HBNC - Earnings call 3 2022 | Horizon Bancorp, Inc.

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Operator

Good morning, everyone, and welcome to the Horizon Bancorp conference call to discuss financial results for the third quarter of 2022. [Operator Instructions] Please note, this event is being recorded.

Before turning the call over to management, please remember that today's call may contain statements that are forward-looking in nature. These statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those discussed, including factors noted in the slide presentation.

Additional information about the factors that could cause actual results to differ materially is contained in the Horizon's current 10-K and later filings.

refer help non-GAAP business. investors may are measures management to intended understand addition, to financial certain that In the Horizon for contained are these presentation. Reconciliations in the measures made obligation any The to assumes call. no forward-looking company statements during the update copy www.horizonbank.com. anyone release the Horizon you and If at it by press can issued of access have presentation the not already yesterday, does a supplemental company's website,

EVP and Secor; Chairman today Chief Executive and Prame; EVP are President, Dwight; Mark Officer, the EVP and Chief Officer, Chief Horizon Banking Financial Representing Craig Executive and Commercial Lynn and Thomas Officer, Kerber; Senior time, and and you, Retail and Mortgage Chief over Lending the Chairman Officer, Thank Noe Officer. over Najera. to I'd At to to this Executive Dwight, you, like Mr. sir. Craig call turn

Craig Dwight

and Bancorp's in morning, for Thank Conference Call. and thank Third Earnings you, Horizon good participating Quarter you Matt,

a investor for quality, today yesterday, published report XX. well-capitalized that comments follow and Our third regulatory an excellent and will ratios exceed definition increase the robust and net quarter, the of solid press banks. release interest pleased for asset that in we presentation by income, consumer loan Horizon continuation to earnings strong growth, is capital commercial October the driven

the of more full will the third average the of closed In addition, of expense objective target close noninterest for to with fourth less X% year X to towards assets we during our branches offices quarter. X contribute The quarter, than closings in to XXXX. offices achieving our

and consumer commercial Year-to-date of highlights, Horizon loan part Prame, was loan quarter-over-quarter and minutes. from growth will completed annualized growth excluding annualized. growth loan provide XX.X% XX.X% strong PPP and on annualized, of Starting achieved on loan third commercial respectively. year-to-date participation just total in few third detail the President, at our Slide level a Thomas more X loans. in growths XX.X%, of with quarter was presentation, sold Horizon growth This the X.X% quarter loans

include on Horizon's return XX.XX%. and X.XX% on average quarter-end reported XX.XX%. XX, X.XX% as was return financial assets on of for metrics reported equity return and of average average of September notable Other the ROE at assets through Year-to-date

of efficient sheet, and our to loan assets well capitalize the operations, positioned on Given shift talented and solid balance organic significant to to additions is Horizon lower continuation growth, size control. workforce assets, team, higher-yielding disciplined of earning to expense our

diversified simple. Why solid to is and returns deposits. Horizon? risk investment a excess core liquidity credit thesis Horizon low our invest report in balance Our low-cost with profile due continues sheet, to

estate in as values located of in volatile the are areas We attractive are growth where real not markets other as country. Midwest

our due attractive quality next in of of recent which enacted of couple impact markets Act, CHIPS plan acceleration quantum infrastructure to the a surplus move attracting businesses in life, affordability, in stimulus economic Chicago, Transportation municipalities; Regional invested Indiana local and are Indiana, the have into as of West for investments and Lake American recently investment the capital Act; Indiana, to and federal the continued improvements positive as promoting the Authority Lafayette, a billion infrastructure creation Plan the the equipment communication and to between additional billion anticipated provide by to outbound migration invest infrastructure new communications and dollars quantum the and corridor; Michigan, Indiana rail South Northwest Michigan into County Regional is in record Northwest including Rescue line roads, $X commuter the to forecasted expansion residents double the they track private as the $X years; $X inflows economic and Bend; which known workforce of focused with development; and known state to and is of extensions, Science states include and billion being lower our housing on Indiana; support, Illinois statute, taxes. U.S. transportation-oriented lines

that To was a cycles. XX% has assets the a of and varying XX% for we Horizon from years, at past demonstrates in total through GDP, GDP. in Horizon's income. the X growth XXXX history has Horizon managing change economic and successfully net Finally, long historically growth and the are attract share from This through grow annual outpaced to X.Xx grew company, talent. rate for clearly support ability XXXX our change we market compounded

new By community in in-house of strategic cost than other inflects able expedite deliver Moving transaction resulting on products and to to CRM based advantage platforms, best at Horizon's the onboarding technology to core transformation, our is per core in on and technology in ability the digital services partners key our banks lower select fintech over include on not service best-in-class And a relying can and who partners price data management. flexibility. optimum flexibility provider, Horizon the peers.

