(NASDAQ:HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and twelve month periods ended December 31, 2010.

SUMMARY:
  • Horizon’s 2010 results represent the Company’s eleventh consecutive year of record earnings.
  • Horizon’s net income for the twelve months ended December 31, 2010, was $10.5 million or $2.71 diluted earnings per share compared to $9.1 million or $2.37 diluted earnings per share for the prior year.
  • Horizon’s fourth quarter 2010 net income was $2.9 million or $.75 diluted earnings per share, a 37.7% increase from the same period in 2009.
  • The net interest margin increased to 4.01% for the three months ending December 31, 2010, primarily as a result of the decrease in the rate paid on interest bearing liabilities during the quarter.
  • Horizon’s residential mortgage loan activity provided $2.0 million of income from the gain on sale of mortgage loans during the fourth quarter.
  • Total loans decreased during the fourth quarter as the balance of mortgage warehouse loans decreased $70.1 million from September 30, 2010 as a result of rising long term mortgage interest rates.
  • The ratio of allowance for loan losses to total loans increased to 2.11% from 1.85% at September 30, 2010 as Horizon’s loan and lease loss reserve increased for probable incurred losses inherent in the portfolio. In addition total loans decreased.
  • Horizon’s net loans charged off increased during the fourth quarter to $1.6 million compared to $1.2 million during the third quarter of 2010.
  • Horizon’s balance of Other Real Estate Owned (“OREO”) and repossessed assets decreased approximately $1.5 million, to $2.7 million, during the fourth quarter as properties were sold.
  • Horizon’s non-performing loans decreased by approximately $252,000 from September 30, 2010 to December 31, 2010 and 30 to 89 days delinquent loans decreased $3.2 million during the same period.
  • Horizon’s 30 to 89 day loan delinquencies were 0.66% and 0.93% of total loans at December 31, 2010 and September 30, 2010, respectively.
  • Horizon’s non-performing loans to total loans ratio as of December 31, 2010 was 2.38%, which compares favorably to National and State of Indiana peer averages 1 as of September 30, 2010 of 4.91% and 2.73%, the most recent data available.
  • On November 10, 2010, the Company completed the redemption process to reduce the US Treasury’s preferred stock investment by $6.25 million, which represents a 25% reduction.
  • 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, “We are proud of Horizon’s 2010 performance and our eleventh consecutive year of record earnings. We believe Horizon’s continued success reflects our business expansion strategy and focus on a balanced mix of revenue streams that are in counter-cyclical businesses. While we anticipate some slowing of the mortgage lending business, which has been very strong during the past several years, we have strong and proven commercial lending teams in place to generate opportunities in line with the general economic improvement occurring.”

“One of our key goals in 2011 is to build core deposits to help maintain a low cost of funding. Our strong capital position enables us to pursue organic growth and acquisition opportunities. Our acquisition of American Trust & Savings Bank in 2010, for example, added $100 million in deposits, of which 70% were core deposits. We believe bank market fragmentation and Horizon’s competitive strength will generate opportunities to grow and build market share in Northern Indiana and Southwest Michigan.”

Dwight explained the Company plans to continue to invest in people and activities that directly support net income generation. For instance, he noted that while non-interest expense increased in 2010 compared with 2009, a significant portion of this increase reflected new facilities and income-generating personnel, as well as bonuses paid based on exceeding individual and branch profitability goals. “Our performance-based corporate culture is a fundamental part of our ability to motivate and reward a talented group of people, and to attract the best bankers possible to support further growth,” he noted.

Performance Highlights:

Net income for the fourth quarter of 2010 was $2.9 million or $.75 diluted earnings per share. This compares to $2.1 million or $.53 diluted earnings per share for the same quarter of the prior year. Net income for the twelve months ended December 31, 2010 was $10.5 million or $2.71 diluted earnings per share. This compares to $9.1 million or $2.37 diluted earnings per share for the same period of the prior year.

