Horizon Bancorp (NASDAQ: HBNC) today announced its unaudited financial results for the three and six month periods ended June 30, 2010.

SUMMARY:
  • Horizon’s second quarter 2010 net income was $2.5 million or $0.65 diluted earnings per share, a 40.4% increase in net income from the previous quarter.
  • Horizon’s net income for the six months ended June 30, 2010, was $4.3 million or $1.09 diluted earnings per share.
  • The purchase and assumption of American Trust & Savings Bank in Whiting, Indiana closed on May 28, 2010 adding $107.8 million in purchased assets and $110.3 million of assumed liabilities.
  • The expensed acquisition costs for American Trust & Savings Bank were $555,000 during the second quarter of 2010 and were $664,000 for the first six months of 2010.
  • The net interest margin increased during the second quarter as excess cash held during the first quarter was deployed into higher yielding assets along with a reduction in the overall cost of funds.
  • The activity in mortgage warehouse lending increased the average loan balance during the quarter, increasing interest income.
  • Horizon continued to experience steady residential mortgage loan activity during the second quarter providing $1.7 million of income from the gain on sale of mortgage loans.
  • Horizon continues to build its loan and lease loss reserve.
  • Horizon’s quarterly provision for loan losses decreased by approximately $233,000 from the allowance for the first quarter of 2010.
  • The ratio of allowance for loan losses to total loans decreased to 1.77% from 1.99% at March 31, 2010 due to the increase in total loans from mortgage warehousing and the acquisition of loans at fair market value from American Trust & Savings Bank.
  • Horizon’s net loans charged off declined during the second quarter to $2.6 million compared to $3.1 million during the first quarter of 2010.
  • Horizon’s balance of Other Real Estate Owned and repossessed assets increased approximately $677,000, to $2.9 million, during the second quarter.
  • Horizon’s non-performing loans increased approximately $4.8 million from March 31, 2010 to June 30, 2010, primarily due to a $4.6 million loan secured by a hotel being placed on non-accrual during the quarter.
  • Horizon’s non-performing loans to total loans ratio as of June 30, 2010 was 2.26%, which compares favorably to National and State of Indiana peer averages 1 of 2.83% and 4.82%, respectively, as of March 31, 2010, the most recent data available.
  • Horizon’s capital ratios continue to be above the regulatory standards for well-capitalized banks.

Craig M. Dwight, Chief Executive Officer of Horizon Bancorp stated, “The second quarter was extremely busy and rewarding for the Horizon team as we successfully closed on the American Trust & Savings Bank purchase and assumption and completed the related data processing conversion. In addition, the improvement in earnings speaks well of our competent team of dedicated and seasoned bankers given these tough economic times.”

Performance Highlights:

Net income for the second quarter of 2010 was $2.5 million or $.65 diluted earnings per share. This compares to $2.1 million or $.52 diluted earnings per share for the same quarter of the prior year. Net income for the six months ended June 30, 2010 was $4.3 million or $1.09 diluted earnings per share. This compares to $4.7 million or $1.22 diluted earnings per share for the same period of the prior year.

Diluted earnings per share for both the June 30, 2010 and June 30, 2009 three and six month periods ending were reduced by $.11 per share and $.21 per share, respectively, due to the preferred stock dividends and the accretion of the discount on the preferred stock.

Net interest income decreased $758,000 for the first six months of 2010 compared to the same prior year period. This was primarily due to lower interest income from a lower balance of interest earning assets partially offset by a decrease in the cost of funds. The net interest margin remained stable at 3.66% for the six months ending June 30, 2010 compared to 3.65% in the prior year for the same period. However, the net interest margin increased to 3.78% for the three month period ending June 30, 2010 from a net interest margin of 3.55% for the three month period ending March 31, 2010 and from 3.51% for the three month period ending June 30, 2009. The increase in the net interest margin during the second quarter of 2010 compared to the first quarter of 2010 was primarily due to the deployment of cash and cash equivalents that management was maintaining during the first quarter of 2010 into higher yielding assets. Cash and cash equivalents were back to more historical levels by June 30, 2010. The increase in the net interest margin during the second quarter of 2010 compared to the same period in 2009 was again due to management maintaining a higher cash and cash equivalent balance at lower yields during the second quarter of 2009 along with the cost of interest bearing liabilities decreasing at a greater pace than the decrease in the yield on interest earning assets.

