Horizon Bancorp Reports Record Quarter And Year-to-Date Earnings

Horizon Bancorp (NASDAQ: HBNC) today announced its unaudited financial results for the three and nine month periods ended September 30, 2011.

SUMMARY:
  • Third quarter 2011 net income was $3.4 million or $.80 diluted earnings per share, a 4.2% increase in net income from the same period in 2010 and the highest quarterly net income in the Company’s history.
  • For the first nine months of 2011, net income was $9.3 million or $2.37 diluted earnings per share, a 22.3% increase in net income from the same period in 2010 and the highest year-to-date nine-month net income in the Company’s history.
  • Total loans increased $86.8 million during the quarter to $925.8 million at September 30, 2011.
  • Total assets grew to a record $1.49 billion at September 30, 2011 compared to $1.41 billion at June 30, 2011.
  • Net interest income, after provisions for loan losses, for the nine months of 2011 was $30.1 million compared with $25.7 million for the same period in the prior year.
  • The provision for loan losses decreased to $4.4 million for the first nine months of 2011 compared to $8.9 million for the same period in 2010.
  • In August, the Company redeemed all of the US Treasury Department’s preferred stock investment under the TARP Capital Purchase Program using $6.25 million in cash and a $12.5 million investment by the US Treasury Department under the Small Business Lending Fund.
  • The Company increased its quarterly dividend to $0.18 per share, its 103rd consecutive quarterly cash dividend to Horizon’s shareholders.
  • Horizon’s tangible book value per share rose to $29.68 compared with $26.50 at the close of the third quarter of 2010.
  • Horizon’s capital ratios, including Tier 1 Capital to total risk weighted assets of 12.37%, continue to be well above the regulatory standards for well-capitalized banks.

Craig M. Dwight, President and CEO, stated: “Horizon’s record quarterly and nine-month results once again demonstrated our ability to grow in spite of the less than robust economic conditions. Our commitment to a balanced revenue stream has continued to support earnings growth and has enabled us to build our capital position and return some of this income to shareholders through increased dividends. Redeeming the Treasury Department’s investment under the Capital Purchase Program also enabled us to increase our dividend to shareholders.”

“The tremendous dedication of our employees, and their commitment to give customers a superior banking experience has led to high customer retention levels, expanded banking relationships and new customer relationships. This commitment, supported by a diverse range of financial products, has enabled us to win market share as individuals and businesses seek a better banking experience.”

“We have expanded our market and outreach efforts to win more business. The successful results of these efforts have been reflected in growing revenue.”

Dwight further explained the numerous operating efficiencies implemented in past years are enabling Horizon to operate more profitably. He noted that a significant year-over-year reduction in the Bank’s loan loss reserve demonstrates an ongoing trend of loan charge-offs reducing, while a 53.3 % decline in loans 30 to 89 days delinquent is an encouraging indication that this trend may continue.

“We continue to develop initiatives to expand our product and service capabilities and build market share,” said Dwight. “We remain watchful for opportunities to grow organically by hiring exceptionally talented producers and for accretive acquisition opportunities in a consolidating banking market.”

Performance Highlights

Net income for the third quarter of 2011 was $3.4 million or $.80 diluted earnings per share, up 4.2% compared to $3.3 million or $.88 diluted earnings per share in the third quarter of 2010. Redeeming the US Treasury Department’s preferred stock investment from the TARP Capital Purchase Program (“CPP”) during the third quarter required that the discount on the preferred stock be completely recognized, resulting in a reduction in net income available to common shareholders of $449,000, or $0.13 per diluted share. This was a one time event and had no net impact on the equity of the Company.

