Horizon Bancorp Announces Record Earnings For 2011

Horizon Bancorp (NASDAQ: HBNC) today announced its unaudited financial results for the three and twelve month periods ended December 31, 2011. All share data has been adjusted to reflect Horizon’s three-for-two stock split paid on December 9, 2011.

SUMMARY:
  • Fourth quarter 2011 net income was $3.5 million or $.68 diluted earnings per share, a 23% increase in net income from the same period in 2010 and the highest quarterly net income and diluted earnings per share in the Company’s history.
  • For the twelve months ending 2011, net income was $12.8 million or $2.27 diluted earnings per share, a 22% increase in net income from 2010 and the highest annual net income and diluted earnings per share in the Company’s history.
  • This represents the Company’s 12th consecutive year of record annual earnings.
  • Total loans increased $57.4 million during the quarter and $100.3 million during the year to $983.2 million at December 31, 2011.
  • Total assets grew to a record $1.55 billion at December 31, 2011 compared to $1.49 billion at September 30, 2011 and $1.40 billion at December 31, 2010.
  • Net interest income, after provisions for loan losses, for the twelve months of 2011 was $42.8 million compared with $36.1 million for the same period in the prior year.
  • The provision for loan losses decreased to $5.3 million for the twelve months of 2011 compared to $11.6 million for the same period in 2010. Fourth quarter 2011 provision for loan losses was $838,000 compared with $2.67 million in fourth quarter 2010.
  • Return on average common equity was 11.20% for 2011.
  • During the fourth quarter of 2012 the Company announced a 3-for-2 stock split and shares were issued for the split on December 9, 2011.
  • The Company increased its cash dividend in 2011 and paid its 104th consecutive quarterly dividend to shareholders.
  • Horizon’s tangible book value per share rose to $20.37 compared with $17.36 (split adjusted) at the end of 2010.
  • In 2011 the Company redeemed all its preferred shares issued to the U.S. Treasury Department under its TARP Capital Purchase Program (“CPP”).
  • Horizon’s capital ratios, including Tier 1 Capital to total risk weighted assets of 11.89% as of December 31, 2011, continue to be well above the regulatory standards for well-capitalized banks.

Craig M. Dwight, President and CEO, stated: “Achieving record assets and net income and concurrently growing loans and deposits and reducing Horizon’s loan loss provision in a recessionary economy was a gratifying accomplishment. Horizon’s balanced business model proved its value in 2011. For example, our consumer lending was stable compared with 2010; however, our mortgage and mortgage warehouse lending enabled Horizon to capture the benefits of strong nationwide new mortgage and refinancing activity and a pick-up in business activity. The counter-cyclical structure of our revenue model enables us to achieve balanced revenue and growth. Year-over-year, the Bank has increased return on average equity and return on average assets.”

“A key goal in 2011 was to build core deposits to help maintain a low cost of funding. We ended 2011 with $1.01 billion in total deposits compared with $985.5 million in 2010, and we accomplished this growth even as we reduced higher-priced time deposits.”

Dwight added that Horizon continues to make strategic investments in people and activities that directly support net income generation, including adding four mortgage loan production staff members in Portage, Michigan office. He also noted the bank intends to open new full service branches in Valparaiso, Indiana and Portage, Michigan during first quarter 2012.

“There are opportunities to expand in our existing markets and enter new markets in which community banks are under-represented,” explained Dwight. “Additionally, our strong capital position and success generating loan and deposit growth supports our ability to consider community bank or branch acquisitions in the highly competitive and fragmented Indiana and Southwest Michigan markets.”

Performance Highlights

Net income for the fourth quarter of 2011 was $3.5 million or $.68 diluted earnings per share, up 22.7% compared to $2.9 million or $.50 diluted earnings per share in the fourth quarter of 2010. Diluted earnings per share were reduced by $0.01 and $0.26, respectively, for the three and twelve months ending December 31, 2011, compared to reductions of $0.07 and $0.28, respectively, for the three and twelve months ending December 31, 2010. The reduction in the fourth quarter of 2011 resulted from the repayment of CPP capital during the third quarter of 2011 and replacing the remaining $12.5 million with the Small Business Lending Fund capital.

