Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: October 22, 2014
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces an 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, 2014.
SUMMARY:
| · | Total loans, excluding mortgage warehouse loans, increased $54.2 million during the quarter or 18.1% on an annualized basis and $268.1 million during the first nine months of 2014 or 36.8% on an annualized basis. |
| · | Commercial loans increased $29.1 million during the quarter or 17.8% on an annualized basis and $172.2 million during the first nine months of 2014 or 45.6% on an annualized basis to $677.3 million as of September 30, 2014. |
| · | Third quarter 2014 net income was $5.0 million or $.51 diluted earnings per share. |
| · | Excluding costs related to the acquisition of SCB Bancorp, Inc. ("Summit") of $124,000, net income for the third quarter of 2014 was $5.0 million or $.52 diluted earnings per share. |
| · | Net income for the first nine months of 2014 was $13.2 million or $1.39 diluted earnings per share. |
| · | Excluding costs related to the acquisition of Summit of $1.3 million, net income for the first nine months of 2014 was $14.0 million or $1.48 diluted earnings per share. |
| · | Tangible book value per share of $15.75 as of September 30, 2014 is the highest in the Company's history. |
| · | Return on average assets was 0.96% for the third quarter of 2014 and 0.92% for the first nine months of 2014. |
| · | Return on average common equity was 10.95% for the third quarter of 2014 and 10.56% for the first nine months of 2014. |
| · | Non-performing loans to total loans as of September 30, 2014 were 1.47% compared to 1.70% as of December 31, 2013 and 2.09% as of September 30, 2013. |
| · | Loan loss reserves to total loans, excluding loans with credit-related purchase accounting adjustments, were 1.32% as of September 30, 2014. |
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Pg. 2 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
Craig M. Dwight, Chairman and CEO, commented: "Horizon's momentum continued into the third quarter of 2014 with core loan growth, excluding mortgage warehouse loans, of 4.6% for the three months ended September 30, 2014 or 18.1% on an annualized basis. Core loan growth for the nine months ended September 30, 2014 equaled 27.5% or 36.8% on an annualized basis. Horizon's third quarter and year to date loan growth highlights our investments in people, technology, and larger markets paying off. With additional capacity for future growth and an improving economic picture, we believe Horizon is well positioned to create additional operating leverage in the future."
The following tables present the amount and growth rate of loans by product type for the three and nine months ended September 30, 2014.
| Loan Growth by Type | |
| Three Months Ended September 30, 2014 | |
| (Dollars in Thousands) | |
| | | | | | | | | | | | | | | Annualized | |
| | | September 30 | | | June 30 | | | Amount | | | Percent | | | Percent | |
| | | 2014 | | | 2014 | | | Change | | | Change | | | Change | |
| | | (Unaudited) | | | (Unaudited) | | | | | | | | | | |
| Commercial loans | | $ | 677,349 | | | $ | 648,202 | | | $ | 29,147 | | | | 4.5% | | | | 17.8% | |
| Residential mortgage loans | | | 251,739 | | | | 235,523 | | | | 16,216 | | | | 6.9% | | | | 27.3% | |
| Consumer loans | | | 308,800 | | | | 296,873 | | | | 11,927 | | | | 4.0% | | | | 15.9% | |
| Held for sale loans | | | 4,167 | | | | 7,286 | | | | (3,119 | ) | | | -42.8% | | | | -169.8% | |
| Subtotal | | | 1,242,055 | | | | 1,187,884 | | | | 54,171 | | | | 4.6% | | | | 18.1% | |
| Mortgage warehouse loans | | | 105,133 | | | | 140,896 | | | | (35,763 | ) | | | -25.4% | | | | -100.7% | |
| Total loans | | $ | 1,347,188 | | | $ | 1,328,780 | | | $ | 18,408 | | | | 1.4% | | | | 5.5% | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan Growth by Type | |
| Nine Months Ended September 30, 2014 | |
| (Dollars in Thousands) | |
| | | | | | | | | | | | | | | | | | | Annualized | |
| | | September 30 | | | December 31 | | | Amount | | | Percent | | | Percent | |
| | | | 2014 | | | | 2013 | | | Change | | | Change | | | Change | |
| | | (Unaudited) | | | | | | | | | | | | | | | | | |
| Commercial loans | | $ | 677,349 | | | $ | 505,189 | | | $ | 172,160 | | | | 34.1% | | | | 45.6% | |
| Residential mortgage loans | | | 251,739 | | | | 185,958 | | | | 65,781 | | | | 35.4% | | | | 47.3% | |
| Consumer loans | | | 308,800 | | | | 279,525 | | | | 29,275 | | | | 10.5% | | | | 14.0% | |
| Held for sale loans | | | 4,167 | | | | 3,281 | | | | 886 | | | | 27.0% | | | | 36.1% | |
| Subtotal | | | 1,242,055 | | | | 973,953 | | | | 268,102 | | | | 27.5% | | | | 36.8% | |
| Mortgage warehouse loans | | | 105,133 | | | | 98,156 | | | | 6,977 | | | | 7.1% | | | | 9.5% | |
| Total loans | | $ | 1,347,188 | | | $ | 1,072,109 | | | $ | 275,079 | | | | 25.7% | | | | 34.3% | |
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Pg. 3 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
"The loan growth we have achieved has been a vital component in combating industry-wide net interest margin pressure as well as lower accretion income from acquisition-related purchase accounting adjustments," Dwight commented. "Excluding accretion income related to purchase accounting adjustments Horizon's third quarter of 2014 net interest income increased $2.3 million or 17.2% compared to the same period of 2013."
