Horizon Bancorp Announces 2017 First Quarter Earnings

MICHIGAN CITY, Ind.--()--(NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three month period ended March 31, 2017. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective November 14, 2016.

SUMMARY:

  • Net income for the first quarter of 2017 was $8.2 million or $0.37 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share for the same period in 2016. The first quarter of 2017 represents an excellent start to the year given that the first quarter is typically a seasonal low revenue point for Horizon.
  • Net income, excluding acquisition-related expenses, gain on sale of investment securities and purchase accounting adjustments (“core net income”), for the first quarter of 2017 increased 38.9% to $7.5 million or $0.34 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share for the same period of 2016.
  • Return on average assets was 1.07% for the first quarter of 2017 compared to 0.83% for the same period in 2016.
  • Net interest income for the first quarter of 2017 increased $5.8 million, or 29.3%, compared to the same period in 2016.
  • Net interest margin was 3.80% for the first quarter of 2017 compared to 2.92% for the prior quarter and 3.45% for the same period in 2016. The improvement in net interest margin reflects Horizon’s execution on its plan to reduce expensive funding costs, which was accomplished in the fourth quarter of 2016.
  • Net interest margin, excluding the impact of prepayment penalties on borrowings and purchase accounting adjustments (“core net interest margin”), was 3.66% for the first quarter of 2017 compared to 3.45% for the prior quarter and 3.36% for the same period in 2016.
  • Horizon’s tangible book value per share rose to $11.79 at March 31, 2017, compared to $11.48 at December 31, 2016.
  • Commercial loans, excluding acquired commercial loans, increased by an annualized rate of 12.8%, or $33.8 million, during the first quarter of 2017.
  • Consumer loans, excluding acquired consumer loans, increased by an annualized rate of 18.8%, or $18.5 million, during the first quarter of 2017.
  • On February 3, 2017, Horizon completed the purchase and assumption of certain assets and liabilities of a single branch of First Farmers Bank & Trust Company located in Bargersville, Indiana. The acquired office was closed and consolidated into Horizon’s existing Bargersville location.
  • Our Grand Rapids team moved to their new downtown loan production office during February 2017. This office was approved to continue as a full service branch which will take place in the second quarter of 2017.
  • Early in the second quarter, Horizon hired two additional seasoned commercial lenders for our Fort Wayne, Indiana loan production office.
  • At the beginning of the second quarter of 2017, Michael Lamping, joined Horizon as Central Ohio Market President. A loan production office will be opened in the greater Columbus, Ohio area during the second quarter of 2017 and will focus on commercial business.
  • Horizon received regulatory approval to open a new office in Noblesville, Indiana, which will be open later this year.
  • Horizon, for the first time, hired a corporate general legal counsel in the first quarter. The objective for this position is, in part, to better manage legal costs and to more closely monitor changes in the regulatory and legal landscape.

Craig Dwight, Chairman and CEO, commented: “During the first quarter of 2017, Horizon’s business model of diversified and balanced revenue streams was proven to be effective as an increase in commercial and consumer lending helped to offset the seasonal low in residential mortgage revenues. Excluding non-core items, Horizon realized an increase in net income of $2.1 million, or 38.9%, in the first quarter of 2017 when compared to the same period of 2016 resulting in an increase in core diluted earnings per share of 13.3%. Core net interest margin increased in the first quarter of 2017 to 3.66% from 3.36% for the same period in 2016. Horizon also realized solid growth in service charges on deposit accounts of 8.7%, interchange fees of 26.3% and fiduciary activities of 17.6% in the first quarter of 2017 when compared to the same period in 2016.”

Mr. Dwight continued, “Although commercial and consumer loan growth was strong in the first quarter of 2017, total loan growth was tempered by a decrease in our mortgage warehouse portfolio. Excluding acquired loans, commercial loan growth increased by an annual rate of 12.8% and was fueled by our growth markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo, which combined produced total loan growth of $39.7 million for the quarter. Additionally, consumer loans, excluding acquired consumer loans, increased by 18.8% on an annualized basis during the quarter as a result of a new seasoned consumer loan portfolio manager in the third quarter of 2016 and increasing our focus on the management of direct consumer loans. The increases in commercial and consumer loans were offset by a decrease in mortgage warehouse loans of $46.4 million from December 31, 2016 to March 31, 2017. The decrease in mortgage warehouse loans was primarily due to quicker turn-around times by the end investors to fund loans which resulted in a lower average balance in the portfolio during the first quarter of 2017. With our established presence in the growth markets of Kalamazoo and Indianapolis, coupled with our recent investments in Fort Wayne, Grand Rapids and Columbus, Horizon is well positioned to continue our growth momentum. In addition, Horizon’s solid growth in trust and service fee income has contributed to our plan to decrease dependence on margin income. ”

