Horizon's Net Interest Income Growth Cools From Second Quarter
Net interest income was $65.2 million in the third quarter, up 11.6% from a year earlier after a 14.7% year-over-year increase in the second quarter, as the FTE margin held at 4.37%.
Horizon Bancorp (HBNC), the $6.6 billion-asset commercial bank holding company for Horizon Bank, reported net interest income of $65.2 million for the three months ended September 30, 2026, up 11.6% from $58.4 million a year earlier. That year-over-year pace slowed from the 14.7% increase recorded in the second quarter.
The fully taxable equivalent net interest margin held at 4.37%, matching the second quarter and well above 3.52% a year earlier. The company said the margin’s stability reflected disciplined loan and deposit pricing and a favorable cash-flow redeployment profile.
Net income was $28.7 million, or $0.56 a share, compared with $24.9 million, or $0.49 a share, in the second quarter. Annualized return on average assets was 1.73% and return on average tangible common equity was 20.03%, versus 1.54% and 18.05% in the second quarter.
Loan growth cooled. Total loans held for investment rose 3.7% annualized versus the linked quarter, down from 6.6% annualized growth in the second quarter. Commercial real estate was roughly unchanged at $2.44 billion, commercial and industrial loans were up 2% to $1.11 billion, residential real estate rose 2% to $772.2 million, and consumer loans increased 3% to $691.4 million.
Deposits continued to accumulate. Total deposits grew $81.2 million, or 6.0% annualized, to $5.5 billion. Non-time deposits rose 9.7% annualized. Time deposits declined $23.9 million. Total deposit costs, including non-interest-bearing balances, were 1.57%.
The provision for credit losses was $1.3 million, up from $0.9 million in the second quarter. The company attributed the increase to changes in the economic forecast, net loan growth and higher specific reserves on commercial loans. Annualized net charge-offs doubled to 0.10% of average loans from 0.05% in the second quarter. The allowance for credit losses was 1.04% of period-end HFI loans.
Non-performing assets rose to $44.6 million, or 0.68% of total assets, from 0.66% at June 30, 2026. Non-accrual loans were 0.67% of HFI loans.
Non-interest income was $11.9 million. Gains on sale of mortgage loans rose to $2.1 million from $1.6 million on higher volumes and wider margins, offset by lower other income and mortgage servicing income.
Non-interest expense fell to $41.5 million from $43.8 million as the $3.1 million second-quarter legal charge did not recur. The efficiency ratio improved to 53.85% from 58.07%.
Preliminary common equity tier 1 capital was 11.53%, up from 11.09% at June 30, 2026. Tangible common equity to tangible assets declined to 8.38% from 8.81%. Book value per common share was $13.68.
President and CEO Thomas Prame said that during the first nine months of 2026, loans held for investment and total deposits increased by $129 million and $206 million, respectively, consistent with the company’s outlook for mid-single-digit organic growth, and that expectations for the business had changed very little despite a shift in the interest-rate outlook since the beginning of the year.
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