On August 25, 2011, the Company redeemed all of the US Treasury Department’s preferred stock investment from the CPP using $6.25 million in cash and $12.5 million investment from the US Treasury Department under the Small Business Lending Fund (“SBLF”) in a new series of our preferred stock. The total preferred stock dividends and accretion of the discount for the third quarter was $710,000, representing $261,000 in preferred stock dividends and $449,000 in discount accretion. The quarterly dividend payment on the SBLF preferred shares is expected to be approximately $156,000 based on the $12.5 million in preferred shares currently outstanding.

Diluted earnings per share were reduced by $0.21 and $0.36, respectively, for the three and nine months ending September 30, 2011, compared to $0.11 and $0.32, respectively, for the three and nine months ending September 30, 2010. The reduction to diluted earnings per share was greater in 2011 due to the recognition of the remaining discount on the CPP preferred stock in the third quarter of 2011 but offset by a decrease in preferred stock dividends. The reduction in 2011 on the preferred stock dividend was due to the repurchase of $6.25 million of CPP preferred stock during the fourth quarter of 2010.

Net income for the first nine months of 2011 rose 22.3% to $9.3 million or $2.37 diluted earnings per share, compared with $7.6 million or $1.96 diluted earnings per share in the first nine months of 2010. This is the highest level of net income for the first three quarters in the Company’s history.

The net interest margin increased to 3.76% in the third quarter of 2011 from 3.67% for the three-month period ending June 30, 2011. This increase in the third quarter of 2011 primarily reflected an increase in average mortgage warehouse loan volume and balances, which were funded by an increase in average federal funds purchased, resulting in an expanded interest rate spread on interest earning assets. Borrowings increased by $106.0 million since June 30, 2011 all in short-term instruments primarily to fund the increase in mortgage warehouse.

“While average aggregate mortgage warehouse loans in 2011 are lower than in 2010, the levels met our expectations,” explained Dwight. “We have operated our mortgage warehousing business for 12 years without a loss. While it is subject to seasonal and rate-driven fluctuations in the mortgage market, it is an important part of our diversified income stream. Overall, in an environment that has caused margin compression, we were satisfied with our ability to maintain relative stability in our net interest margin.”

Residential mortgage loan sale activity during the third quarter of 2011 generated $2.1 million in income from the gain on sale of mortgage loans, a decrease of $328,000 from the same period in 2010 but an increase of $837,000 from the second quarter of 2011. In addition, Horizon recognized a $1.1 million gain on the sale of securities of during the third quarter of 2011 as the result of restructuring a portion of the investment portfolio, utilizing the gains to offset a $798,000 pre-payment penalty, included in other losses, for the repayment of an FHLB advance before its scheduled maturity.

Lending Activity

With respect to Horizon’s lending activities, Dwight commented, “Expanding Horizon’s overall loan activity continues to be a challenge given the local and national economies. Given this challenge, Horizon has increased its marketing and outbound calling efforts in order to increase market share. In addition, we continue to hire talented people to help fuel expansion efforts.”

Total loans increased by $43.0 million from $882.9 million at December 31, 2010 to $925.8 million at September 30, 2011, as the balances in all loan categories have increased except for installment loans which decreased by $2.7 million. Commercial loans increased by $15.3 million, residential mortgage loans increased by $3.0 million, and mortgage warehouse loans increased by $27.4 million.

The provision for loan losses was $1.6 million for the third quarter of 2011, which was approximately $1.1 million less than the provision for the same period of the prior year. The 2011 third-quarter provision was $232,000 more than the 2011 second quarter provision and $16,000 more than the first quarter provision. The higher provision for loan losses was primarily related to an increase of non-performing loans in the third quarter.

The ratio of allowance for loan losses to total loans decreased to 2.04% from 2.11% as of September 30, 2011 and December 31, 2010, respectively. The decrease in the ratio was due to an overall increase in total loan balances as the total allowance for loan losses balance increase slightly during this same period.

Non-performing loans totaled $23.6 million on September 30, 2011, up from $20.6 million on June 30, 2011, and from $21.7 million on September 30, 2010. As a percentage of total loans, non-performing loans were 2.52% on September 30, 2011, up from 2.44% on June 30, 2011, and 2.22% on September 30, 2010.