Dwight concluded, “We are pleased to have completed the purchase of certain assets totaling $3.5 million and the assumption of certain deposits totaling $14.8 million from First Farmers Bank & Trust Company’s Bargersville, Indiana branch which closed on February 3, 2017, enhancing our presence in this attractive and growing central Indiana market.”

Income Statement Highlights

Net income for the first quarter of 2017 was $8.2 million or $0.37 diluted earnings per share compared to $5.6 million or $0.25 diluted earnings per share for the fourth quarter of 2016. The increase in net income and diluted earnings per share from the previous quarter reflects increases in net interest income of $4.6 million and a decrease in non-interest expense and provision for loan losses of $1.1 million and $293,000, respectively, which was partially offset by a decrease in non-interest income of $1.9 million and an increase in income tax expense of $1.4 million. Interest expense decreased $5.2 million primarily due to prepayment penalties on borrowings of $4.8 million during the fourth quarter of 2016. Interest income decreased $555,000 due to a decrease in loan interest income of $924,000, offset by an increase in interest on investment securities of $369,000 during the first quarter of 2017. The decrease in loan interest income was primarily due to the decrease in mortgage warehouse loan balances in the first quarter. The decrease in non-interest income was primarily due to a decrease in the gain on sale of investments of $926,000 and a decrease in gain on mortgage loan sales of $590,000.

Net income for the first quarter of 2017 was $8.2 million or $0.37 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share for the first quarter of 2016. The increase in net income and diluted earnings per share from the same period of 2016 reflects increases in net interest income and non-interest income of $5.8 million and $172,000, respectively, and a decrease in provision for loan losses of $202,000, partially offset by an increase in non-interest expense and income tax expense of $2.3 million and $1.1 million, respectively.

The increase in diluted earnings per share was partially offset by an increase in dilutive shares outstanding as a result of the stock issued in the Kosciusko Financial, Inc. and LaPorte Bancorp, Inc. acquisitions in 2016. Excluding acquisition-related expenses, gain on sale of investment securities and acquisition-related purchase accounting adjustments, net income for the first quarter of 2017 was $7.5 million or $0.34 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share in the first quarter of 2016.

 
Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands Except per Share Data)
       
Three Months Ended
March 31

Non-GAAP Reconciliation of Net Income

2017       2016
(Unaudited)
Net income as reported $ 8,224 $ 5,381
Merger expenses - 639
Tax effect   -         (165 )
Net income excluding merger expenses 8,224 5,855
 
Gain on sale of investment securities (35 ) (108 )
Tax effect   12         38  
Net income excluding gain on sale of investment securities 8,201 5,785
 
Acquisition-related purchase accounting adjustments ("PAUs") (1,016 ) (547 )
Tax effect   356         191  
Net income excluding PAUs $ 7,541       $ 5,429  
 

Non-GAAP Reconciliation of Diluted Earnings per Share

Diluted earnings per share as reported $ 0.37 $ 0.30
Merger expenses - 0.04
Tax effect   -         (0.01 )
Diluted earnings per share excluding merger expenses 0.37 0.33
 
Gain on sale of investment securities (0.00 ) (0.01 )
Tax effect   0.00         0.00  
Net income excluding gain on sale of investment securities 0.37 0.32
 
Acquisition-related PAUs (0.05 ) (0.03 )
Tax effect   0.02         0.01  
Diluted earnings per share excluding PAUs $ 0.34       $ 0.30  
 

Horizon’s net interest margin was 3.80% during the first quarter of 2017, up from 2.92% for the prior quarter and 3.45% for same period of 2016. The increase in the net interest margin compared to the prior quarter was primarily due to prepayment penalties incurred on high fixed-rate borrowings as part of Horizon’s balance sheet restructuring transaction in the fourth quarter of 2016 in addition to a decrease in average outstanding borrowings. Average outstanding borrowings during the first quarter of 2017 were $132.3 million and $156.8 million lower when compared to the prior quarter and the same prior-year period.

