Exhibit 99.1
Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: October 17, 2012
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces Record Earnings for the First Nine Months
Michigan City, Indiana (NASDAQ GM: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and nine month periods ended September 30, 2012. All share data has been adjusted to reflect Horizon’s three-for-two stock split announced on October 16, 2012 to be paid on November 9, 2012.
SUMMARY:
| · | Horizon’s net income of $14.4 million for the first nine months of 2012 surpasses the $12.8 million earned for the entire prior year and represents the highest first nine months of net income in the Company’s history. |
| · | Third quarter 2012 net income was $4.8 million or $.54 diluted earnings per share, which reflects a 50% increase in diluted earnings per share compared to the same period in 2011. |
| · | Horizon’s net income for the first nine months of 2012 was $14.4 million or $1.75 diluted earnings per share, which reflects a 67% increase in diluted earnings per share compared to the same period in 2011. |
| · | On July 17, 2012 Horizon completed its acquisition of Heartland Bancshares, Inc. (“Heartland”). On that date Horizon recorded $229.5 million in assets and $218.7 million in liabilities. |
| · | Total loans increased $157.9 million during the quarter, consisting of $43.3 million in organic loan growth and $114.6 million net loans acquired from Heartland. |
| · | Total deposits increased $261.2 million during the quarter, comprising $50.0 million in organic deposit growth and $211.2 million in deposits acquired from Heartland. |
| · | Net interest income, after provisions for loan losses, for the first nine months of 2012 was $39.4 million compared with $30.1 million for the same period in the prior year. |
| · | The provision for loan losses decreased to $1.8 million for the first nine months of 2012 compared to $4.4 million for the same period in 2011. |
| · | Net charge-offs for the first nine months of 2012 were $2.1 million compared to $4.4 million for the same period in 2011. |
| · | Substandard and delinquent loans increased by $21.4 million and $4.6 million respectively over the prior quarter. The increases were primarily due to loans acquired in the Heartland merger. |
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Pg. 2 cont. Horizon Bancorp Announces Record Earnings for the First Nine Months
| · | Return on average assets was 1.09% for the third quarter of 2012 and 1.21% for the first nine months of 2012. |
| · | Return on average common equity was 13.96% for the third quarter of 2012 and 15.24% for the first nine months of 2012. |
| · | Horizon Bank’s capital ratios continue to be well above the regulatory standards for well-capitalized banks. |
“Throughout the Horizon organization, our employees continue to be successful in identifying and targeting opportunities to expand deposits, make new loans and increase our banking relationships with customers,” said Craig M. Dwight, Chief Executive Officer. “In a lackluster economy, achieving growth targets has required diligent effort, and the Horizon team has demonstrated it’s up to the task.”
“A key goal of ours has been to increase our commercial lending portfolio and build multi-service relationships with small and mid-size businesses. Horizon is making good progress in achieving these goals, and we are particularly pleased with the contributions made by our Kalamazoo, MI and Indianapolis commercial loan teams. In addition, our success in Indianapolis recently prompted us to hire three new mortgage loan originators to serve this growth market.”
“The acquisition of Heartland Bancshares expands Horizon’s ability to serve Central Indiana, including the Indianapolis metropolitan area. This is a very promising and well-suited area for the services and products Horizon offers as a community bank with a talented and local team.”
Dwight noted that the integration of Heartland’s locations was completed during the third quarter and all data, technology and operations have been centralized in Horizon’s Michigan City, IN headquarters. “The integration was completed on time and went very smoothly, and we’re looking forward to developing a uniform level of efficiency and productivity throughout our expanded franchise. The quick and successful integration speaks well of the positive attitudes, work ethic and organization of both the Heartland and Horizon teams who worked on this endeavor,” he explained.
Dwight further stated that Horizon’s efficiency ratio was 62.99% for the nine months of 2012 and 65.35% in third quarter 2012. “We feel this is a good indication that, despite the acquisition and related costs, we were successful in keeping our expenses in line.”
Acquisition Details
The third quarter 2012 results included approximately $1.0 million of one-time costs related to the acquisition and reflected cost reductions post conversion. The nine month operating results for 2012 included approximately $1.5 million of one-time costs. One Heartland branch location was closed on August 31, 2012. In the Heartland acquisition, Horizon recorded $19.7 million in capital, retired approximately $7.2 million of Heartland’s TARP CPP preferred shares, and recorded a $2.3 million core deposit intangible and recorded $13.8 million in goodwill.
