Horizon Bancorp, Inc. (HBNC): Boston Consulting Group Matrix [10-2024 Updated]
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Horizon Bancorp, Inc. (HBNC) Bundle
In the dynamic landscape of banking, understanding where a company like Horizon Bancorp, Inc. (HBNC) stands is crucial for investors and stakeholders alike. Utilizing the Boston Consulting Group Matrix, we can categorize HBNC's business segments into Stars, Cash Cows, Dogs, and Question Marks. In this analysis, we'll explore how HBNC's robust growth in commercial loans and effective cost management position it as a strong player, while also addressing challenges like rising non-performing assets and the need for improved non-interest income. Dive deeper to uncover the strategic insights that define HBNC's current market stance.
Background of Horizon Bancorp, Inc. (HBNC)
Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is a commercial bank holding company based in Michigan City, Indiana, with total assets of approximately $7.93 billion as of September 30, 2024. The company operates through its primary subsidiary, Horizon Bank, which serves customers in various Midwestern markets, including Indiana and Michigan. The bank offers a range of financial products and services, including consumer and commercial lending, deposit accounts, and wealth management solutions.
As of September 30, 2024, Horizon Bancorp reported total loans held for investment of $4.8 billion, with commercial lending comprising more than half of its total loan portfolio. The company has demonstrated significant growth in its commercial and industrial loans, which increased by 20% year-over-year. Additionally, the bank has a strong retail banking presence, providing prime residential and secured consumer lending to in-market customers.
Horizon Bancorp's financial performance has shown resilience, with net interest income reaching $46.9 million in the third quarter of 2024, an increase from $45.3 million in the previous quarter. The net interest margin has also expanded to 2.66%, reflecting a favorable shift in the mix of interest-earning assets. The company's credit metrics remain robust, with an annualized net charge-off rate of just 0.03% of average loans outstanding for the same period.
The bank has been actively optimizing its business model, including the repositioning of a portion of its securities portfolio and plans to sell its mortgage warehouse business, which are expected to enhance profitability in the coming years. Horizon Bancorp's strategic initiatives focus on improving operating performance and maximizing shareholder value, positioning the company for sustainable growth into 2025 and beyond.
Horizon Bancorp, Inc. (HBNC) - BCG Matrix: Stars
Strong growth in commercial loans, particularly in commercial real estate and industrial sectors.
Horizon Bancorp has demonstrated significant growth in its commercial loan portfolio, particularly within the commercial real estate and industrial sectors. As of September 30, 2024, total loans held for investment were $4.8 billion, showcasing stability while emphasizing organic growth momentum in the commercial sector.
Consistent increase in net interest income, reaching $46.9 million in Q3 2024.
Net interest income for the third quarter of 2024 was reported at $46.9 million, marking a sequential increase from $45.3 million in the second quarter of 2024. This growth is attributed to a net increase in average interest-earning assets of $117.5 million and an expansion in the net FTE interest margin to 2.66%.
Return on average tangible common equity (ROACE) improved to 12.65%.
Horizon Bancorp's return on average tangible common equity (ROACE) improved significantly, reaching 12.65% for the third quarter of 2024, up from 10.18% in the previous quarter. This improvement reflects the bank's effective capital management and profitability strategies.
Positive trends in non-interest income, totaling $11.5 million in Q3 2024.
For the third quarter of 2024, Horizon Bancorp reported non-interest income of $11.5 million, an increase from $10.5 million in the second quarter. This rise was primarily driven by higher realized gains on the sale of mortgage loans and an increase in other income.
Strategic repositioning of securities portfolio expected to enhance profitability.
Horizon Bancorp is undergoing a strategic repositioning of its securities portfolio, which is expected to enhance profitability. The company completed the repositioning of approximately $325 million of available-for-sale securities in October 2024, aimed at simplifying operations and strengthening the balance sheet.
| Financial Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Interest Income | $46.9 million | $45.3 million | $42.1 million |
| Return on Average Tangible Common Equity (ROACE) | 12.65% | 10.18% | 11.79% |
| Non-Interest Income | $11.5 million | $10.5 million | $11.8 million |
| Total Loans Held for Investment | $4.8 billion | $4.8 billion | $4.4 billion |
| Net FTE Interest Margin | 2.66% | 2.64% | 2.41% |
Horizon Bancorp, Inc. (HBNC) - BCG Matrix: Cash Cows
Stable Deposit Base
Total deposits for Horizon Bancorp, Inc. stood at $5.73 billion as of September 30, 2024, reflecting a 1.7% growth during the quarter.
Effective Management of Non-Interest Expense
In Q3 2024, Horizon Bancorp effectively managed its non-interest expenses, which totaled $39.3 million. This figure increased from $37.5 million in Q2 2024, driven primarily by a rise in salaries and employee benefits.
Tangible Book Value Per Share
The tangible book value per share increased to $13.46, marking a rise of $0.66 during the third quarter of 2024.