Dwight explained the increase in provision for loan losses in the third quarter of 2014 to $1.7 million from $104,000 in the same period of 2013 by stating, "The increase in provision for loan losses was predominantly related to a $1.0 million charge-off associated with one commercial credit during the quarter. Additionally, the higher provision expense takes into account recent loan growth. Horizon's disciplined credit culture has and will continue to guide us as we continue to make loan growth a priority moving forward."
Horizon's loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, stood at 1.32% as of September 30, 2014. The table below details Horizon's loan loss reserve ratio composition as of September 30, 2014.
| Allowance for Loan and Lease Loss Detail | |
| As of September 30, 2014 | |
| (Dollars in Thousands, Unaudited) | |
| | | | | | | | | | | | | |
| | | Horizon | | | | | | | | | | |
| | | Legacy | | | Heartland | | | Summit | | | Total | |
| Pre-discount loan balance | | $ | 1,204,653 | | | $ | 40,067 | | | $ | 106,432 | | | $ | 1,351,152 | |
| | | | | | | | | | | | | | | | | |
| Allowance for loan losses (ALLL) | | | 15,955 | | | | 205 | | | | - | | | | 16,160 | |
| Loan discount | | | N/ | A | | | 3,179 | | | | 4,952 | | | | 8,131 | |
| Total ALLL+loan discount | | $ | 15,955 | | | $ | 3,384 | | | $ | 4,952 | | | $ | 24,291 | |
| | | | | | | | | | | | | | | | | |
| Loans, net | | $ | 1,188,698 | | | $ | 36,683 | | | $ | 101,480 | | | $ | 1,326,861 | |
| | | | | | | | | | | | | | | | | |
| ALLL/ pre-discount loan balance | | | 1.32 | % | | | 0.51 | % | | | 0.00 | % | | | 1.20 | % |
| Loan discount/ pre-discount loan balance | | | N/ | A | | | 7.93 | % | | | 4.65 | % | | | 0.60 | % |
| Total ALLL+loan discount/ pre-discount loan balance | | | 1.32 | % | | | 8.45 | % | | | 4.65 | % | | | 1.80 | % |
Emerging Issues
Dwight noted the progress being made on the construction of Horizon's Carmel, Indiana branch expected to open in the first quarter of 2015. Dwight concluded, "This new location will provide both tremendous retail and commercial opportunities for our team. Additionally, it will strengthen Horizon's Central Indiana presence and provide a platform to deliver 'Exceptional Service and Sensible Advice' to consumers and businesses north of Indianapolis."
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Pg. 4 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
Income Statement Highlights
Net income for the third quarter of 2014 was $5.0 million or $.51 diluted earnings per share compared to $4.8 million or $.52 diluted earnings per share in the third quarter of 2013. The increase in net income from the previous year reflects an increase in interest income primarily due to loan growth and an increase in noninterest income related to an increase in gain on sale of investment securities and gain on sale of loans. Horizon incurred a gain on the sale of securities of $988,000 during the third quarter as a result of an analysis that determined market conditions provided the opportunity to add gains to capital without negatively impacting long-term earnings. The sale of securities was also used to fund loan growth. These increases to net income were partially offset by an increase in provision expense and an increase in salaries and net occupancy expenses due to company growth. The decrease in diluted earnings per share reflects the increase in shares outstanding due to the shares issued to Summit shareholders as part of the transaction. Excluding transaction expenses related to the Summit acquisition of $124,000, net income would have been $5.0 million or $.52 diluted earnings per share for the third quarter of 2014.
Net income for the nine months ended September 30, 2014 was $13.2 million or $1.39 diluted earnings per share compared to $15.8 million or $1.72 diluted earnings per share for the nine months ended September 30, 2013. Excluding transaction expenses related to the Summit acquisition of $1.3 million, net income would have been $14.0 million or $1.48 diluted earnings per share for the first nine months of 2014.
Horizon's net interest margin was 3.59% during the third quarter of 2014, down from 3.78% for the prior quarter and 3.78% for same period of 2013. The decrease in net interest margin compared to the prior quarter and the same period of the prior year was primarily due to lower yields on new loans and re-pricing earning assets and a decrease in interest income from acquisition-related purchase accounting adjustments. Excluding purchase accounting adjustments related to the 2012 Heartland Bancshares, Inc. and the 2014 Summit acquisitions, the margin would have been 3.50% for the third quarter of 2014 compared to 3.52% for the previous quarter and 3.52% for the same period of the prior year. Interest income from acquisition-related purchase accounting adjustments was $438,000, $1.2 million and $1.0 million for the three months ended September 30, 2014, June 30, 2014 and September 30, 2013, respectively.
Horizon's net interest margin was 3.62% for the nine months ending September 30, 2014, down from 4.06% for same period of 2013. Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.47% for the nine months ending September 30, 2014 compared to 3.61% for same period of 2013. Interest income from acquisition-related purchase accounting adjustments was $2.0 million and $5.4 million for the nine months ended September 30, 2014 and September 30, 2013, respectively.
Residential mortgage lending activity during the third quarter of 2014 generated $2.2 million in income from the gain on sale of mortgage loans, a decrease of $384,000 from the previous quarter and an increase of $486,000 from the third quarter of 2013. Total origination volume in the third quarter of 2014, including loans placed into portfolio, totaled $102.2 million, representing an increase of 24.0% from the previous quarter of $82.4 million and a decrease of 3.1% from the third quarter of 2013 of $105.4 million.
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Pg. 5 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
Purchase money mortgage originations during the third quarter of 2014 represented 77.6% of total originations compared to 77.5% of originations during the previous quarter and 69.5% during the third quarter of 2013.
