Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: October 22, 2015
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces its 2015 Third Quarter Earnings
Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and nine-month periods ended September 30, 2015.
SUMMARY:
| · | On July 1, 2015, Horizon closed the acquisition of Peoples Bancorp (“Peoples”) and its wholly-owned subsidiary, Peoples Federal Savings Bank of DeKalb County, headquartered in Auburn, Indiana. |
| · | The quarterly dividend was increased from $.14 to $.15 per share on September 15, 2015. |
| · | Third quarter 2015 net income was $4.3 million or $.36 diluted earnings per share. |
| · | Excluding merger expenses and gain on sale of investment securities, net income for the third quarter of 2015 increased 52.8% compared to the same period of 2014 to $6.7 million or $.56 diluted earnings per share. |
| · | Net income for the first nine months of 2015 was $14.4 million or $1.37 diluted earnings per share. |
| · | Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the first nine months of 2015 increased 28.3% compared to the same period of 2014 to $17.2 million or $1.64 diluted earnings per share. |
| · | Net interest income for the first nine months of 2015 increased 17.3% or $8.1 million compared to the same period in 2014. |
| · | The net interest margin, excluding the impact of acquisitions (“core net interest margin”), decreased 7 basis points from the linked quarter and 3 basis points in the first nine months of 2015 compared to the same periods in 2014. |
| · | Non-interest income for the first nine months of 2015 increased 15.9% or $3.1 million compared to the same period in 2014. |
| · | Excluding the Peoples acquisition, mortgage warehouse loans and loans held for sale, loans increased 11.9% on an annualized basis during the third quarter of 2015. |
| · | Horizon’s tangible book value per share increased to $16.37 at September 30, 2015, compared to $16.26 at December 31, 2014 and $15.75 at September 30, 2014. |
| · | Horizon Bank’s capital ratios, including Tier 1 Capital to Average Assets of 9.35% and Total Capital to Risk Weighted Assets of 13.03% as of September 30, 2015, continue to be well above the regulatory standards for well-capitalized banks. |
-MORE-
Pg. 2 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
Craig Dwight, Chairman and CEO, commented: “Horizon continued its growth story in the third quarter of 2015 with positive contributions from all four revenue streams - retail banking, business banking, mortgage banking and wealth management. These results are particularly noteworthy as the Peoples integration and systems conversion required a tremendous amount of teamwork and dedication during the quarter.”
Dwight continued, “Horizon’s growth drove a substantial increase in net income and earnings per share compared to the same periods of 2014. Net income and diluted earnings per share, excluding non-core items, increased 57.0% and 26.7% during the third quarter of 2015, respectively. On a year-to-date basis, net income and diluted earnings per share, excluding non-core items, increased by 30.0% and 17.8%, respectively. Given the persistent low interest rate environment, loan and fee income growth and the ability to create operating leverage are critical to combat margin pressure existing throughout the banking industry.”
| Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share | |
| (Dollar in Thousands Except per Share Data, Unaudited) | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | September 30 | |
| Non-GAAP Reconciliation of Net Income | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| | | | | | | | | | | | | | | | | |
| Net income as reported | | $ | 4,288 | | | $ | 4,958 | | | $ | 14,374 | | | $ | 13,153 | |
| Merger expenses | | | 3,648 | | | | 124 | | | | 4,364 | | | | 1,335 | |
| Tax effect | | | (1,219 | ) | | | (43 | ) | | | (1,402 | ) | | | (467 | ) |
| Net income excluding merger expenses | | | 6,717 | | | | 5,039 | | | | 17,336 | | | | 14,021 | |
| | | | | | | | | | | | | | | | | |
| Gain on sale of investment securities | | | - | | | | (988 | ) | | | (124 | ) | | | (988 | ) |
| Tax effect | | | - | | | | 346 | | | | 43 | | | | 346 | |
| Net income excluding gain on sale of investment securities | | | 6,717 | | | | 4,396 | | | | 17,255 | | | | 13,379 | |
| | | | | | | | | | | | | | | | | |
| Death benefit on bank owned life insurance ("BOLI") | | | - | | | | - | | | | (145 | ) | | | - | |
| Tax effect | | | - | | | | - | | | | 51 | | | | - | |
| Net income excluding death benefit on BOLI | | | 6,717 | | | | 4,396 | | | | 17,161 | | | | 13,379 | |
| | | | | | | | | | | | | | | | | |
| Acquisition-related PAUs | | | (402 | ) | | | (438 | ) | | | (2,282 | ) | | | (2,027 | ) |
| Tax effect | | | 141 | | | | 153 | | | | 799 | | | | 709 | |
| Net income excluding PAUs | | $ | 6,456 | | | $ | 4,112 | | | $ | 15,678 | | | $ | 12,061 | |
| | | | | | | | | | | | | | | | | |
| NNon-GAAP Reconciliation of Diluted Earnings per Share | | | | | | | | | | | | | | | | |
| Diluted earnings per share as reported | | $ | 0.36 | | | $ | 0.51 | | | $ | 1.37 | | | $ | 1.39 | |
| Merger expenses | | | 0.30 | | | | 0.01 | | | | 0.42 | | | | 0.14 | |
| Tax effect | | | (0.10 | ) | | | (0.00 | ) | | | (0.13 | ) | | | (0.05 | ) |
| Diluted earnings per share excluding merger expenses | | | 0.56 | | | | 0.52 | | | | 1.66 | | | | 1.48 | |
| | | | | | | | | | | | | | | | | |
| Gain on sale of investment securities | | | - | | | | (0.10 | ) | | | (0.01 | ) | | | (0.11 | ) |
| Tax effect | | | - | | | | 0.03 | | | | 0.00 | | | | 0.04 | |
| Net income excluding gain on sale of investment securities | | | 0.56 | | | | 0.45 | | | | 1.65 | | | | 1.41 | |
| | | | | | | | | | | | | | | | | |
| Death benefit on BOLI | | | - | | | | - | | | | (0.01 | ) | | | - | |
| Tax effect | | | - | | | | - | | | | 0.00 | | | | - | |
| Net income excluding death benefit on BOLI | | | 0.56 | | | | 0.45 | | | | 1.64 | | | | 1.41 | |
| | | | | | | | | | | | | | | | | |
| Acquisition-related PAUs | | | (0.03 | ) | | | (0.05 | ) | | | (0.22 | ) | | | (0.22 | ) |
| Tax effect | | | 0.01 | | | | 0.02 | | | | 0.08 | | | | 0.08 | |
| Diluted earnings per share excluding PAUs | | $ | 0.54 | | | $ | 0.42 | | | $ | 1.50 | | | $ | 1.27 | |
-MORE-
Pg. 3 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
Dwight commented, “Due to a decline in mortgage refinancing activity, Horizon’s mortgage warehouse portfolio returned to more normalized levels during the third quarter of 2015. This decrease was partially offset by continued organic growth in other loan types and the addition of loans acquired in the Peoples transaction. Excluding loans acquired in the Peoples acquisition, mortgage warehouse loans and loans held for sale, loans increased by 11.9% on an annualized basis in the third quarter of 2015 and 12.2% on an annualized basis during the first nine months of 2015 compared to the same periods of 2014.”