The increase of non-performing loans from the prior quarter was primarily due to higher non-performing commercial loans, which increased from $9.6 million on June 30, 2011, to $12.1 million on September 30, 2011. This increase resulted primarily from the addition of two loans totaling $2.1 million secured by a retail income property. Non-performing mortgage loans increased from $7.0 million on June 30, 2011 to $7.2 million on September 30, 2011. Non-performing installment loans increased from $4.0 million on June 30, 2011 to $4.3 million on September 30, 2011.

“We continue to reserve for potential loan losses, but we believe the outlook is significantly more encouraging than a year ago,” said Dwight “Because our non-performing assets represent a small percentage of our total loans, and our capital position remains strong, we are able to seek out new quality lending opportunities that other banks are not able to pursue because of their financial or regulatory situation.”

Real estate and installment non-performing loans on September 30, 2011 included $1.5 million and $1.9 million respectively, of loans in bankruptcy. This compares to $1.7 million and $2.7 million, respectively, on June 30, 2011. 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 Company’s experience with loans in bankruptcy has demonstrated that some debtors continue to make payments during the bankruptcy process, many reaffirm their obligation to the Company 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. The recent trend is for fewer loans to be involved in the bankruptcy process. There were three non-performing loans, totaling $235,000, to commercial borrowers in bankruptcy on September 30, 2011.

TDR’s are also included in the non-performing loan totals. TDR’s declined from $6.1 million on June 30, 2011 to $5.7 million on September 30, 2011. Of these, $3.7 million were mortgage loans, $1.2 million were commercial loans, and $849,000 were consumer installment loans.

Non-accrual loans totaled $17.8 million on September 30, 2011 up from $14.4 million on June 30, 2011, and $16.8 million on September 30, 2010. The increase in the most recent quarter was primarily due to the aforementioned addition of two large commercial loans secured by retail income property. Non-accrual commercial loans were the largest component at $10.9 million. Non-accrual commercial loans to a hotel owner totaled $4.2 million, and loans secured by retail strip malls totaled $2.3 million. The hotel is under contract to sell with little or no additional loss expected. Loans 90 days delinquent but still on accrual totaled $97,000 on September 30, 2011, up from $55,000 on June 30, 2011, but down from $833,000 on September 30, 2010. 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 $3.6 million on September 30, 2011, down from $4.1 million on June 30, 2011, and $4.1 million on September 30, 2010. During the quarter, ten properties with a book value of $869,000 as of June 30, 2011 were sold. Another ten with a book value of $461,000 were transferred into OREO status. Three properties were reduced through partial sales or payments by $119,000. On September 30, 2011, OREO was comprised of 28 properties. Of these, five totaling $1.1 million were commercial properties and 23 totaling $2.5 million were residential real estate.

Expense Management

Total non-interest expenses were $1.1 million higher in the third quarter of 2011 compared to the third quarter of 2010 and $2.1 million higher for the nine months ended September 30, 2011 compared to the same period in the prior year. Salaries and employee benefits increased $96,000 compared to the same quarter in 2010 and $939,000 compared to the same nine-month period of 2010. These increases are primarily 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 of 2010, the expansion into Portage, Michigan, and annual merit pay increases. In third quarter of 2011, included in the other loss line item of non-interest expense, was a $798,000 pre-payment penalty from the early repayment of an FHLB advance and $210,000 for the settlement of a lawsuit.

Dwight concluded, “Horizon has already developed the infrastructure and operations to meet increased regulation, and to comfortably add loans and deposits while managing expenses. We believe Horizon is well-positioned to capitalize on strategic growth opportunities that would contribute to earnings growth.”

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.

