Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: January 23, 2013
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces Record Earnings for 2012
Michigan City, Indiana (NASDAQ GM: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and twelve month periods ended December 31, 2012. All share data has been adjusted to reflect the three-for-two stock split paid on November 9, 2012.
SUMMARY:
| · | Horizon’s net income of $19.5 million for the twelve months ending 2012 surpasses the $12.8 million earned in the prior year and represents the highest annual net income in the Company’s history. |
| · | Fourth quarter 2012 net income was $5.2 million or $.56 diluted earnings per share, a 22% increase in diluted earnings per share compared to 2011. In addition, this represents the highest quarterly net income in the Company’s history. |
| · | Horizon’s net income for 2012 was $19.5 million or $2.30 diluted earnings per share, a 52% 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. |
| · | As a result of the acquisition and organic growth, total assets increased to a record $1.8 billion at December 31, 2012, compared with $1.5 billion at December 31, 2011. |
| · | Total loans increased $207.5 million during 2012, consisting of $92.9 million in organic loan growth and $114.6 million net loans acquired from Heartland. |
| · | Total deposits increased $283.7 million during 2012, consisting of $72.5 million in organic deposit growth and $211.2 million in deposits acquired from Heartland. |
| · | Net interest income, after provisions for loan losses, for 2012 was $54.7 million compared with $42.8 million for 2011. |
| · | The provision for loan losses decreased to $3.5 million for the year ended December 31, 2012 compared to $5.3 million for 2011. |
| · | Net charge-offs in 2012 were $4.1 million compared to $5.5 million in 2011. |
| · | Substandard and 30 to 89 day delinquent loans in total decreased by $1.9 million during 2012 from $60.8 million at December 31, 2011 to $58.9 million at December 31, 2012 including $21.5 million at December 31, 2012 acquired from the Heartland merger. |
| · | Return on average assets was 1.13% in the fourth quarter of 2012 and 1.19% the year ended December 31, 2012. |
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Pg. 2 cont. Horizon Bancorp Announces Record Earnings for 2012
| · | Return on average common equity was 13.70% in fourth quarter 2012 and 14.72% for the year ended December 31, 2012. |
| · | Horizon Bank’s capital ratios continue to be well above the regulatory standards for well-capitalized banks. |
Performance Highlights
Net income for the fourth quarter of 2012 was $5.2 million or $.56 diluted earnings per share, which reflects a 22% increase in diluted earnings per share over the $3.5 million or $.46 diluted earnings per share in the fourth quarter of 2011. Net income for 2012 rose to $19.5 million or $2.30 diluted earnings per share, which reflects a 52% increase in diluted earnings per share over the net income of $12.8 million or $1.51 diluted earnings per share for 2011.
Craig M. Dwight, President and CEO, stated: “It was gratifying that in a year in which we made a substantial acquisition, the entire Horizon team maintained a strong focus on growing the bank’s established business that consequently contributed to increased shareholder value. Our success in serving customers, expanding customer relationships and winning new customers led to organic year-over-year growth. In addition to the growth provided by Heartland, we continued to expand Horizon’s size, scope, and access to new market opportunities in our other markets.”
“We believe Horizon’s continued success reflects our business expansion strategy and focus on a balanced mix of five revenue streams – business banking, retail banking, residential mortgage lending, mortgage warehouse lending and investment management. Being somewhat counter-cyclical sectors in nature, these are designed to deliver consistent and stable performance over time.”
“In 2012, despite a sluggish economy and suppressed interest rates, all five business sectors delivered growth and strong performance. Commercial lending, which was a key focus in 2012, grew significantly, particularly in the Indianapolis, Indiana and Kalamazoo, Michigan markets. The midyear addition of Heartland’s Indianapolis area locations and the 2012 opening of a new commercial banking office in Indianapolis offer the potential to further expand commercial lending.”
Dwight continued, “Horizon had strong production in residential mortgage lending, and related increases from the gain on sale primarily of long-term, low fixed-rate loans which we did not retain in order to manage interest rate risk. Also due to the active mortgage and refinancing market, our mortgage warehousing business, which generates low-cost capital for the Company, grew considerably in 2012.”
“We also continued our diligence in managing expenses. Productivity enhancements in past years have contributed to Horizon’s efficiency in recent years and continue to support efficient growth. We anticipate continuing productivity improvements related to the acquired Heartland business. The ongoing low interest rate environment will continue to present challenges, however, we were satisfied with our ability to maintain net interest margin in 2012.”