Dwight continued, “Horizon’s strategy of revenue diversification through commercial loan growth and non-mortgage related fee income is evident in our results. At its peak, for the year ended December 31, 2012 mortgage warehouse and mortgage gain on sale revenue comprised 24.5% of Horizon’s total revenue base (interest income and non-interest income). For the year ending December 31, 2014 and the nine months ending September 30, 2015, mortgage warehouse and mortgage gain on sale revenue as a percentage of total revenue declined to 12.8% and 14.7%, respectively.”
| Loan Growth by Type, Excluding Acquired Loans | |
| Three Months Ended September 30, 2015 | |
(Dollars in Thousands, Unaudited) | |
| | | | | | | | | | | | | | | Excluding Acquired Loans | |
| | | | | | | | | | | | Acquired | | | | | | | | | Annualized | |
| | | September 30 | | | June 30 | | | Amount | | | Peoples | | | Amount | | | Percent | | | Percent | |
| | | 2015 | | | 2015 | | | Change | | | Loans | | | Change | | | Change | | | Change | |
| Commercial loans | | $ | 795,271 | | | $ | 709,946 | | | $ | 85,325 | | | $ | (67,435 | ) | | $ | 17,890 | | | | 2.5 | % | | | 10.0 | % |
| Residential mortgage loans | | | 430,477 | | | | 277,407 | | | | 153,070 | | | | (136,861 | ) | | | 16,209 | | | | 5.8 | % | | | 23.2 | % |
| Consumer loans | | | 361,298 | | | | 336,006 | | | | 25,292 | | | | (19,593 | ) | | | 5,699 | | | | 1.7 | % | | | 6.7 | % |
| Subtotal | | | 1,587,046 | | | | 1,323,359 | | | | 263,687 | | | | (223,889 | ) | | | 39,798 | | | | 3.0 | % | | | 11.9 | % |
| Held for sale loans | | | 5,583 | | | | 7,677 | | | | (2,094 | ) | | | - | | | | (2,094 | ) | | | -27.3 | % | | | -108.2 | % |
| Mortgage warehouse loans | | | 138,974 | | | | 195,924 | | | | (56,950 | ) | | | - | | | | (56,950 | ) | | | -29.1 | % | | | -115.3 | % |
| Total loans | | $ | 1,731,603 | | | $ | 1,526,960 | | | $ | 204,643 | | | $ | (223,889 | ) | | $ | (19,246 | ) | | | -1.3 | % | | | -5.0 | % |
| Loan Growth by Type, Excluding Acquired Loans | |
| Nine Months Ended September 30, 2015 | |
| (Dollars in Thousands) | |
| | | | | | | | | | | | | | | Excluding Acquired Loans | |
| | | | | | | | | | | | Acquired | | | | | | | | | Annualized | |
| | | September 30 | | | December 31 | | | Amount | | | Peoples | | | Amount | | | Percent | | | Percent | |
| | | 2015 | | | 2014 | | | Change | | | Loans | | | Change | | | Change | | | Change | |
| | | (Unaudited) | | | | | | | | | | | | | | | | | | | |
| Commercial loans | | $ | 795,271 | | | $ | 674,314 | | | $ | 120,957 | | | $ | (67,435 | ) | | $ | 53,522 | | | | 7.9 | % | | | 10.6 | % |
| Residential mortgage loans | | | 430,477 | | | | 254,625 | | | | 175,852 | | | | (136,861 | ) | | | 38,991 | | | | 15.3 | % | | | 20.5 | % |
| Consumer loans | | | 361,298 | | | | 320,459 | | | | 40,839 | | | | (19,593 | ) | | | 21,246 | | | | 6.6 | % | | | 8.9 | % |
| Subtotal | | | 1,587,046 | | | | 1,249,398 | | | | 337,648 | | | | (223,889 | ) | | | 113,759 | | | | 9.1 | % | | | 12.2 | % |
| Held for sale loans | | | 5,583 | | | | 6,143 | | | | (560 | ) | | | - | | | | (560 | ) | | | -9.1 | % | | | -12.2 | % |
| Mortgage warehouse loans | | | 138,974 | | | | 129,156 | | | | 9,818 | | | | - | | | | 9,818 | | | | 7.6 | % | | | 10.2 | % |
| Total loans | | $ | 1,731,603 | | | $ | 1,384,697 | | | $ | 346,906 | | | $ | (223,889 | ) | | $ | 123,017 | | | | 8.9 | % | | | 11.9 | % |
-MORE-
Pg. 4 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
The following table presents Horizon’s core net interest margin, which excludes acquisition-related purchase accounting adjustments. Dwight noted, “The Peoples transaction created a slight reduction in Horizon’s net interest margin. The reduction was partially alleviated due to the mix of earning assets as the cash from Peoples’ liquidated securities portfolio was used to redeem short-term borrowings at the close of the transaction reducing interest-earning assets throughout the third quarter. During the quarter, a portion of the cash from the liquidated securities portfolio was used to repurchase securities and pay down a matured long-term FHLB advance.”