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Pg. 3 cont. Horizon Bancorp Announces Record Earnings for the First Nine Months
At September 30, 2012, $5.3 million in non-performing, $20.0 million in substandard and $4.6 million in delinquent loans were the result of the Heartland acquisition. The Company has deployed a seasoned expert in handling troubled loans to address these challenged credits and Horizon is already starting to see progress from its loan collection efforts.
Performance Highlights
Net income for the third quarter of 2012 was $4.8 million or $.54 diluted earnings per share, which reflects a 50% increase over the $3.4 million or $.36 diluted earnings per share in the third quarter of 2011. Net income for the first nine months of 2012 rose to $14.4 million or $1.75 diluted earnings per share, which reflects a 67% increase over the $9.3 million or $1.05 diluted earnings per share in the first nine months of 2011. This is the highest first nine months of net income in the Company’s history.
“Horizon is focused on creating shareholder value, both through retained earnings and its long-standing practice of paying dividends to its common shareholders,” explained Dwight. “We believe our strong earnings performance drives shareholder value and is supported by Horizon’s long-term organic and acquisitive growth goals.”
The net interest margin was 3.79% in the third quarter of 2012, up from 3.76% for the three-month period ending September 30, 2011 and the same as for the three months ending June 30, 2012. The net interest margin was 3.80% for the nine months ending September 30, 2012, up from 3.67% for the same period in 2011. The increase in the margin in 2012 compared to 2011 was primarily due to the reduction in the rate paid on interest bearing liabilities reducing more than the decline in the yield on interest earning assets.
During the third quarter of 2012 residential mortgage loan activity generated $4.4 million in income from the gain on sale of mortgage loans, an increase of $2.3 million from the same period in 2011.
Lending Activity
Total loans increased by $171.9 million from $983.2 million at December 31, 2011 to $1.2 billion at September 30, 2012. Commercial loans increased by $95.0 million, mortgage warehouse loans increased by $35.9 million, consumer loans increased by $21.5 million and residential mortgage loans increased by $19.4 million compared to December 31, 2011 loan levels. The acquisition of Heartland increased total loans by $114.6 million, and Horizon generated an additional $57.3 million in net organic loan growth during the first nine months of 2012.
The provision for loan losses was $1.0 million for the third quarter of 2012, which was $500,000 less than the provision for the same period of the prior year. For the first nine months of 2012, the provision for loan losses was $1.8 million ($2.6 million less than the provision for the same period of the prior year). The lower provision for loan losses was primarily related to a decrease in charged off loans.
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Pg. 4 cont. Horizon Bancorp Announces Record Earnings for the First Nine Months
“We believe Horizon’s non-performing assets and loan loss reserve ratios are rapidly moving toward the level expected from a strong and growing organization with a healthy balance sheet,” explained Dwight. “We have a strong culture of risk management, underwriting, and credit quality, and we understand the markets we serve. We feel these skills enable us to be very competitive in identifying and pursuing quality lending opportunities.”
The ratio of allowance for loan losses to total loans decreased to 1.58% as of September 30, 2012 from 1.89% as of December 31, 2011. The decrease in the ratio was primarily due to the increase in total loans from the Heartland acquisition which were recorded at fair value with no allowance allocated to them at September 30, 2012.
Non-performing loans totaled $24.4 million on September 30, 2012, up from $20.8 million on June 30, 2012, and $23.6 million on September 30, 2011. The increase was due to the Heartland acquisition. Excluding Heartland, non-performing loans declined to $19.1 million from $20.8 million at June 30, 2012. As a percentage of total loans, non-performing loans were 2.08% on September 30, 2012, up from 2.07% on June 30, 2012, and 2.52% on September 30, 2011.
Other Real Estate Owned (OREO) totaled $2.6 million on September 30, 2012, up from $1.0 million on June 30, 2012, but down from $3.6 million on September 30, 2011. During the quarter, five properties with a book value of $431,000 were sold, four properties with a fair value of $405,000 were acquired from Heartland, and twelve properties with a book value of $1.6 million as of June 30, 2012 were transferred into OREO. One of the new OREO properties is a retail/warehouse building with a book value of $629,000. On September 30, 2012, OREO was comprised of 21 properties. Of these, ten totaling $1.9 million were commercial real estate and twelve totaling $716,000 were residential real estate.
