Strong Financial Performance for Horizon Bancorp in Q1 2025

Horizon Bancorp, Inc., a regional bank holding company, reported impressive financial results for the first quarter of 2025, showcasing its ability to navigate the evolving economic landscape. The company’s net income increased significantly compared to the same period in 2024, driven by growth in both interest and non-interest income.

Net Income Surge

Horizon’s net income increased by $9.9 million to $23.9 million, or $0.54 per diluted share, during the three months ended March 31, 2025. This represents a substantial 70.7% increase compared to the $14.0 million, or $0.32 per diluted share, reported in the same period of 2024. The primary factors contributing to this increase were:

• A $3.9 million rise in interest income
• A $5.1 million decrease in interest expense
• A $6.6 million increase in non-interest income

These positive factors were partially offset by a $2.2 million increase in non-interest expense and a $2.8 million rise in tax expense.

Net Interest Income Expansion

Horizon’s net interest income grew by $9.0 million, or 20.7%, during the first quarter of 2025 compared to the same period in 2024. This was driven by a 54-basis-point expansion in the reported net fully-taxable equivalent (FTE) interest margin to 3.04%. The improvement in the net FTE interest margin was attributable to a favorable shift in the mix of average interest-earning assets towards higher-yielding loans and a shift in the funding mix towards lower-cost deposit liabilities.

The following table illustrates Horizon’s average balance sheet and interest rates for the first quarters of 2025 and 2024:

Average Balance Sheet	March 31, 2025	March 31, 2024
Total Interest-Earning Assets	$7,234,724	$7,293,559
Total Interest-Bearing Liabilities	$5,810,634	$5,951,765
Net FTE Interest Income (Non-GAAP)	$54,296	$45,356
Net FTE Interest Margin (Non-GAAP)	3.04%	2.50%

Non-Interest Income Surge

Total non-interest income increased by $6.6 million, or 66.2%, for the three months ended March 31, 2025 compared to the same period in 2024. The primary drivers of this increase were:

• A $0.4 million, or 71.9%, increase in gain on sale of mortgage loans due to higher loan volumes
• A $6.4 million increase in other income, primarily due to a $7.0 million pre-tax gain on the sale of Horizon’s mortgage warehouse business

Non-Interest Expense Management

Non-interest expense increased by $2.2 million, or 5.9%, for the three months ended March 31, 2025 compared to the same period in 2024. The key changes were:

• A $2.1 million, or 10.6%, increase in salaries and employee benefits, partially due to growth in revenue-generating roles and the termination of a legacy compensation program
• A $1.0 million, or 26.3%, decrease in other expenses, primarily due to lower marketing and advertising costs

Credit Quality Remains Stable

Horizon’s credit quality metrics remained stable during the first quarter of 2025. The allowance for credit losses (ACL) as a percentage of period-end loans held for investment (HFI) was 1.07% as of March 31, 2025, consistent with the prior year-end.

Non-accrual loans increased by $3.0 million, or 11.7%, from December 31, 2024, to 0.59% of total loans HFI. Total non-performing assets increased by $4.0 million, or 14.8%, from the prior year-end, to 0.41% of total assets.

Net charge-offs were $0.9 million, or 7 basis points annualized of average loans, an increase from $0.3 million, or 4 basis points annualized, in the year-ago period.

The following table summarizes Horizon’s key credit quality metrics:

Credit Quality Metrics	March 31, 2025	December 31, 2024
Non-Accrual Loans to HFI Loans	0.59%	0.53%
Non-Performing Assets to Total Assets	0.41%	0.35%
Annualized Net Charge-Offs to Average Loans	0.07%	0.05%
ACL to HFI Loans	1.07%	1.07%
ACL to Non-Accrual Loans	173.25%	192.82%

Liquidity and Capital Strength

Horizon maintained a strong liquidity position, with approximately $1.78 billion in unused credit lines with various money center banks, including the Federal Home Loan Bank and the Federal Reserve Bank Discount Window, as of March 31, 2025. The company’s cash flows from operating, investing, and financing activities resulted in a net decrease in cash, cash equivalents, and restricted cash of $123.8 million during the first quarter.

Horizon’s capital ratios remained well above regulatory requirements for “well-capitalized” banks. As of March 31, 2025, the ratio of total stockholders’ equity to total assets was 10.17%, and the ratio of tangible common equity to tangible assets was 8.19%. Book value per common share increased to $17.72, and tangible book value per common share increased to $13.96.

Outlook and Conclusion

Horizon Bancorp’s strong financial performance in the first quarter of 2025 demonstrates its ability to navigate the evolving economic landscape and capitalize on growth opportunities. The company’s focus on maintaining a balanced loan portfolio, diversified revenue streams, and disciplined expense management has contributed to its success.

Looking ahead, Horizon Bancorp is well-positioned to continue its growth trajectory, supported by its robust liquidity, strong capital position, and prudent risk management practices. The company’s strategic initiatives, such as the expansion of its commercial lending, equipment finance, and treasury management capabilities, are expected to drive further improvements in its financial results.

Overall, Horizon Bancorp’s first-quarter 2025 results highlight its resilience and ability to deliver consistent, profitable growth for its shareholders.