To reduce funding costs over the next four years the Company currently plans to use the securities portfolio to redeem maturing long-term debt. As of September 30, 2015, $31.6 million of long-term debt is scheduled to mature in 2016, $47.5 million in 2017, $27.0 million in 2018 and $55.2 million in 2019. This deleveraging will help reduce the Company’s cost of funds and provide additional capital for growth.
| 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 | |
| Net Interest Margin As Reported | | 2015 | | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| Net interest income | | $ | 19,776 | | | $ | 17,850 | | | $ | 16,400 | | | $ | 54,512 | | | $ | 46,460 | |
| Average interest-earning assets | | | 2,304,515 | | | | 2,008,191 | | | | 1,877,066 | | | | 2,072,276 | | | | 1,770,187 | |
| Net interest income as a percent of average interest-earning assets ("Net Interest Margin") | | | 3.51 | % | | | 3.67 | % | | | 3.59 | % | | | 3.59 | % | | | 3.62 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Impact of Acquisitions | | | | | | | | | | | | | | | | | | | | |
| Interest income from acquisition-related | | | | | | | | | | | | | | | | | | | | |
| purchase accounting adjustments ("PAUs") | | $ | (402 | ) | | $ | (797 | ) | | $ | (438 | ) | | $ | (2,282 | ) | | $ | (2,027 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Excluding Impact of Acquisitions | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 19,374 | | | $ | 17,053 | | | $ | 15,962 | | | $ | 52,230 | | | $ | 44,433 | |
| Average interest-earning assets | | | 2,304,515 | | | | 2,008,191 | | | | 1,877,066 | | | | 2,072,276 | | | | 1,770,187 | |
| Core Net Interest Margin | | | 3.44 | % | | | 3.51 | % | | | 3.50 | % | | | 3.44 | % | | | 3.47 | % |
Horizon’s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, was 1.13% as of September 30, 2015.
| Allowance for Loan and Lease Loss Detail | |
| As of September 30, 2015 | |
| (Dollars in Thousands, Unaudited) | |
| | | | | | | | | | | | | | | | |
| | | Horizon | | | | | | | | | | | | | |
| | | Legacy | | | Heartland | | | Summit | | | Peoples | | | Total | |
| Pre-discount loan balance | | $ | 1,409,298 | | | $ | 26,496 | | | $ | 81,421 | | | $ | 218,195 | | | $ | 1,735,410 | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses (ALLL) | | | 15,896 | | | | 264 | | | | 8 | | | | - | | | | 16,168 | |
| Loan discount | | | N/A | | | | 1,576 | | | | 3,213 | | | | 4,601 | | | | 9,390 | |
| ALLL+loan discount | | | 15,896 | | | | 1,840 | | | | 3,221 | | | | 4,601 | | | | 25,558 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans, net | | $ | 1,393,402 | | | $ | 24,656 | | | $ | 78,200 | | | $ | 213,594 | | | $ | 1,709,852 | |
| | | | | | | | | | | | | | | | | | | | | |
| ALLL/ pre-discount loan balance | | | 1.13 | % | | | 1.00 | % | | | 0.01 | % | | | 0.00 | % | | | 0.93 | % |
| Loan discount/ pre-discount loan balance | | | N/A | | | | 5.95 | % | | | 3.95 | % | | | 2.11 | % | | | 0.54 | % |
| ALLL+loan discount/ pre-discount loan balance | | | 1.13 | % | | | 6.94 | % | | | 3.96 | % | | | 2.11 | % | | | 1.47 | % |
-MORE-
Pg. 5 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
Income Statement Highlights
Net income for the third quarter of 2015 was $4.3 million or $.36 diluted earnings per share compared to $4.9 million or $.51 diluted earnings per share in the third quarter of 2014. The decrease in net income and earnings per share from the previous year reflects an increase in non-interest expenses of $6.9 million primarily due to an increase in salaries and employee benefits and outside services and consultants expense, partially offset by an increase in net interest income of $3.4 million, a decrease in provision for loan losses of $1.4 million and an increase in non-interest income of $1.0 million. The decrease in earnings per share also reflects an increase in diluted shares due to the Peoples acquisition. Excluding acquisition-related expenses and purchase accounting adjustments and gain on sale of investment securities, net income for the third quarter of 2015 was $6.5 million or $.54 diluted earnings per share compared to $4.1 million or $.42 diluted earnings per share in the same period of 2014.
Net income for the nine months ended September 30, 2015 was $14.4 million or $1.37 diluted earnings per share compared to $13.2 million or $1.39 diluted earnings per share for the nine months ended September 30, 2014. The increase in net income from the previous year reflects an increase in net interest income of $8.1 million and an increase in non-interest income of $3.1 million, partially offset by an increase in the provision for loan losses of $740,000 and an increase in non-interest expenses of $8.7 million. The decrease in earnings per share also reflects an increase in diluted shares due to the Peoples acquisition. Excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the first nine months of 2015 was $15.7 million or $1.50 diluted earnings per share compared to $12.1 million or $1.27 diluted earnings per share in the same period of 2014.
Horizon’s net interest margin was 3.51% during the third quarter of 2015, down from 3.67% for the prior quarter and 3.59% for same period of 2014. The decrease in net interest margin compared to the prior quarter and the same period of 2014 was 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 acquisition-related purchase accounting adjustments, the margin would have been 3.44% for the third quarter of 2015 compared to 3.51% for the prior quarter and 3.50% for the same period of 2014. Interest income from acquisition-related purchase accounting adjustments was $402,000, $797,000, and $438,000 for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014, respectively.
Horizon’s net interest margin was 3.59% for the nine months ending September 30, 2015, down from 3.62% for same period of 2014. Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.44% for the nine months ending September 30, 2015 compared to 3.47% for same period of 2014. Interest income from acquisition-related purchase accounting adjustments was $2.3 million and $2.0 million for the nine months ended September 30, 2015 and September 30, 2014, respectively.
