News Column

Horizon Bancorp Announces an Increase in Second Quarter Earnings and Surpasses $2 Billion in Total Assets

July 23, 2014

MICHIGAN CITY, Ind.--(BUSINESS WIRE)-- (NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and six-month periods ended June 30, 2014.

SUMMARY:

  • Assets passed the $2.0 billion threshold reaching $2.1 billion as of June 30, 2014.
  • The quarterly dividend was increased from 11 cents to 13 cents per share on July 18, 2014.
  • Total loans increased $222.7 million during the quarter and $256.7 million during the first six months of 2014 to $1.3 billion as of June 30, 2014.
  • Commercial loans increased $119.6 million during the quarter and $143.0 million during the first six months of 2014 to $648.2 million as of June 30, 2014.
  • Second quarter 2014 net income was $4.8 million or $.50 diluted earnings per share, an increase of $1.4 million over the previous quarter.
  • Excluding costs related to the acquisition of SCB Bancorp, Inc. of $900,000, net income for the second quarter of 2014 was $5.4 million or $.56 diluted earnings per share.
  • Net income for the first six months of 2014 was $8.2 million or $.88 diluted earnings per share.
  • Excluding costs related to the acquisition of SCB Bancorp, Inc. of $1.2 million, net income for the first six months of 2014 was $9.0 million or $.96 diluted earnings per share.
  • Net Interest Margin, excluding the impact of acquisitions (“core net interest margin”), was 3.52% for the second quarter of 2014 compared to 3.38% in the previous quarter.
  • Return on average assets was 0.98% for the second quarter of 2014 and 0.89% for the first six months of 2014.
  • Return on average common equity was 11.95% for the second quarter of 2014 and 10.40% for the first six months of 2014.
  • Non-performing loans to total loans as of June 30, 2014 were 1.41% compared to 1.70% as of December 31, 2013 and 2.27% as of June 30, 2013.

    Craig M. Dwight, Chairman and CEO, commented: “I am pleased to announce Horizon’s second quarter 2014 results, which reflect our continued growth story and a positive contribution from our four key revenue streams – business banking, retail banking, residential mortgage lending and wealth and investment management. Horizon’s assets surpassed the $2.0 billion mark during the quarter through a combination of strategic assets acquired in the SCB Bancorp, Inc. (“Summit”) transaction and organic loan growth, most notably in the commercial loan portfolio. There was also a significant pickup in residential lending activity compared to the previous quarter. Additionally, Horizon’s core net interest margin, excluding interest income from acquisition-related purchase accounting adjustments, increased to 3.52% for the three months ended June 30, 2014 from 3.38% in the previous quarter.”

    “The loan growth we achieved during the quarter was both organic and strategic in its composition,” Dwight explained. The following tables present the amounts and growth rates of loans by various markets and product types:

    Quarterly Loan Growth by Market
    (Dollars in Thousands, Unaudited)
        Acquired         Annualized
    June 30SummitMarch 31AmountPercentPercent
        2014  

    Loans

      2014   Change   Change   Change
    Indianapolis & Kalamazoo loans $ 228,811 $ 202,892 $ 25,919 12.8% 51.8%
    All other markets loans   967,122         903,237     63,885 7.1% 28.7%
    Pre-acquisition loans 1,195,933 1,106,129 89,804 8.1% 32.9%
    Summit loans acquired   132,847   $ 124,081     -     8,766 7.1% 29.3%
    Total loans

    $

    1,328,780

         

    $

    1,106,129

      $ 222,651 20.1% 81.6%
     
    Quarterly Loan Growth by Type
    (Dollars in Thousands, Unaudited)
              Excluding Acquired Loans
    Acquired     Annualized
    June 30March 31AmountSummitAmountPercentPercent
        2014   2014   Change   Loans   Change   Change   Change
    Commercial loans $ 648,202 $ 528,635 $ 119,567 $ (70,441) $ 49,126 9.3% 37.7%
    Mortgage warehouse loans 140,896 102,146 38,750 - 38,750 37.9% 153.9%
    Residential mortgage loans 235,523 189,893 45,630 (43,448) 2,182 1.1% 4.7%
    Consumer loans 296,873 280,120 16,753 (10,192) 6,561 2.3% 9.5%
    Held for sale loans   7,286     5,335     1,951     -     1,951 36.6% 148.3%
    Total loans   1,328,780     1,106,129     222,651     (124,081)     98,570 8.9% 36.1%
     