Diluted earnings per share for both the three and twelve month periods ending December 31, 2010 and December 31, 2009 were reduced by $.11 per share and $.42 per share, respectively, due to the preferred stock dividends and the accretion of the discount on the preferred stock held by the U.S. Department of Treasury. The Company repaid $6.3 million of such preferred stock on November 10, 2010, which, will reduce the amount of dividends paid on the preferred stock starting in the first quarter of 2011 by approximately $78,000.

Net interest income increased $1.7 million and $2.8 million for the three and twelve month periods ending December 31, 2010 compared to the same time periods for the prior year. This increase was primarily due to a decrease in interest expense resulting from a decrease in the cost of funds. The net interest margin increased to 3.80% for the twelve months ending December 31, 2010 compared to 3.66% for the same period in the prior year. The net interest margin increased throughout 2010. For the three months ending March 31, 2010, June 30, 2010, September 30, 2010, and December 31, 2010, the net interest margin was 3.55%, 3.78%, 3.84%, and 4.01%, respectively. The increase in the net interest margin during the fourth quarter of 2010 was primarily due to the reduction in cost of funds from repricing wholesale funding into lower rate instruments.

The provision for loan losses was $2.7 million for the three months ending December 31, 2010, which was approximately $1.0 million less than the provision for the same period of the prior year. The 2010 fourth quarter provision was approximately the same as the third quarter of 2010.

Non-performing loans totaled $21.4 million on December 31, 2010, down slightly from $21.7 million on September 30, 2010 and up from $17.1 million on December 31, 2009. As a percentage of total loans non-performing loans were 2.38% on December 31, 2010, up from 2.22% on September 30, 2010 primarily due to a decrease in total loans as the mortgage warehouse loan balance decreased during the quarter.

Horizon’s non-performing loans to total loans ratio as of December 31, 2010 compares favorably to National and State of Indiana peer averages 1 of 4.91% and 2.73%, respectively, as of September 30, 2010, the most recent data available.

The decrease of non-performing loans from the prior quarter was primarily due to lower non-performing commercial and installment loans, partially offset by higher non-performing real estate loans. Non-performing commercial loans declined from $8.9 million on September 30, 2010 to $8.1 million on December 31, 2010. The decline was due to charge-offs totaling $549,000, and one loan with a balance of $393,000 on September 30, 2010 being brought current while only two new loans totaling $76,000 were added to non-performing status during the quarter. No commercial loans were moved to OREO during the quarter. Real estate nonperforming loans increased from $8.5 million on September 30, 2010 to $9.3 million on December 31, 2010. Installment non-performing loans decreased from $4.4 million on September 30, 2010 to $4.0 million on December 31, 2010.

Real estate and installment non-performing loans on December 31, 2010 include $1.8 million and $2.3 million, respectively, of loans in bankruptcy. This compares to $0.9 million and $2.3 million on September 30, 2010. These loans are not considered troubled debt restructures (TDR’s) while they are going through bankruptcy, a process that can take six to eighteen months. The increase in the amount of loans in bankruptcy included in the Company’s non-performing loans indicates that this cycle potentially has not peaked. The Company’s experience with bankrupt loans has demonstrated that some debtors continue to make payments during the bankruptcy process, many reaffirm when they come out of bankruptcy, and some loans are discharged or restructured by the court. The Company has been accumulating historical data on the performance of loans going through the bankruptcy process and utilizes that data in the calculation of the allowance for loan losses. Currently only two commercial loans totaling approximately $170,000 are in bankruptcy.

TDR’s are also included in the non-performing loans total. TDR’s increased from $3.9 million on September 30, 2010 to $4.4 million on December 31, 2010. Of these, $3.6 million were real estate loans, $574,000 were commercial loans, and $202,000 were installment loans. The increase was primarily due to the addition of one commercial loan totaling $153,000. Only $278,000 of all TDR’s were on non-accrual as of December 31, 2010.

Non-accrual loans totaled $16.7 million on December 31, 2010, similar to $17.0 million on September 30, 2010, but up from $11.9 million on December 31, 2009. On December 31, 2010, non-accrual loans to hotel owners totaled $4.5 million, to home builders and land developers $1.2 million, and to restaurant operators $1.0 million. Loans 90 days delinquent but still on accrual totaled $358,000 down from $833,000 on September 30, 2010, and down from $1.8 million on December 31, 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.

