☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2019
0000-10792
Inc.
Indiana | 35-1562417 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
515 Franklin Street, Michigan City, Indiana | 46360 | |
(Address of principal executive | (Zip Code) |
Stock,stock, no par value
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to the Form10-K. ☐
Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer | ☐ | Smaller Reporting Company | ☐ | |||
Emerging Growth Company | ☐ |
Document | Part of Form 10-K into whichportion of document is incorporated | |
Portions of the Registrant’s Proxy Statement to be filed for its | Part III | |
May |
HORIZON BANCORP
2017
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2017
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shareholders of Lafayette received 0.58780.8817 shares of Horizon common stock and $1.73 in cash for each outstanding share of Lafayette common stock. Lafayette shareholders owning fewer than 100 shares of common stock received $17.25 in cash for each common share. Lafayette shares outstanding at the closing to be exchanged were 1,856,679, and the shares of Horizon common stock issued to Lafayette shareholders totaled 1,091,259.1,636,888. Based upon the August 31, 2017 closing price of $26.17$17.45 per share of Horizon common stock immediately prior to the effectiveness of the merger, the transaction has an implied valuation of approximately $34.5 million. As a result of the acquisition, the Company was able to increase its loan and deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale and to increase revenue in this vibrant growth market.
scale.
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shares of Horizon common stock issued to Peoples shareholders totaled 3,288,303.4,932,454. Horizon’s stock price was $16.88$11.25 per share at the close of business on July 1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1 million. As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale.
On April 3, 2014 Horizon completed its acquisition of SCB Bancorp, Inc. (“Summit”) and the Bank’s acquisition of Summit Community Bank, through mergers effective as of that date. Under the final terms of the acquisition, the exchange ratio was 0.7356 shares of Horizon’s common stock and $5.15 in cash for each share of Summit common stock outstanding. Summit shares outstanding at the closing were 1,164,442, and the shares of Horizon common stock issued to Summit shareholders totaled 856,230. Horizon’s stock price was $14.82 per share at the close of business on April 3, 2014. Based upon these numbers, the total value of the consideration for the acquisition was $18.9 million (not including the retirement of Summit debt). As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale.
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2019.
Many
INDIANA | MICHIGAN | |||||||||||||||||
County | Number of Institutions | Horizon Market Share | County | Number of Institutions | Horizon Market Share | |||||||||||||
Allen | 21 | 0.68 | % | Berrien | 9 | 9.21 | % | |||||||||||
Bartholomew | 9 | 7.92 | % | Cass | 5 | 5.84 | % | |||||||||||
Carroll | 6 | 27.23 | % | Ingham | 17 | 2.38 | % | |||||||||||
Cass | 6 | 19.91 | % | Kalamazoo | 15 | 1.58 | % | |||||||||||
DeKalb | 11 | 18.69 | % | Kent | 26 | 0.45 | % | |||||||||||
Elkhart | 17 | 0.30 | % | Midland | 8 | 13.99 | % | |||||||||||
Fountain | 4 | 10.40 | % | Ottawa | 16 | 0.32 | % | |||||||||||
Grant | 7 | 9.11 | % | Saginaw | 13 | 0.89 | % | |||||||||||
Hamilton | 27 | 0.29 | % | St. Joseph | 9 | 5.18 | % | |||||||||||
Howard | 10 | 3.83 | % | |||||||||||||||
Johnson | 19 | 11.92 | % | |||||||||||||||
Kosciusko | 10 | 5.90 | % | |||||||||||||||
La Porte | 8 | 59.15 | % | |||||||||||||||
LaGrange | 4 | 4.79 | % | |||||||||||||||
Lake | 16 | 1.65 | % | |||||||||||||||
Marion | 23 | 0.79 | % | |||||||||||||||
Noble | 6 | 7.17 | % | |||||||||||||||
Porter | 11 | 11.00 | % | |||||||||||||||
St. Joseph | 15 | 0.23 | % | |||||||||||||||
Tippecanoe | 16 | 7.57 | % | |||||||||||||||
Whitley | 8 | 7.28 | % |
Horizon was the fourth largest of the 11 bank and thrift9 institutions in Berrien County with an 8.46% market share, as of June 30, 2017. The branches acquired from Peoples FSB in Michigan are located in Cass, St. Joseph and Kalamazoo Counties where Horizon held market share of 6.02%, 5.25% and 1.38%, respectively, as of June 30, 2017. Horizon entered Ingham County through its acquisition of Summit Community Bank in 2014 and held 2.37% market share as of June 30, 2017. On October 17, 2017, Horizon acquired Wolverine Bank and entered Midland and Saginaw counties. At June 30, 2017, Wolverine Bank was second largest of seven institutions in Midland County with an 11.51% market share. Wolverine Bank also held a market share of 1.64% in Saginaw County. As of June 30, 2017, Horizon held less than 1% market share in Kent County, Michigan. (Source: FDIC Summary of Deposits Market Share Reports, available at www.fdic.gov.)
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Adjustments are made to the initial assessment rates based on long-term unsecured debt, depository institution debt, and brokered deposits.
However, effective
Horizon’s FDIC deposit insurance expense decreased $513,000 during 2017 compared to 2016 as a result of the new assessment rate schedule effective July 1, 2016.
March 29, 2019, FDIC Quarterly Certified Statement Invoice.
HORIZON BANCORP
This ratio is computed by dividing Tier I capital, net of all intangibles, by the quarterly average of total assets. Pursuant to the regulations, banks must maintain capital levels commensurate with the level of risk, including the volume and severity of problem loans to which they are exposed.
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Required For Capital1 | ||||||||||||||||||||||||||||||||
Required For Capital1 | Adequacy Purposes | Well Capitalized Under Prompt1 | ||||||||||||||||||||||||||||||
Actual | Adequacy Purposes | with Capital Buffer | Corrective Action Provisions | |||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||
As of December 31, 2017 | ||||||||||||||||||||||||||||||||
Total capital1 (torisk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 384,800 | 12.91 | % | $ | 238,543 | 8.00 | % | $ | 275,816 | 9.25 | % | N/A | N/A | ||||||||||||||||||
Bank | 382,788 | 12.85 | % | 238,386 | 8.00 | % | 275,634 | 9.25 | % | $ | 297,982 | 10.00 | % | |||||||||||||||||||
Tier 1 capital1 (torisk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 368,355 | 12.35 | % | 178,907 | 6.00 | % | 216,180 | 7.25 | % | N/A | N/A | |||||||||||||||||||||
Bank | 366,343 | 12.29 | % | 178,790 | 6.00 | % | 216,038 | 7.25 | % | 238,386 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 329,892 | 11.06 | % | 134,181 | 4.50 | % | 171,454 | 5.75 | % | N/A | N/A | |||||||||||||||||||||
Bank | 366,343 | 12.29 | % | 134,092 | 4.50 | % | 171,340 | 5.75 | % | 193,689 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 368,355 | 9.92 | % | 148,503 | 4.00 | % | 148,503 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 366,343 | 9.89 | % | 148,116 | 4.00 | % | 148,116 | 4.00 | % | 185,145 | 5.00 | % |
Actual | Required for Capital 1 Adequacy Purposes | Required For Capital 1 Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt 1 Corrective Action Provisions | |||||||||||||||||||||||||||||
December 31, 2019 | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 548,364 | 13.95 | % | $ | 314,395 | 8.00 | % | $ | 412,644 | 10.50 | % | N/A | N/A | ||||||||||||||||||
Bank | 497,227 | 12.65 | % | 314,452 | 8.00 | % | 412,718 | 10.50 | % | $ | 393,065 | 10.00 | % | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 13.50 | % | 235,796 | 6.00 | % | 334,044 | 8.50 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 235,823 | 6.00 | % | 334,082 | 8.50 | % | 314,430 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 473,150 | 12.04 | % | 176,846 | 4.50 | % | 275,094 | 7.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 176,867 | 4.50 | % | 275,126 | 7.00 | % | 255,475 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 10.50 | % | 202,111 | 4.00 | % | 202,111 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 9.49 | % | 202,110 | 4.00 | % | 202,110 | 4.00 | % | 252,638 | 5.00 | % |
1 | As defined by regulatory agencies |
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programs in 2018.
year.
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Bancorp, Inc.
2018 Regulatory Relief Act
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Horizon’s management will also continue to monitor Congressional action to pursue President Trump’s announced plans to repeal or modify the Dodd-Frank Act. In 2017, the House of Representatives successfully passed a bill to dismantle the Dodd-Frank Act, but no Senate action resulted other than action to repeal a controversial arbitration rule under the Dodd-Frank Act.
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Financial Privacy
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I. | DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL |
II. | INVESTMENT PORTFOLIO |
A. | The following is a schedule of the amortized cost and fair value of investment securities available for sale and held to maturity. |
December 31, 2017 | December 31, 2016 | December 31, 2015 | ||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||
(dollars in thousands) | Cost | Value | Cost | Value | Cost | Value | ||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | 19,277 | $ | 19,052 | $ | 8,051 | $ | 7,989 | $ | 5,940 | $ | 5,926 | ||||||||||||
State and municipal | 148,045 | 149,564 | 117,327 | 116,592 | 73,829 | 75,095 | ||||||||||||||||||
Federal agency collateralized mtg. obligations | 132,871 | 130,365 | 139,040 | 137,195 | 157,291 | 156,203 | ||||||||||||||||||
Federal agency mortgage-backed pools | 211,487 | 208,657 | 180,183 | 176,726 | 206,970 | 207,704 | ||||||||||||||||||
Private labeled mortgage-backed pools | 1,650 | 1,642 | — | — | — | — | ||||||||||||||||||
Corporate notes | 272 | 385 | 1,238 | 1,329 | 32 | 54 | ||||||||||||||||||
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Total available for sale | 513,602 | 509,665 | 445,839 | 439,831 | 444,062 | 444,982 | ||||||||||||||||||
Total held to maturity | 200,448 | 201,085 | 193,194 | 194,086 | 187,629 | 193,703 | ||||||||||||||||||
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Total investment securities | $ | 714,050 | $ | 710,750 | $ | 639,033 | $ | 633,917 | $ | 631,691 | $ | 638,685 | ||||||||||||
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December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
(dollars in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,415 | $ | 1,413 | $ | 16,815 | $ | 16,608 | $ | 19,277 | $ | 19,052 | ||||||||||||
State and municipal | 396,931 | 405,768 | 210,386 | 209,303 | 148,045 | 149,564 | ||||||||||||||||||
Federal agency collateralized mortgage obligations | 267,272 | 269,252 | 187,563 | 185,003 | 132,871 | 130,365 | ||||||||||||||||||
Federal agency mortgage-backed pools | 145,623 | 146,572 | 183,479 | 178,736 | 211,487 | 208,657 | ||||||||||||||||||
Private labeled mortgage-backed pools | — | — | — | — | 1,650 | 1,642 | ||||||||||||||||||
Corporate notes | 10,848 | 11,771 | 10,666 | 10,698 | 272 | 385 | ||||||||||||||||||
Total available for sale | 822,089 | 834,776 | 608,909 | 600,348 | 513,602 | 509,665 | ||||||||||||||||||
Total held to maturity | 207,899 | 215,147 | 210,112 | 208,273 | 200,448 | 201,085 | ||||||||||||||||||
Total investment securities | $ | 1,029,988 | $ | 1,049,923 | $ | 819,021 | $ | 808,621 | $ | 714,050 | $ | 710,750 | ||||||||||||
B. | The following is a schedule of maturities of each category of available for sale and held-to-maturity debt securities and the related weighted-average yield of such securities as of December 31, |
After One Year | After Five Years | |||||||||||||||||||||||||||||||
One Year or Less | Through Five Years | Through Ten Years | After Ten Years | |||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||
Available for sale | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies(1) | $ | 1,492 | 1.21 | % | $ | 17,560 | 1.88 | % | $ | — | 0.00 | % | $ | — | 0.00 | % | ||||||||||||||||
State and municipal | 11,834 | 2.67 | % | 22,633 | 3.04 | % | 51,156 | 4.14 | % | 63,941 | 4.11 | % | ||||||||||||||||||||
Federal agency collateralized mtg. obligations(2) | 65 | 3.99 | % | 6,277 | 2.96 | % | 38,417 | 2.69 | % | 85,606 | 2.70 | % | ||||||||||||||||||||
Federal agency mortgage-backed pools(2) | 30 | 4.43 | % | 8,851 | 2.74 | % | 44,203 | 2.53 | % | 155,573 | 2.67 | % | ||||||||||||||||||||
Private labeled mortgage-backed pools(2) | — | 0.00 | % | — | 0.00 | % | 1,642 | 2.53 | % | — | 0.00 | % | ||||||||||||||||||||
Corporate notes | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | 385 | 0.00 | % | ||||||||||||||||||||
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Total available for sale | $ | 13,421 | 2.52 | % | $ | 55,321 | 2.61 | % | $ | 135,418 | 3.15 | % | $ | 305,505 | 2.98 | % | ||||||||||||||||
Total held to maturity | $ | 1,934 | 1.86 | % | $ | 50,936 | 3.59 | % | $ | 93,279 | 3.86 | % | $ | 54,936 | 3.87 | % | ||||||||||||||||
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Total investment securities | $ | 15,355 | 2.43 | % | $ | 106,257 | 3.08 | % | $ | 228,697 | 3.44 | % | $ | 360,441 | 3.11 | % | ||||||||||||||||
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One Year or Less | After One Year Through Five Years | After Five Years Through Ten Years | After Ten Years | |||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||
Available for sale | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies (1) | $ | — | 0.00 | % | $ | 1,413 | 1.50 | % | $ | — | 0.00 | % | $ | — | 0.00 | % | ||||||||||||||||
State and municipal | 36,006 | 2.04 | % | 39,661 | 2.44 | % | 112,412 | 3.68 | % | 217,689 | 3.39 | % | ||||||||||||||||||||
Federal agency collateralized mortgage obligations (2) | — | 0.00 | % | — | 0.00 | % | 48,207 | 2.55 | % | 221,045 | 3.42 | % | ||||||||||||||||||||
Federal agency mortgage-backed pools (2) | — | 0.00 | % | 5,038 | 2.75 | % | 70,750 | 2.48 | % | 70,784 | 3.25 | % | ||||||||||||||||||||
Corporate notes | — | 0.00 | % | 1,535 | 3.24 | % | 9,732 | 2.88 | % | 503 | 0.00 | % | ||||||||||||||||||||
Total available for sale | 36,006 | 2.04 | % | 47,647 | 2.47 | % | 241,101 | 3.07 | % | 510,021 | 3.38 | % | ||||||||||||||||||||
Total held to maturity | 7,874 | 3.52 | % | 66,048 | 3.52 | % | 100,110 | 3.83 | % | 41,115 | 3.33 | % | ||||||||||||||||||||
Total investment securities | $ | 43,880 | 2.30 | % | $ | 113,695 | 3.08 | % | $ | 341,211 | 3.29 | % | $ | 551,136 | 3.38 | % | ||||||||||||||||
(1) | Fair value is based on contractual maturity or call date where a call option exists |
(2) | Maturity based upon final maturity date |
III. | LOAN PORTFOLIO |
A. | Types of Loans Total loans on the balance sheet are comprised of the following classifications for the years indicated. |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Commercial | $ | 1,617,870 | $ | 1,069,956 | $ | 804,995 | $ | 674,314 | $ | 505,189 | ||||||||||
Real estate | 606,760 | 531,874 | 437,144 | 254,625 | 185,958 | |||||||||||||||
Mortgage warehouse | 94,508 | 135,727 | 144,692 | 129,156 | 98,156 | |||||||||||||||
Consumer | 512,857 | 398,429 | 362,300 | 320,459 | 279,525 | |||||||||||||||
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2,831,995 | 2,135,986 | 1,749,131 | 1,378,554 | 1,068,828 | ||||||||||||||||
Allowance for loan losses | (16,394 | ) | (14,837 | ) | (14,534 | ) | (16,501 | ) | (15,992 | ) | ||||||||||
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Total loans | $ | 2,815,601 | $ | 2,121,149 | $ | 1,734,597 | $ | 1,362,053 | $ | 1,052,836 | ||||||||||
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(dollars in thousands) | December 31 2019 | December 31 2018 | December 31 2017 | December 31 2016 | December 31 2015 | |||||||||||||||
Commercial | $ | 2,046,651 | $ | 1,721,590 | $ | 1,669,934 | $ | 1,069,956 | $ | 804,995 | ||||||||||
Real estate | 770,717 | 668,141 | 609,739 | 531,874 | 437,144 | |||||||||||||||
Mortgage warehouse | 150,293 | 74,120 | 94,508 | 135,727 | 144,692 | |||||||||||||||
Consumer | 669,180 | 549,481 | 460,999 | 398,429 | 362,300 | |||||||||||||||
Total loans | 3,636,841 | 3,013,332 | 2,835,180 | 2,135,986 | 1,749,131 | |||||||||||||||
Allowance for loan losses | (17,667) | (17,820) | (16,394) | (14,837) | (14,534) | |||||||||||||||
Loans, net | $ | 3,619,174 | $ | 2,995,512 | $ | 2,818,786 | $ | 2,121,149 | $ | 1,734,597 | ||||||||||
B. | Maturities and Sensitivities of Loans to Changes in Interest Rates The following is a schedule of maturities and sensitivities of loans to changes in interest rates, excluding real estate mortgage, mortgage warehouse and consumer loans, as of December 31, |
(dollars in thousands) | One Year | One Through | After Five | |||||||||||||
Maturing or repricing | or Less | Five Years | Years | Total | ||||||||||||
Commercial, financial, agricultural and commercialtax-exempt loans | $ | 995,899 | $ | 574,467 | $ | 47,504 | $ | 1,617,870 |
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(dollars in thousands) | One Year or Less | One Through Five Years | After Five Years | Total | ||||||||||||
Maturing or repricing Commercial, financial, agricultural and commercial tax-exempt loans | $ | 1,303,544 | $ | 676,459 | $ | 66,648 | $ | 2,046,651 |
Fixed | Variable | |||||||
(dollars in thousands) | Rate | Rate | ||||||
Total commercial, financial, agricultural and commercialtax-exempt loans due after one year | $ | 415,854 | $ | 206,117 |
(dollars in thousands) | Fixed Rate | Variable Rate | ||||||
Total commercial, financial, agricultural, and commercial tax-exempt loansdue after one year | $ | 479,727 | $ | 263,380 |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Non-performing loans | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
More than 90 days past due | $ | — | $ | 183 | $ | — | $ | — | $ | 45 | ||||||||||
Non-accrual | 6,689 | 2,249 | 5,030 | 10,024 | 4,014 | |||||||||||||||
Trouble debt restructuring - accruing | 1 | — | 60 | 610 | 1,296 | |||||||||||||||
Trouble debt restructuring -non-accrual | 451 | — | 1,915 | 1,221 | 2,116 | |||||||||||||||
Real estate | ||||||||||||||||||||
More than 90 days past due | — | — | 1 | 40 | 2 | |||||||||||||||
Non-accrual | 3,693 | 2,959 | 4,354 | 2,297 | 2,459 | |||||||||||||||
Trouble debt restructuring - accruing | 1,672 | 1,254 | 808 | 2,526 | 2,686 | |||||||||||||||
Trouble debt restructuring -non-accrual | 351 | 809 | 1,074 | 1,031 | 999 | |||||||||||||||
Mortgage warehouse | ||||||||||||||||||||
More than 90 days past due | — | — | — | — | — | |||||||||||||||
Non-accrual | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring - accruing | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring -non-accrual | — | — | — | — | — | |||||||||||||||
Consumer | ||||||||||||||||||||
More than 90 days past due | 167 | 58 | 27 | 75 | 2 | |||||||||||||||
Non-accrual | 2,894 | 2,728 | 2,878 | 2,991 | 3,275 | |||||||||||||||
Trouble debt restructuring - accruing | 285 | 238 | 350 | 1,236 | 1,072 | |||||||||||||||
Trouble debt restructuring -non-accrual | 211 | 205 | 183 | 391 | 311 | |||||||||||||||
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Totalnon-performing loans | 16,414 | 10,683 | 16,680 | 22,442 | 18,277 | |||||||||||||||
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Other real estate owned and repossessed collateral |
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Commercial | 578 | 542 | 161 | 411 | 830 | |||||||||||||||
Real estate | 200 | 2,648 | 3,046 | 636 | 1,277 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Consumer | 60 | 26 | — | 154 | 14 | |||||||||||||||
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Total other real estate owned and repossessed collateral | 838 | 3,216 | 3,207 | 1,201 | 2,121 | |||||||||||||||
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Totalnon-performing assets | $ | 17,252 | $ | 13,899 | $ | 19,887 | $ | 23,643 | $ | 20,398 | ||||||||||
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(dollars in thousands) | ||||
Gross interest income that would have been recorded onnon-accrual loans outstanding as of December 31, 2017, in the period if the loans had been current, in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period. | $ | 870 | ||
Interest income actually recorded onnon-accrual loans outstanding as of December 31, 2017, and included in net income for the period. | 238 | |||
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Interest income not recognized during the period onnon-accrual loans outstanding as of December 31, 2017. | $ | 632 | ||
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HORIZON BANCORP
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Non-performing loans | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
More than 90 days past due | $ | — | $ | 208 | $ | — | $ | 183 | $ | — | ||||||||||
Non-accrual | 4,782 | 6,094 | 6,902 | 2,249 | 5,030 | |||||||||||||||
Trouble debt restructuring - accruing | 1,484 | 109 | 1 | — | 60 | |||||||||||||||
Trouble debt restructuring - non-accrual | 1,081 | 492 | 451 | — | 1,915 | |||||||||||||||
Real estate | ||||||||||||||||||||
More than 90 days past due | 1 | 180 | — | — | 1 | |||||||||||||||
Non-accrual | 7,614 | 2,846 | 3,693 | 2,959 | 4,354 | |||||||||||||||
Trouble debt restructuring - accruing | 1,561 | 1,558 | 1,672 | 1,254 | 808 | |||||||||||||||
Trouble debt restructuring - non-accrual | 708 | 423 | 351 | 809 | 1,074 | |||||||||||||||
Mortgage warehouse | ||||||||||||||||||||
More than 90 days past due | — | — | — | — | — | |||||||||||||||
Non-accrual | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring - accruing | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring - non-accrual | — | — | — | — | — | |||||||||||||||
Consumer | ||||||||||||||||||||
More than 90 days past due | 145 | 180 | 167 | 58 | 27 | |||||||||||||||
Non-accrual | 3,283 | 2,608 | 2,681 | 2,728 | 2,878 | |||||||||||||||
Trouble debt restructuring - accruing | 309 | 335 | 285 | 238 | 350 | |||||||||||||||
Trouble debt restructuring - non-accrual | 217 | 142 | 211 | 205 | 183 | |||||||||||||||
Total non-performing loans | 21,185 | 15,175 | 16,414 | 10,683 | 16,680 | |||||||||||||||
Other real estate owned and repossessed collateral | ||||||||||||||||||||
Commercial | 3,698 | 1,967 | 578 | 542 | 161 | |||||||||||||||
Real estate | 28 | 60 | 200 | 2,648 | 3,046 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Consumer | — | 48 | 60 | 26 | — | |||||||||||||||
Total other real estate owned and repossessed collateral | 3,726 | 2,075 | 838 | 3,216 | 3,207 | |||||||||||||||
Total non-performing assets | $ | 24,911 | $ | 17,250 | $ | 17,252 | $ | 13,899 | $ | 19,887 |
(dollars in thousands) | ||||
Gross interest income that would have been recorded on non-accrual loans outstanding as of December 31, 2019, in the period if the loans had been current, in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period. | $ | 1,129 | ||
Interest income actually recorded on non-accrual loans outstanding as of December 31, 2019, and included in net income for the period. | 808 | |||
Interest income not recognized during the period on non-accrual loans outstanding as of December 31, 2019. | $ | 321 | ||
1. | From time to time, the Bank obtains information which may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of such, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. Further, it is management’s policy to place a commercial loan on anon-accrual status when delinquent in excess of 90 days or non-accrual status. |
2. | Potential Problem Loans: |
3. | Foreign Outstandings: |
4. | Loan Concentrations: |
D. | Other Interest-Bearing Assets |
IV. | SUMMARY OF LOAN LOSS EXPERIENCE |
A. | The following is an analysis of the activity in the allowance for loan losses account: |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Loans outstanding at the end of the period(1) | $ | 2,831,995 | $ | 2,135,986 | $ | 1,749,131 | $ | 1,378,554 | $ | 1,068,828 | ||||||||||
Average loans outstanding during the period (1) | 2,335,126 | 1,948,580 | 1,593,790 | 1,247,510 | 1,092,662 |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Loans outstanding at the end of the period (1) | $ | 3,636,841 | $ | 3,013,332 | $ | 2,835,180 | $ | 2,135,986 | $ | 1,749,131 | ||||||||||
Average loans outstanding during the period (1) | 3,500,649 | 2,910,741 | 2,335,126 | 1,948,580 | 1,593,790 |
(1) | Net of unearned income and deferred loan fees |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Balance at beginning of the period | $ | 14,837 | $ | 14,534 | $ | 16,501 | $ | 15,992 | $ | 18,270 | ||||||||||
Loanscharged-off: | ||||||||||||||||||||
Commercial | 377 | 758 | 3,437 | 1,802 | 2,532 | |||||||||||||||
Real estate | 89 | 213 | 288 | 328 | 1,055 | |||||||||||||||
Consumer | 1,787 | 1,689 | 2,374 | 1,999 | 2,663 | |||||||||||||||
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Total loanscharged-off | 2,253 | 2,660 | 6,099 | 4,129 | 6,250 | |||||||||||||||
Recoveries of loans previouslycharged-off: | ||||||||||||||||||||
Commercial | 268 | 210 | 192 | 773 | 668 | |||||||||||||||
Real estate | 44 | 97 | 69 | 21 | 114 | |||||||||||||||
Consumer | 1,028 | 814 | 709 | 786 | 1,270 | |||||||||||||||
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Total loan recoveries | 1,340 | 1,121 | 970 | 1,580 | 2,052 | |||||||||||||||
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Net loanscharged-off | 913 | 1,539 | 5,129 | 2,549 | 4,198 | |||||||||||||||
Provision charged to operating expense | 2,470 | 1,842 | 3,162 | 3,058 | 1,920 | |||||||||||||||
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Balance at the end of the period | $ | 16,394 | $ | 14,837 | $ | 14,534 | $ | 16,501 | $ | 15,992 | ||||||||||
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Percent of net charge-offs to average loans outstanding for the period | 0.04 | % | 0.08 | % | 0.32 | % | 0.20 | % | 0.38 | % |
HORIZON BANCORP
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Balance at beginning of the period | $ | 17,820 | $ | 16,394 | $ | 14,837 | $ | 14,534 | $ | 16,501 | ||||||||||
Loans charged-off: | ||||||||||||||||||||
Commercial | 863 | 473 | 629 | 758 | 3,437 | |||||||||||||||
Real estate | 93 | 76 | 89 | 213 | 288 | |||||||||||||||
Consumer | 2,312 | 2,003 | 1,535 | 1,689 | 2,374 | |||||||||||||||
Total loans charged-off | 3,268 | 2,552 | 2,253 | 2,660 | 6,099 | |||||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||||||||
Commercial | 199 | 176 | 298 | 210 | 192 | |||||||||||||||
Real estate | 46 | 27 | 44 | 97 | 69 | |||||||||||||||
Consumer | 894 | 869 | 998 | 814 | 709 | |||||||||||||||
Total loan recoveries | 1,139 | 1,072 | 1,340 | 1,121 | 970 | |||||||||||||||
Net loans charged-off | 2,129 | 1,480 | 913 | 1,539 | 5,129 | |||||||||||||||
Provision charged to operating expense | 1,976 | 2,906 | 2,470 | 1,842 | 3,162 | |||||||||||||||
Balance at end of the period | $ | 17,667 | $ | 17,820 | $ | 16,394 | $ | 14,837 | $ | 14,534 | ||||||||||
Percent of net charge-offs to average loans outstanding for the period | 0.06 | % | 0.05 | % | 0.04 | % | 0.07 | % | 0.26 | % |
B. | The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and the percentage of loans in each category to total loans. |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | ||||||||||||||||||||||||||||||
Commercial, financial and agricultural | $ | 8,634 | 57 | % | $ | 6,579 | 50 | % | $ | 7,195 | 46 | % | $ | 7,910 | 50 | % | $ | 6,663 | 48 | % | ||||||||||||||||||||
Real estate | 2,188 | 22 | % | 2,090 | 25 | % | 2,476 | 25 | % | 2,508 | 18 | % | 3,462 | 17 | % | |||||||||||||||||||||||||
Mortgage warehousing | 1,030 | 3 | % | 1,254 | 6 | % | 1,007 | 8 | % | 1,132 | 9 | % | 1,638 | 9 | % | |||||||||||||||||||||||||
Consumer | 4,542 | 18 | % | 4,914 | 19 | % | 3,856 | 21 | % | 4,951 | 23 | % | 4,229 | 26 | % | |||||||||||||||||||||||||
Unallocated | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
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Total | $ | 16,394 | 100 | % | $ | 14,837 | 100 | % | $ | 14,534 | 100 | % | $ | 16,501 | 100 | % | $ | 15,992 | 100 | % | ||||||||||||||||||||
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December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
(dollars in thousands) | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | ||||||||||||||||||
Commercial, financial and agricultural | $ | 11,996 | 68 | % | $ | 10,495 | 59 | % | $ | 9,093 | 56 | % | ||||||||||||
Real estate | 923 | 5 | % | 1,676 | 9 | % | 2,188 | 13 | % | |||||||||||||||
Mortgage warehousing | 1,077 | 6 | % | 1,006 | 6 | % | 1,030 | 6 | % | |||||||||||||||
Consumer | 3,671 | 21 | % | 4,643 | 26 | % | 4,083 | 25 | % | |||||||||||||||
Unallocated | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 17,667 | 100 | % | $ | 17,820 | 100 | % | $ | 16,394 | 100 | % | ||||||||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||
(dollars in thousands) | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | ||||||||||||
Commercial, financial and agricultural | $ | 6,579 | 45 | % | $ | 7,195 | 49 | % | ||||||||
Real estate | 2,090 | 14 | % | 2,476 | 17 | % | ||||||||||
Mortgage warehousing | 1,254 | 8 | % | 1,007 | 7 | % | ||||||||||
Consumer | 4,914 | 33 | % | 3,856 | 27 | % | ||||||||||
Unallocated | — | — | — | — | ||||||||||||
Total | $ | 14,837 | 100 | % | $ | 14,534 | 100 | % | ||||||||
V. | DEPOSITS |
VI. | RETURN ON EQUITY AND ASSETS |
SHORT TERM BORROWINGS |
December 31 | December 31 | |||||||
(dollars in thousands) | 2017 | 2016 | ||||||
Outstanding at year end | $ | 61,097 | $ | 57,144 | ||||
Approximate weighted-average interest rate atyear-end | 0.25 | % | 0.18 | % | ||||
Highest amount outstanding as of anymonth-end during the year | $ | 63,081 | $ | 62,703 | ||||
Approximate average outstanding during the year | $ | 55,206 | $ | 54,737 | ||||
Approximate weighted-average interest during the year | 0.21 | % | 0.17 | % |
December 31 | December 31 | |||||||
(dollars in thousands) | 2019 | 2018 | ||||||
Outstanding at year-end | $ | 90,941 | $ | 52,116 | ||||
Approximate weighted-average interest rate at year-end | 0.70 | % | 0.64 | % | ||||
Highest amount outstanding as of any month-end during the year | $ | 97,301 | $ | 61,383 | ||||
Approximate average outstanding during the year | 81,264 | 51,385 | ||||||
Approximate weighted-average interest during the year | 0.84 | % | 0.43 | % |
HORIZON BANCORP
We are operating
Continuedlocal declines in real estate values, home sales volumes, and financial stress onloss of confidence in the U.S. economy or loss of employment by borrowers, as a result of the uncertain economic environment, including job loss, could have an adverse effect on our borrowers or their customers, which could adversely affect our financial condition and results of operations. Deterioration ofIn general, any loss confidence in the U.S. or local economic conditions in our marketseconomy could drivecause financial stress on borrowers and their customers, driving losses beyond that which is provided for in our allowance for loan losses and resultpotentially resulting in the following otheradditional consequences: increases in loan delinquencies, problem assets and foreclosures; declining demand for our products and services may decline;services; decreased deposits, may decrease, which would adverselynegatively impact our liquidity position; and collateral for our loans, especially real estate, may decline in value, in turn reducing customers’ borrowing power, and reducing the value of assetsdeclining asset and collateral values associated with our existing loans, reducing a customer’s borrowing power and our security for the loans.
HORIZON BANCORP
Our commercial
We have a large percentage of commercialunions and consumer loans. Commercial loans generally have greater credit risk than residential mortgage loans because repayment of these loans often depends on the successful business operations of the borrowers. These loans also typically have much larger loan balances than residential mortgage loans. Consumer loans generally involve greater risk than residential mortgage loans because theyFinTech companies are unsecured or secured bynow actively pursuing small bank acquisitions. Increased competition for bank acquisitions may slow Horizon’s ability to grow earning assets that depreciate in value. Although we undertake a variety of underwriting, monitoring and reserving protections with respect to these types of loans, there can be no guarantee that we will not suffer unexpected losses.
Our holdings of construction, land and home equity loans may pose more credit risk than other types of mortgage loans.
Construction loans, loans secured by commercial real estate and home equity loans generally entail more risk than other types of mortgage loans. When real estate values decrease, the developers to whom we lend are likely to experience a decline in sales of new homes from their projects. Land and construction loans are more likely to becomenon-performing as developers are unable to build and sell homes in volumes large enough for orderly repayment of loans and as other owners of such real estate (including homeowners) are unable to keep up with their payments. We strive to establish what we believe are adequate reserves on our financial statements to cover the credit risk of these loan portfolios. However, there can be no assurance that losses will not exceed our reserves, and ultimately result in a material level of charge-offs, which could adversely impact our results of operations, liquidity and capital.
HORIZON BANCORP
The allowance for loan losses may prove inadequate or be negatively affected by credit risk exposures.
Our business depends on the creditworthiness of our customers. We periodically review the allowance for loan and lease losses for adequacy considering economic conditions and trends, collateral values, and credit quality indicators, including pastcharge-off experience and levels of past due loans andnon-performing assets. There is no certainty that the allowance for loan losses will be adequate over time to cover credit losses in the portfolio because of unanticipated adverse changes in the economy, market conditions or events adversely affecting specific customers, industries or markets. If the credit quality of the customer base materially decreases, if the risk profile of a market, industry or group of customers changes materially, or if the allowance for loan losses is not adequate, our business, financial condition, liquidity, capital; and results of operations could be materially adversely affected.
at comparable historical growth rates.
HORIZON BANCORP
An economic slowdown
asset quality or earnings were to deteriorate significantly. Although we are currently, and have historically been, “well capitalized” for regulatory purposes, in the past we have been required to maintain increased levels of capital in connection with certain acquisitions. Additionally, we periodically explore acquisition opportunities with other financial institutions, some of which are in distressed financial condition. Any future acquisition, particularly the acquisition of a significantly troubled institution or an institution of comparable size to us, may require us to raise additional capital in order to obtain regulatory approval and/or to remain well capitalized.
HORIZON BANCORP
We may need to raise additional capital in the future, and such capital may not be available when needed or at all.
We may need to raise additional capital in the future to fund acquisitions and to provide us with sufficient capital resources and liquidity to meet our commitments, regulatory capital requirements and business needs, particularly if our asset quality or earnings were to deteriorate significantly. Although we are currently, and have historically been, “well capitalized” for regulatory purposes, in the past we have been required to maintain increased levels of capital in connection with certain acquisitions. Additionally, we periodically explore acquisition opportunities with other financial institutions, some of which are in distressed financial condition. Any future acquisition, particularly the acquisition of a significantly troubled institution or an institution of comparable size to us, may require us to raise additional capital in order to obtain regulatory approval and/or to remain well capitalized.
Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve.
We cannot guarantee that such capital will be available on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, our depositors or counterparties participating in the capital markets may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Moreover, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our businesses, financial condition and results of operations and may restrict our ability to grow.
The preparation of our financial statements requires the use of estimates that may vary from actual results.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates that affect the financial statements. One of our most critical estimates is the level of the allowance for loan losses. Due to the inherent nature of these estimates, we cannot provide absolute assurance that we will not have to increase the allowance for loan losses and/or sustain loan losses that are significantly higher than the provided allowance.
Our mortgage warehouse and indirect lending operations are subject to a higher fraud risk than our other lending operations.
We buy loans originated by mortgage bankers and automobile dealers. Because we must rely on the mortgage bankers and automobile dealers in making and documenting these loans, there is an increased risk of fraud to us on the part of the third-party originators and the underlying borrowers. In order to guard against this increased risk, we perform investigations on the mortgage companies with whom we do business, and we review the loan files and loan documents we purchase to attempt to detect any irregularities or legal noncompliance. However, there is no guarantee that our procedures will detect all cases of fraud or legal noncompliance.
Our mortgage lending profitability could be significantly reduced if we are not able to resell mortgages or experience other problems with the secondary market process or are unable to retain our mortgage loan sales force due to regulatory changes.
Currently, we sell a substantial portion of the mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to aggregate a high volume of loans and to sell them in the secondary market at a gain. Thus, we are dependent upon the existence of an active secondary market and our ability to profitably sell loans into that market.
HORIZON BANCORP
Our ability to sell mortgage loans readily is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and Ginnie Mae (the “Agencies”) and other institutional andnon-institutional investors. These entities account for a substantial portion of the secondary market in residential mortgage loans. Some of the largest participants in the secondary market, including the Agencies, are government-sponsored enterprises whose activities are governed by federal law. Any future changes in laws that significantly affect the activity of such government-sponsored enterprises could, in turn, adversely affect our operations.
In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. Although to date, the conservatorship has not had a significant or adverse effect on our operations, and during 2010 and 2012 the Federal Housing Finance Agency indicated that the Treasury Department is committed to fund Fannie Mae and Freddie Mac to levels needed in order to sufficiently meet their funding needs, it is currently unclear whether further changes would significantly and adversely affect our operations. Members of the present federal administration have expressed an intent to seek an end to the conservatorship and to privatize the Agencies, and it is unclear how that might impact us. In addition, our ability to sell mortgage loans readily is dependent upon our ability to remain eligible for the programs offered by the Agencies and other institutional andnon-institutional investors. Our ability to remain eligible may also depend on having an acceptable peer-relative delinquency ratio for the Federal Housing Administration (“FHA”) and maintaining a delinquency rate with respect to Ginnie Mae pools that are below Ginnie Mae guidelines. In the case of Ginnie Mae pools, we have repurchased delinquent loans from them in the past to maintain compliance with the minimum required delinquency ratios. Although these loans are typically insured as to principal by the FHA, such repurchases increase our capital and liquidity needs, and there can be no assurance that we will have sufficient capital or liquidity to continue to purchase such loans out of the Ginnie Mae pools if required to do so.
Any significant impairment of our eligibility with any of the Agencies could materially and adversely affect our operations. Further, the criteria for loans to be accepted under such programs may be changed fromtime-to-time by the sponsoring entity which could result in a lower volume of corresponding loan originations. The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria.
Our mortgage lending profitability could be significantly reduced as changes in interest rates could affect mortgage origination volume and pricing for selling mortgages on the secondary market.
Currently, we sell a substantial portion of the mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to originate and sell mortgages to the secondary market at a gain.
A higher interest rate environment can negatively affect the volume of loan originations and refinanced loans reducing the dollar amount of loans available to be sold to the secondary market. Higher interest rates can also negatively affect the premium received on loans sold to the secondary market as competitive pressures to originate loans can reduce pricing.
We are exposed to intangible asset risk in that our goodwill may become impaired.
As of December 31, 2017, we had $132.3 million of goodwill and other intangible assets. A significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate, or slower growth rates could result in impairment of goodwill. If we were to conclude that a future write-down of our goodwill is necessary, then we would record the appropriate charge, which could be materially adverse to our operating results and financial position. For further discussion, see Notes 1 and 11, “Nature of Operations and Summary of Significant Accounting Policies” and “Goodwill and Intangible Assets,” to the Consolidated Financial Statements included in Item 8 of our Annual Report on Form10-K for the year ended December 31, 2017.
We are subject to extensive regulation and changes in laws and regulatory policies could adversely affect our business.
Our operations are subject to extensive regulation by federal agencies. See “Regulation and Supervision” in the description of our Business in Item 1 of Part I of this report for detailed information on the laws and regulations to which we are subject. Changes in applicable laws, regulations or regulator policies can materially affect our business. The likelihood of any major changes in the future and their effects are impossible to determine. As an example, the Bank could experience higher credit losses because of federal or state legislation or by regulatory or bankruptcy court action that reduces the amount the Bank’s borrowers are otherwise contractually required to pay under existing loan contracts. Also, the Bank could experience higher credit losses because of federal or state legislation or regulatory action that limits its ability to foreclose on property or other collateral or makes foreclosure less economically feasible.