has strategy also deal. fall's core very acquisitions, proven in-house Our integrating XX branch including effective for last

allow have and advisory experience, to an resources have improving voice on we nimble, most entities, on future considerable as addition, these the In of or user are groups. active fintech focused our Horizon developments on representatives boards be partners customer

Horizon As than applications can spend the years. X and of has tech customer you last to devoted see the over proportion total employee-facing on more doubled strategic Slide XX,

productivity in technology, $X.X assets our in million million its in of employee investments XXXX. has As $X.X measured per a in as Horizon from to XXXX result improved

the over transactions consumer increased of XXXX year-to-date. digital are in to XX% opening answered finally, And over XX% by XX% XX% increased to account online in bots. deposit from XXXX We XX our XX% chats programmed XXXX. months from of online Our

an customer increase and more scalable. annual model continue ever our Horizon's our enhance make experience technology plan over to X the will the spend to in next see years

these retail prior in continually network to improving we and the As investments in years, throughout organization. efficiencies our by offset intend

adjustments in growth continuing capital and manages acquisition fall organic rates our efficiently unrealized reported on increase deploys the on of increased XXXX Rising mark-to-market income, the sale occurring branches interest for focus available XXXX Horizon market's by and in bank's resulted the securities an on has and the as recent sheet of and focus in the losses of XX XXXX. comprehensive portfolio. balance evidenced accumulative in have other

as Horizon's from X.XX% losses, capital declined unrealized of June accumulated to This down X.XX% the of XX. reflects quarter-over-quarter. TCE tangible in XX, result a decline as of September X.X% a As

Through capital the the Horizon ratios which end, third to well-capitalized strong continues report definition exceed quarter regulatory for regulatory Bank banks.

this In in Bancorp uninterrupted as year, X.X%. dividend reporting dividend are in yield to was as a to XX, We September historical addition, Horizon common per growth, Horizon's has $X.XX increases $X.XX second from with recently earnings share. plus dividend increase cash X.X% XX-year of Horizon's and increased at attractive dividend quarter consistent we expect line of fully dividends. policy a our our continue of the quarterly

Secor. financial to my Chief Bank's Executive you for Vice privilege Now the it's update, and Officer, to Mark President Financial Mark? introduce Horizon

Mark Secor

Horizon results increase interest increase environment, in with the growth, borrowings the is Craig. competitive increase growth, third was basis quarter were net in the Slide income. a you, as growth, in the the participation, changing. for loan led X.X% the compared increase total Thank to and a quarter income to loan the point Annualized second during net excluding XX, rising cost to driven growth landscape and of interest funds. rates quarter basis with of which loan Starting reported in solid XX and income, the interest drove interest was increase rate primarily and PPP continued increased in by the growth strong by loan offset which in average XXXX, XX sold point along interest-bearing quarter. yields The commercial loans deposit net

and XXXX million. by quarter implemented of Due from to revenues net interest absorbed revenues income, and the mortgages $X the net management to compared the on third increasing servicing quarter increase of while reduction sale of revenue the in gain third mortgage to strategy XXXX, $X.X million the gross impairment PPP,

$XXX,XXX But other the home of mortgage months grow XX higher our period. revenue in down Adjusted income. and ago noninterest to $X.XX, share occurs quarter due the per noninterest per was in per company's when year share expense. A primarily decreased. offset lower assets the rate earnings net adjusted to from increases begin to before up rising down the $X.XX third in income our second cycles, income the successful As from over strategy quarter The continues to to provide of revenue streams interest and second banking last net the share quarters quarter, $X.XX earning countercyclical compared several lag was slowdown. XXXX

