Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: October 26, 2016
FOR IMMEDIATE RELEASE
Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and nine-month periods ended September 30, 2016. All share data has been adjusted to reflect Horizon’s three-for-two stock split announced on October 19, 2016 to be issued on November 14, 2016.
SUMMARY:
| · | Net income for the third quarter of 2016 was $6.6 million or $.30 diluted earnings per share compared to $4.3 million or $.24 diluted earnings per share for the third quarter of 2015. |
| · | Excluding acquisition-related expenses and purchase accounting adjustments, net income for the third quarter of 2016 increased 29.6% compared to the same period of 2015 to $8.4 million or $.39 diluted earnings per share. |
| · | Net income for the first nine months of 2016 was $18.3 million or $.94 diluted earnings per share compared to $14.4 million or $.92 diluted earnings per share for the first nine months of 2015. |
| · | 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 2016 increased 32.1% compared to the same period of 2015 to $20.7 million or $1.07 diluted earnings per share. |
| · | Excluding the LaPorte Bancorp, Inc. (“LaPorte Bancorp”) acquisition, mortgage warehouse loans and loans held for sale, loans increased 4.1% on an annualized basis during the third quarter of 2016. |
| · | Net interest income for the first nine months of 2016 increased 19.3% or $10.5 million compared to the same period in 2015. |
| · | Net interest margin, excluding the impact of acquisitions (“core net interest margin”), was 3.31% for the third quarter of 2016 compared to 3.42% for the prior quarter and 3.44% for the same period in 2015. |
| · | Non-interest income for the first nine months of 2016 increased 22.7% or $5.1 million compared to the same period in 2015. |
| · | Horizon’s tangible book value per share rose to $11.76 at September 30, 2016, compared to $11.02 at December 31, 2015 and $10.89 at September 30, 2015. |
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Pg. 2 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
| · | Horizon opened its first commercial office in Fort Wayne, Indiana on September 14, 2016. The new location will offer commercial loans and cash management services and will be led by Greg Haney, Horizon’s Fort Wayne Market President. |
Craig Dwight, Chairman and CEO, commented: “The Horizon team was very busy in the third quarter of 2016 and we are proud of what they have accomplished. Our balanced strategy of organic growth, expansion into new markets and well-executed acquisitions contributed to Horizon’s increase in net income and earnings per share during the quarter. Core net income, excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, was $8.4 million for the third quarter and $20.7 million for the first nine months of 2016. Core diluted earnings per share was $.39 for the third quarter and $1.07 for the first nine months of 2016, an increase over the same periods of 2015 of 7.3% and 7.1%, respectively.”
| Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share | |
| (Dollars in Thousands Except per Share Data, Unaudited) | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | September 30 | |
| Non-GAAP Reconciliation of Net Income | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| Net income as reported | | $ | 6,602 | | | $ | 4,288 | | | $ | 18,309 | | | $ | 14,374 | |
| Merger expenses | | | 2,953 | | | | 3,648 | | | | 5,472 | | | | 4,364 | |
| Tax effect | | | (886 | ) | | | (1,219 | ) | | | (1,582 | ) | | | (1,402 | ) |
| Net income excluding merger expenses | | | 8,668 | | | | 6,717 | | | | 22,199 | | | | 17,336 | |
| | | | | | | | | | | | | | | | | |
| Gain on sale of investment securities | | | - | | | | - | | | | (875 | ) | | | (124 | ) |
| Tax effect | | | - | | | | - | | | | 306 | | | | 43 | |
| Net income excluding gain on sale of investment securities | | | 8,668 | | | | 6,717 | | | | 21,630 | | | | 17,255 | |
| | | | | | | | | | | | | | | | | |
| Death benefit on bank owned life insurance (“BOLI”) | | | - | | | | - | | | | - | | | | (145 | ) |
| Tax effect | | | - | | | | - | | | | - | | | | 51 | |
| Net income excluding death benefit on BOLI | | | 8,668 | | | | 6,717 | | | | 21,630 | | | | 17,161 | |
| | | | | | | | | | | | | | | | | |
| Acquisition-related purchase accounting adjustments (“PAUs”) | | | (459 | ) | | | (402 | ) | | | (1,404 | ) | | | (2,282 | ) |
| Tax effect | | | 161 | | | | 141 | | | | 491 | | | | 799 | |
| Net income excluding PAUs | | $ | 8,370 | | | $ | 6,456 | | | $ | 20,717 | | | $ | 15,678 | |
| | | | | | | | | | | | | | | | | |
| | |
| Non-GAAP Reconciliation of Diluted Earnings per Share | | | | | | | | | | | | | | | | |
| Diluted earnings per share as reported | | $ | 0.30 | | | $ | 0.24 | | | $ | 0.94 | | | $ | 0.92 | |
| Merger expenses | | | 0.14 | | | | 0.20 | | | | 0.28 | | | | 0.28 | |
| Tax effect | | | (0.04 | ) | | | (0.07 | ) | | | (0.08 | ) | | | (0.09 | ) |
| Diluted earnings per share excluding merger expenses | | | 0.40 | | | | 0.37 | | | | 1.14 | | | | 1.11 | |
| | | | | | | | | | | | | | | | | |
| Gain on sale of investment securities | | | - | | | | - | | | | (0.05 | ) | | | (0.01 | ) |
| Tax effect | | | - | | | | - | | | | 0.02 | | | | 0.00 | |
| Net income excluding gain on sale of investment securities | | | 0.40 | | | | 0.37 | | | | 1.11 | | | | 1.10 | |
| | | | | | | | | | | | | | | | | |
| Death benefit on BOLI | | | - | | | | - | | | | - | | | | (0.01 | ) |
| Tax effect | | | - | | | | - | | | | - | | | | 0.00 | |
| Net income excluding death benefit on BOLI | | | 0.40 | | | | 0.37 | | | | 1.11 | | | | 1.09 | |
| | | | | | | | | | | | | | | | | |
| Acquisition-related PAUs | | | (0.02 | ) | | | (0.02 | ) | | | (0.07 | ) | | | (0.15 | ) |
| Tax effect | | | 0.01 | | | | 0.01 | | | | 0.03 | | | | 0.05 | |
| Diluted earnings per share excluding PAUs | | $ | 0.39 | | | $ | 0.36 | | | $ | 1.07 | | | $ | 0.99 | |
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Pg. 3 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
Mr. Dwight continued, “The third quarter of 2016 was highlighted by commercial loan growth in our Kalamazoo and Indianapolis markets, continued asset quality improvement, the build-out of our new Fort Wayne, Indiana commercial team and the integrations of our recently closed Kosciusko Financial, Inc. (“Kosciusko”) and LaPorte Bancorp acquisitions.”
