Exhibit 99.1
Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date October 20, 2010
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces a Thirty Percent Increase in Third Quarter Earnings
Michigan City, Indiana (NASDAQ GM: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and nine month periods ended September 30, 2010.
SUMMARY:
| | · | Horizon’s third quarter 2010 net income was $3.3 million or $.88 diluted earnings per share, a 30.3% increase in net income from the previous quarter and a 39.1% increase from the same period in 2009. |
| | | Horizon’s net income for the nine months ended September 30, 2010, was $7.6 million or $1.96 diluted earnings per share compared to $7.1 million or $1.84 diluted earnings per share for the same period of the prior year. |
| | | The net interest margin increased to 3.84% for the three months ending September 30, 2010 as the rate paid on interest bearing liabilities decreased during the quarter more than the yield received on interest earning assets. |
| | | The activity in mortgage warehouse lending increased the average loan balance during the quarter, increasing interest income. |
| | | Horizon continued to experience strong residential mortgage loan activity during the third quarter providing $2.5 million of income from the gain on sale of mortgage loans. |
| | | Horizon’s quarterly provision for loan losses decreased by approximately $343,000 from the provision taken during the second quarter of 2010. |
| | | The ratio of allowance for loan losses to total loans increased to 1.85% from 1.77% at June 30, 2010 as Horizon loan and lease loss reserve continues to build for probable incurred losses inherent in the portfolio. |
| | | Horizon’s net loans charged off declined during the third quarter to $1.2 million compared to $2.6 million during the second quarter of 2010. |
| | | Horizon’s balance of Other Real Estate Owned (“OREO”) and repossessed assets increased approximately $1.2 million, to $4.1 million, during the third quarter as certain non-performing loans transferred to OREO. |
| | | Horizon’s non-performing loans increased approximately $507,000 from June 30, 2010 to September 30, 2010 and 30 to 89 days delinquent loans increased $447,000 during the same period. |
| | | Horizon’s 30 to 89 day loan delinquency remained steady at 0.93% and 0.92% of total loans at September 30, 2010 and June 30, 2010, respectively. |
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Pg. 2 cont. Horizon Bancorp Announces a Thirty Percent Increase in Third Quarter Earnings
| | | Horizon’s non-performing loans to total loans ratio as of September 30, 2010 was 2.22%, which compares favorably to National and State of Indiana peer averages1 of 4.77% and 2.78%, respectively, as of June 30, 2010, the most recent data available. |
| | | Horizon’s capital ratios continue to be above the regulatory standards for well-capitalized banks. |
Craig M. Dwight, Chief Executive Officer of Horizon Bancorp stated, “We are extremely proud of Horizon’s year-to-date results and the incredible effort put forth by our employees to maintain our performance at such high levels. Horizon’s year-to-date financial performance is on pace to achieve its eleventh year of record earnings. We truly are fortunate to have such a dedicated team that can deliver results.”
Performance Highlights:
Net income for the third quarter of 2010 was $3.3 million or $.88 diluted earnings per share. This compares to $2.4 million or $.61 diluted earnings per share for the same quarter of the prior year. Net income for the nine months ended September 30, 2010 was $7.6 million or $1.96 diluted earnings per share. This compares to $7.1 million or $1.84 diluted earnings per share for the same period of the prior year.
Diluted earnings per share for both the three and nine month periods ending September 30, 2010 and September 30, 2009 were reduced by $.11 per share and $.32 per share, respectively, due to the preferred stock dividends and the accretion of the discount on the preferred stock.
Net interest income increased $1.9 million and $1.1 million for the three and nine month periods ending September 30, 2010 compared to the same time periods for the prior year. This increase was primarily due to an increase in interest income from a higher average balance of interest earning assets along with a decrease in the cost of funds. The net interest margin increased to 3.72% for the nine months ending September 30, 2010 compared to 3.64% for the same period in the prior year. The net interest margin has been increasing throughout 2010. At three months ending March 31, 2010, June 30, 2010, and September 30, 2010, the net interest margin was 3.55%, 3.78%, and 3.84%, respectively. The increase in the net interest margin during the third quarter of 2010 was primarily due to the r eduction in cost of funds from lower deposit rates and the repricing of certificates of deposits and wholesale funding into lower rate instruments.
The provision for loan losses was $2.7 million for the three months ending September 30, 2010, which was approximately $759,000 less than the provision for the same period of the prior year. The 2010 third quarter provision was the lowest compared to any of the previous four quarters as net charge-offs also declined to their lowest level over that same period.
Non-performing loans totaled $21.7 on September 30, 2010, up slightly from $21.2 million on June 30, 2010 and up from $16.5 million on September 30, 2009. As a percentage of total loans non-performing loans were 2.22% on September 30, 2010, down from 2.26% on June 30, 2010, but up
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| 1 | National peer group: Consists of all insured commercial banks having assets between $1 Billion and $10 Billion as reported by the Uniform Bank Performance Report as of June 30, 2010. Indiana peer group: Consists of 17 publicly traded banks all headquartered in the State of Indiana as reported by the Uniform Bank Performance Reports as of June 30, 2010. |
Pg. 3 cont. Horizon Bancorp Announces a Thirty Percent Increase in Third Quarter Earnings
from 1.87% on September 30, 2009. Horizon’s non-performing loans to total loans ratio as of September 30, 2010 compares favorably to National and State of Indiana peer averages1 of 4.77% and 2.78%, respectively, as of June 30, 2010, the most recent data available.
