Exhibit 99.1
Contact: James H. Foglesong
Chief Financial Officer
Phone: (219) 873-2608
Fax: (219) 874-9280
Date: April 18, 2008
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces Record First Quarter Earnings
Michigan City, Indiana (NASDAQ GM: HBNC) – Horizon Bancorp today announced its unaudited financial results for the quarter ended March 31, 2008. Net income for the first quarter of 2008 was $2.528 million or $.78 per fully diluted share. This compares to $1.844 million or $.57 per fully diluted share for the same quarter of the prior year. This represents a 37% increase in net income from the first quarter of the prior year.
Craig M. Dwight, President and Chief Executive Officer stated, “We are delighted to report record first quarter earnings. The first quarter performance is a result of Horizon’s focus on net interest margin and realizing a full quarter of cost saves that were initiated in 2007. In addition, community banks that are liability sensitive are reaping the benefits of the recent reductions in interest rates by the Federal Open Market Committee and return of a normal yield curve. Horizon is experiencing higher consumer loan charge-offs related to the general economic conditions in the Midwest; however, the net losses are more than offset by improvement in net interest margin. In addition, we have been fortunate that, despite the nationwide decline in residential mortgage activity, our conforming mortgage loan volume has held up. This is a tribute to our outstanding staff of mortgage loan originators, underwriters and processors. Given the general performance of the entire banking sector, I am extremely proud of the performance by the Horizon team.”
Net interest income for the quarter ended March 31, 2008 was $8.923 million, an increase of $1.287 million from the first quarter of 2007. The net interest margin improved 25 basis points from the first quarter of 2007 to 3.10%. Net interest income for the quarter was favorably impacted by approximately $75 thousand of interest income recovered from non-accrual loans on which Horizon received full payment. Without this gain, the margin would have been approximately 3.08%. The first quarter 2008 margin appears to have decreased from the fourth quarter of 2007. However, the fourth quarter of 2007 included a $350 thousand gain from a loan acquired in the Alliance Bank acquisition. Under purchase accounting, this loan was recorded at a discount due to credit issues with the borrower. The loan was paid in full during the fourth quarter resulting in the gain. The fourth quarter net interest margin, including the one time gain, was 3.21%. Without the gain the margin would have been approximately 3.08%. Horizon has reduced rates on interest bearing transaction accounts in line with reductions in short term interest rates. Additionally, in early January Horizon swapped its $27.8 million of subordinated debentures from an adjustable rate to a fixed rate.
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Pg. 2 Cont. Horizon Announces 1st Quarter Earnings
The provision for loan losses increased to $778 thousand for the first quarter of 2008 from $225 thousand for the first quarter of the prior year. The $778 thousand is a decrease from the fourth quarter of 2007 when Horizon recorded a provision of $1.928 million. Non-performing loans at March 31, 2008 were 0.37% of total loans compared to 0.38% at March 31, 2007 and 0.33% at December 31, 2007. These levels are below peer group averages. The change from year-end relates to an increase in non-performing mortgage loans offset by a decrease in non-performing commercial loans. Management feels the total allowance of $9.681 million or 1.14% of total loans is adequate to absorb probable incurred losses contained in the loan portfolio.
Non-interest income increased $348 thousand or 12% from the first quarter of 2007. Increases occurred in most categories of non-interest income. The main contributing factors included: (a) an increase in service charges on deposit accounts primarily due to an increase in the charge for non-sufficient fund checks, implemented in the first quarter of 2008, (b) the increase in gain on sale of loans includes $193 thousand from the sale of approximately $37 million of mostly five year-one year adjustable rate mortgages from Horizon’s mortgage loan portfolio and gain on the sale of current conforming mortgage loan production that is approximately $8.5 million higher compared to the same prior year period, (c) an increase in fiduciary fees primarily due to fluctuations in market value of assets under administration and offset by (d) a decrease in other income due to a decline in fees related to brokering non-conforming mortgage loans.
Non-interest expense increased $171 thousand or 2.2% from the first quarter of 2007. Salaries and benefits decreased due to the staff reduction, which occurred during the third quarter of 2007. Compensation expense increased from the fourth quarter of 2007 due to normal salary increases, which took effect at the beginning of the year, an increase in the accrual for incentive compensation and increased payroll taxes. Loan expense is up from the first quarter of the prior year due to increased collection expense and lower deferred costs on new loans.