Horizon completed the systems conversion of LaPorte Bancorp on October 22, 2016 and announced on October 14, 2016 the receipt of all regulatory approvals required for its previously announced CNB Bancorp acquisition. Horizon also opened its Fort Wayne, Indiana commercial office on September 14, 2016, led by Greg Haney, Horizon’s Fort Wayne Market President. Dwight concluded, “We are thrilled to welcome these exceptional bankers to our team and look forward to continuing Horizon’s successful growth story.”
Income Statement Highlights
Net income for the third quarter of 2016 was $6.6 million or $.30 diluted earnings per share compared to $4.3 million or $.24 diluted earnings per share in the third quarter of 2015. The increase in net income and earnings per share from the previous year reflects an increase in net interest income and non-interest income of $4.6 million and $1.7 million, respectively, partially offset by increases in non-interest expense of $2.6 million, income tax expense of $1.2 million and the diluted shares outstanding primarily due to the stock issued in the Kosciusko and LaPorte Bancorp acquisitions. Excluding acquisition-related expenses and purchase accounting adjustments, net income for the third quarter of 2016 was $8.4 million or $.39 diluted earnings per share compared to $6.5 million or $.36 diluted earnings per share in the third quarter of 2015.
Net income for the nine months ended September 30, 2016 was $18.3 million or $.94 diluted earnings per share compared to $14.4 million or $.92 diluted earnings per share for the nine months ended September 30, 2015. The increase in net income and earnings per share from the previous year reflects an increase in net interest income and non-interest income of $10.5 million and $5.1 million, respectively, and a decrease in the provision for loan losses of $1.6 million, partially offset by increases in non-interest expense of $11.2 million and income tax expense of $2.2 million and the diluted shares outstanding primarily due to the stock issued in the Kosciusko and LaPorte Bancorp acquisitions. 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 2016 was $20.7 million or $1.07 diluted earnings per share compared to $15.7 million or $.99 diluted earnings per share in the same period of 2015.
Horizon’s net interest margin was 3.37% during the third quarter of 2016, down from 3.48% for the prior quarter and 3.51% for same period of 2015. The decrease in the net interest margin compared to the prior quarter and the same period of 2015 was due to lower yields on new loans and re-pricing earning assets, the impact of acquisitions and higher levels of cash during the quarter due to acquisitions, partially offset by lower rates on interest-bearing liabilities. Excluding acquisition-related purchase accounting adjustments, the margin would have been 3.31% for the third quarter of 2016 compared to 3.42% for the prior quarter and 3.44% for the same period of 2015. Interest income from acquisition-related purchase accounting adjustments was $459,000, $397,000 and
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Pg. 4 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
$402,000 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively.
Horizon’s net interest margin was 3.43% for the nine months ending September 30, 2016, down from 3.59% for same period of 2015. Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.36% for the nine months ending September 30, 2016 compared to 3.44% for same period of 2015. Interest income from acquisition-related purchase accounting adjustments was $1.4 million and $2.3 million for the nine months ended September 30, 2016 and September 30, 2015, respectively.
| Non-GAAP Reconciliation of Net Interest Margin | |
(Dollars in Thousands, Unaudited) | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | June 30 | | | September 30 | | | September 30 | |
Net Interest Margin As Reported | | 2016 | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| Net interest income | | $ | 24,410 | | | $ | 20,869 | | | $ | 19,776 | | | $ | 65,053 | | | $ | 54,512 | |
| Average interest-earning assets | | | 2,957,944 | | | | 2,471,354 | | | | 2,304,515 | | | | 2,591,566 | | | | 2,072,276 | |
| Net interest income as a percent of average interest-earning assets (“Net Interest Margin”) | | | 3.37 | % | | | 3.48 | % | | | 3.51 | % | | | 3.43 | % | | | 3.59 | % |
| | | | | | | | | | | | | | | | | | | | | |
Impact of Acquisitions | | | | | | | | | | | | | | | | | | | | |
| Interest income from acquisition-related purchase accounting adjustments | | $ | (459 | ) | | $ | (397 | ) | | $ | (402 | ) | | $ | (1,404 | ) | | $ | (2,282 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Excluding Impact of Acquisitions | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 23,951 | | | $ | 20,472 | | | $ | 19,374 | | | $ | 63,649 | | | $ | 52,230 | |
| Average interest-earning assets | | | 2,957,944 | | | | 2,471,354 | | | | 2,304,515 | | | | 2,591,566 | | | | 2,072,276 | |
| Core Net Interest Margin | | | 3.31 | % | | | 3.42 | % | | | 3.44 | % | | | 3.36 | % | | | 3.44 | % |
Lending Activity
Total loans increased $440.8 million from $1.8 billion as of December 31, 2015 to $2.2 billion as of September 30, 2016 as commercial loans increased by $242.5 million, mortgage warehouse loans increased by $82.2 million, residential mortgage loans increased by $93.0 million and consumer loans increased by $23.7 million. Total loans, excluding acquired loans, mortgage warehouse loans and loans held for sale, increased 1.0% during the third quarter of 2016 or 4.1% on an annualized and 2.7% during the first nine months of 2016 or 3.6% on an annualized basis.
Residential mortgage lending activity during the third quarter of 2016 generated $3.5 million in income from the gain on sale of mortgage loans, an increase of $734,000 from the same period of 2015. Total origination volume in the third quarter of 2016, including loans placed into portfolio, totaled $129.0 million, representing an increase of 1.2% from the same period of 2015. Purchase money mortgage originations during the third quarter of 2016 represented 66.5% of total originations compared to 78.2% of originations during the previous quarter and 81.0% during the third quarter of 2015.