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 “Item 1A Risk Factors” of Part I of Horizon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and in Item 1A “Risk Factors” of Part II of Horizon’s Form 10-Q for the quarter ended June 30, 2011. 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)
         
September 30 June 30 March 31 December 31 September 30
2011   2011   2011   2010   2010
Balance sheet:
Total assets $ 1,490,810 $ 1,413,737 $ 1,382,390 $ 1,400,919 $ 1,485,058
Investment securities 441,334 460,449 445,988 391,939 397,694
Commercial loans 345,366 338,439 335,758 330,018 329,230
Mortgage warehouse loans 151,111 75,057 49,034 123,743 193,848
Residential mortgage loans 165,429 163,803 164,240 162,435 165,234
Installment loans 263,934 261,971 260,525 266,681 270,503
Earning assets 1,391,864 1,316,452 1,274,171 1,307,313 1,387,594
Non-interest bearing deposit accounts 121,483 113,747 111,155 107,606 105,376
Interest bearing transaction accounts 551,597 567,456 531,250 508,953 506,031
Time deposits 316,669 339,073 359,004 368,939 388,076
Borrowings 336,095 230,141 224,358 260,741 318,516
Subordinated debentures 30,653 30,630 30,607 30,584 30,562
Common stockholders' equity 106,180 103,206 97,802 94,066 95,686
Total stockholders’ equity 118,680 121,507 116,060 112,283 120,112
 
Income statement: Three months ended
Net interest income $ 11,991 $ 11,463 $ 11,067 $ 13,075 $ 12,620
Provision for loan losses 1,564 1,332 1,548 2,664 2,657
Other income 6,538 4,448 4,314 4,961 5,648
Other expenses 12,313 10,487 10,258 11,576 11,257
Income tax expense   1,235       999       810       926       1,075  
Net income 3,417 3,093 2,765 2,870 3,279
Preferred stock dividend   (710 )     (277 )     (276 )     (349 )     (353 )
Net income available to common shareholders $ 2,707     $ 2,816     $ 2,489     $ 2,521     $ 2,926  
 
Per share data:
Basic earnings per share $ 0.82 $ 0.86 $ 0.76 $ 0.77 $ 0.89
Diluted earnings per share 0.80 0.83 0.74 0.75 0.88
Cash dividends declared per common share 0.18 0.17 0.17 0.17 0.17
Book value per common share 32.20 31.32 29.76 28.68 29.17
Tangible book value per common share 29.68 28.76 27.17 26.04 26.50
Market value - high 28.35 27.92 29.19 26.99 22.60
Market value - low $ 25.97 $ 26.50 $ 26.20 $ 21.89 $ 21.15
Weighted average shares outstanding - Basic 3,295,130 3,291,833 3,283,143 3,280,331 3,279,201
Weighted average shares outstanding - Diluted 3,376,253 3,376,969 3,383,175 3,362,118 3,336,634
 
Key ratios:
Return on average assets 0.96 % 0.89 % 0.80 % 0.79 % 0.90 %
Return on average common stockholders' equity 10.14 11.25 10.55 10.22 12.12
Net interest margin 3.76 3.67 3.57 4.01 3.84
Loan loss reserve to total loans 2.04 2.20 2.34 2.11 1.85
Non-performing loans to loans 2.52 2.44 2.71 2.38 2.22
Average equity to average assets 8.60 8.51 8.14 8.22 8.32
Bank only capital ratios:
Tier 1 capital to average assets 8.90 9.03 8.83 8.60 8.53
Tier 1 capital to risk weighted assets 12.37 13.62 13.56 12.70 11.69
Total capital to risk weighted assets 13.62 14.88 14.79 13.96 12.94
 
Loan data:
30 to 89 days delinquent $ 4,240 $ 4,903 $ 6,948 $ 5,907 $ 9,084
 
90 days and greater delinquent - accruing interest $ 97 $ 55 $ 57 $ 358 $ 833
Trouble debt restructures - accruing interest 4,016 4,227 4,014 4,119 3,445
Trouble debt restructures - non-accrual 1,699 1,912 682 278 463
Non-accrual loans   17,799       14,430       17,359       16,673       16,939  
Total non-performing loans $ 23,611     $ 20,624     $ 22,112     $ 21,428     $ 21,680  
 