Net income for the year ending 2011 rose 22.4% to $12.8 million or $2.27 diluted earnings per share, compared with $10.5 million or $1.81 diluted earnings per share in 2010. These results were the highest level of net income for a single quarter and for a year in the Company’s 138-year history.

The net interest margin increased to 3.95% in the fourth quarter of 2011 from 3.76% for the three-month period ending September 30, 2011. This increase in the fourth quarter of 2011 primarily reflected an increase in average mortgage warehouse loan volume and balances, which were funded by an increase in average short-term borrowing, resulting in an expanded interest rate spread on interest earning assets. Borrowings in the fourth quarter of 2011 increased by $34.0 million from September 30, 2011, all in short-term instruments primarily to fund the increase in mortgage warehouse lending.

Residential mortgage loan activity during the fourth quarter of 2011 generated $2.5 million in income from the gain on sale of mortgage loans; an increase of $454,000 from the same period in 2010.

Lending Activity

Total loans increased by $100.3 million from $882.9 million at December 31, 2010 to $983.2 million at December 31, 2011. Commercial loans increased by $22.4 million, mortgage warehouse loans increased by $84.6 million, residential mortgage loans decreased by $5.3 million, and consumer loans decreased by $1.3 million.

Dwight explained, “The number of retail households served by Horizon grew in 2011, and we believe this provides opportunities to grow the number of products and services utilized by these customers in the future. We were particularly encouraged by an increase in commercial lending, which we believe indicates our ability to build and win banking relationships with small businesses, which is a significant focus. Our focus on increasing our relationships with small businesses also contributed to an increase in our total direct deposit accounts at year-end compared with 2010.”

The provision for loan losses was $838,000 for the fourth quarter of 2011, which was approximately $1.8 million less than the provision for the same period of the prior year. The 2011 fourth-quarter provision was $726,000 less than the 2011 third quarter provision. The lower provision for loan losses was primarily related to a decrease in non-performing loans in the fourth quarter.

The ratio of allowance for loan losses to total loans decreased to 1.89% as of December 31, 2011 from 2.11% as of December 31, 2010. The decrease in the ratio was due to an overall increase in total loan balances as the total balance for allowance for loan losses decreased from $19.1 million to $18.9 million for year-ends 2010 and 2011 respectively.

Non-performing loans totaled $20.1 million on December 31, 2011, down from $23.6 million on September 30, 2011, and from $21.4 million on December 31, 2010. As a percentage of total loans, non-performing loans were 2.02% on December 31, 2011, down from 2.52% on September 30, 2011, and 2.38% on December 31, 2010.

Dwight added, “The continued decline in our need to reserve for loan losses and a 44% decline in loans 30 to 89 days delinquent at year-end 2011 as compared with 2010 demonstrate Horizon’s ability to effectively manage risk and a general improvement in borrowers’ economic circumstances. Horizon’s strategy of maintaining a broad and diversified loan portfolio has enabled us to minimize exposure to large credits.”

The decrease of non-performing loans in the fourth quarter of 2011 from the prior quarter was primarily due to the payoff of a $4.3 million non-performing commercial loan secured by a hotel property during the fourth quarter. As a result, non-performing commercial loans declined from $12.1 million on September 30, 2011 to $8.0 million on December 31, 2011. Non-performing mortgage loans increased from $7.2 million on September 30, 2011 to $8.5 million on December 31, 2011. Non-performing consumer loans declined from $4.3 million on September 30, 2011 to $3.7 million on December 31, 2011.

Real estate and consumer non-performing loans in bankruptcy on December 31, 2011 totaled $1.5 million and $2.0 million, respectively. This compares to $1.5 million and $1.9 million respectively, on September 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 Horizon 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. Recently, the trend has improved with fewer loans in the bankruptcy process. There were four non-performing loans, totaling $435,000, to commercial borrowers in bankruptcy on December 31, 2011.