HORIZON BANCORP
We face other risks from recent actions of the U.S. Treasury and the Internal Revenue Service. In November 2016, these agencies issued a Notice making captive insurance company activities “transactions of interest” due to the potential for tax avoidance or evasion. We have a captive insurance company and it is not certain at this point how the Notice may impact us on our operation of the captive insurance company as a risk management tool.
Legislation enacted in recent years, together with additional actions announced by the U.S. Treasury and other regulatory agencies, continue to develop. It is not clear at this time what impact legislation and liquidity and funding initiatives of the U.S. Treasury and other bank regulatory agencies, and additional programs that may be initiated in the future, will have on the financial markets and the financial services industry.
The full impact of the Tax Cuts and Jobs Act on us and our customers is unknown at present, creating uncertainty and risk related to our customers’ future demand for credit and our future results.
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the “Tax Reform Act”), which introduced broad and complex tax reforms. Among other changes, the Tax Reform Act reduced the corporate tax rate for 2018 and limited the utilization of net operating losses to offset taxable income. As a result, during the fourth quarter of 2017, Horizon recognized an increase in income tax expense because of a $2.4 million adjustment of Horizon’s net deferred tax assets to the new corporate rate. Many aspects of the Tax Reform Act are unclear and may not be clarified for some time. As additional clarification and implementation guidance is issued on the Tax Reform Act, we may need to make further adjustments, which could have an impact on our earnings.
Increased economic activity expected to result from the decrease in tax rates on businesses generally could spur additional economic activity that would encourage additional borrowing. At the same time, some customers may elect to use their additional cash flow from lower taxes to fund their existing levels of activity, decreasing borrowing needs. The elimination of the federal income tax deductibility of business interest expense for a significant number of our customers effectively increases the cost of borrowings and makes equity or hybrid funding relatively more attractive. This could have a long-term negative impact on business customer borrowing. We are anticipating an increase in ourafter-tax net income available to stockholders in 2018 and future years as a result of the decrease in our effective tax rate. Some or all of this benefit could be lost to the extent that the banks and financial services companies we compete with elect to lower interest rates and fees and we are forced to respond in order to remain competitive. There is no assurance that presently anticipated benefits of the Tax Reform Act for the Company will be realized.
In addition, the Tax Reform Act could have an impact on how we compensate our executives due to amendments affecting the deductibility of certain executive compensation, and it could also prompt tax changes at the state level that could impact us.
In short, the Tax Reform Act may have wide-ranging, unexpected and material effects on our business practices, financial condition and results of operations, and we are not able to predict these effects at this time.
Our inability to continue to accurately process large volumes of transactions could adversely impact our business and financial results.
In the normal course of business, we process large volumes of transactions. If systems of internal control should fail to work as expected, if systems are used in an unauthorized manner, or if employees subvert the system of internal controls, significant losses could result.
We process large volumes of transactions on a daily basis and are exposed to numerous types of operational risk. Operational risk resulting from inadequate or failed internal processes, people and systems includes the risk of fraud by persons inside or outside Horizon, the execution of unauthorized transactions by employees, errors relating to transaction processing and systems, and breaches of the internal control system and compliance requirements. This risk of loss also includes the potential legal actions that could arise as a result of the operational deficiency or as a result of noncompliance with applicable regulatory standards.
HORIZON BANCORP
We establish and maintain systems of internal operational controls that are designed to provide us with timely and accurate information about our level of operational risk. While not foolproof, these systems have been designed to manage operational risk at appropriate, cost-effective levels. Procedures also exist that are designed to ensure that policies relating to conduct, ethics and business practices are followed. From time to time, losses from operational risk may occur, including the consequences of operational errors.
While we continually monitor and improve the system of internal controls, data processing systems and corporate-wide processes and procedures, there can be no assurance that future losses will not occur.
Our information systems may experience cyber-attacks or an interruption or breach in security.
We rely heavily on internal and outsourced technologies, communications, and information systems to conduct our business. Additionally, in the normal course of business, we collect, process and retain sensitive and confidential information regarding our customers. As our reliance on technology has increased, so have the potential risks of a technology-related operation interruption (such as disruptions in our customer relationship management, general ledger, deposit, loan, or other systems) or the occurrence of cyber-attacks (such as unauthorized access to our systems, computer viruses or other malicious code). These risks have increased for all financial institutions as new technologies, including the use of the Internet and telecommunications technologies (including mobile devices), have become commonly used to conduct financial and other business transactions, during a time of increased technological sophistication of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions, particularly denial of service attacks, that are designed to disrupt key business services, such as customer-facing web sites. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources, both domestic and foreign. However, we have analyzed and will continue to analyze security related to device-specific considerations, user access topics, transaction-processing and network integrity.
We also face risks related to cyber-attacks and other security breaches in connection with credit card and debit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including merchant acquiring banks, payment processors, payment card networks and our processors. Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them. Further cyber-attacks or other breaches in the future, whether affecting us or others, could intensify consumer concern and regulatory focus and result in reduced use of payment cards and increased costs, all of which could have a material adverse effect on our business.
To the extent we are involved in any future cyber-attacks or other breaches, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance we maintain. We could also suffer significant damage to our reputation. Although we are insured against many of these risks, including privacy breach response costs, notification expenses, breach support and credit monitoring expenses, cyber extortion and cyber terrorism, there can be no assurances that such insurance will be sufficient to cover all costs arising from a data or information technology breach and our exposure may exceed our coverage.
We continually encounter technological changes.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements, and we may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
HORIZON BANCORP
We rely on other companies to provide key components of our business infrastructure.
Third-party vendors provide key components of our business infrastructure, including Internet connections, mobile and internet banking, statement processing, loan document preparation, network access and transaction and other processing services. Although we have selected these third-party vendors carefully, we do not control their actions. Any problems caused by these third parties, including as a result of inadequate or interrupted service or breach of customer information, could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. In addition, any breach in customer information could affect our reputation and cause a loss of business. Replacing these third- party vendors also could result in significant delay and expense.
Damage to our reputation could damage our business.
Our business depends upon earning and maintaining the trust and confidence of our customers, investors and employees. Damage to our reputation could cause significant harm to our business and prospects. Harm to our reputation can arise from numerous sources, including, among others, employee misconduct, compliance failures, litigation or regulatory outcomes or governmental investigations. In addition, a failure to deliver appropriate standards of service and quality, or a failure or perceived failure to treat customers and clients fairly, can result in customer dissatisfaction, litigation, privacy breach and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs and harm to our reputation. Adverse publicity about Horizon, whether or not true, may result in harm to our existing business, customer relationships and prospects. Should any events or factors that can undermine our reputation occur, there is no assurance that the additional costs and expenses that we may need to incur to address the issues giving rise to the reputational harm would not adversely affect our earnings and results of operations.
The soundness of other financial institutions could adversely affect us.
Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Many of these transactions expose us to credit risk in the event of default by our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings.
HORIZON BANCORP
HORIZON BANCORP
HORIZON BANCORP
in various cities and towns in northern and central Indiana and southern and central Michigan. Horizon maintains such branches and offices as it believes are necessary for the convenience of its customers and the community, and Horizon frequently assesses the suitability of all its business locations.
office in Troy, Michigan.
Craig M. Dwight | 63 | Chairman of Horizon since July 2014; Chairman and Chief Executive Officer of the Bank since January 2003; Chief Executive Officer of Horizon and the Bank since July 2001; President of the Bank from 1998 to January 2003. | ||||
James D. Neff | 60 | President of Horizon and the Bank since January 2018; Executive Vice President – Consumer and Mortgage Banking of the Bank from 2016 to January 2018; Executive Vice President – Mortgage Banking of the Bank from January 2004 to 2016; Senior Vice President of the Bank from October 1999 to January 2004; Corporate Secretary of Horizon from 2007 to 2017. | ||||
Mark E. Secor | 53 | Executive Vice President of Horizon since January 2014 ; | ||||
Kathie A. DeRuiter | 58 | Executive Vice President of Horizon and Senior Bank Operations Officer since January 2014; Senior Vice President, Senior Bank Operations Officer from January 2003 to January 2014; Vice President, Senior Bank Operations Officer from January 2000 to January 2003. | ||||
Dennis J. Kuhn | 60 | Executive Vice President and Chief Commercial Banking Officer since October 2017; Regional Market President for Michigan and Northeast Indiana | ||||
Todd A. Etzler | 53 | Senior Vice President and General Counsel since |
HORIZON BANCORP
2019.
Period Ending | ||||||||||||||||||||||||
December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | |||||||||||||||||||
Index | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||||
Horizon Bancorp | 100.00 | 131.38 | 138.55 | 150.85 | 231.79 | 234.25 | ||||||||||||||||||
Russell 2000 | 100.00 | 138.82 | 145.62 | 139.19 | 168.85 | 193.58 | ||||||||||||||||||
SNL Bank$1B-$5B | 100.00 | 145.41 | 152.04 | 170.20 | 244.85 | 261.04 | ||||||||||||||||||
SNL Micro Cap Bank | 100.00 | 129.02 | 146.32 | 162.71 | 200.04 | 244.72 |
Source :
Index | December 31 2014 | December 31 2015 | December 31 2016 | December 31 2017 | December 31 2018 | December 31 2019 | ||||||||||||||||||
Horizon Bancorp, Inc. | 100.00 | 108.88 | 167.30 | 169.07 | 146.83 | 181.60 | ||||||||||||||||||
Russell 2000 Index | 100.00 | 95.59 | 115.95 | 132.94 | 118.30 | 148.49 | ||||||||||||||||||
SNL Bank $1B-$5B Index | 100.00 | 111.94 | 161.04 | 171.69 | 150.42 | 182.85 | ||||||||||||||||||
SNL Micro Cap Bank Index | 100.00 | 111.20 | 136.72 | 167.25 | 158.70 | 177.22 |
Copyright 2017
HORIZON BANCORP
Period Ending | ||||||||||||||||||||||||
December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | |||||||||||||||||||
Index | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||||
Horizon Bancorp | 100.00 | 128.93 | 133.05 | 142.29 | 213.74 | 212.21 | ||||||||||||||||||
Indiana Banks(1) | 100.00 | 131.09 | 141.28 | 158.90 | 231.81 | 278.42 | ||||||||||||||||||
Michigan Banks(1) | 100.00 | 118.70 | 128.85 | 142.90 | 171.55 | 183.68 |
Index | December 31 2014 | December 31 2015 | December 31 2016 | December 31 2017 | December 31 2018 | December 31 2019 | ||||||||||||||||||
Horizon Bancorp, Inc. | 100.00 | 106.96 | 160.67 | 159.53 | 135.83 | 163.54 | ||||||||||||||||||
Indiana Banks (1) | 100.00 | 111.81 | 156.16 | 186.91 | 190.71 | 201.38 | ||||||||||||||||||
Michigan Banks (1) | 100.00 | 110.52 | 130.62 | 140.61 | 157.23 | 179.68 |
(1) | excludes merger targets |
Source :
Copyright 2017
Other Information
The information regarding Horizon’s common stock, including the approximate number of holders of the common
Years Ended December 31 | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
Earnings | ||||||||||||||||||||
Net interest income | $ | 160,791 | $ | 134,569 | $ | 112,100 | $ | 85,992 | $ | 74,734 | ||||||||||
Provision for loan losses | 1,976 | 2,906 | 2,470 | 1,842 | 3,162 | |||||||||||||||
Non-interest income | 43,058 | 34,413 | 33,136 | 35,455 | 30,402 | |||||||||||||||
Non-interest expense | 122,032 | 102,516 | 94,813 | 86,892 | 74,193 | |||||||||||||||
Income tax expense | 13,303 | 10,443 | 14,836 | 8,801 | 7,232 | |||||||||||||||
Net income | 66,538 | 53,117 | 33,117 | 23,912 | 20,549 | |||||||||||||||
Preferred stock dividend | — | — | — | (42 | ) | (125 | ) | |||||||||||||
Net income available to common shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | $ | 23,870 | $ | 20,424 | ||||||||||
Cash dividends declared | $ | 20,835 | $ | 15,418 | $ | 11,720 | $ | 8,382 | $ | 6,216 | ||||||||||
Per Share Data | ||||||||||||||||||||
Basic earnings per share (1) | $ | 1.53 | $ | 1.39 | $ | 0.96 | $ | 0.79 | $ | 0.87 | ||||||||||
Diluted earnings per share (1) | 1.53 | 1.38 | 0.95 | 0.79 | 0.84 | |||||||||||||||
Cash dividends declared per common share (1) | 0.46 | 0.40 | 0.33 | 0.27 | 0.26 | |||||||||||||||
Book value per common share (1) | 14.59 | 12.82 | 11.93 | 10.25 | 9.47 | |||||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic (1) | 43,493,316 | 38,347,059 | 34,553,736 | 29,981,592 | 23,648,166 | |||||||||||||||
Diluted (1) | 43,597,595 | 38,495,231 | 34,760,439 | 30,123,615 | 24,295,968 | |||||||||||||||
Period End Totals | ||||||||||||||||||||
Loans, net of deferred loan fees and unearned income | $ | 3,636,841 | $ | 3,013,332 | $ | 2,831,995 | $ | 2,135,986 | $ | 1,749,131 | ||||||||||
Allowance for loan losses | 17,667 | 17,820 | 16,394 | 14,837 | 14,534 | |||||||||||||||
Total assets | 5,246,829 | 4,246,688 | 3,964,303 | 3,141,156 | 2,652,401 | |||||||||||||||
Total deposits | 3,931,002 | 3,139,376 | 2,881,003 | 2,471,210 | 1,880,153 | |||||||||||||||
Total borrowings | 606,052 | 588,221 | 601,810 | 304,945 | 482,144 | |||||||||||||||
Ratios | ||||||||||||||||||||
Loan to deposit | 92.62 | % | 96.02 | % | 98.30 | % | 86.43 | % | 93.03 | % | ||||||||||
Loan to total funding | 80.25 | % | 80.87 | % | 81.31 | % | 76.94 | % | 74.04 | % | ||||||||||
Return on average assets | 1.35 | % | 1.31 | % | 0.97 | % | 0.81 | % | 0.87 | % | ||||||||||
Average stockholders’ equity to average total assets | 12.28 | % | 11.65 | % | 11.15 | % | 10.22 | % | 9.30 | % | ||||||||||
Return on average stockholders’ equity | 10.98 | % | 11.22 | % | 8.74 | % | 7.92 | % | 9.87 | % | ||||||||||
Dividend payout ratio (dividends divided by basic earnings per share) | 31.31 | % | 29.03 | % | 34.78 | % | 34.33 | % | 29.85 | % | ||||||||||
Price to book value ratio | 130.27 | % | 123.09 | % | 155.28 | % | 182.13 | % | 131.26 | % | ||||||||||
Price to earnings ratio | 12.42x | 11.35x | 19.45x | 23.56x | 14.78x |
(1) | Adjusted for 3:2 stock splits on June 15, 2018 and November 14, 2016. |
The Equity Compensation Plan Information table appears under the caption “Equity Compensation Plan Information” in Item 12 below and is incorporated herein by reference.
The information required under this item is incorporated by reference to the information appearing under the caption “Summary of Selected Financial Data” in Item 8 of this Form10-K.
HORIZON BANCORPAND SUBSIDIARIES
Subsidiaries
June 15, 2018.
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
2019.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized currently in the consolidated statements of income. Horizon excludes the time value expiration of the hedge when measuring ineffectiveness.
2018. The increase was primarily in net loans of $623.7 million, investment securities available for sale of $234.4 million, cash and due from banks of $40.3 million, goodwill of $31.4 million, other intangible assets of $16.3 million and premises and equipment of $17.9 million primarily due to the acquisition of Salin Bancshares, Inc.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
2018.
Level 1 | Quoted prices in active markets for identical assets or liabilities. | |||
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
respectively.
HORIZON BANCORPAND SUBSIDIARIES
December 31 | December 31 | Dollar | Percent | |||||||||||||
2017 | 2016 | Change | Change | |||||||||||||
Commercial | ||||||||||||||||
Working capital and equipment | $ | 696,612 | $ | 539,403 | $ | 157,209 | 29.1 | % | ||||||||
Real estate, including agriculture | 854,003 | 485,620 | 368,383 | 75.9 | % | |||||||||||
Tax exempt | 36,324 | 15,486 | 20,838 | 134.6 | % | |||||||||||
Other | 30,931 | 29,447 | 1,484 | 5.0 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 1,617,870 | 1,069,956 | 547,914 | 51.2 | % | |||||||||||
Real estate | ||||||||||||||||
1–4 family | 599,217 | 526,024 | 73,193 | 13.9 | % | |||||||||||
Other | 7,543 | 5,850 | 1,693 | 28.9 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 606,760 | 531,874 | 74,886 | 14.1 | % | |||||||||||
Consumer | ||||||||||||||||
Auto | 251,020 | 174,773 | 76,247 | 43.6 | % | |||||||||||
Recreation | 8,752 | 5,669 | 3,083 | 54.4 | % | |||||||||||
Real estate/home improvement | 63,811 | 53,898 | 9,913 | 18.4 | % | |||||||||||
Home equity | 165,240 | 144,508 | 20,732 | 14.3 | % | |||||||||||
Unsecured | 3,743 | 3,875 | (132 | ) | -3.4 | % | ||||||||||
Other | 20,291 | 15,706 | 4,585 | 29.2 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 512,857 | 398,429 | 114,428 | 28.7 | % | |||||||||||
Mortgage warehouse | 94,508 | 135,727 | (41,219 | ) | -30.4 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Total loans | 2,831,995 | 2,135,986 | 696,009 | 32.6 | % | |||||||||||
Allowance for loan losses | (16,394 | ) | (14,837 | ) | (1,557 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Loans, net | $ | 2,815,601 | $ | 2,121,149 | $ | 694,452 | ||||||||||
|
|
|
|
|
|
December 31 2019 | December 31 2018 | Dollar Change | Percent Change | |||||||||||||
Commercial | ||||||||||||||||
Working capital and equipment | $ | 938,317 | $ | 804,083 | $ | 134,234 | 16.7 | % | ||||||||
Real estate, including agriculture | 978,891 | 834,037 | 144,854 | 17.4 | % | |||||||||||
Tax exempt | 63,571 | 48,975 | 14,596 | 29.8 | % | |||||||||||
Other | 65,872 | 34,495 | 31,377 | 91.0 | % | |||||||||||
Total | 2,046,651 | 1,721,590 | 325,061 | 18.9 | % | |||||||||||
Real estate | ||||||||||||||||
1-4 family | 762,571 | 659,754 | 102,817 | 15.6 | % | |||||||||||
Other | 8,146 | 8,387 | (241 | ) | -2.9 | % | ||||||||||
Total | 770,717 | 668,141 | 102,576 | 15.4 | % | |||||||||||
Consumer | ||||||||||||||||
Auto | 362,729 | 327,413 | 35,316 | 10.8 | % | |||||||||||
Recreation | 16,262 | 13,975 | 2,287 | 16.4 | % | |||||||||||
Real estate/home improvement | 43,585 | 39,587 | 3,998 | 10.1 | % | |||||||||||
Home equity | 237,979 | 163,209 | 74,770 | 45.8 | % | |||||||||||
Unsecured | 7,286 | 4,043 | 3,243 | 80.2 | % | |||||||||||
Other | 1,339 | 1,254 | 85 | 6.8 | % | |||||||||||
Total | 669,180 | 549,481 | 119,699 | 21.8 | % | |||||||||||
Mortgage warehouse | 150,293 | 74,120 | 76,173 | 102.8 | % | |||||||||||
Total loans | 3,636,841 | 3,013,332 | 623,509 | 20.7 | % | |||||||||||
Allowance for loan losses | (17,667 | ) | (17,820 | ) | 153 | -0.9 | % | |||||||||
Loans, net | $ | 3,619,174 | $ | 2,995,512 | $ | 623,662 | 20.8 | % | ||||||||
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Commercial | $ | 1,227,698 | $ | 918,844 | $ | 743,175 | ||||||
Real estate | 567,581 | 497,337 | 368,653 | |||||||||
Mortgage warehouse | 89,212 | 159,588 | 138,137 | |||||||||
Consumer | 450,635 | 372,811 | 343,825 | |||||||||
|
|
|
|
|
| |||||||
Total average loans | $ | 2,335,126 | $ | 1,948,580 | $ | 1,593,790 | ||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
December 31 2019 | �� | December 31 2018 | December 31 2017 | |||||||||
Commercial | $ | 1,980,948 | $ | 1,676,013 | $ | 1,227,698 | ||||||
Real estate | 778,844 | 641,161 | 567,581 | |||||||||
Mortgage warehouse | 107,259 | 82,240 | 89,212 | |||||||||
Consumer | 633,598 | 511,327 | 450,635 | |||||||||
Total average loans | $ | 3,500,649 | $ | 2,910,741 | $ | 2,335,126 | ||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||
Percent of | Percent of | |||||||||||||||||||||||
Number | Amount | Portfolio | Number | Amount | Portfolio | |||||||||||||||||||
SBA guaranteed loans | 356 | $ | 69,345 | 4.3 | % | 295 | $ | 61,503 | 5.7 | % | ||||||||||||||
Municipal government | 3 | 11,838 | 0.7 | % | 1 | 344 | 0.0 | % | ||||||||||||||||
Lines of credit | 1,294 | 304,855 | 18.8 | % | 1,106 | 192,178 | 18.0 | % | ||||||||||||||||
Real estate and equipment term loans | 3,339 | 1,231,832 | 76.2 | % | 2,559 | 815,931 | 76.3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 4,992 | $ | 1,617,870 | 100.0 | % | 3,961 | $ | 1,069,956 | 100.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Number | Amount | Percent of Portfolio | Number | Amount | Percent of Portfolio | |||||||||||||||||||
SBA guaranteed | 325 | $ | 65,661 | 3.2 | % | 322 | $ | 68,849 | 4.0 | % | ||||||||||||||
Municipal government | 73 | 63,572 | 3.1 | % | 2 | 11,600 | 0.7 | % | ||||||||||||||||
Lines of credit | 1,328 | 407,558 | 19.9 | % | 1,239 | 306,935 | 17.8 | % | ||||||||||||||||
Real estate and equipment | 4,456 | 1,509,860 | 73.8 | % | 4,022 | 1,334,206 | 77.5 | % | ||||||||||||||||
Total | 6,182 | $ | 2,046,651 | 100.0 | % | 5,585 | $ | 1,721,590 | 100.0 | % | ||||||||||||||
2019.
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||
Percent of | Percent of | |||||||||||||||||||||||
Amount | Portfolio | Yield | Amount | Portfolio | Yield | |||||||||||||||||||
Fixed rate | ||||||||||||||||||||||||
Monthly payment | $ | 140,115 | 23.1 | % | 4.35 | % | $ | 136,292 | 25.6 | % | 4.25 | % | ||||||||||||
Biweekly payment | 6 | 0.0 | % | 7.13 | % | 104 | 0.0 | % | 6.27 | % | ||||||||||||||
Adjustable rate | ||||||||||||||||||||||||
Monthly payment | 466,639 | 76.9 | % | 3.76 | % | 395,478 | 74.4 | % | 3.77 | % | ||||||||||||||
Biweekly payment | — | 0.0 | % | 0.00 | % | — | 0.0 | % | 0.00 | % | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Sub total | 606,760 | 100.0 | % | 3.90 | % | 531,874 | 100.0 | % | 3.89 | % | ||||||||||||||
|
|
|
| |||||||||||||||||||||
Loans held for sale | 3,094 | 8,087 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total real estate loans | $ | 609,854 | $ | 539,961 | ||||||||||||||||||||
|
|
|
|
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Amount | Percent of Portfolio | Yield | Amount | Percent of Portfolio | Yield | |||||||||||||||||||
Fixed rate | ||||||||||||||||||||||||
Monthly payment | $ | 160,742 | 20.9 | % | 4.33 | % | $ | 116,102 | 17.4 | % | 4.38 | % | ||||||||||||
Biweekly payment | — | 0.0 | % | 0.00 | % | 3 | 0.0 | % | 7.13 | % | ||||||||||||||
Adjustable rate | ||||||||||||||||||||||||
Monthly payment | 609,975 | 79.1 | % | 3.96 | % | 552,036 | 82.6 | % | 3.90 | % | ||||||||||||||
Biweekly payment | — | 0.0 | % | 0.00 | % | — | 0.0 | % | 0.00 | % | ||||||||||||||
Subtotal | 770,717 | 100.0 | % | 4.06 | % | 668,141 | 100.0 | % | 3.99 | % | ||||||||||||||
Loans held for sale | 4,088 | 1,038 | ||||||||||||||||||||||
Total real estate loans | $ | 774,805 | $ | 669,179 | ||||||||||||||||||||
2018.
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 11,681 | $ | 9,271 | $ | 7,980 | ||||||
Servicing rights capitalized | 2,109 | 3,426 | 2,974 | |||||||||
Amortization of servicing rights | (1,601 | ) | (1,016 | ) | (1,683 | ) | ||||||
|
|
|
|
|
| |||||||
Balances, December 31 | 12,189 | 11,681 | 9,271 | |||||||||
|
|
|
|
|
| |||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (507 | ) | (397 | ) | (338 | ) | ||||||
Additions | (85 | ) | (236 | ) | (130 | ) | ||||||
Reductions | 5 | 126 | 71 | |||||||||
|
|
|
|
|
| |||||||
Balances, December 31 | (587 | ) | (507 | ) | (397 | ) | ||||||
|
|
|
|
|
| |||||||
Mortgage servicing rights, net | $ | 11,602 | $ | 11,174 | $ | 8,874 | ||||||
|
|
|
|
|
|
December 31 2019 | December 31 2018 | December 31 2017 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 12,876 | $ | 12,189 | $ | 11,681 | ||||||
Servicing rights capitalized | 3,547 | 1,883 | 2,109 | |||||||||
Amortization of servicing rights | (1,377 | ) | (1,196 | ) | (1,601 | ) | ||||||
Balances, December 31 | 15,046 | 12,876 | 12,189 | |||||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (527 | ) | (587 | ) | (507 | ) | ||||||
Additions | (234 | ) | (78 | ) | (85 | ) | ||||||
Reductions | 42 | 138 | 5 | |||||||||
Balances, December 31 | (719 | ) | (527 | ) | (587 | ) | ||||||
Mortgage servicing rights, net | $ | 14,327 | $ | 12,349 | $ | 11,602 | ||||||
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.
This organic growth is a result of placing additional focus on consumer lending, in addition to recent merger activity providing entry into new market areas.
Losses
2019 compared to 0.72% as of December 31, 2018. The decrease in the ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments was due to all-time low historical loss rates and stable economic factors. Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 1.04% as of December 31, 2019 compared to 0.98% as of December 31, 2018. (See the
HORIZON BANCORPAND SUBSIDIARIES
2019.
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Non-performing loans | $ | 16,414 | $ | 10,683 | $ | 16,680 |
December 31 2019 | December 31 2018 | December 31 2017 | ||||||||||
Non-performing loans | $ | 21,185 | $ | 15,175 | $ | 16,414 |
2017.
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Other real estate owned | $ | 778 | $ | 3,190 | $ | 3,207 |
December 31 2019 | December 31 2018 | December 31 2017 | ||||||||||
Other real estate owned | $ | 3,726 | $ | 2,027 | $ | 778 |
The majority of the increase in OREO during 2019 was because several bank owned properties acquired through acquisitions and listed for sale were
HORIZON BANCORPAND SUBSIDIARIES
2017.
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 3,396 | $ | 5,581 | ||||
Net operating loss (from acquisitions) | 1,658 | 2,368 | ||||||
Director and employee benefits | 2,276 | 3,124 | ||||||
Unrealized loss on AFS securities and fair value hedge | 1,147 | 937 | ||||||
Accrued Pension | 852 | 1,323 | ||||||
Fair value adjustment on acquistions | 1,087 | 2,340 | ||||||
Other | 1,083 | 1,593 | ||||||
|
|
|
| |||||
Total assets | 11,499 | 17,266 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Depreciation | (1,680 | ) | (1,916 | ) | ||||
State tax | (210 | ) | (341 | ) | ||||
Federal Home Loan Bank stock dividends | (339 | ) | (474 | ) | ||||
Difference in basis of intangible assets | (2,831 | ) | (4,654 | ) | ||||
Other | (125 | ) | (431 | ) | ||||
|
|
|
| |||||
Total liabilities | (5,185 | ) | (7,816 | ) | ||||
Valuation allowance | (1,613 | ) | (2,018 | ) | ||||
|
|
|
| |||||
Net deferred tax asset | $ | 4,701 | $ | 7,432 | ||||
|
|
|
|
December 31 2019 | December 31 2018 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 4,120 | $ | 3,831 | ||||
Net operating loss and tax credits (from acquisitions) | 54 | 1,038 | ||||||
Director and employee benefits | 1,890 | 2,392 | ||||||
Unrealized loss on AFS securities and fair value hedge | — | 2,165 | ||||||
Accrued pension | 775 | 801 | ||||||
Fair value adjustment on acquisitions | — | — | ||||||
Other | 2,145 | 670 | ||||||
Total assets | 8,984 | 10,897 | ||||||
Liabilities | ||||||||
Depreciation | (4,456 | ) | (1,850 | ) | ||||
State tax | (10 | ) | (137 | ) | ||||
Federal Home Loan Bank stock dividends | (368 | ) | (330 | ) | ||||
Difference in basis of intangible assets | (3,427 | ) | (2,919 | ) | ||||
Fair value adjustment on acquisitions | (2,488 | ) | (62 | ) | ||||
Unrealized gain on AFS securities and fair value hedge | (1,710 | ) | — | |||||
Other | (63 | ) | (119 | ) | ||||
Total liabilities | (12,522 | ) | (5,417 | ) | ||||
Valuation allowance | — | (1,038 | ) | |||||
Net deferred tax asset/(liability) | $ | (3,538 | ) | $ | 4,442 | |||
Average Balance Outstanding for the | Average Rate Paid for the | |||||||||||||||||||||||
Year Ending December 31 | Year Ending December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||||
Noninterest-bearing demand deposits | $ | 533,852 | $ | 417,900 | $ | 314,840 | ||||||||||||||||||
Interest-bearing demand deposits | 831,292 | 732,117 | 671,493 | 0.14 | % | 0.12 | % | 0.12 | % | |||||||||||||||
Savings deposits | 388,953 | 303,229 | 191,593 | 0.07 | % | 0.06 | % | 0.05 | % | |||||||||||||||
Money market | 310,310 | 254,453 | 205,119 | 0.35 | % | 0.26 | % | 0.24 | % | |||||||||||||||
Time deposits | 515,341 | 462,527 | 344,464 | 1.04 | % | 1.06 | % | 1.21 | % | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total deposits | $ | 2,579,748 | $ | 2,170,226 | $ | 1,727,509 | ||||||||||||||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Average Balance Outstanding for the Years Ended December 31 | Average Rate Paid for the Years Ended December 31 | |||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Non-interest bearing demand deposits | $ | 757,389 | $ | 624,576 | $ | 533,852 | ||||||||||||||||||
Interest bearing demand deposits | 1,024,099 | 827,255 | 831,292 | 0.68 | % | 0.30 | % | 0.14 | % | |||||||||||||||
Savings deposits | 552,101 | 416,404 | 388,953 | 0.32 | % | 0.08 | % | 0.07 | % | |||||||||||||||
Money market | 483,187 | 403,475 | 310,310 | 1.09 | % | 0.72 | % | 0.35 | % | |||||||||||||||
Time deposits | 948,550 | 771,853 | 515,341 | 2.07 | % | 1.55 | % | 1.04 | % | |||||||||||||||
Total deposits | $ | 3,765,326 | $ | 3,043,563 | $ | 2,579,748 | ||||||||||||||||||
Due in three months or less | $ | 25,654 | ||
Due after three months through six months | 24,825 | |||
Due after six months through one year | 35,810 | |||
Due after one year | 44,296 | |||
|
| |||
$ | 130,585 | |||
|
|
2019:
Due in three months or less | $ | 186,089 | ||
Due after three months through six months | 85,555 | |||
Due after six months through one year | 115,967 | |||
Due after one year | 73,824 | |||
$ | 461,435 | |||
2017.
Within | One to | Three to | After Five | |||||||||||||||||
Total | One Year | Three Years | Five Years | Years | ||||||||||||||||
Certificates of Deposit | $ | 566,952 | $ | 277,498 | $ | 228,481 | $ | 38,172 | $ | 22,801 | ||||||||||
Borrowings (1) | 564,157 | 434,094 | 97,206 | 22,833 | 10,024 | |||||||||||||||
Subordinated debentures(2) | 37,653 | — | — | — | 37,653 |
Total | Within One Year | One to Three Years | Three to Five Years | After Five Years | ||||||||||||||||
Certificates of deposit | $ | 975,612 | $ | 747,022 | $ | 204,313 | $ | 22,995 | $ | 1,282 | ||||||||||
Borrowings (1) | 549,741 | 276,970 | 67,324 | 80,299 | 125,148 | |||||||||||||||
Subordinated debentures (2) | 56,311 | — | — | — | 56,311 |
(1) | Includes debt obligations to the Federal Home Loan Bank and term repurchase agreements with maturities beyond one year borrowed by Horizon’s banking subsidiary. See Note 13 in Horizon’s Consolidated Financial Statements at Item 8. |
(2) | Includes Trust Preferred Capital Securities issued by Horizon Statutory Trusts II and III and those assumed in the acquisitions of Alliance Bank in 2005, American Trust in 2009, Heartland in 2012, |
Expiration by Period | ||||||||
Greater | ||||||||
Within One | Than | |||||||
Year | One Year | |||||||
Letters of credit | $ | 889 | $ | 2,494 | ||||
Unfunded loan commitments | 214,249 | 588,700 |
HORIZON BANCORPAND SUBSIDIARIES
Expiration by Period | ||||||||
Within One Year | Greater Than One Year | |||||||
Letters of credit | $ | 7,053 | $ | 10,199 | ||||
Unfunded loan commitments | 310,025 | 648,665 |
The
In 2008, in connection with the issuance of preferred stock that was subsequently redeemed, Horizon issued a warrant to the Treasury to purchase shares of Horizon’s common stock. The Treasury sold the warrant to a third party, and at December 31, 2015, the warrant covered 481,510 shares with an exercise price of $7.79 per share. These warrants were exercised during 2015.
On August 25, 2011, the Company sold 12,500 shares of Series B Preferred Stock for aggregate consideration of $12.5 million, to the Treasury pursuant to the Small Business Lending Fund program. Concurrently with this transaction, Horizon redeemed all 18,750 shares of our Series A Preferred Stock that remained outstanding under the Treasury’s Capital Purchase Program. The redemption of the Series A Preferred Stock was funded by the $12.5 million in proceeds from the sale of the Series B Preferred Stock together with other available funds. On February 1, 2016, the Company redeemed all 12,500 shares of Series B Preferred Stock for $12.5 million along with the final dividend payment of $10,417.
Horizon declared dividendsliquidity are discussed below in the amount of $0.50 per sharesection captioned “Liquidity” in 2017, $0.41 per share in 2016, and $0.39 per share in 2015. The dividend payout ratio (dividends as a percent of net income) was 34.8% for 2017, 34.3% for 2016, and 29.9% for 2015. For additional information regarding dividend conditions, see Note 1 of the Notes to the Consolidated Financial Statements atthis Item 8.
In October of 2004, Horizon formed Horizon Statutory Trust II (“Trust II”), a wholly owned statutory business trust. Trust II sold $10.3 million of Trust Preferred Capital Securities as a participant in a pooled trust preferred securities offering. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Horizon. The junior subordinated debentures are the sole assets of Trust II and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 1.95% (3.40% at December 31, 2017) and mature on October 21, 2034, and securities may be called at any quarterly interest payment date at par.
In December of 2006, Horizon formed Horizon Bancorp Capital Trust III (“Trust III”), a wholly owned statutory business trust. Trust III sold $12.4 million of Trust Preferred Capital Securities as a participant in a pooled trust preferred securities offering. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Horizon. The junior subordinated debentures are the sole assets of Trust III and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 1.65% (3.03% at December 31, 2017) and mature on January 30, 2037, and securities may be called at any quarterly interest payment date at par.
The Company assumed additional debentures as the result of the acquisition of Alliance Bank Corporation in 2005. In June 2004, Alliance formed Alliance Financial Statutory Trust I, a wholly owned business trust (“Alliance Trust”) to sell $5.2 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Alliance. The junior subordinated debentures are the sole assets of Alliance Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 2.65% (4.25% at December 31, 2017) and mature in June 2034, and securities may be called at any quarterly interest payment date at par.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and 7.
(Table dollars in thousands except per share data)
The Company assumed additional debentures as the result of the American Trust & Savings Bank purchase and assumption in 2010. In March 2004, Am Tru Inc., the holding company for American Trust & Savings Bank, formed Am Tru Statutory Trust I a wholly owned business trust (“Am Tru Trust”), to sell $3.5 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Am Tru Inc. The junior subordinated debentures are the sole assets of Am Tru Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 2.85% (4.45% at December 31, 2017) and mature in March 2034, and securities may be called at any quarterly interest payment date at par. The carrying value was $3.3 million, net of the remaining purchase discount, at December 31, 2017.
The Company assumed additional debentures as the result of the Heartland merger in July 2013. In December 2006, Heartland formed Heartland (IN) Statutory Trust II a wholly owned business trust (“Heartland Trust”), to sell $3.0 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Heartland. The junior subordinated debentures are the sole assets of Heartland Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 1.67% (3.26% at December 31, 2017) and mature in December 2036, and securities may be called at any quarterly interest payment date at par. The carrying value was $1.8 million, net of the remaining purchase discount, at December 31, 2017.
The Company assumed additional debentures as the result of the LaPorte merger in July 2016. In October 2007, LaPorte assumed debentures as the result of its acquisition of City Savings Financial Corporation (“City Savings”). In June 2003, City Savings formed City Savings Statutory Trust I a wholly owned business trust (“City Savings Trust”), to sell $5.0 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from City Savings. The junior subordinated debentures are the sole assets of City Savings Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 3.10% (4.77% at December 31, 2017) and mature in June 2033, and securities may be called at any quarterly interest payment date at par. The carrying value was $4.4 million, net of the remaining purchase discount, at December 31, 2017.
The Trust Preferred Capital Securities, subject to certain limitations, are included in Tier 1 Capital for regulatory purposes. Dividends on the Trust Preferred Capital Securities are recorded as interest expense.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
Results of Operations
core net income.)
Rates paid on interest-bearing liabilities decreased by 26 basis points during the same period due to the prepayment penalties on borrowings2018.
Net interest income during 2016 was $86.0 million, an increase of $11.3 million or 15.1% over the $74.7 million earned in 2015. Yields on the Company’s interest-earning assets decreased by 15 basis points to 4.05% during 2016 from 4.20% in 2015. Interest income increased $17.9 million to $106.5 million for 2016 from $88.6 million in 2015. This increase was due to increased volume in interest-earning assets, partially offset by a decrease in the recognition of interest income from the acquisition-related purchase accounting adjustments of approximately $673,000 from $3.0 million in 2015 to $2.3 million in 2016 and the lower yield on interest-earning assets in 2016.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
Rates paid on interest-bearing liabilities decreased by 15 basis points during the same period due to the prepayment penalties on borrowings of $4.8 million in 2016. Interest expense increased $6.7 million from $13.9 million in 2015 to $20.5 million in 2016. In addition to the prepayment penalties on FHLB borrowings, this increase was due to increased volume of interest-bearing liabilities, partially offset by lower rates being paid. Due to the decrease in the yield on the Company’s interest-earning assets and the prepayment penalties paid on borrowings, the net interest margin decreased 27 basis points from 3.56% for 2015 to 3.29% in 2016. Excluding the interest expense recognized form the prepayment penalties on borrowings and the interest income recognized from the acquisition-related purchase accounting adjustments, the margin would have been 3.38% for 2016 compared to 3.42% for 2015. Management believes that the current level of interest rates is driven by external factors and therefore impacts the results of the Company’s net interest margin.