-MORE-
Pg. 6 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
Residential mortgage lending activity during the third quarter of 2015 generated $2.8 million in income from the gain on sale of mortgage loans, an increase of $641,000 from the same period of 2014. Total origination volume in the third quarter of 2015, including loans placed into portfolio, totaled $127.5 million, representing an increase of 24.8% from the same period of 2014 of $102.2 million. Purchase money mortgage originations during the third quarter of 2015 represented 81.0% of total originations compared to 71.8% of originations during the previous quarter and 77.6% during the third quarter of 2014.
Lending Activity
Total loans increased $346.9 million from $1.4 billion as of December 31, 2014 to $1.7 billion as of September 30, 2015 as mortgage warehouse loans increased by $9.8 million, residential mortgage loans increased by $175.9 million and consumer loans increased by $40.8 million. Commercial loans increased $121.0 million or 10.5% on an annualized basis from $674.3 million at December 31, 2014 to $795.3 million at September 30, 2015.
Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during the third quarter of 2015 to $166.8 million and $151.2 million, respectively, as of September 30, 2015. In the third quarter of 2015, Kalamazoo’s aggregate loan balances increased $12.4 million or 8.0%, and Indianapolis’ aggregate loan balances increased $5.7 million or 3.9%. Combined, these markets contributed $18.1 million in loan growth during the third quarter of 2015 or 6.0%.
The provision for loan losses was $300,000 for the third quarter of 2015 compared to $1.7 million for the same period of 2014. The lower provision for loan losses in the third quarter of 2015 compared to the same period of the previous year was predominantly due a $1.0 million charge-off associated with one commercial credit during the third quarter of 2014. The provision for loan losses was $2.8 million the first nine months of 2015 compared to $2.1 million for the same period of 2014. The higher provision for loan losses in the first nine months of 2015 compared to the same period of 2014 was due to the charge-off of one commercial credit of $1.3 million in the second quarter of 2015 as well as continued loan growth. The $1.3 million commercial charge-off was a legacy workout loan that was determined to be impaired due to the borrower’s inability to make payments and a decrease in collateral value.
The ratio of the allowance for loan losses to total loans decreased to 0.93% as of September 30, 2015 from 1.19% as of December 31, 2014 due to an increase in total loans and a decrease in the allowance for loan losses from $16.5 million as of December 31, 2014 to $16.2 million as of September 30, 2015. The Peoples transaction added $223.9 million in loans without a loan loss reserve due to purchase accounting adjustments. As of September 30, 2015, the ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 1.13% compared to 1.29% as of December 31, 2015.
Non-performing loans totaled $21.0 million as of September 30, 2015 and $22.4 million as of December 31, 2014. Compared to December 31, 2014, non-performing commercial loans and consumer loans decreased by $707,000 and $927,000, respectively, while non-performing real estate loans increased by $253,000. As a percentage of total loans, non-performing loans were 1.21% at September 30, 2015, down 41 basis points from 1.62% at December 31, 2014.
-MORE-
Pg. 7 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
Expense Management
Total non-interest expense was $6.9 million higher in the third quarter of 2015 compared to the same period of 2014. The increase was primarily due to an increase in salaries and employee benefits costs of $2.4 million, outside services and consultants expense of $2.6 million and other expense of $547,000, reflecting overall company growth and the Peoples acquisition. One-time non-interest expense related to the Peoples acquisition totaled $3.6 million in the third quarter of 2015.
Total non-interest expense was $8.7 million higher in the first nine months of 2015 compared to the same period of 2014. The increase was primarily due to an increase in salaries and employee benefits costs of $3.6 million, outside services and consultants expense of $2.2 million, other expenses of $817,000, net occupancy expenses of $461,000, data processing expense of $456,000, professional fees of $211,000, loan expense of $486,000, FDIC deposit insurance expense of $245,000 and other losses of $253,000 due to overall company growth and the Peoples acquisition. One-time non-interest expense related to the Peoples acquisition totaled $4.4 million in the third quarter of 2015.
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 and the allowance for loan and lease losses 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 acquisitions, acquisition-related purchase accounting adjustments and other events that are considered to be non-recurring. 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 and non-core items, 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.