The provision for loan losses was $3.0 million for the three months ending June 30, 2010, which was approximately $290,000 less than the provision for the same period of the prior year. The 2010 second quarter’s provision was less than the $3.2 million for the first quarter of 2010 and less than the $3.4 million and $3.7 million in provision for the third and fourth quarters of 2009, respectively. Consumer and commercial loan charge-offs continue to require quarterly provisions for loan losses as well as the required provision for anticipated losses from non-performing loans.

Non-performing loans totaled on $21.2 million on June 30, 2010, up from $16.4 million on March 31, 2010, and $13.5 million on June 30, 2009. As a percentage of total loans, non-performing loans were 2.26% on June 30, 2010, up from 2.02% on March 31, 2010 and 1.49% on June 30, 2009. Horizon’s non-performing loan statistics compare favorably to National and State of Indiana peer averages 1 of 2.83% and 4.82%, respectively, as of March 31, 2010, the most recent data available.

The increase of non-performing loans over the prior quarter end was due to an increase in commercial (including commercial real estate) non-performing loans and a reclassification of modified loans resulting in more loans classified as troubled debt restructures (“TDR’s”). Non-performing commercial loans totaled $9.8 million on June 30, 2010, up from $7.0 million on March 31, 2010, and $8.0 million on June 30, 2009. The increase during the quarter was primarily due to a $4.6 million loan secured by a hotel that was placed on non-accrual. This loan is current and making interest only payments which are being applied to the principal balance and the real estate collateral is for sale. Additionally, four other loans totaling $572,000 were placed on non-accrual during the quarter. These additions to commercial non-accrual loans were offset by four loans totaling $1.0 million being paid off, six loans totaling $952,000 being fully or partially charged-off, one loan totaling $111,000 placed back on accrual, and one loan totaling $37,000 moved to Other Real Estate Owned (“OREO”).

TDR’s increased from $1.2 million on March 31, 2010 to $3.4 million on June 30, 2010. Of these, $3.2 million were mortgage loans and $204,000 were consumer loans. The increase was primarily due to seven modified loans reported as TDR’s at December 31, 2009 that were moved to performing status as of March 31, 2010. During the second quarter regulatory guidance recommended that all TDR’s with modified terms, even when performing, should continue to be reported as TDR’s, and as a result, $2.2 million of performing TDR’s were returned to TDR status as of June 30, 2010. Three mortgage loans totaling $494,000 were added to TDR status during the quarter and $420,000 were removed by either a sale of the property or because they were moved to OREO.

Non-accrual loans totaled $17.7 million on June 30, 2010, up from $14.9 million on March 31, 2010, and $10.7 million on June 30, 2009. On June 30, 2010, nonaccrual loans to hotel owners totaled $4.6 million, to restaurant operators totaled $1.7 million, and to home builders and land developers totaled $1.7 million. Mortgage loans on non-accrual totaled $4.6 million on June 30, 2010, down from $4.9 million on March 31, 2010, but up from $3.8 million on June 30, 2009. Consumer loans on non-accrual increased to $3.2 million on June 30, 2010, up from $2.9 million on March 31, 2010, and $1.2 million on June 30, 2009.

The increase in the Company’s non-performing loans over the past year can be attributed to the continued slow economy and continued high local unemployment causing lower business revenues and increased consumer bankruptcies.

Loans 90 days delinquent but still on accrual totaled $77,000 on June 30, 2010, down from $345,000 on March 31, 2010, and $562,000 on June 30, 2009. Horizon’s policy is to place loans over 90 days delinquent on non-accrual unless they are in the process of collection and a full recovery is expected.

OREO and repossessed assets totaled $2.9 million on June 30, 2010, up from $2.2 million on March 31, 2010, and $2.3 million on June 30, 2009. During the quarter, nine properties with a book value of $696,000 on March 31, 2010 were sold. Another nine properties with a book value of $1.4 million on June 30, 2010 were transferred into OREO. One of the properties carried as OREO as of June 30, 2010, a residential lot with a book value of $650,000, is under contract to sell for $950,000. On June 30, 2010, OREO was comprised of 40 properties. Of these, 36 totaling $2.5 million were residential and four totaling $473,000 were commercial. Repossessed assets totaled $70,000 on June 30, 2010, down from $101,000 on March 31, 2010. These were all vehicles.