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||
Interest-earning assets | ||||||||||||||||||||||||||||||||||||
Federal funds sold | $ | 5,450 | $ | 80 | 1.47 | % | $ | 17,142 | $ | 95 | 0.55 | % | $ | 10,264 | $ | 11 | 0.11 | % | ||||||||||||||||||
Interest-earning deposits | 23,865 | 301 | 1.26 | % | 34,506 | 278 | 0.81 | % | 14,045 | 10 | 0.07 | % | ||||||||||||||||||||||||
Investment securities - taxable | 417,993 | 8,705 | 2.08 | % | 490,274 | 9,666 | 1.97 | % | 394,976 | 8,700 | 2.20 | % | ||||||||||||||||||||||||
Investment securities -non-taxable (1) | 292,030 | 7,068 | 3.39 | % | 192,881 | 4,921 | 3.59 | % | 152,931 | 4,494 | 4.32 | % | ||||||||||||||||||||||||
Loans receivable (2)(3)(4) | 2,335,126 | 112,329 | 4.83 | % | 1,948,580 | 91,569 | 4.71 | % | 1,593,790 | 75,373 | 4.74 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total interest-earning assets (1) | 3,074,464 | 128,483 | 4.29 | % | 2,683,383 | 106,529 | 4.05 | % | 2,166,006 | 88,588 | 4.20 | % | ||||||||||||||||||||||||
Non-interest-earning assets | ||||||||||||||||||||||||||||||||||||
Cash and due from banks | 42,578 | 37,549 | 31,692 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (15,226 | ) | (14,439 | ) | (16,351 | ) | ||||||||||||||||||||||||||||||
Other assets | 295,057 | 255,129 | 179,138 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 3,396,873 | $ | 2,961,622 | $ | 2,360,485 | |||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 2,045,896 | $ | 7,901 | 0.39 | % | $ | 1,752,326 | $ | 6,616 | 0.38 | % | $ | 1,438,026 | $ | 5,559 | 0.39 | % | ||||||||||||||||||
Borrowings | 381,488 | 6,178 | 1.62 | % | 425,444 | 11,807 | 2.78 | % | 336,618 | 6,286 | 1.87 | % | ||||||||||||||||||||||||
Subordinated debentures | 36,362 | 2,304 | 6.34 | % | 49,834 | 2,114 | 4.24 | % | 32,717 | 2,009 | 6.14 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total interest-bearing liabilities | 2,463,746 | 16,383 | 0.66 | % | 2,227,604 | 20,537 | 0.92 | % | 1,807,361 | 13,854 | 0.77 | % | ||||||||||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Demand deposits | 533,852 | 417,900 | 317,246 | |||||||||||||||||||||||||||||||||
Accrued interest payable and other liabilities | 20,566 | 13,574 | 16,364 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 378,709 | 302,544 | 219,514 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 3,396,873 | $ | 2,961,622 | $ | 2,360,485 | |||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net interest income/spread | $ | 112,100 | 3.63 | % | $ | 85,992 | 3.13 | % | $ | 74,734 | 3.43 | % | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net interest income as a percent of average interest earning assets (1) | 3.75 | % | 3.29 | % | 3.56 | % |
Twelve Months Ended December 31, 2019 | Twelve Months Ended December 31, 2018 | Twelve Months Ended December 31, 2017 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||
Interest-earning assets | ||||||||||||||||||||||||||||||||||||
Federal funds sold | $ | 21,301 | $ | 511 | 2.40 | % | $ | 4,696 | $ | 115 | 2.45 | % | $ | 5,450 | $ | 80 | 1.47 | % | ||||||||||||||||||
Interest-earning deposits | 19,601 | 342 | 1.74 | % | 24,491 | 393 | 1.60 | % | 23,865 | 301 | 1.26 | % | ||||||||||||||||||||||||
Investment securities - taxable | 474,833 | 11,753 | 2.48 | % | 431,970 | 10,113 | 2.34 | % | 417,993 | 8,705 | 2.08 | % | ||||||||||||||||||||||||
Investment securities - non-taxable (1) | 454,066 | 12,095 | 3.34 | % | 326,040 | 8,069 | 3.13 | % | 292,030 | 7,068 | 3.39 | % | ||||||||||||||||||||||||
Loans receivable (2)(3)(4) | 3,500,649 | 183,631 | 5.27 | % | 2,910,741 | 147,478 | 5.08 | % | 2,335,126 | 112,329 | 4.83 | % | ||||||||||||||||||||||||
Total interest-earning assets (1) | 4,470,450 | 208,332 | 4.75 | % | 3,697,938 | 166,168 | 4.56 | % | 3,074,464 | 128,483 | 4.29 | % | ||||||||||||||||||||||||
Non-interest-earning assets | ||||||||||||||||||||||||||||||||||||
Cash and due from banks | 62,920 | 44,645 | 42,578 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (18,019 | ) | (16,964 | ) | (15,226 | ) | ||||||||||||||||||||||||||||||
Other assets | 417,707 | 337,016 | 295,057 | |||||||||||||||||||||||||||||||||
Total average assets | $ | 4,933,058 | $ | 4,062,635 | $ | 3,396,873 | ||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 3,007,937 | $ | 33,690 | 1.12 | % | $ | 2,418,987 | $ | 18,225 | 0.75 | % | $ | 2,045,896 | $ | 7,901 | 0.39 | % | ||||||||||||||||||
Borrowings | 468,159 | 10,672 | 2.28 | % | 492,830 | 11,009 | 2.23 | % | 381,488 | 6,178 | 1.62 | % | ||||||||||||||||||||||||
Subordinated debentures | 50,134 | 3,179 | 6.34 | % | 36,547 | 2,365 | 6.47 | % | 36,362 | 2,304 | 6.34 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities | 3,526,230 | 47,541 | 1.35 | % | 2,948,364 | 31,599 | 1.07 | % | 2,463,746 | 16,383 | 0.66 | % | ||||||||||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Demand deposits | 757,389 | 624,576 | 533,852 | |||||||||||||||||||||||||||||||||
Accrued interest payable and other liabilities | 43,720 | 16,275 | 20,566 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 605,719 | 473,420 | 378,709 | |||||||||||||||||||||||||||||||||
Total average liabilities and stockholders’ equity | $ | 4,933,058 | $ | 4,062,635 | $ | 3,396,873 | ||||||||||||||||||||||||||||||
Net interest income/spread | $ | 160,791 | 3.40 | % | $ | 134,569 | 3.49 | % | $ | 112,100 | 3.63 | % | ||||||||||||||||||||||||
Net interest income as a percent of average interest-earning assets (1) | 3.69 | % | 3.71 | % | 3.75 | % |
(1) | Horizon has no foreign office and, accordingly, no assets or liabilities to foreign operations. Horizon’s subsidiary bank had no funds invested in Eurodollar Certificates of Deposit at December 31, |
(2) | Yields are presented on atax-equivalent basis. |
(3) | Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred |
(4) | Loan fees and late fees included in interest on loans aggregated $9.8 million, $7.7 million and $7.1 million |
HORIZON BANCORPAND SUBSIDIARIES
2017-2016 | 2016-2015 | |||||||||||||||||||||||
Change | Change | Change | Change | |||||||||||||||||||||
Total | Due To | Due To | Total | Due To | Due To | |||||||||||||||||||
Change | Volume | Rate | Change | Volume | Rate | |||||||||||||||||||
Interest Income | ||||||||||||||||||||||||
Federal funds sold | $ | (15 | ) | $ | (95 | ) | $ | 80 | $ | 84 | $ | 12 | $ | 72 | ||||||||||
Interest-earning deposits | 23 | (103 | ) | 126 | 268 | 33 | 235 | |||||||||||||||||
Investment securities - taxable | (961 | ) | (1,483 | ) | 522 | 966 | 1,946 | (980 | ) | |||||||||||||||
Investment securities -non-taxable | 2,147 | 3,384 | (1,237 | ) | 427 | 1,550 | (1,123 | ) | ||||||||||||||||
Loans receivable | 20,760 | 18,613 | 2,147 | 16,196 | 16,711 | (515 | ) | |||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest income | 21,954 | 20,316 | 1,638 | 17,941 | 20,252 | (2,311 | ) | |||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
Interest Expense | ||||||||||||||||||||||||
Interest-bearing deposits | 1,285 | 1,132 | 153 | 1,057 | 1,189 | (132 | ) | |||||||||||||||||
Borrowings | (5,629 | ) | (1,121 | ) | (4,508 | ) | 5,521 | 1,942 | 3,579 | |||||||||||||||
Subordinated debentures | 190 | (671 | ) | 861 | 105 | 847 | (742 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest expense | (4,154 | ) | (660 | ) | (3,494 | ) | 6,683 | 3,978 | 2,705 | |||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net interest income | $ | 26,108 | $ | 20,976 | $ | 5,132 | $ | 11,258 | $ | 16,274 | $ | (5,016 | ) | |||||||||||
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|
|
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|
|
2019 - 2018 | 2018 - 2017 | |||||||||||||||||||||||
Total Change | Change Due To Volume | Change Due To Rate | Total Change | Change Due To Volume | Change Due To Rate | |||||||||||||||||||
Interest Income | ||||||||||||||||||||||||
Federal funds sold | $ | 396 | $ | 398 | $ | (2 | ) | $ | 35 | $ | (12 | ) | $ | 47 | ||||||||||
Interest-earning deposits | (51 | ) | (83 | ) | 32 | 92 | 8 | 84 | ||||||||||||||||
Investment securities - taxable | 1,640 | 1,040 | 600 | 1,408 | 298 | 1,110 | ||||||||||||||||||
Investment securities - non-taxable | 4,026 | 4,239 | (213 | ) | 1,001 | 1,100 | (99 | ) | ||||||||||||||||
Loans receivable | 36,153 | 30,914 | 5,239 | 35,149 | 28,991 | 6,158 | ||||||||||||||||||
Total interest income | 42,164 | 36,508 | 5,656 | 37,685 | 30,385 | 7,300 | ||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||
Interest-bearing deposits | 15,465 | 5,137 | 10,328 | 10,324 | 1,677 | 8,647 | ||||||||||||||||||
Borrowings | (337 | ) | (559 | ) | 222 | 4,831 | 2,101 | 2,730 | ||||||||||||||||
Subordinated debentures | 814 | 862 | (48 | ) | 61 | 12 | 49 | |||||||||||||||||
Total interest expense | 15,942 | 5,440 | 10,502 | 15,216 | 3,790 | 11,426 | ||||||||||||||||||
Net interest income | $ | 26,222 | $ | 31,068 | $ | (4,846 | ) | $ | 22,469 | $ | 26,595 | $ | (4,126 | ) | ||||||||||
During 2016, the provision for loan losses totaled $1.8 million, compared to $3.2 million in 2015. The lower provision for loan losses in 2016 compared to 2015 was due toa continued improvement innon-performing loans and lower charged off loans.low level of charge-offs. Total loan net charge-offs were $1.5 million, which included commercial loan net charge-offs were $548,000,of $297,000, residential mortgage loan net charge-offs were $116,000of $49,000 and consumer loan net charge-offs were $875,000of $1.1 million for the year ending December 31, 2016.
2018.
Twelve Months Ended | 2015 - 2016 | |||||||||||||||||||||||||||
December 31 | December 31 | Amount | Percent | December 31 | Amount | Percent | ||||||||||||||||||||||
2017 | 2016 | Change | Change | 2015 | Change | Change | ||||||||||||||||||||||
Non-interest Income | ||||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 6,383 | $ | 5,762 | $ | 621 | 10.8 | % | $ | 4,807 | $ | 955 | 19.9 | % | ||||||||||||||
Wire transfer fees | 658 | 806 | (148 | ) | -18.4 | % | 633 | 173 | 27.3 | % | ||||||||||||||||||
Interchange fees | 5,104 | 4,165 | 939 | 22.5 | % | 3,623 | 542 | 15.0 | % | |||||||||||||||||||
Fiduciary activities | 7,894 | 6,621 | 1,273 | 19.2 | % | 5,637 | 984 | 17.5 | % | |||||||||||||||||||
Gain on sale of investment securities | 38 | 1,836 | (1,798 | ) | -97.9 | % | 189 | 1,647 | 871.4 | % | ||||||||||||||||||
Gain on sale of mortgage loans | 7,906 | 11,675 | (3,769 | ) | -32.3 | % | 10,055 | 1,620 | 16.1 | % | ||||||||||||||||||
Mortgage servicing net of impairment | 1,583 | 1,908 | (325 | ) | -17.0 | % | 993 | 915 | 92.1 | % | ||||||||||||||||||
Increase in cash surrender value of bank owned life insurance | 1,797 | 1,643 | 154 | 9.4 | % | 1,249 | 394 | 31.5 | % | |||||||||||||||||||
Death benefit on officer life insurance | — | — | — | 0.0 | % | 145 | (145 | ) | -100.0 | % | ||||||||||||||||||
Other income | 1,773 | 1,039 | 734 | 70.6 | % | 1,103 | (64 | ) | -5.8 | % | ||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||||||
Totalnon-interest income | $ | 33,136 | $ | 35,455 | $ | (2,319 | ) | -6.5 | % | $ | 28,434 | $ | 7,021 | 24.7 | % | |||||||||||||
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|
|
HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ended | 2018 - 2019 | Twelve Months Ended | 2017 - 2018 | |||||||||||||||||||||||||||||
Non-interest Income | December 31 2019 | December 31 2018 | Amount Change | Percent Change | December 31 2018 | December 31 2017 | Amount Change | Percent Change | ||||||||||||||||||||||||
Service charges on deposit accounts | $ | 9,959 | $ | 7,762 | $ | 2,197 | 28.3 | % | $ | 7,762 | $ | 6,383 | $ | 1,379 | 21.6 | % | ||||||||||||||||
Wire transfer fees | 653 | 612 | 41 | 6.7 | % | 612 | 658 | (46 | ) | -7.0 | % | |||||||||||||||||||||
Interchange fees | 7,655 | 5,715 | 1,940 | 33.9 | % | 5,715 | 5,104 | 611 | 12.0 | % | ||||||||||||||||||||||
Fiduciary activities | 8,580 | 7,827 | 753 | 9.6 | % | 7,827 | 7,894 | (67 | ) | -0.8 | % | |||||||||||||||||||||
Gain (loss) on sale of investment securities | (75 | ) | (443 | ) | 368 | -83.1 | % | (443 | ) | 38 | (481 | ) | -1265.8 | % | ||||||||||||||||||
Gain on sale of mortgage loans | 9,208 | 6,613 | 2,595 | 39.2 | % | 6,613 | 7,906 | (1,293 | ) | -16.4 | % | |||||||||||||||||||||
Mortgage servicing net of impairment | 1,914 | 2,120 | (206 | ) | -9.7 | % | 2,120 | 1,583 | 537 | 33.9 | % | |||||||||||||||||||||
Increase in cash surrender value of bank owned life insurance | 2,190 | 1,912 | 278 | 14.5 | % | 1,912 | 1,797 | 115 | 6.4 | % | ||||||||||||||||||||||
Death benefit on officer life insurance | 580 | 154 | 426 | 276.6 | % | 154 | — | 154 | 100.0 | % | ||||||||||||||||||||||
Other income | 2,394 | 2,141 | 253 | 11.8 | % | 2,141 | 1,773 | 368 | 20.8 | % | ||||||||||||||||||||||
Total non-interest income | $ | 43,058 | $ | 34,413 | $ | 8,645 | 25.1 | % | $ | 34,413 | $ | 33,136 | $ | 1,277 | 3.9 | % | ||||||||||||||||
The increase in service charges on deposit accounts and interchange fee income in 2016 compared to 2015 was the result of growth in transactional deposit accounts and volume during 2016. Fiduciary activities income increased $984,000 during 2016 as a result of an increase in assets under management. During 2016, the Company originated approximately $316.9 million of mortgage loans to be sold on the secondary market, compared to $302.4 million in 2015. This increase in volume and increase in the percentage earned on the sale of mortgage loans; increased the overall gain on sale of mortgage loans by $1.6 million compared to the prior year. Mortgage servicing net of impairment increased by $915,000 during 2016 compared to 2015 due to a larger portfolio of mortgage loans serviced during 2016. The cash surrender value of bank owned life insurance increased by $394,000 in 2016 due to an increase in the number of policies outstanding as a result of the Kosciusko and LaPorte acquisitions. Gain on sale of investment securities increased $1.6 million in 2016 due to security gains used to help offset the penalties paid on the repayment of debt as part of a balance sheet restructuring and the result of an analysis that determined market conditions provided the opportunity to add gains to capital without negatively impacting long-term earnings. The death benefit on Bank owned life insurance decreased by $145,000 in 2016 due to a payment realized on one of the policies in 2015. These increases were partially offset by a decrease in other income of $64,000 in 2016.
2018.
Twelve Months Ended | 2015 - 2016 | |||||||||||||||||||||||||||
December 31 | December 31 | Amount | Percent | December 31 | Amount | Percent | ||||||||||||||||||||||
2017 | 2016 | Change | Change | 2015 | Change | Change | ||||||||||||||||||||||
Non-interest Expense | ||||||||||||||||||||||||||||
Salaries | $ | 36,503 | $ | 30,445 | $ | 6,058 | 19.9 | % | $ | 25,284 | $ | 5,161 | 20.4 | % | ||||||||||||||
Commission and bonuses | 6,225 | 6,484 | (259 | ) | -4.0 | % | 6,008 | 476 | 7.9 | % | ||||||||||||||||||
Employee benefits | 8,647 | 7,084 | 1,563 | 22.1 | % | 6,420 | 664 | 10.3 | % | |||||||||||||||||||
Net occupancy expenses | 9,535 | 8,322 | 1,213 | 14.6 | % | 6,400 | 1,922 | 30.0 | % | |||||||||||||||||||
Data processing | 5,914 | 5,367 | 547 | 10.2 | % | 4,251 | 1,116 | 26.3 | % | |||||||||||||||||||
Professional fees | 2,490 | 2,752 | (262 | ) | -9.5 | % | 2,070 | 682 | 32.9 | % | ||||||||||||||||||
Outside services and consultants | 7,018 | 7,863 | (845 | ) | -10.7 | % | 5,735 | 2,128 | 37.1 | % | ||||||||||||||||||
Loan expense | 4,970 | 5,582 | (612 | ) | -11.0 | % | 5,379 | 203 | 3.8 | % | ||||||||||||||||||
FDIC deposit insurance | 1,046 | 1,559 | (513 | ) | -32.9 | % | 1,499 | 60 | 4.0 | % | ||||||||||||||||||
Other losses | 368 | 684 | (316 | ) | -46.2 | % | 432 | 252 | 58.3 | % | ||||||||||||||||||
Other expense | 12,097 | 10,750 | 1,347 | 12.5 | % | 8,747 | 2,003 | 22.9 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Totalnon-interest expense | $ | 94,813 | $ | 86,892 | $ | 7,921 | 9.1 | % | $ | 72,225 | $ | 14,667 | 20.3 | % | ||||||||||||||
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|
|
HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ended | 2018 - 2019 | Twelve Months Ended | 2017 - 2018 | |||||||||||||||||||||||||||||
Non-interest Expense | December 31 2019 | December 31 2018 | Amount Change | Percent Change | December 31 2018 | December 31 2017 | Amount Change | Percent Change | ||||||||||||||||||||||||
Salaries | $ | 46,319 | $ | 40,857 | $ | 5,462 | 13.4 | % | $ | 40,857 | $ | 36,503 | $ | 4,354 | 11.9 | % | ||||||||||||||||
Commission and bonuses | 6,861 | 5,547 | 1,314 | 23.7 | % | 5,547 | 6,225 | (678 | ) | -10.9 | % | |||||||||||||||||||||
Employee benefits | 12,026 | 10,219 | 1,807 | 17.7 | % | 10,219 | 8,647 | 1,572 | 18.2 | % | ||||||||||||||||||||||
Net occupancy expenses | 12,157 | 10,482 | 1,675 | 16.0 | % | 10,482 | 9,535 | 947 | 9.9 | % | ||||||||||||||||||||||
Data processing | 8,480 | 6,816 | 1,664 | 24.4 | % | 6,816 | 5,914 | 902 | 15.3 | % | ||||||||||||||||||||||
Professional fees | 1,946 | 1,926 | 20 | 1.0 | % | 1,926 | 2,490 | (564 | ) | -22.7 | % | |||||||||||||||||||||
Outside services and consultants | 8,152 | 5,271 | 2,881 | 54.7 | % | 5,271 | 7,018 | (1,747 | ) | -24.9 | % | |||||||||||||||||||||
Loan expense | 8,633 | 6,341 | 2,292 | 36.1 | % | 6,341 | 4,970 | 1,371 | 27.6 | % | ||||||||||||||||||||||
FDIC deposit insurance | 252 | 1,444 | (1,192 | ) | -82.5 | % | 1,444 | 1,046 | 398 | 38.0 | % | |||||||||||||||||||||
Other losses | 740 | 665 | 75 | 11.3 | % | 665 | 368 | 297 | 80.7 | % | ||||||||||||||||||||||
Other expenses | 16,466 | 12,948 | 3,518 | 27.2 | % | 12,948 | 12,097 | 851 | 7.0 | % | ||||||||||||||||||||||
Total non-interest expense | $ | 122,032 | $ | 102,516 | $ | 19,516 | 19.0 | % | $ | 102,516 | $ | 94,813 | $ | 7,703 | 8.1 | % | ||||||||||||||||
For
For the twelve monthsyear ended December 31, 2016, salary expense, commission and bonuses, employee benefits, net occupancy expense and other expense increased by $5.2 million, $476,000, $664,000, $1.9 million and $2.0 million, respectively, due to the Kosciusko, LaPorte and CNB mergers, Horizon’s investments in growth markets and overall growth. Data processing and various other expenses increased during 2016 from the cost of continued growth and expansion and the Kosciusko, LaPorte and CNB mergers. Outside services and consultants increased primarily due to the fees associated with the Kosciusko, LaPorte and CNB acquisitions. Loan expense increased in 2016 compared to 2015 due to company growth and collection costs. Other losses increased in 2016 compared to 2015 due to the recovery of a previously recorded loss contingency in 2014 and higherone-time losses in 2015.
Income Taxes
Income tax expense increased $6.0 million in 2017 totaling $14.8 million, compared to $8.8 million in 2016.2018. The majority of the increase was primarily due to an increase in income before taxesincome tax expense of $15.2$16.3 million inwhen comparing 2019 to the prior year.
the transition to replacement or reformed rates, the specific terms and parameters for and market acceptance of the alternative reference rates, prices of and the liquidity of trading markets for products based on the alternative reference rates, and our ability to transition to and develop appropriate systems and analytics for one or more alternative reference rates. For a further discussion of the various risks we face in connection with the expected replacement of LIBOR and reform of interest rate benchmarks on our operations, see “Risk Factors – Risks Related to Our Business.”
HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ended | ||||||||||||
December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Net Interest Margin As Reported | ||||||||||||
Net interest income | $ | 112,100 | $ | 85,992 | $ | 74,734 | ||||||
Average interest-earning assets | 3,074,464 | 2,683,383 | 2,166,006 | |||||||||
Net interest income as a percent of average interest-earning assets (“Net Interest Margin”) | 3.75 | % | 3.29 | % | 3.56 | % | ||||||
Impact of Prepayment Penalties on Borrowings | ||||||||||||
Interest expense from prepayment penalties on borrowings | $ | — | $ | 4,839 | $ | — | ||||||
Impact of Acquisitions | ||||||||||||
Interest income from acquisition-related purchase accounting adjustments | $ | (3,484 | ) | $ | (2,304 | ) | $ | (2,977 | ) | |||
Excluding Impact of Prepayment Penalties and Acquisitions | ||||||||||||
Net interest income | $ | 108,616 | $ | 88,527 | $ | 71,757 | ||||||
Average interest-earning assets | 3,074,464 | 2,683,383 | 2,166,006 | |||||||||
Core Net Interest Margin | 3.64 | % | 3.38 | % | 3.42 | % |
Loan Growth by Type, Excluding Acquired Loans
Twelve Months Ended December 31, 2017
(Dollars in Thousands)
Excluding Acquired Loans | ||||||||||||||||||||||||
December 31 | December 31 | Amount | Acquired | Amount | Percent | |||||||||||||||||||
2017 | 2016 | Change | Loans | Change | Change | |||||||||||||||||||
Commercial loans | $ | 1,617,870 | $ | 1,069,956 | $ | 547,914 | $ | (395,167 | ) | $ | 152,747 | 14.3 | % | |||||||||||
Residential mortgage loans | 606,760 | 531,874 | 74,886 | (43,423 | ) | 31,463 | 5.9 | % | ||||||||||||||||
Consumer loans | 512,857 | 398,429 | 114,428 | (9,739 | ) | 104,689 | 26.3 | % | ||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 2,737,487 | 2,000,259 | 737,228 | (448,329 | ) | 288,899 | 14.4 | % | ||||||||||||||||
Held for sale loans | 3,094 | 8,087 | (4,993 | ) | — | (4,993 | ) | -61.7 | % | |||||||||||||||
Mortgage warehouse loans | 94,508 | 135,727 | (41,219 | ) | — | (41,219 | ) | -30.4 | % | |||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||
Total loans | $ | 2,835,089 | $ | 2,144,073 | $ | 691,016 | $ | (448,329 | ) | $ | 242,687 | 11.3 | % | |||||||||||
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|
|
|
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Non-GAAP Reconciliation of Net Interest Margin | ||||||||||||
Net interest income as reported | $ | 160,791 | $ | 134,569 | $ | 112,100 | ||||||
Average interest-earning assets | 4,470,450 | 3,697,938 | 3,074,464 | |||||||||
Net interest income as a percentage of average interest-earning assets (“Net Interest Margin”) | 3.69 | % | 3.71 | % | 3.75 | % | ||||||
Acquisition-related purchase accounting adjustments (“PAUs”) | (5,590 | ) | (6,089 | ) | (3,484 | ) | ||||||
Core net interest income | 155,201 | 128,480 | 108,616 | |||||||||
Core net interest margin | 3.57 | % | 3.54 | % | 3.64 | % | ||||||
December 31 | September 30 | June 30 | March 31 | December 31 | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
Total stockholders’ equity | $ | 457,078 | $ | 392,055 | $ | 357,259 | $ | 348,575 | $ | 340,855 | ||||||||||
Less: Intangible assets | 132,282 | 103,244 | 86,726 | 87,094 | 86,307 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total tangible stockholders’ equity | $ | 324,796 | $ | 288,811 | $ | 270,533 | $ | 261,481 | $ | 254,548 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Common shares outstanding | 25,529,819 | 23,325,459 | 22,176,465 | 22,176,465 | 22,171,596 | |||||||||||||||
Tangible book value per common share | $ | 12.72 | $ | 12.38 | $ | 12.20 | $ | 11.79 | $ | 11.48 |
HORIZON BANCORPAND SUBSIDIARIES
December 31 2019 | September 30 2019 | June 30 2019 | March 31 2019 | December 31 2018 | ||||||||||||||||
Total stockholders’ equity | $ | 656,023 | $ | 642,711 | $ | 626,461 | $ | 609,468 | $ | 491,992 | ||||||||||
Less: Intangible assets | 177,917 | 178,896 | 179,776 | 176,864 | 130,270 | |||||||||||||||
Total tangible stockholders’ equity | $ | 478,106 | $ | 463,815 | $ | 446,685 | $ | 432,604 | $ | 361,722 | ||||||||||
Common shares outstanding | 44,975,771 | 44,969,021 | 45,061,372 | 45,052,747 | 38,375,407 | |||||||||||||||
Tangible book value per common share | $ | 10.63 | $ | 10.31 | $ | 9.91 | $ | 9.60 | $ | 9.43 |
Twelve Months Ended | ||||||||||||
December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Non-GAAP Reconciliation of Net Income | ||||||||||||
Net income as reported | $ | 33,117 | $ | 23,912 | $ | 20,549 | ||||||
Merger expenses | 3,656 | 6,827 | 4,889 | |||||||||
Tax effect | (1,003 | ) | (1,998 | ) | (1,585 | ) | ||||||
|
|
|
|
|
| |||||||
Net income excluding merger expenses | 35,770 | 28,741 | 23,853 | |||||||||
Gain on sale of investment securities | (38 | ) | (1,836 | ) | (189 | ) | ||||||
Tax effect | 13 | 643 | 66 | |||||||||
|
|
|
|
|
| |||||||
Net income excluding gain on sale of investment securities | 35,745 | 27,548 | 23,730 | |||||||||
Death benefit on bank owned life insurance (“BOLI”) | — | — | (145 | ) | ||||||||
Tax effect | — | — | 51 | |||||||||
|
|
|
|
|
| |||||||
Net income excluding death benefit on BOLI | 35,745 | 27,548 | 23,636 | |||||||||
Prepayment penalties on borrowings | — | 4,839 | — | |||||||||
Tax effect | — | (1,694 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Net income excluding prepayment penalties on borrowings | 35,745 | 30,693 | 23,636 | |||||||||
Gain on remeasurement of equity interest in Lafayette | (530 | ) | — | — | ||||||||
Tax effect | 78 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net income excluding gain on remeasurement of equity interest in Lafayette | 35,293 | 30,693 | 23,636 | |||||||||
Tax reform bill impact | 2,426 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net income excluding tax reform bill impact | 37,719 | 30,693 | 23,636 | |||||||||
Acquisition-related purchase accounting adjustments (“PAUs”) | (3,484 | ) | (2,304 | ) | (2,977 | ) | ||||||
Tax effect | 1,219 | 807 | 1,042 | |||||||||
|
|
|
|
|
| |||||||
Core Net Income | $ | 35,454 | $ | 29,196 | $ | 21,701 | ||||||
|
|
|
|
|
| |||||||
Non-GAAP Reconciliation of Diluted Earnings per Share | ||||||||||||
Diluted earnings per share as reported | $ | 1.43 | $ | 1.19 | $ | 1.26 | ||||||
Merger expenses | 0.16 | 0.34 | 0.30 | |||||||||
Tax effect | (0.04 | ) | (0.10 | ) | (0.10 | ) | ||||||
|
|
|
|
|
| |||||||
Diluted earnings per share excluding merger expenses | 1.55 | 1.43 | 1.46 | |||||||||
Gain on sale of investment securities | — | (0.09 | ) | (0.01 | ) | |||||||
Tax effect | — | 0.03 | 0.01 | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share excluding gain on sale of investment securities | 1.55 | 1.37 | 1.46 | |||||||||
Death benefit on BOLI | — | — | (0.01 | ) | ||||||||
Tax effect | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Net income excluding death benefit on BOLI | 1.55 | 1.37 | 1.45 | |||||||||
Prepayment penalties on borrowings | — | 0.24 | — | |||||||||
Tax effect | — | (0.08 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share excluding prepayment penalties on borrowings | 1.55 | 1.53 | 1.45 | |||||||||
Gain on remeasurement of equity interest in Lafayette | (0.02 | ) | — | — | ||||||||
Tax effect | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share excluding gain on remeasurement of equity interest in Lafayette | 1.53 | 1.53 | 1.45 | |||||||||
Tax reform bill impact | 0.10 | — | — | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share excluding tax reform bill impact | 1.64 | 1.53 | 1.45 | |||||||||
Acquisition-related PAUs | (0.15 | ) | (0.11 | ) | (0.18 | ) | ||||||
Tax effect | 0.05 | 0.03 | 0.06 | |||||||||
|
|
|
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| |||||||
Diluted earnings per share excluding PAUs | $ | 1.53 | $ | 1.45 | $ | 1.33 | ||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Data, Unaudited)
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Non-GAAP Reconciliation of Net Income | ||||||||||||
Net income as reported | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Merger expenses | 5,650 | 487 | 3,656 | |||||||||
Tax effect | (987 | ) | (102 | ) | (1,003 | ) | ||||||
Net income excluding merger expenses | 71,201 | 53,502 | 35,770 | |||||||||
(Gain)/loss on sale of investment securities | 75 | 443 | (38 | ) | ||||||||
Tax effect | (16 | ) | (93 | ) | 13 | |||||||
Net income excluding loss on sale of investment securities | 71,260 | 53,852 | 35,745 | |||||||||
Death benefit on bank owned life insurance (“BOLI”) | (580 | ) | (154 | ) | — | |||||||
Net income excluding death benefit on BOLI | 70,680 | 53,698 | 35,745 | |||||||||
Core Net Income | $ | 70,680 | $ | 53,698 | $ | 37,719 | ||||||
Non-GAAP Reconciliation of Diluted Earnings per Share | ||||||||||||
Diluted earnings per share (“EPS”) as reported | $ | 1.53 | $ | 1.38 | $ | 0.95 | ||||||
Merger expenses | 0.13 | 0.01 | 0.11 | |||||||||
Tax effect | (0.02 | ) | — | (0.03 | ) | |||||||
Diluted EPS excluding merger expenses | 1.64 | 1.39 | 1.03 | |||||||||
(Gain)/loss on sale of investment securities | — | 0.01 | — | |||||||||
Tax effect | — | — | — | |||||||||
Diluted EPS excluding loss on sale of investment securities | 1.64 | 1.40 | 1.03 | |||||||||
Death benefit on BOLI | (0.01 | ) | — | — | ||||||||
Diluted EPS excluding death benefit on BOLI | 1.63 | 1.40 | 1.03 | |||||||||
Core Diluted EPS | $ | 1.63 | $ | 1.40 | $ | 1.09 | ||||||
Twelve Months Ended | ||||||||||||
December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Non-GAAP Reconciliation of Return on Average Assets | ||||||||||||
Average Assets | $ | 3,396,873 | $ | 2,961,622 | $ | 2,360,485 | ||||||
Net income as reported | 0.97 | % | 0.81 | % | 0.87 | % | ||||||
Merger expenses | 0.11 | % | 0.23 | % | 0.21 | % | ||||||
Tax effect | -0.03 | % | -0.07 | % | -0.07 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding merger expenses | 1.05 | % | 0.97 | % | 1.01 | % | ||||||
Gain on sale of investment securities | 0.00 | % | -0.06 | % | -0.01 | % | ||||||
Tax effect | 0.00 | % | 0.02 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding gain on sale of investment securities | 1.05 | % | 0.93 | % | 1.00 | % | ||||||
Death benefit on BOLI | 0.00 | % | 0.00 | % | -0.01 | % | ||||||
Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding death benefit on BOLI | 1.05 | % | 0.93 | % | 0.99 | % | ||||||
Prepayment penalties on borrowings | 0.00 | % | 0.17 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | -0.06 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding prepayment penalties on borrowings | 1.05 | % | 1.04 | % | 0.99 | % | ||||||
Gain on remeasurement of equity interest in Lafayette | -0.02 | % | 0.00 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding gain on remeasurement of equity interest in Lafayette | 1.03 | % | 1.04 | % | 0.99 | % | ||||||
Tax reform bill impact | 0.07 | % | 0.00 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding tax reform bill impact | 1.10 | % | 1.04 | % | 0.99 | % | ||||||
Acquisition-related purchase accounting adjustments (“PAUs”) | -0.10 | % | -0.08 | % | -0.13 | % | ||||||
Tax effect | 0.04 | % | 0.03 | % | 0.04 | % | ||||||
|
|
|
|
|
| |||||||
Net income excluding PAUs | 1.04 | % | 0.99 | % | 0.90 | % | ||||||
|
|
|
|
|
| |||||||
Non-GAAP Reconciliation of Return on Average Common Equity | ||||||||||||
Average Common Equity | $ | 378,709 | $ | 301,485 | $ | 207,014 | ||||||
Return on average common equity as reported | 8.74 | % | 7.93 | % | 9.93 | % | ||||||
Merger expenses | 0.97 | % | 2.26 | % | 2.36 | % | ||||||
Tax effect | -0.26 | % | -0.66 | % | -0.77 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding merger expenses | 9.45 | % | 9.53 | % | 11.52 | % | ||||||
Gain on sale of investment securities | -0.01 | % | -0.61 | % | -0.09 | % | ||||||
Tax effect | 0.00 | % | 0.21 | % | 0.03 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding gain on sale of investment securities | 9.44 | % | 9.13 | % | 11.46 | % | ||||||
Death benefit on BOLI | 0.00 | % | 0.00 | % | -0.07 | % | ||||||
Tax effect | 0.00 | % | 0.00 | % | 0.02 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding death benefit on BOLI | 9.44 | % | 9.13 | % | 11.41 | % | ||||||
Prepayment penalties on borrowings | 0.00 | % | 1.61 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | -0.56 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding prepayment penalties on borrowings | 9.44 | % | 10.18 | % | 11.41 | % | ||||||
Gain on remeasurement of equity interest in Lafayette | -0.14 | % | 0.00 | % | 0.00 | % | ||||||
Tax effect | 0.02 | % | 0.00 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding gain on remeasurement of equity interest in Lafayette | 9.32 | % | 10.18 | % | 11.41 | % | ||||||
Tax reform bill impact | 0.64 | % | 0.00 | % | 0.00 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding tax reform bill impact | 9.96 | % | 10.18 | % | 11.41 | % | ||||||
Acquisition-related PAUs | -0.92 | % | -0.76 | % | -1.44 | % | ||||||
Tax effect | 0.32 | % | 0.27 | % | 0.50 | % | ||||||
|
|
|
|
|
| |||||||
Return on average assets excluding PAUs | 9.36 | % | 9.69 | % | 10.47 | % | ||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Non-GAAP Reconciliation of Return on Average Assets | ||||||||||||
Average assets | $ | 4,933,058 | $ | 4,062,635 | $ | 3,396,873 | ||||||
Return on average assets (“ROAA”) as reported | 1.35 | % | 1.31 | % | 0.97 | % | ||||||
Merger expenses | 0.11 | % | 0.01 | % | 0.11 | % | ||||||
Tax effect | -0.02 | % | 0.00 | % | -0.03 | % | ||||||
ROAA excluding merger expenses | 1.44 | % | 1.32 | % | 1.05 | % | ||||||
(Gain)/loss on sale of investment securities | 0.00 | % | 0.01 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
ROAA excluding loss on sale of investment securities | 1.44 | % | 1.33 | % | 1.05 | % | ||||||
Death benefit on bank owned life insurance (“BOLI”) | -0.01 | % | 0.00 | % | 0.00 | % | ||||||
ROAA excluding death benefit on BOLI | 1.43 | % | 1.33 | % | 1.05 | % | ||||||
Core ROAA | 1.43 | % | 1.33 | % | 1.10 | % | ||||||
Non-GAAP Reconciliation of Return on Average Common Equity | ||||||||||||
Average Common Equity | $ | 605,719 | $ | 473,420 | $ | 378,709 | ||||||
Return on average common equity (“ROACE”) as reported | 10.98 | % | 11.22 | % | 8.74 | % | ||||||
Merger expenses | 0.93 | % | 0.10 | % | 0.97 | % | ||||||
Tax effect | -0.16 | % | -0.02 | % | -0.26 | % | ||||||
ROACE excluding merger expenses | 11.75 | % | 11.30 | % | 9.45 | % | ||||||
(Gain)/loss on sale of investment securities | 0.01 | % | 0.09 | % | -0.01 | % | ||||||
Tax effect | 0.00 | % | -0.02 | % | 0.00 | % | ||||||
ROACE excluding loss on sale of investment securities | 11.76 | % | 11.37 | % | 9.44 | % | ||||||
Death benefit on bank owned life insurance (“BOLI”) | -0.10 | % | -0.03 | % | 0.00 | % | ||||||
ROACE excluding death benefit on BOLI | 11.66 | % | 11.34 | % | 9.44 | % | ||||||
Core ROACE | 11.66 | % | 11.34 | % | 9.96 | % | ||||||
Loan Balance | Allowance for Loan Losses (ALLL) | Acquired Loan Discount | ALLL + Acquired Loan Discount | Loans, net | ALLL/ Loan Balance | Acquired Loan Discount/ Loan Balance | ALLL+ Acquired Loan Discount/ Loan Balance | |||||||||||||||||||||||||
Horizon Legacy | $ | 2,881,650 | $ | 17,534 | N/A | $ | 17,534 | $ | 2,864,116 | 0.61 | % | 0.00 | % | 0.61 | % | |||||||||||||||||
Heartland | 4,863 | — | 549 | 549 | 4,314 | 0.00 | % | 11.29 | % | 11.29 | % | |||||||||||||||||||||
Summit | 14,309 | — | 835 | 835 | 13,474 | 0.00 | % | 5.84 | % | 5.84 | % | |||||||||||||||||||||
Peoples | 66,983 | — | 1,550 | 1,550 | 65,433 | 0.00 | % | 2.31 | % | 2.31 | % | |||||||||||||||||||||
Kosciusko | 28,249 | — | 417 | 417 | 27,832 | 0.00 | % | 1.48 | % | 1.48 | % | |||||||||||||||||||||
LaPorte | 62,580 | — | 2,229 | 2,229 | 60,351 | 0.00 | % | 3.56 | % | 3.56 | % | |||||||||||||||||||||
CNB | 3,210 | — | 78 | 78 | 3,132 | 0.00 | % | 2.43 | % | 2.43 | % | |||||||||||||||||||||
Lafayette | 57,003 | — | 496 | 496 | 56,507 | 0.00 | % | 0.87 | % | 0.87 | % | |||||||||||||||||||||
Wolverine | 120,654 | — | 699 | 699 | 119,955 | 0.00 | % | 0.58 | % | 0.58 | % | |||||||||||||||||||||
Salin | 401,428 | 133 | 13,375 | 13,508 | 387,920 | 0.03 | % | 3.33 | % | 3.36 | % | |||||||||||||||||||||
Total | $ | 3,640,929 | $ | 17,667 | $ | 20,228 | $ | 37,895 | $ | 3,603,034 | 0.49 | % | 0.56 | % | 1.04 | % | ||||||||||||||||
Non- GAAP Allowance for Loan and Lease Loss Detail
As of December 31, 2017
(Dollars in Thousands, Unaudited)
Horizon | ||||||||||||||||||||||||||||||||||||||||
Legacy | Heartland | Summit | Peoples | Kosciusko | LaPorte | CNB | Lafayette | Wolverine | Total | |||||||||||||||||||||||||||||||
Pre-discount loan balance | $ | 2,019,194 | $ | 11,646 | $ | 40,995 | $ | 113,171 | $ | 60,497 | $ | 142,824 | $ | 6,583 | $ | 144,444 | $ | 311,313 | $ | 2,850,667 | ||||||||||||||||||||
Allowance for loan losses (ALLL) | 16,394 | — | — | — | — | — | — | — | — | 16,394 | ||||||||||||||||||||||||||||||
Loan discount | N/A | 800 | 2,241 | 2,754 | 758 | 3,796 | 167 | 3,226 | 4,930 | 18,672 | ||||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||
ALLL+loan discount | 16,394 | 800 | 2,241 | 2,754 | 758 | 3,796 | 167 | 3,226 | 4,930 | 35,066 | ||||||||||||||||||||||||||||||
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|
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| |||||||||||||||||||||
Loans, net | $ | 2,002,800 | $ | 10,846 | $ | 38,754 | $ | 110,417 | $ | 59,739 | $ | 139,028 | $ | 6,416 | $ | 141,218 | $ | 306,383 | $ | 2,815,601 | ||||||||||||||||||||
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|
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|
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|
| |||||||||||||||||||||
ALLL/pre-discount loan balance | 0.81 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.58 | % | ||||||||||||||||||||
Loan discount/pre-discount loan balance | N/A | 6.87 | % | 5.47 | % | 2.43 | % | 1.25 | % | 2.66 | % | 2.54 | % | 2.23 | % | 1.58 | % | 0.66 | % | |||||||||||||||||||||
ALLL+loan discount/pre-discount loan balance | 0.81 | % | 6.87 | % | 5.47 | % | 2.43 | % | 1.25 | % | 2.66 | % | 2.54 | % | 2.23 | % | 1.58 | % | 1.23 | % |
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
2019.