On March 31, 2008, Horizon’s total assets were $1.250 billion, compared to $1.259 billion on December 31, 2007. Cash and cash equivalents increased due to a large cash item deposited on the last day of the quarter. Loans declined $40 million since December 31, 2007. The decline is almost entirely related to the sale of $37 million of adjustable rate mortgage loans. The loans were sold to reduce reliance on non-core funding and improve bank capital ratios.
Deposits declined from the end of the preceding year. The main portion of the decline came in non-interest bearing deposits, as corporate deposit levels were abnormally high at December 31, 2007. Interest bearing transaction accounts were higher than anticipated during the quarter due to higher public fund deposits. Property taxes, which are normally due on November 10th, were not due until January 15, 2008 due to property reassessment and related billing problems in Indiana. Negotiable certificates of deposit were reduced by $27 million during the quarter due to the higher levels maintained in the less expensive transaction accounts and the reduced need for funding due to the mortgage loan sale.
Stockholders' equity totaled $74.7 million at March 31, 2008 compared to $70.6 million at December 31, 2007. The increase in stockholders' equity during the quarter was the result of net income, an increase in the market value of investment securities available for sale, reduced by dividends declared. At March 31, 2008, the ratio of stockholders' equity to total assets was 5.98% compared to 5.61% at December 31, 2007. Book value per common share at March 31, 2008 increased to $23.28 compared to $22.03 at December 31, 2007.
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Pg. 3 Cont. Horizon Announces 1st Quarter Earnings
Other items
Horizon will hold its annual shareholders’ meeting on Thursday, May 8, 2008, 6:00 p.m. (local time; registration will begin at 5:30 p.m.), at the Holiday Inn, 5820 South Franklin Street, Michigan City, Indiana.
Construction is underway on a full service branch in Merrillville, Indiana. This branch is scheduled to open mid-year 2008.
Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern Indiana and Southwest Michigan. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached on the World Wide Web at www.accesshorizon.com. Its common stock is traded on the NASDAQ Global Market under the symbol HBNC.
Statements in this press release which express “belief,” “intention,” “expectation,” and similar expressions, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, such management. Such statements are inherently uncertain and there can be no
assurance that the underlying assumptions will prove to be accurate. Actual results could differ materially from those contemplated by the forward-looking statements. Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
| | Contact: | | Horizon Bancorp James H. Foglesong Chief Financial Officer (219) 873 - 2608 Fax: (219) 874-9280 |
# # #
Financial Highlights
| (Unaudited – dollars in thousands except share and per share data and ratios) |
| | | Three months ended | |
| | March 31, | December 31, | | March 31, | |
| | | 2008 | | | 2007 | | | 2007 | |
| | | | | | | | | | |
| End of period balances: | | | | | | | | | | | | |
| Total assets | | $ | 1,249,676 | | | $ | 1,258,874 | | | $ | 1,151,886 | |
| Investment securities | | | 238,993 | | | | 234,675 | | | | 234,823 | |
| Commercial loans | | | 305,490 | | | | 307,535 | | | | 276,732 | |
| Mortgage warehouse loans | | | 88,483 | | | | 78,225 | | | | 79,504 | |
| Real estate loans | | | 172,427 | | | | 216,019 | | | | 219,305 | |