XX. Slide

balance sheet focus continue on with net to we interest management expected, on to sheet and income our more As more provide want we sensitivity. increasing rate increases detail balance

sheet a rates. As be the XX, as we deposit are we we In of our environment of balance operating XXXX, to increased have we betas expect half the first held rate more liability-sensitive deposit slightly competitive. as deposit September modeling

in landscape, of quarter the demand and the to due are in However, into loan expected increase the deposit XXXX. competitive betas the to and beginning changing increase fourth

income parallel an or As up at approximately we decrease shock September net point a XX, result, interest $X.X modeled X.XX%. of at million basis XXX in

Contributing decreasing the for The are was with funds approximately second deposits to from which for average XX% from rising for betas deposits, to results expected interest-bearing the deposits used X% and third rising XX% for consumer public quarter. deposit range money currently actual of quarter in interest-bearing rates an on rates, the market the to X% beta beta XX%. compared for

conservative We to as rates as continue pressure our betas more increase deposit use we increase. anticipate rates in models to short-term

of when up to yield and projected model rates rate XXX-basis net and move. expected to an X.XX% results rate move. an or income nonparallel a this million model utilized approximately $X.X estimate also of We reflect to increase the point interest The are curve

the interest income by costs. points, decreased adjusted the increase net Slide third the X primarily In margin $XXX,XXX, quarter, funding interest core net in increased to although due XX. adjusted Horizon by basis

earning in primary income net With increase the in interest to the average being dollars. contributor assets growth

keep in similar income. at continue assets generate grow the increased short-term XXX compared allowed anticipated, we Rates to XXX can asset to deposit rate Fed As levels. believe earning more Fed increases rate short-term spread higher net basis were that points the rates average at interest-earning cash increases pace, has of we a the stable margin point by XXXX in to have growth into assets fast and spread replacing when to lagging more flows With Funds interest basis a rate Rate

cash the quarter total cash is effective along higher-yielding a over billion of Slide in cost quarter, a potential from XX. into lines $XXX XXXX. Again, end sound of in the in of duration X.XX% quarter at fourth which as liquidity, with liquidity X.XX assets. in million. for and are position had $XX provide The at The investments, million company. The of last quarter being investment portfolio unpledged was amortized end. $X.X redeployed years billion book of a $XX credit, Expected approximately the flows unused $X an portfolio reduction million yield end of flows the the

tangible to reduced rates of September deposits. to quarter increase third on Slide rising unrealized equity sheet, at mature. the compared valued losses is hold is increased XX. third X.XX% for in common The The year and unrealized in on of a XXXX recognize items as the but not impacts balance in economic our available-for-sale in securities to like intent to XX, sale the maturity, core prior recover quarter. in the of entire available of to ability value we investments, these equity XX as from investments value model, TCE. down loss impact Because quarter unrealized our the certain which pay the balance are these When the losses on the expected time does investments reduction sheet the X.XX% like the June and have over X.XX% liabilities of

organic is The continue our the well to restrict future. in for ability bank's growth strong, will not capital will to exceeds regulatory and our capitalized, fund utilize and capital fund definitions growth our to regulatory

actual Slide increased this account growth, maintaining deposit total strong. sources, XX. rates. from loan financial expect additional funding, for a increase deposits pressure and rates, deposit quarter demand due competition disciplined remains XX We creating that will rate increasing beta increases. beta to all basis the year-to-date, By putting institutions to of retention from do while XX% on other increased with The of nonbanking increasing are on which for only the points a approach cost deposit

around target deposits, interest-bearing is Our data XXXX be on target. XX% which we believe for to

this adversely affect However, markets may deposits valuable have flexibility low-cost in in in future. rising environment. We the provided rate betas Federal move uncertainty and the the core believe our the Bank's Reserve our

assets Slide and year-to-date, goal less average to X.XX% achieving XX. for at were of the Noninterest X%. X.XX% our quarter than expenses

increase the fees benefits. drove costs insurance health were consulting employee increased quarter, our and This Professional and salary quarterly above usual run in fees rate.

and from of to reserve tax assets tax amortization drove payoffs year. quarter, expense of expenses credit credits those course other expect moderate increased We as the the this loan the expenses. during our of intangibles increase, recognized Higher next the dealer amortization our we solar

planned the continued the As and expenses benefits provide to branch quarters. X of closing rationalization we previously operating consolidations, and saves cyclical will future announced, models branch business cost in