Interest-Bearing Deposits Growth
Interest-bearing deposits have shown steady growth, particularly in savings and money market accounts, contributing to the overall stability of the deposit base.
| Financial Metric | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 |
|---|---|---|---|---|---|
| Total Deposits | $5.73 billion | $5.63 billion | $5.55 billion | $5.50 billion | $5.40 billion |
| Non-Interest Expense | $39.3 million | $37.5 million | $37.1 million | $39.3 million | $36.2 million |
| Tangible Book Value Per Share | $13.46 | $12.80 | $12.65 | $12.60 | $12.00 |
| Net Interest Income | $46.9 million | $45.3 million | $43.3 million | $42.3 million | $42.1 million |
| Annualized Net Charge-Offs | 0.03% | 0.05% | 0.04% | 0.07% | 0.07% |
Horizon Bancorp, Inc. (HBNC) - BCG Matrix: Dogs
Non-Performing Assets
As of September 30, 2024, the non-performing assets increased to 0.32% of total assets, up from 0.26% as of June 30, 2024. This rise indicates potential credit quality concerns within the bank's portfolio.
Decline in Mortgage Warehouse Business
The mortgage warehouse business has seen a significant decline, leading Horizon Bancorp to announce an intended sale as part of its strategy to streamline operations. The mortgage warehouse segment reported $862,000 in allowances for credit losses, reflecting a 17% increase from the previous quarter.
Limited Growth in Consumer Loan Segment
The consumer loan segment has faced limited growth, with a reported decline of $43.3 million in consumer loans during the third quarter of 2024. This decline reflects ongoing competitive pressures in the market, as total loans held for investment remained relatively stable at $4.8 billion.
| Metric | September 30, 2024 | June 30, 2024 | Change |
|---|---|---|---|
| Non-Performing Assets to Total Assets | 0.32% | 0.26% | +0.06% |
| Mortgage Warehouse Allowance for Credit Losses | $862,000 | $736,000 | +17% |
| Consumer Loans Decline | -$43.3 million | N/A | N/A |
| Total Loans Held for Investment | $4.8 billion | $4.8 billion | No Change |
Horizon Bancorp, Inc. (HBNC) - BCG Matrix: Question Marks
Strategic initiatives underway to optimize business model, with uncertain impact on future performance.
Horizon Bancorp has initiated several strategic actions in the fourth quarter of 2024 aimed at simplifying its business structure and enhancing long-term profitability. As part of these initiatives, the company has repositioned approximately $325 million of available-for-sale securities and is in the process of selling its mortgage warehouse business, which is expected to yield a gain-on-sale.
Ongoing need to improve non-interest income streams amid fluctuating market conditions.
In the third quarter of 2024, Horizon Bancorp reported a total non-interest income of $11.5 million, an increase from $10.5 million in the previous quarter. This growth was mainly attributed to higher realized gains on mortgage loans and increased other income. The breakdown of non-interest income sources is as follows:
| Source | Q3 2024 ($ in Thousands) | Q2 2024 ($ in Thousands) | Q3 2023 ($ in Thousands) |
|---|---|---|---|
| Service charges on deposit accounts | 3,320 | 3,130 | 3,086 |
| Wire transfer fees | 123 | 113 | 120 |
| Interchange fees | 3,511 | 3,826 | 3,186 |
| Fiduciary activities | 1,394 | 1,372 | 1,206 |
| Gain on sale of mortgage loans | 1,622 | 896 | 1,582 |
| Total non-interest income | 11,511 | 10,485 | 11,830 |
Potential volatility in interest rates may affect loan growth and profitability.
The net interest income for Horizon Bancorp was $46.9 million in the third quarter of 2024, marking an increase from $45.3 million in the previous quarter. The net FTE interest margin expanded to 2.66% from 2.64%. However, fluctuations in interest rates pose risks to loan growth, particularly as the company has seen total loans held for investment remain relatively unchanged at $4.8 billion.
Credit loss provisions increased, indicating heightened risk management focus amid economic uncertainties.
Horizon Bancorp recorded a provision for credit losses of $1.0 million in the third quarter of 2024, down from $2.4 million in the previous quarter but up from $0.3 million in the same quarter of the previous year. The allowance for credit losses as a percentage of loans held for investment was 1.10% at the end of September 2024, reflecting an increase from 1.08% in June 2024.
In summary, Horizon Bancorp, Inc. (HBNC) presents a mixed yet strategically promising outlook as of 2024, characterized by its robust Stars in commercial loans and net interest income, contrasted with Dogs reflecting credit quality concerns and stagnant consumer loan growth. The Cash Cows exhibit stability through strong asset management and a solid deposit base, while the Question Marks highlight the need for strategic initiatives to navigate market fluctuations and enhance profitability. As HBNC continues to optimize its operations, the balance between risk and opportunity will be crucial in shaping its future performance.
Article updated on 8 Nov 2024
Resources:
- Horizon Bancorp, Inc. (HBNC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Horizon Bancorp, Inc. (HBNC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Horizon Bancorp, Inc. (HBNC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.