Other Real Estate Owned (OREO) totaled $2.7 million on December 31, 2010, down from $4.0 million on September 30, 2010, but up from $1.7 million on December 31, 2009. During the quarter 11 properties with a book value of $934,000 as of September 30, 2010 were sold. Another four properties were written down by $187,000. No properties were transferred into OREO during the quarter. On December 31, 2010, OREO was comprised of 17 properties. Of these, seven totaling $2.0 million were commercial and ten totaling $684,000 were residential real estate. There was no repossessed personal property on December 31, 2010, down from $107,000 on September 30, 2010. Horizon currently has $1.7 million of OREO under contract to sell with closing dates scheduled within the next 90 days.

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

The residential mortgage loan activity during the fourth quarter generated $2.0 million of income from the gain on sale of mortgage loans, up $763,000 from the same period in 2009 but down $464,000 from the third quarter of 2010. For the twelve month period ended December 31, 2010, gain on sale of mortgage loans was up $1.4 million compared to the same twelve month period in 2009.

Increased pre-payments on the mortgage loan servicing portfolio caused the servicing asset to be impaired during the fourth quarter, resulting in a $202,000 net loss on mortgage servicing net of impairment compared to a $3,000 loss for the same period in 2009.

Total other expenses were $2.0 million higher in the fourth quarter of 2010 compared to the fourth quarter of 2009 and $4.8 million higher when comparing the twelve month periods ending December 31, 2010 and 2009. Salaries and employee benefits increased $1.2 million and $2.9 million for the three and twelve month periods ending December 31, 2010, respectively. This increase is the result of additional payroll expense from the consolidation of the American Trust & Savings Bank transaction that closed at the end of the second quarter, the expansion into Kalamazoo, Michigan, and bonus accruals based on the Company’s performance through twelve months of 2010. The Company also continues to experience higher loan expense related to problem loan, bankruptcy, and collection costs. In addition, the Company recognized $664,000 of transaction costs related to the purchase and assumption of American Trust & Savings Bank during the twelve months of 2010.

Other items

On November 3, 2010, the Company received approval to redeem 25%, or $6.25 million, of the US Treasury’s original $25.0 million preferred stock investment in the Company from the Capital Purchase Program, which is a program of the Troubled Assets Relief Program (“TARP”). On November 10, 2010, the Company completed the redemption process reducing the US Treasury’s preferred stock investment in the Company to $18.75 million. This repurchase will result in annual savings of $312,500 or $0.09 per share, due to the elimination of the associated preferred stock dividends. The Company’s plan is to repurchase the remaining preferred stock over the next three years from the Company’s earnings or may seek to replace such amount through the recently announced Small Business Lending Fund program which is part of the Small Business Jobs Act of 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 September 30, 2010. Indiana peer group: Consists of 17 publicly traded banks all headquartered in the State of Indiana as reported by the Uniform Bank Performance Reports as of September 30, 2010.

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)
         
December 31 September 30 June 30 March 31 December 31
2010   2010   2010   2010   2009
Balance sheet:
Total assets $ 1,400,919 $ 1,485,058 $ 1,464,415 $ 1,301,660 $ 1,387,020
Investment securities 391,939 397,694 410,284 368,752 344,789
Commercial loans 330,017 329,230 326,401 310,664 314,517
Mortgage warehouse loans 123,743 193,848 156,915 96,327 166,698
Residential mortgage loans 162,435 165,234 168,238 135,475 133,892
Installment loans 266,682 270,503 271,241 266,954 271,210
Earning assets 1,307,313 1,387,594 1,360,488 1,200,043 1,249,998
Non-interest bearing deposit accounts 107,606 105,376 99,291 91,482 84,357
Interest bearing transaction accounts 506,031 506,031 529,612 423,315 540,647
Time deposits 371,861 388,076 394,092 358,725 326,704
Borrowings 260,741 318,516 282,137 273,235 284,016
Subordinated debentures 30,584 30,562 30,539 27,837 27,837
Common stockholders' equity 94,066 95,686 92,127 91,371 90,299
Total stockholders’ equity 112,283 120,112 116,512 115,716 114,605
 