No mortgage warehouse loans were non-performing as of June 30, 2010, March 31, 2010, or June 30, 2009.

The residential mortgage loan activity continued to be steady through the second quarter of 2010 with $1.7 million of income from the gain on sale of mortgage loans, up $3,000 from the same period in 2009 and up from $1.4 million in the first quarter of 2010. For the six month period ending June 30, 2010, gain on sale of mortgage loans was down $528,000 compared to the same six month period in 2009.

Total other expenses were $256,000 higher in the second quarter of 2010 compared to the second quarter of 2009 and $413,000 higher when comparing the six month periods ending June 30, 2010 and 2009. Approximately $555,000 of expense was recognized during the second quarter of 2010 related to the purchase and assumption of American Trust & Savings Bank and $664,000 was recognized over the first six months of 2010.

Other items
  • The expected return on the purchase and assumption of American Trust & Savings Bank is estimated to be between $.27 and $.33 in diluted earnings per share on an annual basis.
  • Horizon is relocating its South Bend office in the third quarter of 2010 and should lower related occupancy expense by approximately $95,000 per year.
  • Horizon will be closing two branches in the third quarter of 2010. One branch was acquired from American Trust & Savings Bank and is located within three miles of an existing Horizon Bank branch. The second branch is located in Harbert, Michigan which has not experienced core deposit growth for several years.
  • Horizon opened a new loan and deposit production office in Portage, Michigan on July 2, 2010.

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

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 accurate. 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.

1 National peer group: Consists of all insured commercial banks having assets between $1 Billion and $10 Billion as reported by the Uniform Bank Performance Report as of March 31, 2010. Indiana peer group: Consists of 18 publicly traded banks all headquartered in the State of Indiana as reported by the Uniform Bank Performance Reports as of March 31, 2010.

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
2010   2010   2009   2009   2009
Balance sheet:
Total assets $ 1,464,415 $ 1,301,660 $ 1,387,020 $ 1,321,224 $ 1,343,296
Investment securities 410,284 368,752 344,789 333,031 331,941
Commercial loans 326,401 310,664 314,517 312,573 313,857
Mortgage warehouse loans 156,915 96,327 166,698 145,270 163,083
Residential mortgage loans 168,238 135,475 133,892 142,568 146,096
Installment loans 271,241 266,954 271,210 275,299 272,394
Earning assets 1,360,488 1,200,043 1,249,998 1,228,085 1,250,389
Non-interest bearing deposit accounts 99,291 91,482 84,357 87,725 83,940
Interest bearing transaction accounts 529,612 423,315 540,647 375,548 388,954
Time deposits 394,092 358,725 326,704 394,724 375,256
Borrowings 282,137 273,235 284,016 311,884 349,499
Subordinated debentures 31,446 27,837 27,837 27,837 27,837
Common stockholders' equity 92,127 91,371 90,299 89,566 82,965
Total stockholders’ equity 116,512 115,716 114,605 113,833 107,194
 
Income statement: Three months ended
Net interest income $ 11,368 $ 10,553 $ 11,371 $ 10,719 $ 11,263
Provision for loan losses 3,000 3,233 3,700 3,416 3,290
Other income 4,923 4,374 4,304 4,542 4,516
Other expenses 10,184 9,554 9,558 8,929 9,928
Income tax expense 592 349 333 559 497
Net income 2,515 1,791 2,084 2,357 2,064
Preferred stock dividend (352 ) (352 ) (351 ) (351 ) (350 )
Net income available to common shareholders 2,163 1,439 1,733 2,006 1,714
 
