(NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited
financial results for the three and nine-month periods ended
September 30, 2015.
SUMMARY:
- On July 1, 2015, Horizon closed the
acquisition of Peoples Bancorp (“Peoples”) and its wholly-owned
subsidiary, Peoples Federal Savings Bank of DeKalb County,
headquartered in Auburn, Indiana.
- The quarterly dividend was increased
from $.14 to $.15 per share on September 15, 2015.
- Third quarter 2015 net income was $4.3
million or $.36 diluted earnings per share.
- Excluding merger expenses and gain on
sale of investment securities, net income for the third quarter of
2015 increased 52.8% compared to the same period of 2014 to $6.7
million or $.56 diluted earnings per share.
- Net income for the first nine months of
2015 was $14.4 million or $1.37 diluted earnings per share.
- Excluding merger expenses, gain on sale
of investment securities and the death benefit on bank owned life
insurance, net income for the first nine months of 2015 increased
28.3% compared to the same period of 2014 to $17.2 million or $1.64
diluted earnings per share.
- Net interest income for the first nine
months of 2015 increased 17.3% or $8.1 million compared to the same
period in 2014.
- The net interest margin, excluding the
impact of acquisitions (“core net interest margin”), decreased 7
basis points from the linked quarter and 3 basis points in the
first nine months of 2015 compared to the same periods in
2014.
- Non-interest income for the first nine
months of 2015 increased 15.9% or $3.1 million compared to the same
period in 2014.
- Excluding the Peoples acquisition,
mortgage warehouse loans and loans held for sale, loans increased
11.9% on an annualized basis during the third quarter of 2015.
- Horizon’s tangible book value per share
increased to $16.37 at September 30, 2015, compared to $16.26 at
December 31, 2014 and $15.75 at September 30, 2014.
- Horizon Bank’s capital ratios,
including Tier 1 Capital to Average Assets of 9.35% and Total
Capital to Risk Weighted Assets of 13.03% as of September 30, 2015,
continue to be well above the regulatory standards for
well-capitalized banks.
Craig Dwight, Chairman and CEO, commented: “Horizon continued
its growth story in the third quarter of 2015 with positive
contributions from all four revenue streams - retail banking,
business banking, mortgage banking and wealth management. These
results are particularly noteworthy as the Peoples integration and
systems conversion required a tremendous amount of teamwork and
dedication during the quarter.”
Dwight continued, “Horizon’s growth drove a substantial increase
in net income and earnings per share compared to the same periods
of 2014. Net income and diluted earnings per share, excluding
non-core items, increased 57.0% and 26.7% during the third quarter
of 2015, respectively. On a year-to-date basis, net income and
diluted earnings per share, excluding non-core items, increased by
30.0% and 17.8%, respectively. Given the persistent low interest
rate environment, loan and fee income growth and the ability to
create operating leverage are critical to combat margin pressure
existing throughout the banking industry.”
Non-GAAP Reconciliation of Net Income and Diluted
Earnings per Share (Dollar in Thousands Except per Share Data,
Unaudited)
Three Months Ended
Nine Months Ended September 30 September 30
Non-GAAP
Reconciliation of Net Income
2015 2014 2015
2014 (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Net income as reported
$ 4,288 $ 4,958
$ 14,374 $ 13,153
Merger expenses
3,648 124
4,364 1,335 Tax effect
(1,219 ) (43 )
(1,402 ) (467 ) Net income excluding
merger expenses
6,717 5,039
17,336 14,021 Gain
on sale of investment securities
- (988 )
(124
) (988 ) Tax effect
- 346
43 346 Net
income excluding gain on sale of investment securities
6,717
4,396
17,255 13,379 Death benefit on bank owned life
insurance ("BOLI")
- -
(145 ) - Tax effect
- -
51 - Net income excluding death
benefit on BOLI
6,717 4,396
17,161 13,379
Acquisition-related PAUs
(402 ) (438 )
(2,282
) (2,027 ) Tax effect
141
153
799 709
Net income excluding PAUs
$ 6,456 $
4,112
$ 15,678 $ 12,061
Non-GAAP
Reconciliation of Diluted Earnings per Share
Diluted earnings per share as reported
$ 0.36 $ 0.51
$ 1.37 $ 1.39 Merger expenses
0.30 0.01
0.42 0.14 Tax effect
(0.10 )
(0.00 )
(0.13 )
(0.05 ) Diluted earnings per share excluding merger expenses
0.56 0.52
1.66 1.48 Gain on sale of investment
securities
- (0.10 )
(0.01 ) (0.11 ) Tax
effect
- 0.03
0.00 0.04 Net income
excluding gain on sale of investment securities
0.56 0.45
1.65 1.41 Death benefit on BOLI
- -
(0.01 ) - Tax effect
-
-
0.00 -
Net income excluding death benefit on BOLI
0.56 0.45
1.64 1.41 Acquisition-related PAUs
(0.03
) (0.05 )
(0.22 ) (0.22 ) Tax effect
0.01 0.02
0.08 0.08 Diluted earnings per
share excluding PAUs
$ 0.54 $ 0.42
$ 1.50 $ 1.27
Dwight commented, “Due to a decline in mortgage refinancing
activity, Horizon’s mortgage warehouse portfolio returned to more
normalized levels during the third quarter of 2015. This decrease
was partially offset by continued organic growth in other loan
types and the addition of loans acquired in the Peoples
transaction. Excluding loans acquired in the Peoples acquisition,
mortgage warehouse loans and loans held for sale, loans increased
by 11.9% on an annualized basis in the third quarter of 2015 and
12.2% on an annualized basis during the first nine months of 2015
compared to the same periods of 2014.”