    Dwight continued, “Horizon’s loan growth speaks well of our talented lending team and the emphasis placed on increasing our presence in larger markets with significant growth potential. Additionally, we have achieved this growth without sacrificing our disciplined credit culture, resulting in a stable level of non-performing assets and low levels of net loan charge-offs for the first six months of 2014.”

    Dwight noted the Bank continues to build core deposits to help maintain low cost funding. Core deposit accounts, excluding the Summit acquisition, grew $27.8 million or 2.6% during the second quarter of 2014 and $95.5 million or 9.4% during the first six months of 2014. Dwight explained, “We are very pleased with our net interest margin results for the second quarter, which can be attributed to the increase in higher yielding assets and low cost funding sources. Horizon’s core net interest margin increased over the first quarter of 2014 during a period in which industry-wide margin pressure persists.”

    On June 18, 2014, Horizon increased its quarterly dividend 18.2% from 11 cents to 13 cents per share. Dwight concluded, “This dividend increase reflects our commitment to Horizon shareholders by aligning dividends with profits while striving every day to build long-term shareholder value. Additionally, the shares issued in the Summit transaction increased our stock liquidity and market capitalization.”

    Income Statement Highlights

    Net income for the second quarter of 2014 was $4.8 million or $.50 diluted earnings per share compared to $5.7 million or $.62 diluted earnings per share in the second quarter of 2013. The decrease in net income from the previous year reflects the decline in net interest margin, lower non-interest income due to a decline in gain on sale of mortgage loans and an increase in non-interest expenses primarily due to an increase in salaries and employee benefits, transaction expenses related to the Summit acquisition and an increase in expenses due to overall company growth. Additionally, the decrease in diluted earnings per share reflects the shares issued to Summit shareholders as part of the transaction. Excluding transaction expenses related to the Summit acquisition of $900,000, net income would have been $5.4 million or $.56 diluted earnings per share for the second quarter of 2014.

    Net income for the six months ended June 30, 2014 was $8.2 million or $.88 diluted earnings per share compared to $11.0 million or $1.20 diluted earnings per share for the six months ended June 30, 2013. Excluding transaction expenses related to the Summit acquisition of $1.2 million, net income would have been $9.0 million or $.96 diluted earnings per share for the first six months of 2014.

    Horizon’s net interest margin was 3.78% during the second quarter of 2014, up from 3.48% for the prior quarter and down from 4.21% for same period of 2013. The increase in net interest margin compared to the previous quarter was primarily due to an increase in higher yielding average loan balances, specifically commercial loans and mortgage warehouse loans, as well as an increase in interest income from acquisition-related purchase accounting adjustments. The decrease in net interest margin compared to the same period of the prior year was primarily due to lower yields on new loans and repricing earning assets and a decrease in interest income from acquisition-related purchase accounting adjustments. Excluding purchase accounting adjustments related to the 2012 Heartland Bancshares, Inc. and the Summit acquisitions, the margin would have been 3.52% for the three-month period ending June 30, 2014 compared to 3.38% for the previous quarter and 3.61% for the same period of 2013. Interest income from acquisition-related purchase accounting adjustments was $1.2 million, $389,000 and $2.4 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.

    Horizon’s net interest margin was 3.62% for the six months ending June 30, 2014, down from 4.17% for same period of 2013. Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.43% for the six months ending June 30, 2014 compared to 3.66% for same period of 2013. Interest income from acquisition-related purchase accounting adjustments was $1.6 million and $4.2 million for the six months ended June 30, 2014 and June 30, 2013, respectively.