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 Select 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
-MORE-
Pg. 8 cont. Horizon Bancorp Announces 2015 Third Quarter Earnings
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 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 | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
| Balance sheet: | | | | | | | | | | | | | |
| Total assets | | $ | 2,606,833 | | | $ | 2,219,307 | | | $ | 2,153,965 | | | $ | 2,076,922 | | | $ | 2,037,045 | |
| Investment securities | | | 617,860 | | | | 493,631 | | | | 495,315 | | | | 489,531 | | | | 495,941 | |
| Commercial loans | | | 795,271 | | | | 709,946 | | | | 695,736 | | | | 674,314 | | | | 677,349 | |
| Mortgage warehouse loans | | | 138,974 | | | | 195,924 | | | | 178,899 | | | | 129,156 | | | | 105,133 | |
| Residential mortgage loans | | | 430,477 | | | | 277,407 | | | | 260,390 | | | | 254,625 | | | | 251,739 | |
| Consumer loans | | | 361,298 | | | | 336,006 | | | | 326,334 | | | | 320,459 | | | | 308,800 | |
| Earning assets | | | 2,363,286 | | | | 2,031,671 | | | | 1,974,251 | | | | 1,885,576 | | | | 1,860,041 | |
| Non-interest bearing deposit accounts | | | 338,436 | | | | 307,215 | | | | 285,181 | | | | 267,667 | | | | 278,527 | |
| Interest bearing transaction accounts | | | 1,164,787 | | | | 983,912 | | | | 905,216 | | | | 930,582 | | | | 881,299 | |
| Time deposits | | | 409,852 | | | | 293,596 | | | | 274,699 | | | | 284,070 | | | | 289,837 | |
| Borrowings | | | 372,820 | | | | 385,236 | | | | 440,415 | | | | 351,198 | | | | 350,113 | |
| Subordinated debentures | | | 32,758 | | | | 32,719 | | | | 32,680 | | | | 32,642 | | | | 32,603 | |
| Common stockholders' equity | | | 252,238 | | | | 189,631 | | | | 186,991 | | | | 181,914 | | | | 177,280 | |
| Total stockholders’ equity | | | 264,738 | | | | 202,131 | | | | 199,491 | | | | 194,414 | | | | 189,780 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income statement: | | Three months ended | |
| Net interest income | | $ | 19,776 | | | $ | 17,850 | | | $ | 16,886 | | | $ | 16,523 | | | $ | 16,400 | |
| Provision for loan losses | | | 300 | | | | 1,906 | | | | 614 | | | | 978 | | | | 1,741 | |
| Non-interest income | | | 8,400 | | | | 7,186 | | | | 7,066 | | | | 6,738 | | | | 7,390 | |
| Non-interest expenses | | | 22,235 | | | | 16,650 | | | | 16,068 | | | | 15,671 | | | | 15,353 | |
| Income tax expense | | | 1,353 | | | | 1,752 | | | | 1,912 | | | | 1,664 | | | | 1,738 | |
| Net income | | | 4,288 | | | | 4,728 | | | | 5,358 | | | | 4,948 | | | | 4,958 | |
| Preferred stock dividend | | | (31 | ) | | | (31 | ) | | | (31 | ) | | | (31 | ) | | | (40 | ) |
| Net income available to common shareholders | | $ | 4,257 | | | $ | 4,697 | | | $ | 5,327 | | | $ | 4,917 | | | $ | 4,918 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.37 | | | $ | 0.51 | | | $ | 0.58 | | | $ | 0.53 | | | $ | 0.53 | |
| Diluted earnings per share | | | 0.36 | | | | 0.49 | | | | 0.55 | | | | 0.51 | | | | 0.51 | |
| Cash dividends declared per common share | | | 0.15 | | | | 0.14 | | | | 0.14 | | | | 0.14 | | | | 0.13 | |
| Book value per common share | | | 21.14 | | | | 20.49 | | | | 20.25 | | | | 19.75 | | | | 19.25 | |
| Tangible book value per common share | | | 16.37 | | | | 17.06 | | | | 16.80 | | | | 16.26 | | | | 15.75 | |
| Market value - high | | | 26.15 | | | | 26.03 | | | | 25.86 | | | | 26.73 | | | | 23.67 | |
| Market value - low | | $ | 22.60 | | | $ | 22.85 | | | $ | 22.38 | | | $ | 22.83 | | | $ | 20.65 | |
| Weighted average shares outstanding - Basic | | | 11,605,976 | | | | 9,240,005 | | | | 9,216,011 | | | | 9,212,156 | | | | 9,208,707 | |
| Weighted average shares outstanding - Diluted | | | 11,893,254 | | | | 9,637,586 | | | | 9,609,506 | | | | 9,628,240 | | | | 9,588,332 | |
| | | | | | | | | | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.69 | % | | | 0.87 | % | | | 1.05 | % | | | 0.96 | % | | | 0.96 | % |
| Return on average common stockholders' equity | | | 8.70 | | | | 9.88 | | | | 11.66 | | | | 10.72 | | | | 10.95 | |
| Net interest margin | | | 3.51 | | | | 3.67 | | | | 3.70 | | | | 3.64 | | | | 3.59 | |
| Loan loss reserve to total loans | | | 0.93 | | | | 1.08 | | | | 1.13 | | | | 1.19 | | | | 1.20 | |
| Non-performing loans to loans | | | 1.21 | | | | 1.51 | | | | 1.52 | | | | 1.62 | | | | 1.47 | |
| Average equity to average assets | | | 8.36 | | | | 9.32 | | | | 9.56 | | | | 9.56 | | | | 9.33 | |
| Bank only capital ratios: | | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 9.35 | | | | 8.18 | | | | 8.75 | | | | 8.80 | | | | 8.63 | |
| Tier 1 capital to risk weighted assets | | | 12.17 | | | | 11.04 | | | | 11.47 | | | | 11.96 | | | | 12.13 | |
| Total capital to risk weighted assets | | | 13.03 | | | | 12.08 | | | | 12.54 | | | | 13.08 | | | | 13.26 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan data: | | | | | | | | | | | | | | | | | | | | |
| Substandard loans | | $ | 25,898 | | | $ | 28,220 | | | $ | 27,355 | | | $ | 27,661 | | | $ | 35,023 | |
| 30 to 89 days delinquent | | | 4,868 | | | | 3,326 | | | | 3,945 | | | | 5,082 | | | | 3,310 | |
| | | | | | | | | | | | | | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 100 | | | $ | 207 | | | $ | 19 | | | $ | 115 | | | $ | 62 | |
| Trouble debt restructures - accruing interest | | | 2,948 | | | | 3,271 | | | | 4,368 | | | | 4,372 | | | | 5,838 | |