The increase of non-performing loans from the prior quarter was due to an increase in residential mortgage and consumer installment non-performing loans, partially offset by lower commercial (which includes commercial real estate) non-performing loans. Residential mortgage non-performing loans increased from $7.9 million on June 30, 2010 to $8.5 million on September 30, 2010. Consumer installment non-performing loans increased from $3.5 million on June 30, 2010 to $4.4 million on September 30, 2010. Non-performing commercial loans declined from $9.8 million on June 30, 2010, to $8.9 million on September 30, 2010. The change in non-performing commercial loans during the quarter was the result of four non-performing loans totaling $2.0 million being moved to OREO, $471,000 of charge offs, and $856,000 of pay downs. There were nine new non-performing loans added totaling $1.9 million and one new troubled debt restructure (“TDR”) for $427,000. The new non-performing loans during the quarter included a $910,000 loan secured by a restaurant that is current but placed on non-accrual due to other deterioration of the credit factors.
Residential mortgage and consumer installment non-performing loans at September 30, 2010 include $896,000 and $2.3 million, respectively, of loans in bankruptcy. This compares to $261,000 and $1.8 million at June 30, 2010. These loans are not considered TDR’s while they are going through bankruptcy. The bankruptcy process can take six to eighteen months. Therefore, the amount of loans in bankruptcy included in the Company’s non-performing loans continues to increase, which indicates that this cycle potentially has not peeked. The Company’s experience with bankrupt loans has demonstrated that some continue to make payments during the bankruptcy process, many reaffirm when they come out of bankruptcy, and some are discharged or restructured by the court. The Company has been accumulating historical data on the performance of loans going through the bankruptcy process and utilizes that data in the calculation for allowance for loan losses. No commercial loans are currently in bankruptcy.
TDR’s are also included in the non-performing loans. TDR’s increased from $3.4 million at June 30, 2010 to $3.9 million on September 30, 2010. Of these, $3.3 million were residential mortgage loans, $427,000 were commercial loans, and $202,000 were consumer installment loans. The increase was primarily due to the addition of one commercial loan totaling $427,000. These TDR’s were accruing interest and were not over 30 days delinquent based on their restructured terms, except for one consumer installment loan for $37,000, and the new commercial loan for $427,000, both of which were on non-accrual.
Non-accrual loans totaled $16.8 million on September 30, 2010, down from $17.7 million on June 30, 2010, but up from $15.7 million on September 30, 2009. On September 30, 2010, nonaccrual loans to hotel owners totaled $4.6 million, to home builders and land developers $1.2 million, and to restaurant operators $1.0 million.
Loans 90 days delinquent but still on accrual totaled $833,000 on September 30, 2010, up from $77,000 on June 30, 2010, and $856,000 on September 30, 2009. Horizon’s policy is to place loans over 90 days delinquent on non-accrual unless they are in the process of collection and a full recovery is expected.
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Pg. 4 cont. Horizon Bancorp Announces a Thirty Percent Increase in Third Quarter Earnings
The increase in the Company’s non-performing loans over the past year can be attributed to the continued slow economy and continued high local unemployment causing an increase in consumer bankruptcies. Business conditions in our markets are improving but remain weak.
Other Real Estate Owned (OREO) totaled $3.9 million on September 30, 2010, up from $2.8 million on June 30, 2010, and $1.7 million on September 30, 2009. During the quarter 24 properties with a book value of $1.6 million on June 30, 2010 were sold. Another nine properties with a book value of $3.0 million on September 30, 2010 were transferred into OREO. On September 30, 2010, OREO was comprised of 29 properties. Of these, 9 totaling $2.5 million were commercial and 20 totaling $1.5 million were residential. Repossessed personal property totaled $107,000 on September 30, 2010, up from $70,000 on June 30, 2010.
No mortgage warehouse loans were non-performing as of September 30, 2010, June 30, 2010, or September 30, 2009.
The residential mortgage loan activity was strong through the third quarter of 2010 with $2.5 million of income from the gain on sale of mortgage loans, up $1.3 million from the same period in 2009 and up $800,000 from the second quarter of 2010. For the nine month period ending September 30, 2010, gain on sale of mortgage loans was up $668,000 compared to the same nine month period in 2009.
Increased pre-payment speeds on the mortgage loan servicing portfolio caused the servicing asset to be impaired during the third quarter resulting in a $331,000 net loss on mortgage servicing net of impairment compared to $35,000 of income for the same period in 2009.
Total other expenses were $2.3 million higher in the third quarter of 2010 compared to the third quarter of 2009 and $2.7 million higher when comparing the nine month periods ending September 30, 2010 and 2009. Salaries and employee benefits increased $1.4 million and $1.7 million for the three and nine month periods ending September 30, 2010, respectively. This increase is the result of additional payroll expense from the consolidation of the American Trust & Savings Bank transaction that closed at the end of the second quarter, the expansion into Kalamazoo, Michigan, and bonus accruals based on the Company’s performance through nine months of 2010. The Company also continues to experience higher loan expense related to problem loan, bankruptcy, and collection costs. In addition, the Company recognized $664,000 of transaction costs related to the purchase and assumption of American Trust & Savings Bank during the first nine months of 2010.