Loan balances in the Kalamazoo and Indianapolis markets totaled $182.6 million and $197.7 million, respectively, as of September 30, 2016. Combined, these markets contributed $29.7 million in loan
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Pg. 5 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
growth during the third quarter of 2016 or 33.8% on an annualized basis.
| Loan Growth by Type, Excluding Acquired Loans | |
| Three Months Ended September 30, 2016 | |
(Dollars in Thousands, Unaudited) | |
| | | | | | | | | | | | | | | Excluding Acquired Loans | |
| | | | | | | | | | | | Acquired | | | | | | | | | Annualized | |
| | | September 30 | | | June 30 | | | Amount | | | LaPorte | | | Amount | | | Percent | | | Percent | |
| | | 2016 | | | 2016 | | | Change | | | Loans | | | Change | | | Change | | | Change | |
| Commercial loans | | $ | 1,047,450 | | | $ | 874,580 | | | $ | 172,870 | | | $ | (154,223 | ) | | $ | 18,647 | | | | 2.1 | % | | | 8.5 | % |
| Residential mortgage loans | | | 530,162 | | | | 493,626 | | | | 36,536 | | | | (42,603 | ) | | | (6,067 | ) | | | -1.2 | % | | | -4.9 | % |
| Consumer loans | | | 386,031 | | | | 363,920 | | | | 22,111 | | | | (16,801 | ) | | | 5,310 | | | | 1.5 | % | | | 5.8 | % |
| Subtotal | | | 1,963,643 | | | | 1,732,126 | | | | 231,517 | | | | (213,627 | ) | | | 17,890 | | | | 1.0 | % | | | 4.1 | % |
| Held for sale loans | | | 7,369 | | | | 7,812 | | | | (443 | ) | | | - | | | | (443 | ) | | | -5.7 | % | | | -22.6 | % |
| Mortgage warehouse loans | | | 226,876 | | | | 205,699 | | | | 21,177 | | | | (99,752 | ) | | | (78,575 | ) | | | -38.2 | % | | | -152.0 | % |
| Total loans | | $ | 2,197,888 | | | $ | 1,945,637 | | | $ | 252,251 | | | $ | (313,379 | ) | | $ | (61,128 | ) | | | -3.1 | % | | | -12.5 | % |
| Loan Growth by Type, Excluding Acquired Loans | |
| Nine Months Ended September 30, 2016 | |
(Dollars in Thousands) | |
| | | | | | | | | | | | Acquired | | | Excluding Acquired Loans | |
| | | | | | | | | | | | Kosciusko | | | | | | | | | Annualized | |
| | | September 30 | | | December 31 | | | Amount | | | and LaPorte | | | Amount | | | Percent | | | Percent | |
| | | 2016 | | | 2015 | | | Change | | | Loans | | | Change | | | Change | | | Change | |
| | | (Unaudited) | | | | | | | | | | | | | | | | | | | |
| Commercial loans | | $ | 1,047,450 | | | $ | 804,995 | | | $ | 242,455 | | | $ | (224,229 | ) | | $ | 18,226 | | | | 2.3 | % | | | 3.0 | % |
| Residential mortgage loans | | | 530,162 | | | | 437,144 | | | | 93,018 | | | | (68,847 | ) | | | 24,171 | | | | 5.5 | % | | | 7.4 | % |
| Consumer loans | | | 386,031 | | | | 362,300 | | | | 23,731 | | | | (23,120 | ) | | | 611 | | | | 0.2 | % | | | 0.2 | % |
| Subtotal | | | 1,963,643 | | | | 1,604,439 | | | | 359,204 | | | | (316,196 | ) | | | 43,008 | | | | 2.7 | % | | | 3.6 | % |
| Held for sale loans | | | 7,369 | | | | 7,917 | | | | (548 | ) | | | - | | | | (548 | ) | | | -6.9 | % | | | -9.2 | % |
| Mortgage warehouse loans | | | 226,876 | | | | 144,692 | | | | 82,184 | | | | (99,752 | ) | | | (17,568 | ) | | | -12.1 | % | | | -16.2 | % |
| Total loans | | $ | 2,197,888 | | | $ | 1,757,048 | | | $ | 440,840 | | | $ | (415,948 | ) | | $ | 24,892 | | | | 1.4 | % | | | 1.9 | % |
The provision for loan losses was $455,000 for the third quarter of 2016 compared to $300,000 for the same period of 2015. The increase in the provision for loan losses during the third quarter of 2016 was due to continued loan growth. The provision for loan losses for the first nine months of 2016 was $1.2 million compared to $2.8 million for the same period of 2015. The decrease in the provision for loan losses during the first nine months of 2016 was due to lower charge-offs, stable delinquency trends and a decrease in non-performing loans.
The ratio of the allowance for loan losses to total loans decreased to 0.66% as of September 30, 2016 from 0.83% as of December 31, 2015 due to an increase in total loans. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.87% as of September 30, 2016. Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 1.40% as of September 30, 2016.
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Pg. 6 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
Non-performing loans to total loans declined 37 basis points to 0.58% at September 30, 2016 from 0.95% at December 31, 2015. Non-performing loans totaled $12.8 million as of September 30, 2016 a decrease of $3.9 million from $16.7 million as of December 31, 2015. Compared to December 31, 2015, non-performing commercial loans decreased by $1.6 million, non-performing real estate loans decreased by $2.0 million and non-performing consumer loans decreased $330,000.