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Pg. 3 cont. Horizon Bancorp Announces Record Earnings for 2012
The net interest margin was 4.16% in the fourth quarter of 2012, up from 3.95% for the three-month period ending December 31, 2011. The net interest margin was 3.89% for the year ended December 31, 2012, up from 3.74% for 2011. The increase in the margin in 2012 compared to 2011 was due to the recognition of approximately $1.5 million of interest income during the fourth quarter from the Heartland loan discounts along with the reduction in the rate paid on interest bearing liabilities. Excluding the interest income recognized from the loan discounts, the margin would have been 3.81% and 3.79% for the three and twelve month periods ending December 31, 2012, respectively.
During the fourth quarter of 2012, residential mortgage loan activity generated $4.0 million in income from the gain on sale of mortgage loans, an increase of $1.5 million from the same period in 2011.
Lending Activity
Total loans increased by $207.5 million from $983.2 million at December 31, 2011 to $1.2 billion at December 31, 2012. For 2012, commercial loans increased by $108.1 million, mortgage warehouse loans increased by $43.1 million, consumer loans increased by $23.7 million and residential mortgage loans increased by $32.6 million compared to December 31, 2011 loan levels. The acquisition of Heartland increased total loans by $114.6 million, and Horizon generated an additional $92.9 million in net organic loan growth during 2012.
“In a very competitive environment for quality lending prospects, it was encouraging to demonstrate meaningful organic loan growth,” explained Dwight. “In addition, we made considerable progress in improving overall credit quality in 2012, measured by net charge-offs, which declined 25% in 2012 compared to the prior year, also lower loan delinquency, and effectively disposing of repossessed collateral and other real estate owned.”
“Although loans past due 30 to 89 days and non-performing loans increased primarily as a result of the acquisition, this was expected and we are working diligently with borrowers to resolve issues and return loans to current status. We have deployed a seasoned expert in handling troubled loans to address these challenged credits. Horizon is also seeing progress from its loan collection efforts.”
The provision for loan losses was $1.7 million for the fourth quarter of 2012, which was $877,000 more than the provision for the same period of the prior year. For the year ended 2012, the provision for loan losses was $3.5 million, which was $1.8 million less than the provision for the prior year. The higher provision for loan losses during the fourth quarter was related to organic growth in the Company’s loan portfolio and $431,000 of charge-offs related to the credit losses resulting from the Heartland loans acquired that exceeded the loan discounts recorded at the time of the acquisition. As a percentage of total loans, non-performing loans were 1.97% on December 31, 2012, down from 2.08% on September 30, 2012, and 2.02% on December 31, 2011.
The ratio of allowance for loan losses to total loans decreased to 1.52% as of December 31, 2012 from 1.89% as of December 31, 2011. The decrease in the ratio was primarily due to the increase in total loans resulting from the Heartland acquisition in which loans were recorded at fair value with no allowance allocated to them at December 31, 2012.
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Pg. 4 cont. Horizon Bancorp Announces Record Earnings for 2012
Non-performing loans totaled $23.8 million on December 31, 2012, down from $24.4 million on September 30, 2012, and up from $20.1 million on December 31, 2011. The increase from December 31, 2011 was due to the Heartland acquisition. Excluding Heartland, non-performing loans would have declined to $16.5 million at December 31, 2012 from $19.1 million at September 30, 2012.
At December 31, 2012, loans acquired in the Heartland acquisition represented $7.3 million in non-performing, $18.1 million in substandard and $3.4 million in delinquent loans, which compares to $5.3 million in non-performing, $20.0 million in substandard and $4.6 million in delinquent loans at September 30, 2012.
Other Real Estate Owned (OREO) totaled $2.6 million on December 31, 2012, representing no change from September 30, 2012, but down from $2.8 million on December 31, 2011. During the fourth quarter, eight properties with a book value of $866,000 as of September 30, 2012 were sold, and seven properties with a book value of $975,000 as of December 31, 2012 were transferred into OREO. Another four properties were written down by $109,000. On December 31, 2012, OREO was comprised of 20 properties. Of these properties, five totaling $1.3 million were commercial real estate and 15 totaling $1.3 million were residential real estate.
Expense Management
Total non-interest expense was $7.9 million higher for the year ending December 31, 2012 compared to 2011 and $2.8 million higher for the three months ending December 31, 2012 compared to the three months ending December 31, 2011. Salaries and employee benefits increased $5.5 million for the year ending December 31, 2012 compared to 2011 and were $2.0 million higher for the three months ending December 31, 2012 compared to 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 and directly related to Horizon’s investment in growth markets. Included in 2012’s non-interest expense was approximately $1.5 million of transaction expenses related to the Heartland acquisition.