Other items
| | | Horizon closed two branches in the third quarter of 2010. One branch was acquired from American Trust & Savings Bank and was located within three miles of an existing Horizon Bank branch. The second branch was located in Harbert, Michigan and had not experienced core deposit growth for several years. |
| | | Horizon relocated its South Bend office in the third quarter of 2010, which should lower related occupancy expense by approximately $95,000 per year. |
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Pg. 5 cont. Horizon Bancorp Announces a Thirty Percent Increase in Third Quarter Earnings
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 online 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 |
| | Mark E. Secor |
| | Chief Financial Officer |
| | (219) 873-2611 |
| | Fax: (219) 874-9280 |
# # #
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2010 | | | 2010 | | | 2010 | | | 2009 | | | 2009 | |
| Balance sheet: | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,485,058 | | | $ | 1,464,415 | | | $ | 1,301,660 | | | $ | 1,387,020 | | | $ | 1,321,224 | |
| Investment securities | | | 397,694 | | | | 410,284 | | | | 368,752 | | | | 344,789 | | | | 333,031 | |
| Commercial loans | | | 329,230 | | | | 326,401 | | | | 310,664 | | | | 314,517 | | | | 312,573 | |
| Mortgage warehouse loans | | | 193,848 | | | | 156,915 | | | | 96,327 | | | | 166,698 | | | | 145,270 | |
| Residential mortgage loans | | | 165,234 | | | | 168,238 | | | | 135,475 | | | | 133,892 | | | | 142,568 | |
| Installment loans | | | 270,503 | | | | 271,241 | | | | 266,954 | | | | 271,210 | | | | 275,299 | |
| Earning assets | | | 1,387,594 | | | | 1,360,488 | | | | 1,200,043 | | | | 1,249,998 | | | | 1,228,085 | |
| Non-interest bearing deposit accounts | | | 105,376 | | | | 99,291 | | | | 91,482 | | | | 84,357 | | | | 87,725 | |
| Interest bearing transaction accounts | | | 506,031 | | | | 529,612 | | | | 423,315 | | | | 540,647 | | | | 375,548 | |
| Time deposits | | | 388,076 | | | | 394,092 | | | | 358,725 | | | | 326,704 | | | | 394,724 | |
| Borrowings | | | 318,516 | | | | 282,137 | | | | 273,235 | | | | 284,016 | | | | 311,884 | |
| Subordinated debentures | | | 30,562 | | | | 30,539 | | | | 27,837 | | | | 27,837 | | | | 27,837 | |
| Common stockholders' equity | | | 95,686 | | | | 92,127 | | | | 91,371 | | | | 90,299 | | | | 89,566 | |
| Total stockholders’ equity | | | 120,112 | | | | 116,512 | | | | 115,716 | | | | 114,605 | | | | 113,833 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income statement: | | Three months ended | |
| Net interest income | | $ | 12,620 | | | $ | 11,368 | | | $ | 10,553 | | | $ | 11,371 | | | $ | 10,719 | |
| Provision for loan losses | | | 2,657 | | | | 3,000 | | | | 3,233 | | | | 3,700 | | | | 3,416 | |
| Other income | | | 5,648 | | | | 4,923 | | | | 4,374 | | | | 4,304 | | | | 4,542 | |
| Other expenses | | | 11,257 | | | | 10,184 | | | | 9,554 | | | | 9,558 | | | | 8,929 | |
| Income tax expense | | | 1,075 | | | | 592 | | | | 349 | | | | 333 | | | | 559 | |
| Net income | | | 3,279 | | | | 2,515 | | | | 1,791 | | | | 2,084 | | | | 2,357 | |
| Preferred stock dividend | | | (353 | ) | | | (352 | ) | | | (352 | ) | | | (351 | ) | | | (351 | ) |
| Net income available to common shareholders | | | 2,926 | | | | 2,163 | | | | 1,439 | | | | 1,733 | | | | 2,006 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.89 | | | $ | 0.66 | | | $ | 0.44 | | | $ | 0.53 | | | $ | 0.62 | |
| Diluted earnings per share | | | 0.88 | | | | 0.65 | | | | 0.44 | | | | 0.53 | | | | 0.61 | |
| Cash dividends declared per common share | | | 0.17 | | | | 0.17 | | | | 0.17 | | | | 0.17 | | | | 0.17 | |
| Book value per common share | | | 29.18 | | | | 28.10 | | | | 27.88 | | | | 27.67 | | | | 27.46 | |
| Tangible book value per common share | | | 26.51 | | | | 25.39 | | | | 25.70 | | | | 25.45 | | | | 25.22 | |
| Market value - high | | $ | 22.60 | | | $ | 22.81 | | | $ | 19.50 | | | $ | 17.25 | | | $ | 17.50 | |
| Market value - low | | $ | 21.15 | | | $ | 19.48 | | | $ | 16.44 | | | $ | 14.31 | | | $ | 15.00 | |
| Basic common shares outstanding | | | 3,279,201 | | | | 3,278,392 | | | | 3,270,217 | | | | 3,262,927 | | | | 3,245,505 | |