Now our lending activities. an will Thomas update on Prame, President, our provide

Thomas Prame

quarters. recently loan funding our is will enter million was and of QX, you, loans commercial Craig said, from $XXX third on closed annualized, to Starting was The results loan begin teams. Thank and lending million QX. strong that $XX.X solid business commercial the That's well or markets. pipeline down lending with loan was Mark. quarter approximately fund Net across as it PPP the our X.X% of sectors robust our participations. for it but And million and sold as and of subsequent commercial that's in construction $XXX balanced Slide a quarter team growth several in we excluding XX generated

future loan commercial economic officers Additionally, joined the new communities. increased we line talented continued local highly over see growing commercial our from year, utilization, investment and in growth who last opportunities

strong be consumer both positive in produced that As higher on for rates we within production with paydowns loans XXX reflect adjusted the our than $XX the approximately XX% basis basis. We and look balances increasing were or and were demand portfolio. the points annualized rate loans while auto equity indirect growth, quarter that lending an at was our Loan XX, Slide payoffs new million to fundings for consumer home by consumer in elevated with $XXX the excellent segments, loan on yields environment. million even to continued and growth

credit lending remain exceptions, charge-offs. consumer underwriting our with borrowers, limited metrics Additionally, low and delinquency consistent high-quality net and

production trends in at adjusted environment. look loan we the rising As with mortgage rapidly industry rate Slide a mortgage on XX,

production about showing XX%. XX% compares XXXX. Our QX well results approximately year-to-date year-over-year. forecasting The down with the decrease Mortgage industry Association Association of Bankers to production about quarter XX% in into the XX%, declines further is Mortgage down was compared down Bankers going very which is a Linked and results

the team from loans revenue, third As X.X% further our revenue credit borrowers balance staffing results, warehouse sheet consistent QX, exposure Horizon's adjusted on approximately mortgage represents quarter to its market we've seen production in gain total QX our model adjustments which to expectations. reflective in mortgage mortgage portfolio. proactively and and QX. of limits demand, sales of to of with the shift we on in client choose aligned further the in quality anticipates our own very The and in efficiency high-quality consumer our mortgage benefits our remains The

Transitioning no metrics to asset quarter. Slide our credit evidenced in loans quality on and remain strong charge-offs as net nonperforming the XX, by low

loans very X.XX%. remain to environment back highlights. positioned economic allowance we transition to in a Craig today's with well for now Additionally, total at fluid solid additional I'll

Craig Dwight

annual by Horizon income rate assets growth over delighted past team. to Bancorp's join the as you, the compounded company Thank annual and we're growth Horizon years. have total XX% Thomas, for evidenced franchise To key highlights, you summarize net rate XX and XX% a is growth compounded for

diversified sheet flows future availability and to loan mix ample liquidity has fund and portfolio, both in a cash Our geography, product growth. balance with

XX.X% returns The capital proven sheet combination to average in has be varying on of Horizon's a economic and successful cycles. diversified our solid model year-to-date of balance

range Bancorp. of XX.X%, commercial the second revised is XX%. targeted excluding of to of XX% reported loan targeted goals the As December we achieve year-to-date Horizon at of our is for which at noted XX.X%, for rate Consumer an annualized metric range XX%. our X and to either X Horizon on X.XX%. return of X.XX% average and XX loans target our far assets our equity exceeded results, participation Overall, expenses updated performance range announced XX.X%, or on year-to-date at target is beating quarter sold, of return of core X.XX%, which PPP annualized Slide assets the outlook solid solid growth, to and XX% of our at loan of Year-to-date is XX.XX% third on on average and growth average XXXX plan Year-to-date growth target on quarter is annualized in exceeds X%. XXXX. is which to on given production Year-to-date, in upper

today, open the please Operator This concludes remarks to questions. the our and Thank prepared lines I'll you. ask for now

Operator

our And Terry first from come with question will Instructions] Stephens. [Operator McEvoy

Terence McEvoy

sheet, below the asset expectations, in start to yet the and were margin. the kind Maybe welcome it leveraging just had the hoping were balance trends. does I betas, margin just Thomas, ago, call. down. think Horizon comments let's appear company's XX% of my can deposit you notes of understand months I me about with went the the X the conference betas and I'm XX% third quarter help When