The increase in the net interest margin compared to the same period of 2016 was primarily due to an increase in the yield earned on loans and a decrease in the cost of borrowings. Excluding prepayment penalties on borrowings and acquisition-related purchase accounting adjustments, the margin would have been 3.66% for the first quarter of 2017 compared to 3.45% for the prior quarter and 3.36% for the same period of 2016. Interest expense from the prepayment penalties on borrowings was $4.8 million for the fourth quarter of 2016. Interest income from acquisition-related purchase accounting adjustments was $1.0 million, $900,000 and $547,000 for the three months ended March 31, 2017, December 31, 2016, and March 31, 2016, respectively.

           
Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
Three Months Ended
March 31 December 31 March 31

Net Interest Margin As Reported

2017     2016     2016
Net interest income $ 25,568 $ 20,939 $ 19,774
Average interest-earning assets 2,797,429 2,932,145 2,367,250
Net interest income as a percent of average interest-
earning assets ("Net Interest Margin") 3.80 % 2.92 % 3.45 %
 

Impact of Prepayment Penalties on Borrowings

Interest expense from prepayment penalties on
borrowings $ - $ 4,839 $ -
 

Impact of Acquisitions

Interest income from acquisition-related
purchase accounting adjustments $ (1,016 ) $ (900 ) $ (547 )
 

Excluding Impact of Prepayment Penalties and Acquisitions

Net interest income $ 24,552 $ 24,878 $ 19,227
Average interest-earning assets 2,797,429 2,932,145 2,367,250
Core Net Interest Margin 3.66 % 3.45 % 3.36 %
 

Lending Activity

Total loans increased $4.7 million from $2.144 billion as of December 31, 2016 to $2.149 billion as of March 31, 2017 as commercial loans increased by $36.5 million, residential mortgage loans increased by $1.8 million and consumer loans increased by $19.0 million. Offsetting these increases was a decrease in mortgage warehouse loans of $46.4 million as of March 31, 2017. Total loans, excluding acquired loans, mortgage warehouse loans and loans held for sale, increased 2.7% for the three months ended March 31, 2017. Commercial and consumer loans, excluding acquired loans, increased $33.8 million, or an annualized growth rate of 12.8%, and $18.5 million, or an annualized growth rate of 18.8%, respectively.

Loan balances in the Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo totaled $436.8 million as of March 31, 2017. Combined, these markets contributed $39.7 million, or 10.0%, in loan growth during the three months ended March 31, 2017.

 
Loan Growth by Type, Excluding Acquired Loans
Three Months Ended March 31, 2017
(Dollars in Thousands)
          Excluding Acquired Loans
Acquired  
March 31 December 31 Amount FFBT Amount Percent
    2017   2016   Change   Loans   Change   Change
    (Unaudited)   (Unaudited)                
Commercial loans $ 1,106,471 $ 1,069,956 $ 36,515 $ (2,742 ) $ 33,773 3.2 %
Residential mortgage loans 533,646 531,874 1,772 (59 ) 1,713 0.3 %
Consumer loans   417,476     398,429     19,047       (562 )     18,485   4.6 %
Subtotal 2,057,593 2,000,259 57,334 (3,363 ) 53,971 2.7 %
Held for sale loans 1,789 8,087 (6,298 ) - (6,298 ) -77.9 %
Mortgage warehouse loans   89,360     135,727     (46,367 )     -       (46,367 ) -34.2 %
Total loans $ 2,148,742   $ 2,144,073   $ 4,669     $ (3,363 )   $ 1,306   0.1 %
 

Residential mortgage lending activity during the three months ended March 31, 2017 generated $1.9 million in income from the gain on sale of mortgage loans, a decrease of $137,000 from the same period of 2016. Total origination volume for the three months ended March 31, 2017, including loans placed into portfolio, totaled $65.9 million, representing a decrease of 17.0% from the same period of 2016. The decrease in mortgage loan origination volume is primarily due to an increase in mortgage loan interest rates when comparing the first quarter of 2017 to the same period of 2016. Purchase money mortgage originations during the first quarter of 2017 represented 69.8% of total originations compared to 68.0% of originations during the previous quarter and 65.3% during the first quarter of 2016.