| Diluted common shares outstanding | | | 3,336,634 | | | | 3,333,768 | | | | 3,293,192 | | | | 3,275,588 | | | | 3,273,742 | |
| | | | | | | | | | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.90 | % | | | 0.75 | % | | | 0.54 | % | | | 0.62 | % | | | 0.72 | % |
| Return on average common stockholders' equity | | | 12.12 | | | | 9.33 | | | | 6.34 | | | | 7.56 | | | | 9.12 | |
| Net interest margin | | | 3.84 | | | | 3.78 | | | | 3.55 | | | | 3.76 | | | | 3.64 | |
| Loan loss reserve to total loans | | | 1.85 | | | | 1.77 | | | | 1.97 | | | | 1.80 | | | | 1.58 | |
| Non-performing loans to loans | | | 2.22 | | | | 2.26 | | | | 2.00 | | | | 1.92 | | | | 1.87 | |
| Average equity to average assets | | | 8.32 | | | | 8.67 | | | | 8.73 | | | | 8.61 | | | | 8.53 | |
| Bank only capital ratios: | | | | | | | | | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 8.53 | | | | 8.92 | | | | 8.83 | | | | 8.64 | | | | 8.79 | |
| Tier 1 capital to risk weighted assets | | | 11.65 | | | | 11.89 | | | | 12.96 | | | | 11.85 | | | | 12.04 | |
| Total capital to risk weighted assets | | | 12.89 | | | | 13.15 | | | | 14.22 | | | | 13.10 | | | | 13.29 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan data: | | | | | | | | | | | | | | | | | | | | |
| 30 to 89 days delinquent | | $ | 9,084 | | | $ | 8,637 | | | $ | 10,926 | | | $ | 9,686 | | | $ | 11,641 | |
| 90 days and greater delinquent - accruing interest | | | 833 | | | | 77 | | | | 345 | | | | 1,758 | | | | 856 | |
| Trouble debt restructures - accruing interest | | | 3,445 | | | | 3,414 | | | | 1,183 | | | | 3,472 | | | | 2,783 | |
| Trouble debt restructures - non-accrual | | | 463 | | | | - | | | | - | | | | - | | | | - | |
| Non-accrual loans | | | 16,939 | | | | 17,682 | | | | 14,862 | | | | 11,915 | | | | 12,834 | |
| Total non-performing loans | | | 21,680 | | | | 21,173 | | | | 16,390 | | | | 17,145 | | | | 16,473 | |
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | September 30 | | | September 30 | |
| | | 2010 | | | 2009 | |
| Balance sheet: | | | | | | |
| Total assets | | $ | 1,485,058 | | | $ | 1,321,224 | |
| Investment securities | | | 397,694 | | | | 333,031 | |
| Commercial loans | | | 329,230 | | | | 312,573 | |
| Mortgage warehouse loans | | | 193,848 | | | | 145,270 | |
| Residential mortgage loans | | | 165,234 | | | | 142,568 | |
| Installment loans | | | 270,503 | | | | 275,299 | |
| Earning assets | | | 1,387,594 | | | | 1,232,548 | |
| Non-interest bearing deposit accounts | | | 105,376 | | | | 87,725 | |
| Interest bearing transaction accounts | | | 506,031 | | | | 375,548 | |
| Time deposits | | | 388,076 | | | | 394,724 | |
| Borrowings | | | 318,516 | | | | 311,884 | |
| Subordinated debentures | | | 30,562 | | | | 27,837 | |
| Common stockholders' equity | | | 95,686 | | | | 89,566 | |
| Total stockholders’ equity | | | 120,112 | | | | 113,833 | |
| | | | | | | | | |
| Income statement: | | Nine months ended | |
| Net interest income | | $ | 34,541 | | | $ | 33,398 | |
| Provision for loan losses | | | 8,890 | | | | 9,903 | |
| Other income | | | 14,945 | | | | 13,552 | |
| Other expenses | | | 30,995 | | | | 28,254 | |
| Income tax expense | | | 2,016 | | | | 1,737 | |
| Net income | | | 7,585 | | | | 7,056 | |
| Preferred stock dividend | | | (1,057 | ) | | | (1,051 | ) |
| Net income available to common shareholders | | | 6,528 | | | | 6,005 | |
| | | | | | | | | |
| Per share data: | | | | | | | | |
| Basic earnings per share | | $ | 1.99 | | | $ | 1.86 | |
| Diluted earnings per share | | | 1.96 | | | | 1.84 | |
| Cash dividends declared per common share | | | 0.51 | | | | 0.51 | |
| Book value per common share | | | 29.21 | | | | 27.46 | |
| Tangible book value per common share | | | 26.53 | | | | 25.22 | |
| Market value - high | | $ | 22.81 | | | $ | 19.45 | |
| Market value - low | | $ | 16.44 | | | $ | 10.50 | |
| Basic common shares outstanding | | | 3,275,969 | | | | 3,221,622 | |
| Diluted common shares outstanding | | | 3,323,830 | | | | 3,270,154 | |
| | | | | | | | | |
| Key ratios: | | | | | | | | |
| Return on average assets | | | 0.74 | % | | | 0.70 | % |
| Return on average common stockholders' equity | | | 9.33 | | | | 9.41 | |
| Net interest margin | | | 3.72 | | | | 3.64 | |
| Loan loss reserve to total loans | | | 1.85 | | | | 1.58 | |