| Non- GAAP Allowance for Loan and Lease Loss Detail | |
| As of September 30, 2016 | |
| (Dollars in Thousands, Unaudited) | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | Horizon | | | | | | | | | | | | | | | | | | | |
| | | Legacy | | | Heartland | | | Summit | | | Peoples | | | Kosciusko | | | LaPorte | | | Total | |
| Pre-discount loan balance | | $ | 1,673,722 | | | $ | 15,719 | | | $ | 57,214 | | | $ | 155,318 | | | $ | 89,490 | | | $ | 215,531 | | | $ | 2,206,994 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses (ALLL) | | | 14,524 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 14,524 | |
| Loan discount | | | N/A | | | | 1,067 | | | | 2,645 | | | | 3,545 | | | | 1,132 | | | | 8,086 | | | | 16,475 | |
| ALLL+loan discount | | | 14,524 | | | | 1,067 | | | | 2,645 | | | | 3,545 | | | | 1,132 | | | | 8,086 | | | | 30,999 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans, net | | $ | 1,659,198 | | | $ | 14,652 | | | $ | 54,569 | | | $ | 151,773 | | | $ | 88,358 | | | $ | 207,445 | | | $ | 2,175,995 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ALLL/ pre-discount loan balance | | | 0.87 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.66 | % |
| Loan discount/ pre-discount loan balance | | | N/A | | | | 6.79 | % | | | 4.62 | % | | | 2.28 | % | | | 1.26 | % | | | 3.75 | % | | | 0.75 | % |
| ALLL+loan discount/ pre-discount loan balance | | | 0.87 | % | | | 6.79 | % | | | 4.62 | % | | | 2.28 | % | | | 1.26 | % | | | 3.75 | % | | | 1.40 | % |
Expense Management
Total non-interest expense was $2.6 million higher in the third quarter of 2016 compared to the same period of 2015. The increase was primarily due to an increase in salaries, employee benefits, net occupancy expenses, data processing, professional fees, loan expense, and other expense reflecting overall company growth. Outside services and consultants expense decreased primarily due to the expense associated with the Peoples Bancorp acquisition that occurred in the third quarter of 2015. Non-interest expense for the third quarter of 2016 included $2.9 million of one- time merger-related expenses due to the Kosciusko, LaPorte Bancorp and CNB Bancorp acquisitions compared to $3.6 million in one-time merger-related expenses during the same period of 2015 due to the Peoples Bancorp acquisition.
Total non-interest expense was $11.2 million higher in the first nine months of 2016 compared to the same period of 2015. The increase in non-interest expense was due to an increase in salaries expense of $4.0 million, employee benefits of $1.3 million, net occupancy expenses of $1.4 million, data processing expense of $685,000, professional fees of $594,000, loan expense of $111,000, FDIC deposit insurance expense of $180,000, other losses of $159,000 and other expense of $1.8 million due to overall company growth. Commission and bonus expense decreased by $261,000 due to decrease in incentive pay. Outside services and consultants expense increased $1.2 million primarily due to the expense associated with the Kosciusko, LaPorte Bancorp and CNB Bancorp acquisitions. Non-interest expense for the first nine months of 2016 included $5.5 million of one-time merger-related expenses due to the Kosciusko, LaPorte Bancorp and CNB Bancorp acquisitions compared to $4.4 million in one-time merger-related expenses in the same period of 2015 due to the Peoples Bancorp acquisition.
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Pg. 7 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
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.
| Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share | |
| (Dollars in Thousands Except per Share Data) | |
| | | | | | | | | | | | | | | | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2016 | | | 2016 | | | 2016 | | | 2015 | | | 2015 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | | | | (Unaudited) | |
| Total stockholders’ equity | | $ | 345,525 | | | $ | 281,002 | | | $ | 261,417 | | | $ | 266,832 | | | $ | 264,738 | |
| Less: Preferred stock | | | - | | | | - | | | | - | | | | 12,500 | | | | 12,500 | |
| Less: Intangible assets | | | 85,179 | | | | 65,144 | | | | 56,695 | | | | 56,971 | | | | 57,248 | |
| Total tangible stockholder’s equity | | $ | 260,346 | | | $ | 215,858 | | | $ | 204,722 | | | $ | 197,361 | | | $ | 194,990 | |
| | | | | | | | | | | | | | | | | | | | | |
| Common shares outstanding | | | 22,143,228 | | | | 18,857,301 | | | | 17,974,970 | | | | 17,909,831 | | | | 17,897,981 | |
| | | | | | | | | | | | | | | | | | | | | |
| Tangible book value per common share | | $ | 11.76 | | | $ | 11.45 | | | $ | 11.39 | | | $ | 11.02 | | | $ | 10.89 | |
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 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
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Pg. 8 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income
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 | |
| | | 2016 | | | 2016 | | | 2016 | | | 2015 | | | 2015 | |
| Balance sheet: | | | | | | | | | | | | | |
| Total assets | | $ | 3,325,658 | | | $ | 2,918,080 | | | $ | 2,627,918 | | | $ | 2,652,401 | | | $ | 2,607,914 | |
| Investment securities | | | 744,240 | | | | 628,935 | | | | 642,767 | | | | 632,611 | | | | 617,860 | |
| Commercial loans | | | 1,047,450 | | | | 874,580 | | | | 797,754 | | | | 804,995 | | | | 795,271 | |