Dwight continued, “Horizon’s strategy of revenue diversification
through commercial loan growth and non-mortgage related fee income
is evident in our results. At its peak, for the year ended December
31, 2012 mortgage warehouse and mortgage gain on sale revenue
comprised 24.5% of Horizon’s total revenue base (interest income
and non-interest income). For the year ending December 31, 2014 and
the nine months ending September 30, 2015, mortgage warehouse and
mortgage gain on sale revenue as a percentage of total revenue
declined to 12.8% and 14.7%, respectively.”
Loan Growth by Type, Excluding Acquired Loans
Three Months Ended September 30, 2015 (Dollars in Thousands,
Unaudited)
Excluding Acquired
Loans Acquired Annualized
September 30 June 30 Amount Peoples
Amount Percent Percent
2015 2015 Change
Loans Change Change
Change Commercial loans
$ 795,271 $ 709,946 $
85,325 $ (67,435 ) $ 17,890 2.5 % 10.0 % Residential mortgage loans
430,477 277,407 153,070 (136,861 ) 16,209 5.8 % 23.2 %
Consumer loans
361,298 336,006
25,292 (19,593 ) 5,699
1.7 % 6.7 % Subtotal
1,587,046 1,323,359 263,687
(223,889 ) 39,798 3.0 % 11.9 % Held for sale loans
5,583
7,677 (2,094 ) - (2,094 ) -27.3 % -108.2 % Mortgage warehouse loans
138,974 195,924 (56,950 )
- (56,950 ) -29.1 % -115.3 %
Total loans
$ 1,731,603 $ 1,526,960 $
204,643 $ (223,889 ) $ (19,246 ) -1.3 % -5.0 %
Loan Growth by Type, Excluding Acquired Loans Nine
Months Ended September 30, 2015 (Dollars in Thousands)
Excluding Acquired Loans Acquired Annualized
September 30 December 31 Amount Peoples
Amount Percent Percent 2015 2014
Change Loans Change Change
Change (Unaudited)
Commercial loans
$ 795,271 $ 674,314 $ 120,957 $
(67,435 ) $ 53,522 7.9 % 10.6 % Residential mortgage loans
430,477 254,625 175,852 (136,861 ) 38,991 15.3 % 20.5 %
Consumer loans
361,298 320,459
40,839 (19,593 ) 21,246
6.6 % 8.9 % Subtotal
1,587,046 1,249,398 337,648
(223,889 ) 113,759 9.1 % 12.2 % Held for sale loans
5,583
6,143 (560 ) - (560 ) -9.1 % -12.2 % Mortgage warehouse loans
138,974 129,156 9,818
- 9,818 7.6 % 10.2
% Total loans
$ 1,731,603 $ 1,384,697 $
346,906 $ (223,889 ) $ 123,017 8.9 %
11.9 %
The following table presents Horizon’s core net interest margin,
which excludes acquisition-related purchase accounting adjustments.
Dwight noted, “The Peoples transaction created a slight reduction
in Horizon’s net interest margin. The reduction was partially
alleviated due to the mix of earning assets as the cash from
Peoples’ liquidated securities portfolio was used to redeem
short-term borrowings at the close of the transaction reducing
interest-earning assets throughout the third quarter. During the
quarter, a portion of the cash from the liquidated securities
portfolio was used to repurchase securities and pay down a matured
long-term FHLB advance.”