    Residential mortgage lending activity during the second quarter of 2014 generated $2.5 million in income from the gain on sale of mortgage loans, an increase of $1.1 million from the previous quarter and a decrease of $270,000 from the second quarter of 2013. Total origination volume in the second quarter of 2014, including loans placed into portfolio, totaled $82.5 million, representing an increase of 56.8% from the previous quarter of $52.6 million and a decrease of 29.9% from the second quarter of 2013 of $117.7 million.

    Purchase money mortgage originations during the second quarter of 2014 represented 77.5% of total originations compared to 70.6% of originations during the previous quarter and 66.0% during the second quarter of 2013.

    Lending Activity

    Total loans increased $256.7 million from December 31, 2013 to $1.3 billion at June 30, 2014 as mortgage warehouse loans increased by $42.7 million, residential mortgage loans increased by $49.6 million and consumer loans increased by $17.3 million. Commercial loans increased $143.0 million or 28.3% from $505.2 million at December 31, 2013 to $648.2 million at June 30, 2014.

    Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during the second quarter of 2014 to $127.1 million and $101.7 million, respectively, as of June 30, 2014. Kalamazoo’s aggregate loan balances increased $6.7 million or 5.5% and Indianapolis’ aggregate loan balances increased $19.3 million or 23.4% during the second quarter of 2014. Additionally, Lansing market loans were $132.8 million as of June 30, 2014, an increase of $8.8 million or 7.1% from $124.1 million as of the Summit transaction completion date on April 3, 2014.

    The provision for loan losses was $339,000 for the second quarter and the first six months of 2014, which was $390,000 lower than the provision for the second quarter of 2013 and $2.5 million lower than the provision for the first six months of 2013. The lower provision for loan losses in the second quarter and for the first six months of 2014 compared to the same periods of 2013 was due to the improvement of non-performing and substandard loans.

    The ratio of the allowance for loan losses to total loans decreased to 1.18% as of June 30, 2014 from 1.49% as of December 31, 2013 due to the increase in total loans from both organic growth and the Summit acquisition. The decrease in allowance for loan losses from $16.0 million as of December 31, 2013 to $15.7 million as of June 30, 2014 was due to net charge-offs of $670,000 during the first six months of 2014, partially offset by a provision for loan losses of $339,000 during the same period.

    Non-performing loans totaled $18.7 million as of June 30, 2014, up from $18.3 million as of December 31, 2013. Compared to December 31, 2013, non-performing commercial loans and real estate loans increased by $772,000 and $527,000, respectively, partially offset by a decrease of $898,000 in non-performing consumer loans. The increase in non-performing loans was primarily due to the addition of non-performing loans as a result of the Summit acquisition in the amount of $859,000 as of June 30, 2014. As a percentage of total loans, non-performing loans were 1.41% at June 30, 2014, down 29 basis points from 1.70% at December 31, 2013.

    At June 30, 2014, loans acquired in the Summit acquisition represented $859,000 in non-performing, $2.9 million in substandard and $463,000 in delinquent loans.

    Expense Management

    Total non-interest expense was $2.1 million higher in the first six months of 2014 compared to the first six months of 2013 and $1.9 million higher in the second quarter of 2014 compared to the previous quarter. The increase in non-interest expense was primarily related to the Summit acquisition expenses in the amount of $1.2 million for the first six months of 2014 and $900,000 for the second quarter of 2014 as well as overall company growth.

    Use of Non-GAAP Financial Measures

    Certain information set forth in this press release refers to a financial measure determined by methods other than in accordance with GAAP. Specifically, we have included a non-GAAP financial measure of the net interest margin excluding the impact of acquisitions. Horizon believes that this non-GAAP financial measure is helpful to investors and provides a greater understanding of our business without giving effect to the purchase accounting impacts of acquisitions, although this measure is not necessarily comparable to similar measures that may be presented by other companies and it should not be considered in isolation or as a substitute for the related GAAP measure.