Income statement: Three months ended
Net interest income $ 13,075 $ 12,620 $ 11,368 $ 10,553 $ 11,371
Provision for loan losses 2,664 2,657 3,000 3,233 3,700
Other income 4,961 5,648 4,923 4,374 4,304
Other expenses 11,576 11,257 10,184 9,554 9,558
Income tax expense 926 1,075 592 349 333
Net income 2,870 3,279 2,515 1,791 2,084
Preferred stock dividend (349 ) (353 ) (352 ) (352 ) (351 )
Net income available to common shareholders 2,521 2,926 2,163 1,439 1,733
 
Per share data:
Basic earnings per share $ 0.77 $ 0.89 $ 0.66 $ 0.44 $ 0.53
Diluted earnings per share 0.75 0.88 0.65 0.44 0.53
Cash dividends declared per common share 0.17 0.17 0.17 0.17 0.17
Book value per common share 28.68 29.17 28.10 27.88 27.67
Tangible book value per common share 26.04 26.50 25.39 25.70 25.45
Market value - high $ 26.99 $ 22.60 $ 22.81 $ 19.50 $ 17.25
Market value - low $ 21.89 $ 21.15 $ 19.48 $ 16.44 $ 14.31
Weighted average shares outstanding - Basic 3,280,331 3,279,201 3,278,392 3,270,217 3,262,927
Weighted average shares outstanding - Diluted 3,362,118 3,336,634 3,333,768 3,293,192 3,275,588
 
Key ratios:
Return on average assets 0.79 % 0.90 % 0.75 % 0.54 % 0.62 %
Return on average common stockholders' equity 10.22 12.12 9.33 6.34 7.56
Net interest margin 4.01 3.84 3.78 3.55 3.76
Loan loss reserve to total loans 2.11 1.85 1.77 1.97 1.80
Non-performing loans to loans 2.38 2.22 2.26 2.00 1.92
Average equity to average assets 8.22 8.32 8.67 8.73 8.61
Bank only capital ratios:
Tier 1 capital to average assets 8.60 8.53 8.92 8.83 8.64
Tier 1 capital to risk weighted assets 12.64 11.69 11.89 12.96 11.85
Total capital to risk weighted assets 13.88 12.94 13.15 14.22 13.10
 
Loan data:
30 to 89 days delinquent $ 5,907 $ 9,084 $ 8,637 $ 10,926 $ 9,686
90 days and greater delinquent - accruing interest 358 833 77 345 1,758
Trouble debt restructures - accruing interest 4,119 3,445 3,414 1,183 3,472
Trouble debt restructures - non-accrual 278 463 - - -
Non-accrual loans   16,673       16,939       17,682       14,862       11,915  
Total non-performing loans 21,428 21,680 21,173 16,390 17,145
 
 
 

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)
   
December 31 December 31
2010   2009
Balance sheet:
Total assets $ 1,400,919 $ 1,387,020
Investment securities 391,939 344,789
Commercial loans 330,017 314,517
Mortgage warehouse loans 123,743 166,698
Residential mortgage loans 162,435 133,892
Installment loans 266,682 271,210
Earning assets 1,307,313 1,254,781
Non-interest bearing deposit accounts 107,606 84,357
Interest bearing transaction accounts 506,031 540,647
Time deposits 371,861 326,704
Borrowings 260,741 284,016
Subordinated debentures 30,584 27,837
Common stockholders' equity 94,066 90,299
Total stockholders’ equity 112,283 114,605
 
Income statement: Twelve months ended
Net interest income $ 47,616 $ 44,769
Provision for loan losses 11,554 13,603
Other income 19,906 17,856
Other expenses 42,571 37,812
Income tax expense 2,942 2,070
Net income 10,455 9,140
Preferred stock dividend (1,406 ) (1,402 )
Net income available to common shareholders 9,049 7,738
 