To reduce funding costs over the next four years the Company
currently plans to use the securities portfolio to redeem maturing
long-term debt. As of September 30, 2015, $31.6 million of
long-term debt is scheduled to mature in 2016, $47.5 million in
2017, $27.0 million in 2018 and $55.2 million in 2019. This
deleveraging will help reduce the Company’s cost of funds and
provide additional capital for growth.
Non-GAAP Reconciliation of Net Interest Margin
(Dollar Amounts in Thousands, Unaudited)
Three Months
Ended Nine Months Ended September 30
June 30 September 30 September
30
Net Interest
Margin As Reported
2015 2015 2014
2015 2014 Net interest income
$
19,776 $ 17,850 $ 16,400
$ 54,512 $
46,460 Average interest-earning assets
2,304,515 2,008,191
1,877,066
2,072,276 1,770,187 Net interest income as a
percent of average interest- earning assets ("Net Interest Margin")
3.51 % 3.67 % 3.59 %
3.59 % 3.62 %
Impact of
Acquisitions
Interest income from acquisition-related purchase accounting
adjustments ("PAUs")
$ (402 ) $ (797 ) $ (438
)
$ (2,282 ) $ (2,027 )
Excluding Impact
of Acquisitions
Net interest income
$ 19,374 $ 17,053 $ 15,962
$ 52,230 $ 44,433 Average interest-earning assets
2,304,515 2,008,191 1,877,066
2,072,276 1,770,187
Core Net Interest Margin
3.44 % 3.51 % 3.50 %
3.44 % 3.47 %
Horizon’s loan loss reserve ratio, excluding loans with
credit-related purchase accounting adjustments, was 1.13% as of
September 30, 2015.
Allowance for Loan and Lease Loss Detail As of
September 30, 2015 (Dollars in Thousands, Unaudited)
Horizon Legacy
Heartland Summit Peoples
Total Pre-discount loan balance $ 1,409,298 $ 26,496 $
81,421 $ 218,195 $ 1,735,410 Allowance for loan losses
(ALLL) 15,896 264 8 - 16,168 Loan discount N/A
1,576 3,213 4,601
9,390 ALLL+loan discount 15,896 1,840
3,221 4,601 25,558
Loans, net $ 1,393,402 $ 24,656
$ 78,200 $ 213,594 $ 1,709,852
ALLL/ pre-discount loan balance 1.13 % 1.00 % 0.01 %
0.00 % 0.93 % Loan discount/ pre-discount loan balance N/A 5.95 %
3.95 % 2.11 % 0.54 % ALLL+loan discount/ pre-discount loan balance
1.13 % 6.94 % 3.96 % 2.11 % 1.47 %
Income Statement Highlights
Net income for the third quarter of 2015 was $4.3 million or
$.36 diluted earnings per share compared to $4.9 million or $.51
diluted earnings per share in the third quarter of 2014. The
decrease in net income and earnings per share from the previous
year reflects an increase in non-interest expenses of $6.9 million
primarily due to an increase in salaries and employee benefits and
outside services and consultants expense, partially offset by an
increase in net interest income of $3.4 million, a decrease in
provision for loan losses of $1.4 million and an increase in
non-interest income of $1.0 million. The decrease in earnings per
share also reflects an increase in diluted shares due to the
Peoples acquisition. Excluding acquisition-related expenses and
purchase accounting adjustments and gain on sale of investment
securities, net income for the third quarter of 2015 was $6.5
million or $.54 diluted earnings per share compared to $4.1 million
or $.42 diluted earnings per share in the same period of 2014.
Net income for the nine months ended September 30, 2015 was
$14.4 million or $1.37 diluted earnings per share compared to $13.2
million or $1.39 diluted earnings per share for the nine months
ended September 30, 2014. The increase in net income from the
previous year reflects an increase in net interest income of $8.1
million and an increase in non-interest income of $3.1 million,
partially offset by an increase in the provision for loan losses of
$740,000 and an increase in non-interest expenses of $8.7 million.
The decrease in earnings per share also reflects an increase in
diluted shares due to the Peoples acquisition. Excluding
acquisition-related expenses and purchase accounting adjustments,
gain on sale of investment securities and the death benefit on bank
owned life insurance, net income for the first nine months of 2015
was $15.7 million or $1.50 diluted earnings per share compared to
$12.1 million or $1.27 diluted earnings per share in the same
period of 2014.