Lending Activity
Total loans increased $275.1 million from December 31, 2013 to $1.3 billion at September 30, 2014 as mortgage warehouse loans increased by $7.0 million, residential mortgage loans increased by $65.8 million and consumer loans increased by $29.3 million. Commercial loans increased $172.2 million or 34.1% from $505.2 million at December 31, 2013 to $677.3 million at September 30, 2014.
Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during the third quarter of 2014 to $134.4 million and $120.3 million, respectively, as of September 30, 2014. Kalamazoo's aggregate loan balances increased $7.2 million or 5.7% and Indianapolis' aggregate loan balances increased $18.6 million or 18.3% during the third quarter of 2014.
The provision for loan losses was $1.7 million for the third quarter of 2014 compared to $104,000 for the same period of 2013. The higher provision for loan losses in the third quarter of 2014 compared to the same period of the previous year was predominantly due to a $1.0 million charge-off associated with one commercial credit during the quarter. The provision for loan losses was $2.1 million the first nine months of 2014 compared to $2.9 million for the same period of 2013. The lower provision for the first nine months of 2014 compared to the same period of 2013 was due to a decrease in net charge-offs from $3.3 million for the first nine months of 2013 to $1.9 million for the first nine months of 2014.
The ratio of the allowance for loan losses to total loans decreased to 1.20% as of September 30, 2014 from 1.49% as of December 31, 2013 due to the increase in total loans from both organic growth and the Summit acquisition, partially offset by an increase in allowance for loan losses from $16.0 million as of December 31, 2013 to $16.2 million as of September 30, 2014. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 1.32% as of September 30, 2014.
Non-performing loans totaled $19.8 million as of September 30, 2014, up from $18.3 million as of December 31, 2013. Compared to December 31, 2013, non-performing commercial loans and real estate loans increased by $1.9 million and $167,000, respectively, partially offset by a decrease of $507,000 in non-performing consumer loans. The increase in non-performing commercial loans was due to the Summit acquisition as well as two commercial and industrial loans totaling $1.2 million that were moved to nonaccrual status. As a percentage of total loans, non-performing loans were 1.47% at September 30, 2014, down 23 basis points from 1.70% at December 31, 2013. At September 30, 2014, loans acquired in the Summit acquisition represented $1.2 million in non-performing, $2.5 million in substandard and $4,000 in delinquent loans.
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Pg. 6 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
Expense Management
Total non-interest expense was $3.4 million higher in the first nine months of 2014 compared to the first nine months of 2013. The increase in non-interest expense was primarily related to an increase in salaries of $1.3 million and Summit acquisition expenses of $1.3 million as well as overall company growth.
Use of Non-GAAP Financial Measures
Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures of the net interest margin excluding the impact of acquisition-related purchase accounting adjustments and net income and diluted earnings per share excluding the impact of one-time costs related to the Summit acquisition. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions, although these measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure.
| Non-GAAP Reconciliation of Net Interest Margin | |
| (Dollar Amounts in Thousands, Unaudited) | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | June 30 | | | September 30 | | | September 30 | |
| | | 2014 | | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
| Net Interest Margin As Reported | | | | | | | | | | | | | | | |
| Net interest income | | $ | 16,400 | | | $ | 16,788 | | | $ | 14,669 | | | $ | 46,460 | | | $ | 47,254 | |
| Average interest-earning assets | | | 1,877,066 | | | | 1,832,576 | | | | 1,607,801 | | | | 1,770,187 | | | | 1,617,169 | |
| Net interest income as a percent of average interest earning assets | | | 3.59 | % | | | 3.78 | % | | | 3.78 | % | | | 3.62 | % | | | 4.06 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Impact of Acquisitions | | | | | | | | | | | | | | | | | | | | |
| Interest income from acquisition-related purchase accounting | | | | | | | | | | | | | | | | | | | | |
| adjustments | | $ | (438 | ) | | $ | (1,199 | ) | | $ | (1,044 | ) | | $ | (2,027 | ) | | $ | (5,364 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin Excluding Impact of Acquisitions | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 15,962 | | | $ | 15,599 | | | $ | 13,625 | | | $ | 44,433 | | | $ | 41,890 | |
| Average interest-earning assets | | | 1,877,066 | | | | 1,832,576 | | | | 1,607,801 | | | | 1,770,187 | | | | 1,617,169 | |
| Net interest income as a percent of average interest earning assets | | | 3.50 | % | | | 3.52 | % | | | 3.52 | % | | | 3.47 | % | | | 3.61 | % |
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Pg. 7 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
| Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share | |
| (Dollar Amounts in Thousands Except per Share Data, Unaudited) | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | September 30 | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
| Non-GAAP Reconciliation of Net Income | | | | | | | | | | | | |
| Net income as reported | | $ | 4,958 | | | $ | 4,785 | | | $ | 13,153 | | | $ | 15,761 | |
| Summit expenses | | | 124 | | | | - | | | | 1,335 | | | | - | |
| Tax Effect | | | (43 | ) | | | - | | | | (467 | ) | | | - | |
| Net income excluding Summit expenses | | $ | 5,039 | | | $ | 4,785 | | | $ | 14,021 | | | $ | 15,761 | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP Reconciliation of Diluted Earnings per Share | |
| Diluted earnings per share as reported | | $ | 0.51 | | | $ | 0.52 | | | $ | 1.39 | | | $ | 1.72 | |
| Summit expenses | | | 0.01 | | | | - | | | | 0.14 | | | | - | |
| Tax Effect | | | (0.00 | ) | | | - | | | | (0.05 | ) | | | - | |
| Diluted earnings per share excluding Summit expenses | | $ | 0.52 | | | $ | 0.52 | | | $ | 1.48 | | | $ | 1.72 | |
About Horizon
Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern and Central Indiana and Southwest and Central Michigan through its commercial banking subsidiary Horizon Bank, NA. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Market under the symbol HBNC.