Outlook
Dwight concluded: “In an eventful year with numerous potential distractions, Horizon grew its existing banking business while integrating acquired assets and positioning the Company to pursue additional expansion opportunities. In addition to the acquisition, Horizon opened two new full service branches: one in Valparaiso, Indiana, which was our third branch in this market, and relocated a loan and deposit office in Kalamazoo, Michigan. We also opened the loan and deposit office in Indianapolis, Indiana, which grew total assets to $35 million in approximately six months of operations.”
“We very are diligent in analyzing opportunities before opening offices or branches. We anticipate leasing an empty bank building in downtown Kalamazoo and opening a new office in the coming months to serve this strong-performing market. We have also started construction on a branch in the Indianapolis suburb of Greenwood, Indiana. When completed, we plan to relocate a current branch to this location, which we believe is far superior.”
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Pg. 5 cont. Horizon Bancorp Announces Record Earnings for 2012
“Horizon continues to consider opportunities to expand in our existing and new markets and to further leverage our capabilities and business model. We remain focused on growing shareholder value, including returning a portion of earnings as cash dividends. We were gratified that during a time of great uncertainty, speculation and volatility in the stock market, investors recognized and rewarded our performance with a significantly higher stock price. We are making strategic investments in people and capabilities which, we believe, will allow us to be more productive and generate business, creating a balanced approach to building the Horizon franchise.”
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, which also operates under the “Heartland Community Bank a Horizon Bank Company” name in certain markets. 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)
| | | December 31 | | | September 30 | | | June 30 | | | March 31 | | | December 31 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2012 | | | 2011 | |
| Balance sheet: | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,847,677 | | | $ | 1,846,776 | | | $ | 1,563,265 | | | $ | 1,546,831 | | | $ | 1,547,162 | |
| Investment securities | | | 482,801 | | | | 503,804 | | | | 441,715 | | | | 440,601 | | | | 438,145 | |
| Commercial loans | | | 460,471 | | | | 447,414 | | | | 356,549 | | | | 350,463 | | | | 352,376 | |
| Mortgage warehouse loans | | | 251,448 | | | | 244,233 | | | | 215,478 | | | | 213,152 | | | | 208,299 | |
| Residential mortgage loans | | | 189,714 | | | | 176,553 | | | | 156,675 | | | | 155,550 | | | | 157,141 | |
| Consumer loans | | | 289,084 | | | | 286,848 | | | | 268,437 | | | | 269,388 | | | | 265,377 | |
| Earning assets | | | 1,700,595 | | | | 1,690,348 | | | | 1,460,544 | | | | 1,451,746 | | | | 1,447,818 | |
| Non-interest bearing deposit accounts | | | 208,650 | | | | 211,935 | | | | 136,979 | | | | 138,618 | | | | 130,673 | |
| Interest bearing transaction accounts | | | 769,822 | | | | 767,202 | | | | 634,907 | | | | 641,128 | | | | 538,083 | |
| Time deposits | | | 315,131 | | | | 327,834 | | | | 273,903 | | | | 284,875 | | | | 341,109 | |
| Borrowings | | | 345,764 | | | | 333,150 | | | | 339,880 | | | | 310,889 | | | | 370,111 | |
| Subordinated debentures | | | 32,331 | | | | 32,282 | | | | 30,722 | | | | 30,699 | | | | 30,676 | |
| Common stockholders' equity | | | 146,468 | | | | 143,362 | | | | 118,112 | | | | 113,738 | | | | 108,965 | |
| Total stockholders’ equity | | | 158,968 | | | | 155,862 | | | | 130,612 | | | | 126,238 | | | | 121,465 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income statement: | | Three months ended | |
| Net interest income | | $ | 17,003 | | | $ | 14,999 | | | $ | 13,006 | | | $ | 13,198 | | | $ | 13,592 | |