Horizon’s net interest margin was 3.51% during the third quarter
of 2015, down from 3.67% for the prior quarter and 3.59% for same
period of 2014. The decrease in net interest margin compared to the
prior quarter and the same period of 2014 was due to lower yields
on new loans and re-pricing earning assets and a decrease in
interest income from acquisition-related purchase accounting
adjustments. Excluding acquisition-related purchase accounting
adjustments, the margin would have been 3.44% for the third quarter
of 2015 compared to 3.51% for the prior quarter and 3.50% for the
same period of 2014. Interest income from acquisition-related
purchase accounting adjustments was $402,000, $797,000, and
$438,000 for the three months ended September 30, 2015, June 30,
2015 and September 30, 2014, respectively.
Horizon’s net interest margin was 3.59% for the nine months
ending September 30, 2015, down from 3.62% for same period of 2014.
Excluding interest income from acquisition-related purchase
accounting adjustments, the margin would have been 3.44% for the
nine months ending September 30, 2015 compared to 3.47% for same
period of 2014. Interest income from acquisition-related purchase
accounting adjustments was $2.3 million and $2.0 million for the
nine months ended September 30, 2015 and September 30, 2014,
respectively.
Residential mortgage lending activity during the third quarter
of 2015 generated $2.8 million in income from the gain on sale of
mortgage loans, an increase of $641,000 from the same period of
2014. Total origination volume in the third quarter of 2015,
including loans placed into portfolio, totaled $127.5 million,
representing an increase of 24.8% from the same period of 2014 of
$102.2 million. Purchase money mortgage originations during the
third quarter of 2015 represented 81.0% of total originations
compared to 71.8% of originations during the previous quarter and
77.6% during the third quarter of 2014.
Lending Activity
Total loans increased $346.9 million from $1.4 billion as of
December 31, 2014 to $1.7 billion as of September 30, 2015 as
mortgage warehouse loans increased by $9.8 million, residential
mortgage loans increased by $175.9 million and consumer loans
increased by $40.8 million. Commercial loans increased $121.0
million or 10.5% on an annualized basis from $674.3 million at
December 31, 2014 to $795.3 million at September 30, 2015.
Total loan balances in the Kalamazoo and Indianapolis markets
continued to grow during the third quarter of 2015 to $166.8
million and $151.2 million, respectively, as of September 30, 2015.
In the third quarter of 2015, Kalamazoo’s aggregate loan balances
increased $12.4 million or 8.0%, and Indianapolis’ aggregate loan
balances increased $5.7 million or 3.9%. Combined, these markets
contributed $18.1 million in loan growth during the third quarter
of 2015 or 6.0%.
The provision for loan losses was $300,000 for the third quarter
of 2015 compared to $1.7 million for the same period of 2014. The
lower provision for loan losses in the third quarter of 2015
compared to the same period of the previous year was predominantly
due a $1.0 million charge-off associated with one commercial credit
during the third quarter of 2014. The provision for loan losses was
$2.8 million the first nine months of 2015 compared to $2.1 million
for the same period of 2014. The higher provision for loan losses
in the first nine months of 2015 compared to the same period of
2014 was due to the charge-off of one commercial credit of $1.3
million in the second quarter of 2015 as well as continued loan
growth. The $1.3 million commercial charge-off was a legacy workout
loan that was determined to be impaired due to the borrower’s
inability to make payments and a decrease in collateral value.
The ratio of the allowance for loan losses to total loans
decreased to 0.93% as of September 30, 2015 from 1.19% as of
December 31, 2014 due to an increase in total loans and a decrease
in the allowance for loan losses from $16.5 million as of December
31, 2014 to $16.2 million as of September 30, 2015. The Peoples
transaction added $223.9 million in loans without a loan loss
reserve due to purchase accounting adjustments. As of September 30,
2015, the ratio of the allowance for loan losses to total loans,
excluding loans with credit-related purchase accounting
adjustments, was 1.13% compared to 1.29% as of December 31,
2015.
Non-performing loans totaled $21.0 million as of September 30,
2015 and $22.4 million as of December 31, 2014. Compared to
December 31, 2014, non-performing commercial loans and consumer
loans decreased by $707,000 and $927,000, respectively, while
non-performing real estate loans increased by $253,000. As a
percentage of total loans, non-performing loans were 1.21% at
September 30, 2015, down 41 basis points from 1.62% at December 31,
2014.
Expense Management
Total non-interest expense was $6.9 million higher in the third
quarter of 2015 compared to the same period of 2014. The increase
was primarily due to an increase in salaries and employee benefits
costs of $2.4 million, outside services and consultants expense of
$2.6 million and other expense of $547,000, reflecting overall
company growth and the Peoples acquisition. One-time non-interest
expense related to the Peoples acquisition totaled $3.6 million in
the third quarter of 2015.