    Non-GAAP Reconciliation of Net Interest Margin
    (Dollar Amounts in Millions, Unaudited)
      Three Months Ended   Six Months Ended
         
    June 30, 2014   March 31, 2014   June 30, 2013June 30, 2014   June 30, 2013

    Net Interest Margin As Reported

    Net interest income $ 16.8 $ 13.3 $ 16.6 $ 30.1 $ 32.6
    Average interest-earning assets 1,832.6 1,598.3 1,626.2 1,715.9 1,631.0
    Net interest income as a percent of average interest earning assets 3.78 % 3.48 % 4.21 % 3.62 % 4.17 %
     

    Impact of Acquisitions

    Interest income from acquisition-related purchase accounting
    adjustments $ (1.2 ) $ (0.4 ) $ (2.4 ) $ (1.6 ) $ (4.1 )
     

    Net Interest Margin Excluding Impact of Acquisitions

    Net interest income $ 15.6 $ 12.9 $ 14.2 $ 28.5 $ 28.4
    Average interest-earning assets 1,832.6 1,598.3 1,626.2 1,715.9 1,631.0
    Net interest income as a percent of average interest earning assets 3.52 % 3.38 % 3.61 % 3.43 % 3.66 %
     


    About Horizon

    Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern and Central Indiana and Southwest and CentralMichigan through its commercial banking subsidiary Horizon Bank, NA. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Market under the symbol HBNC.

    Forward Looking Statements

    This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon. For these statements, Horizon claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in its Form 10-K. Undue reliance should not be placed on the forward-looking statements, which speak 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.

    HORIZON BANCORP

    Financial Highlights

    (Dollars in thousands except share and per share data and ratios, Unaudited)

     
      June 30   March 31   December 31   September 30   June 30
    2014   2014   2013   2013   2013
    Balance sheet:
    Total assets $ 2,073,251 $ 1,806,583 $ 1,758,276 $ 1,781,024 $ 1,785,907
    Investment securities 537,618 529,340 518,501 524,054 492,363
    Commercial loans 648,202 528,635 505,189 499,584 502,230
    Mortgage warehouse loans 140,896 102,146 98,156 113,591 154,962
    Residential mortgage loans 235,523 189,893 185,958 189,254 182,610
    Consumer loans 296,873 280,120 279,525 278,990 277,864
    Earning assets 1,882,724 1,649,653 1,604,794 1,624,251 1,638,923
    Non-interest bearing deposit accounts 270,023 238,499 231,096 223,354 213,700
    Interest bearing transaction accounts 919,024 840,258 779,966 816,167 772,790
    Time deposits 310,056 276,814 280,458 288,799 310,766
    Borrowings 340,201 236,043 256,296 242,505 282,837
    Subordinated debentures 32,564 32,525 32,486 32,448 32,409
    Common stockholders' equity 174,836 157,283 152,020 150,959 147,665
    Total stockholders’ equity 187,336 169,783 164,520 163,459 160,165
     
    Income statement:Three months ended
    Net interest income $ 16,788 $ 13,272 $ 14,129 $ 14,669 $ 16,575
    Provision for loan losses 339 - (997 ) 104 729
    Non-interest income 6,627 5,522 5,687 5,910 6,849
    Non-interest expenses 16,408 14,514 15,610 14,061 14,795
    Income tax expense   1,890       863       1,088       1,629       2,235  
    Net income 4,778 3,417 4,115 4,785 5,665
    Preferred stock dividend   (31 )     (31 )     (63 )     (66 )     (96 )
    Net income available to common shareholders $ 4,747     $ 3,386     $ 4,052     $ 4,719     $ 5,569  
     
    Per share data:
    Basic earnings per share $ 0.52 $ 0.39 $ 0.47 $ 0.55 $ 0.65
    Diluted earnings per share 0.50 0.38 0.45 0.52 0.62
    Cash dividends declared per common share 0.13 0.11 0.11 0.11 0.10
    Book value per common share 19.00 18.22 17.64 17.52 17.14
    Tangible book value per common share 15.47 15.52 14.97 14.82 14.42
    Market value - high 22.58 24.91 26.09 25.04 20.45
    Market value - low $ 19.57 $ 20.27 $ 21.07 $ 20.74 $ 18.97
    Weighted average shares outstanding - Basic 9,182,986 8,630,966 8,623,360 8,618,969 8,617,466
    Weighted average shares outstanding - Diluted 9,560,939 9,021,786 9,020,289 9,019,211 8,974,103
     