Per share data:
Basic earnings per share $ 2.76 $ 2.39
Diluted earnings per share 2.71 2.37
Cash dividends declared per common share 0.68 0.68
Book value per common share 28.68 27.67
Tangible book value per common share 26.04 25.45
Market value - high $ 26.99 $ 19.45
Market value - low $ 16.44 $ 10.50
Weighted average shares outstanding - Basic 3,277,069 3,232,033
Weighted average shares outstanding - Diluted 3,334,598 3,270,723
 
Key ratios:
Return on average assets 0.75 % 0.68 %
Return on average common stockholders' equity 9.56 8.92
Net interest margin 3.80 3.66
Loan loss reserve to total loans 2.11 1.80
Non-performing loans to loans 2.38 1.92
Average equity to average assets 8.47 8.21
Bank only capital ratios:
Tier 1 capital to average assets 8.60 8.64
Tier 1 capital to risk weighted assets 12.64 11.79
Total capital to risk weighted assets 13.88 13.04
 
Loan data:
30 to 89 days delinquent $ 5,907 $ 9,686
90 days and greater delinquent - accruing interest 358 1,758
Trouble debt restructures - accruing interest 4,119 3,772
Trouble debt restructures - non-accrual 278 -
Non-accrual loans   16,673       11,915  
Total non-performing loans 21,428 17,445
 
 
 

HORIZON BANCORP
     
Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)
   
December 31 September 30 June 30 March 31 December 31
2010   2010   2010   2010   2009
Commercial $ 7,554 $ 7,029 $ 6,204 $ 6,010 $ 5,766
Real estate 2,379 1,957 1,536 1,444 1,933
Mortgage warehousing 1,435 1,441 1,362 1,390 1,455
Installment 7,696 7,603 7,441 7,276 6,861
Unallocated   -     -     -     -     -
Total $ 19,064   $ 18,030   $ 16,543   $ 16,120   $ 16,015
 

Net Charge-offs

(Dollars in Thousands, Unaudited)
 
Three months ended
December 31 September 30 June 30 March 31 December 31
2010   2010   2010   2010   2009
Commercial $ 426 $ 485 $ 884 $ 1,832 $ 527
Real estate 128 86 288 309 146
Mortgage warehousing - - - - -
Installment   1,076     599     1,406     986     936
Total $ 1,630   $ 1,170   $ 2,578   $ 3,127  

$

1,609
 

Total Non-performing Loans

(Dollars in Thousands, Unaudited)
 
December 31 September 30 June 30 March 31 December 31
2010   2010   2010   2010   2009
Commercial $ 8,082 $ 8,855 $ 9,805 $ 7,024 $ 9,229
Real estate 9,326 8,467 8,021 6,217 4,819
Mortgage warehousing - - - - -
Installment   4,020     4,358     3,347     3,149     3,097
Total $ 21,428   $ 21,680   $ 21,173   $ 16,390   $ 17,145
 

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)
 
December 31 September 30 June 30 March 31 December 31
2010   2010   2010   2010   2009
Commercial $ 1,980 $ 2,751 $ 623 $ 494 $ -
Real estate 684 1,283 2,160 1,581 1,730
Mortgage warehousing - - - - -
Installment   -     107     70     101     23
Total $ 2,664   $ 4,141   $ 2,853   $ 2,176   $ 1,753
 
 
 

HORIZON BANCORP

Loan Portfolio Detail
         
Non- Percent Specific Percent of
Loan Performing of Reserves on Non - Non-performing
December 31, 2010 (Unaudited) Balance   Loans Loans Performing Loans Loans
Owner occupied real estate $ 232,402 $ 5,552 2.39 % $ 1,096 19.74 %
Non owner occupied real estate 40,920 1,772 4.33 % 165 9.31 %
Residential development 8,696 266 3.06 % 17 6.39 %
Commercial and industrial   47,999       493 1.03 %   189 38.34 %
Total commercial 330,017 8,083 2.45 % 1,467 18.15 %
 
Residential mortgage (includes HFS) 173,801 9,327 5.37 % 969 10.39 %
Residential construction 7,467 - 0.00 % - 0.00 %
Mortgage warehouse   123,743       - 0.00 %   - 0.00 %
Total mortgage 305,011 9,327 3.06 % 969 10.39 %
 