The provision for loan losses was $330,000 for the first quarter of 2017 compared to $532,000 for the same period of 2016. The decrease in the provision for loan losses during the first quarter of 2017 was due to lower charge-offs, stable delinquency trends and a decrease in non-performing loans.

The ratio of the allowance for loan losses to total loans increased to 0.70% as of March 31, 2017 from 0.69% as of December 31, 2016 due to an increase in allowance for loan losses. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.89% as of March 31, 2017 compared to 0.91% as of December 31, 2016. Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 1.31% as of March 31, 2017 compared to 1.39% as of December 31, 2016.

 
Non- GAAP Allowance for Loan and Lease Loss Detail
As of March 31, 2017
(Dollars in Thousands, Unaudited)
               
Horizon
Legacy   Heartland   Summit   Peoples   Kosciusko   LaPorte   CNB   Total
Pre-discount loan balance $ 1,681,167 $ 14,698 $ 51,026 $ 139,602 $ 75,151 $ 189,149 $ 9,485 $ 2,160,278
 
Allowance for loan losses (ALLL) 14,983 71 - - - - - 15,054
Loan discount   N/A       867       2,431       3,260       994       5,466       307       13,325  
ALLL+loan discount 14,983 938 2,431 3,260 994 5,466 307 28,379
 
Loans, net $ 1,666,184     $ 13,760     $ 48,595     $ 136,342     $ 74,157     $ 183,683     $ 9,178     $ 2,131,899  
 
ALLL/ pre-discount loan balance 0.89 % 0.48 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.70 %
Loan discount/ pre-discount loan balance N/A 5.90 % 4.76 % 2.34 % 1.32 % 2.89 % 3.24 % 0.62 %
ALLL+loan discount/ pre-discount loan balance 0.89 % 6.38 % 4.76 % 2.34 % 1.32 % 2.89 % 3.24 % 1.31 %
 

Non-performing loans to total loans decreased 4 basis points to 0.46% at March 31, 2017 from 0.50% at December 31, 2016. Non-performing loans totaled $9.8 million as of March 31, 2017, a decrease of $849,000 from $10.7 million as of December 31, 2016. Compared to December 31, 2016, non-performing commercial loans decreased by $902,000, non-performing real estate loans increased by $35,000 and non-performing consumer loans increased $18,000.

Expense Management

Total non-interest expense was $2.3 million higher in the first quarter of 2017 compared to the same period of 2016. The increase was primarily due to an increase in salaries and employee benefits of $1.6 million, net occupancy expenses of $516,000, data processing expenses of $202,000, and other expenses of $431,000 reflecting overall company growth, market expansion and recent acquisitions. Professional fee expense decreased $218,000 in the first quarter of 2017 when compared to the same period of 2016 primarily due to one-time expenses related to the Kosciusko Financial, Inc. and LaPorte Bancorp, Inc. acquisitions in 2016. Other losses decreased $217,000 in the first quarter of 2017 when compared to the same period of 2016 due to a decrease in debit card fraud-related expense. FDIC insurance expense decreased $142,000 in the first quarter of 2017 when compared to the same period of 2016 as the assessment rate schedule was reduced effective for assessment payments due in the fourth quarter of 2016 and 2017.

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures of the net interest margin and the allowance for loan and lease losses excluding the impact of acquisition-related purchase accounting adjustments, total loans and loan growth, and net income and diluted earnings per share excluding the impact of one-time costs related to acquisitions, acquisition-related purchase accounting adjustments and other events that are considered to be non-recurring. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items, although these measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information contained elsewhere in this press release for reconciliations of the non-GAAP figures identified herein and their most comparable GAAP measures.