Total non-interest expense was $8.7 million higher in the first
nine months of 2015 compared to the same period of 2014. The
increase was primarily due to an increase in salaries and employee
benefits costs of $3.6 million, outside services and consultants
expense of $2.2 million, other expenses of $817,000, net occupancy
expenses of $461,000, data processing expense of $456,000,
professional fees of $211,000, loan expense of $486,000, FDIC
deposit insurance expense of $245,000 and other losses of $253,000
due to overall company growth and the Peoples acquisition. One-time
non-interest expense related to the Peoples acquisition totaled
$4.4 million in the third quarter of 2015.
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 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.
About Horizon
Horizon Bancorp is a locally owned, 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) September
30 June 30 March 31 December 31
September 30 2015 2015
2015 2014 2014 Balance
sheet: Total assets $ 2,606,833 $ 2,219,307 $ 2,153,965 $
2,076,922 $ 2,037,045 Investment securities 617,860 493,631 495,315
489,531 495,941 Commercial loans 795,271 709,946 695,736 674,314
677,349 Mortgage warehouse loans 138,974 195,924 178,899 129,156
105,133 Residential mortgage loans 430,477 277,407 260,390 254,625
251,739 Consumer loans 361,298 336,006 326,334 320,459 308,800
Earning assets 2,363,286 2,031,671 1,974,251 1,885,576 1,860,041
Non-interest bearing deposit accounts 338,436 307,215 285,181
267,667 278,527 Interest bearing transaction accounts 1,164,787
983,912 905,216 930,582 881,299 Time deposits 409,852 293,596
274,699 284,070 289,837 Borrowings 372,820 385,236 440,415 351,198
350,113 Subordinated debentures 32,758 32,719 32,680 32,642 32,603
Common stockholders' equity 252,238 189,631 186,991 181,914 177,280
Total stockholders’ equity 264,738 202,131 199,491 194,414 189,780
Income statement: Three months ended Net
interest income $ 19,776 $ 17,850 $ 16,886 $ 16,523 $ 16,400
Provision for loan losses 300 1,906 614 978 1,741 Non-interest
income 8,400 7,186 7,066 6,738 7,390 Non-interest expenses 22,235
16,650 16,068 15,671 15,353 Income tax expense 1,353
1,752 1,912
1,664 1,738 Net income 4,288 4,728
5,358 4,948 4,958 Preferred stock dividend (31 )
(31 ) (31 ) (31 )
(40 ) Net income available to common shareholders $ 4,257
$ 4,697 $ 5,327 $ 4,917
$ 4,918
Per share data: Basic earnings
per share $ 0.37 $ 0.51 $ 0.58 $ 0.53 $ 0.53 Diluted earnings per
share 0.36 0.49 0.55 0.51 0.51 Cash dividends declared per common
share 0.15 0.14 0.14 0.14 0.13 Book value per common share 21.14
20.49 20.25 19.75 19.25 Tangible book value per common share 16.37
17.06 16.80 16.26 15.75 Market value - high 26.15 26.03 25.86 26.73
23.67 Market value - low $ 22.60 $ 22.85 $ 22.38 $ 22.83 $ 20.65
Weighted average shares outstanding - Basic 11,605,976 9,240,005
9,216,011 9,212,156 9,208,707 Weighted average shares outstanding -
Diluted 11,893,254 9,637,586 9,609,506 9,628,240 9,588,332
Key ratios: Return on average assets 0.69 % 0.87 % 1.05 %
0.96 % 0.96 % Return on average common stockholders' equity 8.70
9.88 11.66 10.72 10.95 Net interest margin 3.51 3.67 3.70 3.64 3.59
Loan loss reserve to total loans 0.93 1.08 1.13 1.19 1.20
Non-performing loans to loans 1.21 1.51 1.52 1.62 1.47 Average
equity to average assets 8.36 9.32 9.56 9.56 9.33 Bank only capital
ratios: Tier 1 capital to average assets 9.35 8.18 8.75 8.80 8.63
Tier 1 capital to risk weighted assets 12.17 11.04 11.47 11.96
12.13 Total capital to risk weighted assets 13.03 12.08 12.54 13.08
13.26
Loan data: Substandard loans $ 25,898 $ 28,220
$ 27,355 $ 27,661 $ 35,023 30 to 89 days delinquent 4,868 3,326
3,945 5,082 3,310 90 days and greater delinquent - accruing
