Exhibit 99.1
[HORIZON BANCORP LOGO]
Contact: James H. Foglesong
Chief Financial Officer
Phone: (219) 873-2608
Fax: (219) 874-9280
Date: January 23, 2004
FOR IMMEDIATE RELEASE
HORIZON BANCORP ANNOUNCES RECORD EARNINGS FOR 2003
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AND A 12.5% QUARTERLY DIVIDEND INCREASE
Michigan City, Indiana, (January 23, 2004) - Horizon Bancorp today announced
unaudited financial results for the year ended December 31, 2003. Net income was
$6.534 million or $2.11 per fully diluted share. This compares to net income of
$5.499 million or $1.83 per fully diluted share for the prior year. This
represents a 19% increase in net income over the prior year. Net income for the
fourth quarter of 2003 was $1.007 million or $.33 per fully diluted share
compared to net income of $1.575 million or $.51 per fully diluted share for the
fourth quarter of 2002. In accordance with plans announced in our October 21,
2003 press release, Horizon did declare a $.12 per share dividend on December
16, 2003 for stockholders of record on January 2, 2004 and was payable on
January 16, 2004. This represents a 12.5% increase in the quarterly dividend.
All per share amounts have been adjusted for the three-for-two stock split
declared on October 21, 2003.
Craig M. Dwight, President and Chief Executive Officer stated, "We are pleased
to announce record earnings for 2003. Horizon has been able to take advantage of
a very active mortgage refinance market in 2003. The hard work and dedication of
our mortgage origination and processing team has helped Horizon generate record
earnings. I am also pleased with the growth of our commercial and consumer loan
portfolios which grew 37% and 25% respectively in 2003. We at Horizon look
forward to continued success in all lines of business by delivering exceptional
service and sensible advice."
While full year earnings were at record levels, fourth quarter income declined
$568 thousand or 36% from the same quarter of the prior year due primarily to a
reduction in mortgage loan volume, but also by the investment portfolio losses
taken in the quarter. The decline in mortgage volume caused a reduction in the
gain on sale of mortgage loans as well as a reduction in the volume of mortgage
warehouse loans, which declined 45% from an average of $275 million in loans
outstanding during the third quarter of 2003 to an average of $150 million in
the fourth quarter. Mortgage warehouse loans declined 27% from an average of
$205 million in the fourth quarter of 2002. Lower mortgage volumes are expected
to continue throughout 2004. As a result, the rate of increase in Horizon's
earnings for 2004 compared to 2003 is not expected to be as great as the
increase in 2003 and 2002 compared to prior years.
"To mitigate the effect of the decline in mortgage refinance activity, we
acquired an independent mortgage origination company in August of 2003 and we
will initiate a wholesale mortgage operation in early 2004. We expect both of
these initiatives to have a positive effect on 2004," stated President Dwight.
"Additionally we expect continued growth in our core commercial and consumer
lending business. We are especially pleased with the progress of our expansion
into Southwest Michigan, which has grown to $25 million in assets and is showing
a profit after only seven months of operation. Further expansion is planned for
new markets and the addition of an indirect loan originator, who has been
successful in Southwest Michigan."
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Pg. 2 Cont. Horizon's 2003 Record Earnings
Net interest income for the year was $24.151 million, an increase of $998
thousand, or 4.3%, over the prior year. This increase was the result of an
increase in average earning assets over 2002 of approximately $106 million and
was partially offset by a decline in net interest margin of 40 basis points. The
growth in earning assets came primarily in the investment portfolio and mortgage
warehouse and commercial loans. The continuing low interest rate environment is
causing compression in the net interest margin. Earning assets yields declined
as rates on maturing assets cannot be replaced at previous levels, while the
cost of deposits are at rates which would not allow for further material
reductions. Horizon's balance sheet continues to be asset sensitive and is
positioned for a rising interest rate environment.
Non-interest income increased $891 thousand or 8.7% from 2002. The increase
relates primarily to an increase in the gain on sale of mortgage loans into the
secondary market. During 2003 a total of $185 million of loans were sold
compared to $132 million in 2002. This increased volume combined with improved
marketing techniques created the increased gain. Partially offsetting this gain
were losses taken on the sale of investments. During the third and fourth
quarter of 2003, approximately $20 million of investment securities were sold at
a loss of $510 thousand. The funds generated by these sales were reinvested in
securities with higher yields and shorter average lives.
Non-interest expense increased $1.368 million or 5.8% from 2002. The increase
relates primarily to commission expense paid to mortgage originators. Also
included are increased bonuses earned based on company performance.
At December 31, 2003, Horizon's total assets were $757 million compared to $720
million at December 31, 2002. Total net loans were $441 million at December 31,
2003 compared to $530 million at December 31, 2002. Mortgage warehouse loans
declined by approximately $142 million due to the slow down in mortgage
refinance activity which occurred in the fourth quarter. Partially offsetting
this decline was growth in commercial loans, primarily in the St Joseph,
Michigan market. Commercial loans increased in other markets as well.