| Mortgage warehouse loans | | | 226,876 | | | | 205,699 | | | | 119,876 | | | | 144,692 | | | | 138,974 | |
| Residential mortgage loans | | | 530,162 | | | | 493,626 | | | | 442,806 | | | | 437,144 | | | | 430,946 | |
| Consumer loans | | | 386,031 | | | | 363,920 | | | | 359,636 | | | | 362,300 | | | | 361,298 | |
| Earning assets | | | 2,963,005 | | | | 2,591,208 | | | | 2,379,830 | | | | 2,403,482 | | | | 2,363,755 | |
| Non-interest bearing deposit accounts | | | 479,771 | | | | 397,412 | | | | 343,025 | | | | 335,955 | | | | 338,436 | |
| Interest bearing transaction accounts | | | 1,367,285 | | | | 1,213,659 | | | | 1,118,617 | | | | 1,177,651 | | | | 1,164,787 | |
| Time deposits | | | 489,106 | | | | 471,190 | | | | 416,837 | | | | 366,547 | | | | 409,852 | |
| Borrowings | | | 571,889 | | | | 492,883 | | | | 430,507 | | | | 449,347 | | | | 373,901 | |
| Subordinated debentures | | | 37,418 | | | | 32,874 | | | | 32,836 | | | | 32,797 | | | | 32,758 | |
| Common stockholders’ equity | | | 345,525 | | | | 281,002 | | | | 261,417 | | | | 254,332 | | | | 252,238 | |
| Total stockholders’ equity | | | 345,525 | | | | 281,002 | | | | 261,417 | | | | 266,832 | | | | 264,738 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income statement: | | Three months ended | |
| Net interest income | | $ | 24,410 | | | $ | 20,869 | | | $ | 19,774 | | | $ | 20,222 | | | $ | 19,776 | |
| Provision for loan losses | | | 455 | | | | 232 | | | | 532 | | | | 342 | | | | 300 | |
| Non-interest income | | | 10,056 | | | | 9,869 | | | | 7,864 | | | | 7,750 | | | | 8,400 | |
| Non-interest expenses | | | 24,820 | | | | 21,555 | | | | 19,747 | | | | 19,240 | | | | 22,235 | |
| Income tax expense | | | 2,589 | | | | 2,625 | | | | 1,978 | | | | 2,215 | | | | 1,353 | |
| Net income | | | 6,602 | | | | 6,326 | | | | 5,381 | | | | 6,175 | | | | 4,288 | |
| Preferred stock dividend | | | - | | | | - | | | | (42 | ) | | | (31 | ) | | | (31 | ) |
| Net income available to common shareholders | | $ | 6,602 | | | $ | 6,326 | | | $ | 5,339 | | | $ | 6,144 | | | $ | 4,257 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.30 | | | $ | 0.34 | | | $ | 0.24 | |
| Diluted earnings per share | | | 0.30 | | | | 0.34 | | | | 0.30 | | | | 0.34 | | | | 0.24 | |
| Cash dividends declared per common share | | | 0.10 | | | | 0.10 | | | | 0.10 | | | | 0.10 | | | | 0.10 | |
| Book value per common share | | | 15.60 | | | | 14.90 | | | | 14.54 | | | | 14.20 | | | | 14.09 | |
| Tangible book value per common share | | | 11.76 | | | | 11.45 | | | | 11.39 | | | | 11.02 | | | | 10.89 | |
| Market value - high | | | 20.01 | | | | 16.76 | | | | 18.59 | | | | 18.77 | | | | 17.43 | |
| Market value - low | | $ | 16.61 | | | $ | 15.87 | | | $ | 15.41 | | | $ | 15.72 | | | $ | 15.07 | |
| Weighted average shares outstanding - Basic | | | 21,538,752 | | | | 18,268,880 | | | | 17,924,124 | | | | 17,905,871 | | | �� | 17,408,964 | |
| Weighted average shares outstanding - Diluted | | | 21,651,953 | | | | 18,364,167 | | | | 18,012,726 | | | | 18,020,615 | | | | 17,839,882 | |
| | | | | | | | | | | | | | | | | | | | | |
| Key ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.80 | % | | | 0.94 | % | | | 0.83 | % | | | 0.94 | % | | | 0.67 | % |
| Return on average common stockholders’ equity | | | 7.88 | | | | 9.43 | | | | 8.26 | | | | 9.53 | | | | 6.76 | |
| Net interest margin | | | 3.37 | | | | 3.48 | | | | 3.45 | | | | 3.50 | | | | 3.51 | |
| Loan loss reserve to total loans | | | 0.66 | | | | 0.73 | | | | 0.83 | | | | 0.83 | | | | 0.93 | |
| Non-performing loans to loans | | | 0.58 | | | | 0.68 | | | | 0.87 | | | | 0.95 | | | | 1.21 | |
| Average equity to average assets | | | 10.18 | | | | 9.94 | | | | 10.16 | | | | 10.32 | | | | 10.38 | |
| Bank only capital ratios: | | | | | | | | | | | | | |
| Tier 1 capital to average assets | | | 9.88 | | | | 9.39 | | | | 8.98 | | | | 8.77 | | | | 9.31 | |
| Tier 1 capital to risk weighted assets | | | 12.35 | | | | 12.51 | | | | 12.33 | | | | 11.80 | | | | 12.30 | |
| Total capital to risk weighted assets | | | 12.95 | | | | 13.23 | | | | 13.10 | | | | 12.57 | | | | 13.17 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loan data: | | | | | | | | | | | | | | | | | | | | |
| Substandard loans | | $ | 33,914 | | | $ | 28,629 | | | $ | 23,600 | | | $ | 25,127 | | | $ | 26,073 | |
| 30 to 89 days delinquent | | | 3,821 | | | | 2,887 | | | | 2,149 | | | | 5,011 | | | | 4,868 | |
| | | | | | | | | | | | | | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 59 | | | $ | 24 | | | $ | 1 | | | $ | 28 | | | $ | 100 | |
| Trouble debt restructures - accruing interest | | | 1,523 | | | | 1,256 | | | | 1,231 | | | | 1,218 | | | | 2,948 | |
| Trouble debt restructures - non-accrual | | | 1,164 | | | | 1,466 | | | | 2,857 | | | | 3,172 | | | | 3,994 | |
| Non-accrual loans | | | 10,032 | | | | 10,426 | | | | 10,895 | | | | 12,262 | | | | 13,956 | |
| Total non-performing loans | | $ | 12,778 | | | $ | 13,172 | | | $ | 14,984 | | | $ | 16,680 | | | $ | 20,998 | |
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
| | | September 30 | | | September 30 | |
| | | 2016 | | | 2015 | |
| Balance sheet: | | | | |
| Total assets | | $ | 3,325,658 | | | $ | 2,607,914 | |
| Investment securities | | | 744,240 | | | | 617,860 | |
| Commercial loans | | | 1,047,450 | | | | 795,271 | |
| Mortgage warehouse loans | | | 226,876 | | | | 138,974 | |