| Provision for loan losses | | | 1,715 | | | | 1,041 | | | | 209 | | | | 559 | | | | 838 | |
| Other income | | | 7,924 | | | | 7,710 | | | | 6,555 | | | | 5,142 | | | | 4,999 | |
| Other expenses | | | 15,844 | | | | 14,840 | | | | 12,180 | | | | 11,160 | | | | 13,089 | |
| Income tax expense | | | 2,198 | | | | 1,978 | | | | 2,262 | | | | 2,008 | | | | 1,142 | |
| Net income | | | 5,170 | | | | 4,850 | | | | 4,910 | | | | 4,613 | | | | 3,522 | |
| Preferred stock dividend | | | (156 | ) | | | (63 | ) | | | (106 | ) | | | (156 | ) | | | (63 | ) |
| Net income available to common shareholders | | $ | 5,014 | | | $ | 4,787 | | | $ | 4,804 | | | $ | 4,457 | | | $ | 3,459 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.58 | | | $ | 0.56 | | | $ | 0.65 | | | $ | 0.60 | | | $ | 0.47 | |
| Diluted earnings per share | | | 0.56 | | | | 0.54 | | | | 0.62 | | | | 0.59 | | | | 0.46 | |
| Cash dividends declared per common share | | | 0.10 | | | | 0.10 | | | | 0.09 | | | | 0.09 | | | | 0.08 | |
| Book value per common share | | | 17.00 | | | | 16.64 | | | | 15.88 | | | | 15.33 | | | | 14.68 | |
| Tangible book value per common share | | | 14.23 | | | | 13.85 | | | | 14.81 | | | | 14.24 | | | | 13.58 | |
| Market value - high | | | 19.68 | | | | 19.08 | | | | 17.73 | | | | 12.33 | | | | 11.97 | |
| Market value - low | | $ | 16.54 | | | $ | 17.67 | | | $ | 11.76 | | | $ | 11.53 | | | $ | 10.82 | |
| Weighted average shares outstanding - Basic | | | 8,617,466 | | | | 8,503,475 | | | | 7,434,537 | | | | 7,422,860 | | | | 7,421,544 | |
| Weighted average shares outstanding - Diluted | | | 8,964,315 | | | | 8,838,659 | | | | 7,728,519 | | | | 7,598,490 | | | | 7,576,052 | |
| | | | | | | | | | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 1.13 | % | | | 1.09 | % | | | 1.31 | % | | | 1.23 | % | | | 0.93 | % |
| Return on average common stockholders' equity | | | 13.70 | | | | 13.96 | | | | 16.43 | | | | 15.90 | | | | 12.74 | |
| Net interest margin | | | 4.16 | | | | 3.79 | | | | 3.79 | | | | 3.87 | | | | 3.95 | |
| Loan loss reserve to total loans | | | 1.52 | | | | 1.58 | | | | 1.83 | | | | 1.94 | | | | 1.89 | |
| Non-performing loans to loans | | | 1.97 | | | | 2.08 | | | | 2.07 | | | | 2.11 | | | | 2.02 | |
| Average equity to average assets | | | 8.71 | | | | 8.45 | | | | 8.61 | | | | 8.33 | | | | 7.96 | |
| Bank only capital ratios: | | | | | | | | | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 7.87 | | | | 8.58 | | | | 8.74 | | | | 8.53 | | | | 8.50 | |
| Tier 1 capital to risk weighted assets | | | 10.91 | | | | 11.25 | | | | 12.01 | | | | 11.82 | | | | 11.86 | |
| Total capital to risk weighted assets | | | 12.16 | | | | 12.50 | | | | 13.27 | | | | 13.08 | | | | 13.12 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan data: | | | | | | | | | | | | | | | | | | | | |
| Substandard loans | | $ | 52,114 | | | $ | 57,079 | | | $ | 35,634 | | | $ | 46,643 | | | $ | 57,489 | |
| 30 to 89 days delinquent | | | 6,759 | | | | 8,351 | | | | 3,773 | | | | 2,932 | | | | 3,282 | |
| | | | | | | | | | | | | | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 51 | | | $ | 109 | | | $ | 13 | | | $ | 28 | | | $ | 37 | |
| Trouble debt restructures - accruing interest | | | 3,702 | | | | 3,356 | | | | 3,092 | | | | 3,188 | | | | 3,540 | |
| Trouble debt restructures - non-accrual | | | 6,649 | | | | 5,062 | | | | 2,786 | | | | 2,439 | | | | 2,198 | |
| Non-accrual loans | | | 13,374 | | | | 15,887 | | | | 14,925 | | | | 15,451 | | | | 14,368 | |
| Total non-performing loans | | $ | 23,776 | | | $ | 24,414 | | | $ | 20,816 | | | $ | 21,106 | | | $ | 20,143 | |
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | December 31 | | | December 31 | |
| | | 2012 | | | 2011 | |
| Balance sheet: | | | | | | |
| Total assets | | $ | 1,847,677 | | | $ | 1,547,162 | |
| Investment securities | | | 482,801 | | | | 438,145 | |
| Commercial loans | | | 460,471 | | | | 352,376 | |
| Mortgage warehouse loans | | | 251,448 | | | | 208,299 | |