Direct installment 24,545 238 0.97 % 976 410.08 %
Indirect installment 128,122 1,431 1.12 % - 0.00 %
Home equity   114,015       2,349 2.06 %   - 0.00 %
Total installment 266,682 4,018 1.51 % 976 24.29 %
       
Total loans 901,710 21,428 2.38 % 3,412 15.92 %
Allowance for loan losses   (19,064 )      
Net loans $ 882,646     $ 21,428 $ 3,412
 
 
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
December 31, 2010 December 30, 2009
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
 
ASSETS
Interest-earning assets
Federal funds sold $ 5,039 $ 3 0.24% $ 19,331 $ 12 0.25%
Interest-earning deposits 7,114 3 0.17% 8,111 5 0.24%
Investment securities - taxable 293,537 2,205 2.98% 250,223 2,535 4.02%
Investment securities - non-taxable (1) 109,234 1,010 5.48% 107,980 1,060 5.90%
Loans receivable (2) 931,380   14,455 6.17% 873,293   14,043 6.39%
Total interest-earning assets (1) 1,346,304 17,676 5.36% 1,258,938 17,655 5.74%
 
Noninterest-earning assets
Cash and due from banks 16,052 15,267
Allowance for loan losses (18,342) (14,229)
Other assets 99,727 78,634
 
$ 1,443,741 $ 1,338,610
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 901,884 $ 2,473 1.09% $ 808,363 $ 3,275 1.61%
Borrowings 264,173 1,669 2.51% 288,684 2,685 3.69%
Subordinated debentures 34,946   459 5.21% 27,837   324 4.62%
Total interest-bearing liabilities 1,201,003 4,601 1.52% 1,124,884 6,284 2.22%
 
Noninterest-bearing liabilities
Demand deposits 111,140 89,137

Accrued interest payable and other liabilities
12,960 9,322
Shareholders' equity 118,638 115,267
 
$ 1,443,741 $ 1,338,610
 
Net interest income/spread $ 13,075 3.84% $ 11,371 3.52%
 

Net interest income as a percent of average interest earning assets (1)
4.01% 3.76%
(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)
   
Twelve Months Ended Twelve Months Ended
December 31, 2010 December 31, 2009
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
ASSETS
Interest-earning assets
Federal funds sold $ 23,917 $ 53 0.22 % $ 25,551 $ 56 0.22 %
Interest-earning deposits 8,684 17 0.20 % 7,170 16 0.22 %
Investment securities - taxable 282,507 9,535 3.38 % 247,903 10,813 4.36 %
Investment securities - non-taxable (1) 108,809 4,148 5.45 % 97,913 3,942 5.75 %
Loans receivable (2)   878,181       54,738 6.24 %   892,431       57,836 6.49 %
Total interest-earning assets (1) 1,302,098 68,491 5.40 % 1,270,968 72,663 5.85 %
 
Noninterest-earning assets
Cash and due from banks 15,341 15,344
Allowance for loan losses (17,058 ) (12,372 )
Other assets   93,671     77,215  
 
$ 1,394,052   $ 1,351,155  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 871,526 $ 10,711 1.23 % $ 800,255 $ 14,792 1.85 %
Borrowings 264,293 8,476 3.21 % 318,661 11,696 3.67 %
Subordinated debentures   32,005       1,688 5.27 %   27,837       1,406 5.05 %

Total interest-bearing liabilities
1,167,824 20,875 1.79 % 1,146,753 27,894 2.43 %
 
Noninterest-bearing liabilities
Demand deposits 97,665 84,209

Accrued interest payable and other liabilities
10,466 9,215
Shareholders' equity   118,097     110,978  
 
$ 1,394,052   $ 1,351,155  
 
Net interest income/spread $ 47,616 3.61 % $ 44,769 3.42 %
 

Net interest income as a percent of average interest earning assets (1)
3.80 % 3.66 %
(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)
   