| Residential mortgage loans | | | 530,162 | | | | 430,946 | |
| Consumer loans | | | 386,031 | | | | 361,298 | |
| Earning assets | | | 2,963,005 | | | | 2,363,755 | |
| Non-interest bearing deposit accounts | | | 479,771 | | | | 338,436 | |
| Interest bearing transaction accounts | | | 1,367,285 | | | | 1,164,787 | |
| Time deposits | | | 489,106 | | | | 409,852 | |
| Borrowings | | | 571,889 | | | | 373,901 | |
| Subordinated debentures | | | 37,418 | | | | 32,758 | |
| Common stockholders’ equity | | | 345,525 | | | | 252,238 | |
| Total stockholders’ equity | | | 345,525 | | | | 264,738 | |
| | | | | | | | | |
| Income statement: | | Nine Months Ended | |
| Net interest income | | $ | 65,053 | | | $ | 54,512 | |
| Provision for loan losses | | | 1,219 | | | | 2,820 | |
| Non-interest income | | | 27,789 | | | | 22,652 | |
| Non-interest expenses | | | 66,122 | | | | 54,953 | |
| Income tax expense | | | 7,192 | | | | 5,017 | |
| Net income | | | 18,309 | | | | 14,374 | |
| Preferred stock dividend | | | (42 | ) | | | (94 | ) |
| Net income available to common shareholders | | $ | 18,267 | | | $ | 14,280 | |
| | | | | | | | | |
| Per share data: | | | | | | | | |
| Basic earnings per share | | $ | 0.95 | | | $ | 0.95 | |
| Diluted earnings per share | | | 0.94 | | | | 0.92 | |
| Cash dividends declared per common share | | | 0.30 | | | | 0.29 | |
| Book value per common share | | | 15.60 | | | | 14.09 | |
| Tangible book value per common share | | | 11.76 | | | | 10.89 | |
| Market value - high | | | 20.01 | | | | 17.43 | |
| Market value - low | | $ | 15.41 | | | $ | 14.92 | |
| Weighted average shares outstanding - Basic | | | 19,252,295 | | | | 15,044,129 | |
| Weighted average shares outstanding - Diluted | | | 19,346,376 | | | | 15,580,711 | |
| | | | | | | | | |
| Key ratios: | | | | | | | | |
| Return on average assets | | | 0.86 | % | | | 0.85 | % |
| Return on average common stockholders’ equity | | | 8.82 | | | | 9.12 | |
| Net interest margin | | | 3.43 | | | | 3.59 | |
| Loan loss reserve to total loans | | | 0.66 | | | | 0.93 | |
| Non-performing loans to loans | | | 0.58 | | | | 1.21 | |
| Average equity to average assets | | | 10.13 | | | | 9.81 | |
| Bank only capital ratios: | |
| Tier 1 capital to average assets | | | 9.88 | | | | 9.31 | |
| Tier 1 capital to risk weighted assets | | | 12.35 | | | | 12.30 | |
| Total capital to risk weighted assets | | | 12.95 | | | | 13.17 | |
| | | | | | | | | |
| Loan data: | | | | | | | | |
| Substandard loans | | $ | 33,914 | | | $ | 25,898 | |
| 30 to 89 days delinquent | | | 3,821 | | | | 4,868 | |
| | | | | | | | | |
| 90 days and greater delinquent - accruing interest | | $ | 59 | | | $ | 100 | |
| Trouble debt restructures - accruing interest | | | 1,523 | | | | 2,948 | |
| Trouble debt restructures - non-accrual | | | 1,164 | | | | 3,994 | |
| Non-accrual loans | | | 10,032 | | | | 13,956 | |
| Total non-performing loans | | $ | 12,778 | | | $ | 20,998 | |
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 | |
| | | 2016 | | | 2016 | | | 2016 | | | 2015 | | | 2015 | |
| Commercial | | $ | 6,222 | | | $ | 6,051 | | | $ | 6,460 | | | $ | 7,195 | | | $ | 8,842 | |
| Real estate | | | 1,947 | | | | 2,102 | | | | 1,794 | | | | 2,476 | | | | 2,297 | |
| Mortgage warehousing | | | 1,337 | | | | 1,080 | | | | 1,014 | | | | 1,007 | | | | 1,015 | |
| Consumer | | | 5,018 | | | | 4,993 | | | | 4,968 | | | | 3,856 | | | | 4,014 | |
| Total | | $ | 14,524 | | | $ | 14,226 | | | $ | 14,236 | | | $ | 14,534 | | | $ | 16,168 | |
Net Charge-offs (Recoveries)
(Dollars in Thousands, Unaudited)
| | | Three months ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2016 | | | 2016 | | | 2016 | | | 2015 | | | 2015 | |
| Commercial | | $ | (5 | ) | | $ | 101 | | | $ | 403 | | | $ | 1,595 | | | $ | 77 | |
| Real estate | | | - | | | | (31 | ) | | | 83 | | | | (59 | ) | | | 96 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 162 | | | | 172 | | | | 344 | | | | 440 | | | | 380 | |
| Total | | $ | 157 | | | $ | 242 | | | $ | 830 | | | $ | 1,976 | | | $ | 553 | |
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2016 | | | 2016 | | | 2016 | | | 2015 | | | 2015 | |
| Commercial | | $ | 5,419 | | | $ | 4,330 | | | $ | 5,774 | | | $ | 7,005 | | | $ | 10,832 | |
| Real estate | | | 4,251 | | | | 5,659 | | | | 5,974 | | | | 6,237 | | | | 6,315 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 3,108 | | | | 3,183 | | | | 3,236 | | | | 3,438 | | | | 3,851 | |
| Total | | $ | 12,778 | | | $ | 13,172 | | | $ | 14,984 | | | $ | 16,680 | | | $ | 20,998 | |
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2016 | | | 2016 | | | 2016 | | | 2015 | | | 2015 | |
| Commercial | | $ | 542 | | | $ | 542 | | | $ | 424 | | | $ | 161 | | | $ | 324 | |
| Real estate | | | 3,182 | | | | 2,925 | | | | 3,393 | | | | 3,046 | | | | 958 | |
| Mortgage warehousing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 67 | | | | 69 | | | | - | | | | - | | | | - | |
| Total | | $ | 3,791 | | | $ | 3,536 | | | $ | 3,817 | | | $ | 3,207 | | | $ | 1,282 | |
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
| | | Three Months Ended | | | Three Months Ended | |
| | | September 30, 2016 | | | September 30, 2015 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 35,492 | | | $ | 20 | | | | 0.22 | % | | $ | 23,086 | | | $ | 2 | | | | 0.03 | % |