Expense Management
Total non-interest expense was $5.1 million higher in the first nine months of 2012 compared to the first nine months of 2011 and $2.5 million higher in the three months ending September 30, 2012 compared to the three months ending September 30, 2011. Salaries and employee benefits increased $3.5 million for the first nine months compared to the same period in 2011 and were $1.8 million higher for the three months ending September 30, 2012 compared to the same period in 2011. These increases were primarily the result of changes to annual merit pay, employee benefits costs, commissions earned and bonus accruals. In addition, compensation expense was higher due to the Heartland merger. As stated above, included in the first nine months of 2012’s non-interest expense was approximately $1.5 million of transaction expenses related to the Heartland acquisition and approximately $1.0 million in merger expenses for the three months ended September 30, 2012.
Dwight concluded: “We firmly believe there is tremendous opportunity for the community banking model to succeed. Although challenges are posed by regulatory uncertainty, pressure on margins due to a low interest rate environment, and increased requirements for capital, we feel Horizon has demonstrated that it’s possible to achieve year-over-year and quarter-over-quarter growth despite these obstacles.”
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Pg. 5 cont. Horizon Bancorp Announces Record Earnings for the First Nine Months
“We steadfastly maintain our commitment to provide superior products and services to the communities we serve, while generating value for the shareholders who support us.”
Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern and Central Indiana and Southwest Michigan through its commercial banking subsidiary, Horizon Bank, also doing business as Heartland Community Bank. 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.
This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon. For these statements, Horizon claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Horizon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.
| 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 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| Balance sheet: | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,846,776 | | | $ | 1,563,265 | | | $ | 1,546,831 | | | $ | 1,547,162 | | | $ | 1,490,810 | |
| Investment securities | | | 503,804 | | | | 441,715 | | | | 440,601 | | | | 438,145 | | | | 441,334 | |
| Commercial loans | | | 447,414 | | | | 356,549 | | | | 350,463 | | | | 352,376 | | | | 345,366 | |
| Mortgage warehouse loans | | | 244,233 | | | | 215,478 | | | | 213,152 | | | | 208,299 | | | | 151,111 | |
| Residential mortgage loans | | | 176,553 | | | | 156,675 | | | | 155,550 | | | | 157,141 | | | | 165,429 | |
| Consumer loans | | | 286,848 | | | | 268,437 | | | | 269,388 | | | | 265,377 | | | | 263,934 | |
| Earning assets | | | 1,690,348 | | | | 1,460,544 | | | | 1,451,746 | | | | 1,447,818 | | | | 1,391,864 | |
| Non-interest bearing deposit accounts | | | 211,935 | | | | 136,979 | | | | 138,618 | | | | 130,673 | | | | 121,483 | |
| Interest bearing transaction accounts | | | 767,202 | | | | 634,907 | | | | 641,128 | | | | 538,083 | | | | 551,597 | |
| Time deposits | | | 327,834 | | | | 273,903 | | | | 284,875 | | | | 341,109 | | | | 316,669 | |
| Borrowings | | | 333,150 | | | | 339,880 | | | | 310,889 | | | | 370,111 | | | | 336,095 | |
| Subordinated debentures | | | 32,282 | | | | 30,722 | | | | 30,699 | | | | 30,676 | | | | 30,653 | |
| Common stockholders' equity | | | 143,362 | | | | 118,112 | | | | 113,738 | | | | 108,965 | | | | 106,180 | |
| Total stockholders’ equity | | | 155,862 | | | | 130,612 | | | | 126,238 | | | | 121,465 | | | | 118,680 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income statement: | | Three month sended | |