So maybe flat a months quarter-over-quarter. quarter. the in X ex and was of I X that ago, me thought basis borrowings, did still margin, understand happen was even help points just what third kind higher message the of not the

Thomas Prame

the We point in is to and our be the year-end. market a growth play funds, do our net the expect XX-basis expectations in quarter, which in a come still therefore, year-to-date. more back should exceeded has is borrowed thanks flows margin loan And fourth tied in a funding lower actually gap Yes, portfolio which driving quarter. our income of in cash X% for the Terry, lower the the our in your But increased was loan decline off were to -- $XXX,XXX sufficient fund for first, slight the the what question. about not cost. which let's far deposits beta coming decline, with interest is expensive growth. our start deposit was net And as the municipalities through out seasonal to investment beta margin with What's by portfolios, drove range

Terence McEvoy

And a your about expense Or were those top all talk outlook any you increase just follow-up, and in in maybe inflation quarter? quarter? the closure-related there third on just And costs branch given costs? the taken branch actions second then could were in of wage the as the

Mark Secor

second branch the earlier, August going the closed in X month. them of fixed to assets The when it of X as are them, approved. for took We closing X branches, quarter said the Craig and in Yes. write-down this was be

the We you're see and to I I know from than haven't other change to to don't fund continues significant seen expenses inflationary going the our But -- saves forward. help all that a don't cost going costs. maintain yet those. it us helping of

Operator

Sandler. from Piper come will Race with question next Our Nathan

Nathan Race

Thomas, Welcome, great at Horizon. and on congrats joining the team

just still kind on and test around needing to maybe the spoke to you Just Craig going be the margin quarter? of growth as some additional dynamics you yourselves of in X, deposit the do Terry's wholesale guys I given out the securities some going mid see sources cash single-digit least doesn't balance book increasing back come look going quarter kind growth believe to the to at the the that in through outlook sheet I guys or coming that of is dynamics to Or loan fund necessarily to off high competitive the question fourth funding if flow release? that's forward, sufficient guess next over

Craig Dwight

question. Yes, for Nathan, thanks the

fourth funding wholesale and option on XXXX. growth. We borrowed term we'll coming quarter going funds That's all, we investment loan less then may, expect increase the million slightly. to the do would we earnings longer one deposits of assist reduce And costs retained expect in fourth First diminished pipelines over of as at. into $XX some to in well quarter after debt cash the way, in about by quarter reliance growth the have flows million in We $XX fourth the to as as funding moderate look the though. have future

Nathan Race

terms cost the may And that you. the to of and in look speak those in kind Got in the you funding sources and just you can duration sources? had of to just the future, wholesale of quarter

Mark Secor

wouldn't have percentage it year we A a at is good over this duration Yes. of the on been growth together. XX funding loan point all it. over and The with be

Nathan Race

I you -- fourth that we yields, about Is I'm last all going last from purchased the quarter to margin? what of flat the of maybe context quarter. the year on that kind put a of of how a those acquisition? putting security just should portfolio flat the of just they're guess compressing following the I securities items largely versus function movements yield they're in think guys If securities branch together. then gather Or kind forward just of the kind the structure in And the

Mark Secor

If be book cash at it the Yes, should rates is. very I Nate, the fairly portfolio they flow are look to rates of coming similar the steady. off, what yield

fairly it You expect would to stable. be

Nathan Race

could of nice I the ask believe other if the have forward, loan core going for guys your last loan I yields question, from expansion on in outlook around that's based yields the fair And just books the one kind portfolio rate. some just of to Is XX% to quarter. the Fed their on as the expansion of way hikes just margin? coming additional on through new it yield quarter in and holding expect loans these loan Rate rate accelerate fourth just work you

Craig Dwight

X%. the going quarter. to into they Yes. that -- We're yields good X%s, to second we are that quarter The quarter third quarter and But yield down, replace slowing is fourth, over last expect continue of from X% loans loan last was an were have coming with results range. pipelines the yields side strong coming but equity and to production the in Nathan, commercial of probably expect in the quite home frankly. so Expect third X%, shrunk and in well drag amortizing the some are over better some average improve. with consumer, mortgage are those the on the booking exceeding we -- off loans