| Installment loans | | | 282,025 | | | | 287,073 | | | | 232,767 | |
| Non-interest bearing deposit accounts | | | 74,757 | | | | 84,097 | | | | 87,341 | |
| Interest bearing transaction accounts | | | 403,784 | | | | 360,476 | | | | 352,301 | |
| Time deposits | | | 404,189 | | | | 449,091 | | | | 390,102 | |
| Borrowings | | | 255,974 | | | | 258,852 | | | | 223,219 | |
| Subordinated debentures | | | 27,837 | | | | 27,837 | | | | 27,837 | |
| Stockholders’ equity | | | 74,671 | | | | 70,645 | | | | 64,493 | |
| | | | | | | | | | | | | |
| Average balances : | | | | | | | | | | | | |
| Total assets | | $ | 1,258,716 | | | $ | 1,196,835 | | | $ | 1,161,105 | |
| Investment securities | | | 236,544 | | | | 226,672 | | | | 240,443 | |
| Commercial loans | | | 307,506 | | | | 304,456 | | | | 273,019 | |
| Mortgage warehouse loans | | | 71,756 | | | | 53,599 | | | | 86,587 | |
| Real estate loans | | | 198,137 | | | | 217,731 | | | | 221,202 | |
| Installment loans | | | 284,150 | | | | 281,337 | | | | 235,665 | |
| Non-interest bearing deposit accounts | | | 73,214 | | | | 77,245 | | | | 74,078 | |
| Interest bearing transaction accounts | | | 388,492 | | | | 338,749 | | | | 355,590 | |
| Time deposits | | | 429,253 | | | | 391,817 | | | | 419,736 | |
| Borrowings | | | 260,300 | | | | 283,104 | | | | 176,527 | |
| Long-term borrowings | | | 27,837 | | | | 27,837 | | | | 27,837 | |
| Stockholders’ equity | | | 73,596 | | | | 70,151 | | | | 63,089 | |
| | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | |
| Basic earnings per share | | $ | .79 | | | $ | .63 | | | $ | .58 | |
| Diluted earnings per share | | | .78 | | | | .62 | | | | .57 | |
| Cash dividends declared per common share | | | .15 | | | | .15 | | | | .14 | |
| Book value per common share | | | 23.28 | | | | 22.03 | | | | 20.17 | |
| Market value - high | | | 24.50 | | | | 26.40 | | | | 28.10 | |
| Market value - low | | | 20.86 | | | | 24.40 | | | | 26.60 | |
| Basic common shares outstanding | | | 3,207,232 | | | | 3,204,203 | | | | 3,194,309 | |
| Diluted common shares outstanding | | | 3,242,471 | | | | 3,247,331 | | | | 3,239,479 | |
| | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | |
| Return on average assets | | | .80 | % | | | .68 | % | | | .64 | % |
| Return on average equity | | | 13.82 | | | | 11.46 | | | | 11.85 | |
| Net interest margin | | | 3.10 | | | | 3.21 | | | | 2.85 | |
| Loan loss reserve to loans | | | 1.14 | | | | 1.10 | | | | 1.07 | |
| Non-performing loans to loans | | | .37 | | | | .33 | | | | .38 | |
| Average equity to average assets | | | 5.85 | | | | 5.93 | | | | 5.43 | |
| Bank only capital ratios: | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 6.94 | | | | 7.29 | | | | 7.13 | |
| Tier 1 capital to risk weighted assets | | | 9.76 | | | | 9.49 | | | | 10.28 | |
| Total capital to risk weighted assets | | | 10.84 | | | | 10.56 | | | | 12.37 | |
| | Horizon Bancorp and Subsidiaries |
| | Condensed Consolidated Balance Sheets |
| | (Dollar Amounts in Thousands) |
| | | March 31, 2008 (Unaudited) | | | December 31, 2007 | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 48,097 | | | $ | 19,714 | |
| Interest-bearing demand deposits | | | 1 | | | | 1 | |
| Federal funds sold | | | 33,000 | | | | 35,314 | |
| Cash and cash equivalents | | | 81,098 | | | | 55,029 | |
| Interest-bearing deposits | | | 3,230 | | | | 249 | |
| Investment securities, available for sale | | | 238,993 | | | | 234,675 | |
| Loans held for sale | | | 7,645 | | | | 8,413 | |
| Loans, net of allowance for loan losses of $9,681 and $9,791 | | | 838,744 | | | | 879,061 | |
| Premises and equipment | | | 25,054 | | | | 24,607 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 12,625 | | | | 12,625 | |