| Net interest income | | $ | 14,999 | | | $ | 13,006 | | | $ | 13,198 | | | $ | 13,592 | | | $ | 11,991 | |
| Provision for loan losses | | | 1,041 | | | | 209 | | | | 559 | | | | 838 | | | | 1,564 | |
| Other income | | | 7,710 | | | | 6,555 | | | | 5,142 | | | | 4,999 | | | | 6,538 | |
| Other expenses | | | 14,840 | | | | 12,180 | | | | 11,160 | | | | 13,089 | | | | 12,313 | |
| Income tax expense | | | 1,978 | | | | 2,262 | | | | 2,008 | | | | 1,142 | | | | 1,235 | |
| Net income | | | 4,850 | | | | 4,910 | | | | 4,613 | | | | 3,522 | | | | 3,417 | |
| Preferred stock dividend | | | (63 | ) | | | (106 | ) | | | (156 | ) | | | (63 | ) | | | (710 | ) |
| Net income available to common shareholders | | $ | 4,787 | | | $ | 4,804 | | | $ | 4,457 | | | $ | 3,459 | | | $ | 2,707 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.56 | | | $ | 0.65 | | | $ | 0.60 | | | $ | 0.47 | | | $ | 0.37 | |
| Diluted earnings per share | | | 0.54 | | | | 0.62 | | | | 0.59 | | | | 0.46 | | | | 0.36 | |
| Cash dividends declared per common share | | | 0.10 | | | | 0.09 | | | | 0.09 | | | | 0.08 | | | | 0.08 | |
| Book value per common share | | | 16.64 | | | | 15.88 | | | | 15.33 | | | | 14.68 | | | | 14.31 | |
| Tangible book value per common share | | | 13.85 | | | | 14.81 | | | | 14.24 | | | | 13.58 | | | | 13.19 | |
| Market value - high | | | 19.08 | | | | 17.73 | | | | 12.33 | | | | 11.97 | | | | 12.60 | |
| Market value - low | | $ | 17.67 | | | $ | 11.76 | | | $ | 11.53 | | | $ | 10.82 | | | $ | 11.54 | |
| Weighted average shares outstanding - Basic | | | 8,503,475 | | | | 7,434,537 | | | | 7,422,860 | | | | 7,421,544 | | | | 7,414,043 | |
| Weighted average shares outstanding - Diluted | | | 8,838,659 | | | | 7,728,519 | | | | 7,598,490 | | | | 7,576,052 | | | | 7,596,570 | |
| | | | | | | | | | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 1.09 | % | | | 1.31 | % | | | 1.23 | % | | | 0.93 | % | | | 0.96 | % |
| Return on average common stockholders' equity | | | 13.96 | | | | 16.43 | | | | 15.90 | | | | 12.74 | | | | 10.14 | |
| Net interest margin | | | 3.79 | | | | 3.79 | | | | 3.87 | | | | 3.95 | | | | 3.76 | |
| Loan loss reserve to total loans | | | 1.58 | | | | 1.83 | | | | 1.94 | | | | 1.89 | | | | 2.04 | |
| Non-performing loans to loans | | | 2.08 | | | | 2.07 | | | | 2.11 | | | | 2.02 | | | | 2.52 | |
| Average equity to average assets | | | 8.45 | | | | 8.61 | | | | 8.33 | | | | 7.96 | | | | 8.60 | |
| Bank only capital ratios: | | | | | | | | | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 8.58 | | | | 8.74 | | | | 8.53 | | | | 8.50 | | | | 8.89 | |
| Tier 1 capital to risk weighted assets | | | 11.25 | | | | 12.01 | | | | 11.82 | | | | 11.86 | | | | 12.33 | |
| Total capital to risk weighted assets | | | 12.50 | | | | 13.27 | | | | 13.08 | | | | 13.12 | | | | 13.58 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan data: | | | | | | | | | | | | | | | | | | | | |
| Substandard loans | | $ | 57,079 | | | $ | 35,634 | | | $ | 46,643 | | | $ | 57,489 | | | $ | 58,993 | |
| 30 to 89 days delinquent | | | 8,351 | | | | 3,773 | | | | 2,932 | | | | 3,282 | | | | 4,240 | |
| | | | | | | | | | | | | | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 109 | | | $ | 13 | | | $ | 28 | | | $ | 37 | | | $ | 97 | |
| Trouble debt restructures - accruing interest | | | 3,356 | | | | 3,092 | | | | 3,188 | | | | 3,540 | | | | 4,042 | |
| Trouble debt restructures - non-accrual | | | 5,062 | | | | 2,786 | | | | 2,439 | | | | 2,198 | | | | 1,673 | |
| Non-accrual loans | | | 15,887 | | | | 14,925 | | | | 15,451 | | | | 14,368 | | | | 17,799 | |
| Total non-performing loans | | $ | 24,414 | | | $ | 20,816 | | | $ | 21,106 | | | $ | 20,143 | | | $ | 23,611 | |
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | September 30 | | | September 30 | |
| | | 2012 | | | 2011 | |
| Balance sheet: | | | | | | |
| Total assets | | $ | 1,846,776 | | | $ | 1,490,810 | |
| Investment securities | | | 503,804 | | | | 441,334 | |