After one | After three | After | ||||||||||||||||||
Within | but within | but within | five | |||||||||||||||||
Total | one year | three years | five years | years | ||||||||||||||||
Remaining contractual maturities of time deposits | $ | 566,952 | $ | 277,498 | $ | 228,481 | $ | 38,172 | $ | 22,801 | ||||||||||
Borrowings | 564,157 | 430,078 | 106,724 | 17,196 | 10,159 | |||||||||||||||
Subordinated debentures | 37,653 | — | — | — | 37,653 | |||||||||||||||
Loan Commitments | 802,949 | 214,249 | 588,700 | — | — | |||||||||||||||
Letters of credit | 3,383 | 889 | 2,494 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 1,975,094 | $ | 922,714 | $ | 926,399 | $ | 55,368 | $ | 70,613 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Total | Within One Year | After one but within three years | After three but within five years | After five years | ||||||||||||||||
Remaining contractual maturities of time deposits | $ | 975,612 | $ | 747,022 | $ | 204,313 | $ | 22,995 | $ | 1,282 | ||||||||||
Borrowings | 549,741 | 276,970 | 67,324 | 80,299 | 125,148 | |||||||||||||||
Subordinated debentures | 56,311 | — | — | — | 56,311 | |||||||||||||||
Loan commitments | 958,690 | 310,025 | 648,665 | — | — | |||||||||||||||
Letters of credit | 17,252 | 7,053 | 10,199 | — | — | |||||||||||||||
Total | $ | 2,557,606 | $ | 1,340,728 | $ | 930,844 | $ | 103,189 | $ | 182,845 | ||||||||||
HORIZON BANCORPAND SUBSIDIARIES
3 Months or Less | > 3 Months & </= 6 Months | > 6 Months & </= 1 Year | Greater Than 1 Year | Total | ||||||||||||||||
Loans | $ | 1,429,780 | $ | 213,752 | $ | 350,923 | $ | 1,646,474 | $ | 3,640,929 | ||||||||||
Federal funds sold | 5,646 | — | — | — | 5,646 | |||||||||||||||
Interest-earning balances with banks | 17,343 | — | — | — | 17,343 | |||||||||||||||
Investment securities and FHLB stock | 49,549 | 36,893 | 84,662 | 894,018 | 1,065,122 | |||||||||||||||
Other assets | — | — | — | 517,789 | 517,789 | |||||||||||||||
Total assets | $ | 1,502,318 | $ | 250,645 | $ | 435,585 | $ | 3,058,281 | $ | 5,246,829 | ||||||||||
Noninterest-bearing deposits | $ | 16,786 | $ | 16,786 | $ | 33,572 | $ | 642,616 | $ | 709,760 | ||||||||||
Interest-bearing deposits | 376,119 | 292,509 | 399,566 | 2,153,048 | 3,221,242 | |||||||||||||||
Borrowed funds | 117,874 | 98,950 | 6,086 | 383,142 | 606,052 | |||||||||||||||
Other liabilities | — | — | — | 53,752 | 53,752 | |||||||||||||||
Stockholders’ equity | — | — | — | 656,023 | 656,023 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 510,779 | $ | 408,245 | $ | 439,224 | $ | 3,888,581 | $ | 5,246,829 | ||||||||||
GAP | $ | 991,539 | $ | (157,600 | ) | $ | (3,639 | ) | $ | (830,300 | ) | |||||||||
Cumulative GAP | $ | 991,539 | $ | 833,939 | $ | 830,300 |
Rate Sensitivity | ||||||||||||||||||||
> 3 Months | Greater | |||||||||||||||||||
3 Months | & </= 6 | > 6 Months | Than 1 | |||||||||||||||||
or Less | Months | & </= 1 Year | Year | Total | ||||||||||||||||
Loans | $ | 1,048,841 | $ | 206,877 | $ | 304,267 | $ | 1,275,104 | $ | 2,835,089 | ||||||||||
Federal Funds Sold | 590 | — | — | — | 590 | |||||||||||||||
Interest-Bearing balances with Banks | 18,371 | — | — | — | 18,371 | |||||||||||||||
Investment securities and FRB and FHLB stock | 50,011 | 30,507 | 55,247 | 592,453 | 728,218 | |||||||||||||||
Other assets | — | — | — | 382,035 | 382,035 | |||||||||||||||
|
|
|
|
| �� |
|
|
|
| |||||||||||
Total Assets | $ | 1,117,813 | $ | 237,384 | $ | 359,514 | $ | 2,249,592 | $ | 3,964,303 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Noninterest-bearing deposits | $ | 16,143 | $ | 16,143 | $ | 32,287 | $ | 537,232 | $ | 601,805 | ||||||||||
Interest-bearing deposits | 126,308 | 110,910 | 213,225 | 1,828,755 | 2,279,198 | |||||||||||||||
Borrowed Funds | 345,619 | 21,926 | 13,229 | 221,036 | 601,810 | |||||||||||||||
Other Liabilities | — | — | — | 24,412 | 24,412 | |||||||||||||||
Stockholders’ equity | — | — | — | 457,078 | 457,078 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities and stockholder’s equity | $ | 488,070 | $ | 148,979 | $ | 258,741 | $ | 3,068,513 | $ | 3,964,303 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
GAP | $ | 629,743 | $ | 88,405 | $ | 100,773 | $ | (818,921 | ) | |||||||||||
Cumulative GAP | $ | 629,743 | $ | 718,148 | $ | 818,921 |
HORIZON BANCORPAND SUBSIDIARIES
2025 | Fair Value December 31 | |||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | & Beyond | Total | 2019 | |||||||||||||||||||||||||
Rate-sensitive assets | ||||||||||||||||||||||||||||||||
Fixed interest rate loans | $ | 689,022 | $ | 367,287 | $ | 215,722 | $ | 131,021 | $ | 69,181 | $ | 109,563 | $ | 1,581,796 | $ | 1,420,685 | ||||||||||||||||
Average interest rate | 4.89 | % | 4.83 | % | 4.96 | % | 5.01 | % | 4.97 | % | 4.78 | % | 4.89 | % | ||||||||||||||||||
Variable interest rate loans | 1,319,167 | 148,803 | 133,360 | 107,601 | 99,296 | 250,906 | 2,059,133 | 2,138,354 | ||||||||||||||||||||||||
Average interest rate | 4.70 | % | 4.36 | % | 4.46 | % | 4.52 | % | 4.27 | % | 3.87 | % | 4.53 | % | ||||||||||||||||||
Total loans | 2,008,189 | 516,090 | 349,082 | 238,622 | 168,477 | 360,469 | 3,640,929 | 3,559,039 | ||||||||||||||||||||||||
Average interest rate | 4.76 | % | 4.69 | % | 4.77 | % | 4.79 | % | 4.56 | % | 4.15 | % | 4.68 | % | ||||||||||||||||||
Securities, including FHLB stock | 177,407 | 106,642 | 83,685 | 69,485 | 62,792 | 565,111 | 1,065,122 | 1,071,425 | ||||||||||||||||||||||||
Average interest rate | 2.47 | % | 3.17 | % | 3.18 | % | 3.08 | % | 3.16 | % | 3.54 | % | 3.24 | % | ||||||||||||||||||
Other interest-earning assets | 22,989 | — | — | — | — | — | 22,989 | 22,989 | ||||||||||||||||||||||||
Average interest rate | 5.61 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 5.61 | % | ||||||||||||||||||
Total earning assets | $ | 2,208,585 | $ | 622,732 | $ | 432,767 | $ | 308,107 | $ | 231,269 | $ | 925,580 | $ | 4,729,040 | $ | 4,653,453 | ||||||||||||||||
Average interest rate | 4.59 | % | 4.43 | % | 4.46 | % | 4.40 | % | 4.18 | % | 3.77 | % | 4.36 | % | ||||||||||||||||||
Rate-sensitive liabilities | ||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 67,145 | $ | 60,792 | $ | 55,041 | $ | 49,834 | $ | 45,120 | $ | 431,828 | $ | 709,760 | $ | 709,760 | ||||||||||||||||
NOW accounts | 77,857 | 67,689 | 58,849 | 51,163 | 44,481 | 296,109 | 596,148 | 574,709 | ||||||||||||||||||||||||
Average interest rate | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | ||||||||||||||||||
Savings and money market accounts | 243,331 | 206,992 | 176,134 | 149,924 | 127,656 | 745,445 | 1,649,482 | 1,627,824 | ||||||||||||||||||||||||
Average interest rate | 0.82 | % | 0.81 | % | 0.80 | % | 0.80 | % | 0.79 | % | 0.74 | % | 0.78 | % | ||||||||||||||||||
Certificates of deposit | 747,006 | 122,957 | 48,181 | 33,175 | 22,995 | 1,298 | 975,612 | 978,235 | ||||||||||||||||||||||||
Average interest rate | 2.05 | % | 2.15 | % | 1.90 | % | 2.28 | % | 1.93 | % | 0.76 | % | 2.06 | % | ||||||||||||||||||
Total deposits | 1,135,339 | 458,430 | 338,205 | 284,096 | 240,252 | 1,474,680 | 3,931,002 | 3,890,528 | ||||||||||||||||||||||||
Average interest rate | 1.53 | % | 0.96 | % | 0.71 | % | 0.71 | % | 0.63 | % | 0.40 | % | 0.86 | % | ||||||||||||||||||
Fixed interest rate borrowings | 174,015 | 26,692 | 127,933 | 80 | 80,047 | 50,033 | 458,800 | 460,631 | ||||||||||||||||||||||||
Average interest rate | 1.04 | % | 2.21 | % | 1.80 | % | 3.32 | % | 1.66 | % | 2.69 | % | 1.60 | % | ||||||||||||||||||
Variable interest rate borrowings | 147,252 | — | — | — | — | — | 147,252 | 138,172 | ||||||||||||||||||||||||
Average interest rate | 2.35 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 2.35 | % | ||||||||||||||||||
Total funds | $ | 1,456,606 | $ | 485,122 | $ | 466,138 | $ | 284,176 | $ | 320,299 | $ | 1,524,713 | $ | 4,537,054 | $ | 4,489,331 | ||||||||||||||||
Average interest rate | 1.56 | % | 1.03 | % | 1.01 | % | 0.71 | % | 0.89 | % | 0.48 | % | 0.98 | % |
Fair Value | ||||||||||||||||||||||||||||||||
2023 | December 31 | |||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | & Beyond | Total | 2017 | |||||||||||||||||||||||||
Rate-sensitive assets | ||||||||||||||||||||||||||||||||
Fixed interest rate loans | $ | 610,499 | $ | 297,692 | $ | 183,718 | $ | 107,903 | $ | 53,235 | $ | 71,918 | $ | 1,324,965 | $ | 1,221,263 | ||||||||||||||||
Average interest rate | 4.55 | % | 4.53 | % | 4.51 | % | 4.51 | % | 4.59 | % | 4.63 | % | 4.55 | % | ||||||||||||||||||
Variable interest rate loans | 950,032 | 123,165 | 97,866 | 83,942 | 76,662 | 178,457 | 1,510,124 | 1,522,286 | ||||||||||||||||||||||||
Average interest rate | 4.25 | % | 4.11 | % | 4.27 | % | 4.16 | % | 4.42 | % | 3.67 | % | 4.17 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total loans | 1,560,531 | 420,857 | 281,584 | 191,845 | 129,897 | 250,375 | 2,835,089 | 2,743,549 | ||||||||||||||||||||||||
Average interest rate | 4.37 | % | 4.41 | % | 4.43 | % | 4.35 | % | 4.49 | % | 3.94 | % | 4.35 | % | ||||||||||||||||||
Securities, including FHLB stock | 135,766 | 83,908 | 71,389 | 60,484 | 58,347 | 318,324 | 728,218 | 728,855 | ||||||||||||||||||||||||
Average interest rate | 2.27 | % | 2.55 | % | 2.73 | % | 3.00 | % | 3.16 | % | 3.71 | % | 3.11 | % | ||||||||||||||||||
Other interest-bearing assets | 18,961 | — | — | — | — | — | 18,961 | 18,961 | ||||||||||||||||||||||||
Average interest rate | 2.15 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 2.15 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total earnings assets | $ | 1,715,258 | $ | 504,765 | $ | 352,973 | $ | 252,329 | $ | 188,244 | $ | 568,699 | $ | 3,582,268 | $ | 3,491,365 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Average interest rate | 4.18 | % | 4.10 | % | 4.08 | % | 4.03 | % | 4.10 | % | 3.81 | % | 4.08 | % | ||||||||||||||||||
Rate-sensitive liabilities | ||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 64,576 | $ | 57,645 | $ | 51,460 | $ | 45,938 | $ | 41,009 | $ | 341,177 | $ | 601,805 | $ | 601,805 | ||||||||||||||||
NOW accounts | 49,916 | 45,059 | 40,675 | 36,717 | 33,145 | 307,498 | 513,010 | 480,615 | ||||||||||||||||||||||||
Average interest rate | 0.14 | % | 0.14 | % | 0.14 | % | 0.14 | % | 0.14 | % | 0.14 | % | 0.14 | % | ||||||||||||||||||
Savings and money market accounts | 122,618 | 110,044 | 98,764 | 88,643 | 79,563 | 699,604 | 1,199,236 | 1,118,315 | ||||||||||||||||||||||||
Average interest rate | 0.28 | % | 0.28 | % | 0.28 | % | 0.28 | % | 0.27 | % | 0.27 | % | 0.27 | % | ||||||||||||||||||
Certificates of deposit | 277,909 | 164,040 | 63,819 | 19,443 | 18,638 | 23,103 | 566,952 | 559,181 | ||||||||||||||||||||||||
Average interest rate | 0.93 | % | 1.30 | % | 1.40 | % | 1.54 | % | 1.57 | % | 1.68 | % | 1.16 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total deposits | 515,019 | 376,788 | 254,718 | 190,741 | 172,355 | 1,371,382 | 2,881,003 | 2,759,916 | ||||||||||||||||||||||||
Average interest rate | 0.58 | % | 0.66 | % | 0.48 | % | 0.31 | % | 0.32 | % | 0.20 | % | 0.37 | % | ||||||||||||||||||
Fixed interest rate borrowings | 360,497 | 60,854 | 36,353 | 9,304 | 13,529 | 10,024 | 490,561 | 492,504 | ||||||||||||||||||||||||
Average interest rate | 1.21 | % | 1.60 | % | 1.96 | % | 2.40 | % | 3.89 | % | 2.22 | % | 1.43 | % | ||||||||||||||||||
Variable interest rate borrowings | 111,249 | — | — | — | — | — | 111,249 | 109,683 | ||||||||||||||||||||||||
Average interest rate | 2.53 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 2.53 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total funds | $ | 986,765 | $ | 437,642 | $ | 291,071 | $ | 200,045 | $ | 185,884 | $ | 1,381,406 | $ | 3,482,813 | $ | 3,362,103 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Average interest rate | 1.03 | % | 0.79 | % | 0.66 | % | 0.41 | % | 0.58 | % | 0.21 | % | 0.59 | % |
Page | |||||
Consolidated Financial Statements | |||||
65 | |||||
66 | |||||
67 | |||||
68 | |||||
69 | |||||
70 | |||||
133 | |||||
| |||||
138 |
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Cash and due from banks | $ | 76,441 | $ | 70,832 | ||||
Investment securities, available for sale | 509,665 | 439,831 | ||||||
Investment securities, held to maturity (fair value of $201,085 and $194,086) | 200,448 | 193,194 | ||||||
Loans held for sale | 3,094 | 8,087 | ||||||
Loans, net of allowance for loan losses of $16,394 and $14,837 | 2,815,601 | 2,121,149 | ||||||
Premises and equipment, net | 75,529 | 66,357 | ||||||
Federal Reserve and Federal Home Loan Bank stock | 18,105 | 23,932 | ||||||
Goodwill | 119,880 | 76,941 | ||||||
Other intangible assets | 12,402 | 9,366 | ||||||
Interest receivable | 16,244 | 12,713 | ||||||
Cash value of life insurance | 75,931 | 74,134 | ||||||
Other assets | 40,963 | 44,620 | ||||||
|
|
|
| |||||
Total assets | $ | 3,964,303 | $ | 3,141,156 | ||||
|
|
|
| |||||
Liabilities | ||||||||
Deposits | ||||||||
Non-interest bearing | $ | 601,805 | $ | 496,248 | ||||
Interest bearing | 2,279,198 | 1,974,962 | ||||||
|
|
|
| |||||
Total deposits | 2,881,003 | 2,471,210 | ||||||
Borrowings | 564,157 | 267,489 | ||||||
Subordinated debentures | 37,653 | 37,456 | ||||||
Interest payable | 886 | 472 | ||||||
Other liabilities | 23,526 | 23,674 | ||||||
|
|
|
| |||||
Total liabilities | 3,507,225 | 2,800,301 | ||||||
|
|
|
| |||||
Commitments and contingent liabilities | ||||||||
Stockholders’ Equity | ||||||||
Preferred stock, Authorized, 1,000,000 shares Issued 0 and 0 shares | — | — | ||||||
Common stock, no par value Authorized 66,000,000 shares(1) Issued, 25,549,069 and 22,192,530 shares(1) Outstanding, 25,529,819 and 22,171,596 shares(1) | — | — | ||||||
Additionalpaid-in capital | 275,059 | 182,326 | ||||||
Retained earnings | 185,570 | 164,173 | ||||||
Accumulated other comprehensive loss | (3,551 | ) | (5,644 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 457,078 | 340,855 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 3,964,303 | $ | 3,141,156 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Cash and due from banks | $ | 98,831 | $ | 58,492 | ||||
Interest-earning time deposits | 8,455 | 15,744 | ||||||
Investment securities, available for sale | 834,776 | 600,348 | ||||||
Investment securities, held to maturity (fair value of $215,147 and $208,273) | 207,899 | 210,112 | ||||||
Loans held for sale | 4,088 | 1,038 | ||||||
Loans, net of allowance for loan losses of $17,667 and $17,820 | 3,619,174 | 2,995,512 | ||||||
Premises and equipment, net | 92,209 | 74,331 | ||||||
Federal Home Loan Bank stock | 22,447 | 18,073 | ||||||
Goodwill | 151,238 | 119,880 | ||||||
Other intangible assets | 26,679 | 10,390 | ||||||
Interest receivable | 18,828 | 14,239 | ||||||
Cash value of life insurance | 95,577 | 88,062 | ||||||
Other assets | 66,628 | 40,467 | ||||||
Total assets | 5,246,829 | $ | 4,246,688 | |||||
Liabilities | ||||||||
Deposits | ||||||||
Non-interest bearing | $ | 709,760 | $ | 642,129 | ||||
Interest bearing | 3,221,242 | 2,497,247 | ||||||
Total deposits | 3,931,002 | 3,139,376 | ||||||
Borrowings | 549,741 | 550,384 | ||||||
Subordinated debentures | 56,311 | 37,837 | ||||||
Interest payable | 3,062 | 2,031 | ||||||
Other liabilities | 50,690 | 25,068 | ||||||
Total liabilities | 4,590,806 | 3,754,696 | ||||||
Commitments and contingent liabilities | ||||||||
Stockholders’ Equity | ||||||||
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares | — | — | ||||||
Common stock, 0 par value, Authorized 99,000,000 shares | ||||||||
Issued 45,000,840 and 38,400,476 shares, Outstanding 44,975,771 and 38,375,407 shares | — | — | ||||||
Additional paid-in capital | 379,853 | 276,101 | ||||||
Retained earnings | 269,738 | 224,035 | ||||||
Accumulated other comprehensive income (loss) | 6,432 | (8,144 | ) | |||||
Total stockholders’ equity | 656,023 | 491,992 | ||||||
Total liabilities and stockholders’ equity | 5,246,829 | $ | 4,246,688 | |||||
Years Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest Income | ||||||||||||
Loans receivable | $ | 112,329 | $ | 91,569 | $ | 75,373 | ||||||
Investment securities | ||||||||||||
Taxable | 9,086 | 10,039 | 8,721 | |||||||||
Tax exempt | 7,068 | 4,921 | 4,494 | |||||||||
|
|
|
|
|
| |||||||
Total interest income | 128,483 | 106,529 | 88,588 | |||||||||
|
|
|
|
|
| |||||||
Interest Expense | ||||||||||||
Deposits | 7,901 | 6,616 | 5,559 | |||||||||
Borrowed funds | 6,178 | 11,807 | 6,286 | |||||||||
Subordinated debentures | 2,304 | 2,114 | 2,009 | |||||||||
|
|
|
|
|
| |||||||
Total interest expense | 16,383 | 20,537 | 13,854 | |||||||||
|
|
|
|
|
| |||||||
Net Interest Income | 112,100 | 85,992 | 74,734 | |||||||||
Provision for loan losses | 2,470 | 1,842 | 3,162 | |||||||||
|
|
|
|
|
| |||||||
Net Interest Income after Provision for Loan Losses | 109,630 | 84,150 | 71,572 | |||||||||
|
|
|
|
|
| |||||||
Non-interest Income | ||||||||||||
Service charges on deposit accounts | 6,383 | 5,762 | 4,807 | |||||||||
Wire transfer fees | 658 | 806 | 633 | |||||||||
Interchange fees | 5,104 | 4,165 | 3,623 | |||||||||
Fiduciary activities | 7,894 | 6,621 | 5,637 | |||||||||
Gain on sale of investment securities (includes $38, $1,836 and $189 for the years ended December 31, 2017, 2016 and 2015 related to accumulated other comprehensive earnings reclassifications) | 38 | 1,836 | 189 | |||||||||
Gain on sale of mortgage loans | 7,906 | 11,675 | 10,055 | |||||||||
Mortgage servicing income net of impairment | 1,583 | 1,908 | 993 | |||||||||
Increase in cash value of bank owned life insurance | 1,797 | 1,643 | 1,249 | |||||||||
Death benefit on bank owned life insurance | — | — | 145 | |||||||||
Other income | 1,773 | 1,039 | 1,103 | |||||||||
|
|
|
|
|
| |||||||
Totalnon-interest income | 33,136 | 35,455 | 28,434 | |||||||||
|
|
|
|
|
| |||||||
Non-interest Expense | ||||||||||||
Salaries and employee benefits | 51,375 | 44,013 | 37,712 | |||||||||
Net occupancy expenses | 9,535 | 8,322 | 6,400 | |||||||||
Data processing | 5,914 | 5,367 | 4,251 | |||||||||
Professional fees | 2,490 | 2,752 | 2,070 | |||||||||
Outside services and consultants | 7,018 | 7,863 | 5,735 | |||||||||
Loan expense | 4,970 | 5,582 | 5,379 | |||||||||
FDIC insurance expense | 1,046 | 1,559 | 1,499 | |||||||||
Other losses | 368 | 684 | 432 | |||||||||
Other expense | 12,097 | 10,750 | 8,747 | |||||||||
|
|
|
|
|
| |||||||
Totalnon-interest expense | 94,813 | 86,892 | 72,225 | |||||||||
|
|
|
|
|
| |||||||
Income Before Income Tax | 47,953 | 32,713 | 27,781 | |||||||||
Income tax expense (includes $13, $643 and $66 for the years ended December 31, 2017, 2016 and 2015 related to income tax expense from reclassification items) | 14,836 | 8,801 | 7,232 | |||||||||
|
|
|
|
|
| |||||||
Net Income | 33,117 | 23,912 | 20,549 | |||||||||
Preferred stock dividend | — | (42 | ) | (125 | ) | |||||||
|
|
|
|
|
| |||||||
Net Income Available to Common Shareholders | $ | 33,117 | $ | 23,870 | $ | 20,424 | ||||||
|
|
|
|
|
| |||||||
Basic Earnings Per Share(1) | $ | 1.44 | $ | 1.19 | $ | 1.30 | ||||||
Diluted Earnings Per Share(1) | 1.43 | 1.19 | 1.26 |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Interest Income | ||||||||||||
Loans receivable | $ | 183,631 | $ | 147,478 | $ | 112,329 | ||||||
Investment securities | ||||||||||||
Taxable | 12,606 | 10,621 | 9,086 | |||||||||
Tax exempt | 12,095 | 8,069 | 7,068 | |||||||||
Total interest income | 208,332 | 166,168 | 128,483 | |||||||||
Interest Expense | ||||||||||||
Deposits | 33,690 | 18,225 | 7,901 | |||||||||
Borrowed funds | 10,672 | 11,009 | 6,178 | |||||||||
Subordinated debentures | 3,179 | 2,365 | 2,304 | |||||||||
Total interest expense | 47,541 | 31,599 | 16,383 | |||||||||
Net Interest Income | 160,791 | 134,569 | 112,100 | |||||||||
Provision for loan losses | 1,976 | 2,906 | 2,470 | |||||||||
Net Interest Income after Provision for Loan Losses | 158,815 | 131,663 | 109,630 | |||||||||
Non-interest Income | ||||||||||||
Service charges on deposit accounts | 9,959 | 7,762 | 6,383 | |||||||||
Wire transfer fees | 653 | 612 | 658 | |||||||||
Interchange fees | 7,655 | 5,715 | 5,104 | |||||||||
Fiduciary activities | 8,580 | 7,827 | 7,894 | |||||||||
Gains (losses) on sale of investment securities (includes $(75), $(443) and $38 for the years ended December 31, 2019, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassificiations) | (75 | ) | (443 | ) | 38 | |||||||
Gain on sale of mortgage loans | 9,208 | 6,613 | 7,906 | |||||||||
Mortgage servicing income net of impairment | 1,914 | 2,120 | 1,583 | |||||||||
Increase in cash value of bank owned life insurance | 2,190 | 1,912 | 1,797 | |||||||||
Death benefit on bank owned life insurance | 580 | 154 | — | |||||||||
Other income | 2,394 | 2,141 | 1,773 | |||||||||
Total non-interest income | 43,058 | 34,413 | 33,136 | |||||||||
Non-interest Expense | ||||||||||||
Salaries and employee benefits | 65,206 | 56,623 | 51,375 | |||||||||
Net occupancy expenses | 12,157 | 10,482 | 9,535 | |||||||||
Data processing | 8,480 | 6,816 | 5,914 | |||||||||
Professional fees | 1,946 | 1,926 | 2,490 | |||||||||
Outside services and consultants | 8,152 | 5,271 | 7,018 | |||||||||
Loan expense | 8,633 | 6,341 | 4,970 | |||||||||
FDIC insurance expense | 252 | 1,444 | 1,046 | |||||||||
Other losses | 740 | 665 | 368 | |||||||||
Other expense | 16,466 | 12,948 | 12,097 | |||||||||
Total non-interest expense | 122,032 | 102,516 | 94,813 | |||||||||
Income Before Income Taxes | 79,841 | 63,560 | 47,953 | |||||||||
Income tax expense (includes $(16), $(93) and $13 for the years ended December 31, 2019, 2018 and 2017, respectively, related to income tax expense (benefit) from reclassification items) | 13,303 | 10,443 | 14,836 | |||||||||
Net Income Available to Common Shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Basic Earnings Per Share | $ | 1.53 | $ | 1.39 | $ | 0.96 | ||||||
Diluted Earnings Per Share | 1.53 | 1.38 | 0.95 |
Years Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Net Income | $ | 33,117 | $ | 23,912 | $ | 20,549 | ||||||
|
|
|
|
|
| |||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments: | ||||||||||||
Change in fair value of derivative instruments for the period | 1,404 | 9 | 195 | |||||||||
Income tax effect | (491 | ) | (3 | ) | (68 | ) | ||||||
|
|
|
|
|
| |||||||
Changes from derivative instruments | 913 | 6 | 127 | |||||||||
|
|
|
|
|
| |||||||
Change in securities: | ||||||||||||
Unrealized appreciation (depreciation) for the period on AFS securities | 2,110 | (5,091 | ) | (2,910 | ) | |||||||
Amortization from transfer of securities from available for sale to held to maturity securities | (256 | ) | (653 | ) | (549 | ) | ||||||
Reclassification adjustment for securities (gains) losses realized in income | (38 | ) | (1,836 | ) | (189 | ) | ||||||
Income tax effect | (636 | ) | 2,653 | 1,277 | ||||||||
|
|
|
|
|
| |||||||
Unrealized gains (losses) on securities | 1,180 | (4,927 | ) | (2,371 | ) | |||||||
|
|
|
|
|
| |||||||
Other Comprehensive Income (Loss), Net of Tax | 2,093 | (4,921 | ) | (2,244 | ) | |||||||
|
|
|
|
|
| |||||||
Comprehensive Income | $ | 35,210 | $ | 18,991 | $ | 18,305 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net Income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments: | ||||||||||||
Change in fair value of derivative instruments for the period | (2,680 | ) | (32 | ) | 1,404 | |||||||
Income tax effect | 563 | 7 | (491 | ) | ||||||||
Changes from derivative instruments | (2,117 | ) | (25 | ) | 913 | |||||||
Change in securities: | ||||||||||||
Unrealized appreciation (depreciation) for the period on AFS securities | 21,173 | (5,067 | ) | 2,110 | ||||||||
Amortization from transfer of securities from available for sale to held to maturity securities | (117 | ) | (190 | ) | (256 | ) | ||||||
Reclassification adjustment for securities (gains) losses realized in income | 75 | 443 | (38 | ) | ||||||||
Income tax effect | (4,438 | ) | 1,012 | (636 | ) | |||||||
Unrealized gains (losses) on securities | 16,693 | (3,802 | ) | 1,180 | ||||||||
Other Comprehensive Income (Loss), Net of Tax | 14,576 | (3,827 | ) | 2,093 | ||||||||
Comprehensive Income | $ | 81,114 | $ | 49,290 | $ | 35,210 | ||||||
Accumulated | ||||||||||||||||||||
Additional | Other | |||||||||||||||||||
Preferred | Paid-in | Retained | Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
Balances, January 1, 2015 | $ | 12,500 | $ | 45,916 | $ | 134,477 | $ | 1,521 | $ | 194,414 | ||||||||||
Net income | 20,549 | 20,549 | ||||||||||||||||||
Other comprehensive loss, net of tax | (2,244 | ) | (2,244 | ) | ||||||||||||||||
Amortization of unearned compensation | 355 | 355 | ||||||||||||||||||
Stock issued stock plans | 554 | 554 | ||||||||||||||||||
Exercise of stock warrants | 3,751 | 3,751 | ||||||||||||||||||
Stock option expense | 288 | 288 | ||||||||||||||||||
Stock issued from acquisition | 55,506 | 55,506 | ||||||||||||||||||
Cash dividends on preferred stock (1.00%) | (125 | ) | (125 | ) | ||||||||||||||||
Cash dividends on common stock ($0.39 per share) | (6,216 | ) | (6,216 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balances, December 31, 2015 | $ | 12,500 | $ | 106,370 | $ | 148,685 | $ | (723 | ) | $ | 266,832 | |||||||||
Net income | 23,912 | 23,912 | ||||||||||||||||||
Other comprehensive income, net of tax | (4,921 | ) | (4,921 | ) | ||||||||||||||||
Redemption of preferred stock | (12,500 | ) | (12,500 | ) | ||||||||||||||||
Amortization of unearned compensation | 284 | 284 | ||||||||||||||||||
Stock option expense | 324 | 324 | ||||||||||||||||||
Stock issued stock plans | 572 | 572 | ||||||||||||||||||
Stock issued in Kosciusko acquisition | 14,470 | 14,470 | ||||||||||||||||||
Stock issued in LaPorte acquisition | 60,306 | 60,306 | ||||||||||||||||||
Cash dividends on preferred stock (1.00%) | (42 | ) | (42 | ) | ||||||||||||||||
Cash dividends on common stock ($0.41 per share) | (8,382 | ) | (8,382 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balances, December 31, 2016 | $ | — | $ | 182,326 | $ | 164,173 | $ | (5,644 | ) | $ | 340,855 | |||||||||
Net income | 33,117 | 33,117 | ||||||||||||||||||
Other comprehensive income, net of tax | 2,093 | 2,093 | ||||||||||||||||||
Amortization of unearned compensation | 135 | 135 | ||||||||||||||||||
Exercise of stock options | 1,604 | 1,604 | ||||||||||||||||||
Stock option expense | 325 | 325 | ||||||||||||||||||
Stock issued in Lafayette acquisition | 28,558 | 28,558 | ||||||||||||||||||
Stock issued in Wolverine acquisition | 62,111 | 62,111 | ||||||||||||||||||
Cash dividends on common stock ($0.50 per share) | (11,720 | ) | (11,720 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balances, December 31, 2017 | $ | — | $ | 275,059 | $ | 185,570 | $ | (3,551 | ) | $ | 457,078 | |||||||||
|
|
|
|
|
|
|
|
|
|
Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balances, January 1, 2017 | $ | — | $ | — | $ | 182,326 | $ | 164,173 | $ | (5,644 | ) | $ | 340,855 | |||||||||||
Net income | — | — | — | 33,117 | — | 33,117 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | 2,093 | 2,093 | ||||||||||||||||||
Amortization of unearned compensation | — | — | 135 | — | — | 135 | ||||||||||||||||||
Exercise of stock options | — | — | 1,604 | — | — | 1,604 | ||||||||||||||||||
Stock option expense | — | — | 325 | — | — | 325 | ||||||||||||||||||
Stock issued in Lafayette acquisition | — | — | 28,558 | — | — | 28,558 | ||||||||||||||||||
Stock issued in Wolverine acquisition | — | — | 62,111 | — | — | 62,111 | ||||||||||||||||||
Cash dividends on common stock ($0.33 per share) (Restated - See Note 1) | — | — | — | (11,720 | ) | — | (11,720 | ) | ||||||||||||||||
Balances, December 31, 2017 | $ | — | $ | — | $ | 275,059 | $ | 185,570 | $ | (3,551 | ) | $ | 457,078 | |||||||||||
Net income | — | — | — | 53,117 | — | 53,117 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (3,827 | ) | (3,827 | ) | ||||||||||||||||
Amortization of unearned compensation | — | — | 169 | — | — | 169 | ||||||||||||||||||
Exercise of stock options | — | — | 493 | — | — | 493 | ||||||||||||||||||
Stock option expense | — | — | 251 | — | — | 251 | ||||||||||||||||||
Stock issued stock plans | — | — | 129 | — | — | 129 | ||||||||||||||||||
Reclassification of tax adjustment on accumulated other comprehensive loss | — | — | — | 766 | (766 | ) | — | |||||||||||||||||
Cash dividends on common stock ($0.40 per share) (Restated - See Note 1) | — | — | — | (15,418 | ) | — | (15,418 | ) | ||||||||||||||||
Balances, December 31, 2018 | $ | — | $ | — | $ | 276,101 | $ | 224,035 | $ | (8,144 | ) | $ | 491,992 | |||||||||||
Net income | — | — | — | 66,538 | — | 66,538 | ||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 14,576 | 14,576 | ||||||||||||||||||
Amortization of unearned compensation | — | — | 705 | — | — | 705 | ||||||||||||||||||
Exercise of stock options | — | — | 236 | — | — | 236 | ||||||||||||||||||
Stock option expense | — | — | 215 | — | — | 215 | ||||||||||||||||||
Stock issued stock plans | — | — | 1,469 | — | — | 1,469 | ||||||||||||||||||
Stock issued in Salin acquisition | — | — | 102,722 | — | — | 102,722 | ||||||||||||||||||
Repurchase of outstanding stock | — | — | (1,595 | ) | — | — | (1,595 | ) | ||||||||||||||||
Cash dividends on common stock ($0.46 per share) | — | — | — | (20,835 | ) | — | (20,835 | ) | ||||||||||||||||
Balances, December 31, 2019 | $ | — | $ | — | $ | 379,853 | $ | 269,738 | $ | 6,432 | $ | 656,023 | ||||||||||||
Twelve Months Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 33,117 | $ | 23,912 | $ | 20,549 | ||||||
Items not requiring (providing) cash | ||||||||||||
Provision for loan losses | 2,470 | 1,842 | 3,162 | |||||||||
Depreciation and amortization | 5,936 | 5,275 | 4,152 | |||||||||
Share based compensation | 325 | 324 | 288 | |||||||||
Mortgage servicing rights net impairment | 80 | 110 | 59 | |||||||||
Premium amortization on securities, net | 6,024 | 6,162 | 3,420 | |||||||||
Gain on sale of investment securities | (38 | ) | (1,836 | ) | (189 | ) | ||||||
Gain on sale of mortgage loans | (7,906 | ) | (11,675 | ) | (10,055 | ) | ||||||
Proceeds from sales of loans | 231,410 | 328,377 | 310,700 | |||||||||
Loans originated for sale | (218,511 | ) | (316,875 | ) | (302,419 | ) | ||||||
Change in cash value of life insurance | (1,797 | ) | (1,618 | ) | (1,224 | ) | ||||||
Loss (gain) on sale of other real estate owned | (4 | ) | 261 | (289 | ) | |||||||
Net change in | ||||||||||||
Interest receivable | (2,591 | ) | (544 | ) | (1,010 | ) | ||||||
Interest payable | 152 | (275 | ) | (11 | ) | |||||||
Other assets | 6,173 | 489 | 8,569 | |||||||||
Other liabilities | (5,776 | ) | (8,381 | ) | (472 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 49,064 | 25,548 | 35,230 | |||||||||
|
|
|
|
|
| |||||||
Investing Activities | ||||||||||||
Purchases of securities available for sale | (149,376 | ) | (225,555 | ) | (244,195 | ) | ||||||
Proceeds from sales, maturities, calls, and principal repayments of securities available for sale | 85,587 | 269,587 | 121,724 | |||||||||
Purchases of securities held to maturity | (31,794 | ) | (45,832 | ) | (32,605 | ) | ||||||
Proceeds from maturities of securities held to maturity | 13,376 | 30,843 | 7,155 | |||||||||
Change in Federal Reserve and FHLB stock | 8,922 | (5,448 | ) | 268 | ||||||||
Net change in loans | (251,821 | ) | 32,099 | (156,340 | ) | |||||||
Proceeds on the sale of OREO and repossessed assets | 4,238 | 2,572 | 3,014 | |||||||||
Change in premises and equipment, net | (2,689 | ) | (1,383 | ) | (5,622 | ) | ||||||
Net cash received in acquisition, Peoples | — | — | 182,413 | |||||||||
Net cash received in acquisition, Kosciusko | — | 30,437 | — | |||||||||
Net cash received in acquisition, LaPorte | — | 116,521 | — | |||||||||
Net cash received in acquisition, CNB | — | 22,549 | — | |||||||||
Net cash received in acquisition of branch | 11,000 | — | — | |||||||||
Net cash received in acquisition, Lafayette | 20,425 | — | — | |||||||||
Gain on remeasurement of equity interest in Lafayette | (530 | ) | — | — | ||||||||
Net cash received in acquisition, Wolverine | 12,788 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net cash provided by (used in) investing activities | (279,874 | ) | 226,390 | (124,188 | ) | |||||||
|
|
|
|
|
| |||||||
Financing Activities | ||||||||||||
Net change in | ||||||||||||
Deposits | (13,360 | ) | 46,590 | 46,747 | ||||||||
Borrowings | 259,895 | (255,994 | ) | 49,421 | ||||||||
Redemption of preferred stock | — | (12,500 | ) | — | ||||||||
Proceeds from issuance of stock | 1,604 | 572 | 4,305 | |||||||||
Dividends paid on common shares | (11,720 | ) | (8,382 | ) | (6,216 | ) | ||||||
Dividends paid on preferred shares | — | (42 | ) | (125 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash provided by (used in) financing activities | 236,419 | (229,756 | ) | 94,132 | ||||||||
|
|
|
|
|
| |||||||
Net Change in Cash and Cash Equivalents | 5,609 | 22,182 | 5,174 | |||||||||
Cash and Cash Equivalents, Beginning of Period | 70,832 | 48,650 | 43,476 | |||||||||
|
|
|
|
|
| |||||||
Cash and Cash Equivalents, End of Period | $ | 76,441 | $ | 70,832 | $ | 48,650 | ||||||
|
|
|
|
|
|
Continued
HORIZON BANCORPAND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollar Amounts in Thousands)
Additional Supplemental Information | ||||||||||||
Interest paid | $ | 15,969 | $ | 20,572 | $ | 13,844 | ||||||
Income taxes paid | 10,195 | 6,916 | 4,123 | |||||||||
Transfer of loans to other real estate owned | 2,411 | 3,679 | 5,567 | |||||||||
The Company purchased all of the capital stock of Wolverine for $93,773 on October 17, 2017. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | 394,090 | — | — | |||||||||
Less: common stock issued | 62,111 | — | — | |||||||||
Cash paid for the capital stock | 31,662 | — | — | |||||||||
Liabilities assumed | 300,317 | — | — | |||||||||
The Company purchased all of the capital stock of Lafayette for $34,465 on September 1, 2017. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | 186,844 | — | — | |||||||||
Less: common stock issued | 30,044 | — | — | |||||||||
Cash paid for the capital stock | 4,421 | — | — | |||||||||
Liabilities assumed | 152,379 | — | — | |||||||||
Acquisition of LaPorte, measurement period adjustments | 704 | — | — | |||||||||
The Company purchased all of the capital stock of CNB Bancorp for $5,311 on November 7, 2016. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | — | 56,219 | — | |||||||||
Less: cash paid for the capital stock | — | 5,311 | — | |||||||||
Liabilities assumed | — | 50,908 | — | |||||||||
The Company purchased all of the capital stock of LaPorte Bancorp for $98,634 on July 18, 2016. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | — | 546,770 | — | |||||||||
Less: common stock issued | — | 60,306 | — | |||||||||
Cash paid for the capital stock | — | 38,328 | — | |||||||||
Liabilities assumed | — | 448,136 | — | |||||||||
The Company purchased all of the capital stock of Kosciusko for $22,983 on June 1, 2016. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | — | 155,873 | — | |||||||||
Less: common stock issued | — | 14,470 | — | |||||||||
Cash paid for the capital stock | — | 8,513 | — | |||||||||
Liabilities assumed | — | 132,890 | — | |||||||||
The Company purchased all of the capital stock of Peoples for $78,147 on July 1, 2015. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | — | — | 485,077 | |||||||||
Less: common stock issued | — | — | 55,506 | |||||||||
Cash paid for the capital stock | — | 22,641 | ||||||||||
Liabilities assumed | — | — | 406,930 |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Items not requiring (providing) cash | ||||||||||||
Provision for loan losses | 1,976 | 2,906 | 2,470 | |||||||||
Depreciation and amortization | 9,688 | 6,813 | 5,936 | |||||||||
Share based compensation | 215 | 251 | 325 | |||||||||
Mortgage servicing rights, net impairment | 192 | (60 | ) | 80 | ||||||||
Premium amortization on securities, net | 5,929 | 5,798 | 6,024 | |||||||||
Loss (gain) on sale of investment securities | 75 | 443 | (38 | ) | ||||||||
Gain on sale of mortgage loans | (9,208 | ) | (6,613 | ) | (7,906 | ) | ||||||
Proceeds from sales of loans | 275,809 | 197,492 | 231,410 | |||||||||
Loans originated for sale | (269,651 | ) | (188,823 | ) | (218,511 | ) | ||||||
Change in cash value life insurance | (2,190 | ) | (1,912 | ) | (1,797 | ) | ||||||
Death benefit on bank owned life insurance | 580 | 154 | — | |||||||||
Loss (gain) on other real estate owned | (126 | ) | (209 | ) | (4 | ) | ||||||
Net change in: | ||||||||||||
Interest receivable | (2,101 | ) | (1,180 | ) | (2,591 | ) | ||||||
Interest payable | 205 | 1,145 | 152 | |||||||||
Other assets | 97,629 | 2,460 | 6,173 | |||||||||
Other liabilities | (608 | ) | 658 | (5,776 | ) | |||||||
Net cash provided by operating activities | 174,952 | 72,440 | 49,064 | |||||||||
Investing Activities | ||||||||||||
Purchases of securities available for sale | (425,879 | ) | (214,706 | ) | (149,376 | ) | ||||||
Proceeds from sales, maturities, calls and principal repayments of securities available for sale | 248,422 | 123,377 | 85,587 | |||||||||
Purchases of securities held to maturity | — | (28,374 | ) | (31,794 | ) | |||||||
Proceeds from maturities of securities held to maturity | 8,384 | 8,301 | 13,376 | |||||||||
Net change in interest-earning time deposits | 7,289 | 717 | 950 | |||||||||
Change in Federal Reserve and FHLB stock | (803 | ) | 32 | 8,987 | ||||||||
Net change in loans | (59,420 | ) | (182,637 | ) | (251,821 | ) | ||||||
Proceeds on the sale of OREO and repossessed assets | 4,744 | 3,258 | 4,238 | |||||||||
Change in premises and equipment, net | (4,612 | ) | (3,434 | ) | (2,689 | ) | ||||||
Purchases of bank owned life insurance | — | (10,450 | ) | — | ||||||||
Net cash received in acquisition of branch | — | — | 11,000 | |||||||||
Net cash received in acquisition, Lafayette | — | — | 20,425 | |||||||||
Gain on remeasurement of equity interest in Lafayette | — | — | (530 | ) | ||||||||
Net cash received in acquisition, Wolverine | — | — | 12,723 | |||||||||
Net cash received in acquisition, Salin | 128,745 | — | — | |||||||||
Repurchase of outstanding stock | (1,595 | ) | — | — | ||||||||
Net cash provided by (used in) investing activities | (94,725 | ) | (303,916 | ) | (278,924 | ) | ||||||
Financing Activities | ||||||||||||
Net change in: | ||||||||||||
Deposits | 50,282 | 258,373 | (13,360 | ) | ||||||||
Borrowings | (71,040 | ) | (13,589 | ) | 259,895 | |||||||
Proceeds from issuance of stock | 1,705 | 622 | 1,604 | |||||||||
Dividends paid on common stock | (20,835 | ) | (15,418 | ) | (11,720 | ) | ||||||
Net cash provided by (used in) financing activities | (39,888 | ) | 229,988 | 236,419 | ||||||||
Net Change in Cash and Cash Equivalents | 40,339 | (1,488 | ) | 6,559 | ||||||||
Cash and Cash Equivalents, Beginning of Period | 58,492 | 59,980 | 53,421 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 98,831 | $ | 58,492 | $ | 59,980 | ||||||
Additional Supplemental Information | ||||||||||||
Interest paid | $ | 46,510 | $ | 30,454 | $ | 15,969 | ||||||
Income taxes paid | 13,219 | 6,819 | 10,350 | |||||||||
Transfer of loans to other real estate and repossessed assets | 2,700 | 3,005 | 2,411 | |||||||||
Transfer of premises to other real estate | 1,705 | — | — | |||||||||
Right-of-use assets exchanged for lease obligations | 3,411 | — | — | |||||||||
Sale of securities available for sale not yet settled | 6,303 | — | — |
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability).