Forward Looking Statements
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 its Form 10-K. Undue reliance should not be placed on the forward-looking statements, which speak
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Pg. 8 cont. Horizon Bancorp Announces an Increase in Third Quarter Earnings
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 | |
| | | 2014 | | | 2014 | | | 2014 | | | 2013 | | | 2013 | |
| Balance sheet: | | | | | | | | | | | | | | | |
| Total assets | | $ | 2,037,045 | | | $ | 2,073,251 | | | $ | 1,806,583 | | | $ | 1,758,276 | | | $ | 1,781,024 | |
| Investment securities | | | 495,941 | | | | 537,618 | | | | 529,340 | | | | 518,501 | | | | 524,054 | |
| Commercial loans | | | 677,349 | | | | 648,202 | | | | 528,635 | | | | 505,189 | | | | 499,584 | |
| Mortgage warehouse loans | | | 105,133 | | | | 140,896 | | | | 102,146 | | | | 98,156 | | | | 113,591 | |
| Residential mortgage loans | | | 251,739 | | | | 235,523 | | | | 189,893 | | | | 185,958 | | | | 189,254 | |
| Consumer loans | | | 308,800 | | | | 296,873 | | | | 280,120 | | | | 279,525 | | | | 278,990 | |
| Earning assets | | | 1,860,041 | | | | 1,882,724 | | | | 1,649,653 | | | | 1,604,794 | | | | 1,624,251 | |
| Non-interest bearing deposit accounts | | | 278,527 | | | | 270,023 | | | | 238,499 | | | | 231,096 | | | | 223,354 | |
| Interest bearing transaction accounts | | | 881,299 | | | | 919,024 | | | | 840,258 | | | | 779,966 | | | | 816,167 | |
| Time deposits | | | 289,837 | | | | 310,056 | | | | 276,814 | | | | 280,458 | | | | 288,799 | |
| Borrowings | | | 350,113 | | | | 340,201 | | | | 236,043 | | | | 256,296 | | | | 242,505 | |
| Subordinated debentures | | | 32,603 | | | | 32,564 | | | | 32,525 | | | | 32,486 | | | | 32,448 | |
| Common stockholders' equity | | | 177,280 | | | | 174,836 | | | | 157,283 | | | | 152,020 | | | | 150,959 | |
| Total stockholders' equity | | | 189,780 | | | | 187,336 | | | | 169,783 | | | | 164,520 | | | | 163,459 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income statement: | | Three months ended | |
| Net interest income | | $ | 16,400 | | | $ | 16,788 | | | $ | 13,272 | | | $ | 14,129 | | | $ | 14,669 | |
| Provision for loan losses | | | 1,741 | | | | 339 | | | | - | | | | (997 | ) | | | 104 | |
| Non-interest income | | | 7,390 | | | | 6,627 | | | | 5,522 | | | | 5,687 | | | | 5,910 | |
| Non-interest expenses | | | 15,353 | | | | 16,408 | | | | 14,514 | | | | 15,610 | | | | 14,061 | |
| Income tax expense | | | 1,738 | | | | 1,890 | | | | 863 | | | | 1,088 | | | | 1,629 | |
| Net income | | | 4,958 | | | | 4,778 | | | | 3,417 | | | | 4,115 | | | | 4,785 | |
| Preferred stock dividend | | | (40 | ) | | | (31 | ) | | | (31 | ) | | | (63 | ) | | | (66) | |
| Net income available to common shareholders | | $ | 4,918 | | | $ | 4,747 | | | $ | 3,386 | | | $ | 4,052 | | | $ | 4,719 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.53 | | | $ | 0.52 | | | $ | 0.39 | | | $ | 0.47 | | | $ | 0.55 | |
| Diluted earnings per share | | | 0.51 | | | | 0.50 | | | | 0.38 | | | | 0.45 | | | | 0.52 | |
| Cash dividends declared per common share | | | 0.13 | | | | 0.13 | | | | 0.11 | | | | 0.11 | | | | 0.11 | |
| Book value per common share | | | 19.25 | | | | 19.00 | | | | 18.22 | | | | 17.64 | | | | 17.52 | |
| Tangible book value per common share | | | 15.75 | | | | 15.47 | | | | 15.52 | | | | 14.97 | | | | 14.82 | |
| Market value - high | | | 23.67 | | | | 22.58 | | | | 24.91 | | | | 26.09 | | | | 25.04 | |
| Market value - low | | $ | 20.65 | | | $ | 19.57 | | | $ | 20.27 | | | $ | 21.07 | | | $ | 20.74 | |
| Weighted average shares outstanding - Basic | | | 9,208,707 | | | | 9,182,986 | | | | 8,630,966 | | | | 8,623,360 | | | | 8,618,969 | |
| Weighted average shares outstanding - Diluted | | | 9,588,332 | | | | 9,560,939 | | | | 9,021,786 | | | | 9,020,289 | | | | 9,019,211 | |
| | | | | | | | | | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.96 | % | | | 0.97 | % | | | 0.79 | % | | | 0.93 | % | | | 1.09% | |
| Return on average common stockholders' equity | | | 10.95 | | | | 11.82 | | | | 8.81 | | | | 10.44 | | | | 12.60 | |
| Net interest margin | | | 3.59 | | | | 3.78 | | | | 3.48 | | | | 3.60 | | | | 3.78 | |
| Loan loss reserve to total loans | | | 1.20 | | | | 1.18 | | | | 1.46 | | | | 1.49 | | | | 1.64 | |
| Non-performing loans to loans | | | 1.47 | | | | 1.41 | | | | 1.59 | | | | 1.70 | | | | 2.09 | |
| Average equity to average assets | | | 9.33 | | | | 8.79 | | | | 9.65 | | | | 9.46 | | | | 9.22 | |
| Bank only capital ratios: | | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 8.63 | | | | 8.78 | | | | 9.11 | | | | 9.18 | | | | 9.00 | |