| Non-performing loans to loans | | | 2.22 | | | | 1.87 | |
| Average equity to average assets | | | 8.56 | | | | 8.08 | |
| Bank only capital ratios: | | | | | | | | |
| Tier 1 capital to average assets | | | 8.53 | | | | 8.82 | |
| Tier 1 capital to risk weighted assets | | | 11.65 | | | | 12.10 | |
| Total capital to risk weighted assets | | | 12.89 | | | | 13.35 | |
| | | | | | | | | |
| Loan data: | | | | | | | | |
| 30 to 89 days delinquent | | $ | 9,084 | | | $ | 11,641 | |
| 90 days and greater delinquent - accruing interest | | | 833 | | | | 856 | |
| Trouble debt restructures - accruing interest | | | 3,445 | | | | 2,783 | |
| Trouble debt restructures - non-accrual | | | 463 | | | | - | |
| Non-accrual loans | | | 16,939 | | | | 12,834 | |
| Total non-performing loans | | | 21,680 | | | | 16,473 | |
HORIZON BANCORP
Allocation of the Allowance for Loan and Lease Losses
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2010 | | | 2010 | | | 2010 | | | 2009 | | | 2009 | |
| Commercial | | $ | 7,029 | | | $ | 6,204 | | | $ | 6,010 | | | $ | 5,766 | | | $ | 4,699 | |
| Real estate | | | 1,957 | | | | 1,536 | | | | 1,444 | | | | 1,933 | | | | 1,599 | |
| Mortgage warehousing | | | 1,441 | | | | 1,362 | | | | 1,390 | | | | 1,455 | | | | 1,480 | |
| Installment | | | 7,603 | | | | 7,441 | | | | 7,276 | | | | 6,861 | | | | 6,146 | |
| Unallocated | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total | | $ | 18,030 | | | $ | 16,543 | | | $ | 16,120 | | | $ | 16,015 | | | $ | 13,924 | |
Net Charge-offs
(Dollars in Thousands, Unaudited)
| | | Three months ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | 2010 | | | 2010 | | | 2010 | | | 2009 | | | 2009 | |
| Commercial | | $ | 485 | | | $ | 884 | | | $ | 1,832 | | | $ | 527 | | | $ | 530 | |
| Real estate | | | 86 | | | | 288 | | | | 309 | | | | 146 | | | | 22 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Installment | | | 599 | | | | 1,406 | | | | 986 | | | | 936 | | | | 1,589 | |
| Total | | $ | 1,170 | | | $ | 2,578 | | | $ | 3,127 | | | $ | 1,609 | | | $ | 2,141 | |
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2010 | | | 2010 | | | 2010 | | | 2009 | | | 2009 | |
| Commercial | | $ | 8,855 | | | $ | 9,805 | | | $ | 7,024 | | | $ | 9,229 | | | $ | 9,235 | |
| Real estate | | | 8,467 | | | | 7,855 | | | | 6,217 | | | | 4,819 | | | | 4,926 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Installment | | | 4,358 | | | | 3,513 | | | | 3,149 | | | | 3,097 | | | | 2,312 | |
| Total | | $ | 21,680 | | | $ | 21,173 | | | $ | 16,390 | | | $ | 17,145 | | | $ | 16,473 | |
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2010 | | | 2010 | | | 2010 | | | 2009 | | | 2009 | |
| Commercial | | $ | 2,751 | | | $ | 623 | | | $ | 494 | | | $ | - | | | $ | - | |
| Real estate | | | 1,283 | | | | 2,160 | | | | 1,581 | | | | 1,730 | | | | 1,671 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Installment | | | 107 | | | | 70 | | | | 101 | | | | 23 | | | | 142 | |
| Total | | $ | 4,141 | | | $ | 2,853 | | | $ | 2,176 | | | $ | 1,753 | | | $ | 1,813 | |
HORIZON BANCORP
Loan Portfolio Detail
| September 30, 2010 (Unaudited) | | | | | | | | | | Specific Reserves on Non-Performing Loans | | | Percent of Non-performing Loans |
| Owner occupied real estate | | $ | 200,975 | | | $ | 6,159 | | | | 3.06 | % | | $ | 894 | | | | 14.52 | % |
| Non owner occupied real estate | | | 67,272 | | | | 2,002 | | | | 2.98 | % | | | 383 | | | | 19.13 | % |
| Residential development | | | 12,282 | | | | 267 | | | | 2.17 | % | | | 125 | | | | 46.82 | % |
| Commercial and industrial | | | 48,701 | | | | 427 | | | | 0.88 | % | | | 125 | | | | 29.27 | % |
| Total commercial | | | 329,230 | | | | 8,855 | | | | 2.69 | % | | | 1,527 | | | | 17.24 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage (includes HFS) | | | 174,112 | | | | 8,098 | | | | 4.65 | % | | | 594 | | | | 7.34 | % |
| Residential construction | | | 7,604 | | | | 369 | | | | 4.85 | % | | | - | | | | 0.00 | % |
| Mortgage warehouse | | | 193,848 | | | | - | | | | 0.00 | % | | | - | | | | 0.00 | % |
| Total mortgage | | | 375,564 | | | | 8,467 | | | | 2.25 | % | | | 594 | | | | 7.02 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Direct installment | | | 25,233 | | | | 180 | | | | 0.71 | % | | | - | | | | 0.00 | % |