| Residential mortgage loans | | | 189,714 | | | | 157,141 | |
| Consumer loans | | | 289,084 | | | | 265,377 | |
| Earning assets | | | 1,700,595 | | | | 1,447,818 | |
| Non-interest bearing deposit accounts | | | 208,650 | | | | 130,673 | |
| Interest bearing transaction accounts | | | 769,822 | | | | 538,083 | |
| Time deposits | | | 315,131 | | | | 341,109 | |
| Borrowings | | | 345,764 | | | | 370,111 | |
| Subordinated debentures | | | 32,331 | | | | 30,676 | |
| Common stockholders' equity | | | 146,468 | | | | 108,965 | |
| Total stockholders’ equity | | | 158,968 | | | | 121,465 | |
| | | | | | | | | |
| Income statement: | | Twelve months ended | |
| Net interest income | | $ | 58,206 | | | $ | 48,113 | |
| Provision for loan losses | | | 3,524 | | | | 5,282 | |
| Other income | | | 27,331 | | | | 20,299 | |
| Other expenses | | | 54,024 | | | | 46,147 | |
| Income tax expense | | | 8,446 | | | | 4,186 | |
| Net income | | | 19,543 | | | | 12,797 | |
| Preferred stock dividend | | | (481 | ) | | | (1,325 | ) |
| Net income available to common shareholders | | $ | 19,062 | | | $ | 11,472 | |
| | | | | | | | | |
| Per share data: | | | | | | | | |
| Basic earnings per share | | $ | 2.39 | | | $ | 1.55 | |
| Diluted earnings per share | | | 2.30 | | | | 1.51 | |
| Cash dividends declared per common share | | | 0.38 | | | | 0.31 | |
| Book value per common share | | | 17.00 | | | | 14.68 | |
| Tangible book value per common share | | | 14.23 | | | | 13.58 | |
| Market value - high | | | 19.68 | | | | 12.97 | |
| Market value - low | | $ | 11.53 | | | $ | 10.82 | |
| Weighted average shares outstanding - Basic | | | 7,974,241 | | | | 7,407,258 | |
| Weighted average shares outstanding - Diluted | | | 8,271,177 | | | | 7,588,394 | |
| | | | | | | | | |
| Key ratios: | | | | | | | | |
| Return on average assets | | | 1.19 | % | | | 0.90 | % |
| Return on average common stockholders' equity | | | 14.72 | | | | 11.20 | |
| Net interest margin | | | 3.89 | | | | 3.74 | |
| Loan loss reserve to total loans | | | 1.52 | | | | 1.89 | |
| Non-performing loans to loans | | | 1.97 | | | | 2.02 | |
| Average equity to average assets | | | 8.63 | | | | 8.30 | |
| Bank only capital ratios: | | | | | | | | |
| Tier 1 capital to average assets | | | 7.87 | | | | 8.52 | |
| Tier 1 capital to risk weighted assets | | | 10.91 | | | | 11.89 | |
| Total capital to risk weighted assets | | | 12.16 | | | | 13.14 | |
| | | | | | | | | |
| Loan data: | | | | | | | | |
| Substandard loans | | $ | 52,114 | | | $ | 57,489 | |
| 30 to 89 days delinquent | | | 6,759 | | | | 3,282 | |
| | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 51 | | | $ | 37 | |
| Trouble debt restructures - accruing interest | | | 3,702 | | | | 3,540 | |
| Trouble debt restructures - non-accrual | | | 6,649 | | | | 2,198 | |
| Non-accrual loans | | | 13,374 | | | | 14,368 | |
| Total non-performing loans | | $ | 23,776 | | | $ | 20,143 | |
HORIZON BANCORP
Allocation of the Allowance for Loan and Lease Losses
(Dollars in Thousands, Unaudited)
| | | December 31 | | | September 30 | | | June 30 | | | March 31 | | | December 31 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2012 | | | 2011 | |
| Commercial | | $ | 7,771 | | | $ | 8,058 | | | $ | 7,766 | | | $ | 8,435 | | | $ | 8,017 | |
| Real estate | | | 3,204 | | | | 2,974 | | | | 2,946 | | | | 3,025 | | | | 2,472 | |
| Mortgage warehousing | | | 1,705 | | | | 1,716 | | | | 1,695 | | | | 1,694 | | | | 1,695 | |
| Consumer | | | 5,590 | | | | 5,820 | | | | 5,967 | | | | 6,258 | | | | 6,698 | |
| Unallocated | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total | | $ | 18,270 | | | $ | 18,568 | | | $ | 18,374 | | | $ | 19,412 | | | $ | 18,882 | |
Net Charge-offs
(Dollars in Thousands, Unaudited)
| | | Three months ended | |
| | | December 31 | | | September 30 | | | June 30 | | | March 31 | | | December 31 | |
| | 2012 | | | 2012 | | | 2012 | | | 2012 | | | 2011 | |