 
 

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)
   
September 30 September 30
2011   2010
Balance sheet:
Total assets $ 1,490,810 $ 1,485,058
Investment securities 441,334 397,694
Commercial loans 345,366 329,230
Mortgage warehouse loans 151,111 193,848
Residential mortgage loans 165,429 165,234
Installment loans 263,934 270,503
Earning assets 1,391,864 1,387,594
Non-interest bearing deposit accounts 121,483 105,376
Interest bearing transaction accounts 551,597 506,031
Time deposits 316,669 388,076
Borrowings 336,095 318,516
Subordinated debentures 30,653 30,562
Common stockholders' equity 106,180 95,686
Total stockholders’ equity 118,680 120,112
 
Income statement: Nine months ended
Net interest income $ 34,521 $ 34,541
Provision for loan losses 4,444 8,890
Other income 15,300 14,945
Other expenses 33,058 30,995
Income tax expense   3,044       2,016  
Net income 9,275 7,585
Preferred stock dividend   (1,263 )     (1,057 )
Net income available to common shareholders $ 8,012     $ 6,528  
 
Per share data:
Basic earnings per share $ 2.44 $ 1.99
Diluted earnings per share 2.37 1.96
Cash dividends declared per common share 0.52 0.51
Book value per common share 32.20 29.21
Tangible book value per common share 29.68 26.53
Market value - high 29.19 22.81
Market value - low $ 25.97 $ 16.44
Weighted average shares outstanding - Basic 3,289,911 3,275,969
Weighted average shares outstanding - Diluted 3,377,311 3,323,830
 
Key ratios:
Return on average assets 0.88 % 0.74 %
Return on average common stockholders' equity 10.64 9.33
Net interest margin 3.67 3.72
Loan loss reserve to total loans 2.04 1.85
Non-performing loans to loans 2.52 2.22
Average equity to average assets 8.43 8.56
Bank only capital ratios:
Tier 1 capital to average assets 8.90 8.53
Tier 1 capital to risk weighted assets 12.37 11.69
Total capital to risk weighted assets 13.62 12.94
 
Loan data:
30 to 89 days delinquent $ 4,240 $ 9,084
 
90 days and greater delinquent - accruing interest $ 97 $ 833
Trouble debt restructures - accruing interest 4,016 3,445
Trouble debt restructures - non-accrual 1,699 463
Non-accrual loans   17,799       16,939  
Total non-performing loans $ 23,611     $ 21,680  
 
 
 

HORIZON BANCORP

 

Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)
         
September 30 June 30 March 31 December 31 September 30
2011   2011   2011   2010   2010
Commercial $ 8,151 $ 7,078 $ 8,609 $ 7,554 $ 7,029
Real estate 2,457 1,710 2,357 2,379 1,957
Mortgage warehousing 1,477 1,516 1,421 1,435 1,441
Consumer 7,025 8,282 6,703 7,696 7,603
Unallocated   -     -     -     -     -
Total $ 19,110   $ 18,586   $ 19,090   $ 19,064   $ 18,030

Net Charge-offs

(Dollars in Thousands, Unaudited)
 
Three months ended
September 30   June 30   March 31   December 31   September 30
2011   2011   2011   2010   2010
Commercial $ 269 $ 366 $ 59 $ 426 $ 485
Real estate 86 659 82 128 86
Mortgage warehousing - - - - -
Consumer   685     811     1,380     1,076     599
Total $ 1,040   $ 1,836   $ 1,521   $ 1,630   $ 1,170

Total Non-performing Loans

(Dollars in Thousands, Unaudited)
         