Nathan Race

one just I one. -- apologize, last And Understood.

to flat all the from Just in those a together, you XQ? quarter to put position, the are it liability-sensitive new fourth expecting X.XX% recorded pieces guys like margin maybe in lower with sounds trying maybe the

Mark Secor

asset we're and net with Yes. continue then grow to of making moves margin -- repricing the but some We're and hoping to interest income. maintain the the

Operator

Our next question KBW. will with DelMonte come Damon from

Damon Del Monte

work to more. getting with to forward Look Thomas. you Welcome,

Nate that kind here. response especially margin points term. we're But have to another Just shock was potentially the the the hoping are rate scenario, up that to have December? you by to on that of questions kind margin you'd based that followed to the near more on doesn't your in November, in considering follow maintain going last in imply Mark, pressure, XX XX basis of

Mark Secor

inverted nonparallel where the that increase our results are on pressure more try Damon, we're interest the there when it. little shock on I expecting able yield the margin the and a one, think not to we're rate income. what it to be is once. net continue matching all the going as is to shock, mentioned to here is I But another to maintain happen And in is, and to curve rate then shocks are going month at this

our I more seeing nonparallel makes what income. income, we're our that in that think ramp happening interest net that

Damon Del Monte

then quarter's with kind from of of couple end quarter factor outlook range I growth results, contributed the we as in we but of that expenses, XXXX? regards the kind the a this this out items out of look called and could you that key And year for is there a to to know into a or expectation into

Mark Secor

Yes.

-- such 'XX. going increase those into narrowing On for as obviously targeting 'XX. some to the consulting and benefits, be we're as anticipate going expenses, going salary this think I not there's as into controllable you professional levels quarter, increases high. some and The at was those fees said, to we we -- inflationary be indicated,

going is goal, goal I maintain under what that average of give to assets. percentage X% is a rate to not up, think our interest go and that the we to our of think

the that that's we guidance best that provide. think I can

Craig Dwight

this We to other of to company. the have is by and productive quarter of fourth some costs way, rationalize the plans, those some during more transfer the Craig, areas

There hitting hit business so aren't some rationalization the some this expect be numbers to the taking next don't year. we additional just numbers, place quarter. lines And will

Damon Del Monte

that's from on dollars shifting to to back one end? category more expense So the to revenue basically try another get

Craig Dwight

Exactly.

business As reducing other business we're the spread with commercial into go we in more costs lines. side,

Damon Del Monte

must missed quarter? notable those, I then quarter-over-quarter considering flat last the portfolio -- guess on you have walk the just security going yields the a just question, it, that in could basis, back but to yield and I movement dynamics could during why on the the just through kind Also, change of the to being as why you rates

Mark Secor

the not there rates replacing I be the any Well, pretty be in out right it's what's now, we're let and us. steady. of wouldn't at so think going portfolio, to We'll that

Operator

next Our Raymond come will James. Long with question from David

David Joseph Long

I'm some more I'll to you as Thomas, spend you, time too. welcome well. forward with looking

challenging at With little all? more availability impact lend of that your environment, credit prospects? and to does funding the appetite Your customers to

Craig Dwight

Thanks, Thomas. It the not. Thank for does question. you

core I wouldn't I have we communities. pulling as local our think to communities. is productive environment, back segments. rate a and be local still across we're rising our our knitting lending help communities We'll our mission to in say on stick

have of taking to foot off markets could high-quality economy. challenges We slowdown us the we're continuing very pedal seasoned the that can our these to lend borrowers. in help from be lenders that say here coming a navigate wouldn't in the But I

David Joseph Long

asset take the to upside would we backdrop sheet higher on here anything had the that be advantage if you differently done it of thinking back that And in I that look more bank to may of the is there of this would things, have what is year the and the backdrop, then have management directed there could known rates? were to more this angle balance better you if is be towards Mark, take side some maybe sensitivity, today allowed but the NIM and another beginning the you

Mark Secor

I It think we would to wouldn't Yes, ball, don't would. crystal have course? a nice of it, be

the within out very that time, had manage -- get right sensitive branch had was asset we deal to and coming had the and that policy the we think asset to in we I sensitivity. were We of in change decision. At that.