    Key ratios:
    Return on average assets 0.98 % 0.79 % 0.93 % 1.09 % 1.29 %
    Return on average common stockholders' equity 11.95 8.81 10.44 12.60 14.67
    Net interest margin 3.78 3.48 3.60 3.78 4.21
    Loan loss reserve to total loans 1.18 1.46 1.49 1.64 1.67
    Non-performing loans to loans 1.41 1.59 1.70 2.09 2.27
    Average equity to average assets 8.79 9.65 9.46 9.22 9.34
    Bank only capital ratios:
    Tier 1 capital to average assets 8.82 9.11 9.18 9.00 8.77
    Tier 1 capital to risk weighted assets 11.48 12.87 13.42 13.17 12.37
    Total capital to risk weighted assets 12.54 14.12 14.67 14.42 13.63
     
    Loan data:
    Substandard loans $ 35,495 $ 32,648 $ 34,721 $ 44,420 $ 51,773
    30 to 89 days delinquent 3,671 2,613 3,452 2,692 4,083
     
    90 days and greater delinquent - accruing interest $ 42 $ 202 $ 48 $ 2 $ 122
    Trouble debt restructures - accruing interest 5,614 4,997 5,053 3,507 5,086
    Trouble debt restructures - non-accrual 3,178 3,662 3,427 5,986 6,586
    Non-accrual loans   9,844       8,775       9,749       12,986       13,855  
    Total non-performing loans $ 18,678     $ 17,636     $ 18,277     $ 22,481     $ 25,649  
     

    HORIZON BANCORP

    Financial Highlights

    (Dollars in thousands except share and per share data and ratios, Unaudited)

     
      June 30   June 30
    2014   2013
    Balance sheet:
    Total assets $ 2,073,251 $ 1,785,907
    Investment securities 537,618 492,363
    Commercial loans 648,202 502,230
    Mortgage warehouse loans 140,896 154,962
    Residential mortgage loans 235,523 182,610
    Consumer loans 296,873 277,864
    Earning assets 1,882,724 1,638,923
    Non-interest bearing deposit accounts 270,023 213,700
    Interest bearing transaction accounts 919,024 772,790
    Time deposits 310,056 310,766
    Borrowings 340,201 282,837
    Subordinated debentures 32,564 32,409
    Common stockholders' equity 174,836 147,665
    Total stockholders’ equity 187,336 160,165
     
    Income statement:Six months ended
    Net interest income $ 30,060 $ 32,585
    Provision for loan losses 339 2,813
    Non-interest income 12,149 14,309
    Non-interest expenses 30,922 28,774
    Income tax expense   2,753       4,331  
    Net income 8,195 10,976
    Preferred stock dividend   (63 )     (242 )
    Net income available to common shareholders $ 8,132     $ 10,734  
     
    Per share data:
    Basic earnings per share $ 0.91 $ 1.25
    Diluted earnings per share 0.88 1.20
    Cash dividends declared per common share 0.24 0.20
    Book value per common share 19.00 17.14
    Tangible book value per common share 15.47 14.42
    Market value - high 24.91 20.87
    Market value - low $ 19.57 $ 18.97
    Weighted average shares outstanding - Basic 8,908,492 8,617,466
    Weighted average shares outstanding - Diluted 9,293,423 8,977,408
     
    Key ratios:
    Return on average assets 0.89 % 1.25 %
    Return on average common stockholders' equity 10.40 14.31
    Net interest margin 3.62 4.17
    Loan loss reserve to total loans 1.18 1.67
    Non-performing loans to loans 1.41 2.27
    Average equity to average assets 9.20 9.25
    Bank only capital ratios:
    Tier 1 capital to average assets 8.82 8.77
    Tier 1 capital to risk weighted assets 11.48 12.37
    Total capital to risk weighted assets 12.54 13.63
     