| Trouble debt restructures - non-accrual | | | 3,994 | | | | 4,523 | | | | 4,711 | | | | 2,643 | | | | 3,061 | |
| Non-accrual loans | | | 13,956 | | | | 15,050 | | | | 13,282 | | | | 15,312 | | | | 10,828 | |
| Total non-performing loans | | $ | 20,998 | | | $ | 23,051 | | | $ | 22,380 | | | $ | 22,442 | | | $ | 19,789 | |
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | September 30 | | | September 30 | |
| | | 2015 | | | 2014 | |
| Balance sheet: | | | | |
| Total assets | | $ | 2,606,833 | | | $ | 2,037,045 | |
| Investment securities | | | 617,860 | | | | 495,941 | |
| Commercial loans | | | 795,271 | | | | 677,349 | |
| Mortgage warehouse loans | | | 138,974 | | | | 105,133 | |
| Residential mortgage loans | | | 430,477 | | | | 251,739 | |
| Consumer loans | | | 361,298 | | | | 308,800 | |
| Earning assets | | | 2,363,286 | | | | 1,860,041 | |
| Non-interest bearing deposit accounts | | | 338,436 | | | | 278,527 | |
| Interest bearing transaction accounts | | | 1,164,787 | | | | 881,299 | |
| Time deposits | | | 409,852 | | | | 289,837 | |
| Borrowings | | | 372,820 | | | | 350,113 | |
| Subordinated debentures | | | 32,758 | | | | 32,603 | |
| Common stockholders' equity | | | 252,238 | | | | 177,280 | |
| Total stockholders’ equity | | | 264,738 | | | | 189,780 | |
| | | | | | | | | |
| Income statement: | | Nine Months Ended | |
| Net interest income | | $ | 54,512 | | | $ | 46,460 | |
| Provision for loan losses | | | 2,820 | | | | 2,080 | |
| Non-interest income | | | 22,652 | | | | 19,539 | |
| Non-interest expenses | | | 54,953 | | | | 46,275 | |
| Income tax expense | | | 5,017 | | | | 4,491 | |
| Net income | | | 14,374 | | | | 13,153 | |
| Preferred stock dividend | | | (94 | ) | | | (102 | ) |
| Net income available to common shareholders | | $ | 14,280 | | | $ | 13,051 | |
| | | | | | | | | |
| Per share data: | | | | | | | | |
| Basic earnings per share | | $ | 1.42 | | | $ | 1.45 | |
| Diluted earnings per share | | | 1.37 | | | | 1.39 | |
| Cash dividends declared per common share | | | 0.43 | | | | 0.37 | |
| Book value per common share | | | 21.14 | | | | 19.25 | |
| Tangible book value per common share | | | 16.37 | | | | 15.75 | |
| Market value - high | | | 26.15 | | | | 24.91 | |
| Market value - low | | $ | 22.38 | | | $ | 19.57 | |
| Weighted average shares outstanding - Basic | | | 10,029,419 | | | | 9,009,663 | |
| Weighted average shares outstanding - Diluted | | | 10,387,113 | | | | 9,389,359 | |
| | | | | | | | | |
| Key ratios: | | | | | | | | |
| Return on average assets | | | 0.86 | % | | | 0.92 | % |
| Return on average common stockholders' equity | | | 10.03 | | | | 10.56 | |
| Net interest margin | | | 3.59 | | | | 3.62 | |
| Loan loss reserve to total loans | | | 0.93 | | | | 1.20 | |
| Non-performing loans to loans | | | 1.21 | | | | 1.47 | |
| Average equity to average assets | | | 9.05 | | | | 9.25 | |
| Bank only capital ratios: | |
| Tier 1 capital to average assets | | | 9.35 | | | | 8.63 | |
| Tier 1 capital to risk weighted assets | | | 12.17 | | | | 12.13 | |
| Total capital to risk weighted assets | | | 13.03 | | | | 13.26 | |
| | | | | | | | | |
| Loan data: | | | | | | | | |
| Substandard loans | | $ | 25,898 | | | $ | 35,023 | |
| 30 to 89 days delinquent | | | 4,868 | | | | 3,310 | |
| | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 100 | | | $ | 62 | |
| Trouble debt restructures - accruing interest | | | 2,948 | | | | 5,838 | |
| Trouble debt restructures - non-accrual | | | 3,994 | | | | 3,061 | |
| Non-accrual loans | | | 13,956 | | | | 10,828 | |
| Total non-performing loans | | $ | 20,998 | | | $ | 19,789 | |
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 | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
| Commercial | | $ | 8,841 | | | $ | 8,386 | | | $ | 7,876 | | | $ | 7,910 | | | $ | 7,515 | |
| Real estate | | | 2,297 | | | | 3,044 | | | | 3,281 | | | | 2,508 | | | | 3,304 | |
| Mortgage warehousing | | | 1,015 | | | | 1,319 | | | | 1,272 | | | | 1,132 | | | | 1,300 | |
| Consumer | | | 4,015 | | | | 3,672 | | | | 4,205 | | | | 4,951 | | | | 4,041 | |
| Total | | $ | 16,168 | | | $ | 16,421 | | | $ | 16,634 | | | $ | 16,501 | | | $ | 16,160 | |
Net Charge-offs (Recoveries)
(Dollars in Thousands, Unaudited)
| | | Three months ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
| Commercial | | $ | 77 | | | $ | 1,584 | | | $ | (11 | ) | | $ | 199 | | | $ | 1,006 | |
| Real estate | | | 96 | | | | 161 | | | | 20 | | | | 101 | | | | 19 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 380 | | | | 375 | | | | 472 | | | | 336 | | | | 217 | |
| Total | | $ | 553 | | | $ | 2,120 | | | $ | 481 | | | $ | 636 | | | $ | 1,242 | |
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
| Commercial | | $ | 10,832 | | | $ | 13,384 | | | $ | 11,540 | | | $ | 11,855 | | | $ | 9,323 | |
| Real estate | | | 6,315 | | | | 5,819 | | | | 6,062 | | | | 5,894 | | | | 6,312 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 3,851 | | | | 3,848 | | | | 4,778 | | | | 4,693 | | | | 4,154 | |
| Total | | $ | 20,998 | | | $ | 23,051 | | | $ | 22,380 | | | $ | 22,442 | | | $ | 19,789 | |
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
| Commercial | | $ | 324 | | | $ | 376 | | | $ | 307 | | | $ | 411 | | | $ | 376 | |
| Real estate | | | 958 | | | | 58 | | | | 219 | | | | 636 | | | | 875 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | - | | | | 37 | | | | 223 | | | | 154 | | | | 3 | |