| Indirect installment | | | 130,359 | | | | 1,396 | | | | 1.07 | % | | | 21 | | | | 1.50 | % |
| Home equity | | | 114,911 | | | | 2,782 | | | | 2.42 | % | | | 887 | | | | 31.88 | % |
| Total installment | | | 270,503 | | | | 4,358 | | | | 1.61 | % | | | 908 | | | | 20.84 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Total loans | | | 975,297 | | | | 21,680 | | | | 2.22 | % | | | 3,029 | | | | 13.97 | % |
| Allowance for loan losses | | | (18,030 | ) | | | | | | | | | | | | | | | | |
| Net loans | | $ | 957,267 | | | $ | 21,680 | | | | | | | $ | 3,029 | | | | | |
| December 31, 2009 | | | | | | | | | | Specific Reserves on Non-Performing Loans | | | Percent of Non-performing Loans |
| Owner occupied real estate | | $ | 138,999 | | | $ | 3,152 | | | | 2.27 | % | | $ | 700 | | | | 22.21 | % |
| Non owner occupied real estate | | | 100,502 | | | | 1,677 | | | | 1.67 | % | | | 125 | | | | 7.45 | % |
| Residential development | | | 16,101 | | | | 2,343 | | | | 14.55 | % | | | 125 | | | | 5.34 | % |
| Commercial and industrial | | | 58,915 | | | | 2,057 | | | | 3.49 | % | | | 725 | | | | 35.25 | % |
| Total commercial | | | 314,517 | | | | 9,229 | | | | 2.93 | % | | | 1,675 | | | | 18.15 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage (includes HFS) | | | 132,172 | | | | 4,638 | | | | 3.51 | % | | | 441 | | | | 9.51 | % |
| Residential construction | | | 7,423 | | | | 181 | | | | 2.43 | % | | | 71 | | | | 39.29 | % |
| Mortgage warehouse | | | 166,698 | | | | - | | | | 0.00 | % | | | - | | | | 0.00 | % |
| Total mortgage | | | 306,293 | | | | 4,819 | | | | 1.57 | % | | | 512 | | | | 10.62 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Direct installment | | | 24,908 | | | | 387 | | | | 1.55 | % | | | - | | | | 0.00 | % |
| Indirect installment | | | 136,600 | | | | 1,089 | | | | 0.80 | % | | | 95 | | | | 8.72 | % |
| Home equity | | | 109,702 | | | | 1,621 | | | | 1.48 | % | | | 1,188 | | | | 73.29 | % |
| Total installment | | | 271,210 | | | | 3,097 | | | | 1.14 | % | | | 1,283 | | | | 41.43 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Total loans | | | 892,020 | | | | 17,145 | | | | 1.92 | % | | | 3,470 | | | | 20.24 | % |
| Allowance for loan losses | | | (16,015 | ) | | | | | | | | | | | | | | | | |
| Net loans | | $ | 876,005 | | | $ | 17,145 | | | | | | | $ | 3,470 | | | | | |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Three Months Ended | | | Three Months Ended | |
| | | September 30, 2010 | | | September 30, 2009 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 12,273 | | | $ | 4 | | | | 0.13 | % | | $ | 10,711 | | | $ | 7 | | | | 0.26 | % |
| Interest-earning deposits | | | 15,349 | | | | 4 | | | | 0.10 | % | | | 7,783 | | | | - | | | | 0.00 | % |
| Investment securities - taxable | | | 298,152 | | | | 2,423 | | | | 3.22 | % | | | 248,165 | | | | 2,666 | | | | 4.26 | % |
| Investment securities - non-taxable (1) | | | 102,885 | | | | 979 | | | | 5.32 | % | | | 102,286 | | | | 1,015 | | | | 5.97 | % |
| Loans receivable (2) | | | 918,930 | | | | 14,466 | | | | 6.25 | % | | | 857,801 | | | | 13,797 | | | | 6.39 | % |
| Total interest-earning assets (1) | | | 1,347,589 | | | | 17,876 | | | | 5.39 | % | | | 1,226,746 | | | | 17,485 | | | | 5.83 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 16,518 | | | | | | | | | | | | 15,277 | | | | | | | | | |
| Allowance for loan losses | | | (17,137 | ) | | | | | | | | | | | (12,513 | ) | | | | | | | | |
| Other assets | | | 97,460 | | | | | | | | | | | | 77,734 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,444,430 | | | | | | | | | | | $ | 1,307,244 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 913,473 | | | $ | 2,769 | | | | 1.20 | % | | $ | 756,567 | | | $ | 3,528 | | | | 1.85 | % |
| Borrowings | | | 258,476 | | | | 2,026 | | | | 3.11 | % | | | 317,224 | | | | 2,897 | | | | 3.62 | % |
| Subordinated debentures | | | 34,946 | | | | 461 | | | | 5.23 | % | | | 27,837 | | | | 341 | | | | 4.86 | % |
| Total interest-bearing liabilities | | | 1,206,895 | | | | 5,256 | | | | 1.73 | % | | | 1,101,628 | | | | 6,766 | | | | 2.44 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 106,152 | | | | | | | | | | | | 84,897 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 11,204 | | | | | | | | | | | | 9,238 | | | | | | | | | |