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
Acquired loans not accounted for under ASC
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
business acquired. Horizon’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Horizon to provide quality, cost effective banking services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Goodwill totaled $119.9 million at December 31, 2017 and $76.9 million at December 31, 2016. A large majority of the goodwill relates to the acquisitions of Heartland, Summit, Peoples, Kosciusko, LaPorte, Lafayette, Wolverine and Wolverine.
Salin.
HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Basic earnings per share | ||||||||||||
Net income | $ | 33,117 | $ | 23,912 | $ | 20,549 | ||||||
Less: Preferred stock dividends | — | 42 | 125 | |||||||||
|
|
|
|
|
| |||||||
Net income available to common shareholders | $ | 33,117 | $ | 23,870 | $ | 20,424 | ||||||
Weighted average common shares outstanding(1) | 23,035,824 | 19,987,728 | 15,765,444 | |||||||||
Basic earnings per share | $ | 1.44 | $ | 1.19 | $ | 1.30 | ||||||
|
|
|
|
|
| |||||||
Diluted earnings per share | ||||||||||||
Net income available to common shareholders | $ | 33,117 | $ | 23,870 | $ | 20,424 | ||||||
Weighted average common shares outstanding(1) | 23,035,824 | 19,987,728 | 15,765,444 | |||||||||
Effect of dilutive securities: | ||||||||||||
Warrants | — | — | 330,474 | |||||||||
Restricted stock | 31,321 | 26,553 | 48,015 | |||||||||
Stock options | 106,481 | 68,129 | 53,379 | |||||||||
|
|
|
|
|
| |||||||
Weighted average shares outstanding | 23,173,626 | 20,082,410 | 16,197,312 | |||||||||
Diluted earnings per share | $ | 1.43 | $ | 1.19 | $ | 1.26 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Basic earnings per share | ||||||||||||
Net income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Weighted average common shares outstanding (1) | 43,493,316 | 38,347,059 | 34,553,736 | |||||||||
Basic earnings per share | $ | 1.53 | $ | 1.39 | $ | 0.96 | ||||||
Diluted earnings per share | ||||||||||||
Net income available to common shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Weighted average common shares outstanding (1) | 43,493,316 | 38,347,059 | 34,553,736 | |||||||||
Effect of dilutive securities: | ||||||||||||
Restricted stock | 23,006 | 36,185 | 46,981 | |||||||||
Stock options | 81,273 | 111,987 | 159,721 | |||||||||
Weighted average common shares outstanding | 43,597,595 | 38,495,231 | 34,760,438 | |||||||||
$ | 1.53 | $ | 1.38 | $ | 0.95 | |||||||
(1) | Adjusted for 3:2 stock split on |
At
HORIZON BANCORPAND SUBSIDIARIES
Notesthe adjustment to Consolidated Financial Statements
(Table dollarsfair value of the derivative instrument is recorded in thousands exceptearnings. For a derivative used to hedge changes in cash flows associated with forecasted transactions, the gain or loss of the effective portion of the derivative will be deferred, and reported as accumulated other comprehensive income, a component of shareholders’ equity, until such time the hedged transaction affects earnings. For derivative instruments not accounted for per share data)
as hedges, changes in fair value are recognized in
Recent
Standards
AOCI and reclassified to retained earnings at January 1, 2018.
842)
FASB ASUNo. 2017-08,Receivables – Nonrefundable Fees and Other Costs (Subtopic310-20), Premium Amortization on Purchased Callable Debt Securities
The FASB has issued ASUNo. 2017-08,Receivables – Nonrefundable Fees and Other Costs (Subtopic310-20), Premium Amortization on Purchased Callable Debt Securities.These amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amendments in this update were adopted on January 1, 2017 and did not have a material impact on the consolidated financial statements.
FASB ASUNo. 2017-04,Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment
The FASB has issued ASUNo. 2017-04,Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The new guidance is intended to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. The amendments in this
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
update should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted on testing dates after January 1, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.
FASB ASUNo. 2017-01,Business Combinations (Topic 805), Clarifying the Definition of a Business
The FASB has issued ASUNo. 2017-01,Business Combinations (Topic 805), Clarifying the Definition of a Business. The amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business. Because the current definition of a business is interpreted broadly and can be difficult to apply, stakeholders indicated that analyzing transactions is inefficient and costly and that the definition does not permit the use of reasonable judgment. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The amendments in this update became effective on January 1, 2017 and did not have a material impact on the consolidated financial statements.
FASB ASUNo. 2016-13,Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments
The FASB has issued ASUNo. 2016-13,Financial Instrument – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates. The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the ASU amends the accounting for credit losses onavailable-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. Early adoption will be permitted beginning after December 15, 2018. We have formed a cross functional committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. We expect to recognize aone-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any suchone-time adjustment or the overall impact of the new guidance on the consolidated financial statements.
FASB ASUNo. 2016-09,Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting
The FASB has issued ASUNo. 2016-09,Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including the income tax consequences, the classification of awards as either equity or liabilities and the classification on the statement of cash flows. The amendments in this update became effective on January 1, 2017 and resulted in a tax benefit of $522,000 for the year ended December 31, 2017.
FASB ASUNo.Leases (Topic 842)The FASB has issued ASUNo. 2016-02,Based on leases outstanding asDecember 31, 2017, we do not expectJanuary 1, 2019, the new standard to haveCompany recorded a material impact on our balance sheet or income statement.HORIZON BANCORPAND SUBSIDIARIESNotes to Consolidated Financial Statements(Table dollars in thousands except for per share data)
FASB ASUNo. 2014-09,
The FASB has issued ASUNo. 2014-09,Revenue from Contracts with Customers (Topic 606). The guidance in this update affects any entity provides that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that anyan entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance providesenumerates five steps that entities should follow in achieving this core principle. Revenue generated from financial instruments, including loans and investment securities, are not included in the scope of ASC 606. The adoption of ASC 606 did not result in a change to followthe accounting of any of the Company’s revenue streams that are within the scope of the amendments. Revenue-gathering activities that are within the scope of ASC 606 and that are presented as
HORIZON BANCORPAND SUBSIDIARIES
shares of Horizon common stock issued to Salin shareholders totaled 6,563,697. The Salin shareholders received cash in lieu of fractional shares. Based upon the March 25, 2019 closing price of $15.65 per share of Horizon common stock immediately prior to the effectiveness of the merger the transaction has an implied valuation of approximately $126.7 million.
principle. An entity should disclose sufficient
Assets | Liabilities | |||||||||
Cash and due from banks | $ | 152,745 | Deposits | |||||||
Investment securities, available for sale | 54,319 | Non-interest bearing | $ | 188,744 | ||||||
NOW accounts | 207,567 | |||||||||
Loans | Savings and money market | 274,504 | ||||||||
Commercial | 352,798 | Certificates of deposit | 70,529 | |||||||
Residential mortgage | 131,008 | Total deposits | 741,344 | |||||||
Consumer | 85,112 | |||||||||
Total loans | 568,918 | |||||||||
Borrowings | 70,495 | |||||||||
Premises and equipment, net | 20,425 | Subordinated debentures | 18,376 | |||||||
FRB and FHLB stock | 3,571 | Interest payable | 826 | |||||||
Goodwill | 31,358 | Other liabilities | 8,759 | |||||||
Core deposit intangible | 19,818 | |||||||||
Interest receivable | 2,488 | |||||||||
Other assets | 112,880 | |||||||||
Total liabilities assumed | $ | 839,800 | ||||||||
Total assets purchased | $ | 966,522 | ||||||||
Common shares issued | $ | 102,722 | ||||||||
Cash paid | 24,000 | |||||||||
Total purchase price | $ | 126,722 | ||||||||
Contractually required principal and interest at acquisition | $ | 22,672 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 6,694 | |||
Expected cash flows at acquisition | 15,978 | |||
Interest component of expected cash flows (accretable discount) | 735 | |||
Fair value of acquired loans accounted for under ASC 310-30 | $ | 15,243 | ||
In May 2016, the FASB issued ASUNo. 2016-12,Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and some practical expedients.
In December 2016, the FASB issued ASUNo. 2016-20,Revenue from Contracts with Customers (Topic 606), Technical Corrections and Improvements. The FASB board decided to issue a separate update for technical corrections and improvements to Topic 606 and other Topics amended by ASUNo. 2014-09 to increase awareness of the proposals and to expedite improvements to ASUNo. 2014-09. The amendment affects narrow aspects of the guidance issued in ASUNo. 2014-09.
Note 2 – Acquisitions
collected.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
ASSETS | ||||
Cash and due from banks | $ | 44,450 | ||
Investment securities, available for sale | — | |||
Commercial | 276,167 | |||
Residential mortgage | 30,603 | |||
Consumer | 3,897 | |||
|
| |||
Total loans | 310,667 | |||
Premises and equipment, net | 2,941 | |||
FHLB stock | 2,700 | |||
Goodwill | 26,827 | |||
Core deposit intangible | 2,024 | |||
Interest receivable | 584 | |||
Other assets | 3,897 | |||
|
| |||
Total assets purchased | $ | 394,090 | ||
|
| |||
Common shares issued | $ | 62,111 | ||
Cash paid | 31,662 | |||
|
| |||
Total estimated purchase price | $ | 93,773 | ||
|
|
LIABILITIES | ||||
Deposits | ||||
Non-interest bearing | $ | 25,221 | ||
NOW accounts | 8,026 | |||
Savings and money market | 129,044 | |||
Certificates of deposits | 94,688 | |||
|
| |||
Total deposits | 256,979 | |||
Borrowings | 36,970 | |||
Interest payable | 214 | |||
Other liabilities | 6,154 | |||
|
| |||
Total liabilities assumed | $ | 300,317 | ||
|
|
Assets | Liabilities | |||||||||
Cash and due from banks | $ | 44,450 | Deposits | |||||||
Non-interest bearing | $ | 25,221 | ||||||||
Loans | NOW accounts | 8,026 | ||||||||
Commercial | 276,167 | Savings and money market | 129,044 | |||||||
Residential mortgage | 30,603 | Certificates of deposit | 94,688 | |||||||
Consumer | 3,897 | Total deposits | 256,979 | |||||||
Total loans | 310,667 | |||||||||
Premises and equipment, net | 2,941 | Borrowings | 36,970 | |||||||
FRB and FHLB stock | 2,700 | Interest payable | 214 | |||||||
Goodwill | 26,827 | Other liabilities | 6,154 | |||||||
Core deposit intangible | 2,024 | |||||||||
Interest receivable | 584 | |||||||||
Other assets | 3,897 | |||||||||
Total assets purchased | $ | 394,090 | Total liabilities assumed | $ | 300,317 | |||||
Common shares issued | $ | 62,111 | ||||||||
Cash paid | 31,662 | |||||||||
Total purchase price | $ | 93,773 | ||||||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Contractually required principal and interest at acquisition | $ | 21,912 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 1,832 | |||
Expected cash flows at acquisition | 20,080 | |||
Interest component of expected cash flows (accretable discount) | 2,267 | |||
Fair value of acquired loans accounted for under ASC 310-30 | $ | 17,813 | ||
HORIZON BANCORPAND SUBSIDIARIES
Assets | Liabilities | |||||||||||
Cash and due from banks | $ | 24,846 | Deposits | |||||||||
Investment securities, available for sale | 6 | Non-interest bearing | $ | 34,990 | ||||||||
NOW accounts | 30,174 | |||||||||||
Loans | Savings and money market | 53,663 | ||||||||||
Commercial | 116,258 | Certificates of deposit | 32,520 | |||||||||
Residential mortgage | 12,761 | Total deposits | 151,347 | |||||||||
Consumer | 5,280 | |||||||||||
Total loans | 134,299 | |||||||||||
Premises and equipment, net | 7,818 | Interest payable | 42 | |||||||||
FHLB stock | 395 | Other liabilities | 990 | |||||||||
Goodwill | 15,408 | |||||||||||
Core deposit intangible | 2,085 | |||||||||||
Interest receivable | 338 | |||||||||||
Other assets | 1,649 | |||||||||||
Total assets purchased | $ | 186,844 | Total liabilities assumed | $ | 152,379 | |||||||
Common shares issued | $ | 30,044 | (1) | |||||||||
Cash paid | 4,421 | |||||||||||
Total purchase price | $ | 34,465 | ||||||||||
ASSETS | ||||
Cash and due from banks | $ | 24,846 | ||
Investment securities, available for sale | 6 | |||
Commercial | 116,258 | �� | ||
Residential mortgage | 12,761 | |||
Consumer | 5,280 | |||
|
| |||
Total loans | 134,299 | |||
Premises and equipment, net | 7,818 | |||
FHLB stock | 395 | |||
Goodwill | 15,408 | |||
Core deposit intangible | 2,085 | |||
Interest receivable | 338 | |||
Other assets | 1,649 | |||
|
| |||
Total assets purchased | $ | 186,844 | ||
|
| |||
Common shares issued | $ | 30,044 | (1) | |
Cash paid | 4,421 | |||
|
| |||
Total estimated purchase price | $ | 34,465 | ||
|
|
LIABILITIES | ||||
Deposits | ||||
Non-interest bearing | $ | 34,990 | ||
NOW accounts | 30,174 | |||
Savings and money market | 53,663 | |||
Certificates of deposits | 32,520 | |||
|
| |||
Total deposits | 151,347 | |||
Borrowings | — | |||
Interest payable | 42 | |||
Other liabilities | 990 | |||
|
| |||
Total liabilities assumed | $ | 152,379 | ||
|
|
(1) | This includes $955,000 of common shares previously held by Horizon. |
HORIZON BANCORPAND SUBSIDIARIES
Contractually required principal and interest at acquisition | $ | 6,128 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 1,326 | |||
|
| |||
Expected cash flows at acquisition | 4,802 | |||
Interest component of expected cash flows (accretable discount) | 933 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 3,869 | ||
|
|
Contractually required principal and interest at acquisition | $ | 6,128 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 1,326 | |||
Expected cash flows at acquisition | 4,802 | |||
Interest component of expected cash flows (accretable discount) | 933 | |||
Fair value of acquired loans accounted for under ASC 310-30 | $ | 3,869 | ||
CNB Bancorp
On November 7, 2016, Horizon completed the acquisition of CNB Bancorp, an Indiana corporation headquartered in Attica, Indiana (“CNB”) and the Bank’s acquisition of The Central National Bank and Trust Company (“Central National Bank & Trust”), through mergers effective November 7, 2016. Under terms of the acquisition, shareholders of CNB received merger consideration in the form of cash. The total value of the consideration for the acquisition was $5.3 million. The Company had approximately $779,000 in costs related to the acquisition as of December 31, 2016. These expenses are classified in thenon-interest expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company was able to increase its deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the purchase method of accounting, the total estimated purchase price is allocated to CNB’s net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the CNB acquisition is allocated as follows:
ASSETS | ||||
Cash and due from banks | $ | 27,860 | ||
Investment securities, available for sale | 16,393 | |||
Commercial | 2,267 | |||
Residential mortgage | 6,624 | |||
Consumer | 1,579 | |||
|
| |||
Total loans | 10,470 | |||
Premises and equipment, net | 444 | |||
FHLB stock | 50 | |||
Goodwill | 609 | |||
Core deposit intangible | 190 | |||
Interest receivable | 154 | |||
Other assets | 49 | |||
|
| |||
Total assets purchased | $ | 56,219 | ||
|
| |||
Cash paid | 5,311 | |||
|
| |||
Total estimated purchase price | $ | 5,311 | ||
|
|
LIABILITIES | ||||
Deposits | ||||
Non-interest bearing | $ | 24,079 | ||
NOW accounts | 9,038 | |||
Savings and money market | 13,829 | |||
Certificates of deposits | 3,342 | |||
|
| |||
Total deposits | 50,288 | |||
Borrowings | 459 | |||
Interest payable | 7 | |||
Other liabilities | 154 | |||
|
| |||
Total liabilities assumed | $ | 50,908 | ||
|
|
Of the total purchase price of $5.3 million, $190,000 has been allocated to core deposit intangible. Additionally, $609,000 has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis.
The Company acquired the $10.8 million performing loan portfolio with an estimated fair value of $10.5 million. No loans were purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected or which are considered to be credit impaired.
LaPorte Bancorp, Inc.
On July 18, 2016, Horizon completed the acquisition of LaPorte Bancorp, Inc., a Maryland corporation (“LaPorte Bancorp”) and the Bank’s acquisition of The LaPorte Savings Bank, a state-chartered savings bank and wholly owned subsidiary of LaPorte Bancorp, through mergers effective July 18, 2016. Under the terms of the merger agreement, shareholders of LaPorte Bancorp had the option to receive $17.50 per share in cash or 0.9435 shares of Horizon common stock for each share of LaPorte Bancorp’s common stock, subject to allocation provisions to assure that in aggregate, LaPorte Bancorp shareholders received total consideration that consisted of 65% stock and 35% cash. As a result of LaPorte Bancorp shareholder stock and cash elections and the related proration provisions of the merger agreement, Horizon issued 3,421,488 shares of its common stock in the merger. Based upon the July 18, 2016 closing price of $18.36 per share of Horizon common stock, less the consideration used to pay off LaPorte Bancorp’s ESOP loan receivable, the transaction has an implied valuation of approximately $98.6 million. The Company had approximately $4.0 million in costs related to the acquisition as of December 31, 2016. These expenses are classified in thenon-interest expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company was able to increase its deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the LaPorte Bancorp acquisition is detailed in the following table.
ASSETS | ||||
Cash and due from banks | $ | 154,849 | ||
Investment securities, available for sale | 23,779 | |||
Commercial | 153,750 | |||
Residential mortgage | 42,603 | |||
Consumer | 16,801 | |||
Mortgage Warehousing | 99,752 | |||
|
| |||
Total loans | 312,906 | |||
Premises and equipment, net | 6,022 | |||
FHLB stock | 4,029 | |||
Goodwill | 20,993 | |||
Core deposit intangible | 2,514 | |||
Interest receivable | 844 | |||
Cash value of life insurance | 15,267 | |||
Other assets | 8,334 | |||
|
| |||
Total assets purchased | $ | 549,537 | ||
|
| |||
Common shares issued | $ | 60,306 | ||
Cash paid | 38,328 | |||
|
| |||
Total estimated purchase price | $ | 98,634 | ||
|
|
LIABILITIES | ||||
Deposits | ||||
Non-interest bearing | $ | 66,733 | ||
NOW accounts | 99,346 | |||
Savings and money market | 117,688 | |||
Certificates of deposits | 87,605 | |||
|
| |||
Total deposits | 371,372 | |||
Borrowings | 64,793 | |||
Interest payable | 178 | |||
Subordinated debt | 4,504 | |||
Other liabilities | 10,056 | |||
|
| |||
Total liabilities assumed | $ | 450,903 | ||
|
|
Of the total estimated purchase price of $98.6 million, $2.5 million has been allocated to core deposit intangible. Additionally, $21.0 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis.
The Company acquired various loans in the acquisition that had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such aspast-due andnon-accrual status, borrower credit scores and recentloan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.
Loans with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
The following table details the acquired loans that are accounted for in accordance with ASC310-30 as of July 18, 2016.
Contractually required principal and interest at acquisition | $ | 12,545 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 4,492 | |||
|
| |||
Expected cash flows at acquisition | 8,053 | |||
Interest component of expected cash flows (accretable discount) | 1,258 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 6,795 | ||
|
|
Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
Kosciusko Financial, Inc.
On June 1, 2016, Horizon completed the acquisition of Kosciusko Financial, Inc., an Indiana corporation (“Kosciusko”) and the Bank’s acquisition of Farmers State Bank, a state-chartered bank and wholly owned subsidiary of Kosciusko, through mergers effective June 1, 2016. Under the terms of the merger agreement, shareholders of Kosciusko had the option to receive $81.75 per share in cash or 4.5183 shares of Horizon common stock for each share of Kosciusko’s common stock, subject to allocation provisions to assure that in aggregate, Kosciusko shareholders received total consideration that consisted of 65% stock and 35% cash. Kosciusko shareholders owning fewer than 100 shares of common stock received $81.75 in cash for each common share. As a result of Kosciusko shareholder stock and cash elections and the related proration provisions of the merger agreement, Horizon issued 873,430 shares of its common stock in the merger. Based upon the June 1, 2016 closing price of $16.57 per share of Horizon common stock, the transaction has an implied valuation of approximately $23.0 million. The Company had approximately $2.0 million in costs related to the acquisition. These expenses are classified in thenon-interest expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company was able to increase its deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Kosciusko acquisition is detailed in the following table.
ASSETS | ||||
Cash and due from banks | $ | 38,950 | ||
Investment securities, available for sale | 1,191 | |||
Commercial | 70,006 | |||
Residential mortgage | 26,244 | |||
Consumer | 6,319 | |||
|
| |||
Total loans | 102,569 | |||
Premises and equipment, net | 1,466 | |||
FRB and FHLB stock | 582 | |||
Goodwill | 6,443 | |||
Core deposit intangible | 526 | |||
Interest receivable | 636 | |||
Cash value of life insurance | 2,745 | |||
Other assets | 765 | |||
|
| |||
Total assets purchased | $ | 155,873 | ||
|
| |||
Common shares issued | $ | 14,470 | ||
Cash paid | 8,513 | |||
|
| |||
Total estimated purchase price | $ | 22,983 | ||
|
|
LIABILITIES | ||||
Deposits | ||||
Non-interest bearing | $ | 27,871 | ||
NOW accounts | 35,213 | |||
Savings and money market | 26,953 | |||
Certificates of deposits | 32,771 | |||
|
| |||
Total deposits | 122,808 | |||
Borrowings | 9,038 | |||
Interest payable | 55 | |||
Other liabilities | 989 | |||
|
| |||
Total liabilities assumed | $ | 132,890 | ||
|
| |||
Of the total estimated purchase price of $23.0 million, $526,000 has been allocated to core deposit intangible. Additionally, $6.4 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis.
The Company acquired various loans in the acquisition that had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such aspast-due andnon-accrual status, borrower credit scores and recentloan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.
Loans with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
The following table details the acquired loans that are accounted for in accordance with ASC310-30 as of June 1, 2016.
Contractually required principal and interest at acquisition | $ | 2,682 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 25 | |||
|
| |||
Expected cash flows at acquisition | 2,657 | |||
Interest component of expected cash flows (accretable discount) | 634 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 2,023 | ||
|
|
Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
Peoples Bancorp
On July 1, 2015, Horizon completed the acquisition of Peoples Bancorp, an Indiana corporation (“Peoples”) and the Bank’s acquisition of Peoples Federal Savings Bank of DeKalb County (“Peoples FSB”), through mergers effective July 1, 2015. Under the terms of the acquisition, the exchange ratio was 1.425 shares of Horizon common stock and $9.75 in cash for each outstanding share of Peoples common stock. Peoples shareholders owning fewer than 100 shares of common stock received $33.14 in cash for each common share. Peoples shares outstanding at the closing were 2,311,858, and the shares of Horizon common stock issued to Peoples shareholders totaled 3,288,303. Horizon’s stock price was $16.88 per share at the close of business on July 1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1 million. The Company had approximately $4.9 million in costs related to the acquisition as of December 31, 2015. These expenses are classified in thenon-interest expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the purchase method of accounting, the total estimated purchase price is allocated to Peoples net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Peoples acquisition is allocated as follows:
ASSETS | ||||
Cash and due from banks | $ | 205,054 | ||
Investment securities, available for sale | 2,038 | |||
Commercial | 67,435 | |||
Residential mortgage | 137,331 | |||
Consumer | 19,593 | |||
|
| |||
Total loans | 224,359 | |||
Premises and equipment, net | 5,524 | |||
FRB and FHLB stock | 2,743 | |||
Goodwill | 21,424 | |||
Core deposit intangible | 4,394 | |||
Interest receivable | 1,279 | |||
Cash value of life insurance | 13,898 | |||
Other assets | 4,364 | |||
|
| |||
Total assets purchased | $ | 485,077 | ||
|
| |||
Common shares issued | $ | 55,506 | ||
Cash paid | 22,641 | |||
|
| |||
Total estimated purchase price | $ | 78,147 | ||
|
|
LIABILITIES | ||||
Deposits | ||||
Non-interest bearing | $ | 28,251 | ||
NOW accounts | 65,771 | |||
Savings and money market | 125,176 | |||
Certificates of deposits | 131,889 | |||
|
| |||
Total deposits | 351,087 | |||
Borrowings | 48,884 | |||
Interest payable | 21 | |||
Other liabilities | 6,938 | |||
|
| |||
Total liabilities assumed | $ | 406,930 | ||
|
|
Of the total purchase price of $78.1 million, $4.4 million has been allocated to core deposit intangible. Additionally, $21.4 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis.
The Company acquired the $228.6 million loan portfolio at a fair value discount of $4.8 million. The performing portion of the portfolio, $223.4 million, had an estimated fair value of $220.0 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC310-20.
The Company acquired various loans in the acquisition that had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
The loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such aspast-due andnon-accrual status, borrower credit scores and recentloan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Loan with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
The following table details the acquired loans that are accounted for in accordance with ASC310-30 as of July 1, 2015.
Contractually required principal and interest at acquisition | $ | 5,730 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 715 | |||
|
| |||
Expected cash flows at acquisition | 5,015 | |||
Interest component of expected cash flows (accretable discount) | 647 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 4,368 | ||
|
|
The results of operations of Salin, Wolverine Lafayette, CNB, LaPorte Bancorp, Kosciusko and PeoplesLafayette have been included in the Company’s consolidated financial statements since the acquisition dates. The following schedule includes2017, 20162019, 2018 and 20152017 as if the Salin, Wolverine Lafayette, CNB, LaPorte Bancorp, Kosciusko and PeoplesLafayette acquisitions had occurred as of the beginning of the comparable prior reporting periods.
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Summary of Operations: | ||||||||||||
Net Interest Income | $ | 125,442 | $ | 115,860 | 119,732 | |||||||
Provision for loan losses | (12 | ) | 1,082 | 4,027 | ||||||||
Net Interest Income after Provision for Loan Losses | 125,454 | 114,778 | 115,705 | |||||||||
Non-interest Income | 33,959 | 43,330 | 37,976 | |||||||||
Non-interest Expense | 109,605 | 119,522 | 112,309 | |||||||||
Income before Income Taxes | 49,808 | 38,586 | 41,372 | |||||||||
Income Tax Expense | 16,204 | 12,072 | 10,764 | |||||||||
Net Income | 33,604 | 26,514 | 30,608 | |||||||||
Net Income Available to Common Shareholders | $ | 33,604 | $ | 26,472 | 30,483 | |||||||
|
|
|
|
|
| |||||||
Basic Earnings Per Share | $ | 1.46 | $ | 1.32 | $ | 1.93 | ||||||
Diluted Earnings Per Share | $ | 1.45 | $ | 1.32 | $ | 1.88 |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Summary of Operations: | ||||||||||||
Net Interest Income | $ | 168,693 | $ | 157,194 | $ | 153,376 | ||||||
Provision for Loan Losses | 2,276 | 3,706 | 3,438 | |||||||||
Net Interest Income after Provision for Loan Losses | 166,417 | 153,488 | 149,938 | |||||||||
Non-interest Income | 43,472 | 39,918 | 42,456 | |||||||||
Non-interest Expense | 134,446 | 124,944 | 138,752 | |||||||||
Income before Income Taxes | 75,443 | 68,462 | 53,642 | |||||||||
Income Tax Expense | 13,246 | 10,216 | 15,978 | |||||||||
Net Income | $ | 62,197 | $ | 58,246 | $ | 37,664 | ||||||
Basic Earnings per Share | $ | 1.43 | $ | 1.52 | $ | 1.09 | ||||||
Diluted Earnings per Share | $ | 1.43 | $ | 1.51 | $ | 1.08 |
Thepro-forma
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Approximately $6.7 million of this amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Indianapolis, which is not federally insured.
Gross | Gross | |||||||||||||||
December 31, 2017 | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 19,277 | $ | — | $ | (225 | ) | $ | 19,052 | |||||||
State and municipal | 148,045 | 2,189 | (670 | ) | 149,564 | |||||||||||
Federal agency collateralized mortgage obligations | 132,871 | 45 | (2,551 | ) | 130,365 | |||||||||||
Federal agency mortgage-backed pools | 211,487 | 155 | (2,985 | ) | 208,657 | |||||||||||
Private labeled mortgage-backed pools | 1,650 | — | (8 | ) | 1,642 | |||||||||||
Corporate notes | 272 | 113 | — | 385 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total available for sale investment securities | $ | 513,602 | $ | 2,502 | $ | (6,439 | ) | $ | 509,665 | |||||||
|
|
|
|
|
|
|
| |||||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 179,836 | $ | 3,493 | $ | (2,932 | ) | $ | 180,397 | |||||||
Federal agency collateralized mortgage obligations | 5,734 | 17 | (69 | ) | 5,682 | |||||||||||
Federal agency mortgage-backed pools | 14,878 | 216 | (88 | ) | 15,006 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total held to maturity investment securities | $ | 200,448 | $ | 3,726 | $ | (3,089 | ) | $ | 201,085 | |||||||
|
|
|
|
|
|
|
| |||||||||
Gross | Gross | |||||||||||||||
December 31, 2016 | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 8,051 | $ | 2 | $ | (64 | ) | $ | 7,989 | |||||||
State and municipal | 117,327 | 324 | (1,059 | ) | 116,592 | |||||||||||
Federal agency collateralized mortgage obligations | 139,040 | 254 | (2,099 | ) | 137,195 | |||||||||||
Federal agency mortgage-backed pools | 180,183 | 251 | (3,707 | ) | 176,726 | |||||||||||
Corporate notes | 1,238 | 91 | — | 1,329 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total available for sale investment securities | $ | 445,839 | $ | 922 | $ | (6,929 | ) | $ | 439,831 | |||||||
|
|
|
|
|
|
|
| |||||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 165,607 | $ | 2,700 | $ | (2,485 | ) | $ | 165,822 | |||||||
Federal agency collateralized mortgage obligations | 6,530 | 31 | (71 | ) | 6,490 | |||||||||||
Federal agency mortgage-backed pools | 21,057 | 897 | (180 | ) | 21,774 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total held to maturity investment securities | $ | 193,194 | $ | 3,628 | $ | (2,736 | ) | $ | 194,086 | |||||||
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,415 | $ | — | $ | (2 | ) | $ | 1,413 | |||||||
State and municipal | 396,931 | 11,288 | (2,451 | ) | 405,768 | |||||||||||
Federal agency collateralized mortgage obligations | 267,272 | 2,543 | (563 | ) | 269,252 | |||||||||||
Federal agency mortgage-backed pools | 145,623 | 1,207 | (258 | ) | 146,572 | |||||||||||
Corporate notes | 10,848 | 923 | — | 11,771 | ||||||||||||
Total available for sale investment securities | $ | 822,089 | $ | 15,961 | $ | (3,274 | ) | $ | 834,776 | |||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 190,767 | $ | 7,129 | $ | (54 | ) | $ | 197,842 | |||||||
Federal agency collateralized mortgage obligations | 4,560 | 13 | (5 | ) | 4,568 | |||||||||||
Federal agency mortgage-backed pools | 12,572 | 194 | (29 | ) | 12,737 | |||||||||||
Total held to maturity investment securities | $ | 207,899 | $ | 7,336 | $ | (88 | ) | $ | 215,147 | |||||||
December 31, 2018 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 16,815 | $ | 1 | $ | (208 | ) | $ | 16,608 | |||||||
State and municipal | 210,386 | 1,495 | (2,578 | ) | 209,303 | |||||||||||
Federal agency collateralized mortgage obligations | 187,563 | 625 | (3,185 | ) | 185,003 | |||||||||||
Federal agency mortgage-backed pools | 183,479 | 80 | (4,823 | ) | 178,736 | |||||||||||
Corporate notes | 10,666 | 107 | (75 | ) | 10,698 | |||||||||||
Total available for sale investment securities | $ | 608,909 | $ | 2,308 | $ | (10,869 | ) | $ | 600,348 | |||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 191,269 | $ | 1,773 | $ | (3,366 | ) | $ | 189,676 | |||||||
Federal agency collateralized mortgage obligations | 5,144 | 6 | (120 | ) | 5,030 | |||||||||||
Federal agency mortgage-backed pools | 13,699 | 74 | (206 | ) | 13,567 | |||||||||||
Total held to maturity investment securities | $ | 210,112 | $ | 1,853 | $ | (3,692 | ) | $ | 208,273 | |||||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2019.