 
Non-GAAP Reconciliation of Tangible Stockholders' Equity and Tangible Book Value per Share
(Dollars in Thousands Except per Share Data)
           
March 31 December 31 March 31
2017     2016     2016
(Unaudited)           (Unaudited)
Total stockholders’ equity $ 348,575 $ 340,855 $ 261,417
Less: Preferred stock - - -
Less: Intangible assets   87,094       86,307       56,695
Total tangible stockholder's equity $ 261,481     $ 254,548     $ 204,722
 
Common shares outstanding 22,176,465 22,171,596 17,974,970
 
Tangible book value per common share $ 11.79 $ 11.48 $ 11.39
 

About Horizon

Horizon Bancorp is an independent, commercial bank holding company serving northern and central Indiana and southwest and central Michigan through its commercial banking subsidiary Horizon Bank, NA. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.

Forward Looking Statements

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

 
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
 
  March 31   December 31   September 30   June 30   March 31
2017   2016   2016   2016   2016
Balance sheet:
Total assets $ 3,169,643 $ 3,141,156 $ 3,325,650 $ 2,918,080 $ 2,627,918
Investment securities 673,090 633,025 744,240 628,935 642,767
Commercial loans 1,106,471 1,069,956 1,047,450 874,580 797,754
Mortgage warehouse loans 89,360 135,727 226,876 205,699 119,876
Residential mortgage loans 533,646 531,874 530,162 493,626 442,806
Consumer loans 417,476 398,429 386,031 363,920 359,636
Earning assets 2,845,922 2,801,030 2,963,005 2,591,208 2,379,830
Non-interest bearing deposit accounts 502,400 496,248 479,771 397,412 343,025
Interest bearing transaction accounts 1,432,228 1,499,120 1,367,285 1,213,659 1,118,617
Time deposits 509,071 475,842 489,106 471,190 416,837
Borrowings 319,993 267,489 569,908 492,883 430,507
Subordinated debentures 37,516 37,456 37,418 32,874 32,836
Total stockholders’ equity 348,575 340,855 345,736 281,002 261,417
 
Income statement: Three months ended
Net interest income $ 25,568 $ 20,939 $ 24,410 $ 20,869 $ 19,774
Provision for loan losses 330 623 455 232 532
Non-interest income 7,559 9,484 9,318 9,266 7,387
Non-interest expenses 21,521 22,588 24,082 20,952 19,270
Income tax expense   3,052       1,609       2,589       2,625       1,978  
Net income 8,224 5,603 6,602 6,326 5,381
Preferred stock dividend   -       -       -       -       (42 )
Net income available to common shareholders $ 8,224     $ 5,603     $ 6,602     $ 6,326     $ 5,339  
 
Per share data:
Basic earnings per share (1) $ 0.37 $ 0.25 $ 0.31 $ 0.35 $ 0.30
Diluted earnings per share (1) 0.37 0.25 0.30 0.34 0.30
Cash dividends declared per common share (1) 0.11 0.11 0.10 0.10 0.10
Book value per common share (1) 15.72 15.37 15.61 14.90 14.54
Tangible book value per common share 11.79 11.48 11.83 11.45 11.39
Market value - high 28.09 28.41 20.01 16.76 18.59
Market value - low $ 24.91 $ 17.84 $ 16.61 $ 15.87 $ 15.41
Weighted average shares outstanding - Basic 22,175,526 22,155,549 21,538,752 18,268,880 17,924,124
Weighted average shares outstanding - Diluted 22,326,071 22,283,722 21,651,953 18,364,167 18,012,726
 
Key ratios:
Return on average assets 1.07 % 0.69 % 0.80 % 0.94 % 0.83 %
Return on average common stockholders' equity 9.66 6.49 7.88 9.43 8.26
Net interest margin 3.80 2.92 3.37 3.48 3.45
Loan loss reserve to total loans 0.70 0.69 0.66 0.73 0.83
Non-performing loans to loans 0.46 0.50 0.58 0.68 0.87
Average equity to average assets 11.12 10.59 10.18 9.94 10.16
Bank only capital ratios:
Tier 1 capital to average assets 10.26 9.93 9.65 9.39 8.98
Tier 1 capital to risk weighted assets 13.40 13.33 12.73 12.51 12.33
Total capital to risk weighted assets 14.05 13.98 13.34 13.23 13.10
 
Loan data:
Substandard loans $ 30,865 $ 30,361 $ 33,914 $ 28,629 $ 23,600
30 to 89 days delinquent 5,476 6,315 3,821 2,887 2,149
 