TDR’s are also included in the non-performing loans total. TDR’s totaled $5.7 million on both December 31, 2011 and September 30, 2011. Of these, $3.8 million were mortgage loans, $1.1 million were commercial loans, and $883,000 were consumer loans. In addition, $3.5 million of TDR’s were accruing interest as of December 31, 2011, compared to $4.0 million accruing interest at September 30, 2011.

Non-accrual loans, excluding non-accrual TDR’s, were $14.4 million on December 31, 2011, down from $17.8 million on September 30, 2011 and $16.7 million on December 31, 2010. The decrease in the most recent quarter was primarily due to the aforementioned payoff of a commercial loan with a $4.3 million balance on September 30, 2011. Non-accrual commercial loans were the largest component at $6.9 million. Non-accrual commercial loans secured by retail income properties, the largest concentration, totaled $3.2 million. Loans 90 days delinquent but still on accrual totaled $37,000 on December 31, 2011, down from $97,000 on September 30, 2011, and $358,000 on December 31, 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 $2.8 million on December 31, 2011, down from $3.6 million on September 30, 2011, but up from $2.7 million on December 31, 2010. During the quarter four properties with a book value of $222,000 as of September 30, 2011 were sold. Another four with a book value of $218,000 were transferred into OREO. Eighteen properties were sold with additional loss or written down by a total of $735,000 during the fourth quarter. On December 31, 2011, OREO was comprised of 26 properties. Of these, four totaling $1.1 million were commercial and 22 totaling $1.7 million were residential real estate. In addition, Horizon currently has offers to purchase on approximately $1.8 million of its $2.8 million in OREO properties.

Expense Management

Total non-interest expenses were $1.5 million higher in the fourth quarter of 2011 compared to the fourth quarter of 2010 and $3.6 million higher for the twelve months ended December 31, 2011 compared to the same period in the prior year. Salaries and employee benefits decreased $154,000 compared to the same quarter in 2010 and increased $785,000 compared to the same twelve-month period of 2010. This twelve-month increase is 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; expansion into Portage, Michigan, and annual merit pay increases. In the fourth quarter of 2011 other losses included $598,000 in OREO write downs and $370,000 from write downs on two bank-owned properties from branches that were closed in 2010. Horizon currently has offers to purchase both branches.

Dwight concluded: “We are constantly striving to operate as efficiently as possible and to generate greater productivity from our people and physical resources. We reward performance, which is a key reason we believe Horizon Bank is perceived as a great place to work. In 2011, we fully integrated American Trust & Savings Bank, retaining more than 90% of its customers and we met our goal of a payback on our initial cash investment within a year of the acquisition.”

“We believe that excellent opportunities remain for Horizon to grow, so we will continue to make investments that support revenue generation. We are well-positioned to pursue quality loans and deposits throughout our markets.”

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 September 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)
 
  December 31   September 30   June 30   March 31   December 31
2011   2011   2011   2011   2010
Balance sheet:
Total assets $ 1,547,162 $ 1,490,810 $ 1,413,737 $ 1,382,390 $ 1,400,919
Investment securities 438,145 441,334 460,449 445,988 391,939
Commercial loans 352,376 345,366 338,439 335,758 330,018
Mortgage warehouse loans 208,299 151,111 75,057 49,034 123,743
Residential mortgage loans 157,141 165,429 163,803 164,240 162,435
Consumer loans 265,377 263,934 261,971 260,525 266,681
Earning assets 1,447,818 1,391,864 1,316,452 1,274,171 1,307,313
Non-interest bearing deposit accounts 130,673 121,483 113,747 111,155 107,606
Interest bearing transaction accounts 538,083 551,597 567,456 531,250 508,953
Time deposits 341,109 316,669 339,073 359,004 368,939
Borrowings 370,111 336,095 230,141 224,358 260,741
Subordinated debentures 30,676 30,653 30,630 30,607 30,584
Common stockholders' equity 108,965 106,180 103,206 97,802 94,066
Total stockholders’ equity 121,465 118,680 121,507 116,060 112,283
 