| Commercial | | $ | 1,326 | | | $ | 334 | | | $ | 278 | | | $ | (332 | ) | | $ | 111 | |
| Real estate | | | 143 | | | | 205 | | | | 113 | | | | 59 | | | | 118 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 544 | | | | 308 | | | | 856 | | | | 302 | | | | 837 | |
| Total | | $ | 2,013 | | | $ | 847 | | | $ | 1,247 | | | $ | 29 | | | $ | 1,066 | |
Total Non-performing Loans (Dollars in Thousands, Unaudited) | |
| | | December 31 | | | September 30 | | | June 30 | | | March 31 | | | December 31 | |
| | 2012 | | | 2012 | | | 2012 | | | 2012 | | | 2011 | |
| Commercial | | $ | 10,693 | | | $ | 11,957 | | | $ | 8,796 | | | $ | 9,035 | | | $ | 7,958 | |
| Real estate | | | 9,153 | | | | 8,833 | | | | 8,595 | | | | 8,669 | | | | 8,496 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 3,930 | | | | 3,624 | | | | 3,425 | | | | 3,402 | | | | 3,689 | |
| Total | | $ | 23,776 | | | $ | 24,414 | | | $ | 20,816 | | | $ | 21,106 | | | $ | 20,143 | |
Other Real Estate Owned and Repossessed Assets (Dollars in Thousands, Unaudited) | |
| | | December 31 | | | September 30 | | | June 30 | | | March 31 | | | December 31 | |
| | 2012 | | | 2012 | | | 2012 | | | 2012 | | | 2011 | |
| Commercial | | $ | 1,337 | | | $ | 1,867 | | | $ | 688 | | | $ | 94 | | | $ | 1,092 | |
| Real estate | | | 1,228 | | | | 716 | | | | 338 | | | | 709 | | | | 1,708 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 11 | | | | 72 | | | | 43 | | | | 86 | | | | 49 | |
| Total | | $ | 2,576 | | | $ | 2,655 | | | $ | 1,069 | | | $ | 889 | | | $ | 2,849 | |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Three Months Ended | | | Three Months Ended | |
| | | December 31, 2012 | | | December 31, 2011 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 3,094 | | | $ | 2 | | | | 0.26 | % | | $ | 2,084 | | | $ | 1 | | | | 0.19 | % |
| Interest-earning deposits | | | 498 | | | | - | | | | 0.00 | % | | | 2,591 | | | | 1 | | | | 0.15 | % |
| Investment securities - taxable | | | 385,821 | | | | 2,093 | | | | 2.16 | % | | | 340,407 | | | | 2,371 | | | | 2.76 | % |
| Investment securities - non-taxable (1) | | | 126,265 | | | | 1,024 | | | | 4.68 | % | | | 111,344 | | | | 1,007 | | | | 5.28 | % |
| Loans receivable (2)(3)(4) | | | 1,157,474 | | | | 17,341 | | | | 5.97 | % | | | 957,651 | | | | 14,080 | | | | 5.84 | % |
| Total interest-earning assets (1) | | | 1,673,152 | | | | 20,460 | | | | 4.98 | % | | | 1,414,077 | | | | 17,460 | | | | 5.04 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 24,726 | | | | | | | | | | | | 16,065 | | | | | | | | | |
| Allowance for loan losses | | | (18,049 | ) | | | | | | | | | | | (19,208 | ) | | | | | | | | |
| Other assets | | | 135,803 | | | | | | | | | | | | 99,631 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,815,632 | | | | | | | | | | | $ | 1,510,565 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,107,786 | | | $ | 1,403 | | | | 0.50 | % | | $ | 882,213 | | | $ | 1,836 | | | | 0.83 | % |
| Borrowings | | | 293,200 | | | | 1,531 | | | | 2.08 | % | | | 331,769 | | | | 1,574 | | | | 1.88 | % |
| Subordinated debentures | | | 33,799 | | | | 523 | | | | 6.16 | % | | | 31,446 | | | | 458 | | | | 5.78 | % |
| Total interest-bearing liabilities | | | 1,434,785 | | | | 3,457 | | | | 0.96 | % | | | 1,245,428 | | | | 3,868 | | | | 1.23 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 203,393 | | | | | | | | | | | | 131,523 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 19,317 | | | | | | | | | | | | 13,372 | | | | | | | | | |
| Shareholders' equity | | | 158,137 | | | | | | | | | | | | 120,242 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,815,632 | | | | | | | | | | | $ | 1,510,565 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 17,003 | | | | 4.02 | % | | | | | | $ | 13,592 | | | | 3.80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 4.16 | % | | | | | | | | | | | 3.95 | % |
_____________
| (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)