December 31, 2017 | December 31, 2016 | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
Available for sale | ||||||||||||||||
Within one year | $ | 13,347 | $ | 13,326 | $ | 7,455 | $ | 7,480 | ||||||||
One to five years | 40,468 | 40,193 | 37,483 | 37,479 | ||||||||||||
Five to ten years | 50,473 | 51,156 | 21,112 | 20,984 | ||||||||||||
After ten years | 63,306 | 64,326 | 60,566 | 59,967 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
167,594 | 169,001 | 126,616 | 125,910 | |||||||||||||
Federal agency collateralized mortgage obligations | 132,871 | 130,365 | 139,040 | 137,195 | ||||||||||||
Federal agency mortgage-backed pools | 211,487 | 208,657 | 180,183 | 176,726 | ||||||||||||
Private labeled mortgage-backed pools | 1,650 | 1,642 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total available for sale investment securities | $ | 513,602 | $ | 509,665 | $ | 445,839 | $ | 439,831 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Held to maturity | ||||||||||||||||
Within one year | $ | 1,948 | $ | 1,934 | $ | — | $ | — | ||||||||
One to five years | 40,603 | 41,531 | 24,594 | 25,271 | ||||||||||||
Five to ten years | 89,801 | 91,249 | 87,645 | 88,805 | ||||||||||||
After ten years | 47,484 | 45,683 | 53,368 | 51,746 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
179,836 | 180,397 | 165,607 | 165,822 | |||||||||||||
Federal agency collateralized mortgage obligations | 5,734 | 5,682 | 6,530 | 6,490 | ||||||||||||
Federal agency mortgage-backed pools | 14,878 | 15,006 | 21,057 | 21,774 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total held to maturity investment securities | $ | 200,448 | $ | 201,085 | $ | 193,194 | $ | 194,086 | ||||||||
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2019 | December 31, 2018 | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
Within one year | $ | 37,386 | $ | 37,321 | $ | 20,532 | $ | 20,448 | ||||||||
One to five years | 41,230 | 41,293 | 42,476 | 41,705 | ||||||||||||
Five to ten years | 117,004 | 122,145 | 107,839 | 107,107 | ||||||||||||
After ten years | 213,574 | 218,193 | 67,020 | 67,349 | ||||||||||||
409,194 | 418,952 | 237,867 | 236,609 | |||||||||||||
Federal agency collateralized mortgage obligations | 267,272 | 269,252 | 187,563 | 185,003 | ||||||||||||
Federal agency mortgage-backed pools | 145,623 | 146,572 | 183,479 | 178,736 | ||||||||||||
Total available for sale investment securities | $ | 822,089 | $ | 834,776 | $ | 608,909 | $ | 600,348 | ||||||||
Held to maturity | ||||||||||||||||
Within one year | $ | 7,811 | $ | 7,874 | $ | 70 | $ | 70 | ||||||||
One to five years | 56,037 | 57,048 | 48,732 | 49,324 | ||||||||||||
Five to ten years | 94,756 | 98,480 | 101,809 | 101,533 | ||||||||||||
After ten years | 32,163 | 34,440 | 40,658 | 38,749 | ||||||||||||
190,767 | 197,842 | 191,269 | 189,676 | |||||||||||||
Federal agency collateralized mortgage obligations | 4,560 | 4,568 | 5,144 | 5,030 | ||||||||||||
Federal agency mortgage-backed pools | 12,572 | 12,737 | 13,699 | 13,567 | ||||||||||||
Total held to maturity investment securities | $ | 207,899 | $ | 215,147 | $ | 210,112 | $ | 208,273 | ||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
December 31, 2017 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
U.S. Treasury and federal agencies | $ | 15,882 | $ | (180 | ) | $ | 2,870 | $ | (45 | ) | $ | 18,752 | $ | (225 | ) | |||||||||
State and municipal | 54,312 | (2,758 | ) | 30,691 | (844 | ) | 85,003 | (3,602 | ) | |||||||||||||||
Federal agency collateralized mortgage obligations | 54,006 | (589 | ) | 73,462 | (2,031 | ) | 127,468 | (2,620 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 103,926 | (1,019 | ) | 86,846 | (2,054 | ) | 190,772 | (3,073 | ) | |||||||||||||||
Private labeled mortgage-backed pools | 1,642 | (8 | ) | — | — | 1,642 | (8 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total temporarily impaired securities | $ | 229,768 | $ | (4,554 | ) | $ | 193,869 | $ | (4,974 | ) | $ | 423,637 | $ | (9,528 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
December 31, 2016 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
U.S. Treasury and federal agencies | $ | 6,987 | $ | (64 | ) | $ | — | $ | — | $ | 6,987 | $ | (64 | ) | ||||||||||
State and municipal | 142,466 | (3,544 | ) | — | — | 142,466 | (3,544 | ) | ||||||||||||||||
Federal agency collateralized mortgage obligations | 112,414 | (1,918 | ) | 10,199 | (252 | ) | 122,613 | (2,170 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 163,768 | (3,887 | ) | — | — | 163,768 | (3,887 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total temporarily impaired securities | $ | 425,635 | $ | (9,413 | ) | $ | 10,199 | $ | (252 | ) | $ | 435,834 | $ | (9,665 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
Investment Securities | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,413 | $ | (2 | ) | $ | — | $ | — | $ | 1,413 | $ | (2 | ) | ||||||||||
State and municipal | 129,942 | (2,374 | ) | 6,279 | (131 | ) | 136,221 | (2,505 | ) | |||||||||||||||
Federal agency collateralized mortgage obligations | 68,043 | (308 | ) | 23,301 | (260 | ) | 91,344 | (568 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 24,740 | (104 | ) | 37,822 | (183 | ) | 62,562 | (287 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 224,138 | $ | (2,788 | ) | $ | 67,402 | $ | (574 | ) | $ | 291,540 | $ | (3,362 | ) | |||||||||
December 31, 2018 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
Investment Securities | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | — | $ | — | $ | 9,707 | $ | (208 | ) | $ | 9,707 | $ | (208 | ) | ||||||||||
State and municipal | 75,163 | (1,628 | ) | 106,335 | (4,316 | ) | 181,498 | (5,944 | ) | |||||||||||||||
Federal agency collateralized mortgage obligations | 6,450 | (25 | ) | 106,257 | (3,280 | ) | 112,707 | (3,305 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 5,739 | (39 | ) | 175,865 | (4,990 | ) | 181,604 | (5,029 | ) | |||||||||||||||
Corporate notes | 5,263 | (75 | ) | — | — | 5,263 | (75 | ) | ||||||||||||||||
Total temporarily impaired securities | $ | 92,615 | $ | (1,767 | ) | $ | 398,164 | $ | (12,794 | ) | $ | 490,779 | $ | (14,561 | ) | |||||||||
2019.
2019.
Years ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Sales of securities available for sale | ||||||||||||
Proceeds | $ | 5,490 | $ | 182,549 | $ | 43,051 | ||||||
Gross gains | 151 | 2,646 | 254 | |||||||||
Gross losses | (113 | ) | (810 | ) | (65 | ) |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Sales of securities available for sale | ||||||||||||
Proceeds | $ | 98,425 | $ | 38,519 | $ | 5,490 | ||||||
Gross gains | 168 | 37 | 151 | |||||||||
Gross losses | (243 | ) | (480 | ) | (113 | ) |
HORIZON BANCORPAND SUBSIDIARIES
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Commercial | ||||||||
Working capital and equipment | $ | 696,612 | $ | 539,403 | ||||
Real estate, including agriculture | 854,003 | 485,620 | ||||||
Tax exempt | 36,324 | 15,486 | ||||||
Other | 30,931 | 29,447 | ||||||
|
|
|
| |||||
Total | 1,617,870 | 1,069,956 | ||||||
Real estate | ||||||||
1–4 family | 599,217 | 526,024 | ||||||
Other | 7,543 | 5,850 | ||||||
|
|
|
| |||||
Total | 606,760 | 531,874 | ||||||
Consumer | ||||||||
Auto | 251,020 | 174,773 | ||||||
Recreation | 8,752 | 5,669 | ||||||
Real estate/home improvement | 63,811 | 53,898 | ||||||
Home equity | 165,240 | 144,508 | ||||||
Unsecured | 3,743 | 3,875 | ||||||
Other | 20,291 | 15,706 | ||||||
|
|
|
| |||||
Total | 512,857 | 398,429 | ||||||
Mortgage warehouse | 94,508 | 135,727 | ||||||
|
|
|
| |||||
Total loans | 2,831,995 | 2,135,986 | ||||||
Allowance for loan losses | (16,394 | ) | (14,837 | ) | ||||
|
|
|
| |||||
Loans, net | $ | 2,815,601 | $ | 2,121,149 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Commercial | ||||||||
Working capital and equipment | $ | 938,317 | $ | 804,083 | ||||
Real estate, including agriculture | 978,891 | 834,037 | ||||||
Tax exempt | 63,571 | 48,975 | ||||||
Other | 65,872 | 34,495 | ||||||
Total | 2,046,651 | 1,721,590 | ||||||
Real estate | ||||||||
1-4 family | 762,571 | 659,754 | ||||||
Other | 8,146 | 8,387 | ||||||
Total | 770,717 | 668,141 | ||||||
Consumer | ||||||||
Auto | 362,729 | 327,413 | ||||||
Recreation | 16,262 | 13,975 | ||||||
Real estate/home improvement | 43,585 | 39,587 | ||||||
Home equity | 237,979 | 163,209 | ||||||
Unsecured | 7,286 | 4,043 | ||||||
Other | 1,339 | 1,254 | ||||||
Total | 669,180 | 549,481 | ||||||
Mortgage warehouse | 150,293 | 74,120 | ||||||
Total loans | 3,636,841 | 3,013,332 | ||||||
Allowance for loan losses | (17,667 | ) | (17,820 | ) | ||||
Loans, net | $ | 3,619,174 | $ | 2,995,512 | ||||
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
Loan | Deferred | Recorded | ||||||||||||||
December 31, 2017 | Balance | Interest Due | Fees / (Costs) | Investment | ||||||||||||
Owner occupied real estate | $ | 547,596 | $ | 1,441 | $ | 1,917 | $ | 550,954 | ||||||||
Non owner occupied real estate | 664,281 | 1,100 | 2,478 | 667,859 | ||||||||||||
Residential spec homes | 16,431 | 63 | 80 | 16,574 | ||||||||||||
Development & spec land loans | 48,674 | 116 | 579 | 49,369 | ||||||||||||
Commercial and industrial | 335,227 | 2,524 | 607 | 338,358 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial | 1,612,209 | 5,244 | 5,661 | 1,623,114 | ||||||||||||
Residential mortgage | 588,358 | 1,776 | 2,375 | 592,509 | ||||||||||||
Residential construction | 16,027 | 39 | — | 16,066 | ||||||||||||
Mortgage warehouse | 94,508 | 480 | — | 94,988 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total real estate | 698,893 | 2,295 | 2,375 | 703,563 | ||||||||||||
Direct installment | 89,617 | 270 | (552 | ) | 89,335 | |||||||||||
Direct installment purchased | 82 | — | — | 82 | ||||||||||||
Indirect installment | 227,323 | 528 | 168 | 228,019 | ||||||||||||
Home equity | 197,578 | 889 | (1,359 | ) | 197,108 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total consumer | 514,600 | 1,687 | (1,743 | ) | 514,544 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total loans | 2,825,702 | 9,226 | 6,293 | 2,841,221 | ||||||||||||
Allowance for loan losses | (16,394 | ) | — | — | (16,394 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loans | $ | 2,809,308 | $ | 9,226 | $ | 6,293 | $ | 2,824,827 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Loan | Deferred | Recorded | ||||||||||||||
December 31, 2016 | Balance | Interest Due | Fees / (Costs) | Investment | ||||||||||||
Owner occupied real estate | $ | 337,548 | $ | 899 | $ | 1,022 | $ | 339,469 | ||||||||
Non owner occupied real estate | 461,897 | 624 | 2,176 | 464,697 | ||||||||||||
Residential spec homes | 5,006 | 8 | (2 | ) | 5,012 | |||||||||||
Development & spec land loans | 31,228 | 56 | 119 | 31,403 | ||||||||||||
Commercial and industrial | 230,520 | 1,906 | 442 | 232,868 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial | 1,066,199 | 3,493 | 3,757 | 1,073,449 | ||||||||||||
Residential mortgage | 508,233 | 1,492 | 3,030 | 512,755 | ||||||||||||
Residential construction | 20,611 | 33 | — | 20,644 | ||||||||||||
Mortgage warehouse | 135,727 | 480 | — | 136,207 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total real estate | 664,571 | 2,005 | 3,030 | 669,606 | ||||||||||||
Direct installment | 71,150 | 199 | (385 | ) | 70,964 | |||||||||||
Direct installment purchased | 119 | — | — | 119 | ||||||||||||
Indirect installment | 153,204 | 345 | — | 153,549 | ||||||||||||
Home equity | 175,126 | 703 | (785 | ) | 175,044 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total consumer | 399,599 | 1,247 | (1,170 | ) | 399,676 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total loans | 2,130,369 | 6,745 | 5,617 | 2,142,731 | ||||||||||||
Allowance for loan losses | (14,837 | ) | — | — | (14,837 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loans | $ | 2,115,532 | $ | 6,745 | $ | 5,617 | $ | 2,127,894 | ||||||||
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||
Loan Balance | Interest Due | Deferred Costs/ (Fees) | Recorded Investment | |||||||||||||
Owner occupied real estate | $ | 519,577 | $ | 784 | $ | (148 | ) | $ | 520,213 | |||||||
Non-owner occupied real estate | 973,331 | 1,752 | (763 | ) | 974,320 | |||||||||||
Residential spec homes | 12,925 | 15 | (2 | ) | 12,938 | |||||||||||
Development & spec land | 35,954 | 101 | (14 | ) | 36,041 | |||||||||||
Commercial and industrial | 505,859 | 4,600 | (68 | ) | 510,391 | |||||||||||
Total commercial | 2,047,646 | 7,252 | (995 | ) | 2,053,903 | |||||||||||
Residential mortgage | 751,019 | 2,245 | 12 | 753,276 | ||||||||||||
Residential construction | 19,686 | 40 | — | 19,726 | ||||||||||||
Mortgage warehouse | 150,293 | 242 | — | 150,535 | ||||||||||||
Total real estate | 920,998 | 2,527 | 12 | 923,537 | ||||||||||||
Direct installment | 41,079 | 148 | 678 | 41,905 | ||||||||||||
Indirect installment | 348,658 | 911 | — | 349,569 | ||||||||||||
Home equity | 276,215 | 1,304 | 2,550 | 280,069 | ||||||||||||
Total consumer | 665,952 | 2,363 | 3,228 | 671,543 | ||||||||||||
Total loans | 3,634,596 | 12,142 | 2,245 | 3,648,983 | ||||||||||||
Allowance for loan losses | (17,667 | ) | — | — | (17,667 | ) | ||||||||||
Net loans | $ | 3,616,929 | $ | 12,142 | $ | 2,245 | $ | 3,631,316 | ||||||||
December 31, 2018 | ||||||||||||||||
Loan Balance | Interest Due | Deferred Costs/ (Fees) | Recorded Investment | |||||||||||||
Owner occupied real estate | $ | 444,834 | $ | 931 | $ | (130 | ) | $ | 445,635 | |||||||
Non-owner occupied real estate | 852,855 | 1,436 | (747 | ) | 853,544 | |||||||||||
Residential spec homes | 5,195 | 13 | — | 5,208 | ||||||||||||
Development & spec land | 50,706 | 153 | (15 | ) | 50,844 | |||||||||||
Commercial and industrial | 368,962 | 3,063 | (70 | ) | 371,955 | |||||||||||
Total commercial | 1,722,552 | 5,596 | (962 | ) | 1,727,186 | |||||||||||
Residential mortgage | 644,094 | 1,861 | 17 | 645,972 | ||||||||||||
Residential construction | 24,030 | 42 | — | 24,072 | ||||||||||||
Mortgage warehouse | 74,120 | 132 | — | 74,252 | ||||||||||||
Total real estate | 742,244 | 2,035 | 17 | 744,296 | ||||||||||||
Direct installment | 35,103 | 108 | 593 | 35,804 | ||||||||||||
Indirect installment | 314,177 | 738 | — | 314,915 | ||||||||||||
Home equity | 197,494 | 968 | 2,114 | 200,576 | ||||||||||||
Total consumer | 546,774 | 1,814 | 2,707 | 551,295 | ||||||||||||
Total loans | 3,011,570 | 9,445 | 1,762 | 3,022,777 | ||||||||||||
Allowance for loan losses | (17,820 | ) | — | — | (17,820 | ) | ||||||||||
Net loans | $ | 2,993,750 | $ | 9,445 | $ | 1,762 | $ | 3,004,957 | ||||||||
Interest marks are accreted to income over the remaining life of the loan. Credit marks are evaluated using the practical expedient method.
December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | |||||||||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||||||||||||
Heartland | Summit | Peoples | Kosciusko | LaPorte | Lafayette | Wolverine | Total | |||||||||||||||||||||||||
Commercial | $ | 390 | $ | 3,653 | $ | 315 | $ | 838 | $ | 1,034 | $ | 4,271 | $ | 16,697 | $ | 27,198 | ||||||||||||||||
Real estate | 229 | 870 | 126 | 403 | 1,004 | — | — | 2,632 | ||||||||||||||||||||||||
Consumer | — | — | — | — | 33 | — | — | 33 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Outstanding balance | $ | 619 | $ | 4,523 | $ | 441 | $ | 1,241 | $ | 2,071 | $ | 4,271 | $ | 16,697 | $ | 29,863 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Carrying amount, net of allowance of $0 | $ | 29,863 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | |||||||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||||||||||||
Heartland | Summit | Peoples | Kosciusko | LaPorte | Lafayette | Wolverine | Total | |||||||||||||||||||||||||
Commercial | $ | 774 | $ | 5,245 | $ | 692 | $ | 1,652 | $ | 3,200 | $ | — | $ | — | $ | 11,563 | ||||||||||||||||
Real estate | 534 | 967 | 165 | 457 | 1,114 | — | — | 3,237 | ||||||||||||||||||||||||
Consumer | 2 | — | — | — | 41 | — | — | 43 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Outstanding balance | $ | 1,310 | $ | 6,213 | $ | 856 | $ | 2,109 | $ | 4,355 | $ | — | $ | — | $ | 14,843 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Carrying amount, net of allowance of $0 | $ | 14,843 | ||||||||||||||||||||||||||||||
|
|
December 31, 2019 | ||||||||||||||||||||||||
Commercial | Real Estate | Consumer | Outstanding Balance | Allowance for Loan Losses | Carrying Amount | |||||||||||||||||||
Heartland | $ | 197 | $ | 99 | $ | — | $ | 296 | $ | — | $ | 296 | ||||||||||||
Summit | 88 | 473 | — | 561 | — | 561 | ||||||||||||||||||
Peoples | 229 | 35 | — | 264 | — | 264 | ||||||||||||||||||
Kosciusko | 244 | 131 | — | 375 | — | 375 | ||||||||||||||||||
LaPorte | 353 | 793 | 20 | 1,166 | — | 1,166 | ||||||||||||||||||
Lafayette | 1,867 | — | — | 1,867 | — | 1,867 | ||||||||||||||||||
Wolverine | 2,289 | — | — | 2,289 | — | 2,289 | ||||||||||||||||||
Salin | 4,938 | 1,912 | 962 | 7,812 | 133 | 7,679 | ||||||||||||||||||
Total | $ | 10,205 | $ | 3,443 | $ | 982 | $ | 14,630 | $ | 133 | $ | 14,497 | ||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Commercial | Real Estate | Consumer | Outstanding Balance | Allowance for Loan Losses | Carrying Amount | |||||||||||||||||||
Heartland | $ | 232 | $ | 175 | $ | — | $ | 407 | $ | — | $ | 407 | ||||||||||||
Summit | 323 | 555 | — | 878 | — | 878 | ||||||||||||||||||
Peoples | 270 | 58 | — | 328 | — | 328 | ||||||||||||||||||
Kosciusko | 746 | 155 | — | 901 | — | 901 | ||||||||||||||||||
LaPorte | 753 | 947 | 27 | 1,727 | 60 | 1,667 | ||||||||||||||||||
Lafayette | 3,080 | — | — | 3,080 | — | 3,080 | ||||||||||||||||||
Wolverine | 7,841 | — | — | 7,841 | — | 7,841 | ||||||||||||||||||
�� | ||||||||||||||||||||||||
Total | $ | 13,245 | $ | 1,890 | $ | 27 | $ | 15,162 | $ | 60 | $ | 15,102 | ||||||||||||
Twelve Months Ended December 31, 2017 | ||||||||||||||||||||||||||||||||
Heartland | Summit | Peoples | Kosciusko | LaPorte | Lafayette | Wolverine | Total | |||||||||||||||||||||||||
Balance at January 1 | $ | 557 | $ | 502 | $ | 389 | $ | 530 | $ | 1,479 | $ | — | $ | — | $ | 3,457 | ||||||||||||||||
Additions | — | — | — | — | — | 933 | 2,267 | 3,200 | ||||||||||||||||||||||||
Accretion | (99 | ) | (353 | ) | (388 | ) | (101 | ) | (235 | ) | — | — | (1,176 | ) | ||||||||||||||||||
Reclassification from nonaccretable difference | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Disposals | (6 | ) | (2 | ) | (1 | ) | (43 | ) | (264 | ) | — | — | (316 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31 | $ | 452 | $ | 147 | $ | — | $ | 386 | $ | 980 | $ | 933 | $ | 2,267 | $ | 5,165 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Twelve Months Ended December 31, 2016 | ||||||||||||||||||||||||||||||||
Heartland | Summit | Peoples | Kosciusko | LaPorte | Lafayette | Wolverine | Total | |||||||||||||||||||||||||
Balance at January 1 | $ | 795 | $ | 708 | $ | 555 | $ | — | $ | — | $ | — | $ | — | $ | 2,058 | ||||||||||||||||
Additions | — | — | — | 634 | 1,636 | — | — | 2,270 | ||||||||||||||||||||||||
Accretion | (164 | ) | (171 | ) | (106 | ) | (72 | ) | (147 | ) | — | — | (660 | ) | ||||||||||||||||||
Reclassification from nonaccretable difference | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Disposals | (74 | ) | (35 | ) | (60 | ) | (32 | ) | (10 | ) | — | — | (211 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31 | $ | 557 | $ | 502 | $ | 389 | $ | 530 | $ | 1,479 | $ | — | $ | — | $ | 3,457 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019 | ||||||||||||||||||||||||
Beginning balance | Additions | Accretion | Reclassification from nonaccretable difference | Disposals | Ending balance | |||||||||||||||||||
Heartland | $ | 174 | $ | — | $ | (32 | ) | $ | — | $ | — | $ | 142 | |||||||||||
Summit | 42 | — | (9 | ) | — | (11 | ) | 22 | ||||||||||||||||
Kosciusko | 300 | — | (63 | ) | — | (2 | ) | 235 | ||||||||||||||||
LaPorte | 829 | — | (111 | ) | — | 4 | 722 | |||||||||||||||||
Lafayette | 609 | — | (126 | ) | — | (193 | ) | 290 | ||||||||||||||||
Wolverine | 698 | — | (272 | ) | — | (306 | ) | 120 | ||||||||||||||||
Salin | — | 2,002 | (590 | ) | — | (37 | ) | 1,375 | ||||||||||||||||
Total | $ | 2,652 | $ | 2,002 | $ | (1,203 | ) | $ | — | $ | (545 | ) | $ | 2,906 | ||||||||||
Twelve Months Ended December 31, 2018 | ||||||||||||||||||||||||
Beginning balance | Additions | Accretion | Reclassification from nonaccretable difference | Disposals | Ending balance | |||||||||||||||||||
Heartland | $ | 452 | $ | — | $ | (85 | ) | $ | — | $ | (193 | ) | $ | 174 | ||||||||||
Summit | 147 | — | (54 | ) | — | (51 | ) | 42 | ||||||||||||||||
Kosciusko | 386 | — | (78 | ) | — | (8 | ) | 300 | ||||||||||||||||
LaPorte | 980 | — | (144 | ) | — | (7 | ) | 829 | ||||||||||||||||
Lafayette | 933 | — | (275 | ) | — | (49 | ) | 609 | ||||||||||||||||
Wolverine | 2,267 | — | (812 | ) | — | (757 | ) | 698 | ||||||||||||||||
Total | $ | 5,165 | $ | — | $ | (1,448 | ) | $ | — | $ | (1,065 | ) | $ | 2,652 | ||||||||||
HORIZON BANCORPAND SUBSIDIARIES
2018.
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Balance at beginning of the period | $ | 14,837 | $ | 14,534 | $ | 16,501 | ||||||
Loanscharged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | 68 | 181 | 2,208 | |||||||||
Non owner occupied real estate | 20 | 471 | 556 | |||||||||
Residential development | — | — | — | |||||||||
Development & Spec Land Loans | 1 | — | — | |||||||||
Commercial and industrial | 288 | 106 | 673 | |||||||||
|
|
|
|
|
| |||||||
Total commercial | 377 | 758 | 3,437 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 89 | 213 | 288 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total real estate | 89 | 213 | 288 | |||||||||
Consumer | ||||||||||||
Direct Installment | 389 | 329 | 367 | |||||||||
Direct Installment Purchased | — | — | — | |||||||||
Indirect Installment | 1,193 | 1,051 | 1,081 | |||||||||
Home Equity | 205 | 309 | 926 | |||||||||
|
|
|
|
|
| |||||||
Total consumer | 1,787 | 1,689 | 2,374 | |||||||||
|
|
|
|
|
| |||||||
Total loanscharged-off | 2,253 | 2,660 | 6,099 | |||||||||
Recoveries of loans previouslycharged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | 9 | 31 | 104 | |||||||||
Non owner occupied real estate | 32 | 55 | 1 | |||||||||
Residential development | 8 | 8 | — | |||||||||
Development & Spec Land Loans | — | — | 35 | |||||||||
Commercial and industrial | 219 | 116 | 52 | |||||||||
|
|
|
|
|
| |||||||
Total commercial | 268 | 210 | 192 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 44 | 97 | 69 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total real estate | 44 | 97 | 69 | |||||||||
Consumer | ||||||||||||
Direct Installment | 531 | 81 | 106 | |||||||||
Direct Installment Purchased | — | — | — | |||||||||
Indirect Installment | 497 | 529 | 489 | |||||||||
Home Equity | — | 204 | 114 | |||||||||
|
|
|
|
|
| |||||||
Total consumer | 1,028 | 814 | 709 | |||||||||
|
|
|
|
|
| |||||||
Total loan recoveries | 1,340 | 1,121 | 970 | |||||||||
|
|
|
|
|
| |||||||
Net loanscharged-off | 913 | 1,539 | 5,129 | |||||||||
|
|
|
|
|
| |||||||
Provision charged to operating expense | ||||||||||||
Commercial | 2,164 | (68 | ) | 2,531 | ||||||||
Real estate | (81 | ) | (23 | ) | 62 | |||||||
Consumer | 387 | 1,933 | 569 | |||||||||
|
|
|
|
|
| |||||||
Total provision charged to operating expense | 2,470 | 1,842 | 3,162 | |||||||||
|
|
|
|
|
| |||||||
Balance at the end of the period | $ | 16,394 | $ | 14,837 | $ | 14,534 | ||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Balance at beginning of the period | $ | 17,820 | $ | 16,394 | $ | 14,837 | ||||||
Loans charged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | 41 | 109 | 12 | |||||||||
Non-owner occupied real estate | 64 | — | 75 | |||||||||
Residential spec homes | 3 | — | — | |||||||||
Development & spec land | — | — | 1 | |||||||||
Commercial and industrial | 755 | 364 | 541 | |||||||||
Total commercial | 863 | 473 | 629 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 93 | 76 | 89 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
Total real estate | 93 | 76 | 89 | |||||||||
Consumer | ||||||||||||
Direct installment | 208 | 154 | 137 | |||||||||
Indirect installment | 1,785 | 1,673 | 1,193 | |||||||||
Home equity | 319 | 176 | 205 | |||||||||
Total consumer | 2,312 | 2,003 | 1,535 | |||||||||
Total loans charged-off | 3,268 | 2,552 | 2,253 | |||||||||
Recoveries of loans previously charged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | — | 55 | 8 | |||||||||
Non-owner occupied real estate | 15 | 33 | 32 | |||||||||
Residential spec homes | 5 | 8 | 8 | |||||||||
Development & spec land | — | — | — | |||||||||
Commercial and industrial | 179 | 80 | 250 | |||||||||
Total commercial | 199 | 176 | 298 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 46 | 27 | 44 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
Total real estate | 46 | 27 | 44 | |||||||||
Consumer | ||||||||||||
Direct installment | 97 | 53 | 501 | |||||||||
Indirect installment | 661 | 505 | 497 | |||||||||
Home equity | 136 | 311 | — | |||||||||
Total consumer | 894 | 869 | 998 | |||||||||
Total loan recoveries | 1,139 | 1,072 | 1,340 | |||||||||
Net loans charged-off | 2,129 | 1,480 | 913 | |||||||||
Provision charged to operating expense | ||||||||||||
Commercial | 2,165 | 1,699 | 2,164 | |||||||||
Real estate | (635 | ) | (487 | ) | (81 | ) | ||||||
Consumer | 446 | 1,694 | 387 | |||||||||
Total provision charged to operating expense | 1,976 | 2,906 | 2,470 | |||||||||
Balance at the end of the period | $ | 17,667 | $ | 17,820 | $ | 16,394 | ||||||
Mortgage | ||||||||||||||||||||
December 31, 2017 | Commercial | Real Estate | Warehousing | Consumer | Total | |||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 184 | $ | — | $ | — | $ | — | $ | 184 | ||||||||||
Collectively evaluated for impairment | 8,450 | 2,188 | 1,030 | 4,542 | 16,210 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending allowance balance | $ | 8,634 | $ | 2,188 | $ | 1,030 | $ | 4,542 | $ | 16,394 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 7,187 | $ | — | $ | — | $ | — | $ | 7,187 | ||||||||||
Collectively evaluated for impairment | 1,615,927 | 608,575 | 94,988 | 514,544 | 2,834,034 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending loans balance | $ | 1,623,114 | $ | 608,575 | $ | 94,988 | $ | 514,544 | $ | 2,841,221 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Mortgage | ||||||||||||||||||||
December 31, 2016 | Commercial | Real Estate | Warehousing | Consumer | Total | |||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 4 | $ | — | $ | — | $ | — | $ | 4 | ||||||||||
Collectively evaluated for impairment | 6,575 | 2,090 | 1,254 | 4,914 | 14,833 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending allowance balance | $ | 6,579 | $ | 2,090 | $ | 1,254 | $ | 4,914 | $ | 14,837 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 2,250 | $ | — | $ | — | $ | — | $ | 2,250 | ||||||||||
Collectively evaluated for impairment | 1,071,199 | 533,399 | 136,207 | 399,676 | 2,140,481 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending loans balance | $ | 1,073,449 | $ | 533,399 | $ | 136,207 | $ | 399,676 | $ | 2,142,731 | ||||||||||
|
|
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||
Commercial | Real Estate | Mortgage Warehousing | Consumer | Total | ||||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 541 | $ | — | $ | — | $ | — | $ | 541 | ||||||||||
Collectively evaluated for impairment | 11,455 | 923 | 1,077 | 3,671 | 17,126 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending allowance balance | $ | 11,996 | $ | 923 | $ | 1,077 | $ | 3,671 | $ | 17,667 | ||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 7,347 | $ | — | $ | — | $ | — | $ | 7,347 | ||||||||||
Collectively evaluated for impairment | 2,040,299 | 770,705 | 150,293 | 665,952 | 3,627,249 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending loans balance | $ | 2,047,646 | $ | 770,705 | $ | 150,293 | $ | 665,952 | $ | 3,634,596 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Commercial | Real Estate | Mortgage Warehousing | Consumer | Total | ||||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 1,035 | $ | — | $ | — | $ | — | $ | 1,035 | ||||||||||
Collectively evaluated for impairment | 9,460 | 1,676 | 1,006 | 4,643 | 16,785 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending allowance balance | $ | 10,495 | $ | 1,676 | $ | 1,006 | $ | 4,643 | $ | 17,820 | ||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 6,696 | $ | — | $ | — | $ | — | $ | 6,696 | ||||||||||
Collectively evaluated for impairment | 1,715,856 | 668,124 | 74,120 | 546,774 | 3,004,874 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending loans balance | $ | 1,722,552 | $ | 668,124 | $ | 74,120 | $ | 546,774 | $ | 3,011,570 | ||||||||||
Loans Past | ||||||||||||||||||||
Due Over 90 | Non- | Total Non- | ||||||||||||||||||
Days Still | Performing | Performing | Performing | |||||||||||||||||
December 31, 2017 | Non-accrual | Accruing | TDRs | TDRs | Loans | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 4,742 | $ | — | $ | 11 | $ | 1 | $ | 4,754 | ||||||||||
Non owner occupied real estate | 115 | — | 440 | — | 555 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 176 | — | — | — | 176 | |||||||||||||||
Commercial and industrial | 1,656 | — | — | — | 1,656 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 6,689 | — | 451 | 1 | 7,141 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 3,693 | — | 351 | 1,450 | 5,494 | |||||||||||||||
Residential construction | — | — | — | 222 | 222 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
�� |
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 3,693 | — | 351 | 1,672 | 5,716 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 373 | — | — | — | 373 | |||||||||||||||
Direct Installment Purchased | — | — | — | — | — | |||||||||||||||
Indirect Installment | 1,041 | 167 | — | — | 1,208 | |||||||||||||||
Home Equity | 1,480 | — | 211 | 285 | 1,976 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 2,894 | 167 | 211 | 285 | 3,557 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 13,276 | $ | 167 | $ | 1,013 | $ | 1,958 | $ | 16,414 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans Past | ||||||||||||||||||||
Due Over 90 | Non- | Total Non- | ||||||||||||||||||
Days Still | Performing | Performing | Performing | |||||||||||||||||
December 31, 2016 | Non-accrual | Accruing | TDRs | TDRs | Loans | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,532 | $ | 183 | $ | — | $ | — | $ | 1,715 | ||||||||||
Non owner occupied real estate | 440 | — | — | — | 440 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 118 | — | — | — | 118 | |||||||||||||||
Commercial and industrial | 159 | — | — | — | 159 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 2,249 | 183 | — | — | 2,432 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 2,959 | — | 576 | 1,254 | 4,789 | |||||||||||||||
Residential construction | — | — | 233 | — | 233 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 2,959 | — | 809 | 1,254 | 5,022 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 512 | — | — | — | 512 | |||||||||||||||
Direct Installment Purchased | — | — | — | — | — | |||||||||||||||
Indirect Installment | 659 | 49 | — | — | 708 | |||||||||||||||
Home Equity | 1,557 | 9 | 205 | 238 | 2,009 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 2,728 | 58 | 205 | 238 | 3,229 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 7,936 | $ | 241 | $ | 1,014 | $ | 1,492 | $ | 10,683 | ||||||||||
|
|
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2019 | ||||||||||||||||||||
Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non-peforming TDRs | Performing TDRs | Total Non-performing Loans | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 2,424 | $ | — | $ | 629 | $ | 139 | $ | 3,192 | ||||||||||
Non-owner occupied real estate | 682 | — | 374 | — | 1,056 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 73 | — | — | — | 73 | |||||||||||||||
Commercial and industrial | 1,603 | — | 78 | 1,345 | 3,026 | |||||||||||||||
Total commercial | 4,782 | — | 1,081 | 1,484 | 7,347 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 7,614 | 1 | 708 | 1,561 | 9,884 | |||||||||||||||
Residential construction | — | — | — | — | — | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Total real estate | 7,614 | 1 | 708 | 1,561 | 9,884 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 30 | 5 | — | — | 35 | |||||||||||||||
Indirect installment | 1,234 | 135 | — | — | 1,369 | |||||||||||||||
Home equity | 2,019 | 5 | 217 | 309 | 2,550 | |||||||||||||||
Total consumer | 3,283 | 145 | 217 | 309 | 3,954 | |||||||||||||||
Total | $ | 15,679 | $ | 146 | $ | 2,006 | $ | 3,354 | $ | 21,185 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non-peforming TDRs | Performing TDRs | Total Non-performing Loans | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 3,531 | $ | 208 | $ | — | $ | 109 | $ | 3,848 | ||||||||||
Non-owner occupied real estate | 554 | — | 492 | — | 1,046 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 68 | — | — | — | 68 | |||||||||||||||
Commercial and industrial | 1,941 | — | — | — | 1,941 | |||||||||||||||
Total commercial | 6,094 | 208 | 492 | 109 | 6,903 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 2,846 | 180 | 423 | 1,558 | 5,007 | |||||||||||||||
Residential construction | — | — | — | — | — | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Total real estate | 2,846 | 180 | 423 | 1,558 | 5,007 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 35 | — | — | — | 35 | |||||||||||||||
Indirect installment | 916 | 173 | — | — | 1,089 | |||||||||||||||
Home equity | 1,657 | 7 | 142 | 335 | 2,141 | |||||||||||||||
Total consumer | 2,608 | 180 | 142 | 335 | 3,265 | |||||||||||||||
Total | $ | 11,548 | $ | 568 | $ | 1,057 | $ | 2,002 | $ | 15,175 | ||||||||||
HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ending | ||||||||||||||||||||
Average | Cash/Accrual | |||||||||||||||||||
Unpaid | Allowance For | Balance in | Interest | |||||||||||||||||
Principal | Recorded | Loan Loss | Impaired | Income | ||||||||||||||||
December 31, 2017 | Balance | Investment | Allocated | Loans | Recognized | |||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 3,824 | $ | 3,849 | $ | — | $ | 1,673 | $ | 11 | ||||||||||
Non owner occupied real estate | 554 | 570 | — | 345 | — | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 176 | 174 | — | 233 | 4 | |||||||||||||||
Commercial and industrial | 1,656 | 1,663 | — | 1,445 | 25 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 6,210 | 6,256 | — | 3,696 | 40 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 931 | 931 | 184 | 78 | 46 | |||||||||||||||
Non owner occupied real estate | — | — | — | — | — | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 931 | 931 | 184 | 78 | 46 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 7,141 | $ | 7,187 | $ | 184 | $ | 3,774 | $ | 86 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Twelve Months Ending | ||||||||||||||||||||
Average | Cash/Accrual | |||||||||||||||||||
Unpaid | Allowance For | Balance in | Interest | |||||||||||||||||
Principal | Recorded | Loan Loss | Impaired | Income | ||||||||||||||||
December 31, 2016 | Balance | Investment | Allocated | Loans | Recognized | |||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,533 | $ | 1,533 | $ | — | $ | 1,619 | $ | 58 | ||||||||||
Non owner occupied real estate | 440 | 440 | — | 871 | 18 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 118 | 118 | — | 61 | 16 | |||||||||||||||
Commercial and industrial | 128 | 127 | — | 349 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 2,219 | 2,218 | — | 2,900 | 93 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | — | — | — | — | — | |||||||||||||||
Non owner occupied real estate | — | — | — | — | — | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 31 | 32 | 4 | 5 | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 31 | 32 | 4 | 5 | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 2,250 | $ | 2,250 | $ | 4 | $ | 2,905 | $ | 95 | ||||||||||
|
|
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | ||||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 3,192 | $ | 3,193 | $ | — | $ | 3,608 | $ | 246 | ||||||||||
Non-owner occupied real estate | 937 | 937 | — | 2,810 | 98 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 73 | 73 | — | 158 | — | |||||||||||||||
Commercial and industrial | 1,859 | 1,861 | — | 2,464 | 100 | |||||||||||||||
Total commercial | 6,061 | 6,064 | — | 9,040 | 444 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | — | — | — | — | — | |||||||||||||||
Non-owner occupied real estate | 119 | 119 | 25 | 130 | — | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 1,167 | 1,168 | 516 | 1,225 | 46 | |||||||||||||||
Total commercial | 1,286 | 1,287 | 541 | 1,355 | 46 | |||||||||||||||
Total | $ | 7,347 | $ | 7,351 | $ | 541 | $ | 10,395 | $ | 490 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | ||||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 2,814 | $ | 2,815 | $ | — | $ | 3,168 | $ | 77 | ||||||||||
Non-owner occupied real estate | 860 | 860 | — | 1,096 | 12 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 68 | 68 | — | 71 | — | |||||||||||||||
Commercial and industrial | 1,226 | 1,226 | — | 1,119 | 21 | |||||||||||||||
Total commercial | 4,968 | 4,969 | — | 5,454 | 110 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 827 | 827 | 145 | 864 | — | |||||||||||||||