quickly have growth as some it you expect to thought just that would we that industry deposit we didn't rates I was thing thought but much I is deposits. rising other a the also to think the of raise loan don't that, shifting as and has. anyone of as about, think too or the the in of rates. happen how what seen came And the mention going we've But we That, that quickly didn't the demand. competition into

products that to You've they've yielding Where for now are opportunities got looking are their yielding. years money their that actually deposits moving. years, for they're and moved move lower not into higher money

You're your getting some shift products are. deposit what in

Craig Dwight

we branch the of million TCF October David, $XXX of proceeds by net 'XX. Yes, invested acquisition, had about

you the going information happen. inflation. to the correct If with now did growth tame exceptional cash it that that was their but growth, saying a done But transitory, had, at pent-up inflation frankly, flows, was point And I September is that The tied we in have demand. outlook. we invested recall, was, the Fed the growth. not this it's time, strategy portfolio have teams to And to time, they loan realistic of in there and aggressive was anticipated Part it and in pivoted to tied their itself, year. we been think, 'XX, has jobs. point to up quite At loan

But appreciate payback XX. at thank And transaction the not of still September that question, XXX We portfolio. had of offset entire of going so investment months. bad cost yield incurred And deal than too, was the to capital knew on, transaction. XXX the into at end in we that thing a overall, We've period 'XX, had going as the the I portfolio. we our a the outlay, you. We're other our already from a spread less announced XX to funds investment so lose on to the that we we'd that spread of income payback PPP of and cost

David Joseph Long

transaction No, your a it good on was part.

Operator

will question from [Operator Brian Janney Montgomery. come Martin Instructions] Our with next

Brian Martin

welcome you, Also Thomas.

maybe just a team, couple the of follow-ups. For

growth at coming cash I the you're growth The that Just, off that Is will much the year, securities fourth the expectation be think here? that Is guess that by sheet? with and funded Mark, and loan on sheet, flow the should the balance about book look be expecting the there's plan how will next bond it we the funded? growth portfolio? not balance that in is you as quarter

Mark Secor

we is growth. That help would able plan. the be going earnings retained That the to fund be loan and think to

Brian Martin

this the outlook, down the on just maybe can sense you then saw provide on And any mortgage -- step you quarter.

is on you forecast this seeing to it's trends how of MBA lower kind of level? guys or currently? a you kind say let's kind Just you're think sustainable still of going -- the based go Do

Noe Najera

trending the MBA the is Yes, This that will stay mortgage we Thank been to for with outlook we've how forecast. in Noe. expect question. line the you

will flat. remain now, down. and significant we think officers. think down. entire we of We're that. I have, take pipelines that a market that's I presented But But the the in very anticipate as advantage serve, we mentioned opportunity any will The do still that we will communities earlier, We slow are and seasoned that slowdown loan embedded

Brian Martin

that you couple sale, would moderate MBA go here quarters? on the I as sale next forecast just well? the go down should So mean as is on the revenue to gain Noe, if gain expect lower, you of

Noe Najera

a That's -- that total portion I just what to anticipate again, it's smaller but bottom expected will And of in our we delivered line. as it's well. fall income earned, line. the

Brian Martin

for maybe just comment. I Thomas. last just one understood to wanted And maybe make I one you. sure Thank your

pipeline saw forward, aspect, with Just of level going commercial the healthy, kind year-to-date margins can I coming maybe sounds pretty still bit that mean significant. just outlook. the the a more growth it the reliance is is outlined share loan we you stable, little more portfolio down. -- like But Craig the from your

on commercial what some And you're about utilization. side, those thinking outlook give X growth you did you would how I'm that could utilization, X I linked X thinking in. the if quarter, about helpful. also Just about think to you're just on next quarters loan not talked be sure how the

Thomas Prame

your loan on question Sure. growth. overall I'll hit first the

and Mark in will maximize earnings, and retained our there. then benefit loan alluded, as portfolio, probably out coming with think our of be cash growth I to line flows securities Craig our

loan We portfolio. have very a diversified

see, side. very direct on from sheet. growth we you us parts look lending see to Lynn in just utilization gives As I'll to in auto, you our we It more our our opportunities commercial diverse commercial segments markets pass balance can and the quarter-over-quarter, consumer the the it consumer various mortgage and over side. side, the the perhaps around both branch from for get ability have area. to Also, and color at on according best and where

Lynn Kerber

Thank you, Thomas.

have but a actually increasing our overall still utilization, trend. about we been lower utilization as per month-over-month, that positive it's is month, has But pre-pandemic average our line far been below utilization. our As X% increasing credit and than so of

the our that clients of with some increase credit do from hearing line expect utilization, they're have been to to have inventory logistics, and we expecting increased so We here.