| Goodwill | | | 5,787 | | | | 5,787 | |
| Other intangible assets | | | 1,988 | | | | 2,068 | |
| Interest receivable | | | 5,704 | | | | 5,897 | |
| Cash value life insurance | | | 22,612 | | | | 22,384 | |
| Other assets | | | 6,196 | | | | 8,079 | |
| Total assets | | $ | 1,249,676 | | | $ | 1,258,874 | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Noninterest bearing | | $ | 74,757 | | | $ | 84,097 | |
| Interest bearing | | | 807,973 | | | | 809,567 | |
| Total deposits | | | 882,730 | | | | 893,664 | |
| Borrowings | | | 255,974 | | | | 258,852 | |
| Subordinated debentures | | | 27,837 | | | | 27,837 | |
| Interest payable | | | 2,823 | | | | 2,439 | |
| Other liabilities | | | 5,641 | | | | 5,437 | |
| Total liabilities | | | 1,175,005 | | | | 1,188,229 | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock, no par value | | | | | | | | |
| Authorized, 1,000,000 shares | | | | | | | | |
| No shares issued | | | | | | | | |
| Common stock, $.2222 stated value | | | | | | | | |
| Authorized, 22,500,000 shares | | | | | | | | |
| Issued, 5,011,656 shares | | | 1,114 | | | | 1,114 | |
| Additional paid-in capital | | | 25,705 | | | | 25,638 | |
| Retained earnings | | | 63,023 | | | | 60,982 | |
| Accumulated other comprehensive income | | | 1,981 | | | | 63 | |
| Less treasury stock, at cost, 1,759,424 shares | | | (17,152 | ) | | | (17,152 | ) |
| Total stockholders’ equity | | | 74,671 | | | | 70,645 | |
| Total liabilities and stockholders’ equity | | $ | 1,249,676 | | | $ | 1,258,874 | |
| | Horizon Bancorp and Subsidiaries |
| | Condensed Consolidated Statements of Income |
| | (Dollar Amounts in Thousands, Except Per Share Data) |
| | | Three Months Ended March 31 | |
| | | 2008 (Unaudited) | | | 2007 (Unaudited) | |
| Interest Income | | | | | | |
| Loans receivable | | $ | 15,367 | | | $ | 14,984 | |
| Investment securities: | | | | | | | | |
| Taxable | | | 2,548 | | | | 2,103 | |
| Tax exempt | | | 837 | | | | 861 | |
| Total interest income | | | 18,752 | | | | 17,948 | |
| Interest Expense | | | | | | | | |
| Deposits | | | 6,594 | | | | 7,294 | |
| Borrowings funds | | | 2,828 | | | | 2,252 | |
| Subordinated debentures | | | 407 | | | | 766 | |
| Total interest expense | | | 9,829 | | | | 10,312 | |
| Net Interest Income | | | 8,923 | | | | 7,636 | |
| Provision for loan losses | | | 778 | | | | 225 | |
| Net Interest Income after Provision for Loan Losses | | | 8,145 | | | | 7,411 | |
| Other Income | | | | | | | | |
| Service charges on deposit accounts | | | 921 | | | | 778 | |
| Wire transfer fees | | | 105 | | | | 94 | |
| Fiduciary activities | | | 885 | | | | 804 | |
| Gain on sale of loans | | | 804 | | | | 550 | |
| Increase in cash surrender value of Bank owned life insurance | | | 228 | | | | 232 | |
| Other income | | | 270 | | | | 407 | |
| Total other income | | | 3,213 | | | | 2,865 | |
| Other Expenses | | | | | | | | |
| Salaries and employee benefits | | | 4,275 | | | | 4,369 | |
| Net occupancy expenses | | | 672 | | | | 617 | |
| Data processing and equipment expenses | | | 633 | | | | 637 | |
| Professional fees | | | 249 | | | | 369 | |
| Outside services and consultants | | | 274 | | | | 259 | |
| Loan expense | | | 600 | | | | 455 | |
| Other expenses | | | 1,324 | | | | 1,150 | |
| Total other expenses | | | 8,027 | | | | 7,856 | |
| Income Before Income Tax | | | 3,331 | | | | 2,420 | |
| Income tax expense | | | 803 | | | | 576 | |
| Net income | | $ | 2,528 | | | $ | 1,844 | |
| Basic Earnings Per Share | | $ | .79 | | | $ | .58 | |
| Diluted Earnings Per Share | | $ | .78 | | | $ | .57 | |