September 30 June 30 March 31 December 31 September 30
2011   2011   2011   2010   2010
Commercial $ 12,094 $ 9,613 $ 9,428 $ 8,082 $ 8,855
Real estate 7,201 6,983 8,744 9,326 8,467
Mortgage warehousing - - - - -
Consumer   4,316     4,028     3,940     4,020     4,358
Total $ 23,611   $ 20,624   $ 22,112   $ 21,428   $ 21,680

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)
         
September 30 June 30 March 31 December 31 September 30
2011   2011   2011   2010   2010
Commercial $ 1,087 $ 1,414 $ 1,443 $ 1,622 $ 2,751
Real estate 2,478 2,679 839 1,042 1,283
Mortgage warehousing - - - - -
Consumer   90     16     8     -     107
Total $ 3,655   $ 4,109   $ 2,290   $ 2,664   $ 4,141
 
 
 

HORIZON BANCORP

 

Loan Portfolio Detail
         
 
Non- Percent Specific Percent of
Loan Performing of Reserves on Non - Non-performing
September 30, 2011 (Unaudited) Balance   Loans Loans Performing Loans Loans
Owner occupied real estate $ 128,724 $ 2,734 2.12 % $ 460 16.83 %
Non owner occupied real estate 141,727 7,902 5.58 % 996 12.60 %
Residential development 10,146 90 0.89 % 125 138.89 %
Commercial and industrial   64,769       1,368 2.11 %   200 14.62 %
Total commercial 345,366 12,094 3.50 % 1,781 14.73 %
 
Residential mortgage (1) 170,234 6,766 3.97 % 202 2.99 %
Residential construction 7,495 435 5.80 % 62 14.25 %
Mortgage warehouse   151,111       - 0.00 %   - 0.00 %
Total real estate 328,840 7,201 2.19 % 264 3.67 %
 
Direct installment 24,737 354 1.43 % 18 5.08 %
Indirect installment 127,666 1,173 0.92 % 7 0.60 %
Home equity   111,531       2,789 2.50 %   906 32.48 %
Total consumer 263,934 4,316 1.64 % 931 21.57 %
       
Total loans 938,140 23,611 2.52 % 2,976 12.60 %
Allowance for loan losses   (19,110 )      
Net loans $ 919,030     $ 23,611 2.57 % $ 2,976
 
(1) Residential mortgage total includes Held for Sale mortgage loans
 
Non- Percent Specific Percent of
Loan Performing of Reserves on Non - Non-performing
December 31, 2010 Balance   Loans Loans Performing Loans Loans
Owner occupied real estate $ 125,909 $ 1,042 0.83 % $ 385 36.95 %
Non owner occupied real estate 137,073 6,329 4.62 % 665 10.51 %
Residential development 8,694 266 3.06 % 142 53.38 %
Commercial and industrial   58,342       445 0.76 %   265 59.55 %
Total commercial 330,018 8,082 2.45 % 1,457 18.03 %
 
Residential mortgage (1) 173,800 9,326 5.37 % 969 10.39 %
Residential construction 7,468 - 0.00 % - 0.00 %
Mortgage warehouse   123,743       - 0.00 %   - 0.00 %
Total real estate 305,011 9,326 3.06 % 969 10.39 %
 
Direct installment 25,058 287 1.15 % 976 340.07 %
Indirect installment 128,129 1,431 1.12 % - 0.00 %
Home equity   113,494       2,302 2.03 %   - 0.00 %
Total consumer 266,681 4,020 1.51 % 976 24.28 %
       
Total loans 901,710 21,428 2.38 % 3,402 15.88 %
Allowance for loan losses   (19,064 )      
Net loans $ 882,646     $ 21,428 2.43 % $ 3,402
 
(1) Residential mortgage total includes Held for Sale mortgage loans
 
 
 

HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)
       
 
Three Months Ended Three Months Ended
September 30, 2011 September 30, 2010
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
 