| Commercial loans | | | 447,414 | | | | 345,366 | |
| Mortgage warehouse loans | | | 244,233 | | | | 151,111 | |
| Residential mortgage loans | | | 176,553 | | | | 165,429 | |
| Consumer loans | | | 286,848 | | | | 263,934 | |
| Earning assets | | | 1,690,348 | | | | 1,391,864 | |
| Non-interest bearing deposit accounts | | | 211,935 | | | | 121,483 | |
| Interest bearing transaction accounts | | | 767,202 | | | | 551,597 | |
| Time deposits | | | 327,834 | | | | 316,669 | |
| Borrowings | | | 333,150 | | | | 336,095 | |
| Subordinated debentures | | | 32,282 | | | | 30,653 | |
| Common stockholders' equity | | | 143,362 | | | | 106,180 | |
| Total stockholders’ equity | | | 155,862 | | | | 118,680 | |
| | | | | | | | | |
| Income statement: | | Nine months ended | |
| Net interest income | | $ | 41,203 | | | $ | 34,521 | |
| Provision for loan losses | | | 1,809 | | | | 4,444 | |
| Other income | | | 19,407 | | | | 15,300 | |
| Other expenses | | | 38,180 | | | | 33,058 | |
| Income tax expense | | | 6,248 | | | | 3,044 | |
| Net income | | | 14,373 | | | | 9,275 | |
| Preferred stock dividend | | | (325 | ) | | | (1,263 | ) |
| Net income available to common shareholders | | $ | 14,048 | | | $ | 8,012 | |
| | | | | | | | | |
| Per share data: | | | | | | | | |
| Basic earnings per share | | $ | 1.81 | | | $ | 1.08 | |
| Diluted earnings per share | | | 1.75 | | | | 1.05 | |
| Cash dividends declared per common share | | | 0.27 | | | | 0.23 | |
| Book value per common share | | | 16.64 | | | | 14.31 | |
| Tangible book value per common share | | | 13.85 | | | | 13.19 | |
| Market value - high | | | 19.08 | | | | 12.97 | |
| Market value - low | | $ | 11.53 | | | $ | 11.54 | |
| Weighted average shares outstanding - Basic | | | 7,758,537 | | | | 7,402,300 | |
| Weighted average shares outstanding - Diluted | | | 8,034,996 | | | | 7,598,950 | |
| | | | | | | | | |
| Key ratios: | | | | | | | | |
| Return on average assets | | | 1.21 | % | | | 0.88 | % |
| Return on average common stockholders' equity | | | 15.34 | | | | 10.64 | |
| Net interest margin | | | 3.80 | | | | 3.67 | |
| Loan loss reserve to total loans | | | 1.58 | | | | 2.04 | |
| Non-performing loans to loans | | | 2.08 | | | | 2.52 | |
| Average equity to average assets | | | 8.51 | | | | 8.43 | |
| Bank only capital ratios: | | | | | | | | |
| Tier 1 capital to average assets | | | 8.58 | | | | 8.89 | |
| Tier 1 capital to risk weighted assets | | | 11.25 | | | | 12.33 | |
| Total capital to risk weighted assets | | | 12.50 | | | | 13.58 | |
| | | | | | | | | |
| Loan data: | | | | | | | | |
| Substandard loans | | $ | 57,079 | | | $ | 58,993 | |
| 30 to 89 days delinquent | | | 8,351 | | | | 4,240 | |
| | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 109 | | | $ | 97 | |
| Trouble debt restructures - accruing interest | | | 3,356 | | | | 4,042 | |
| Trouble debt restructures - non-accrual | | | 5,062 | | | | 1,673 | |
| Non-accrual loans | | | 15,887 | | | | 17,799 | |
| Total non-performing loans | | $ | 24,414 | | | $ | 23,611 | |
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 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| Commercial | | $ | 8,058 | | | $ | 7,766 | | | $ | 8,435 | | | $ | 8,017 | | | $ | 8,151 | |
| Real estate | | | 2,974 | | | | 2,946 | | | | 3,025 | | | | 2,472 | | | | 2,457 | |
| Mortgage warehousing | | | 1,716 | | | | 1,695 | | | | 1,694 | | | | 1,695 | | | | 1,477 | |
| Consumer | | | 5,820 | | | | 5,967 | | | | 6,258 | | | | 6,698 | | | | 7,025 | |
| Unallocated | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total | | $ | 18,568 | | | $ | 18,374 | | | $ | 19,412 | | | $ | 18,882 | | | $ | 19,110 | |
Net Charge-offs
(Dollars in Thousands, Unaudited)
| | | Three months ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| Commercial | | $ | 334 | | | $ | 278 | | | $ | (332 | ) | | $ | 111 | | | $ | 269 | |