| Interest-earning deposits | | | 55,047 | | | | 32 | | | | 0.23 | % | | | 16,340 | | | | 5 | | | | 0.12 | % |
| Investment securities - taxable | | | 530,228 | | | | 2,446 | | | | 1.84 | % | | | 401,702 | | | | 2,149 | | | | 2.12 | % |
| Investment securities - non-taxable (1) | | | 186,074 | | | | 1,151 | | | | 3.73 | % | | | 154,050 | | | | 1,125 | | | | 4.39 | % |
| Loans receivable (2)(3) | | | 2,151,103 | | | | 25,313 | | | | 4.69 | % | | | 1,709,337 | | | | 20,297 | | | | 4.72 | % |
| Total interest-earning assets (1) | | | 2,957,944 | | | | 28,962 | | | | 3.98 | % | | | 2,304,515 | | | | 23,578 | | | | 4.17 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 39,875 | | | | | | | | | | | | 31,384 | | | | | | | | | |
| Allowance for loan losses | | | (14,301 | ) | | | | | | | | | | | (16,427 | ) | | | | | | | | |
| Other assets | | | 290,100 | | | | | | | | | | | | 206,545 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 3,273,618 | | | | | | | | | | | $ | 2,526,017 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,896,156 | | | $ | 1,875 | | | | 0.39 | % | | $ | 1,568,777 | | | $ | 1,566 | | | | 0.40 | % |
| Borrowings | | | 510,738 | | | | 2,128 | | | | 1.66 | % | | | 303,521 | | | | 1,729 | | | | 2.26 | % |
| Subordinated debentures | | | 37,092 | | | | 549 | | | | 5.89 | % | | | 32,737 | | | | 507 | | | | 6.14 | % |
| Total interest-bearing liabilities | | | 2,443,986 | | | | 4,552 | | | | 0.74 | % | | | 1,905,035 | | | | 3,802 | | | | 0.79 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 462,253 | | | | | | | | | | | | 343,780 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 34,144 | | | | | | | | | | | | 14,891 | | | | | | | | | |
| Stockholders’ equity | | | 333,235 | | | | | | | | | | | | 262,311 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 3,273,618 | | | | | | | | | | | $ | 2,526,017 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 24,410 | | | | 3.24 | % | | | | | | $ | 19,776 | | | | 3.38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.37 | % | | | | | | | | | | | 3.51 | % |
| (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, 2016 | | | September 30, 2015 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | $ | 13,812 | | | $ | 23 | | | | 0.22 | % | | $ | 10,563 | | | $ | 11 | | | | 0.14 | % |
| Interest-earning deposits | | | 34,624 | | | | 59 | | | | 0.23 | % | | | 11,927 | | | | 10 | | | | 0.11 | % |
| Investment securities - taxable | | | 486,374 | | | | 7,621 | | | | 2.09 | % | | | 375,548 | | | | 6,356 | | | | 2.26 | % |
| Investment securities - non-taxable (1) | | | 183,142 | | | | 3,583 | | | | 3.63 | % | | | 145,576 | | | | 3,281 | | | | 3.96 | % |
| Loans receivable (2)(3) | | | 1,873,614 | | | | 65,854 | | | | 4.70 | % | | | 1,528,662 | | | | 55,140 | | | | 4.83 | % |
| Total interest-earning assets (1) | | | 2,591,566 | | | | 77,140 | | | | 4.05 | % | | | 2,072,276 | | | | 64,798 | | | | 4.25 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 36,220 | | | | | | | | | | | | 30,729 | | | | | | | | | |
| Allowance for loan losses | | | (14,334 | ) | | | | | | | | | | | (16,557 | ) | | | | | | | | |
| Other assets | | | 243,021 | | | | | | | | | | | | 174,363 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,856,473 | | | | | | | | | | | $ | 2,260,811 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 1,680,560 | | | $ | 4,923 | | | | 0.39 | % | | $ | 1,347,882 | | | $ | 4,035 | | | | 0.40 | % |
| Borrowings | | | 438,324 | | | | 5,608 | | | | 1.71 | % | | | 340,593 | | | | 4,747 | | | | 1.86 | % |
| Subordinated debentures | | | 34,144 | | | | 1,556 | | | | 6.09 | % | | | 32,698 | | | | 1,504 | | | | 6.15 | % |
| Total interest-bearing liabilities | | | 2,153,028 | | | | 12,087 | | | | 0.75 | % | | | 1,721,173 | | | | 10,286 | | | | 0.80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 387,768 | | | | | | | | | | | | 303,309 | | | | | | | | | |
| Accrued interest payable and other liabilities | | | 26,397 | | | | | | | | | | | | 14,582 | | | | | | | | | |
| Stockholders’ equity | | | 289,280 | | | | | | | | | | | | 221,747 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,856,473 | | | | | | | | | | | $ | 2,260,811 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | | | | $ | 65,053 | | | | 3.30 | % | | | | | | $ | 54,512 | | | | 3.45 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income as a percent of average interest earning assets (1) | | | | | | | | | | | 3.43 | % | | | | | | | | | | | 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
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
| | | September 30 | | | December 31 | |
| | | 2016 | | | 2015 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 83,721 | | | $ | 48,650 | |
| Investment securities, available for sale | | | 557,213 | | | | 444,982 | |
| Investment securities, held to maturity (fair value of $194,293 and $193,703) | | | 187,027 | | | | 187,629 | |
| Loans held for sale | | | 7,369 | | | | 7,917 | |
| Loans, net of allowance for loan losses of $14,524 and $14,534 | | | 2,175,995 | | | | 1,734,597 | |
| Premises and equipment, net | | | 67,265 | | | | 60,798 | |
| Federal Reserve and Federal Home Loan Bank stock | | | 20,877 | | | | 13,823 | |
| Goodwill | | | 75,596 | | | | 49,600 | |
| Other intangible assets | | | 9,583 | | | | 7,371 | |
| Interest receivable | | | 12,702 | | | | 10,535 | |
| Cash value of life insurance | | | 73,661 | | | | 54,504 | |
| Other assets | | | 54,649 | | | | 31,995 | |