interest $ 100 $ 207 $ 19 $ 115 $ 62 Trouble debt restructures -
accruing interest 2,948 3,271 4,368 4,372 5,838 Trouble debt
restructures - non-accrual 3,994 4,523 4,711 2,643 3,061
Non-accrual loans 13,956 15,050
13,282 15,312
10,828 Total non-performing loans $ 20,998
$ 23,051 $ 22,380 $ 22,442
$ 19,789
HORIZON BANCORP
Financial Highlights (Dollars in thousands except share
and per share data and ratios, Unaudited) September
30 September 30 2015 2014
Balance sheet: Total assets $ 2,606,833 $ 2,037,045
Investment securities 617,860 495,941 Commercial loans 795,271
677,349 Mortgage warehouse loans 138,974 105,133 Residential
mortgage loans 430,477 251,739 Consumer loans 361,298 308,800
Earning assets 2,363,286 1,860,041 Non-interest bearing deposit
accounts 338,436 278,527 Interest bearing transaction accounts
1,164,787 881,299 Time deposits 409,852 289,837 Borrowings 372,820
350,113 Subordinated debentures 32,758 32,603 Common stockholders'
equity 252,238 177,280 Total stockholders’ equity 264,738 189,780
Income statement: Nine Months Ended Net
interest income $ 54,512 $ 46,460 Provision for loan losses 2,820
2,080 Non-interest income 22,652 19,539 Non-interest expenses
54,953 46,275 Income tax expense 5,017
4,491 Net income 14,374 13,153 Preferred stock dividend
(94 ) (102 ) Net income available to common
shareholders $ 14,280 $ 13,051
Per
share data: Basic earnings per share $ 1.42 $ 1.45 Diluted
earnings per share 1.37 1.39 Cash dividends declared per common
share 0.43 0.37 Book value per common share 21.14 19.25 Tangible
book value per common share 16.37 15.75 Market value - high 26.15
24.91 Market value - low $ 22.38 $ 19.57 Weighted average shares
outstanding - Basic 10,029,419 9,009,663 Weighted average shares
outstanding - Diluted 10,387,113 9,389,359
Key
ratios: Return on average assets 0.86 % 0.92 % Return on
average common stockholders' equity 10.03 10.56 Net interest margin
3.59 3.62 Loan loss reserve to total loans 0.93 1.20 Non-performing
loans to loans 1.21 1.47 Average equity to average assets 9.05 9.25
Bank only capital ratios: Tier 1 capital to average assets 9.35
8.63 Tier 1 capital to risk weighted assets 12.17 12.13 Total
capital to risk weighted assets 13.03 13.26
Loan
data: Substandard loans $ 25,898 $ 35,023 30 to 89 days
delinquent 4,868 3,310 90 days and greater delinquent -
accruing interest $ 100 $ 62 Trouble debt restructures - accruing
interest 2,948 5,838 Trouble debt restructures - non-accrual 3,994
3,061 Non-accrual loans 13,956 10,828
Total non-performing loans $ 20,998 $ 19,789
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 2015
2015 2015 2014
2014 Commercial
$ 8,841 $ 8,386 $ 7,876 $
7,910 $ 7,515 Real estate
2,297 3,044 3,281 2,508 3,304
Mortgage warehousing
1,015 1,319 1,272 1,132 1,300 Consumer
4,015 3,672 4,205
4,951 4,041 Total
$ 16,168
$ 16,421 $ 16,634 $ 16,501 $ 16,160
Net Charge-offs (Recoveries)
(Dollars in Thousands, Unaudited)
Three months ended September 30 June
30 March 31 December 31
September 30 2015 2015
2015 2014 2014 Commercial
$ 77 $ 1,584 $ (11 ) $ 199 $ 1,006 Real estate
96 161 20 101 19 Mortgage warehousing
- - - - -
Consumer
380 375 472
336 217 Total
$
553 $ 2,120 $ 481 $ 636 $
1,242
Total
Non-performing Loans
(Dollars in Thousands, Unaudited)
September 30 June 30 March 31
December 31 September 30 2015
2015 2015 2014
2014 Commercial
$ 10,832 $ 13,384 $ 11,540 $
11,855 $ 9,323 Real estate
6,315 5,819 6,062 5,894 6,312
Mortgage warehousing
- - - - - Consumer
3,851
3,848 4,778 4,693
4,154 Total
$ 20,998 $ 23,051 $
22,380 $ 22,442 $ 19,789
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
September 30 June 30 March 31
December 31 September 30 2015
2015 2015 2014
2014 Commercial
$ 324 $ 376 $ 307 $ 411 $ 376
Real estate
958 58 219 636 875 Mortgage warehousing
-
- - - - Consumer