Per share data:
Basic earnings per share $ 0.66 $ 0.44 $ 0.53 $ 0.62 $ 0.53
Diluted earnings per share 0.65 0.44 0.53 0.61 0.52
Cash dividends declared per common share 0.17 0.17 0.17 0.17 0.17
Book value per common share 28.10 27.88 27.67 27.46 25.85
Tangible book value per common share 25.39 25.70 25.45 25.22 23.55
Market value - high $ 22.81 $ 19.50 $ 17.25 $ 17.50 $ 19.45
Market value - low $ 19.48 $ 16.44 $ 14.31 $ 15.00 $ 11.00
Basic common shares outstanding 3,278,392 3,270,217 3,262,927 3,245,505 3,209,482
Diluted common shares outstanding 3,333,768 3,293,192 3,275,588 3,273,742 3,270,178
 
Key ratios:
Return on average assets 0.75 % 0.54 % 0.62 % 0.72 % 0.59 %
Return on average common stockholders' equity 9.33 6.34 7.56 9.12 8.01
Net interest margin 3.78 3.55 3.76 3.64 3.51
Loan loss reserve to total loans 1.77 1.97 1.80 1.58 1.40
Non-performing loans to loans 2.26 2.00 1.92 1.87 1.49
Average equity to average assets 8.67 8.73 8.61 8.53 7.80
Bank only capital ratios:
Tier 1 capital to average assets 8.92 8.83 8.64 8.79 8.22
Tier 1 capital to risk weighted assets 11.78 12.96 11.85 12.04 11.93
Total capital to risk weighted assets 13.02 14.22 13.10 13.29 13.19
 
Loan data:
30 to 89 days delinquent $ 8,637 $ 10,926 $ 9,686 $ 11,641 $ 15,369
 
90 days and greater delinquent - accruing interest 77 345 1,758 856 562
Trouble debt restructures - accruing interest 3,414 1,183 3,472 2,783 2,172
Non-accrual loans   17,682       14,862       11,915       12,834       10,743  
Total non-performing loans 21,173 16,390 17,145 16,473 13,477
 

HORIZON BANCORP Financial Highlights (Dollars in thousands except share and per share data and ratios, Unaudited)
   
June 30 June 30
2010   2009
Balance sheet:
Total assets $ 1,464,415 $ 1,343,296
Investment securities 410,284 331,941
Commercial loans 326,401 313,857
Mortgage warehouse loans 156,915 163,083
Residential mortgage loans 168,238 146,096
Installment loans 271,241 272,394
Earning assets 1,360,488 1,250,389
Non-interest bearing deposit accounts 99,291 83,940
Interest bearing transaction accounts 529,612 388,954
Time deposits 394,092 375,256
Borrowings 282,137 349,499
Subordinated debentures 31,446 27,837
Common stockholders' equity 92,127 82,965
Total stockholders’ equity 116,512 107,194
 
Income statement: Six months ended
Net interest income $ 21,921 $ 22,679
Provision for loan losses 6,233 6,487
Other income 9,297 9,010
Other expenses 19,738 19,325
Income tax expense 941 1,178
Net income 4,306 4,699
Preferred stock dividend (704 ) (700 )
Net income available to common shareholders 3,602 3,999
 
Per share data:
Basic earnings per share $ 1.10 $ 1.25
Diluted earnings per share 1.09 1.22
Cash dividends declared per common share 0.34 0.34
Book value per common share 28.14 25.85
Tangible book value per common share 25.42 23.55
Market value - high $ 22.81 $ 19.45
Market value - low $ 16.44 $ 10.50
Basic common shares outstanding 3,274,327 3,209,482
Diluted common shares outstanding 3,316,671 3,267,314
 
Key ratios:
Return on average assets 0.65 % 0.69 %
Return on average common stockholders' equity 7.86 9.66
Net interest margin 3.66 3.65
Loan loss reserve to total loans 1.77 1.40
Non-performing loans to loans 2.26 1.49
Average equity to average assets 8.69 7.81
Bank only capital ratios:
Tier 1 capital to average assets 8.92 8.15
Tier 1 capital to risk weighted assets 11.78 11.88
Total capital to risk weighted assets 13.02 13.13
 
Loan data:
30 to 89 days delinquent $ 8,637 $ 15,369
 
90 days and greater delinquent - accruing interest 77 562
Trouble debt restructures - accruing interest 3,414 2,172
Non-accrual loans   17,682       10,743  
Total non-performing loans 21,173 13,477
 