    Loan data:
    Substandard loans $ 35,495 $ 51,773
    30 to 89 days delinquent 3,671 4,083
     
    90 days and greater delinquent - accruing interest $ 42 $ 122
    Trouble debt restructures - accruing interest 5,614 5,086
    Trouble debt restructures - non-accrual 3,178 6,586
    Non-accrual loans   9,844       13,855  
    Total non-performing loans $ 18,678     $ 25,649  
     

    HORIZON BANCORP

     

    Allocation of the Allowance for Loan and Lease Losses

    (Dollars in Thousands, Unaudited)

     
      June 30   March 31   December 31   September 30   June 30
    2014   2014   2013   2013   2013
    Commercial $6,958 $ 7,236 $ 6,663 $ 7,663 $ 7,526
    Real estate 2,367 2,813 3,462 3,238 3,734
    Mortgage warehousing 1,559 1,665 1,638 1,686 1,610
    Consumer 4,776 4,388 4,229 5,261 6,010
    Unallocated   -     -     -     -     -
    Total $15,660   $ 16,102   $ 15,992   $ 17,848   $ 18,880
     

    Net Charge-offs (Recoveries)

    (Dollars in Thousands, Unaudited)

     
    Three months ended
    June 30   March 31   December 31   September 30   June 30
    2014   2014   2013   2013   2013
    Commercial $185 $ (361 ) $ 214 $ 604 $ 699
    Real estate 169 18 350 40 411
    Mortgage warehousing - - - - -
    Consumer   426     233       295     492     304
    Total $780   $ (110 )   $ 859   $ 1,136   $ 1,414
     

    Total Non-performing Loans

    (Dollars in Thousands, Unaudited)

     
      June 30   March 31   December 31   September 30   June 30
    2014   2014   2013   2013   2013
    Commercial $8,243 $ 7,313 $ 7,471 $ 7,887 $ 9,466
    Real estate 6,672 6,357 6,145 8,093 9,366
    Mortgage warehousing - - - - -
    Consumer   3,763     3,966     4,661     6,501     6,817
    Total $18,678   $ 17,636   $ 18,277   $ 22,481   $ 25,649
     

    Other Real Estate Owned and Repossessed Assets

    (Dollars in Thousands, Unaudited)

     
      June 30   March 31   December 31   September 30   June 30
    2014   2014   2013   2013   2013
    Commercial $452 $ 812 $ 830 $ 954 $ 629
    Real estate 752 867 1,277 385 429
    Mortgage warehousing - - - - -
    Consumer   23     39     14     44     37
    Total $1,227   $ 1,718   $ 2,121   $ 1,383   $ 1,095
     

    HORIZON BANCORP AND SUBSIDIARIES

    Average Balance Sheets

    (Dollar Amounts in Thousands, Unaudited)

     
        Three Months Ended   Three Months Ended
    June 30, 2014June 30, 2013
    Average     AverageAverage     Average
    Balance   Interest   RateBalance   Interest   Rate
     
    ASSETS
    Interest-earning assets
    Federal funds sold $ 9,062 $ 5 0.22 % $ 5,690 $ 3 0.21 %
    Interest-earning deposits 7,987 4 0.20 % 10,289 5 0.19 %
    Investment securities - taxable 403,910 2,386 2.37 % 369,382 2,039 2.21 %
    Investment securities - non-taxable (1) 145,591 1,096 4.25 % 131,474 1,024 4.53 %
    Loans receivable (2)(3)   1,266,026       16,631 5.27 %   1,109,345       16,906 6.12 %
    Total interest-earning assets (1) 1,832,576 20,122 4.51 % 1,626,180 19,977 5.05 %
     
    Noninterest-earning assets
    Cash and due from banks 28,106 23,544
    Allowance for loan losses (15,808 ) (19,572 )
    Other assets   129,608     133,658  
     