- 37 223
154 3 Total
$ 1,282
$ 471 $ 749 $ 1,201 $ 1,254
HORIZON BANCORP AND
SUBSIDIARIES Average Balance Sheets
(Dollar Amounts in Thousands,
Unaudited)
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014 Average
Average Average
Average Balance Interest
Rate Balance Interest
Rate ASSETS Interest-earning assets Federal
funds sold $ 23,086 $ 2 0.03 % $ 4,033 $ 5 0.49 % Interest-earning
deposits 16,340 5 0.12 % 5,941 4 0.27 % Investment securities -
taxable 401,702 2,149 2.12 % 394,954 2,330 2.34 % Investment
securities - non-taxable (1) 154,050 1,125 4.39 % 146,513 1,109
4.48 % Loans receivable (2)(3) 1,709,337
20,297 4.72 % 1,325,625 16,403
4.92 % Total interest-earning assets (1) 2,304,515 23,578 4.17 %
1,877,066 19,851 4.32 % Non-interest-earning assets Cash and
due from banks 31,384 27,188 Allowance for loan losses (16,427 )
(15,706 ) Other assets 151,035 155,021
$ 2,470,507 $ 2,043,569
LIABILITIES
AND SHAREHOLDERS' EQUITY Interest-bearing liabilities
Interest-bearing deposits $ 1,568,777 $ 1,566 0.40 % $ 1,204,122 $
1,352 0.45 % Borrowings 303,521 1,729 2.26 % 320,676 1,593 1.97 %
Subordinated debentures 32,737 507 6.14
% 32,580 506 6.16 % Total
interest-bearing liabilities 1,905,035 3,802 0.79 % 1,557,378 3,451
0.88 % Non-interest-bearing liabilities Demand deposits
343,780 282,494 Accrued interest payable and other liabilities
15,149 12,979 Stockholders' equity 206,543
190,718 $ 2,470,507 $ 2,043,569
Net interest income/spread $ 19,776 3.38 % $ 16,400 3.44 %
Net interest income as a percent of average interest earning assets
(1) 3.51 % 3.59 % (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 Average Balance Sheets
(Dollar Amounts in Thousands,
Unaudited)
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014 Average
Average Average
Average Balance Interest
Rate Balance Interest
Rate ASSETS Interest-earning assets Federal funds
sold $ 10,563 $ 11 0.14 % $ 6,559 $ 9 0.18 % Interest-earning
deposits 11,927 10 0.11 % 6,547 7 0.14 % Investment securities -
taxable 375,548 6,356 2.26 % 395,255 7,108 2.40 % Investment
securities - non-taxable (1) 145,576 3,281 3.96 % 146,643 3,328
4.33 % Loans receivable (2)(3) 1,528,662
55,140 4.83 % 1,215,183 45,988
5.07 % Total interest-earning assets (1) 2,072,276 64,798 4.25 %
1,770,187 56,440 4.37 % Non-interest-earning assets Cash and
due from banks 30,729 26,736 Allowance for loan losses (16,557 )
(15,892 ) Other assets 155,657 140,698
$ 2,242,105 $ 1,921,729
LIABILITIES
AND SHAREHOLDERS' EQUITY Interest-bearing liabilities
Interest-bearing deposits $ 1,347,882 $ 4,035 0.40 % $ 1,171,343 $
3,984 0.45 % Borrowings 340,593 4,747 1.86 % 274,322 4,493 2.19 %
Subordinated debentures 32,698 1,504
6.15 % 32,541 1,503 6.18 % Total
interest-bearing liabilities 1,721,173 10,286 0.80 % 1,478,206
9,980 0.90 % Non-interest-bearing liabilities Demand
deposits 303,309 253,331 Accrued interest payable and other
liabilities 14,692 12,454 Stockholders' equity 202,931
177,738 $ 2,242,105 $ 1,921,729
Net interest income/spread $ 54,512 3.45 % $ 46,460
3.47 % Net interest income as a percent of average interest
earning assets (1) 3.59 % 3.62 % (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)
September 30 December 31 2015
2014 (Unaudited) Assets
Cash and due from banks
$ 48,155 $ 43,476 Investment
securities, available for sale
435,673 323,764 Investment
securities, held to maturity (fair value of $188,575 and $169,904)
182,187 165,767 Loans held for sale
5,583 6,143
Loans, net of allowance for loan losses of $16,168 and $16,501
1,709,852 1,362,053 Premises and equipment, net
60,700 52,461 Federal Reserve and Federal Home Loan Bank
stock
13,823 11,348 Goodwill
49,214 28,176 Other
intangible assets
7,648 3,965 Interest receivable
10,862 8,246 Cash value of life insurance
54,148