Income statement: Three months ended
Net interest income $ 13,592 $ 11,991 $ 11,463 $ 11,067 $ 13,075
Provision for loan losses 838 1,564 1,332 1,548 2,664
Other income 4,999 6,538 4,448 4,314 4,961
Other expenses 13,089 12,313 10,487 10,258 11,576
Income tax expense   1,142       1,235       999       810       926  
Net income 3,522 3,417 3,093 2,765 2,870
Preferred stock dividend   (63 )     (710 )     (277 )     (276 )     (349 )
Net income available to common shareholders $ 3,459     $ 2,707     $ 2,816     $ 2,489     $ 2,521  
 
Per share data:
Basic earnings per share $ 0.70 $ 0.55 $ 0.57 $ 0.51 $ 0.51
Diluted earnings per share 0.68 0.53 0.55 0.49 0.50
Cash dividends declared per common share 0.12 0.12 0.11 0.11 0.11
Book value per common share 22.02 21.47 20.88 19.84 19.12
Tangible book value per common share 20.37 19.79 19.17 18.11 17.36
Market value - high 17.95 18.90 18.61 19.46 17.99
Market value - low $ 16.23 $ 17.31 $ 17.67 $ 17.47 $ 14.59
Weighted average shares outstanding - Basic 4,947,696 4,942,695 4,937,750 4,924,715 4,920,497
Weighted average shares outstanding - Diluted 5,050,701 5,064,380 5,065,454 5,074,763 5,043,177
 
Key ratios:
Return on average assets 0.93 % 0.96 % 0.89 % 0.80 % 0.79 %
Return on average common stockholders' equity 12.74 10.14 11.25 10.55 10.22
Net interest margin 3.95 3.76 3.67 3.57 4.01
Loan loss reserve to total loans 1.89 2.04 2.20 2.34 2.11
Non-performing loans to loans 2.02 2.52 2.44 2.71 2.38
Average equity to average assets 7.96 8.60 8.51 8.14 8.22
Bank only capital ratios:
Tier 1 capital to average assets 8.52 8.89 9.03 8.83 8.60
Tier 1 capital to risk weighted assets 11.89 12.33 13.62 13.56 12.70
Total capital to risk weighted assets 13.14 13.58 14.88 14.79 13.96
 
Loan data:
30 to 89 days delinquent $ 3,282 $ 4,240 $ 4,903 $ 6,948 $ 5,907
 
90 days and greater delinquent - accruing interest $ 37 $ 97 $ 55 $ 57 $ 358
Trouble debt restructures - accruing interest 3,540 4,042 4,227 4,014 4,119
Trouble debt restructures - non-accrual 2,198 1,673 1,912 682 278
Non-accrual loans   14,368       17,799       14,430       17,359       16,673  
Total non-performing loans $ 20,143     $ 23,611     $ 20,624     $ 22,112     $ 21,428  
 
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)

 
  December 31   December 31
2011   2010
Balance sheet:
Total assets $ 1,547,162 $ 1,400,919
Investment securities 438,145 391,939
Commercial loans 352,376 330,018
Mortgage warehouse loans 208,299 123,743
Residential mortgage loans 157,141 162,435
Consumer loans 265,377 266,681
Earning assets 1,447,818 1,307,313
Non-interest bearing deposit accounts 130,673 107,606
Interest bearing transaction accounts 538,083 508,953
Time deposits 341,109 368,939
Borrowings 370,111 260,741
Subordinated debentures 30,676 30,584
Common stockholders' equity 108,965 94,066
Total stockholders’ equity 121,465 112,283
 
Income statement: Twelve months ended
Net interest income $ 48,113 $ 47,616
Provision for loan losses 5,282 11,554
Other income 20,299 19,906
Other expenses 46,147 42,571
Income tax expense   4,186       2,942  
Net income 12,797 10,455
Preferred stock dividend   (1,325 )     (1,406 )
Net income available to common shareholders $ 11,472     $ 9,049  
 
Per share data:
Basic earnings per share $ 2.32 $ 1.84
Diluted earnings per share 2.27 1.81
Cash dividends declared per common share 0.47 0.45
Book value per common share 22.02 19.12
Tangible book value per common share 20.37 17.36
Market value - high 19.46 17.99
Market value - low $ 16.23 $ 10.96
Weighted average shares outstanding - Basic 4,938,172 4,915,604
Weighted average shares outstanding - Diluted 5,058,929 5,001,897
 