ASSETS
Interest-earning assets
Federal funds sold $ 2,265 $ 1 0.18 % $ 12,273 $ 4 0.13 %
Interest-earning deposits 14,868 1 0.03 % 15,349 4 0.10 %
Investment securities - taxable 336,027 2,540 3.00 % 298,152 2,423 3.22 %
Investment securities - non-taxable (1) 109,875 988 5.41 % 102,885 979 5.32 %
Loans receivable (2)   855,938       12,481 5.79 %   918,930       14,466 6.25 %
Total interest-earning assets (1) 1,318,973 16,011 4.97 % 1,347,589 17,876 5.39 %
 
Noninterest-earning assets
Cash and due from banks 17,169 16,518
Allowance for loan losses (18,823 ) (17,137 )
Other assets   99,560     97,460  
 
$ 1,416,879   $ 1,444,430  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 871,621 $ 1,978 0.90 % $ 913,473 $ 2,769 1.20 %
Borrowings 259,783 1,583 2.42 % 258,476 2,026 3.11 %
Subordinated debentures   31,446       459 5.79 %   34,946       461 5.23 %
Total interest-bearing liabilities 1,162,850 4,020 1.37 % 1,206,895 5,256 1.73 %
 
Noninterest-bearing liabilities
Demand deposits 121,034 106,152
Accrued interest payable and
other liabilities 11,158 11,204
Shareholders' equity   121,837     120,179  
 
$ 1,416,879   $ 1,444,430  
 
Net interest income/spread $ 11,991 3.60 % $ 12,620 3.66 %
 
Net interest income as a percent
of average interest earning assets (1) 3.76 % 3.84 %
(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)
       
Nine Months Ended Nine Months Ended
September 30, 2011 September 30, 2010
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
ASSETS
Interest-earning assets
Federal funds sold $ 26,448 $ 49 0.25 % $ 30,279 $ 13 0.06 %
Interest-earning deposits 8,837 2 0.03 % 9,213 38 0.55 %
Investment securities - taxable 329,903 7,777 3.15 % 278,790 7,343 3.52 %
Investment securities - non-taxable (1) 112,133 3,066 5.22 % 108,666 3,138 5.36 %
Loans receivable (2)   830,432       36,260 5.85 %   860,253       40,283 6.27 %
Total interest-earning assets (1) 1,307,753 47,154 4.96 % 1,287,201 50,815 5.41 %
 
Noninterest-earning assets
Cash and due from banks 15,756 15,101
Allowance for loan losses (18,992 ) (16,625 )
Other assets   97,540     91,630  
 
$ 1,402,057   $ 1,377,307  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 889,531 $ 6,510 0.98 % $ 861,296 $ 8,238 1.28 %
Borrowings 237,491 4,760 2.68 % 264,333 6,807 3.44 %
Subordinated debentures   31,446       1,363 5.80 %   31,014       1,229 5.30 %
Total interest-bearing liabilities 1,158,468 12,633 1.46 % 1,156,643 16,274 1.88 %
 
Noninterest-bearing liabilities
Demand deposits 115,454 93,123
Accrued interest payable and
other liabilities 9,989 9,627
Shareholders' equity   118,146     117,914  
 
$ 1,402,057   $ 1,377,307  
 
Net interest income/spread $ 34,521 3.50 % $ 34,541 3.53 %
 
Net interest income as a percent
of average interest earning assets (1) 3.67 % 3.72 %
(3)   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.
(4) 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)
   