    $ 1,974,482   $ 1,763,810  
     
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Interest-bearing liabilities
    Interest-bearing deposits $ 1,229,025 $ 1,355 0.44 % $ 1,091,285 $ 1,445 0.53 %
    Borrowings 273,968 1,478 2.16 % 240,681 1,456 2.43 %
    Subordinated debentures   32,541       501 6.18 %   32,172       501 6.25 %
    Total interest-bearing liabilities 1,535,534 3,334 0.87 % 1,364,138 3,402 1.00 %
     
    Noninterest-bearing liabilities
    Demand deposits 253,093 218,433
    Accrued interest payable and
    other liabilities 12,245 16,492
    Shareholders' equity   173,610     164,747  
     
    $ 1,974,482   $ 1,763,810  
     
    Net interest income/spread $ 16,788 3.63 % $ 16,575 4.05 %
     
    Net interest income as a percent
    of average interest earning assets (1) 3.78 % 4.21 %
     
    (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)

     
        Six Months Ended   Six Months Ended
    June 30, 2014June 30, 2013
    Average     AverageAverage     Average
    Balance   Interest   RateBalance   Interest   Rate
    ASSETS
    Interest-earning assets
    Federal funds sold $ 7,842 $ 9 0.23 % $ 9,171 $ 10 0.22 %
    Interest-earning deposits 6,855 7 0.21 % 8,920 9 0.20 %
    Investment securities - taxable 395,406 4,769 2.43 % 372,394 4,050 2.19 %
    Investment securities - non-taxable (1) 146,709 2,219 4.07 % 126,758 1,991 4.95 %
    Loans receivable (2)(3)   1,159,127       29,585 5.15 %   1,113,770       33,346 6.05 %
    Total interest-earning assets (1) 1,715,939 36,589 4.39 % 1,631,013 39,406 5.02 %
     
    Noninterest-earning assets
    Cash and due from banks 26,507 23,780
    Allowance for loan losses (15,987 ) (19,124 )
    Other assets   133,408     134,689  
     
    $ 1,859,867   $ 1,770,358  
     
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Interest-bearing liabilities
    Interest-bearing deposits $ 1,154,682 $ 2,632 0.46 % $ 1,102,991 $ 2,925 0.53 %
    Borrowings 250,761 2,900 2.33 % 242,364 2,904 2.42 %
    Subordinated debentures   32,522       997 6.18 %   32,265       992 6.20 %
    Total interest-bearing liabilities 1,437,965 6,529 0.92 % 1,377,620 6,821 1.00 %
     
    Noninterest-bearing liabilities
    Demand deposits 238,579 211,568
    Accrued interest payable and
    other liabilities 12,191 17,384
    Shareholders' equity   171,132     163,786  
     
    $ 1,859,867   $ 1,770,358  
     
    Net interest income/spread $ 30,060 3.47 % $ 32,585 4.02 %
     
    Net interest income as a percent
    of average interest earning assets (1) 3.62 % 4.17 %
     
    (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)

     
      June 30   December 31
    2014   2013
    (Unaudited)    
    Assets
    Cash and due from banks $50,804 $ 31,721
    Investment securities, available for sale 366,289 508,591
    Investment securities, held to maturity (fair value of $173,200 and $9,910) 171,329 9,910
    Loans held for sale 7,286 3,281
    Loans, net of allowance for loan losses of $15,660 and $15,9921,305,834 1,052,836
    Premises and equipment, net 50,853 46,194
    Federal Reserve and Federal Home Loan Bank stock 16,326 14,184
    Goodwill 28,034 19,748
    Other intangible assets 4,422 3,288
    Interest receivable 8,280 7,501
    Cash value life insurance 38,860 36,190
    Other assets   24,934     24,832  
    Total assets $2,073,251   $ 1,758,276  
    Liabilities
    Deposits
    Non-interest bearing $270,023 $ 231,096
    Interest bearing   1,229,080     1,060,424  
    Total deposits 1,499,103 1,291,520
    Borrowings 340,201 256,296
    Subordinated debentures 32,564 32,486
    Interest payable 508 506
    Other liabilities   13,539     12,948  
    Total liabilities   1,885,915     1,593,756  
    Commitments and contingent liabilities
    Stockholders’ Equity
    Preferred stock, Authorized, 1,000,000 shares
    Series B shares $.01 par value, $1,000 liquidation value
    Issued 12,500 shares 12,500 12,500
    Common stock, no par value
    Authorized, 22,500,000 shares
    Issued, 9,274,416 and 8,706,971 shares
    Outstanding, 9,201,786 and 8,630,966 shares - -
    Additional paid-in capital 45,438 32,496
    Retained earnings 127,154 121,253
    Accumulated other comprehensive income (loss)   2,244     (1,729 )
    Total stockholders’ equity   187,336     164,520  
    Total liabilities and stockholders’ equity $2,073,251   $ 1,758,276  
     