39,382 Other assets
28,988 32,141 Total
assets
$ 2,606,833 $ 2,076,922
Liabilities Deposits Non-interest bearing
$
338,436 $ 267,667 Interest bearing
1,574,639
1,214,652 Total deposits
1,913,075 1,482,319
Borrowings
372,820 351,198 Subordinated debentures
32,758 32,642 Interest payable
490 497 Other
liabilities
22,952 15,852 Total
liabilities
2,342,095 1,882,508
Commitments and contingent liabilities Stockholders’
Equity Preferred stock, Authorized, 1,000,000 shares Series B
shares $.01 par value, $1,000 liquidation value Issued 12,500
shares
12,500 12,500 Common stock, no par value Authorized,
22,500,000 shares Issued, 11,987,424 and 9,278,916 shares
Outstanding, 11,931,987 and 9,213,036 shares
- - Additional
paid-in capital
106,083 45,916 Retained earnings
144,344 134,477 Accumulated other comprehensive income
1,811 1,521 Total stockholders’ equity
264,738 194,414 Total liabilities and
stockholders’ equity
$ 2,606,833 $ 2,076,922
HORIZON BANCORP AND SUBSIDIARIES Condensed
Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per
Share Data, Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30 2015
2014 2015 2014
(Unaudited) (Unaudited)
(Unaudited) (Unaudited) Interest Income
Loans receivable
$ 20,297 $ 16,403
$ 55,140 $ 45,988 Investment securities Taxable
2,156 2,339
6,377 7,124 Tax exempt
1,125 1,109
3,281 3,328 Total interest
income
23,578 19,851
64,798 56,440
Interest Expense Deposits
1,566 1,352
4,035
3,984 Borrowed funds
1,729 1,593
4,747 4,493
Subordinated debentures
507 506
1,504 1,503
Total interest expense
3,802
3,451
10,286 9,980
Net Interest Income 19,776 16,400
54,512 46,460 Provision for loan losses
300
1,741
2,820
2,080
Net Interest Income after Provision
for Loan Losses 19,476
14,659
51,692
44,380
Non-interest Income Service charges on deposit
accounts
1,359 1,076
3,443 3,037 Wire transfer fees
160 151
493 408 Interchange fees
1,625 1,223
4,093 3,436 Fiduciary activities
1,520 1,131
4,033 3,378 Gain on sale of investment securities (includes
$0 for the three months ended and $124 for the nine months ended
September 30, 2015 and $988 for the three and nine months ended
September 30, 2014, related to accumulated other comprehensive
earnings reclassifications)
- 988
124 988 Gain on
sale of mortgage loans
2,794 2,153
7,815 6,101
Mortgage servicing income net of impairment
246 116
725 556 Increase in cash value of bank owned life insurance
374 296
889 781 Death benefit on bank owned life
insurance
- -
145 - Other income
322
256
892
854 Total non-interest income
8,400 7,390
22,652 19,539
Non-interest
Expense Salaries and employee benefits
10,652 8,215
27,541 23,991 Net occupancy expenses
1,723 1,404
4,649 4,188 Data processing
1,281 907
3,170
2,714 Professional fees
409 358
1,596 1,385 Outside
services and consultants
3,209 595
4,753 2,554 Loan
expense
1,351 1,202
3,975 3,489 FDIC insurance
expense
423 313
1,099 854 Other losses
246 (35
)
351 98 Other expense
2,941
2,394
7,819
7,002 Total non-interest expense
22,235
15,353
54,953
46,275
Income Before Income Tax
5,641 6,696
19,391 17,644 Income tax expense
(includes $0 for the three months ended and $43 for the nine months
ended September 30, 2015 and $346 for the three and nine months
ended September 30, 2014, related to income tax expense from
reclassification items)
1,353
1,738
5,017 4,491
Net Income 4,288 4,958
14,374 13,153
Preferred stock dividend
(31 )
(40 )
(94 ) (102 )
Net
Income Available to Common Shareholders $ 4,257
$ 4,918
$ 14,280
$ 13,051
Basic Earnings Per Share $
0.37 $ 0.53
$ 1.42 $ 1.45
Diluted Earnings
Per Share 0.36 0.51
1.37 1.39
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151022006688/en/
Horizon BancorpMark E. SecorChief Financial Officer(219)
873-2611Fax: (219) 874-9280
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