September 30 December 31
2011 2010
(Unaudited)    
Assets
Cash and due from banks $ 18,462 $ 15,683
Investment securities, available for sale 430,702 382,344
Investment securities, held to maturity 10,632 9,595
Loans held for sale 12,300 18,833
Loans, net of allowance for loan losses of $19,110 and $19,064 906,730 863,813
Premises and equipment 34,289 34,194
Federal Reserve and Federal Home Loan Bank stock 12,390 13,664
Goodwill 5,910 5,910
Other intangible assets 2,403 2,741
Interest receivable 6,651 6,519
Cash value life insurance 29,959 27,195
Other assets   20,382     20,428
Total assets $ 1,490,810   $ 1,400,919
Liabilities
Deposits
Non-interest bearing $ 121,483 $ 107,606
Interest bearing   868,266     877,892
Total deposits 989,749 985,498
Borrowings 336,095 260,741
Subordinated debentures 30,653 30,584
Interest payable 582 781
Other liabilities   15,051     11,032
Total liabilities   1,372,130     1,288,636
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, no par value, $1,000 liquidation value
Authorized, 1,000,000 shares
Issued 12,500 and 18,750 shares 12,500 18,217
Common stock, $.2222 stated value
Authorized, 22,500,000 shares
Issued, 3,309,512 and 3,300,659 shares 1,126 1,122
Additional paid-in capital 10,579 10,356
Retained earnings 86,524 80,240
Accumulated other comprehensive income   7,951     2,348
Total stockholders’ equity   118,680     112,283
Total liabilities and stockholders’ equity $ 1,490,810   $ 1,400,919
 
 

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Income(Dollar Amounts in Thousands, Except Per Share Data)
   
Three Months Ended September 30   Nine Months Ended September 30
2011   2010 2011   2010
(Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Interest Income
Loans receivable $ 12,481 $ 14,466 $ 36,260 $ 40,283
Investment securities
Taxable 2,542 2,431 7,828 7,394
Tax exempt   988       979       3,066       3,138  
Total interest income   16,011       17,876       47,154       50,815  
Interest Expense
Deposits 1,978 2,769 6,510 8,238
Borrowed funds 1,583 2,026 4,760 6,807
Subordinated debentures   459       461       1,363       1,229  
Total interest expense   4,020       5,256       12,633       16,274  
Net Interest Income 11,991 12,620 34,521 34,541
Provision for loan losses   1,564       2,657       4,444       8,890  
Net Interest Income after Provision for Loan Losses   10,427       9,963       30,077       25,651  
Other Income
Service charges on deposit accounts 802 921 2,422 2,750
Wire transfer fees 167 211 412 536
Interchange fees 721 649 1,905 1,663
Fiduciary activities 1,016 934 2,911 2,936
Gain on sale of securities 1,115 336 1,754 467
Gain on sale of mortgage loans 2,145 2,473 3,986 5,529
Mortgage servicing income net of impairment (172 ) (331 ) 691 (363 )
Increase in cash surrender value of bank owned life insurance 245 246 661 599
Death benefit on officer life insurance 453 - 453 -
Other income   46       209       105       828  

Total other income
  6,538       5,648       15,300       14,945  
Other Expenses
Salaries and employee benefits 6,081 5,985 16,912 15,973
Net occupancy expenses 1,056 1,036 3,176 3,077
Data processing 549 502 1,450 1,474
Professional fees 359 417 1,039 1,418
Outside services and consultants 454 374 1,221 1,163
Loan expense 820 855 2,276 2,376
FDIC insurance expense 254 423 944 1,219
Other losses 1,088 143 1,365 180
Other expenses   1,652       1,522       4,675       4,115  

Total other expenses
  12,313       11,257       33,058       30,995  
Income Before Income Tax 4,652 4,354 12,319 9,601
Income tax expense   1,235       1,075       3,044       2,016  
Net Income 3,417 3,279 9,275 7,585
Preferred stock dividend and discount accretion   (710 )     (353 )     (1,263 )     (1,057 )
Net Income Available to Common Shareholders $ 2,707     $ 2,926     $ 8,012     $ 6,528  
Basic Earnings Per Share $ 0.82 $ 0.89 $ 2.44 $ 1.99
Diluted Earnings Per Share 0.80 0.88 2.37 1.96

Copyright Business Wire 2010

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