| | | Twelve Months Ended | | | Twelve Months Ended | |
| | | December 31, 2012 | | | December 31, 2011 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 5,609 | | | $ | 13 | | | | 0.23 | % | | $ | 20,307 | | | $ | 49 | | | | 0.24 | % |
| Interest-earning deposits | | | 2,770 | | | | 6 | | | | 0.22 | % | | | 7,262 | | | | 2 | | | | 0.03 | % |
| Investment securities - taxable | | | 365,693 | | | | 8,814 | | | | 2.41 | % | | | 332,551 | | | | 10,150 | | | | 3.05 | % |
| Investment securities - non-taxable (1) | | | 115,398 | | | | 3,968 | | | | 4.65 | % | | | 111,934 | | | | 4,073 | | | | 5.20 | % |
| Loans receivable (2)(3)(4) | | | 1,043,620 | | | | 59,727 | | | | 5.73 | % | | | 862,498 | | | | 50,340 | | | | 5.84 | % |
| Total interest-earning assets (1) | | | 1,533,090 | | | | 72,528 | | | | 4.83 | % | | | 1,334,552 | | | | 64,614 | | | | 4.98 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 19,365 | | | | | | | | | | | | 15,834 | | | | | | | | | |
| Allowance for loan losses | | | (18,738 | ) | | | | | | | | | | | (19,047 | ) | | | | | | | | |
| Other assets | | | 112,739 | | | | | | | | | | | | 98,069 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,646,456 | | | | | | | | | | | $ | 1,429,408 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 992,880 | | | $ | 6,206 | | | | 0.63 | % | | $ | 887,687 | | | $ | 8,346 | | | | 0.94 | % |
| Borrowings | | | 297,597 | | | | 6,166 | | | | 2.07 | % | | | 261,255 | | | | 6,334 | | | | 2.42 | % |
| Subordinated debentures | | | 32,408 | | | | 1,950 | | | | 6.02 | % | | | 31,446 | | | | 1,821 | | | | 5.79 | % |
| Total interest-bearing liabilities | | | 1,322,885 | | | | 14,322 | | | | 1.08 | % | | | 1,180,388 | | | | 16,501 | | | | 1.40 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 165,340 | | | | | | | | | | | | 119,504 | | | �� | | | | | | |
| Accrued interest payable and other liabilities | | | 16,190 | | | | | | | | | | | | 10,841 | | | | | | | | | |
| Shareholders' equity | | | 142,041 | | | | | | | | | | | | 118,675 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,646,456 | | | | | | | | | | | $ | 1,429,408 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 58,206 | | | | 3.75 | % | | | | | | $ | 48,113 | | | | 3.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.89 | % | | | | | | | | | | | 3.74 | % |
______________
| (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)
| | | December 31 | | | December 31 | |
| | | 2012 | | | 2011 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 30,735 | | | $ | 20,447 | |
| Investment securities, available for sale | | | 482,801 | | | | 431,045 | |
| Investment securities, held to maturity | | | - | | | | 7,100 | |
| Loans held for sale | | | 13,744 | | | | 14,090 | |
| Loans, net of allowance for loan losses of $18,270 and $18,882 | | | 1,172,447 | | | | 964,311 | |
| Premises and equipment | | | 42,184 | | | | 34,665 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 13,333 | | | | 12,390 | |
| Goodwill | | | 19,748 | | | | 5,910 | |
| Other intangible assets | | | 4,048 | | | | 2,292 | |
| Interest receivable | | | 7,716 | | | | 6,671 | |
| Cash value life insurance | | | 35,192 | | | | 30,190 | |
| Other assets | | | 25,729 | | | | 18,051 | |
| Total assets | | $ | 1,847,677 | | | $ | 1,547,162 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 208,650 | | | $ | 130,673 | |
| Interest bearing | | | 1,084,953 | | | | 879,192 | |
| Total deposits | | | 1,293,603 | | | | 1,009,865 | |
| Borrowings | | | 345,764 | | | | 370,111 | |
| Subordinated debentures | | | 32,331 | | | | 30,676 | |
| Interest payable | | | 560 | | | | 596 | |
| Other liabilities | | | 16,451 | | | | 14,449 | |
| Total liabilities | | | 1,688,709 | | | | 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, no par value | | | | | | | | |
| Authorized, 22,500,000 shares | | | | | | | | |
| Issued, 8,693,471 and 7,450,794 shares | | | | | | | | |
| Outstanding, 8,617,466 and 7,421,544 shares | | | - | | | | - | |