| Real estate | | | 205 | | | | 113 | | | | 59 | | | | 118 | | | | 86 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 308 | | | | 856 | | | | 302 | | | | 837 | | | | 685 | |
| Total | | $ | 847 | | | $ | 1,247 | | | $ | 29 | | | $ | 1,066 | | | $ | 1,040 | |
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| Commercial | | $ | 11,957 | | | $ | 8,796 | | | $ | 9,035 | | | $ | 7,958 | | | $ | 12,094 | |
| Real estate | | | 8,833 | | | | 8,595 | | | | 8,669 | | | | 8,496 | | | | 7,201 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 3,624 | | | | 3,425 | | | | 3,402 | | | | 3,689 | | | | 4,316 | |
| Total | | $ | 24,414 | | | $ | 20,816 | | | $ | 21,106 | | | $ | 20,143 | | | $ | 23,611 | |
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| Commercial | | $ | 1,867 | | | $ | 688 | | | $ | 94 | | | $ | 1,092 | | | $ | 1,087 | |
| Real estate | | | 716 | | | | 338 | | | | 709 | | | | 1,708 | | | | 2,478 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 72 | | | | 43 | | | | 86 | | | | 49 | | | | 90 | |
| Total | | $ | 2,655 | | | $ | 1,069 | | | $ | 889 | | | $ | 2,849 | | | $ | 3,655 | |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Three Months Ended | | | Three Months Ended | |
| | | September 30, 2012 | | | September 30, 2011 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 13,854 | | | $ | 8 | | | | 0.23 | % | | $ | 2,265 | | | $ | 1 | | | | 0.18 | % |
| Interest-earning deposits | | | 6,252 | | | | 2 | | | | 0.13 | % | | | 14,868 | | | | 1 | | | | 0.03 | % |
| Investment securities - taxable | | | 383,200 | | | | 2,168 | | | | 2.25 | % | | | 336,027 | | | | 2,540 | | | | 3.00 | % |
| Investment securities - non-taxable (1) | | | 121,428 | | | | 1,014 | | | | 5.27 | % | | | 109,875 | | | | 988 | | | | 5.41 | % |
| Loans receivable (2)(3)(4) | | | 1,112,712 | | | | 15,527 | | | | 5.56 | % | | | 855,938 | | | | 12,481 | | | | 5.79 | % |
| Total interest-earning assets (1) | | | 1,637,446 | | | | 18,719 | | | | 4.70 | % | | | 1,318,973 | | | | 16,011 | | | | 4.97 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 21,385 | | | | | | | | | | | | 17,169 | | | | | | | | | |
| Allowance for loan losses | | | (18,195 | ) | | | | | | | | | | | (18,823 | ) | | | | | | | | |
| Other assets | | | 121,919 | | | | | | | | | | | | 99,560 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,762,555 | | | | | | | | | | | $ | 1,416,879 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,041,268 | | | $ | 1,638 | | | | 0.63 | % | | $ | 871,621 | | | $ | 1,978 | | | | 0.90 | % |
| Borrowings | | | 324,975 | | | | 1,597 | | | | 1.96 | % | | | 259,783 | | | | 1,583 | | | | 2.42 | % |
| Subordinated debentures | | | 33,353 | | | | 485 | | | | 5.78 | % | | | 31,446 | | | | 459 | | | | 5.79 | % |
| Total interest-bearing liabilities | | | 1,399,596 | | | | 3,720 | | | | 1.06 | % | | | 1,162,850 | | | | 4,020 | | | | 1.37 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 196,640 | | | | | | | | | | | | 121,034 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 17,435 | | | | | | | | | | | | 11,158 | | | | | | | | | |
| Shareholders' equity | | | 148,884 | | | | | | | | | | | | 121,837 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,762,555 | | | | | | | | | | | $ | 1,416,879 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 14,999 | | | | 3.64 | % | | | | | | $ | 11,991 | | | | 3.60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.79 | % | | | | | | | | | | | 3.76 | % |
| (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. |
| (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 loans fees. |
| (4) | Loan fees and late fees included in interest on loans. |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Nine Months Ended | | | Nine Months Ended | |
| | | September 30, 2012 | | | September 30, 2011 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 6,870 | | | $ | 13 | | | | 0.25 | % | | $ | 26,448 | | | $ | 49 | | | | 0.25 | % |