Non-owner occupied real estate | 186 | 186 | 30 | 180 | 4 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 715 | 715 | 860 | 870 | 14 | |||||||||||||||
Total commercial | 1,728 | 1,728 | 1,035 | 1,914 | 18 | |||||||||||||||
Total | $ | 6,696 | $ | 6,697 | $ | 1,035 | $ | 7,368 | $ | 128 | ||||||||||
Twelve Months Ending | ||||||||||||||||||||
Average | Cash/Accrual | |||||||||||||||||||
Unpaid | Allowance For | Balance in | Interest | |||||||||||||||||
Principal | Recorded | Loan Loss | Impaired | Income | ||||||||||||||||
December 31, 2015 | Balance | Investment | Allocated | Loans | Recognized | |||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,340 | $ | 1,339 | $ | — | $ | 1,001 | $ | 22 | ||||||||||
Non owner occupied real estate | 4,938 | 4,953 | — | 5,417 | 8 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 71 | 71 | — | 6 | 3 | |||||||||||||||
Commercial and industrial | 79 | 79 | — | 275 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 6,428 | 6,442 | — | 6,699 | 37 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 410 | 410 | 105 | 243 | 8 | |||||||||||||||
Non owner occupied real estate | 70 | 70 | 32 | 6 | 13 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 97 | 97 | 65 | 162 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 577 | 577 | 202 | 411 | 21 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 7,005 | $ | 7,019 | $ | 202 | $ | 7,110 | $ | 58 | ||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2017 | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | ||||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,255 | $ | 1,270 | $ | — | $ | 1,168 | $ | 4 | ||||||||||
Non-owner occupied real estate | 3,123 | 3,139 | — | 850 | 7 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 176 | 176 | — | 233 | 4 | |||||||||||||||
Commercial and industrial | 1,656 | 1,656 | — | 1,445 | 25 | |||||||||||||||
Total commercial | 6,210 | 6,241 | — | 3,696 | 40 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 704 | 704 | 78 | 59 | 33 | |||||||||||||||
Non-owner occupied real estate | 227 | 227 | 106 | 19 | 13 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | — | — | — | — | — | |||||||||||||||
Commercial and industrial | — | — | — | — | — | |||||||||||||||
Total commercial | 931 | 931 | 184 | 78 | 46 | |||||||||||||||
Total | $ | 7,141 | $ | 7,172 | $ | 184 | $ | 3,774 | $ | 86 | ||||||||||
30 - 59 Days | 60 - 89 Days | 90 Days or | Loans Not Past | |||||||||||||||||||||
December 31, 2017 | Past Due | Past Due | Greater Past Due | Total Past Due | Due | Total | ||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Owner occupied real estate | $ | 1,613 | $ | 1,950 | $ | — | $ | 3,563 | $ | 544,033 | $ | 547,596 | ||||||||||||
Non owner occupied real estate | 512 | 122 | — | 634 | 663,647 | 664,281 | ||||||||||||||||||
Residential development | — | — | — | — | 16,431 | 16,431 | ||||||||||||||||||
Development & Spec Land Loans | 31 | — | — | 31 | 48,643 | 48,674 | ||||||||||||||||||
Commercial and industrial | 520 | 1 | — | 521 | 334,706 | 335,227 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial | 2,676 | 2,073 | — | 4,749 | 1,607,460 | 1,612,209 | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential mortgage | 1,248 | 49 | — | 1,297 | 587,061 | 588,358 | ||||||||||||||||||
Residential construction | 63 | — | — | 63 | 15,964 | 16,027 | ||||||||||||||||||
Mortgage warehouse | — | — | — | — | 94,508 | 94,508 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total real estate | 1,311 | 49 | — | 1,360 | 697,533 | 698,893 | ||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Direct Installment | 78 | 10 | — | 88 | 89,529 | 89,617 | ||||||||||||||||||
Direct Installment Purchased | — | — | — | — | 82 | 82 | ||||||||||||||||||
Indirect Installment | 1,859 | 244 | 167 | 2,270 | 225,053 | 227,323 | ||||||||||||||||||
Home Equity | 502 | 527 | — | 1,029 | 196,549 | 197,578 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer | 2,439 | 781 | 167 | 3,387 | 511,213 | 514,600 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 6,426 | $ | 2,903 | $ | 167 | $ | 9,496 | $ | 2,816,206 | $ | 2,825,702 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Percentage of total loans | 0.23 | % | 0.10 | % | 0.01 | % | 0.34 | % | 99.66 | % |
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||||||||||
Current | 30-59 DaysPast Due | 60-89 DaysPast Due | 90 Days or Greater Past Due | Non-accrual & Non-peforming TDRs | Total Past Due & Non-accrual Loans | Total | ||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||
Owner occupied real estate | $ | 515,604 | $ | 920 | $ | — | $ | — | $ | 3,053 | $ | 3,973 | $ | 519,577 | ||||||||||||||
Non-owner occupied realestate | 972,195 | 80 | — | — | 1,056 | 1,136 | 973,331 | |||||||||||||||||||||
Residential spec homes | 12,925 | — | — | — | — | — | 12,925 | |||||||||||||||||||||
Development & spec land | 35,881 | — | — | — | 73 | 73 | 35,954 | |||||||||||||||||||||
Commercial and industrial | 503,348 | 819 | 11 | — | 1,681 | 2,511 | 505,859 | |||||||||||||||||||||
Total commercial | 2,039,953 | 1,819 | 11 | — | 5,863 | 7,693 | 2,047,646 | |||||||||||||||||||||
Real estate | ||||||||||||||||||||||||||||
Residential mortgage | 740,712 | 1,984 | — | 1 | 8,322 | 10,307 | 751,019 | |||||||||||||||||||||
Residential construction | 19,686 | — | — | — | — | — | 19,686 | |||||||||||||||||||||
Mortgage warehouse | 150,293 | — | — | — | — | — | 150,293 | |||||||||||||||||||||
Total real estate | 910,691 | 1,984 | — | 1 | 8,322 | 10,307 | 920,998 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Direct installment | 40,864 | 175 | 5 | 5 | 30 | 215 | 41,079 | |||||||||||||||||||||
Indirect installment | 344,478 | 2,407 | 404 | 135 | 1,234 | 4,180 | 348,658 | |||||||||||||||||||||
Home equity | 273,050 | 904 | 20 | 5 | 2,236 | 3,165 | 276,215 | |||||||||||||||||||||
Total consumer | 658,392 | 3,486 | 429 | 145 | 3,500 | 7,560 | 665,952 | |||||||||||||||||||||
Total | $ | 3,609,036 | $ | 7,289 | $ | 440 | $ | 146 | $ | 17,685 | $ | 25,560 | $ | 3,634,596 | ||||||||||||||
Percentage of total loans | 99.30 | % | 0.20 | % | 0.01 | % | 0.00 | % | 0.49 | % | 0.70 | % | 100.00 | % |
30 - 59 Days | 60 - 89 Days | 90 Days or | Loans Not Past | |||||||||||||||||||||
December 31, 2016 | Past Due | Past Due | Greater Past Due | Total Past Due | Due | Total | ||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Owner occupied real estate | $ | 1,068 | $ | — | $ | 183 | $ | 1,251 | $ | 336,297 | $ | 337,548 | �� | |||||||||||
Non owner occupied real estate | 357 | — | — | 357 | 461,540 | 461,897 | ||||||||||||||||||
Residential development | — | — | — | — | 5,006 | 5,006 | ||||||||||||||||||
Development & Spec Land Loans | 1 | — | — | 1 | 31,227 | 31,228 | ||||||||||||||||||
Commercial and industrial | 982 | — | — | 982 | 229,538 | 230,520 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial | 2,408 | — | 183 | 2,591 | 1,063,608 | 1,066,199 | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential mortgage | 886 | 123 | — | 1,009 | 507,224 | 508,233 | ||||||||||||||||||
Residential construction | — | — | — | — | 20,611 | 20,611 | ||||||||||||||||||
Mortgage warehouse | — | — | — | — | 135,727 | 135,727 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total real estate | 886 | 123 | — | 1,009 | 663,562 | 664,571 | ||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Direct Installment | 139 | 4 | — | 143 | 71,007 | 71,150 | ||||||||||||||||||
Direct Installment Purchased | — | — | — | — | 119 | 119 | ||||||||||||||||||
Indirect Installment | 1,339 | 237 | 49 | 1,625 | 151,579 | 153,204 | ||||||||||||||||||
Home Equity | 912 | 267 | 9 | 1,188 | 173,938 | 175,126 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer | 2,390 | 508 | 58 | 2,956 | 396,643 | 399,599 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 5,684 | $ | 631 | $ | 241 | $ | 6,556 | $ | 2,123,813 | $ | 2,130,369 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Percentage of total loans | 0.27 | % | 0.03 | % | 0.01 | % | 0.31 | % | 99.69 | % |
December 31, 2018 | ||||||||||||||||||||||||||||
Current | 30-59 DaysPast Due | 60-89 DaysPast Due | 90 Days or Greater Past Due | Non-accrual & Non-peforming TDRs | Total Past Due & Non-accrual Loans | Total | ||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||
Owner occupied real estate | $ | 439,542 | $ | 537 | $ | 1,016 | $ | 208 | $ | 3,531 | $ | 5,292 | $ | 444,834 | ||||||||||||||
Non-owner occupied real estate | 851,587 | 203 | 19 | — | 1,046 | 1,268 | 852,855 | |||||||||||||||||||||
Residential spec homes | 4,703 | 492 | — | — | — | 492 | 5,195 | |||||||||||||||||||||
Development & spec land | 50,638 | — | — | — | 68 | 68 | 50,706 | |||||||||||||||||||||
Commercial and industrial | 365,817 | 487 | 717 | — | 1,941 | 3,145 | 368,962 | |||||||||||||||||||||
Total commercial | 1,712,287 | 1,719 | 1,752 | 208 | 6,586 | 10,265 | 1,722,552 | |||||||||||||||||||||
Real estate | ||||||||||||||||||||||||||||
Residential mortgage | 639,458 | 1,131 | 56 | 180 | 3,269 | 4,636 | 644,094 | |||||||||||||||||||||
Residential construction | 24,030 | — | — | — | — | — | 24,030 | |||||||||||||||||||||
Mortgage warehouse | 74,120 | — | — | — | — | — | 74,120 | |||||||||||||||||||||
Total real estate | 737,608 | 1,131 | 56 | 180 | 3,269 | 4,636 | 742,244 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Direct installment | 34,957 | 93 | 18 | — | 35 | 146 | 35,103 | |||||||||||||||||||||
Indirect installment | 311,494 | 1,396 | 198 | 173 | 916 | 2,683 | 314,177 | |||||||||||||||||||||
Home equity | 194,890 | 761 | 37 | 7 | 1,799 | 2,604 | 197,494 | |||||||||||||||||||||
Total consumer | 541,341 | 2,250 | 253 | 180 | 2,750 | 5,433 | 546,774 | |||||||||||||||||||||
Total | $ | 2,991,236 | $ | 5,100 | $ | 2,061 | $ | 568 | $ | 12,605 | $ | 20,334 | $ | 3,011,570 | ||||||||||||||
Percentage of total loans | 99.32 | % | 0.17 | % | 0.07 | % | 0.02 | % | 0.42 | % | 0.68 | % | 100.00 | % |
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
Special | ||||||||||||||||||||
December 31, 2017 | Pass | Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 520,907 | $ | 8,622 | $ | 18,067 | $ | — | $ | 547,596 | ||||||||||
Non owner occupied real estate | 655,410 | 3,864 | 5,007 | — | 664,281 | |||||||||||||||
Residential development | 16,431 | — | — | — | 16,431 | |||||||||||||||
Development & Spec Land Loans | 47,562 | 886 | 226 | — | 48,674 | |||||||||||||||
Commercial and industrial | 314,190 | 7,448 | 13,589 | — | 335,227 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 1,554,500 | 20,820 | 36,889 | — | 1,612,209 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 582,864 | — | 5,494 | — | 588,358 | |||||||||||||||
Residential construction | 15,805 | — | 222 | — | 16,027 | |||||||||||||||
Mortgage warehouse | 94,508 | — | — | — | 94,508 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 693,177 | — | 5,716 | — | 698,893 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 89,244 | — | 373 | — | 89,617 | |||||||||||||||
Direct Installment Purchased | 82 | — | — | — | 82 | |||||||||||||||
Indirect Installment | 226,115 | — | 1,208 | — | 227,323 | |||||||||||||||
Home Equity | 195,602 | — | 1,976 | — | 197,578 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 511,043 | — | 3,557 | — | 514,600 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 2,758,720 | $ | 20,820 | $ | 46,162 | $ | — | $ | 2,825,702 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Percentage of total loans | 97.63 | % | 0.74 | % | 1.63 | % | 0.00 | % | ||||||||||||
Special | ||||||||||||||||||||
December 31, 2016 | Pass | Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 322,924 | $ | 4,960 | $ | 9,664 | $ | — | $ | 337,548 | ||||||||||
Non owner occupied real estate | 455,648 | 341 | 5,908 | — | 461,897 | |||||||||||||||
Residential development | 5,006 | — | — | — | 5,006 | |||||||||||||||
Development & Spec Land Loans | 31,057 | — | 171 | — | 31,228 | |||||||||||||||
Commercial and industrial | 220,424 | 3,728 | 6,368 | — | 230,520 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 1,035,059 | 9,029 | 22,111 | — | 1,066,199 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 503,444 | — | 4,789 | — | 508,233 | |||||||||||||||
Residential construction | 20,378 | — | 233 | — | 20,611 | |||||||||||||||
Mortgage warehouse | 135,727 | — | — | — | 135,727 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 659,549 | — | 5,022 | — | 664,571 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 70,638 | — | 512 | — | 71,150 | |||||||||||||||
Direct Installment Purchased | 119 | — | — | — | 119 | |||||||||||||||
Indirect Installment | 152,496 | — | 708 | — | 153,204 | |||||||||||||||
Home Equity | 173,117 | — | 2,009 | — | 175,126 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 396,370 | — | 3,229 | — | 399,599 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 2,090,978 | $ | 9,029 | $ | 30,362 | $ | — | $ | 2,130,369 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Percentage of total loans | 98.15 | % | 0.42 | % | 1.43 | % | 0.00 | % |
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 492,386 | $ | 8,328 | $ | 18,863 | $ | — | $ | 519,577 | ||||||||||
Non-owner occupied real estate | 957,990 | 7,824 | 7,517 | — | 973,331 | |||||||||||||||
Residential spec homes | 12,925 | — | — | — | 12,925 | |||||||||||||||
Development & spec land | 35,815 | — | 139 | — | 35,954 | |||||||||||||||
Commercial and industrial | 468,893 | 18,652 | 18,314 | — | 505,859 | |||||||||||||||
Total commercial | 1,968,009 | 34,804 | 44,833 | — | 2,047,646 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 741,136 | — | 9,883 | — | 751,019 | |||||||||||||||
Residential construction | 19,686 | — | — | — | 19,686 | |||||||||||||||
Mortgage warehouse | 150,293 | — | — | — | 150,293 | |||||||||||||||
Total real estate | 911,115 | — | 9,883 | — | 920,998 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 41,044 | — | 35 | — | 41,079 | |||||||||||||||
Indirect installment | 347,289 | — | 1,369 | — | 348,658 | |||||||||||||||
Home equity | 273,665 | — | 2,550 | — | 276,215 | |||||||||||||||
Total consumer | 661,998 | — | 3,954 | — | 665,952 | |||||||||||||||
Total | $ | 3,541,122 | $ | 34,804 | $ | 58,670 | $ | — | $ | 3,634,596 | ||||||||||
Percentage of total loans | 97.43 | % | 0.96 | % | 1.61 | % | 0.00 | % | 100.00 | % |
December 31, 2018 | ||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 426,887 | $ | 3,664 | $ | 14,283 | $ | — | $ | 444,834 | ||||||||||
Non-owner occupied real estate | 834,582 | 9,682 | 8,591 | — | 852,855 | |||||||||||||||
Residential spec homes | 5,195 | — | — | — | 5,195 | |||||||||||||||
Development & spec land | 47,523 | 3,115 | 68 | — | 50,706 | |||||||||||||||
Commercial and industrial | 354,630 | 6,591 | 7,741 | — | 368,962 | |||||||||||||||
Total commercial | 1,668,817 | 23,052 | 30,683 | — | 1,722,552 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 639,267 | — | 4,827 | — | 644,094 | |||||||||||||||
Residential construction | 24,030 | — | — | — | 24,030 | |||||||||||||||
Mortgage warehouse | 74,120 | — | — | — | 74,120 | |||||||||||||||
Total real estate | 737,417 | — | 4,827 | — | 742,244 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 35,068 | — | 35 | — | 35,103 | |||||||||||||||
Indirect installment | 313,088 | — | 1,089 | — | 314,177 | |||||||||||||||
Home equity | 195,353 | — | 2,141 | — | 197,494 | |||||||||||||||
Total consumer | 543,509 | — | 3,265 | — | 546,774 | |||||||||||||||
Total | $ | 2,949,743 | $ | 23,052 | $ | 38,775 | $ | — | $ | 3,011,570 | ||||||||||
Percentage of total loans | 97.95 | % | 0.76 | % | 1.29 | % | 0.00 | % | 100.00 | % |
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Land | $ | 21,633 | $ | 20,032 | ||||
Buildings and improvements | 68,447 | 59,607 | ||||||
Furniture and equipment | 22,288 | 19,965 | ||||||
|
|
|
| |||||
Total cost | 112,368 | 99,604 | ||||||
Accumulated depreciation | (36,839 | ) | (33,247 | ) | ||||
|
|
|
| |||||
Net premise and equipment | $ | 75,529 | $ | 66,357 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Land | $ | 27,292 | $ | 21,604 | ||||
Buildings and improvements | 83,669 | 69,590 | ||||||
Furniture and equipment | 27,482 | 24,596 | ||||||
Total cost | 138,443 | 115,790 | ||||||
Accumulated depreciation | (46,234 | ) | (41,459 | ) | ||||
Net premises and equipment | $ | 92,209 | $ | 74,331 | ||||
2018.
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 11,681 | $ | 9,271 | $ | 7,980 | ||||||
Servicing rights capitalized | 2,109 | 3,426 | 2,974 | |||||||||
Amortization of servicing rights | (1,601 | ) | (1,016 | ) | (1,683 | ) | ||||||
|
|
|
|
|
| |||||||
Balances, December 31 | 12,189 | 11,681 | 9,271 | |||||||||
|
|
|
|
|
| |||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (507 | ) | (397 | ) | (338 | ) | ||||||
Additions | (85 | ) | (236 | ) | (130 | ) | ||||||
Reductions | 5 | 126 | 71 | |||||||||
|
|
|
|
|
| |||||||
Balances, December 31 | (587 | ) | (507 | ) | (397 | ) | ||||||
|
|
|
|
|
| |||||||
Mortgage servicing rights, net | $ | 11,602 | $ | 11,174 | $ | 8,874 | ||||||
|
|
|
|
|
|
December 31 | December 31 | December 31 | ||||||||||
2019 | 2018 | 2017 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 12,876 | $ | 12,189 | $ | 11,681 | ||||||
Servicing rights capitalized | 3,547 | 1,883 | 2,109 | |||||||||
Amortization of servicing rights | (1,377 | ) | (1,196 | ) | (1,601 | ) | ||||||
Balances, December 31 | 15,046 | 12,876 | 12,189 | |||||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (527 | ) | (587 | ) | (507 | ) | ||||||
Additions | (234 | ) | (78 | ) | (85 | ) | ||||||
Reductions | 42 | 138 | 5 | |||||||||
Balances, December 31 | (719 | ) | (527 | ) | (587 | ) | ||||||
Mortgage servicing rights, net | $ | 14,327 | $ | 12,349 | $ | 11,602 | ||||||
HORIZON BANCORPAND SUBSIDIARIES
No
2017 | 2016 | |||||||
Balance, January 1 | $ | 76,941 | $ | 49,600 | ||||
Goodwill acquired | 42,939 | 27,341 | ||||||
|
|
|
| |||||
Balance, December 31 | $ | 119,880 | $ | 76,941 | ||||
|
|
|
|
Goodwill acquired in 2017 includes a $704,000 measurement period adjustment related to the 2016 acquisition of LaPorte.
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Balance, January 1 | $ | 119,880 | $ | 119,880 | ||||
Goodwill acquired | 31,358 | — | ||||||
Balance, December 31 | $ | 151,238 | $ | 119,880 | ||||
December 31, 2017 | December 31, 2016 | |||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Amortizable intangible assets | ||||||||||||||||
Core deposit intangible | $ | 20,711 | $ | (8,309 | ) | $ | 16,151 | $ | (6,785 | ) |
December 31, 2019 | December 31, 2018 | |||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||
Amortizable intangible assets | ||||||||||||||||
Core deposit intangible | $ | 40,590 | $ | (13,911 | ) | $ | 20,711 | $ | (10,321 | ) |
2018 | $ | 2,012 | ||
2019 | 1,787 | |||
2020 | 1,481 | |||
2021 | 1,394 | |||
2022 | 1,375 | |||
Thereafter | 4,353 | |||
|
| |||
$ | 12,402 | |||
|
|
2020 | $ | 3,723 | ||
2021 | 3,591 | |||
2022 | 3,516 | |||
2023 | 3,430 | |||
2024 | 3,225 | |||
Thereafter | 9,194 | |||
$ | 26,679 | |||
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Noninterest-bearing demand deposits | $ | 601,805 | $ | 496,248 | ||||
Interest-bearing demand deposits | 909,638 | 850,641 | ||||||
Money market (variable rate) | 378,108 | 290,896 | ||||||
Savings deposits | 424,500 | 357,582 | ||||||
Certificates of deposit of $250,000 or more | 130,585 | 105,361 | ||||||
Other certificates and time deposits | 436,367 | 370,482 | ||||||
|
|
|
| |||||
Total deposits | $ | 2,881,003 | $ | 2,471,210 | ||||
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Leases
Year | Amount | |||
2020 | $ | 476 | ||
2021 | 476 | |||
2022 | 504 | |||
2023 | 504 | |||
2024 and thereafter | 1,105 | |||
Total lease payments | $ | 3,065 | ||
Less: Interest | (51 | ) | ||
Present value of lease liabilities | $ | 3,014 | ||
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Noninterest-bearing demand deposits | $ | 709,760 | $ | 642,129 | ||||
Interest-bearing demand deposits | 1,159,296 | 864,026 | ||||||
Money market (variable rate) | 522,382 | 420,123 | ||||||
Savings deposits | 563,952 | 400,187 | ||||||
Certificates of deposit of $250,000 or more | 461,435 | 371,824 | ||||||
Other certificates and time deposits | 514,177 | 441,087 | ||||||
Total deposits | $ | 3,931,002 | $ | 3,139,376 | ||||
Retail | Brokered | Total | ||||||||||
2018 | $ | 258,488 | $ | 19,010 | $ | 277,498 | ||||||
2019 | 152,027 | 12,558 | 164,585 | |||||||||
2020 | 56,838 | 7,058 | 63,896 | |||||||||
2021 | 16,128 | 3,386 | 19,514 | |||||||||
2022 | 16,758 | 1,900 | 18,658 | |||||||||
Thereafter | 22,222 | 579 | 22,801 | |||||||||
|
|
|
|
|
| |||||||
$ | 522,461 | $ | 44,491 | $ | 566,952 | |||||||
|
|
|
|
|
|
Retail | Brokered | Total | ||||||||||
2020 | $ | 722,672 | $ | 24,350 | $ | 747,022 | ||||||
2021 | 102,449 | 20,508 | 122,957 | |||||||||
2022 | 32,925 | 15,256 | 48,181 | |||||||||
2023 | 16,527 | 16,648 | 33,175 | |||||||||
2024 | 22,995 | — | 22,995 | |||||||||
Thereafter | 1,282 | — | 1,282 | |||||||||
$ | 898,850 | $ | 76,762 | $ | 975,612 | |||||||
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Federal Home Loan Bank advances, variable and fixed rates ranging from 0.93% to 7.53%, due at various dates through November 15, 2024 | $ | 336,308 | $ | 124,034 | ||||
Securities sold under agreements to repurchase | 61,097 | 57,144 | ||||||
Federal Reserve Bank discount window | 11,000 | — | ||||||
Federal funds purchased | 143,252 | 66,811 | ||||||
Notes payable,variable rate of 2.75%, due at various dates through July 13, 2019 | 12,500 | 19,500 | ||||||
|
|
|
| |||||
Total borrowings | $ | 564,157 | $ | 267,489 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Federal Home Loan Bank advances, variable and fixed rates ranging from 0.68% to 7.53%, due at various dates through August 20, 2029 | $ | 390,800 | $ | 356,579 | ||||
Securities sold under agreements to repurchase | 90,941 | 52,116 | ||||||
Federal funds purchased | 68,000 | 141,689 | ||||||
Total borrowings | $ | 549,741 | $ | 550,384 | ||||
2018 | $ | 430,078 | ||
2019 | 69,252 | |||
2020 | 37,472 | |||
2021 | 5,042 | |||
2022 | 12,154 | |||
Thereafter | 10,159 | |||
|
| |||
$ | 564,157 | |||
|
|
Note 14 – Repurchase Agreements
The Company transfers various securities to customers in exchange for cash at the end of each business day
2020 | $ | 276,970 | ||
2021 | 15,102 | |||
2022 | 52,222 | |||
2023 | 183 | |||
2024 | 80,116 | |||
Thereafter | 125,148 | |||
$ | 549,741 | |||
HORIZON BANCORPAND SUBSIDIARIES
Subsidiaries
The following table shows repurchase agreements accounted for as secured borrowings (in thousands):
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||||||||||
December 31, 2017 | Overnight and Continuous | Up to one year | One to three years | Three to five years | Five to ten years | Beyond ten years | Total | |||||||||||||||||||||
Repurchase Agreements andrepurchase-to-maturity transactions | ||||||||||||||||||||||||||||
Repurchase Agreements | $ | 61,097 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 61,097 | ||||||||||||||
Securities pledged for Repurchase Agreements | ||||||||||||||||||||||||||||
Federal agency collateralized mortgage obligations | 38,421 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 38,421 | |||||||||||||||
Federal agency mortgage-backed pools | 35,577 | — | — | — | — | — | 35,577 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | 73,998 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 73,998 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||||||||||||||
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||||||||||
Overnight and Continuous | Up to one year | One to three years | Three to five years | Five to ten years | Beyond ten years | Total | ||||||||||||||||||||||
Repurchase Agreements and repurchase-to-maturity transactions | ||||||||||||||||||||||||||||
Repurchase Agreements | $ | 90,941 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 90,941 | ||||||||||||||
Securities pledged for Repurchase Agreements | ||||||||||||||||||||||||||||
Federal agency collateralized mortgage obligations | $ | 35,537 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 35,537 | ||||||||||||||
Federal agency mortgage-backed pools | 71,234 | — | — | — | — | — | 71,234 | |||||||||||||||||||||
Total | $ | 106,771 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 106,771 | ||||||||||||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2019.
2019.
2019.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2017.
shares as of December 31, 2019.
2017.
shares as of December 31, 2019.
HORIZON BANCORPAND SUBSIDIARIES
December 31 | December 31 | December 31 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Income tax expense | ||||||||||||
Currently payable | ||||||||||||
Federal | $ | 12,079 | $ | 7,467 | $ | 5,511 | ||||||
Deferred | ||||||||||||
Federal | 331 | 1,334 | 1,721 | |||||||||
Revaluation of deferred tax assets | 2,426 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total income tax expense | $ | 14,836 | $ | 8,801 | $ | 7,232 | ||||||
|
|
|
|
|
| |||||||
Reconciliation of federal statutory to actual tax expense | ||||||||||||
Federal statutory income tax at 35% | $ | 16,783 | $ | 11,450 | $ | 9,724 | ||||||
Tax exempt interest | (2,699 | ) | (1,882 | ) | (1,708 | ) | ||||||
Tax exempt income | (638 | ) | (575 | ) | (488 | ) | ||||||
Stock compensation | (546 | ) | — | — | ||||||||
Revaluation of deferred tax assets | 2,426 | — | — | |||||||||
Other tax exempt income | (456 | ) | (608 | ) | (199 | ) | ||||||
Nondeductible and other | (34 | ) | 416 | (97 | ) | |||||||
|
|
|
|
|
| |||||||
Actual tax expense | $ | 14,836 | $ | 8,801 | $ | 7,232 | ||||||
|
|
|
|
|
|
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 3,396 | $ | 5,581 | ||||
Net operating loss (from acquisitions) | 1,658 | 2,368 | ||||||
Director and employee benefits | 2,276 | 3,124 | ||||||
Unrealized loss on AFS securities and fair value hedge | 1,147 | 937 | ||||||
Accrued Pension | 852 | 1,323 | ||||||
Fair value adjustment on acquistions | 1,087 | 2,340 | ||||||
Other | 1,083 | 1,593 | ||||||
|
|
|
| |||||
Total assets | 11,499 | 17,266 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Depreciation | (1,680 | ) | (1,916 | ) | ||||
State tax | (210 | ) | (341 | ) | ||||
Federal Home Loan Bank stock dividends | (339 | ) | (474 | ) | ||||
Difference in basis of intangible assets | (2,831 | ) | (4,654 | ) | ||||
Other | (125 | ) | (431 | ) | ||||
|
|
|
| |||||
Total liabilities | (5,185 | ) | (7,816 | ) | ||||
Valuation allowance | (1,613 | ) | (2,018 | ) | ||||
|
|
|
| |||||
Net deferred tax asset | $ | 4,701 | $ | 7,432 | ||||
|
|
|
|
The Tax Cuts
December 31 | December 31 | December 31 | ||||||||||
2019 | 2018 | 2017 | ||||||||||
Income tax expense | ||||||||||||
Currently payable | ||||||||||||
Federal | $ | 11,143 | $ | 9,166 | $ | 12,079 | ||||||
State | 140 | — | — | |||||||||
Deferred | ||||||||||||
Federal | 1,787 | 1,277 | 331 | |||||||||
State | 233 | — | — | |||||||||
Revaluation of deferred tax assets | — | — | 2,426 | |||||||||
Total income tax expense | $ | 13,303 | $ | 10,443 | $ | 14,836 | ||||||
Reconciliation of federal statutory to actual tax expense | ||||||||||||
Federal statutory income tax at 21% in 201 9 and2 018 35% in 2017 | $ | 16,767 | $ | 13,348 | $ | 16,783 | ||||||
Tax exempt interest | (2,977 | ) | (1,982 | ) | (2,699 | ) | ||||||
Tax exempt income | (587 | ) | (448 | ) | (638 | ) | ||||||
Stock compensation | (324 | ) | (384 | ) | (546 | ) | ||||||
Revaluation of deferred tax assets | — | — | 2,426 | |||||||||
Other tax exempt income | (313 | ) | (260 | ) | (456 | ) | ||||||
State tax | 295 | — | — | |||||||||
Nondeductible and other | 442 | 169 | (34 | ) | ||||||||
Actual tax expense | $ | 13,303 | $ | 10,443 | $ | 14,836 | ||||||
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 4,120 | $ | 3,831 | ||||
Net operating loss and tax credits (from acquisitions) | 54 | 1,038 | ||||||
Director and employee benefits | 1,890 | 2,392 | ||||||
Unrealized loss on AFS securities and fair value hedge | — | 2,165 | ||||||
Accrued pension | 775 | 801 | ||||||
Fair value adjustment on acquisitions | — | — | ||||||
Other | 2,145 | 670 | ||||||
Total assets | 8,984 | 10,897 | ||||||
Liabilities | ||||||||
Depreciation | (4,456 | ) | (1,850 | ) | ||||
State tax | (10 | ) | (137 | ) | ||||
Federal Home Loan Bank stock dividends | (368 | ) | (330 | ) | ||||
Difference in basis of intangible assets | (3,427 | ) | (2,919 | ) | ||||
Fair value adjustment on acquisitions | (2,488 | ) | (62 | ) | ||||
Unrealized gain on AFS securities and fair value hedge | (1,710 | ) | — | |||||
Other | (63 | ) | (119 | ) | ||||
Total liabilities | (12,522 | ) | (5,417 | ) | ||||
Valuation allowance | — | (1,038 | ) | |||||
Net deferred tax asset/(liability) | $ | (3,538 | ) | $ | 4,442 | |||
As of December 31, 2017,2019, the Company had approximately $25.2 million$900,000 of state tax loss carryforward available to offset future franchise taxable income. Also, at December 31, 2017, the Company had approximately $74,000 of Federal loss carryforward available to offset future federal income tax. The state loss carryforward begins to expire in 2024. The Federal loss carryforward begins to expire in 2032. 2031.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
carryforwards.
2019.
2016.
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Unrealized loss on securities available for sale | $ | (3,937 | ) | $ | (6,007 | ) | ||
Unamortized gain on securities held to maturity, previously transferred from AFS | 200 | 456 | ||||||
Unrealized loss on derivative instruments | (1,728 | ) | (3,132 | ) | ||||
Tax effect | 1,914 | 3,039 | ||||||
|
|
|
| |||||
Total accumulated other comprehensive loss | $ | (3,551 | ) | $ | (5,644 | ) | ||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Unrealized gain (loss) on securities available for sale | $ | 12,687 | $ | (8,561 | ) | |||
Unamortized gain (loss) on securities held to maturity, previously transferred from AFS | (107 | ) | 10 | |||||
Unrealized loss on derivative instruments | (4,440 | ) | (1,760 | ) | ||||
Tax effect | (1,708 | ) | 2,167 | |||||
Total accumulated other comprehensive income (loss) | $ | 6,432 | $ | (8,144 | ) | |||
Because of the nature of its activities, Horizon is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.
HORIZON BANCORPAND SUBSIDIARIES
Required For Capital1 | ||||||||||||||||||||||||||||||||
Required For Capital1 | Adequacy Purposes | Well Capitalized Under Prompt1 | ||||||||||||||||||||||||||||||
Actual | Adequacy Purposes | with Capital Buffer | Corrective Action Provisions | |||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||
As of December 31, 2017 | ||||||||||||||||||||||||||||||||
Total capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 384,800 | 12.91 | % | $ | 238,543 | 8.00 | % | $ | 275,816 | 9.25 | % | N/A | N/A | ||||||||||||||||||
Bank | 382,788 | 12.85 | % | 238,386 | 8.00 | % | 275,634 | 9.25 | % | $ | 297,982 | 10.00 | % | |||||||||||||||||||
Tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 368,355 | 12.35 | % | 178,907 | 6.00 | % | 216,180 | 7.25 | % | N/A | N/A | |||||||||||||||||||||
Bank | 366,343 | 12.29 | % | 178,790 | 6.00 | % | 216,038 | 7.25 | % | 238,386 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 329,892 | 11.06 | % | 134,181 | 4.50 | % | 171,454 | 5.75 | % | N/A | N/A | |||||||||||||||||||||
Bank | 366,343 | 12.29 | % | 134,092 | 4.50 | % | 171,340 | 5.75 | % | 193,689 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 368,355 | 9.92 | % | 148,503 | 4.00 | % | 148,503 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 366,343 | 9.89 | % | 148,116 | 4.00 | % | 148,116 | 4.00 | % | 185,145 | 5.00 | % | ||||||||||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||||||||||
Total capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 316,576 | 13.87 | % | $ | 182,596 | 8.00 | % | $ | 196,976 | 8.63 | % | N/A | N/A | ||||||||||||||||||
Bank | 319,013 | 13.98 | % | 182,541 | 8.00 | % | 196,916 | 8.63 | % | $ | 228,176 | 10.00 | % | |||||||||||||||||||
Tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 301,739 | 13.22 | % | 136,947 | 6.00 | % | 151,326 | 6.63 | % | N/A | N/A | |||||||||||||||||||||
Bank | 304,176 | 13.33 | % | 136,905 | 6.00 | % | 151,280 | 6.63 | % | 182,540 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 263,313 | 11.50 | % | 103,036 | 4.50 | % | 117,460 | 5.13 | % | N/A | N/A | |||||||||||||||||||||
Bank | 304,176 | 13.33 | % | 102,679 | 4.50 | % | 117,054 | 5.13 | % | 148,314 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 301,739 | 10.44 | % | 115,609 | 4.00 | % | 115,609 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 304,176 | 9.93 | % | 122,521 | 4.00 | % | 122,521 | 4.00 | % | 153,151 | 5.00 | % |
HORIZON BANCORPAND SUBSIDIARIES
Actual | Required for Capital 1 Adequacy Purposes | Required For Capital 1 Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt 1 Corrective Action Provisions | |||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 548,364 | 13.95 | % | $ | 314,395 | 8.00 | % | $ | 412,644 | 10.50 | % | N/A | N/A | ||||||||||||||||||
Bank | 497,227 | 12.65 | % | 314,452 | 8.00 | % | 412,718 | 10.50 | % | $ | 393,065 | 10.00 | % | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 13.50 | % | 235,796 | 6.00 | % | 334,044 | 8.50 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 235,823 | 6.00 | % | 334,082 | 8.50 | % | 314,430 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 473,150 | 12.04 | % | 176,846 | 4.50 | % | 275,094 | 7.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 176,867 | 4.50 | % | 275,126 | 7.00 | % | 255,475 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 10.50 | % | 202,111 | 4.00 | % | 202,111 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 9.49 | % | 202,110 | 4.00 | % | 202,110 | 4.00 | % | 252,638 | 5.00 | % | ||||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 427,616 | 13.39 | % | $ | 255,419 | 8.00 | % | $ | 315,283 | 9.875 | % | N/A | N/A | ||||||||||||||||||
Bank | 396,755 | 12.43 | % | 255,419 | 8.00 | % | 315,283 | 9.875 | % | $ | 319,274 | 10.00 | % | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 409,760 | 12.83 | % | 191,565 | 6.00 | % | 251,429 | 7.875 | % | N/A | N/A | |||||||||||||||||||||
Bank | 378,899 | 11.87 | % | 191,565 | 6.00 | % | 251,429 | 7.875 | % | 255,420 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 371,297 | 11.63 | % | 143,673 | 4.50 | % | 203,537 | 6.375 | % | N/A | N/A | |||||||||||||||||||||
Bank | 378,899 | 11.87 | % | 143,674 | 4.50 | % | 203,537 | 6.375 | % | 207,528 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 409,760 | 10.12 | % | 162,033 | 4.00 | % | 162,033 | 4.000 | % | N/A | N/A | |||||||||||||||||||||
Bank | 378,899 | 9.34 | % | 162,327 | 4.00 | % | 162,327 | 4.000 | % | 202,908 | 5.00 | % |
Weighted- | ||||||||||||||||
Average | ||||||||||||||||
Weighted- | Remaining | Aggregate | ||||||||||||||
Average | Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price | Term | Value | |||||||||||||
Outstanding, beginning of year | 36,635 | $ | 7.25 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (9,185 | ) | 6.86 | |||||||||||||
Forfeited | — | — | ||||||||||||||
|
| |||||||||||||||
Outstanding, end of year | 27,450 | 7.37 | 2.73 | $ | 560,691 | |||||||||||
|
| |||||||||||||||
Exercisable, end of year | 27,450 | 7.37 | 2.73 | 560,691 |
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding, beginning of year | 21,300 | $ | 5.03 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (8,625 | ) | 4.45 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Outstanding, end of year | 12,675 | 5.42 | 1.04 | $ | 172,096 | |||||||||||
Exercisable, end of year | 12,675 | 5.42 | 1.04 | 172,096 |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units, performance shares or any combination of these awards. The Committee determines the provisions, terms and conditions of each award.
December 31 | 2017 | 2016 | 2015 | |||||||||
Dividend yields | 1.75 | % | 2.34 | % | 2.35 | % | ||||||
Volatility factors of expected market price of common stock | 28.52 | % | 28.60 | % | 28.97 | % | ||||||
Risk-free interest rates | 2.42 | % | 1.83 | % | 2.10 | % | ||||||
Expected life of options | 8 years | 8 years | 8 years |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Dividend yields | 2.39 | % | 1.99 | % | 1.75 | % | ||||||
Volatility factors of expected market price of common stock | 28.67 | % | 28.60 | % | 28.52 | % | ||||||
Risk-free interest rates | 2.61 | % | 2.85 | % | 2.42 | % | ||||||
Expected life of options | 8 years | 8 years | 8 years |
Weighted- | ||||||||||||||||
Average | ||||||||||||||||
Weighted- | Remaining | Aggregate | ||||||||||||||
Average | Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price | Term | Value | |||||||||||||
Outstanding, beginning of year | 286,586 | $ | 15.08 | |||||||||||||
Granted | 43,502 | 25.14 | ||||||||||||||
Exercised | (108,434 | ) | 14.77 | |||||||||||||
Forfeited | (5,871 | ) | 15.64 | |||||||||||||
|
| |||||||||||||||
Outstanding, end of year | 215,783 | 17.25 | 7.69 | $ | 2,276,823 | |||||||||||
|
| |||||||||||||||
Exercisable, end of year | 88,036 | 14.77 | 6.62 | 1,147,538 |
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding, beginning of year | 307,317 | $ | 12.28 | |||||||||||||
Granted | 35,966 | 16.74 | ||||||||||||||
Exercised | (24,256 | ) | 9.75 | |||||||||||||
Forfeited | (2,250 | ) | 10.38 | |||||||||||||
Outstanding, end of year | 316,777 | 12.99 | 6.37 | $ | 1,822,924 | |||||||||||
Exercisable, end of year | 242,814 | 11.58 | 5.74 | 1,802,010 |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
$4.83.