| Shareholders' equity | | | 120,179 | | | | | | | | | | | | 111,481 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,444,430 | | | | | | | | | | | $ | 1,307,244 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 12,620 | | | | 3.66 | % | | | | | | $ | 10,719 | | | | 3.39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.84 | % | | | | | | | | | | | 3.64 | % |
| (1) | Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. |
| (2) | Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Nine Months Ended | | | Nine Months Ended | |
| | | September 30, 2010 | | | September 30, 2009 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 30,279 | | | $ | 13 | | | | 0.06 | % | | $ | 27,647 | | | $ | 9 | | | | 0.04 | % |
| Interest-earning deposits | | | 9,213 | | | | 38 | | | | 0.55 | % | | | 6,979 | | | | 54 | | | | 1.03 | % |
| Investment securities - taxable | | | 278,790 | | | | 7,343 | | | | 3.52 | % | | | 247,168 | | | | 8,270 | | | | 4.47 | % |
| Investment securities - non-taxable (1) | | | 108,666 | | | | 3,138 | | | | 5.36 | % | | | 94,473 | | | | 2,882 | | | | 5.91 | % |
| Loans receivable (2) | | | 860,253 | | | | 40,283 | | | | 6.27 | % | | | 898,876 | | | | 43,793 | | | | 6.52 | % |
| Total interest-earning assets (1) | | | 1,287,201 | | | | 50,815 | | | | 5.41 | % | | | 1,275,143 | | | | 55,008 | | | | 5.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 15,101 | | | | | | | | | | | | 15,370 | | | | | | | | | |
| Allowance for loan losses | | | (16,625 | ) | | | | | | | | | | | (11,742 | ) | | | | | | | | |
| Other assets | | | 91,630 | | | | | | | | | | | | 76,613 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,377,307 | | | | | | | | | | | $ | 1,355,384 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 861,296 | | | $ | 8,238 | | | | 1.28 | % | | $ | 797,523 | | | $ | 11,517 | | | | 1.93 | % |
| Borrowings | | | 264,333 | | | | 6,807 | | | | 3.44 | % | | | 328,763 | | | | 9,011 | | | | 3.66 | % |
| Subordinated debentures | | | 31,014 | | | | 1,229 | | | | 5.30 | % | | | 27,837 | | | | 1,082 | | | | 5.20 | % |
| Total interest-bearing liabilities | | | 1,156,643 | | | | 16,274 | | | | 1.88 | % | | | 1,154,123 | | | | 21,610 | | | | 2.50 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 93,123 | | | | | | | | | | | | 82,548 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 9,627 | | | | | | | | | | | | 9,180 | | | | | | | | | |
| Shareholders' equity | | | 117,914 | | | | | | | | | | | | 109,533 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,377,307 | | | | | | | | | | | $ | 1,355,384 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 34,541 | | | | 3.53 | % | | | | | | $ | 33,398 | | | | 3.41 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.72 | % | | | | | | | | | | | 3.64 | % |
| (1) | Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. |
| (2) | Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. |
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
| | | September 30 | | | December 31 | |
| | | 2010 | | | 2009 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 18,203 | | | $ | 68,702 | |
| Investment securities, available for sale | | | 384,204 | | | | 333,132 | |
| Investment securities, held to maturity | | | 13,490 | | | | 11,657 | |
| Loans held for sale | | | 16,483 | | | | 5,703 | |
| Loans, net of allowance for loan losses of $18,030 and $16,015 | | | 940,784 | | | | 870,302 | |
| Premises and equipment | | | 34,274 | | | | 30,534 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 14,603 | | | | 13,189 | |
| Goodwill | | | 5,910 | | | | 5,787 | |
| Other intangible assets | | | 2,855 | | | | 1,447 | |
| Interest receivable | | | 6,720 | | | | 5,986 | |
| Cash value life insurance | | | 26,991 | | | | 23,139 | |
| Other assets | | | 20,541 | | | | 17,442 | |
| Total assets | | $ | 1,485,058 | | | $ | 1,387,020 | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 105,376 | | | $ | 84,357 | |
| Interest bearing | | | 894,107 | | | | 867,351 | |
| Total deposits | | | 999,483 | | | | 951,708 | |
| Borrowings | | | 318,516 | | | | 284,016 | |
| Subordinated debentures | | | 30,562 | | | | 27,837 | |
| Interest payable | | | 766 | | | | 1,135 | |
| Other liabilities | | | 15,619 | | | | 7,719 | |
| Total liabilities | | | 1,364,946 | | | | 1,272,415 | |