Key ratios:
Return on average assets 0.90 % 0.75 %
Return on average common stockholders' equity 11.20 9.56
Net interest margin 3.74 3.80
Loan loss reserve to total loans 1.89 2.11
Non-performing loans to loans 2.02 2.38
Average equity to average assets 8.30 8.47
Bank only capital ratios:
Tier 1 capital to average assets 8.52 8.60
Tier 1 capital to risk weighted assets 11.89 12.70
Total capital to risk weighted assets 13.14 13.96
 
Loan data:
30 to 89 days delinquent $ 3,282 $ 5,907
 
90 days and greater delinquent - accruing interest $ 37 $ 358
Trouble debt restructures - accruing interest 3,540 4,119
Trouble debt restructures - non-accrual 2,198 278
Non-accrual loans   14,368       16,673  
Total non-performing loans $ 20,143     $ 21,428  
 

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
2011   2011   2011   2011   2010
Commercial $ 8,017 $ 8,151 $ 7,078 $ 8,609 $ 7,554
Real estate 2,472 2,457 1,710 2,357 2,379
Mortgage warehousing 1,695 1,477 1,516 1,421 1,435
Consumer 6,698 7,025 8,282 6,703 7,696
Unallocated   -     -     -     -     -
Total $ 18,882   $ 19,110   $ 18,586   $ 19,090   $ 19,064
 
Net Charge-offs

(Dollars in Thousands, Unaudited)
 
Three months ended
December 31 September 30 June 30 March 31 December 31
2011   2011   2011   2011   2010
Commercial $ 111 $ 269 $ 366 $ 59 $ 426
Real estate 118 86 659 82 128
Mortgage warehousing - - - - -
Consumer   837     685     811     1,380     1,076
Total $ 1,066   $ 1,040   $ 1,836   $ 1,521   $ 1,630
 
Total Non-performing Loans

(Dollars in Thousands, Unaudited)
 
December 31 September 30 June 30 March 31 December 31
2011   2011   2011   2011   2010
Commercial $ 7,958 $ 12,094 $ 9,613 $ 9,428 $ 8,082
Real estate 8,496 7,201 6,983 8,744 9,326
Mortgage warehousing - - - - -
Consumer   3,689     4,316     4,028     3,940     4,020
Total $ 20,143   $ 23,611   $ 20,624   $ 22,112   $ 21,428
 
Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)
 
December 31 September 30 June 30 March 31 December 31
2011   2011   2011   2011   2010
Commercial $ 1,092 $ 1,087 $ 1,414 $ 1,443 $ 1,622
Real estate 1,708 2,478 2,679 839 1,042
Mortgage warehousing - - - - -
Consumer   49     90     16     8     -
Total $ 2,849   $ 3,655   $ 4,109   $ 2,290   $ 2,664
 
HORIZON BANCORP
 
Loan Portfolio Detail
 
    Non-   Percent   Specific     Percent of
Loan Performing of Reserves on Non - Non-performing
December 31, 2011 (Unaudited) Balance   Loans Loans Performing Loans Loans
Owner occupied real estate $ 131,923 $ 2,515 1.91 % $ 770 30.62 %
Non owner occupied real estate 142,363 4,122 2.90 % 1,239 30.06 %
Residential development 12,313 90 0.73 % - 0.00 %
Commercial and industrial   65,777       1,231 1.87 %   428 34.77 %
Total commercial 352,376 7,958 2.26 % 2,437 30.62 %
 
Residential mortgage (1) 165,050 8,060 4.88 % 980 12.16 %
Residential construction 6,181 436 7.05 % 62 14.22 %
Mortgage warehouse   208,299       - 0.00 %   - 0.00 %
Total real estate 379,530 8,496 2.24 % 1,042 12.26 %
 