| Total assets | | $ | 3,325,658 | | | $ | 2,652,401 | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 479,771 | | | $ | 335,955 | |
| Interest bearing | | | 1,856,391 | | | | 1,544,198 | |
| Total deposits | | | 2,336,162 | | | | 1,880,153 | |
| Borrowings | | | 571,889 | | | | 449,347 | |
| Subordinated debentures | | | 37,418 | | | | 32,797 | |
| Interest payable | | | 1,015 | | | | 507 | |
| Other liabilities | | | 33,649 | | | | 22,765 | |
| Total liabilities | | | 2,980,133 | | | | 2,385,569 | |
| Commitments and contingent liabilities | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock, Authorized, 1,000,000 shares | | | | | | | | |
| Series B shares $.01 par value, $1,000 liquidation value | | | | | | | | |
| Issued 0 and 12,500 shares | | | - | | | | 12,500 | |
| Common stock, no par value | | | | | | | | |
| Authorized, 66,000,000 shares | | | | | | | | |
| Issued, 22,172,103 and 17,909,831 shares | | | | | | | | |
| Outstanding, 22,143,228 and 17,909,831 shares | | | - | | | | - | |
| Additional paid-in capital | | | 181,901 | | | | 106,370 | |
| Retained earnings | | | 161,026 | | | | 148,685 | |
| Accumulated other comprehensive income (loss) | | | 2,598 | | | | (723 | ) |
| Total stockholders’ equity | | | 345,525 | | | | 266,832 | |
| Total liabilities and stockholders’ equity | | $ | 3,325,658 | | | $ | 2,652,401 | |
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 | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Interest Income | | | | | | | | | | | | |
| Loans receivable | | $ | 25,313 | | | $ | 20,297 | | | $ | 65,854 | | | $ | 55,140 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 2,498 | | | | 2,156 | | | | 7,703 | | | | 6,377 | |
| Tax exempt | | | 1,151 | | | | 1,125 | | | | 3,583 | | | | 3,281 | |
| Total interest income | | | 28,962 | | | | 23,578 | | | | 77,140 | | | | 64,798 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 1,875 | | | | 1,566 | | | | 4,923 | | | | 4,035 | |
| Borrowed funds | | | 2,128 | | | | 1,729 | | | | 5,608 | | | | 4,747 | |
| Subordinated debentures | | | 549 | | | | 507 | | | | 1,556 | | | | 1,504 | |
| Total interest expense | | | 4,552 | | | | 3,802 | | | | 12,087 | | | | 10,286 | |
| Net Interest Income | | | 24,410 | | | | 19,776 | | | | 65,053 | | | | 54,512 | |
| Provision for loan losses | | | 455 | | | | 300 | | | | 1,219 | | | | 2,820 | |
| Net Interest Income after Provision for Loan Losses | | | 23,955 | | | | 19,476 | | | | 63,834 | | | | 51,692 | |
| Non-interest Income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,483 | | | | 1,359 | | | | 4,056 | | | | 3,443 | |
| Wire transfer fees | | | 292 | | | | 160 | | | | 588 | | | | 493 | |
| Interchange fees | | | 2,016 | | | | 1,625 | | | | 5,137 | | | | 4,093 | |
| Fiduciary activities | | | 1,653 | | | | 1,520 | | | | 4,753 | | | | 4,033 | |
| Gain on sale of investment securities (includes $0 for the three months ended and $875 for the nine months ended September 30, 2016 and $0 for the three months ended and $124 for the nine months ended September 30, 2015, related to accumulated other comprehensive earnings reclassifications) | | | - | | | | - | | | | 875 | | | | 124 | |
| Gain on sale of mortgage loans | | | 3,528 | | | | 2,794 | | | | 9,171 | | | | 7,815 | |
| Mortgage servicing income net of impairment | | | 409 | | | | 246 | | | | 1,356 | | | | 725 | |
| Increase in cash value of bank owned life insurance | | | 449 | | | | 374 | | | | 1,145 | | | | 889 | |
| Death benefit on bank owned life insurance | | | - | | | | - | | | | - | | | | 145 | |
| Other income | | | 226 | | | | 322 | | | | 708 | | | | 892 | |
| Total non-interest income | | | 10,056 | | | | 8,400 | | | | 27,789 | | | | 22,652 | |
| Non-interest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 12,210 | | | | 10,652 | | | | 32,592 | | | | 27,541 | |
| Net occupancy expenses | | | 2,174 | | | | 1,723 | | | | 6,011 | | | | 4,649 | |
| Data processing | | | 1,616 | | | | 1,281 | | | | 3,855 | | | | 3,170 | |
| Professional fees | | | 612 | | | | 409 | | | | 2,190 | | | | 1,596 | |
| Outside services and consultants | | | 2,686 | | | | 3,209 | | | | 5,983 | | | | 4,753 | |
| Loan expense | | | 1,482 | | | | 1,351 | | | | 4,086 | | | | 3,975 | |
| FDIC insurance expense | | | 465 | | | | 423 | | | | 1,279 | | | | 1,099 | |
| Other losses | | | 107 | | | | 246 | | | | 510 | | | | 351 | |
| Other expense | | | 3,468 | | | | 2,941 | | | | 9,616 | | | | 7,819 | |
| Total non-interest expense | | | 24,820 | | | | 22,235 | | | | 66,122 | | | | 54,953 | |
| Income Before Income Tax | | | 9,191 | | | | 5,641 | | | | 25,501 | | | | 19,391 | |
| Income tax expense (includes $0 for the three months ended and $306 for the nine months ended September 30, 2016 and $0 for the three months ended and $43 for the nine months ended September 30, 2015, related to income tax expense from reclassification items) | | | 2,589 | | | | 1,353 | | | | 7,192 | | | | 5,017 | |
| Net Income | | | 6,602 | | | | 4,288 | | | | 18,309 | | | | 14,374 | |
| Preferred stock dividend | | | - | | | | (31 | ) | | | (42 | ) | | | (94 | ) |
| Net Income Available to Common Shareholders | | $ | 6,602 | | | $ | 4,257 | | | $ | 18,267 | | | $ | 14,280 | |
| Basic Earnings Per Share | | $ | 0.31 | | | $ | 0.24 | | | $ | 0.95 | | | $ | 0.95 | |
| Diluted Earnings Per Share | | | 0.30 | | | | 0.24 | | | | 0.94 | | | | 0.92 | |