90 days and greater delinquent - accruing interest $ 245 $ 241 $ 59 $ 24 $ 1
Trouble debt restructures - accruing interest 1,647 1,492 1,523 1,256 1,231
Trouble debt restructures - non-accrual 998 1,014 1,164 1,466 2,857
Non-accrual loans   6,944       7,936       10,091       10,426       10,895  
Total non-performing loans $ 9,834     $ 10,683     $ 12,837     $ 13,172     $ 14,984  
 
(1) Adjusted for 3:2 stock split on November 14, 2016
 
 
HORIZON BANCORP
 
Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

 
    March 31     December 31     September 30     June 30     March 31
2017     2016     2016     2016     2016
Commercial $ 7,600 $ 6,579 $ 6,222 $ 6,051 $ 6,460
Real estate 1,697 2,090 1,947 2,102 1,794
Mortgage warehousing 1,042 1,254 1,337 1,080 1,014
Consumer   4,715       4,914       5,018       4,993       4,968
Total $ 15,054     $ 14,837     $ 14,524     $ 14,226     $ 14,236
 
 
Net Charge-offs (Recoveries)

(Dollars in Thousands, Unaudited)

 
    Three months ended
March 31     December 31     September 30     June 30     March 31
2017     2016     2016     2016     2016
Commercial $ (134 ) $ 49 $ (5 ) $ 101 $ 403
Real estate 38 64 - (31 ) 83
Mortgage warehousing - - - - -
Consumer   209         197       162         172         344
Total $ 113       $ 310     $ 157       $ 242       $ 830
 
Total Non-performing Loans

(Dollars in Thousands, Unaudited)

 
    March 31     December 31     September 30     June 30     March 31
2017     2016     2016     2016     2016
Commercial $ 1,530 $ 2,432 $ 5,419 $ 4,330 $ 5,774
Real estate 5,057 5,022 4,251 5,659 5,974
Mortgage warehousing - - - - -
Consumer   3,247       3,229       3,108       3,183       3,236
Total $ 9,834     $ 10,683     $ 12,778     $ 13,172     $ 14,984
 
Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)

 
    March 31     December 31     September 30     June 30     March 31
2017     2016     2016     2016     2016
Commercial $ 542 $ 542 $ 542 $ 542 $ 424
Real estate 2,413 2,648 3,182 2,925 3,393
Mortgage warehousing - - - - -
Consumer   20       26       67       69       -
Total $ 2,975     $ 3,216     $ 3,791     $ 3,536     $ 3,817
 
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

 
      Three Months Ended     Three Months Ended
March 31, 2017 March 31, 2016
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
 
ASSETS
Interest-earning assets
Federal funds sold $ 3,034 $ 5 0.67 % $ 2,424 $ 1 0.17 %
Interest-earning deposits 24,748 69 1.13 % 20,810 49 0.95 %
Investment securities - taxable 398,871 2,332 2.37 % 463,544 2,494 2.16 %
Investment securities - non-taxable (1) 270,522 1,637 3.41 % 182,275 1,237 3.79 %
Loans receivable (2)(3)   2,100,254       24,791 4.79 %   1,698,197       19,747 4.69 %
Total interest-earning assets (1) 2,797,429 28,834 4.28 % 2,367,250 23,528 4.09 %
 
Non-interest-earning assets
Cash and due from banks 40,994 32,925
Allowance for loan losses (14,937 ) (14,508 )
Other assets   279,982     214,604  
 
$ 3,103,468   $ 2,600,271  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 1,960,337 $ 1,753 0.36 % $ 1,534,833 $ 1,491 0.39 %
Borrowings 249,923 937 1.52 % 406,679 1,759 1.74 %
Subordinated debentures   36,290       576 6.44 %   32,813       504 6.18 %
Total interest-bearing liabilities 2,246,550 3,266 0.59 % 1,974,325 3,754 0.76 %
 
Non-interest-bearing liabilities
Demand deposits 491,154 339,141
Accrued interest payable and
other liabilities 20,672 22,521
Stockholders' equity   345,092     264,284  
 
$ 3,103,468   $ 2,600,271  
 
Net interest income/spread $ 25,568 3.69 % $ 19,774 3.32 %
 
Net interest income as a percent
of average interest earning assets (1) 3.80 % 3.45 %
(1)   Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.
(3) Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.
 