Direct installment 24,873 276 1.11 % 132 47.83 %
Indirect installment 127,695 956 0.75 % 8 0.84 %
Home equity   112,809       2,457 2.18 %   995 40.50 %
Total consumer 265,377 3,689 1.39 % 1,135 30.77 %
       
Total loans 997,283 20,143 2.02 % 4,614 22.91 %
Allowance for loan losses   (18,882 )      
Net loans $ 978,401     $ 20,143 2.06 % $ 4,614
(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
December 31, 2011 December 31, 2010
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
 

ASSETS
Interest-earning assets
Federal funds sold $ 2,084 $ 1 0.19 % $ 5,039 $ 3 0.24 %
Interest-earning deposits 2,591 1 0.15 % 7,114 3 0.17 %
Investment securities - taxable 340,407 2,371 2.76 % 293,537 2,205 2.98 %
Investment securities - non-taxable (1) 111,344 1,007 5.28 % 109,234 1,010 5.48 %
Loans receivable (2)   957,651       14,080 5.84 %   931,380       14,455 6.17 %
Total interest-earning assets (1) 1,414,077 17,460 5.04 % 1,346,304 17,676 5.36 %
 
Noninterest-earning assets
Cash and due from banks 16,065 16,052
Allowance for loan losses (19,208 ) (18,342 )
Other assets   99,631     99,727  
 
$ 1,510,565   $ 1,443,741  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 882,213 $ 1,836 0.83 % $ 901,884 $ 2,473 1.09 %
Borrowings 331,769 1,574 1.88 % 264,173 1,669 2.51 %
Subordinated debentures   31,446       458 5.78 %   34,946       459 5.21 %
Total interest-bearing liabilities 1,245,428 3,868 1.23 % 1,201,003 4,601 1.52 %
 
Noninterest-bearing liabilities
Demand deposits 131,523 111,140
Accrued interest payable and
other liabilities 13,372 12,960
Shareholders' equity   120,242     118,638  
 
$ 1,510,565   $ 1,443,741  
 
Net interest income/spread $ 13,592 3.80 % $ 13,075 3.84 %
 
Net interest income as a percent
of average interest earning assets (1) 3.95 % 4.01 %
 
(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, 2011 December 31, 2010
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate

ASSETS
Interest-earning assets
Federal funds sold $ 20,307 $ 49 0.24 % $ 23,917 $ 53 0.22 %
Interest-earning deposits 7,262 2 0.03 % 8,684 17 0.20 %
Investment securities - taxable 332,551 10,150 3.05 % 282,507 9,535 3.38 %
Investment securities - non-taxable (1) 111,934 4,073 5.20 % 108,809 4,148 5.45 %
Loans receivable (2)   862,498       50,340 5.84 %   878,181       54,738 6.24 %
Total interest-earning assets (1) 1,334,552 64,614 4.98 % 1,302,098 68,491 5.40 %
 
Noninterest-earning assets
Cash and due from banks 15,834 15,341
Allowance for loan losses (19,047 ) (17,058 )
Other assets   98,069     93,671  
 
$ 1,429,408   $ 1,394,052  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 887,687 $ 8,346 0.94 % $ 871,526 $ 10,711 1.23 %
Borrowings 261,255 6,334 2.42 % 264,293 8,476 3.21 %
Subordinated debentures   31,446       1,821 5.79 %   32,005       1,688 5.27 %
Total interest-bearing liabilities 1,180,388 16,501 1.40 % 1,167,824 20,875 1.79 %
 
Noninterest-bearing liabilities
Demand deposits 119,504 97,665
Accrued interest payable and
other liabilities 10,841 10,466
Shareholders' equity   118,675     118,097  
 
$ 1,429,408   $ 1,394,052  
 
Net interest income/spread $ 48,113 3.58 % $ 47,616 3.61 %
 
Net interest income as a percent
of average interest earning assets (1) 3.74 % 3.80 %
 
(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)
 