| Tier 1 capital to risk weighted assets | | | 12.13 | | | | 11.47 | | | | 12.87 | | | | 13.42 | | | | 13.17 | |
| Total capital to risk weighted assets | | | 13.26 | | | | 12.53 | | | | 14.12 | | | | 14.67 | | | | 14.42 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan data: | | | | | | | | | | | | | | | | | | | | |
| Substandard loans | | $ | 35,023 | | | $ | 35,495 | | | $ | 32,648 | | | $ | 34,721 | | | $ | 44,420 | |
| 30 to 89 days delinquent | | | 3,310 | | | | 3,671 | | | | 2,613 | | | | 3,452 | | | | 2,692 | |
| | | | | | | | | | | | | | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 62 | | | $ | 42 | | | $ | 202 | | | $ | 48 | | | $ | 2 | |
| Trouble debt restructures - accruing interest | | | 5,838 | | | | 5,614 | | | | 4,997 | | | | 5,053 | | | | 3,507 | |
| Trouble debt restructures - non-accrual | | | 3,061 | | | | 3,178 | | | | 3,662 | | | | 3,427 | | | | 5,986 | |
| Non-accrual loans | | | 10,828 | | | | 9,844 | | | | 8,775 | | | | 9,749 | | | | 12,986 | |
| Total non-performing loans | | $ | 19,789 | | | $ | 18,678 | | | $ | 17,636 | | | $ | 18,277 | | | $ | 22,481 | |
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | September 30 | | | September 30 | |
| | | 2014 | | | 2013 | |
| Balance sheet: | | | | |
| Total assets | | $ | 2,037,045 | | | $ | 1,781,024 | |
| Investment securities | | | 495,941 | | | | 524,054 | |
| Commercial loans | | | 677,349 | | | | 499,584 | |
| Mortgage warehouse loans | | | 105,133 | | | | 113,591 | |
| Residential mortgage loans | | | 251,739 | | | | 189,254 | |
| Consumer loans | | | 308,800 | | | | 278,990 | |
| Earning assets | | | 1,860,041 | | | | 1,624,251 | |
| Non-interest bearing deposit accounts | | | 278,527 | | | | 223,354 | |
| Interest bearing transaction accounts | | | 881,299 | | | | 816,167 | |
| Time deposits | | | 289,837 | | | | 288,799 | |
| Borrowings | | | 350,113 | | | | 242,505 | |
| Subordinated debentures | | | 32,603 | | | | 32,448 | |
| Common stockholders' equity | | | 177,280 | | | | 150,959 | |
| Total stockholders' equity | | | 189,780 | | | | 163,459 | |
| | | | | | | | | |
| Income statement: | | Nine Months Ended | |
| Net interest income | | $ | 46,460 | | | $ | 47,254 | |
| Provision for loan losses | | | 2,080 | | | | 2,917 | |
| Non-interest income | | | 19,539 | | | | 20,219 | |
| Non-interest expenses | | | 46,275 | | | | 42,835 | |
| Income tax expense | | | 4,491 | | | | 5,960 | |
| Net income | | | 13,153 | | | | 15,761 | |
| Preferred stock dividend | | | (102 | ) | | | (308) | |
| Net income available to common shareholders | | $ | 13,051 | | | $ | 15,453 | |
| | | | | | | | | |
| Per share data: | | | | | | | | |
| Basic earnings per share | | $ | 1.45 | | | $ | 1.79 | |
| Diluted earnings per share | | | 1.39 | | | | 1.72 | |
| Cash dividends declared per common share | | | 0.37 | | | | 0.31 | |
| Book value per common share | | | 19.25 | | | | 17.52 | |
| Tangible book value per common share | | | 15.75 | | | | 14.82 | |
| Market value - high | | | 24.91 | | | | 25.04 | |
| Market value - low | | $ | 19.57 | | | $ | 18.97 | |
| Weighted average shares outstanding - Basic | | | 9,009,663 | | | | 8,617,972 | |
| Weighted average shares outstanding - Diluted | | | 9,389,359 | | | | 8,998,628 | |
| | | | | | | | | |
| Key ratios: | | | | | | | | |
| Return on average assets | | | 0.92 | % | | | 1.20% | |
| Return on average common stockholders' equity | | | 10.56 | | | | 13.69 | |
| Net interest margin | | | 3.62 | | | | 4.06 | |
| Loan loss reserve to total loans | | | 1.20 | | | | 1.64 | |
| Non-performing loans to loans | | | 1.47 | | | | 2.07 | |
| Average equity to average assets | | | 9.25 | | | | 9.31 | |
| Bank only capital ratios: | |
| Tier 1 capital to average assets | | | 8.63 | | | | 9.00 | |
| Tier 1 capital to risk weighted assets | | | 12.13 | | | | 13.17 | |
| Total capital to risk weighted assets | | | 13.26 | | | | 14.42 | |
| | | | | | | | | |
| Loan data: | | | | | | | | |
| Substandard loans | | $ | 35,023 | | | $ | 44,420 | |
| 30 to 89 days delinquent | | | 3,310 | | | | 2,692 | |
| | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 62 | | | $ | 2 | |
| Trouble debt restructures - accruing interest | | | 5,838 | | | | 3,507 | |
| Trouble debt restructures - non-accrual | | | 3,061 | | | | 5,986 | |
| Non-accrual loans | | | 10,828 | | | | 12,986 | |
| Total non-performing loans | | $ | 19,789 | | | $ | 22,481 | |
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 | |
| | | 2014 | | | 2014 | | | 2013 | | | 2013 | | | 2013 | |