| Interest-earning deposits | | | 3,533 | | | | 4 | | | | 0.15 | % | | | 8,837 | | | | 2 | | | | 0.03 | % |
| Investment securities - taxable | | | 358,935 | | | | 6,721 | | | | 2.50 | % | | | 329,903 | | | | 7,777 | | | | 3.15 | % |
| Investment securities - non-taxable (1)(2) | | | 111,750 | | | | 2,944 | | | | 4.89 | % | | | 112,133 | | | | 3,066 | | | | 5.22 | % |
| Loans receivable (2)(3)(4) | | | 1,009,052 | | | | 42,386 | | | | 5.62 | % | | | 830,432 | | | | 36,260 | | | | 5.85 | % |
| Total interest-earning assets (1) | | | 1,490,140 | | | | 52,068 | | | | 4.77 | % | | | 1,307,753 | | | | 47,154 | | | | 4.96 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 17,708 | | | | | | | | | | | | 15,756 | | | | | | | | | |
| Allowance for loan losses | | | (18,970 | ) | | | | | | | | | | | (18,992 | ) | | | | | | | | |
| Other assets | | | 95,986 | | | | | | | | | | | | 97,540 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,584,864 | | | | | | | | | | | $ | 1,402,057 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 958,651 | | | $ | 4,803 | | | | 0.67 | % | | $ | 889,531 | | | $ | 6,510 | | | | 0.98 | % |
| Borrowings | | | 299,074 | | | | 4,635 | | | | 2.07 | % | | | 237,491 | | | | 4,760 | | | | 2.68 | % |
| Subordinated debentures | | | 31,606 | | | | 1,427 | | | | 6.03 | % | | | 31,446 | | | | 1,363 | | | | 5.80 | % |
| Total interest-bearing liabilities | | | 1,289,331 | | | | 10,865 | | | | 1.13 | % | | | 1,158,468 | | | | 12,633 | | | | 1.46 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 154,244 | | | | | | | | | | | | 115,454 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 13,387 | | | | | | | | | | | | 9,989 | | | | | | | | | |
| Shareholders' equity | | | 134,820 | | | | | | | | | | | | 118,146 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,591,782 | | | | | | | | | | | $ | 1,402,057 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 41,203 | | | | 3.65 | % | | | | | | $ | 34,521 | | | | 3.50 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.80 | % | | | | | | | | | | | 3.67 | % |
| (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. |
| (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 loans fees. |
| (4) | Loan fees and late fees included in interest on loans. |
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
| | | September 30 | | | December 31 | |
| | | 2012 | | | 2011 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 41,562 | | | $ | 20,447 | |
| Investment securities, available for sale | | | 497,704 | | | | 431,045 | |
| Investment securities, held to maturity | | | 6,100 | | | | 7,100 | |
| Loans held for sale | | | 18,163 | | | | 14,090 | |
| Loans, net of allowance for loan losses of $18,568 and $18,882 | | | 1,136,480 | | | | 964,311 | |
| Premises and equipment | | | 40,297 | | | | 34,665 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 13,333 | | | | 12,390 | |
| Goodwill | | | 19,748 | | | | 5,910 | |
| Other intangible assets | | | 4,295 | | | | 2,292 | |
| Interest receivable | | | 8,248 | | | | 6,671 | |
| Cash value life insurance | | | 34,929 | | | | 30,190 | |
| Other assets | | | 25,917 | | | | 18,051 | |
| Total assets | | $ | 1,846,776 | | | $ | 1,547,162 | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 211,935 | | | $ | 130,673 | |
| Interest bearing | | | 1,095,036 | | | | 879,192 | |
| Total deposits | | | 1,306,971 | | | | 1,009,865 | |
| Borrowings | | | 333,150 | | | | 370,111 | |
| Subordinated debentures | | | 32,282 | | | | 30,676 | |
| Interest payable | | | 579 | | | | 596 | |
| Other liabilities | | | 17,932 | | | | 14,449 | |
| Total liabilities | | | 1,690,914 | | | | 1,425,697 | |
| Commitments and contingent liabilities | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock, $.01 par value, $1,000 liquidation value | | | | | | | | |
| Authorized, 1,000,000 Series B shares | | | | | | | | |
| Issued 12,500 and 12,500 shares | | | 12,500 | | | | 12,500 | |
| Common stock, $.3333 stated value | | | | | | | | |
