 23,821 52,427 72,243 Death benefit on bank owned life insurance (“BOLI”) — — — — — — (644 ) Net income excluding death benefit on BOLI 16,205 17,599 18,623 21,165 23,821 52,427 71,599 Adjusted net income $ 16,205 $ 17,599 $ 18,623 $ 21,165 $ 23,821 $ 52,427 $ 71,599 Non–GAAP Reconciliation of Diluted Earnings per Share (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Diluted earnings per share (“EPS”) as reported $ 0.37 $ 0.43 $ 0.42 $ 0.48 $ 0.55 $ 1.21 $ 1.65 Swap termination fee — (0.03 ) — — — (0.03 ) — Tax effect — 0.01 — — — 0.01 — Diluted EPS excluding swap termination fee 0.37 0.41 0.42 0.48 0.55 1.19 1.65 (Gain) / loss on sale of investment securities — — 0.01 — — 0.01 — Tax effect — — — — — — — Diluted EPS excluding (gain) / loss on sale of investment securities 0.37 0.41 0.43 0.48 0.55 1.20 1.65 Death benefit on bank owned life insurance (“BOLI”) — — — — — — (0.01 ) Diluted EPS excluding death benefit on BOLI 0.37 0.41 0.43 0.48 0.55 1.20 1.64 Adjusted diluted EPS $ 0.37 $ 0.41 $ 0.43 $ 0.48 $ 0.55 $ 1.20 $ 1.64 Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Pre–tax income $ 17,489 $ 20,215 $ 20,091 $ 23,814 $ 25,834 $ 57,795 $ 81,770 Credit loss expense (recovery) 263 680 242 (69 ) (601 ) 1,185 (1,747 ) Pre–tax, pre–provision net income $ 17,752 $ 20,895 $ 20,333 $ 23,745 $ 25,233 $ 58,980 $ 80,023 Pre–tax, pre–provision net income $ 17,752 $ 20,895 $ 20,333 $ 23,745 $ 25,233 $ 58,980 $ 80,023 Swap termination fee — (1,453 ) — — — (1,453 ) — (Gain) / loss on sale of investment securities — (20 ) 500 — — 480 — Death benefit on BOLI — — — — — — (644 ) Adjusted pre–tax, pre–provision net income $ 17,752 $ 19,422 $ 20,833 $ 23,745 $ 25,233 $ 58,007 $ 79,379 Non–GAAP Reconciliation of Net Interest Margin (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Net interest income as reported $ 42,090 $ 46,160 $ 45,237 $ 48,782 $ 51,861 $ 133,487 $ 150,736 Average interest earning assets 7,286,611 7,212,640 7,201,266 7,091,980 7,056,208 7,233,818 6,939,643 Net interest income as a percentage of average interest earning assets (“Net Interest Margin”) 2.41 % 2.69 % 2.67 % 2.85 % 3.04 % 2.59 % 3.02 % Net interest income as reported $ 42,090 $ 46,160 $ 45,237 $ 48,782 $ 51,861 $ 133,487 $ 150,736 Acquisition–related purchase accounting adjustments (“PAUs”) (435 ) (651 ) (367 ) (431 ) (906 ) (1,453 ) (3,045 ) Swap termination fee — (1,453 ) — — — (1,453 ) — Adjusted net interest income $ 41,655 $ 44,056 $ 44,870 $ 48,351 $ 50,955 $ 130,581 $ 147,691 Adjusted net interest margin 2.38 % 2.57 % 2.65 % 2.83 % 2.99 % 2.53 % 2.96 % Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share (Dollars in Thousands, Unaudited) September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Total stockholders’ equity $ 693,369 $ 709,243 $ 702,559 $ 677,375 $ 644,993 Less: Intangible assets 169,741 170,644 171,547 172,450 173,375 Total tangible stockholders’ equity $ 523,628 $ 538,599 $ 531,012 $ 504,925 $ 471,618 Common shares outstanding 43,648,501 43,645,216 43,621,422 43,574,151 43,574,151 Book value per common share $ 15.89 $ 16.25 $ 16.11 $ 15.55 $ 14.80 Tangible book value per common share $ 12.00 $ 12.34 $ 12.17 $ 11.59 $ 10.82 Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Non–interest expense as reported $ 36,168 $ 36,262 $ 34,524 $ 35,711 $ 36,816 $ 106,954 $ 107,490 Net interest income as reported 42,090 46,160 45,237 48,782 51,861 133,487 150,736 Non–interest income as reported $ 11,830 $ 10,997 $ 9,620 $ 10,674 $ 10,188 $ 32,447 $ 36,777 Non–interest expense / (Net interest income + Non–interest income)
(“Efficiency Ratio”)67.08 % 63.44 % 62.93 % 60.06 % 59.33 % 64.46 % 57.32 % Non–interest expense as reported $ 36,168 $ 36,262 $ 34,524 $ 35,711 $ 36,816 $ 106,954 $ 107,490 Net interest income as reported 42,090 46,160 45,237 48,782 51,861 133,487 150,736 Swap termination fee — (1,453 ) — — — (1,453 ) — Net interest income excluding swap termination fee 42,090 44,707 45,237 48,782 51,861 132,034 150,736 Non–interest income as reported 11,830 10,997 9,620 10,674 10,188 32,447 36,777 (Gain) / loss on sale of investment securities — (20 ) 500 — — 480 — Death benefit on BOLI — — — — — — (644 ) Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI $ 11,830 $ 10,977 $ 10,120 $ 10,674 $ 10,188 $ 32,927 $ 36,133 Adjusted efficiency ratio 67.08 % 65.12 % 62.37 % 60.06 % 59.33 % 64.84 % 57.52 % Non–GAAP Reconciliation of Return on Average Assets (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Average assets $ 7,924,751 $ 7,840,026 $ 7,831,106 $ 7,718,366 $ 7,635,102 $ 7,865,446 $ 7,473,534 Return on average assets (“ROAA”) as reported 0.81 % 0.96 % 0.94 % 1.09 % 1.24 % 0.90 % 1.29 % Swap termination fee — (0.07 ) — — — (0.02 ) — Tax effect — 0.02 — — — 0.01 — ROAA excluding swap termination fee 0.81 0.91 0.94 1.09 1.24 0.89 1.29 (Gain) / loss on sale of investment securities — — 0.03 — — 0.01 — Tax effect — — (0.01 ) — — — — ROAA excluding (gain) / loss on sale of investment securities 0.81 0.91 0.96 1.09 1.24 0.90 1.29 Death benefit on BOLI — — — — — — (0.01 ) ROAA excluding death benefit on BOLI 0.81 0.91 0.96 1.09 1.24 0.90 1.28 Adjusted ROAA 0.81 % 0.91 % 0.96 % 1.09 % 1.24 % 0.90 % 1.28 % Non–GAAP Reconciliation of Return on Average Common Equity (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Average common equity $ 715,485 $ 710,953 $ 693,472 $ 660,188 $ 680,376 $ 707,162 $ 691,529 Return on average common equity (“ROACE”) as reported 8.99 % 10.59 % 10.66 % 12.72 % 13.89 % 10.06 % 13.97 % Swap termination fee — (0.82 ) — — — (0.27 ) — Tax effect — 0.17 — — — 0.06 — ROACE excluding swap termination fee 8.99 9.94 10.66 12.72 13.89 9.85 13.97 (Gain) / loss on sale of investment securities — (0.01 ) 0.29 — — 0.09 — Tax effect — — (0.06 ) — — (0.02 ) — ROACE excluding (gain) / loss on sale of investment securities 8.99 9.93 10.89 12.72 13.89 9.92 13.97 Death benefit on BOLI — — — — — — (0.12 ) ROACE excluding death benefit on BOLI 8.99 9.93 10.89 12.72 13.89 9.92 13.85 Adjusted ROACE 8.99 % 9.93 % 10.89 % 12.72 % 13.89 % 9.92 % 13.85 % Non–GAAP Reconciliation of Return on Average Tangible Equity (Dollars in Thousands, Unaudited) Three Months Ended Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2023 2023 2023 2022 2022 2023 2022 Average common equity $ 715,485 $ 710,953 $ 693,472 $ 660,188 $ 680,376 $ 707,162 $ 691,529 Less: Average intangible assets 170,301 171,177 172,139 173,050 173,546 171,199 174,323 Average tangible equity $ 545,184 $ 539,776 $ 521,333 $ 487,138 $ 506,830 $ 535,963 $ 517,206 Return on average tangible equity (“ROATE”) as reported 11.79 % 13.94 % 14.18 % 17.24 % 18.65 % 13.27 % 18.68 % Swap termination fee — (1.08 ) — — — (0.36 ) — Tax effect — 0.23 — — — 0.08 — ROATE excluding swap termination fee 11.79 13.09 14.18 17.24 18.65 12.99 18.68 (Gain) / loss on sale of investment securities — (0.01 ) 0.39 — — 0.12 — Tax effect — — (0.08 ) — — (0.03 ) — ROATE excluding (gain) / loss on sale of investment securities 11.79 13.08 14.49 17.24 18.65 13.08 18.68 Death benefit on BOLI — — — — — — (0.17 ) ROATE excluding death benefit on BOLI 11.79 13.08 14.49 17.24 18.65 13.08 18.51 Adjusted ROATE 11.79 % 13.08 % 14.49 % 17.24 % 18.65 % 13.08 % 18.51 % Earnings Conference Call
As previously announced, Horizon will host a conference call to review its third quarter financial results and operating performance.
Participants may access the live conference call on October 26, 2023 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833–974–2379 from the United States, 866–450–4696 from Canada or 1–412–317–5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.
A telephone replay of the call will be available approximately one hour after the end of the conference through November 2, 2023. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 1–412–317–0088 from other international locations, and entering the access code 7722200.
About Horizon Bancorp, Inc.
Celebrating 150 years, Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $8.0 billion–asset commercial bank holding company for Horizon Bank, which serve customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon Bank’s retail offerings include prime residential, indirect auto, and other consumer lending to in–market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in–market business banking and treasury management services, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana’s Michigan City, is available at horizonbank.com and investor.horizonbank.com.
Contact: Mark E. Secor Chief Financial Officer Phone: (219) 873–2611 Fax: (219) 874–9280 Date: October 25, 2023 
- Net income was $16.2 million or $0.37 per diluted share. This compared to $18.8 million or $0.43 in the second quarter of 2023, which included an after–tax benefit of approximately $1.1 million, or $0.02 per share on a non–recurring swap termination fee.