| Commercial | | $ | 7,515 | | | $ | 6,958 | | | $ | 7,236 | | | $ | 6,663 | | | $ | 7,663 | |
| Real estate | | | 3,304 | | | | 2,367 | | | | 2,813 | | | | 3,462 | | | | 3,238 | |
| Mortgage warehousing | | | 1,300 | | | | 1,559 | | | | 1,665 | | | | 1,638 | | | | 1,686 | |
| Consumer | | | 4,041 | | | | 4,776 | | | | 4,388 | | | | 4,229 | | | | 5,261 | |
| Unallocated | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total | | $ | 16,160 | | | $ | 15,660 | | | $ | 16,102 | | | $ | 15,992 | | | $ | 17,848 | |
Net Charge-offs (Recoveries)
(Dollars in Thousands, Unaudited)
| | | Three months ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2014 | | | 2014 | | | 2013 | | | 2013 | | | 2013 | |
| Commercial | | $ | 1,006 | | | $ | 185 | | | $ | (361 | ) | | $ | 214 | | | $ | 604 | |
| Real estate | | | 19 | | | | 169 | | | | 18 | | | | 350 | | | | 40 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 217 | | | | 426 | | | | 233 | | | | 295 | | | | 492 | |
| Total | | $ | 1,242 | | | $ | 780 | | | $ | (110 | ) | | $ | 859 | | | $ | 1,136 | |
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2014 | | | 2014 | | | 2013 | | | 2013 | | | 2013 | |
| Commercial | | $ | 9,323 | | | $ | 8,243 | | | $ | 7,313 | | | $ | 7,471 | | | $ | 7,887 | |
| Real estate | | | 6,312 | | | | 6,672 | | | | 6,357 | | | | 6,145 | | | | 8,093 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 4,154 | | | | 3,763 | | | | 3,966 | | | | 4,661 | | | | 6,501 | |
| Total | | $ | 19,789 | | | $ | 18,678 | | | $ | 17,636 | | | $ | 18,277 | | | $ | 22,481 | |
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2014 | | | 2014 | | | 2013 | | | 2013 | | | 2013 | |
| Commercial | | $ | 376 | | | $ | 452 | | | $ | 812 | | | $ | 830 | | | $ | 954 | |
| Real estate | | | 875 | | | | 752 | | | | 867 | | | | 1,277 | | | | 385 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 3 | | | | 23 | | | | 39 | | | | 14 | | | | 44 | |
| Total | | $ | 1,254 | | | $ | 1,227 | | | $ | 1,718 | | | $ | 2,121 | | | $ | 1,383 | |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Three Months Ended | | | Three Months Ended | |
| | | September 30, 2014 | | | September 30, 2013 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 4,033 | | | $ | 5 | | | | 0.49 | % | | $ | 10,140 | | | $ | 6 | | | | 0.23% | |
| Interest-earning deposits | | | 5,941 | | | | 4 | | | | 0.27 | % | | | 6,834 | | | | 2 | | | | 0.12% | |
| Investment securities - taxable | | | 394,954 | | | | 2,330 | | | | 2.34 | % | | | 356,275 | | | | 2,076 | | | | 2.31% | |
| Investment securities - non-taxable (1) | | | 146,513 | | | | 1,109 | | | | 4.48 | % | | | 146,622 | | | | 1,114 | | | | 4.71% | |
| Loans receivable (2)(3) | | | 1,325,625 | | | | 16,403 | | | | 4.92 | % | | | 1,087,930 | | | | 14,843 | | | | 5.42% | |
| Total interest-earning assets (1) | | | 1,877,066 | | | | 19,851 | | | | 4.32 | % | | | 1,607,801 | | | | 18,041 | | | | 4.61% | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 27,188 | | | | | | | | | | | | 24,619 | | | | | | | | | |
| Allowance for loan losses | | | (15,706 | ) | | | | | | | | | | | (18,910 | ) | | | | | | | | |
| Other assets | | | 155,021 | | | | | | | | | | | | 133,890 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,043,569 | | | | | | | | | | | $ | 1,747,400 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,204,122 | | | $ | 1,352 | | | | 0.45 | % | | $ | 1,081,256 | | | $ | 1,395 | | | | 0.51% | |
| Borrowings | | | 320,676 | | | | 1,593 | | | | 1.97 | % | | | 236,071 | | | | 1,465 | | | | 2.46% | |
| Subordinated debentures | | | 32,580 | | | | 506 | | | | 6.16 | % | | | 32,425 | | | | 512 | | | | 6.26% | |
| Total interest-bearing liabilities | | | 1,557,378 | | | | 3,451 | | | | 0.88 | % | | | 1,349,752 | | | | 3,372 | | | | 0.99% | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 282,494 | | | | | | | | | | | | 224,622 | | | | | | | | | |
| Accrued interest payable and | | | | | | | | | | | | | | | | | | | | | | | | |
| other liabilities | | | 12,979 | | | | | | | | | | | | 11,904 | | | | | | | | | |
| Shareholders' equity | | | 190,718 | | | | | | | | | | | | 161,122 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,043,569 | | | | | | | | | | | $ | 1,747,400 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 16,400 | | | | 3.44 | % | | | | | | $ | 14,669 | | | | 3.62% | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent | | | | | | | | | | | | | | | | | | | | | | | | |
| of average interest earning assets (1) | | | | | | | | 3.59 | % | | | | | | | | | | | 3.78% | |
(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 loan fees.