| Total | | $ | 1,282 | | | $ | 471 | | | $ | 749 | | | $ | 1,201 | | | $ | 1,254 | |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Three Months Ended | | | Three Months Ended | |
| | | September 30, 2015 | | | September 30, 2014 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 23,086 | | | $ | 2 | | | | 0.03 | % | | $ | 4,033 | | | $ | 5 | | | | 0.49 | % |
| Interest-earning deposits | | | 16,340 | | | | 5 | | | | 0.12 | % | | | 5,941 | | | | 4 | | | | 0.27 | % |
| Investment securities - taxable | | | 401,702 | | | | 2,149 | | | | 2.12 | % | | | 394,954 | | | | 2,330 | | | | 2.34 | % |
| Investment securities - non-taxable (1) | | | 154,050 | | | | 1,125 | | | | 4.39 | % | | | 146,513 | | | | 1,109 | | | | 4.48 | % |
| Loans receivable (2)(3) | | | 1,709,337 | | | | 20,297 | | | | 4.72 | % | | | 1,325,625 | | | | 16,403 | | | | 4.92 | % |
| Total interest-earning assets (1) | | | 2,304,515 | | | | 23,578 | | | | 4.17 | % | | | 1,877,066 | | | | 19,851 | | | | 4.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 31,384 | | | | | | | | | | | | 27,188 | | | | | | | | | |
| Allowance for loan losses | | | (16,427 | ) | | | | | | | | | | | (15,706 | ) | | | | | | | | |
| Other assets | | | 151,035 | | | | | | | | | | | | 155,021 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,470,507 | | | | | | | | | | | $ | 2,043,569 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,568,777 | | | $ | 1,566 | | | | 0.40 | % | | $ | 1,204,122 | | | $ | 1,352 | | | | 0.45 | % |
| Borrowings | | | 303,521 | | | | 1,729 | | | | 2.26 | % | | | 320,676 | | | | 1,593 | | | | 1.97 | % |
| Subordinated debentures | | | 32,737 | | | | 507 | | | | 6.14 | % | | | 32,580 | | | | 506 | | | | 6.16 | % |
| Total interest-bearing liabilities | | | 1,905,035 | | | | 3,802 | | | | 0.79 | % | | | 1,557,378 | | | | 3,451 | | | | 0.88 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 343,780 | | | | | | | | | | | | 282,494 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 15,149 | | | | | | | | | | | | 12,979 | | | | | | | | | |
| Stockholders' equity | | | 206,543 | | | | | | | | | | | | 190,718 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,470,507 | | | | | | | | | | | $ | 2,043,569 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 19,776 | | | | 3.38 | % | | | | | | $ | 16,400 | | | | 3.44 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | 3.51 | % | | | | | | | | | | | 3.59 | % |
| (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, 2015 | | | September 30, 2014 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 10,563 | | | $ | 11 | | | | 0.14 | % | | $ | 6,559 | | | $ | 9 | | | | 0.18 | % |
| Interest-earning deposits | | | 11,927 | | | | 10 | | | | 0.11 | % | | | 6,547 | | | | 7 | | | | 0.14 | % |
| Investment securities - taxable | | | 375,548 | | | | 6,356 | | | | 2.26 | % | | | 395,255 | | | | 7,108 | | | | 2.40 | % |
| Investment securities - non-taxable (1) | | | 145,576 | | | | 3,281 | | | | 3.96 | % | | | 146,643 | | | | 3,328 | | | | 4.33 | % |
| Loans receivable (2)(3) | | | 1,528,662 | | | | 55,140 | | | | 4.83 | % | | | 1,215,183 | | | | 45,988 | | | | 5.07 | % |
| Total interest-earning assets (1) | | | 2,072,276 | | | | 64,798 | | | | 4.25 | % | | | 1,770,187 | | | | 56,440 | | | | 4.37 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 30,729 | | | | | | | | | | | | 26,736 | | | | | | | | | |
| Allowance for loan losses | | | (16,557 | ) | | | | | | | | | | | (15,892 | ) | | | | | | | | |
| Other assets | | | 155,657 | | | | | | | | | | | | 140,698 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,242,105 | | | | | | | | | | | $ | 1,921,729 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,347,882 | | | $ | 4,035 | | | | 0.40 | % | | $ | 1,171,343 | | | $ | 3,984 | | | | 0.45 | % |
| Borrowings | | | 340,593 | | | | 4,747 | | | | 1.86 | % | | | 274,322 | | | | 4,493 | | | | 2.19 | % |
| Subordinated debentures | | | 32,698 | | | | 1,504 | | | | 6.15 | % | | | 32,541 | | | | 1,503 | | | | 6.18 | % |
| Total interest-bearing liabilities | | | 1,721,173 | | | | 10,286 | | | | 0.80 | % | | | 1,478,206 | | | | 9,980 | | | | 0.90 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 303,309 | | | | | | | | | | | | 253,331 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 14,692 | | | | | | | | | | | | 12,454 | | | | | | | | | |
| Stockholders' equity | | | 202,931 | | | | | | | | | | | | 177,738 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,242,105 | | | | | | | | | | | $ | 1,921,729 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 54,512 | | | | 3.45 | % | | | | | | $ | 46,460 | | | | 3.47 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | 3.59 | % | | | | | | | | | | | 3.62 | % |
| (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 | |
| | | 2015 | | | 2014 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 48,155 | | | $ | 43,476 | |
| Investment securities, available for sale | | | 435,673 | | | | 323,764 | |
| Investment securities, held to maturity (fair value of $188,575 and $169,904) | | | 182,187 | | | | 165,767 | |
| Loans held for sale | | | 5,583 | | | | 6,143 | |
| Loans, net of allowance for loan losses of $16,168 and $16,501 | | | 1,709,852 | | | | 1,362,053 | |
| Premises and equipment, net | | | 60,700 | | | | 52,461 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 13,823 | | | | 11,348 | |