December 31 December 31
2010 2009
(Unaudited)    
Assets
Cash and due from banks $ 15,683 $ 68,702
Investment securities, available for sale 382,344 333,132
Investment securities, held to maturity 9,595 11,657
Loans held for sale 18,833 5,703
Loans, net of allowance for loan losses of $19,064 and $16,015 863,813 870,302
Premises and equipment 34,194 30,534
Federal Reserve and Federal Home Loan Bank stock 13,664 13,189
Goodwill 5,910 5,787
Other intangible assets 2,741 1,447
Interest receivable 6,519 5,986
Cash value life insurance 27,195 23,139
Other assets   20,428     17,442
Total assets $ 1,400,919   $ 1,387,020
Liabilities
Deposits
Non-interest bearing $ 107,606 $ 84,357
Interest bearing   877,892     867,351
Total deposits 985,498 951,708
Borrowings 260,741 284,016
Subordinated debentures 30,584 27,837
Interest payable 781 1,135
Other liabilities   11,032     7,719

Total liabilities
  1,288,636     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 18,217 24,306
Common stock, $.2222 stated value
Authorized, 22,500,000 shares
Issued, 3,301,437 and 3,273,881 shares 1,122 1,119
Additional paid-in capital 10,356 10,030
Retained earnings 80,240 73,431
Accumulated other comprehensive income   2,348     5,719
Total stockholders’ equity   112,283     114,605
Total liabilities and stockholders’ equity $ 1,400,919   $ 1,387,020
 
 
 

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Dollar Amounts in Thousands, Except Per Share Data)
   
Three Months Ended December 31   Twelve Months Ended December 31
2010   2009 2010   2009
(Unaudited)       (Unaudited)    
Interest Income
Loans receivable $ 14,455 $ 14,043 $ 54,738 $ 57,836
Investment securities
Taxable 2,211 2,552 9,605 10,885
Tax exempt   1,010       1,060       4,148       3,942  
Total interest income   17,676       17,655       68,491       72,663  
Interest Expense
Deposits 2,473 3,275 10,711 14,792
Borrowed funds 1,669 2,685 8,476 11,696
Subordinated debentures   459       324       1,688       1,406  
Total interest expense   4,601       6,284       20,875       27,894  
Net Interest Income 13,075 11,371 47,616 44,769
Provision for loan losses   2,664       3,700       11,554       13,603  
Net Interest Income after Provision for Loan Losses   10,411       7,671       36,062       31,166  
Other Income
Service charges on deposit accounts 857 978 3,607 3,858
Wire transfer fees 220 212 756 921
Interchange fees 584 506 2,247 1,864
Fiduciary activities 1,043 850 3,979 3,336
Gain (loss) on sale of securities 66 373 533 795
Gain on sale of mortgage loans 2,009 1,246 7,538 6,107
Mortgage servicing net of impairment (202 ) (3 ) (565 ) (134 )
Increase in cash surrender value of bank owned life insurance 204 173 803 720
Other income   180       (31 )     1,008       389  
Total other income   4,961       4,304       19,906       17,856  
Other Expenses
Salaries and employee benefits 6,117 4,940 22,090 19,204
Net occupancy expenses 1,118 924 4,195 3,796
Data processing 451 388 1,925 1,582
Professional fees 283 392 1,701 1,413
Outside services and consultants 531 428 1,694 1,471
Loan expense 832 770 3,208 2,611
FDIC insurance expense 416 375 1,635 2,126
Other losses 324 68 504 510
Other expenses   1,504       1,273       5,619       5,099  
Total other expenses   11,576       9,558       42,571       37,812  
Income Before Income Tax 3,796 2,417 13,397 11,210
Income tax expense   926       333       2,942       2,070  
Net Income 2,870 2,084 10,455 9,140
Preferred stock dividend and discount accretion   (349 )     (351 )     (1,406 )     (1,402 )
Net Income Available to Common Shareholders $ 2,521     $ 1,733     $ 9,049     $ 7,738  
Basic Earnings Per Share $ 0.77 $ 0.53 $ 2.76 $ 2.39
Diluted Earnings Per Share 0.75 0.53 2.71 2.37

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