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Nine Months Ended | | | Nine Months Ended | |
| | | September 30, 2014 | | | September 30, 2013 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 6,559 | | | $ | 9 | | | | 0.18 | % | | $ | 9,480 | | | $ | 11 | | | | 0.16% | |
| Interest-earning deposits | | | 6,547 | | | | 7 | | | | 0.14 | % | | | 8,186 | | | | 5 | | | | 0.08% | |
| Investment securities - taxable | | | 395,255 | | | | 7,108 | | | | 2.40 | % | | | 365,569 | | | | 6,137 | | | | 2.24% | |
| Investment securities - non-taxable (1) | | | 146,643 | | | | 3,328 | | | | 4.33 | % | | | 133,011 | | | | 3,105 | | | | 4.88% | |
| Loans receivable (2)(3) | | | 1,215,183 | | | | 45,988 | | | | 5.07 | % | | | 1,100,923 | | | | 48,189 | | | | 5.86% | |
| Total interest-earning assets (1) | | | 1,770,187 | | | | 56,440 | | | | 4.37 | % | | | 1,617,169 | | | | 57,447 | | | | 4.90% | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 26,736 | | | | | | | | | | | | 24,588 | | | | | | | | | |
| Allowance for loan losses | | | (15,892 | ) | | | | | | | | | | | (18,980 | ) | | | | | | | | |
| Other assets | | | 140,698 | | | | | | | | | | | | 133,544 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,921,729 | | | | | | | | | | | $ | 1,756,321 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,171,343 | | | $ | 3,984 | | | | 0.45 | % | | $ | 1,091,635 | | | $ | 4,320 | | | | 0.53% | |
| Borrowings | | | 274,322 | | | | 4,493 | | | | 2.19 | % | | | 239,323 | | | | 4,369 | | | | 2.44% | |
| Subordinated debentures | | | 32,541 | | | | 1,503 | | | | 6.18 | % | | | 32,386 | | | | 1,504 | | | | 6.21% | |
| Total interest-bearing liabilities | | | 1,478,206 | | | | 9,980 | | | | 0.90 | % | | | 1,363,344 | | | | 10,193 | | | | 1.00% | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 253,331 | | | | | | | | | | | | 215,869 | | | | | | | | | |
| Accrued interest payable and | | | | | | | | | | | | | | | | | | | | | | | | |
| other liabilities | | | 12,454 | | | | | | | | | | | | 13,657 | | | | | | | | | |
| Shareholders' equity | | | 177,738 | | | | | | | | | | | | 163,451 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,921,729 | | | | | | | | | | | $ | 1,756,321 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 46,460 | | | | 3.47 | % | | | | | | $ | 47,254 | | | | 3.90% | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent | | | | | | | | | | | | | | | | | | | | | | | | |
| of average interest earning assets (1) | | | | | | | | 3.62 | % | | | | | | | | | | | 4.06% | |
(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 loan fees.
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
| | | September 30 | | | December 31 | |
| | | 2014 | | | 2013 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | | 37,318 | | | $ | 31,721 | |
| Investment securities, available for sale | | | 323,492 | | | | 508,591 | |
| Investment securities, held to maturity (fair value of $175,838 and $9,910) | | | 172,449 | | | | 9,910 | |
| Loans held for sale | | | 4,167 | | | | 3,281 | |
| Loans, net of allowance for loan losses of $16,160 and $15,992 | | | 1,326,861 | | | | 1,052,836 | |
| Premises and equipment, net | | | 50,945 | | | | 46,194 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 16,912 | | | | 14,184 | |
| Goodwill | | | 28,034 | | | | 19,748 | |
| Other intangible assets | | | 4,193 | | | | 3,288 | |
| Interest receivable | | | 8,411 | | | | 7,501 | |
| Cash value life insurance | | | 39,120 | | | | 36,190 | |
| Other assets | | | 25,143 | | | | 24,832 | |
| Total assets | | $ | 2,037,045 | | | $ | 1,758,276 | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 278,527 | | | $ | 231,096 | |
| Interest bearing | | | 1,171,136 | | | | 1,060,424 | |
| Total deposits | | | 1,449,663 | | | | 1,291,520 | |
| Borrowings | | | 350,113 | | | | 256,296 | |
| Subordinated debentures | | | 32,603 | | | | 32,486 | |
| Interest payable | | | 477 | | | | 506 | |
| Other liabilities | | | 14,409 | | | | 12,948 | |
| Total liabilities | | | 1,847,265 | | | | 1,593,756 | |
| Commitments and contingent liabilities | | | | | | | | |
| Stockholders' Equity | | | | | | | | |
| Preferred stock, Authorized, 1,000,000 shares | | | | | | | | |
| Series B shares $.01 par value, $1,000 liquidation value | | | | | | | | |
| Issued 12,500 shares | | | 12,500 | | | | 12,500 | |
| Common stock, no par value | | | | | | | | |
| Authorized, 22,500,000 shares | | | | | | | | |
| Issued, 9,280,041 and 8,706,971 shares | | | | | | | | |