| Goodwill | | | 49,214 | | | | 28,176 | |
| Other intangible assets | | | 7,648 | | | | 3,965 | |
| Interest receivable | | | 10,862 | | | | 8,246 | |
| Cash value of life insurance | | | 54,148 | | | | 39,382 | |
| Other assets | | | 28,988 | | | | 32,141 | |
| Total assets | | $ | 2,606,833 | | | $ | 2,076,922 | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 338,436 | | | $ | 267,667 | |
| Interest bearing | | | 1,574,639 | | | | 1,214,652 | |
| Total deposits | | | 1,913,075 | | | | 1,482,319 | |
| Borrowings | | | 372,820 | | | | 351,198 | |
| Subordinated debentures | | | 32,758 | | | | 32,642 | |
| Interest payable | | | 490 | | | | 497 | |
| Other liabilities | | | 22,952 | | | | 15,852 | |
| Total liabilities | | | 2,342,095 | | | | 1,882,508 | |
| 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, 11,987,424 and 9,278,916 shares | | | | | | | | |
| Outstanding, 11,931,987 and 9,213,036 shares | | | - | | | | - | |
| Additional paid-in capital | | | 106,083 | | | | 45,916 | |
| Retained earnings | | | 144,344 | | | | 134,477 | |
| Accumulated other comprehensive income | | | 1,811 | | | | 1,521 | |
| Total stockholders’ equity | | | 264,738 | | | | 194,414 | |
| Total liabilities and stockholders’ equity | | $ | 2,606,833 | | | $ | 2,076,922 | |
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data, Unaudited)
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | September 30 | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Interest Income | | | | | | | | | | | | |
| Loans receivable | | $ | 20,297 | | | $ | 16,403 | | | $ | 55,140 | | | $ | 45,988 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 2,156 | | | | 2,339 | | | | 6,377 | | | | 7,124 | |
| Tax exempt | | | 1,125 | | | | 1,109 | | | | 3,281 | | | | 3,328 | |
| Total interest income | | | 23,578 | | | | 19,851 | | | | 64,798 | | | | 56,440 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 1,566 | | | | 1,352 | | | | 4,035 | | | | 3,984 | |
| Borrowed funds | | | 1,729 | | | | 1,593 | | | | 4,747 | | | | 4,493 | |
| Subordinated debentures | | | 507 | | | | 506 | | | | 1,504 | | | | 1,503 | |
| Total interest expense | | | 3,802 | | | | 3,451 | | | | 10,286 | | | | 9,980 | |
| Net Interest Income | | | 19,776 | | | | 16,400 | | | | 54,512 | | | | 46,460 | |
| Provision for loan losses | | | 300 | | | | 1,741 | | | | 2,820 | | | | 2,080 | |
| Net Interest Income after Provision for Loan Losses | | | 19,476 | | | | 14,659 | | | | 51,692 | | | | 44,380 | |
| Non-interest Income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,359 | | | | 1,076 | | | | 3,443 | | | | 3,037 | |
| Wire transfer fees | | | 160 | | | | 151 | | | | 493 | | | | 408 | |
| Interchange fees | | | 1,625 | | | | 1,223 | | | | 4,093 | | | | 3,436 | |
| Fiduciary activities | | | 1,520 | | | | 1,131 | | | | 4,033 | | | | 3,378 | |
| Gain on sale of investment securities (includes $0 for the three months ended and $124 for the nine months ended September 30, 2015 and $988 for the three and nine months ended September 30, 2014, related to accumulated other comprehensive earnings reclassifications) | | | - | | | | 988 | | | | 124 | | | | 988 | |
| Gain on sale of mortgage loans | | | 2,794 | | | | 2,153 | | | | 7,815 | | | | 6,101 | |
| Mortgage servicing income net of impairment | | | 246 | | | | 116 | | | | 725 | | | | 556 | |
| Increase in cash value of bank owned life insurance | | | 374 | | | | 296 | | | | 889 | | | | 781 | |
| Death benefit on bank owned life insurance | | | - | | | | - | | | | 145 | | | | - | |
| Other income | | | 322 | | | | 256 | | | | 892 | | | | 854 | |
| Total non-interest income | | | 8,400 | | | | 7,390 | | | | 22,652 | | | | 19,539 | |
| Non-interest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 10,652 | | | | 8,215 | | | | 27,541 | | | | 23,991 | |
| Net occupancy expenses | | | 1,723 | | | | 1,404 | | | | 4,649 | | | | 4,188 | |
| Data processing | | | 1,281 | | | | 907 | | | | 3,170 | | | | 2,714 | |
| Professional fees | | | 409 | | | | 358 | | | | 1,596 | | | | 1,385 | |
| Outside services and consultants | | | 3,209 | | | | 595 | | | | 4,753 | | | | 2,554 | |
| Loan expense | | | 1,351 | | | | 1,202 | | | | 3,975 | | | | 3,489 | |
| FDIC insurance expense | | | 423 | | | | 313 | | | | 1,099 | | | | 854 | |
| Other losses | | | 246 | | | | (35 | ) | | | 351 | | | | 98 | |
| Other expense | | | 2,941 | | | | 2,394 | | | | 7,819 | | | | 7,002 | |
| Total non-interest expense | | | 22,235 | | | | 15,353 | | | | 54,953 | | | | 46,275 | |
| Income Before Income Tax | | | 5,641 | | | | 6,696 | | | | 19,391 | | | | 17,644 | |
| Income tax expense (includes $0 for the three months ended and $43 for the nine months ended September 30, 2015 and $346 for the three and nine months ended September 30, 2014, related to income tax expense from reclassification items) | | | 1,353 | | | | 1,738 | | | | 5,017 | | | | 4,491 | |
| Net Income | | | 4,288 | | | | 4,958 | | | | 14,374 | | | | 13,153 | |
| Preferred stock dividend | | | (31 | ) | | | (40 | ) | | | (94 | ) | | | (102 | ) |
| Net Income Available to Common Shareholders | | $ | 4,257 | | | $ | 4,918 | | | $ | 14,280 | | | $ | 13,051 | |
| Basic Earnings Per Share | | $ | 0.37 | | | $ | 0.53 | | | $ | 1.42 | | | $ | 1.45 | |
| Diluted Earnings Per Share | | | 0.36 | | | | 0.51 | | | | 1.37 | | | | 1.39 | |