| Authorized, 22,500,000 shares | | | | | | | | |
| Issued, 8,685,490 and 7,450,794 shares | | | | | | | | |
| Outstanding, 8,617,735 and 7,421,544 shares | | | 1,403 | | | | 1,126 | |
| Additional paid-in capital | | | 30,491 | | | | 10,610 | |
| Retained earnings | | | 101,267 | | | | 89,387 | |
| Accumulated other comprehensive income | | | 10,201 | | | | 7,842 | |
| Total stockholders’ equity | | | 155,862 | | | | 121,465 | |
| Total liabilities and stockholders’ equity | | $ | 1,846,776 | | | $ | 1,547,162 | |
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 | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Interest Income | | | | | | | | | | | | |
| Loans receivable | | $ | 15,527 | | | $ | 12,481 | | | $ | 42,386 | | | $ | 36,260 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 2,178 | | | | 2,542 | | | | 6,738 | | | | 7,828 | |
| Tax exempt | | | 1,014 | | | | 988 | | | | 2,944 | | | | 3,066 | |
| Total interest income | | | 18,719 | | | | 16,011 | | | | 52,068 | | | | 47,154 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 1,638 | | | | 1,978 | | | | 4,803 | | | | 6,510 | |
| Borrowed funds | | | 1,597 | | | | 1,583 | | | | 4,635 | | | | 4,760 | |
| Subordinated debentures | | | 485 | | | | 459 | | | | 1,427 | | | | 1,363 | |
| Total interest expense | | | 3,720 | | | | 4,020 | | | | 10,865 | | | | 12,633 | |
| Net Interest Income | | | 14,999 | | | | 11,991 | | | | 41,203 | | | | 34,521 | |
| Provision for loan losses | | | 1,041 | | | | 1,564 | | | | 1,809 | | | | 4,444 | |
| Net Interest Income after Provision for Loan Losses | | | 13,958 | | | | 10,427 | | | | 39,394 | | | | 30,077 | |
| Other Income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,002 | | | | 802 | | | | 2,477 | | | | 2,422 | |
| Wire transfer fees | | | 248 | | | | 167 | | | | 643 | | | | 412 | |
| Interchange fees | | | 885 | | | | 721 | | | | 2,227 | | | | 1,905 | |
| Fiduciary activities | | | 971 | | | | 1,016 | | | | 2,928 | | | | 2,911 | |
| Gain on sale of securities | | | 2 | | | | 1,115 | | | | 2 | | | | 1,754 | |
| Gain on sale of mortgage loans | | | 4,436 | | | | 2,145 | | | | 10,121 | | | | 3,986 | |
| Mortgage servicing income net of impairment | | | (355 | ) | | | (172 | ) | | | (95 | ) | | | 691 | |
| Increase in cash value of bank owned life insurance | | | 300 | | | | 245 | | | | 760 | | | | 661 | |
| Other income | | | 221 | | | | 46 | | | | 344 | | | | 105 | |
| Total other income | | | 7,710 | | | | 6,538 | | | | 19,407 | | | | 15,300 | |
| Other Expenses | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 7,905 | | | | 6,081 | | | | 20,407 | | | | 16,912 | |
| Net occupancy expenses | | | 1,186 | | | | 1,056 | | | | 3,216 | | | | 3,176 | |
| Data processing | | | 754 | | | | 549 | | | | 1,883 | | | | 1,450 | |
| Professional fees | | | 366 | | | | 359 | | | | 1,483 | | | | 1,039 | |
| Outside services and consultants | | | 624 | | | | 454 | | | | 1,621 | | | | 1,221 | |
| Loan expense | | | 1,311 | | | | 820 | | | | 2,879 | | | | 2,276 | |
| FDIC insurance expense | | | 291 | | | | 254 | | | | 798 | | | | 944 | |
| Other losses | | | 309 | | | | 1,088 | | | | 501 | | | | 1,365 | |
| Other expenses | | | 2,094 | | | | 1,652 | | | | 5,392 | | | | 4,675 | |
| Total other expenses | | | 14,840 | | | | 12,313 | | | | 38,180 | | | | 33,058 | |
| Income Before Income Tax | | | 6,828 | | | | 4,652 | | | | 20,621 | | | | 12,319 | |
| Income tax expense | | | 1,978 | | | | 1,235 | | | | 6,248 | | | | 3,044 | |
| Net Income | | | 4,850 | | | | 3,417 | | | | 14,373 | | | | 9,275 | |
| Preferred stock dividend and discount accretion | | | (63 | ) | | | (710 | ) | | | (325 | ) | | | (1,263 | ) |
| Net Income Available to Common Shareholders | | $ | 4,787 | | | $ | 2,707 | | | $ | 14,048 | | | $ | 8,012 | |
| Basic Earnings Per Share | | $ | 0.56 | | | $ | 0.37 | | | $ | 1.81 | | | $ | 1.08 | |
| Diluted Earnings Per Share | | | 0.54 | | | | 0.36 | | | | 1.75 | | | | 1.05 | |
12