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
2010   2010   2009   2009   2009
Commercial $ 6,204 $ 6,010 $ 5,766 $ 4,699 $ 3,076
Real estate 1,536 1,444 1,933 1,599 1,511
Mortgage warehousing 1,362 1,390 1,455 1,480 1,453
Installment 7,441 7,276 6,861 6,146 6,609
Unallocated   -     -     -     -     -
Total $ 16,543   $ 16,120   $ 16,015   $ 13,924   $ 12,649
 

Net Charge-offs(Dollars in Thousands, Unaudited)
 
Three months ended
June 30 March 31 December 31 September 30 June 30
2010   2010   2009   2009   2009
Commercial $ 884 $ 1,832 $ 527 $ 530 $ 262
Real estate 288 309 146 22 214
Mortgage warehousing - - - - -
Installment   1,406     986     936     1,589     1,754
Total $ 2,578   $ 3,127   $ 1,609   $ 2,141   $ 2,230
 

Total Non-performing Loans(Dollars in Thousands, Unaudited)
 
June 30 March 31 December 31 September 30 June 30
2010   2010   2009   2009   2009
Commercial $ 9,805 $ 7,024 $ 9,229 $ 9,235 $ 7,959
Real estate 7,855 6,217 4,819 4,926 3,764
Mortgage warehousing - - - - -
Installment   3,513     3,149     3,097     2,312     1,754
Total $ 21,173   $ 16,390   $ 17,145   $ 16,473   $ 13,477
 

Other Real Estate Owned and Repossessed Assets(Dollars in Thousands, Unaudited)
 
June 30 March 31 December 31 September 30 June 30
2010   2010   2009   2009   2009
Commercial $ 623 $ 494 $ - $ - $ -
Real estate 2,160 1,581 1,730 1,671 2,212
Mortgage warehousing - - - - -
Installment   70     101     23     142     115
Total $ 2,853   $ 2,176   $ 1,753   $ 1,813   $ 2,327
 

HORIZON BANCORP

Loan Portfolio Detail
         
Non- Percent Specific Percent of
Loan Performing of Reserves on Non - Non-performing
June 30, 2010 (Unaudited) Balance   Loans Loans Performing Loans Loans
Owner occupied real estate $ 144,406 $ 2,354 1.63 % $ 75 3.19 %
Non owner occupied real estate 114,227 5,640 4.94 % 791 14.02 %
Residential development 13,267 803 6.05 % 125 15.57 %
Commercial and industrial   54,501       1,017 1.87 %   500 49.16 %
Total commercial 326,401 9,814 3.01 % 1,491 15.19 %
 
Residential mortgage (includes HFS) 173,428 7,792 4.49 % 320 4.11 %
Residential construction 7,694 62 0.81 % - 0.00 %
Mortgage warehouse   156,915       - 0.00 %   - 0.00 %
Total mortgage 338,037 7,854 2.32 % 320 4.07 %
 
Direct installment 25,668 202 0.79 % 579 286.63 %
Indirect installment 129,646 1,184 0.91 % 22 1.86 %
Home equity   115,927       2,119 1.83 %   260 12.27 %
Total installment 271,241 3,505 1.29 % 861 24.56 %
       
Total loans 935,679 21,173 2.26 % 2,672 12.62 %
Allowance for loan losses   (16,543 )      
Net loans $ 919,136     $ 21,173 $ 2,672
 
 
Non- Percent Specific Percent of
Loan Performing of Reserves on Non - Non-performing
December 31, 2009 Balance   Loans Loans Performing Loans Loans
Owner occupied real estate $ 138,999 $ 3,152 2.27 % $ 700 22.21 %
Non owner occupied real estate 100,502 1,677 1.67 % 125 7.45 %
Residential development 16,101 2,343 14.55 % 125 5.34 %
Commercial and industrial   58,915       2,057 3.49 %   725 35.25 %
Total commercial 314,517 9,229 2.93 % 1,675 18.15 %
 
Residential mortgage (includes HFS) 132,172 4,638 3.51 % 441 9.51 %
Residential construction 7,423 181 2.43 % 71 39.29 %
Mortgage warehouse   166,698       - 0.00 %   - 0.00 %
Total mortgage 306,293 4,819 1.57 % 512 10.62 %
 