    HORIZON BANCORP AND SUBSIDIARIES

    Condensed Consolidated Statements of Income

    (Dollar Amounts in Thousands, Except Per Share Data)

     
      Three Months Ended June 30   Six Months Ended June 30
    2014   2013   2014   2013
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
    Interest Income
    Loans receivable $16,631 $ 16,906 $29,585 $ 33,346
    Investment securities
    Taxable 2,395 2,047 4,785 4,069
    Tax exempt   1,096       1,024       2,219       1,991  
    Total interest income   20,122       19,977       36,589       39,406  
    Interest Expense
    Deposits 1,355 1,445 2,632 2,925
    Borrowed funds 1,478 1,456 2,900 2,904
    Subordinated debentures   501       501       997       992  
    Total interest expense   3,334       3,402       6,529       6,821  
    Net Interest Income16,788 16,575 30,060 32,585
    Provision for loan losses   339       729       339       2,813  
    Net Interest Income after Provision for Loan Losses   16,449       15,846       29,721       29,772  
    Non-interest Income
    Service charges on deposit accounts 1,038 988 1,961 1,901
    Wire transfer fees 145 203 257 393
    Interchange fees 1,254 1,060 2,213 1,926
    Fiduciary activities 1,199 1,047 2,247 2,187
    Gain on sale of investment securities (includes $0 for the three and six months ended
    June 30, 2014 and $0 for the three months ended and $368 for the six months ended
    June 30, 2013, related to accumulated other comprehensive earnings reclassifications) - - - 368
    Gain on sale of mortgage loans 2,537 2,807 3,948 5,913
    Mortgage servicing income net of impairment 233 302 440 465
    Increase in cash value of bank owned life insurance 252 257 485 509
    Other income   (31)     185       598       647  
    Total non-interest income   6,627       6,849       12,149       14,309  
    Non-interest Expense
    Salaries and employee benefits 8,293 7,721 15,776 15,225
    Net occupancy expenses 1,360 1,295 2,784 2,606
    Data processing 937 818 1,807 1,418
    Professional fees 419 454 1,027 953
    Outside services and consultants 1,298 486 1,959 1,198
    Loan expense 1,272 1,402 2,287 2,516
    FDIC insurance expense 285 268 541 551
    Other losses 95 163 133 91
    Other expense   2,449       2,188       4,608       4,216  
    Total non-interest expense   16,408       14,795       30,922       28,774  
    Income Before Income Tax6,668 7,900 10,948 15,307
    Income tax expense (includes $0 for the three and six months ended June 30, 2014
    and $0 for the three months ended and $129 for the six months ended June 30, 2013,
    related to income tax expense from reclassification items)   1,890       2,235       2,753       4,331  
    Net Income4,778 5,665 8,195 10,976
    Preferred stock dividend and discount accretion   (31)     (96 )     (63)     (242 )
    Net Income Available to Common Shareholders$4,747     $ 5,569     $8,132     $ 10,734  
    Basic Earnings Per Share$0.52 $ 0.65 $0.91 $ 1.25
    Diluted Earnings Per Share0.50 0.62 0.88 1.20
     





    Horizon Bancorp

    Mark E. Secor

    Chief Financial Officer

    (219) 873-2611

    Fax: (219) 874-9280

    Source: Horizon Bancorp


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