As housing. clients. far for family, us. our the seen in X-X all Residential activity. as These our multifamily, we nice active to with forward-looking, industrial mentioned deck, fourth quarter. opportunities being continue said, still are We've for in as senior a pipeline be moderating is sectors bit That uptick seeing a

residential so to strong just development, some that our as support expect say watching impact the mortgage past and buyers, on course, pipeline to helping lending, with and we this on is that moderate. lastly, rates And are I'll year, construction then originated We of overall we that well.

benefit into go We of to that see as expect the XXXX. we

Brian Martin

you. Got

come and the which that just to one be as you last you the talked Okay. directionally, expense I just plan helpful. Can me That's is maybe about some could, dollars as benefits areas XX dollars aren't areas better. out just may if you'd of some Craig, maybe these was other for the months about it's where think where the reallocating well you performing And from? for as where you invest like do talk to next might about

Craig Dwight

some investment management. transfer and they're income under see the our going wealth that part model. as side. lines, of areas Well, to countercyclical are our obviously noninterest is mortgages to of our which business less of pressure, reduction And is design Those we commercial

As Brian. cost well saves too, as

Operator

with Piper Sandler. from a Our follow-up Race next is Nathan question

Nathan Race

credit discern so a lately? to going of want versus negligible. are just in can't the from few some keeping is eye and of there reserve see closer NPAs guys are outlook stable any kind deterioration? we provisioning that on where or adjustments? commercial substandard you are forward, forth. segment terms guys kind Just any XQ Charge-offs qualitative client CECL numbers next has guess just of about maybe absent how kind expecting I anything you thinking and guys And you of how been quarters obviously pretty I on the guess, trend the over that metrics the are

Lynn Kerber

Sure. quality, performing been deck, credit see metrics in as to This the you is Lynn have our credit Kerber. Relative really quality well.

last has a this and talk quarter extremely a about team were lending for that trend Our regularly team been any continuation outlook management we've past that of dues the seen low, a we that for concerns and as our and have. last We year.

point, frankly, watching to for analysis At a those provide were had closely. some help Quite subscribe performed of well. sectors special have very allocations hospitality, services retail, And this us. to also of some all the like variety additional that we through We exceedingly timeframe. restaurants pandemic sectors during we

at our those reserved. in Having released into we've appropriately reserve, with to some a those to there's change X.XX, we related increases At right we you of we're itself, as unwound that overall additional look mix feel as economic tempered As allocations. some been lead those additional that's the of just now. allocations sectors, some been conditions allowance the that

that, change and probability group, looks would of we're And at But our we're just with quality I going we well this positioned. slightly etc., trends as credit above at peer reevaluate. so good. the of could course look that you recession, forward, as the If point our condition to have far think

Nathan Race

some that the were forward? one the housekeeping back And utilized Can in tax for maybe XX% the just on rate. Obviously, up tax one going somewhere between credits Great. Okay. then go Mark, last to rate solar you had XX% quarter.

Mark Secor

was, Yes, completed more in recognized to There quarter, back lot this is this projects normal quarter, so a levels. go it's of more. fourth the got they'll a we little but -- been bit

Operator

for our conference Dwight concludes like I Craig would question-and-answer over to any session. This the to turn back closing remarks.

Craig Dwight

in everyone thank participated and for Matt, Thank who call. today's you, you

or feel comments, contact questions embrace you, other Thank our have questions to now. a comments you We day. myself always Mark analysts. shareholders additional and please If great Secor. have or and Bye free or from

Operator

has you now Thank presentation. conference concluded. for The attending today's

now disconnect. may You

Horizon Bancorp (HBNC) 27 Oct 222022 Q3 Earnings call transcript