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

 
    March 31     December 31
2017     2016
(Unaudited)      
Assets
Cash and due from banks $ 60,280 $ 70,832
Investment securities, available for sale 474,222 439,831
Investment securities, held to maturity (fair value of $200,482 and $194,086) 198,868 193,194
Loans held for sale 1,789 8,087
Loans, net of allowance for loan losses of $15,054 and $14,837 2,131,899 2,121,149
Premises and equipment, net 66,314 66,357
Federal Reserve and Federal Home Loan Bank stock 24,090 23,932
Goodwill 77,644 76,941
Other intangible assets 9,450 9,366
Interest receivable 12,581 12,713
Cash value of life insurance 74,598 74,134
Other assets   37,908         44,620  
Total assets $ 3,169,643       $ 3,141,156  
Liabilities
Deposits
Non-interest bearing $ 502,400 $ 496,248
Interest bearing   1,941,299         1,974,962  
Total deposits 2,443,699 2,471,210
Borrowings 319,993 267,489
Subordinated debentures 37,516 37,456
Interest payable 523 472
Other liabilities   19,337         23,674  
Total liabilities   2,821,068         2,800,301  
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, Authorized, 1,000,000 shares
Issued 0 and 0 shares - -
Common stock, no par value
Authorized 66,000,000 shares(1)
Issued, 22,195,715 and 22,192,530 shares(1)
Outstanding, 22,176,465 and 22,171,596 shares(1) - -
Additional paid-in capital 182,402 182,326
Retained earnings 169,950 164,173
Accumulated other comprehensive loss   (3,777 )       (5,644 )
Total stockholders’ equity   348,575         340,855  
Total liabilities and stockholders’ equity $ 3,169,643       $ 3,141,156  
 
(1) Adjusted for 3:2 stock split on November 14, 2016
 
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income

(Dollar Amounts in Thousands, Except Per Share Data, Unaudited)

 
    Three Months Ended
March 31
2017     2016
(Unaudited)     (Unaudited)
Interest Income    
Loans receivable $ 24,791 $ 19,747
Investment securities
Taxable 2,406 2,544
Tax exempt   1,637       1,237  
Total interest income   28,834       23,528  
Interest Expense
Deposits 1,753 1,491
Borrowed funds 937 1,759
Subordinated debentures   576       504  
Total interest expense   3,266       3,754  
Net Interest Income 25,568 19,774
Provision for loan losses   330       532  
Net Interest Income after Provision for Loan Losses   25,238       19,242  
Non-interest Income
Service charges on deposit accounts 1,400 1,288
Wire transfer fees 150 121
Interchange fees 1,176 931
Fiduciary activities 1,922 1,635
 
Gain on sale of investment securities (includes $35 and $108 for the three
months ended March 31, 2017 and 2016 related to accumulated other
comprehensive earnings reclassifications) 35 108
Gain on sale of mortgage loans 1,914 2,114
Mortgage servicing income net of impairment 447 447
Increase in cash value of bank owned life insurance 471 345
Other income   44       398  
Total non-interest income   7,559       7,387  
Non-interest Expense
Salaries and employee benefits 11,709 10,065
Net occupancy expenses 2,452 1,936
Data processing 1,307 1,105
Professional fees 613 831
Outside services and consultants 1,222 1,099
Loan expense 1,107 1,195
FDIC insurance expense 263 405
Other losses 50 267
Other expense   2,798       2,367  
Total non-interest expense   21,521       19,270  
Income Before Income Tax 11,276 7,359
Income tax expense (includes $12 and $38 for the three months ended
March 31, 2017 and 2016, respectively, related to income tax expense from
reclassification items)   3,052       1,978  
Net Income 8,224 5,381
Preferred stock dividend   -       (42 )
Net Income Available to Common Shareholders $ 8,224     $ 5,339  
Basic Earnings Per Share $ 0.37 $ 0.30
Diluted Earnings Per Share 0.37 0.30
 

Contacts

Horizon Bancorp
Mark E. Secor
Chief Financial Officer
(219) 873-2611
Fax: (219) 874-9280

Contacts

Horizon Bancorp
Mark E. Secor
Chief Financial Officer
(219) 873-2611
Fax: (219) 874-9280