Horizon's allowance for loan losses at December 31, 2003 was $6.91 million, or
1.54% of gross loans, compared to $6.3 million or 1.17% at December 31, 2002.
Non-performing assets at December 31, 2003 were $1.9 million, or 0.42% of gross
loans, compared to $1.3 million or .24% at December 31, 2002. The increase
occurred in residential real estate loans.
Total deposits were $546 million at December 31, 2003, an increase of $56.9
million or 11.6% from December 31, 2002. Core deposits increased to $395.8
million, from $344.2 million at December 31, 2002.
The increase in stockholders' equity of $4.8 million during the year was the
result of net income, net of dividends declared, and a decrease in the market
value of investment securities available for sale.
Horizon Bancorp is a locally owned, independent, bank holding company serving
the Northwestern Indiana/Southwestern Michigan area. It offers banking,
insurance, investment and trust services from offices located in Michigan City,
LaPorte, Wanatah, Chesterton, Portage, Valparaiso and Merrillville, Indiana, and
St. Joseph, Michigan. Horizon also provides mortgage-banking services throughout
the Midwest. Horizon Bancorp may be reached on the World Wide Web at
www.accesshorizon.com. Its common stock is traded on the NASDAQ SmallCap Market
under the symbol HBNC.
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Pg. 3 Cont. Horizon's 2003 Record Earnings
Statements in this press release which express "belief," "intention,"
"expectation," and similar expressions, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of the Company's
management, as well as assumptions made by, and information currently available
to, such management. Such statements are inherently uncertain and there can be
no assurance that the underlying assumptions will prove to be valid. Actual
results could differ materially from those contemplated by the forward-looking
statements. Any forward-looking statements in this release are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995.
Contact: Horizon Bancorp
James H. Foglesong
Chief Financial Officer
(219) 873 - 2608
Fax: (219) 874-9280
# # #
HORIZON BANCORP
(in thousands except per share data and ratios)
At At
December 31, December 31,
2003 2002
---- ----
SELECTED FINANCIAL DATE:
Total assets $757,071 $720,130
Cash and cash equivalents 45,464 35,692
Investment securities available for sale 215,695 109,453
Loans held for sale 8,213 12,620
Loans, net 440,809 529,538
Deposits 546,168 489,259
Total borrowings 158,213 183,521
Total equity 46,223 41,410
CAPITAL RATIOS (BANK ONLY):
Total capital to risk weighted assets 14.92% 13.55%
Tier 1 capital to risk weighted assets 13.66% 12.29%
Tier 1 capital to average assets 7.90% 7.20%
ASSET QUALITY RATIOS:
Nonperforming loans to total loans 0.42% 0.24%
Allowance for loan losses to nonperforming loans 367.11% 483.76%
Allowance for loan losses to total loans 1.54% 1.17%
Three Months Year
Ended December 30, Ended December 31,
-------------------------------------------------------
2003 2002 2003 2002
---- ---- ---- ----
SELECTED OPERATING DATA:
Total interest income $ 10,019 $ 11,125 $ 41,543 $ 41,265
Total interest expense 4,344 4,741 17,392 18,112
-------- -------- -------- --------
Net interest income 5,675 6,384 24,151 23,153
Provision for loan losses 300 500 1,350 1,625
-------- -------- -------- --------
Net interest income after provision for loan losses 5,375 5,884 22,801 21,528
-------- -------- -------- --------
Noninterest income:
Service charges on deposit accounts 815 793 3,161 2,948
Fiduciary activities 614 572 2,411 2,348
Gain on sale of loans 516 872 3,843 3,152
Loss on sale of securities (237) (510)
Other noninterest income 757 259 2,235 1,801
-------- -------- -------- --------
Total noninterest income 2,465 2,496 11,140 10,249
-------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits 3,582 3,576 13,948 12,752
Other noninterest expense 2,943 2,431 10,823 10,651
-------- -------- -------- --------
Total noninterest expense 6,525 6,007 24,771 23,403
-------- -------- -------- --------
Net income before taxes and cumulative effect of
change in accounting method 1,315 2,373 9,170 8,374
Income tax expense 308 798 2,636 2,778
-------- -------- -------- --------
Net income before cumulative effect of change in
accounting method 1,007 1,575 6,534 5,596
Cumulative effect of change in accounting method - - - (97)
-------- -------- -------- --------
Net income $ 1,007 $ 1,575 $ 6,534 $ 5,499
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PERFORMANCE RATIOS:
Diluted earnings per share(1) $ 0.33 $ 0.51 $ 2.11 $ 1.83
Return on average equity 8.78% 15.08% 14.65% 14.21%
Net interest margin 3.27% 3.87% 3.50% 3.90%
(1) Reflects 3 for 2 stock split declared October 21, 2003