| Commitments and contingent liabilities | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock, no par value, $1,000 liquidation value | | | | | | | | |
| Authorized, 1,000,000 shares | | | | | | | | |
| Issued 25,000 shares | | | 24,426 | | | | 24,306 | |
| Common stock, $.2222 stated value | | | | | | | | |
| Authorized, 22,500,000 shares | | | | | | | | |
| Issued, 3,301,437 and 3,273,881 shares | | | 1,122 | | | | 1,119 | |
| Additional paid-in capital | | | 10,295 | | | | 10,030 | |
| Retained earnings | | | 78,280 | | | | 73,431 | |
| Accumulated other comprehensive income | | | 5,989 | | | | 5,719 | |
| Total stockholders’ equity | | | 120,112 | | | | 114,605 | |
| Total liabilities and stockholders’ equity | | $ | 1,485,058 | | | $ | 1,387,020 | |
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
| | | Three Months Ended September 30 | | | Nine Months Ended September 30 | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Interest Income | | | | | | | | | | | | |
| Loans receivable | | $ | 14,466 | | | $ | 13,797 | | | $ | 40,283 | | | $ | 43,793 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 2,431 | | | | 2,673 | | | | 7,394 | | | | 8,333 | |
| Tax exempt | | | 979 | | | | 1,015 | | | | 3,138 | | | | 2,882 | |
| Total interest income | | | 17,876 | | | | 17,485 | | | | 50,815 | | | | 55,008 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 2,769 | | | | 3,528 | | | | 8,238 | | | | 11,517 | |
| Borrowed funds | | | 2,026 | | | | 2,897 | | | | 6,807 | | | | 9,011 | |
| Subordinated debentures | | | 461 | | | | 341 | | | | 1,229 | | | | 1,082 | |
| Total interest expense | | | 5,256 | | | | 6,766 | | | | 16,274 | | | | 21,610 | |
| Net Interest Income | | | 12,620 | | | | 10,719 | | | | 34,541 | | | | 33,398 | |
| Provision for loan losses | | | 2,657 | | | | 3,416 | | | | 8,890 | | | | 9,903 | |
| Net Interest Income after Provision for Loan Losses | | | 9,963 | | | | 7,303 | | | | 25,651 | | | | 23,495 | |
| Other Income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 921 | | | | 972 | | | | 2,750 | | | | 2,880 | |
| Wire transfer fees | | | 211 | | | | 201 | | | | 536 | | | | 709 | |
| Interchange fees | | | 649 | | | | 514 | | | | 1,663 | | | | 1,358 | |
| Fiduciary activities | | | 934 | | | | 745 | | | | 2,936 | | | | 2,486 | |
| Gain (loss) on sale of securities | | | 336 | | | | 422 | | | | 467 | | | | 422 | |
| Gain on sale of mortgage loans | | | 2,473 | | | | 1,277 | | | | 5,529 | | | | 4,861 | |
| Mortgage servicing net of impairment | | | (331 | ) | | | 35 | | | | (363 | ) | | | (131 | ) |
| Increase in cash surrender value of bank owned life insurance | | | 246 | | | | 206 | | | | 599 | | | | 547 | |
| Other income | | | 209 | | | | 170 | | | | 828 | | | | 420 | |
| Total other income | | | 5,648 | | | | 4,542 | | | | 14,945 | | | | 13,552 | |
| Other Expenses | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 5,985 | | | | 4,539 | | | | 15,973 | | | | 14,264 | |
| Net occupancy expenses | | | 1,036 | | | | 941 | | | | 3,077 | | | | 2,872 | |
| Data processing | | | 502 | | | | 419 | | | | 1,474 | | | | 1,194 | |
| Professional fees | | | 417 | | | | 316 | | | | 1,418 | | | | 1,021 | |
| Outside services and consultants | | | 374 | | | | 366 | | | | 1,163 | | | | 1,043 | |
| Loan expense | | | 855 | | | | 631 | | | | 2,376 | | | | 1,841 | |
| FDIC insurance expense | | | 423 | | | | 400 | | | | 1,219 | | | | 1,751 | |
| Other losses | | | 143 | | | | (25 | ) | | | 180 | | | | 442 | |
| Other expenses | | | 1,522 | | | | 1,342 | | | | 4,115 | | | | 3,826 | |
| Total other expenses | | | 11,257 | | | | 8,929 | | | | 30,995 | | | | 28,254 | |
| Income Before Income Tax | | | 4,354 | | | | 2,916 | | | | 9,601 | | | | 8,793 | |
| Income tax expense | | | 1,075 | | | | 559 | | | | 2,016 | | | | 1,737 | |
| Net Income | | | 3,279 | | | | 2,357 | | | | 7,585 | | | | 7,056 | |
| Preferred stock dividend and discount accretion | | | (353 | ) | | | (351 | ) | | | (1,057 | ) | | | (1,051 | ) |
| Net Income Available to Common Shareholders | | $ | 2,926 | | | $ | 2,006 | | | $ | 6,528 | | | $ | 6,005 | |
| Basic Earnings Per Share | | $ | 0.89 | | | $ | 0.62 | | | $ | 1.99 | | | $ | 1.86 | |
| Diluted Earnings Per Share | | $ | 0.88 | | | $ | 0.61 | | | $ | 1.96 | | | $ | 1.84 | |