| Outstanding, 9,210,786 and 8,630,966 shares | | | - | | | | - | |
| Additional paid-in capital | | | 45,729 | | | | 32,496 | |
| Retained earnings | | | 130,864 | | | | 121,253 | |
| Accumulated other comprehensive income (loss) | | | 687 | | | | (1,729 | ) |
| Total stockholders' equity | | | 189,780 | | | | 164,520 | |
| Total liabilities and stockholders' equity | | $ | 2,037,045 | | | $ | 1,758,276 | |
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | September 30 | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Interest Income | | | | | | | | | | | | |
| Loans receivable | | $ | 16,403 | | | $ | 14,843 | | | $ | 45,988 | | | $ | 48,189 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 2,339 | | | | 2,084 | | | | 7,124 | | | | 6,153 | |
| Tax exempt | | | 1,109 | | | | 1,114 | | | | 3,328 | | | | 3,105 | |
| Total interest income | | | 19,851 | | | | 18,041 | | | | 56,440 | | | | 57,447 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 1,352 | | | | 1,395 | | | | 3,984 | | | | 4,320 | |
| Borrowed funds | | | 1,593 | | | | 1,465 | | | | 4,493 | | | | 4,369 | |
| Subordinated debentures | | | 506 | | | | 512 | | | | 1,503 | | | | 1,504 | |
| Total interest expense | | | 3,451 | | | | 3,372 | | | | 9,980 | | | | 10,193 | |
| Net Interest Income | | | 16,400 | | | | 14,669 | | | | 46,460 | | | | 47,254 | |
| Provision for loan losses | | | 1,741 | | | | 104 | | | | 2,080 | | | | 2,917 | |
| Net Interest Income after Provision for Loan Losses | | | 14,659 | | | | 14,565 | | | | 44,380 | | | | 44,337 | |
| Non-interest Income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,076 | | | | 1,083 | | | | 3,037 | | | | 2,984 | |
| Wire transfer fees | | | 151 | | | | 169 | | | | 408 | | | | 562 | |
| Interchange fees | | | 1,223 | | | | 1,123 | | | | 3,436 | | | | 3,049 | |
| Fiduciary activities | | | 1,131 | | | | 953 | | | | 3,378 | | | | 3,140 | |
| Gain on sale of investment securities (includes $988 for the three | | | | | | | | | |
| and nine months ended September 30, 2014 and $6 for the | | | | | | | | | | | | | |
| three months ended and $374 for the nine months ended | | | | | | | | | | | | | |
| September 30, 2013, related to accumulated other | | | | | | | | | | | | | | | | |
| comprehensive earnings reclassifications) | | | 988 | | | | 6 | | | | 988 | | | | 374 | |
| Gain on sale of mortgage loans | | | 2,153 | | | | 1,667 | | | | 6,101 | | | | 7,580 | |
| Mortgage servicing income net of impairment | | | 116 | | | | 348 | | | | 556 | | | | 813 | |
| Increase in cash value of bank owned life insurance | | | 296 | | | | 278 | | | | 781 | | | | 787 | |
| Other income | | | 256 | | | | 283 | | | | 854 | | | | 930 | |
| Total non-interest income | | | 7,390 | | | | 5,910 | | | | 19,539 | | | | 20,219 | |
| Non-interest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 8,215 | | | | 7,694 | | | | 23,991 | | | | 22,919 | |
| Net occupancy expenses | | | 1,404 | | | | 1,172 | | | | 4,188 | | | | 3,778 | |
| Data processing | | | 907 | | | | 766 | | | | 2,714 | | | | 2,184 | |
| Professional fees | | | 358 | | | | 357 | | | | 1,385 | | | | 1,310 | |
| Outside services and consultants | | | 595 | | | | 436 | | | | 2,554 | | | | 1,634 | |
| Loan expense | | | 1,202 | | | | 1,040 | | | | 3,489 | | | | 3,556 | |
| FDIC insurance expense | | | 313 | | | | 270 | | | | 854 | | | | 821 | |
| Other losses | | | (35 | ) | | | 55 | | | | 98 | | | | 146 | |
| Other expense | | | 2,394 | | | | 2,271 | | | | 7,002 | | | | 6,487 | |
| Total non-interest expense | | | 15,353 | | | | 14,061 | | | | 46,275 | | | | 42,835 | |
| Income Before Income Tax | | | 6,696 | | | | 6,414 | | | | 17,644 | | | | 21,721 | |
| Income tax expense (includes $346 for the three and nine months | | | | | | | | | |
| ended September 30, 2014 and $2 for the three months ended | | | | | | | | | | | | | |
| and $131 for the nine months ended September 30, 2013 | | | | | | | | | | | | | |
| related to income tax expense from reclassification items) | | | 1,738 | | | | 1,629 | | | | 4,491 | | | | 5,960 | |
| Net Income | | | 4,958 | | | | 4,785 | | | | 13,153 | | | | 15,761 | |
| Preferred stock dividend and discount accretion | | | (40 | ) | | | (66 | ) | | | (102 | ) | | | (308) | |
| Net Income Available to Common Shareholders | | $ | 4,918 | | | $ | 4,719 | | | $ | 13,051 | | | $ | 15,453 | |
| Basic Earnings Per Share | | $ | 0.53 | | | $ | 0.55 | | | $ | 1.45 | | | $ | 1.79 | |
| Diluted Earnings Per Share | | | 0.51 | | | | 0.52 | | | | 1.39 | | | | 1.72 | |
15