Direct installment 24,908 387 1.55 % - 0.00 %
Indirect installment 136,600 1,089 0.80 % 95 8.72 %
Home equity   109,702       1,621 1.48 %   1,188 73.29 %
Total installment 271,210 3,097 1.14 % 1,283 41.43 %
       
Total loans 892,020 17,145 1.92 % 3,470 20.24 %
Allowance for loan losses   (16,015 )      
Net loans $ 876,005     $ 17,145 $ 3,470
 

HORIZON BANCORP AND SUBSIDIARIES Average Balance Sheets(Dollar Amounts in Thousands, Unaudited)
     
Three Months Ended Three Months Ended
June 30, 2010 June 30, 2009
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
 
ASSETS
Interest-earning assets
Federal funds sold $ 10,968 $ 4 0.15 % $ 11,247 $ 7 0.25 %
Interest-earning deposits 6,988 4 0.23 % 61,369 39 0.25 %
Investment securities - taxable 283,883 2,509 3.54 % 247,847 2,765 4.47 %
Investment securities - non-taxable (1) 110,940 1,078 5.73 % 91,812 947 5.52 %
Loans receivable (2)   849,296       13,212 6.25 %   921,903       15,091 6.57 %
Total interest-earning assets (1) 1,262,075 16,807 5.51 % 1,334,178 18,849 5.70 %
 
Noninterest-earning assets
Cash and due from banks 14,904 15,634
Allowance for loan losses (16,723 ) (11,316 )
Other assets   92,376     72,835  
 
$ 1,352,632   $ 1,411,331  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 840,647 $ 2,706 1.29 % $ 851,522 $ 3,993 1.88 %
Borrowings 264,964 2,338 3.54 % 329,891 3,222 3.92 %
Subordinated debentures   30,181       395 5.25 %   27,837       371 5.35 %
Total interest-bearing liabilities 1,135,792 5,439 1.92 % 1,209,250 7,586 2.52 %
 
Noninterest-bearing liabilities
Demand deposits 90,301 82,914
Accrued interest payable and other liabilities
9,216 9,137
Shareholders' equity   117,323     110,030  
 
$ 1,352,632   $ 1,411,331  
 
Net interest income/spread $ 11,368 3.59 % $ 11,263 3.18 %
 

Net interest income as a percent of average interest earning assets (1)
3.78 % 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.
 

HORIZON BANCORP AND SUBSIDIARIES Average Balance Sheets(Dollar Amounts in Thousands, Unaudited)
     
Six Months Ended Six Months Ended
June 30, 2010 June 30, 2009
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
ASSETS
Interest-earning assets
Federal funds sold $ 39,431 $ 13 0.07 % $ 7,509 $ 9 0.24 %
Interest-earning deposits 5,928 38 1.29 % 34,453 44 0.26 %
Investment securities - taxable 268,949 4,912 3.68 % 246,591 5,607 4.59 %
Investment securities - non-taxable (1) 111,604 2,159 5.42 % 90,573 1,867 5.54 %
Loans receivable (2)   830,429       25,817 6.28 %   919,758       29,996 6.58 %
Total interest-earning assets (1) 1,256,341 32,939 5.43 % 1,298,884 37,523 5.86 %
 
Noninterest-earning assets
Cash and due from banks 14,381 15,216
Allowance for loan losses (16,365 ) (11,356 )
Other assets   88,667     76,229  
 
$ 1,343,024   $ 1,378,973  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 834,775 $ 5,469 1.32 % $ 818,341 $ 7,989 1.97 %
Borrowings 267,145 4,781 3.61 % 334,628 6,114 3.68 %
Subordinated debentures   29,015       768 5.34 %   27,837       741 5.37 %
Total interest-bearing liabilities 1,130,935 11,018 1.96 % 1,180,806 14,844 2.54 %
 
Noninterest-bearing liabilities
Demand deposits 86,501 81,358

Accrued interest payable and other liabilities
8,822 9,146
Shareholders' equity   116,766     107,663  
 
$ 1,343,024   $ 1,378,973  
 
Net interest income/spread $ 21,921 3.46 % $ 22,679 3.32 %
 

Net interest income as a percent of average interest earning assets (1)
3.66 % 3.65 %
 
(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.
 