  December 31   December 31
2011   2010
(Unaudited)    
Assets
Cash and due from banks $ 20,447 $ 15,683
Investment securities, available for sale 431,045 382,344
Investment securities, held to maturity 7,100 9,595
Loans held for sale 14,090 18,833
Loans, net of allowance for loan losses of $18,882 and $19,064 964,311 863,813
Premises and equipment 34,665 34,194
Federal Reserve and Federal Home Loan Bank stock 12,390 13,664
Goodwill 5,910 5,910
Other intangible assets 2,292 2,741
Interest receivable 6,671 6,519
Cash value life insurance 30,190 27,195
Other assets   18,051     20,428
Total assets $ 1,547,162   $ 1,400,919
Liabilities
Deposits
Non-interest bearing $ 130,673 $ 107,606
Interest bearing   879,192     877,892
Total deposits 1,009,865 985,498
Borrowings 370,111 260,741
Subordinated debentures 30,676 30,584
Interest payable 596 781
Other liabilities   14,449     11,032
Total liabilities   1,425,697     1,288,636
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, $.01 par value, $1,000 liquidation value
Authorized, 1,000,000 Series A shares
Issued 0 and 18,750 shares - 18,217
Preferred stock, $.01 par value, $1,000 liquidation value
Authorized, 1,000,000 Series B shares
Issued 12,500 and 0 shares 12,500 -
Common stock, $.1481 stated value
Authorized, 22,500,000 shares
Issued, 4,967,720 and 4,950,989 shares 1,126 1,122
Additional paid-in capital 10,610 10,356
Retained earnings 89,387 80,240
Accumulated other comprehensive income   7,842     2,348
Total stockholders’ equity   121,465     112,283
Total liabilities and stockholders’ equity $ 1,547,162   $ 1,400,919
 
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
2011   2010   2011   2010
(Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Interest Income
Loans receivable $ 14,080 $ 14,455 $ 50,340 $ 54,738
Investment securities
Taxable 2,373 2,211 10,201 9,605
Tax exempt   1,007       1,010       4,073       4,148  
Total interest income   17,460       17,676       64,614       68,491  
Interest Expense
Deposits 1,836 2,473 8,346 10,711
Borrowed funds 1,574 1,669 6,334 8,476
Subordinated debentures   458       459       1,821       1,688  
Total interest expense   3,868       4,601       16,501       20,875  
Net Interest Income 13,592 13,075 48,113 47,616
Provision for loan losses   838       2,664       5,282       11,554  
Net Interest Income after Provision for Loan Losses   12,754       10,411       42,831       36,062  
Other Income
Service charges on deposit accounts 742 857 3,164 3,607
Wire transfer fees 207 220 619 756
Interchange fees 689 584 2,594 2,247
Fiduciary activities 1,072 1,043 3,983 3,979
Gain on sale of securities 23 66 1,777 533
Gain on sale of mortgage loans 2,463 2,009 6,449 7,538
Mortgage servicing income net of impairment (424 ) (202 ) 267 (565 )
Increase in cash surrender value of bank owned life insurance 230 204 891 803
Death benefit on officer life insurance - - 453 -
Other income   (3 )     180       102       1,008  
Total other income   4,999       4,961       20,299       19,906  
Other Expenses
Salaries and employee benefits 5,963 6,117 22,875 22,090
Net occupancy expenses 1,091 1,118 4,267 4,195
Data processing 556 451 2,006 1,925
Professional fees 458 283 1,497 1,701
Outside services and consultants 520 531 1,741 1,694
Loan expense 1,310 832 3,586 3,208
FDIC insurance expense 276 416 1,220 1,635
Other losses 1,018 324 2,383 504
Other expenses   1,897       1,504       6,572       5,619  
Total other expenses   13,089       11,576       46,147       42,571  
Income Before Income Tax 4,664 3,796 16,983 13,397
Income tax expense   1,142       926       4,186       2,942  
Net Income 3,522 2,870 12,797 10,455
Preferred stock dividend and discount accretion   (63 )     (349 )     (1,325 )     (1,406 )
Net Income Available to Common Shareholders $ 3,459     $ 2,521     $ 11,472     $ 9,049  
Basic Earnings Per Share $ 0.70 $ 0.51 $ 2.32 $ 1.84
Diluted Earnings Per Share 0.68 0.50 2.27 1.81
 

Copyright Business Wire 2010

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