Weighted | ||||||||
Average | ||||||||
Grant Date | ||||||||
Shares | Fair Value | |||||||
Non-vested beginning of year | 70,959 | $ | 15.59 | |||||
Vested | (6,754 | ) | 14.80 | |||||
Granted | 41,786 | 25.49 | ||||||
Forfeited | (9,461 | ) | 15.05 | |||||
|
| |||||||
Non-vested, end of year | 96,530 | 19.98 | ||||||
|
|
Grants vest at the end of three, four or five years of continuous employment.
Shares | Weighted Average Grant Date Fair Value | |||||||
Non-vested, beginning of year | 176,538 | $ | 16.90 | |||||
Vested | (43,358 | ) | 11.17 | |||||
Granted | 84,526 | 16.74 | ||||||
Forfeited | (4,137 | ) | 18.23 | |||||
Non-vested, end of year | 213,569 | 17.97 | ||||||
2017.
2017.
On December 19, 2017, the Board of Directors proposed adoption of the Amended and Restated 2013 Omnibus Equity Incentive Plan, primarily to allow awards of “Other Stock Based Awards,” which includes awards valued in whole or in part by reference to Horizon’s common shares. The Amended and Restated 2013 Omnibus Equity Incentive Plan must be approved by the shareholders in order to become effective, and the shareholders will vote on its adoption at the Annual Meeting to be held on May 3, 2018.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2018.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Asset Derivatives | Liability Derivatives | |||||||||||
December 31, 2017 | December 31, 2017 | |||||||||||
Derivatives designated as hedging instruments | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Interest rate contracts | Loans | $ | — | Other liabilities | $ | 811 | ||||||
Interest rate contracts | Other Assets | 811 | Other liabilities | 1,728 | ||||||||
|
|
|
| |||||||||
Total derivatives designated as hedging instruments | 811 | 2,539 | ||||||||||
|
|
|
| |||||||||
Derivatives not designated as hedging instruments | ||||||||||||
Mortgage loan contracts | Other assets | 143 | Other liabilities | 3 | ||||||||
|
|
|
| |||||||||
Total derivatives not designated as hedging instruments | 143 | 3 | ||||||||||
|
|
|
| |||||||||
Total derivatives | $ | 954 | $ | 2,542 | ||||||||
|
|
|
| |||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
December 31, 2016 | December 31, 2016 | |||||||||||
Derivatives designated as hedging instruments | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Interest rate contracts | Loans | $ | — | Other liabilities | $ | 6 | ||||||
Interest rate contracts | Other Assets | 6 | Other liabilities | 3,132 | ||||||||
|
|
|
| |||||||||
Total derivatives designated as hedging instruments | 6 | 3,138 | ||||||||||
|
|
|
| |||||||||
Derivatives not designated as hedging instruments | ||||||||||||
Mortgage loan contracts | Other assets | 602 | Other liabilities | 22 | ||||||||
|
|
|
| |||||||||
Total derivatives not designated as hedging instruments | 602 | 22 | ||||||||||
|
|
|
| |||||||||
Total derivatives | $ | 608 | $ | 3,160 | ||||||||
|
|
|
|
Asset Derivatives | Liability Derivatives | |||||||||||||||
December 31, 2019 | December 31, 2019 | |||||||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Interest rate contracts | Other a ssets | $ | 11,422 | Other liabilities | $ | 15,861 | ||||||||||
Total derivatives desginated as hedging instruments | 11,422 | 15,861 | ||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Mortgage loan contracts | Other assets | 264 | Other liabilities | 38 | ||||||||||||
Total derivatives not designated as hedging instruments | 264 | 38 | ||||||||||||||
Total derivatives | $ | 11,686 | $ | 3,745 | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||
December 31, 2018 | December 31, 2018 | |||||||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Interest rate contracts | Other a ssets | $ | 42 | Other liabilities | $ | 1,802 | ||||||||||
Total derivatives desginated as hedging instruments | 42 | 1,802 | ||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Mortgage loan contracts | Other assets | 135 | Other liabilities | — | ||||||||||||
Total derivatives not designated as hedging instruments | 135 | — | ||||||||||||||
Total derivatives | $ | 177 | $ | 1,802 |
Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion) | ||||||||||||
Derivative in cash flow | Years Ended December 31 | |||||||||||
hedging relationship | 2017 | 2016 | 2015 | |||||||||
Interest rate contracts | $ | 913 | $ | 6 | $ | 127 |
Amount of (Gain) Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion) | ||||||||||||
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Derivatives in cash flow hedging relationship | ||||||||||||
Interest rate contracts | $ | (2,117 | ) | $ | (25 | ) | $ | 913 |
HORIZON BANCORPAND SUBSIDIARIES
Location of gain (loss) recognized on | Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 | |||||||||||||
derivative | 2019 | 2018 | 2017 | |||||||||||
Derivative in fair value hedging relationship | ||||||||||||||
Interest rate contracts | Interest income - loans | $ | (11,380 | ) | $ | (852 | ) | $ | (817 | ) | ||||
Interest rate contracts | Interestincome | 11,380 | 852 | 817 | ||||||||||
Total | $ | — | $ | — | $ | — | ||||||||
Location of gain (loss) recognized on | Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 | |||||||||||||
derivative | 2019 | 2018 | 2017 | |||||||||||
Derivative not designated as hedging relationship | ||||||||||||||
Mortgage contracts | Other income - gain on sale of loans | $ | 91 | $ | (5 | ) | $ | (439 | ) |
Amount of Gain (Loss) Recognized on Derivative | ||||||||||||||
Derivative in fair value | Location of gain (loss) | Years Ended December 31 | ||||||||||||
hedging relationship | recognized on derivative | 2017 | 2016 | 2015 | ||||||||||
Interest rate contracts | Interest income - loans | $ | (817 | ) | $ | (1,776 | ) | $ | 574 | |||||
Interest rate contracts | Interest income - loans | 817 | 1,776 | (574 | ) | |||||||||
|
|
|
|
|
| |||||||||
Total | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
| |||||||||
Amount of Gain (Loss) Recognized on Derivative | ||||||||||||||
Derivative not designated | Location of gain (loss) | Years Ended December 31 | ||||||||||||
as hedging relationship | recognized on derivative | 2017 | 2016 | 2015 | ||||||||||
Mortgage contracts | Other income - gain on sale of loans | $ | (439 | ) | $ | (62 | ) | $ | 195 |
Level 1 | Quoted prices in active markets for identical assets or liabilities | |
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities | |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
2019.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
December 31, 2017 | ||||||||||||||||
Available-for-sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 19,052 | $ | — | $ | 19,052 | $ | — | ||||||||
State and municipal | 149,564 | — | 149,564 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 130,365 | — | 130,365 | — | ||||||||||||
Federal agency mortgage-backed pools | 208,657 | — | 208,657 | — | ||||||||||||
Private labeled mortgage-backed pools | 1,642 | — | 1,642 | — | ||||||||||||
Corporate notes | 385 | — | 385 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totalavailable-for-sale securities | 509,665 | — | 509,665 | — | ||||||||||||
Hedged loans | 154,575 | — | 154,575 | — | ||||||||||||
Forward sale commitments | 143 | — | 143 | — | ||||||||||||
Interest rate swap agreements | (917 | ) | — | (917 | ) | — | ||||||||||
Commitments to originate loans | (3 | ) | — | (3 | ) | — | ||||||||||
December 31, 2016 | ||||||||||||||||
Available-for-sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 7,989 | $ | — | $ | 7,989 | $ | — | ||||||||
State and municipal | 116,592 | — | 116,592 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 137,195 | — | 137,195 | — | ||||||||||||
Federal agency mortgage-backed pools | 176,726 | — | 176,726 | — | ||||||||||||
Corporate notes | 1,329 | — | 1,329 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totalavailable-for-sale securities | 439,831 | — | 439,831 | — | ||||||||||||
Hedged loans | 122,345 | — | 122,345 | — | ||||||||||||
Forward sale commitments | 602 | — | 602 | — | ||||||||||||
Interest rate swap agreements | (3,138 | ) | — | (3,138 | ) | — | ||||||||||
Commitments to originate loans | (22 | ) | — | (22 | ) | — |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2019 | ||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Available for sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,413 | $ | — | $ | 1,413 | $ | — | ||||||||
State and municipal | 405,768 | — | 405,768 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 269,252 | — | 269,252 | — | ||||||||||||
Federal agency mortgage-backed pools | 146,572 | — | 146,572 | — | ||||||||||||
Corporate notes | 11,771 | — | 11,771 | — | ||||||||||||
Total available for sale securities | 834,776 | — | 834,776 | — | ||||||||||||
Interest rate swap agreements asset | 11,422 | — | 11,422 | — | ||||||||||||
Forward sale commitments | 264 | — | 264 | — | ||||||||||||
Interest rate swap agreements liability | (15,861 | ) | — | (15,861 | ) | — | ||||||||||
Commitments to originate loans | (38 | ) | — | (38 | ) | — |
December 31, 2018 | ||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Available for sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 16,608 | $ | — | $ | 16,608 | $ | — | ||||||||
State and municipal | 209,303 | — | 209,303 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 185,003 | — | 185,003 | — | ||||||||||||
Federal agency mortgage-backed pools | 178,736 | — | 178,736 | — | ||||||||||||
Corporate notes | 10,698 | — | 10,698 | — | ||||||||||||
Total available for sale securities | 600,348 | — | 600,348 | — | ||||||||||||
Interest rate swap agreements asset | 42 | — | 42 | — | ||||||||||||
Forward sale commitments | 135 | — | 135 | — | ||||||||||||
Interest rate swap agreements liability | (1,801 | ) | — | (1,801 | ) | — | ||||||||||
Commitments to originate loans | — | — | — | — |
Non Interest Income | Years Ended December 31 | |||||||||||
Total gains and losses from: | 2017 | 2016 | 2015 | |||||||||
Hedged loans | $ | (817 | ) | $ | (1,776 | ) | $ | 574 | ||||
Fair value interest rate swap agreements | 817 | 1,776 | (574 | ) | ||||||||
Derivative loan commitments | (439 | ) | (62 | ) | 195 | |||||||
|
|
|
|
|
| |||||||
$ | (439 | ) | $ | (62 | ) | $ | 195 | |||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
Non-interest Income | 2019 | 2018 | 2017 | |||||||||
Total gains and losses from: | ||||||||||||
Hedged loans | $ | (11,380 | ) | $ | (852 | ) | $ | (817 | ) | |||
Fair value interest rate swap agreements | 11,380 | 852 | 817 | |||||||||
Derivative loan commitments | 91 | (5 | ) | (439 | ) | |||||||
$ | 91 | $ | (5 | ) | $ | (439 | ) | |||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
December 31, 2017 | ||||||||||||||||
Impaired loans | $ | 6,957 | $ | — | $ | — | $ | 6,957 | ||||||||
Mortgage servicing rights | 11,602 | — | — | 11,602 | ||||||||||||
December 31, 2016 | ||||||||||||||||
Impaired loans | $ | 2,246 | $ | — | $ | — | $ | 2,246 | ||||||||
Mortgage servicing rights | 11,174 | — | — | 11,174 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
December 31, 2019 | ||||||||||||||||
Impaired loans | $ | 6,806 | $ | — | $ | — | $ | 6,806 | ||||||||
Mortgage servicing rights | 14,327 | — | — | 14,327 | ||||||||||||
December 31, 2018 | ||||||||||||||||
Impaired loans | $ | 5,661 | $ | — | $ | — | $ | 5,661 | ||||||||
Mortgage servicing rights | 12,349 | — | — | 12,349 |
HORIZON BANCORPAND SUBSIDIARIES
Fair Value at | Valuation | Range (Weighted | ||||||||||
December 31, 2017 | Technique | Unobservable Inputs | Average) | |||||||||
Impaired loans | $ | 6,957 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 0% - 46.8% (2.6%) | |||||||
Mortgage servicing rights | $ | 11,602 | Discounted cashflows | Discount rate, Constant prepayment rate, Probability of default | | 9.6% - 10.8% (9.7%), 9.2% - 27.7% (10.5%), 0% - 1.5% (0.2%) |
| |||||
Fair Value at | Valuation | Range (Weighted | ||||||||||
December 31, 2016 | Technique | Unobservable Inputs | Average) | |||||||||
Impaired loans | $ | 2,246 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 10% - 16% (13%) | |||||||
Mortgage servicing rights | $ | 11,174 | Discounted cashflows | Discount rate, Constant prepayment rate, Probability of default | | 10% - 16% (13%), 4% - 7% (4.6%), 1% - 10% (4.5%) |
|
2018.
December 31, 2019 | ||||||||||||
Fair | Valuation | Unobservable | Range | |||||||||
Value | Technique | Inputs | (Weighted Average) | |||||||||
Impaired loans | $ | 6,806 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 0%-100% (7.4%) | |||||||
Mortgage servicing rights | 14,327 | Discounted cash flows | Discount rate, Constant prepayment rate, Probability of default | 8.7%-9.0% (8.7%),10.2%-19.8% ( 12.2%), 0.1%-2.9% (0.7%) |
December 31, 2018 | ||||||||||||
Fair | Valuation | Unobservable | Range | |||||||||
Value | Technique | Inputs | (Weighted Average) | |||||||||
Impaired loans | $ | 5,661 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 0%-100% (15.5%) | |||||||
Mortgage servicing rights | 12,349 | Discounted cash flows | Discount rate, Constant prepayment rate, Probability of default | 10.2%-11.0% 10.3%),( 9.1%-21.9% (9.3%),0.1%-2.8% (0.6%) |
Net Loans — The fair value of portfolio loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings
HORIZON BANCORPAND SUBSIDIARIES
Subsidiaries
December 31, 2017 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Carrying | Assets | Inputs | Inputs | |||||||||||||
Amount | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 76,441 | $ | 76,441 | $ | — | $ | — | ||||||||
Investment securities, held to maturity | 200,448 | — | 201,085 | — | ||||||||||||
Loans held for sale | 3,094 | — | — | 3,094 | ||||||||||||
Loans excluding loan level hedges, net | 2,661,026 | — | — | 2,585,879 | ||||||||||||
Stock in FHLB | 18,105 | — | 18,105 | — | ||||||||||||
Interest receivable | 16,244 | — | 16,244 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 601,805 | $ | 601,805 | $ | — | $ | — | ||||||||
Interest-bearing deposits | 2,279,198 | — | 2,156,487 | — | ||||||||||||
Borrowings | 564,157 | — | 560,057 | — | ||||||||||||
Subordinated debentures | 37,653 | — | 35,994 | — | ||||||||||||
Interest payable | 886 | — | 886 | — |
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 98,831 | $ | 98,831 | $ | — | $ | — | ||||||||
Interest-earning time deposits | 8,455 | — | 8,537 | — | ||||||||||||
Investment securities, held to maturity | 207,899 | — | 215,147 | — | ||||||||||||
Loans held for sale | 4,088 | — | — | 4,088 | ||||||||||||
Loans (excluding loan level hedges), net | 3,619,174 | — | — | 3,554,951 | ||||||||||||
Stock in FHLB | 22,447 | — | 22,447 | — | ||||||||||||
Interest receivable | 18,828 | — | 18,828 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 709,760 | $ | 709,760 | $ | — | $ | — | ||||||||
Interest bearing deposits | 3,221,242 | — | 3,180,768 | — | ||||||||||||
Borrowings | 549,741 | — | 546,995 | — | ||||||||||||
Subordinated debentures | 56,311 | — | 51,809 | — | ||||||||||||
Interest payable | 3,062 | — | 3,062 | — |
December 31, 2016 | ||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Assets | �� | |||||||||||||||
Cash and due from banks | $ | 70,832 | $ | 70,832 | $ | — | $ | — | ||||||||
Investment securities, held to maturity | 193,194 | — | 194,086 | — | ||||||||||||
Loans held for sale | 8,087 | — | — | 8,087 | ||||||||||||
Loans excluding loan level hedges, net | 1,998,804 | — | — | 1,965,928 | ||||||||||||
Stock in FHLB and FRB | 23,932 | — | 23,932 | — | ||||||||||||
Interest receivable | 12,713 | — | 12,713 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 496,248 | $ | 496,248 | $ | — | $ | — | ||||||||
Interest-bearing deposits | 1,974,962 | — | 1,839,167 | — | ||||||||||||
Borrowings | 267,489 | — | 261,141 | — | ||||||||||||
Subordinated debentures | 37,456 | — | 36,371 | — | ||||||||||||
Interest payable | 472 | — | 472 | — |
December 31, 2018 | ||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 58,492 | $ | 58,492 | $ | — | $ | — | ||||||||
Interest-earning time deposits | 15,744 | — | 15,542 | — | ||||||||||||
Investment securities, held to maturity | 210,112 | — | 208,273 | — | ||||||||||||
Loans held for sale | 1,038 | — | — | 1,038 | ||||||||||||
Loans (excluding loan level hedges), net | 2,786,351 | — | — | 2,681,741 | ||||||||||||
Stock in FHLB | 18,073 | — | 18,073 | — | ||||||||||||
Interest receivable | 14,239 | — | 14,239 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 642,129 | $ | 642,129 | $ | — | $ | — | ||||||||
Interest bearing deposits | 2,497,247 | — | 2,377,274 | — | ||||||||||||
Borrowings | 550,384 | — | 542,311 | — | ||||||||||||
Subordinated debentures | 37,837 | — | 35,711 | — | ||||||||||||
Interest payable | 2,031 | — | 2,031 | — |
C
Bancorp, Inc.:
December 31 | December 31 | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Total cash and cash equivalents | $ | 13,361 | $ | 15,736 | ||||
Investment in Subsidiaries | 497,623 | 386,389 | ||||||
Other assets | 1,318 | 2,504 | ||||||
|
|
|
| |||||
Total assets | $ | 512,302 | $ | 404,629 | ||||
|
|
|
| |||||
Liabilities | ||||||||
Borrowings | $ | 12,500 | $ | 19,500 | ||||
Subordinated debentures | 37,653 | 37,456 | ||||||
Other liabilities | 5,071 | 6,818 | ||||||
Stockholders’ Equity | 457,078 | 340,855 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 512,302 | $ | 404,629 | ||||
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Total cash and cash equivalents | $ | 50,961 | $ | 30,653 | ||||
Investment in subsidiaries | 666,639 | 502,844 | ||||||
Other assets | 3,882 | 1,186 | ||||||
Total assets | $ | 721,482 | $ | 534,683 | ||||
Liabilities | ||||||||
Subordinated debentures | $ | 56,311 | $ | 37,837 | ||||
Other liabilities | 9,148 | 4,854 | ||||||
Stockholders’ Equity | 656,023 | 491,992 | ||||||
Total liabilities and stockholders’ equity | $ | 721,482 | $ | 534,683 | ||||
Years Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Operating Income (Expense) | ||||||||||||
Dividend income from Bank | $ | 27,000 | $ | 20,000 | $ | 30,470 | ||||||
Investment income | — | 33 | 15 | |||||||||
Other income | 540 | 42 | 24 | |||||||||
Interest expense | (2,791 | ) | (2,376 | ) | (2,009 | ) | ||||||
Employee benefit expense | (1,094 | ) | (1,158 | ) | (1,093 | ) | ||||||
Other expense | (326 | ) | 1,279 | 910 | ||||||||
|
|
|
|
|
| |||||||
Income Before Undistributed Income of Subsidiaries | 23,329 | 17,820 | 28,317 | |||||||||
Undistributed Income of Subsidiaries | 8,804 | 5,938 | (8,168 | ) | ||||||||
|
|
|
|
|
| |||||||
Income Before Tax | 32,133 | 23,758 | 20,149 | |||||||||
Income Tax Benefit | 984 | 154 | 400 | |||||||||
|
|
|
|
|
| |||||||
Net Income | 33,117 | 23,912 | 20,549 | |||||||||
Preferred stock dividend | — | (42 | ) | (125 | ) | |||||||
|
|
|
|
|
| |||||||
Net Income Available to Common Shareholders | $ | 33,117 | $ | 23,870 | $ | 20,424 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Operating Income (Expense) | ||||||||||||
Dividend income from subsidiaries | $ | 46,150 | $ | 46,950 | $ | 27,000 | ||||||
Other income | — | — | 540 | |||||||||
Interest expense | (3,209 | ) | (2,475 | ) | (2,791 | ) | ||||||
Employee benefit expense | (1,687 | ) | (1,423 | ) | (1,094 | ) | ||||||
Other expense | (416 | ) | (357 | ) | (326 | ) | ||||||
Income Before Undistributed Income of Subsidiaries | 40,838 | 42,695 | 23,329 | |||||||||
Undistributed Income of Subsidiaries | 25,053 | 9,643 | 8,804 | |||||||||
Income Before Tax | 65,891 | 52,338 | 32,133 | |||||||||
Income Tax Benefit | 647 | 779 | 984 | |||||||||
Net Income Available to Common Shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Years Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Net Income | $ | 33,117 | $ | 23,912 | $ | 20,549 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments, net of taxes | 913 | 6 | 127 | |||||||||
Unrealized appreciation for the period onheld-to-maturity securities, net of taxes | (166 | ) | (424 | ) | (357 | ) | ||||||
Unrealized appreciation (depreciation) onavailable-for-sale securities, net of taxes | 1,371 | (3,310 | ) | (1,891 | ) | |||||||
Less: reclassification adjustment for realized gains included in net income, net of taxes | (25 | ) | (1,193 | ) | (123 | ) | ||||||
|
|
|
|
|
| |||||||
2,093 | (4,921 | ) | (2,244 | ) | ||||||||
|
|
|
|
|
| |||||||
Comprehensive Income | $ | 35,210 | $ | 18,991 | $ | 18,305 | ||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net Income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments, net of taxes | (2,117 | ) | (25 | ) | 913 | |||||||
Unrealized appreciation for the period on held to maturity securities, net of taxes | (92 | ) | (150 | ) | (166 | ) | ||||||
Unrealized appreciation (depreciation) on available for sale securities, net of taxes | 16,727 | (4,003 | ) | 1,371 | ||||||||
Less: reclassification adjustment for realized (gains) losses included in net income, net of taxes | 59 | 351 | (25 | ) | ||||||||
14,576 | (3,827 | ) | 2,093 | |||||||||
Comprehensive Income | $ | 81,114 | $ | 49,290 | $ | 35,210 | ||||||
Years Ended December 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 33,117 | $ | 23,912 | $ | 20,549 | ||||||
Items not requiring (providing) cash | ||||||||||||
Equity in undistributed net income of subsidiaries | (8,804 | ) | (5,938 | ) | 8,168 | |||||||
Change in | ||||||||||||
Share based compensation | 325 | 284 | 288 | |||||||||
Amortization of unearned compensation | 135 | 324 | 355 | |||||||||
Other assets | 388 | 888 | (634 | ) | ||||||||
Other liabilities | (1,675 | ) | (244 | ) | (13 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 23,486 | 19,226 | 28,713 | |||||||||
|
|
|
|
|
| |||||||
Investing Activities | ||||||||||||
Acquisition of Peoples | — | — | (19,365 | ) | ||||||||
Acquisition of Kosciusko | — | (6,741 | ) | — | ||||||||
Acquisition of LaPorte | — | (17,108 | ) | — | ||||||||
Acquisition of CNB | — | (5,296 | ) | — | ||||||||
Acquisition of Lafayette | (1,254 | ) | — | — | ||||||||
Acquisition of Wolverine | (7,688 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net cash used in investing activities | (8,942 | ) | (29,145 | ) | (19,365 | ) | ||||||
|
|
|
|
|
| |||||||
Financing Activities | ||||||||||||
Redemption of preferred stock | — | (12,500 | ) | — | ||||||||
Net change in borrowings | (6,803 | ) | 19,500 | — | ||||||||
Dividends paid on preferred shares | — | (42 | ) | (125 | ) | |||||||
Dividends paid on common shares | (11,720 | ) | (8,382 | ) | (6,216 | ) | ||||||
Exercise of stock options | 1,604 | 572 | 4,305 | |||||||||
|
|
|
|
|
| |||||||
Net cash used in financing activities | (16,919 | ) | (852 | ) | (2,036 | ) | ||||||
|
|
|
|
|
| |||||||
Net Change in Cash and Cash Equivalents | (2,375 | ) | (10,771 | ) | 7,312 | |||||||
Cash and Cash Equivalents at Beginning of Year | 15,736 | 26,507 | 19,195 | |||||||||
|
|
|
|
|
| |||||||
Cash and Cash Equivalents at End of Year | $ | 13,361 | $ | 15,736 | $ | 26,507 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Items not requiring (providing) cash | ||||||||||||
Equity in undistributed net income of subsidiaries | (25,053 | ) | (9,643 | ) | (8,804 | ) | ||||||
Change in: | ||||||||||||
Share based compensation | 215 | 251 | 325 | |||||||||
Amortization of unearned compensation | 705 | 169 | 135 | |||||||||
Other assets | (5,449 | ) | 132 | 388 | ||||||||
Other liabilities | 1,629 | 378 | (1,675 | ) | ||||||||
Net cash provided by operating activities | 38,585 | 44,404 | 23,486 | |||||||||
Investing Activities | ||||||||||||
Repurchase of outstanding stock | (1,595 | ) | — | — | ||||||||
Acquisition of Lafayette | — | — | (1,254 | ) | ||||||||
Acquisition of Wolverine | — | — | (7,688 | ) | ||||||||
Acquisition of Salin | 2,350 | — | — | |||||||||
Net cash used in investing activities | 755 | — | (8,942 | ) | ||||||||
Financing Activities | ||||||||||||
Net change in borrowings | 98 | (12,316 | ) | (6,803 | ) | |||||||
Dividends paid on common shares | (20,835 | ) | (15,418 | ) | (11,720 | ) | ||||||
Proceeds from issuance of stock | 1,705 | 622 | 1,604 | |||||||||
Net cash used in financing activities | (19,032 | ) | (27,112 | ) | (16,919 | ) | ||||||
Net Change in Cash and Cash Equivalents | 20,308 | 17,292 | (2,375 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Year | 30,653 | 13,361 | 15,736 | |||||||||
Cash and Cash Equivalents at End of Year | $ | 50,961 | $ | 30,653 | $ | 13,361 | ||||||
Three Months Ended 2017 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Interest income | $ | 28,834 | $ | 30,805 | $ | 32,070 | $ | 36,774 | ||||||||
Interest expense | 3,266 | 3,607 | 4,191 | 5,319 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest income | 25,568 | 27,198 | 27,879 | 31,455 | ||||||||||||
Provision for loan losses | 330 | 330 | 710 | 1,100 | ||||||||||||
Gain on sale of securities | 35 | (3 | ) | 6 | — | |||||||||||
Net income | 8,224 | 9,072 | 8,171 | 7,650 | ||||||||||||
Net income available to common shareholders | $ | 8,224 | $ | 9,072 | $ | 8,171 | $ | 7,650 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.37 | $ | 0.41 | $ | 0.36 | $ | 0.30 | ||||||||
Diluted | 0.37 | 0.41 | 0.36 | 0.30 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 22,175,526 | 22,176,465 | 22,580,160 | 25,140,800 | ||||||||||||
Diluted | 22,326,071 | 22,322,390 | 22,715,273 | 25,262,010 | ||||||||||||
Three Months Ended 2016 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Interest income | $ | 23,528 | $ | 24,650 | $ | 28,962 | $ | 29,390 | ||||||||
Interest expense | 3,754 | 3,781 | 4,552 | 8,450 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest income | 19,774 | 20,869 | 24,410 | 20,940 | ||||||||||||
Provision for loan losses | 532 | 232 | 455 | 623 | ||||||||||||
Gain on sale of securities | 108 | 767 | — | 961 | ||||||||||||
Net income | 5,381 | 6,326 | 6,602 | 5,603 | ||||||||||||
Net income available to common shareholders | $ | 5,339 | $ | 6,326 | $ | 6,602 | $ | 5,603 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.35 | $ | 0.31 | $ | 0.25 | ||||||||
Diluted | 0.30 | 0.34 | 0.30 | 0.25 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 17,924,124 | 18,268,880 | 21,538,752 | 22,155,549 | ||||||||||||
Diluted | 18,012,726 | 18,364,167 | 21,651,953 | 22,283,722 |
Three Months Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2019 | 2019 | 2019 | 2019 | |||||||||||||
Interest income | $ | 45,373 | $ | 53,850 | $ | 55,711 | $ | 53,398 | ||||||||
Interest expense | 11,093 | 12,321 | 12,248 | 11,879 | ||||||||||||
Net interest income | 34,280 | 41,529 | 43,463 | 41,519 | ||||||||||||
Provision for loan losses | 364 | 896 | 376 | 340 | ||||||||||||
Gain (loss) on sale of securities | 15 | (100 | ) | — | 10 | |||||||||||
Net income | $ | 10,816 | $ | 16,642 | $ | 20,537 | $ | 18,543 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.28 | $ | 0.37 | $ | 0.46 | $ | 0.41 | ||||||||
Diluted | 0.28 | 0.37 | 0.46 | 0.41 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 38,822,543 | 45,055,117 | 45,038,021 | 44,971,676 | ||||||||||||
Diluted | 38,906,172 | 45,130,408 | 45,113,730 | 45,103,065 |
Three Months Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2018 | 2018 | 2018 | 2018 | |||||||||||||
Interest income | $ | 39,426 | $ | 40,741 | $ | 42,271 | $ | 43,730 | ||||||||
Interest expense | 6,015 | 7,191 | 8,499 | 9,894 | ||||||||||||
Net interest income | 33,411 | 33,550 | 33,772 | 33,836 | ||||||||||||
Provision for loan losses | 567 | 635 | 1,176 | 528 | ||||||||||||
Gain (loss) on sale of securities | 11 | — | (122 | ) | (332 | ) | ||||||||||
Net income | $ | 12,804 | $ | 14,115 | $ | 13,065 | $ | 13,133 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.37 | $ | 0.34 | $ | 0.35 | ||||||||
Diluted | 0.33 | 0.37 | 0.34 | 0.34 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 38,306,395 | 38,347,612 | 38,365,379 | 38,367,972 | ||||||||||||
Diluted | 38,468,810 | 38,519,401 | 38,534,970 | 38,488,861 |
1998.
2020
Inc.
Summary of Selected Financial Data
(Dollars in thousands except for per share data)
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Earnings | ||||||||||||||||||||
Net interest income | $ | 112,100 | $ | 85,992 | $ | 74,734 | $ | 62,983 | $ | 61,383 | ||||||||||
Provision for loan losses | 2,470 | 1,842 | 3,162 | 3,058 | 1,920 | |||||||||||||||
Non-interest income | 33,136 | 35,455 | 30,402 | 26,277 | 25,906 | |||||||||||||||
Non-interest expenses | 94,813 | 86,892 | 74,193 | 61,946 | 58,445 | |||||||||||||||
Income tax expense | 14,836 | 8,801 | 7,232 | 6,155 | 7,048 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income | 33,117 | 23,912 | 20,549 | 18,101 | 19,876 | |||||||||||||||
Preferred stock dividend | — | (42 | ) | (125 | ) | (133 | ) | (370 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income available to common shareholders | $ | 33,117 | $ | 23,870 | $ | 20,424 | $ | 17,968 | $ | 19,506 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash dividend declared | $ | 11,720 | $ | 8,382 | $ | 6,216 | $ | 4,744 | $ | 3,655 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Per Share Data | ||||||||||||||||||||
Basic earnings per share (1) | $ | 1.44 | $ | 1.19 | $ | 1.30 | $ | 1.32 | $ | 1.51 | ||||||||||
Diluted earnings per share (1) | 1.43 | 1.19 | 1.26 | 1.27 | 1.45 | |||||||||||||||
Cash dividends declared per common share (1) | 0.50 | 0.41 | 0.39 | 0.34 | 0.28 | |||||||||||||||
Book value per common share (1) | 17.90 | 15.37 | 14.20 | 13.16 | 11.76 | |||||||||||||||
Weighted-average shares outstanding |
| |||||||||||||||||||
Basic (1) | 23,035,824 | 19,987,728 | 15,765,444 | 13,591,053 | 12,928,995 | |||||||||||||||
Diluted (1) | 23,173,626 | 20,082,410 | 16,197,312 | 14,181,188 | 13,501,445 | |||||||||||||||
Period End Totals | ||||||||||||||||||||
Loans, net of deferred loan fees and unearned income | $ | 2,831,995 | $ | 2,135,986 | $ | 1,749,131 | $ | 1,378,554 | $ | 1,068,828 | ||||||||||
Allowance for loan losses | 16,394 | 14,837 | 14,534 | 16,501 | 15,992 | |||||||||||||||
Total assets | 3,964,303 | 3,141,156 | 2,652,401 | 2,076,922 | 1,758,276 | |||||||||||||||
Total deposits | 2,881,003 | 2,471,210 | 1,880,153 | 1,482,319 | 1,291,520 | |||||||||||||||
Total borrowings | 601,810 | 304,945 | 482,144 | 383,840 | 288,782 | |||||||||||||||
Ratios | ||||||||||||||||||||
Loan to deposit | 98.30 | % | 86.43 | % | 93.03 | % | 93.00 | % | 82.76 | % | ||||||||||
Loan to total funding | 81.31 | % | 76.94 | % | 74.04 | % | 73.87 | % | 67.63 | % | ||||||||||
Return on average assets | 0.97 | % | 0.81 | % | 0.87 | % | 0.93 | % | 1.13 | % | ||||||||||
Average stockholders’ equity to average total assets | 11.15 | % | 10.22 | % | 9.30 | % | 9.33 | % | 9.34 | % | ||||||||||
Return on average stockholders’ equity | 8.74 | % | 7.92 | % | 9.87 | % | 10.60 | % | 12.86 | % | ||||||||||
Dividend payout ratio (dividends divided by basic earnings per share) | 34.78 | % | 34.33 | % | 29.85 | % | 25.72 | % | 18.56 | % | ||||||||||
Price to book value ratio | 155.28 | % | 182.13 | % | 131.26 | % | 132.39 | % | 143.59 | % | ||||||||||
Price to earnings ratio | 19.45 | 23.56 | 14.78 | 13.75 | 11.69 |
Horizon’s Common Stock and Related Stockholders Matters
Horizon common stock is traded on the NASDAQ Global Select Market under the symbol “HBNC.” The following table sets forth, for the periods indicated, the high and low prices per share. Also summarized below are the cash dividends declared by quarter for 2017 and 2016.
2017 | ||||||||||||
Dividends | ||||||||||||
Common Stock Prices | Declared | |||||||||||
High | Low | Per Share | ||||||||||
First Quarter | $ | 28.09 | $ | 24.91 | $ | 0.11 | ||||||
Second Quarter | 27.50 | 24.73 | 0.13 | |||||||||
Third Quarter | 29.17 | 25.30 | 0.13 | |||||||||
Fourth Quarter | 29.21 | 25.99 | 0.13 | |||||||||
2016 | ||||||||||||
Dividends | ||||||||||||
Common Stock Prices | Declared | |||||||||||
High | Low | Per Share | ||||||||||
First Quarter | $ | 18.59 | $ | 15.41 | $ | 0.10 | ||||||
Second Quarter | 16.76 | 15.87 | 0.10 | |||||||||
Third Quarter | 20.01 | 16.61 | 0.10 | |||||||||
Fourth Quarter | 28.41 | 17.84 | 0.11 |
The approximate number of holders of record of Horizon’s outstanding common stock as of February 27, 2018 was 1,554.
Horizon’s ability to pay dividends to its stockholders is largely dependent upon the dividends it receives from the Bank, and the Bank is subject to regulatory limitations on the amount of cash dividends it may pay. See “Part I. Item 1 Business: Regulation and Supervision – Dividends” for a discussion of the regulatory requirements and limitations.
Horizon Bancorp
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | |||||||||
Equity compensation plans approved by security holders | 257,751 | $ | 16.07 | 621,526 | ||||||||
Equity compensation plans not approved by security holders | — | $ | — | — | ||||||||
|
|
|
| |||||||||
Total | 257,751 | $ | 16.07 | 621,526 | ||||||||
|
|
|
|
2019.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | |||||||||
Equity compensation plans approved by security holders | 329,452 | $ | 12.70 | 657,612 | ||||||||
Equity compensation plans not approved by security holders | — | $ | — | — | ||||||||
329,452 | $ | 12.70 | 657,612 | |||||||||
1. | Financial Statements |
See the Financial Statements included in Item 8.
The following financial statements are filed as part of this document under Item 8: | ||
Consolidated Balance Sheets at December 31, 2019 and 2018 | ||
Consolidated Statements of Income, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Comprehensive Income, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Stockholders’ Equity, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Cash Flows, years ended December 31, 2019, 2018 and 2017 | ||
Notes to Consolidated Financial Statements | ||
Reports of Independent Registered Public Accounting Firm |
2. | Financial Statement Schedules |
Horizon Bancorp
3. | Exhibits |
Horizon Bancorp
|
|
| ||||
10.4* | Incorporated by reference to Appendix A to Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders | |||||
10.5* | Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on June 18, 2013 |
Exhibit Number | Description | Incorporated by Reference/Attached | ||||
10.6* | Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on June 18, 2013 | |||||
10.7* | Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on March 27, 2017 | |||||
10.8* | Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on March 27, 2017 | |||||
10.9* | Incorporated by reference to Exhibit 10.9 to Registrant’s Form 10-K filed on February 28, 2018 | |||||
10.10* | Incorporated by reference to Exhibit 10.10 to Registrant’s Form 10-K filed on February 28, 2018 | |||||
10.11* | Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (RegistrationNo. 333-222329) | |||||
10.12* | Incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (RegistrationNo. 333-222329) | |||||
10.13* | Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (RegistrationNo. 333-222330) | |||||
10.14* | Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (RegistrationNo. 333-222330) | |||||
10.15* | Attached | |||||
10.16* | Incorporated by reference to Exhibit 10.7 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.17* | Incorporated by reference to Exhibit 10.8 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.18* | Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on | |||||
10.19* | Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed | |||||
10.20* | Incorporated by reference to Exhibit |
Horizon Bancorp
8-K filed on January 7, 2020 | ||||||
|
|
| ||||
10.21* | Incorporated by reference to Exhibit 8-K filed on January 7, 2020 |
Exhibit Number | Description | Incorporated by Reference/Attached | ||||
10.22* | Incorporated by reference to Exhibit 8-K filed on | |||||
10.23* | Incorporated by reference to Exhibit 8-K | |||||
14 | Incorporated by reference to Exhibit 14 to Registrant’s Form 8-K filed on December 21, 2017 | |||||
21 | Attached | |||||
23 | Attached | |||||
31.1 | Attached | |||||
31.2 | Attached | |||||
32.1 | Attached | |||||
32.2 | Attached | |||||
101 | Inline Interactive Data Files | Attached | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Embedded Within the Inline XBRL Document |
* | Indicates exhibits that describe or evidence management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K. |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized | ||||||||
Horizon Bancorp, Inc. Registrant | ||||||||
Date: February 28, | By: | /s/ Craig M. Dwight | ||||||
Craig M. Dwight | ||||||||
Chairman and Chief Executive Officer (Principal Executive Officer) | ||||||||
Date: February 28, | By : | /s/ Mark E. Secor | ||||||
Mark E. Secor | ||||||||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. | ||||
Date | Signature and Title | |||
February 28, 2020 | /s/ Craig M. Dwight | |||
Craig M. Dwight, Chairman of the Board Chief Executive Officer and Director | ||||
February 28, 2020 | /s/ Susan D. Aaron | |||
Susan D. Aaron, Director | ||||
February 28, 2020 | /s/ Eric P. Blackhurst | |||
Eric P. Blackhurst, Director | ||||
February 28, 2020 | /s/ Lawrence E. Burnell | |||
Lawrence E. Burnell, Director | ||||
February 28, 2020 | /s/ James B. Dworkin | |||
James B. Dworkin, Director | ||||
February 28, 2020 | /s/ Julie Scheck Freigang Julie Scheck Freigang, Director | |||
February 28, 2020 | /s/ Daniel F. Hopp | |||
Daniel F. Hopp, Director | ||||
February 28, 2020 | /s/ Michele M. Magnuson | |||
Michele M. Magnuson, Director |
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Date | Signature and Title | |||
February 28, 2020 | /s/ Peter L. Pairitz | |||
Peter L. Pairitz, Director | ||||
February 28, 2020 | /s/ Steven W. Reed | |||
Steven W. Reed, Director | ||||
February 28, 2020 | /s/ Spero W. Valavanis | |||
Spero W. Valavanis, Director | ||||
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