HORIZON BANCORP AND SUBSIDIARIES Condensed Consolidated Balance Sheets(Dollar Amounts in Thousands)
   
June 30 December 31
2010 2009
(Unaudited)    
Assets
Cash and due from banks $ 25,216 $ 68,702
Investment securities, available for sale 396,527 333,132
Investment securities, held to maturity 13,757 11,657
Loans held for sale 12,884 5,703
Loans, net of allowance for loan losses of $16,543 and $16,015 906,252 870,302
Premises and equipment 34,458 30,534
Federal Reserve and Federal Home Loan Bank stock 14,525 13,189
Goodwill 5,910 5,787
Other intangible assets 2,970 1,447
Interest receivable 6,583 5,986
Cash value life insurance 26,778 23,139
Other assets   18,555     17,442
Total assets $ 1,464,415   $ 1,387,020
Liabilities
Deposits
Non-interest bearing $ 99,291 $ 84,357
Interest bearing   923,704     867,351
Total deposits 1,022,995 951,708
Borrowings 282,137 284,016
Subordinated debentures 31,446 27,837
Interest payable 1,015 1,135
Other liabilities   10,310     7,719
Total liabilities   1,347,903     1,272,415
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, no par value, $1,000 liquidation value
Authorized, 1,000,000 shares
Issued 25,000 shares 24,385 24,306
Common stock, $.2222 stated value
Authorized, 22,500,000 shares
Issued, 3,300,087 and 3,273,881 shares 1,122 1,119
Additional paid-in capital 10,253 10,030
Retained earnings 75,916 73,431
Accumulated other comprehensive income   4,836     5,719
Total stockholders’ equity   116,512     114,605
Total liabilities and stockholders’ equity $ 1,464,415   $ 1,387,020
 

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
2010   2009 2010   2009
(Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Interest Income
Loans receivable $ 13,212 $ 15,091 $ 25,817 $ 29,996
Investment securities
Taxable 2,517 2,811 4,963 5,660
Tax exempt   1,078       947       2,159       1,867  
Total interest income   16,807       18,849       32,939       37,523  
Interest Expense
Deposits 2,706 3,993 5,469 7,989
Borrowed funds 2,338 3,222 4,781 6,114
Subordinated debentures   395       371       768       741  
Total interest expense   5,439       7,586       11,018       14,844  
Net Interest Income 11,368 11,263 21,921 22,679
Provision for loan losses   3,000       3,290       6,233       6,487  
Net Interest Income after Provision for Loan Losses   8,368       7,973       15,688       16,192  
Other Income
Service charges on deposit accounts 964 974 1,829 1,908
Wire transfer fees 185 261 325 508
Interchange fees 560 456 1,014 844
Fiduciary activities 1,007 824 2,002 1,741
Gain (loss) on sale of securities 131 - 131 -
Gain on sale of mortgage loans 1,674 1,671 3,056 3,584
Mortgage servicing net of impairment (97 ) (32 ) (32 ) (166 )
Increase in cash surrender value of bank owned life insurance 197 185 353 341
Other income   302       177       619       250  
Total other income   4,923       4,516       9,297       9,010  
Other Expenses
Salaries and employee benefits 5,190 4,894 9,988 9,725
Net occupancy expenses 979 899 2,041 1,931
Data processing 570 396 972 775
Professional fees 530 310 1,001 705
Outside services and consultants 424 351 789 677
Loan expense 771 644 1,521 1,210
FDIC insurance expense 408 1,059 796 1,351
Other losses 10 82 37 467
Other expenses   1,302       1,293       2,593       2,484  
Total other expenses   10,184       9,928       19,738       19,325  
Income Before Income Tax 3,107 2,561 5,247 5,877
Income tax expense   592       497       941       1,178  
Net Income 2,515 2,064 4,306 4,699
Preferred stock dividend and discount accretion   (352 )     (350 )     (704 )     (700 )
Net Income Available to Common Shareholders $ 2,163     $ 1,714     $ 3,602     $ 3,999  
Basic Earnings Per Share $ 0.66 $ 0.53 $ 1.10 $ 1.25
Diluted Earnings Per Share $ 0.65 $ 0.52 1.09 $ 1.22

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