| Additional paid-in capital | | | 31,965 | | | | 11,736 | |
| Retained earnings | | | 105,402 | | | | 89,387 | |
| Accumulated other comprehensive income | | | 9,101 | | | | 7,842 | |
| Total stockholders’ equity | | | 158,968 | | | | 121,465 | |
| Total liabilities and stockholders’ equity | | $ | 1,847,677 | | | $ | 1,547,162 | |
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
| | | Three Months Ended December 31 | | | Twelve Months Ended December 31 | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | | |
| Interest Income | | | | | | | | | | | | |
| Loans receivable | | $ | 17,341 | | | $ | 14,080 | | | $ | 59,727 | | | $ | 50,340 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 2,095 | | | | 2,373 | | | | 8,833 | | | | 10,201 | |
| Tax exempt | | | 1,024 | | | | 1,007 | | | | 3,968 | | | | 4,073 | |
| Total interest income | | | 20,460 | | | | 17,460 | | | | 72,528 | | | | 64,614 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 1,403 | | | | 1,836 | | | | 6,206 | | | | 8,346 | |
| Borrowed funds | | | 1,531 | | | | 1,574 | | | | 6,166 | | | | 6,334 | |
| Subordinated debentures | | | 523 | | | | 458 | | | | 1,950 | | | | 1,821 | |
| Total interest expense | | | 3,457 | | | | 3,868 | | | | 14,322 | | | | 16,501 | |
| Net Interest Income | | | 17,003 | | | | 13,592 | | | | 58,206 | | | | 48,113 | |
| Provision for loan losses | | | 1,715 | | | | 838 | | | | 3,524 | | | | 5,282 | |
| Net Interest Income after Provision for Loan Losses | | | 15,288 | | | | 12,754 | | | | 54,682 | | | | 42,831 | |
| Other Income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 993 | | | | 742 | | | | 3,470 | | | | 3,164 | |
| Wire transfer fees | | | 249 | | | | 207 | | | | 892 | | | | 619 | |
| Interchange fees | | | 895 | | | | 689 | | | | 3,122 | | | | 2,594 | |
| Fiduciary activities | | | 1,069 | | | | 1,072 | | | | 3,997 | | | | 3,983 | |
| Gain on sale of securities | | | - | | | | 23 | | | | 2 | | | | 1,777 | |
| Gain on sale of mortgage loans | | | 4,002 | | | | 2,463 | | | | 14,123 | | | | 6,449 | |
| Mortgage servicing income net of impairment | | | 329 | | | | (424 | ) | | | 234 | | | | 267 | |
| Increase in cash value of bank owned life insurance | | | 265 | | | | 230 | | | | 1,025 | | | | 891 | |
| Death benefit on officer life insurance | | | - | | | | - | | | | - | | | | 453 | |
| Other income | | | 122 | | | | (3 | ) | | | 466 | | | | 102 | |
| Total other income | | | 7,924 | | | | 4,999 | | | | 27,331 | | | | 20,299 | |
| Other Expenses | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 7,976 | | | | 5,963 | | | | 28,383 | | | | 22,875 | |
| Net occupancy expenses | | | 1,313 | | | | 1,091 | | | | 4,529 | | | | 4,267 | |
| Data processing | | | 834 | | | | 556 | | | | 2,717 | | | | 2,006 | |
| Professional fees | | | 507 | | | | 458 | | | | 1,990 | | | | 1,497 | |
| Outside services and consultants | | | 692 | | | | 520 | | | | 2,313 | | | | 1,741 | |
| Loan expense | | | 1,397 | | | | 1,310 | | | | 4,276 | | | | 3,586 | |
| FDIC insurance expense | | | 310 | | | | 276 | | | | 1,108 | | | | 1,220 | |
| Other losses | | | 118 | | | | 1,018 | | | | 619 | | | | 2,383 | |
| Other expenses | | | 2,697 | | | | 1,897 | | | | 8,089 | | | | 6,572 | |
| Total other expenses | | | 15,844 | | | | 13,089 | | | | 54,024 | | | | 46,147 | |
| Income Before Income Tax | | | 7,368 | | | | 4,664 | | | | 27,989 | | | | 16,983 | |
| Income tax expense | | | 2,198 | | | | 1,142 | | | | 8,446 | | | | 4,186 | |
| Net Income | | | 5,170 | | | | 3,522 | | | | 19,543 | | | | 12,797 | |
| Preferred stock dividend and discount accretion | | | (156 | ) | | | (63 | ) | | | (481 | ) | | | (1,325 | ) |
| Net Income Available to Common Shareholders | | $ | 5,014 | | | $ | 3,459 | | | $ | 19,062 | | | $ | 11,472 | |
| Basic Earnings Per Share | | $ | 0.58 | | | $ | 0.47 | | | $ | 2.39 | | | $ | 1.55 | |
| Diluted Earnings Per Share | | | 0.56 | | | | 0.46 | | | | 2.30 | | | | 1.51 | |
12
