Horizon Bancorp Announces an Increase in 2015 First Quarter Earnings

MICHIGAN CITY, Ind.--(BUSINESS WIRE)-- (NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three-month period ended March 31, 2015.

SUMMARY:

• Net income for the first quarter of 2015 increased 56.8% or $1.9 million compared to the same period in 2014 to $5.4 million or $.55 diluted earnings per share.
• Total loans increased 24.3% on an annualized basis during the first quarter of 2015.
• Commercial loans increased 12.9% on an annualized basis during the first quarter of 2015.
• Net interest income for the first quarter of 2015 increased 27.2% or $3.6 million compared to the same period in 2014.
• Non-interest income for the first quarter of 2015 increased 28.0% or $1.5 million compared to the same period in 2014.
• Net interest margin, excluding the impact of acquisitions (“core net interest margin”), was 3.47% for the first quarter of 2015 compared to 3.38% for the same period in 2014.
• Return on average assets was 1.05% for the first quarter of 2015.
• Return on average common equity was 11.66% for the first quarter of 2015.
• Horizon’s tangible book value per share rose to $16.80 at March 31, 2015, compared to $16.26 at December 31, 2014 and $15.52 at March 31, 2014. $16.80 is the highest tangible book value per share in the company’s history.
• On February 19, 2015, Horizon announced the acquisition of Peoples Bancorp and its wholly-owned subsidiary, Peoples Federal Savings Bank of DeKalb County, headquartered in Auburn, Indiana.
• Horizon’s full-service Carmel, Indiana office opened on February 23, 2015.

Craig Dwight, Chairman and CEO, commented: “I am pleased to announce Horizon’s 2015 first quarter results, which reflected positive contributions from all four revenue streams – retail banking, business banking, mortgage banking and wealth management. Headlining the quarter was the continued growth of our loan portfolio, an increase in mortgage activity and the announcement of a strategic partnership whereby Horizon will acquire Peoples Bancorp, a company with approximately $486.6 million in total assets headquartered in Auburn, Indiana.”

Dwight continued, “Our investments in people and technology along with an improving economic environment resulted in a strong first quarter of 2015. Net income and diluted earnings per share, excluding non-core items, increased 38.7% and 30.5%, respectively, compared to the same period of 2014. Loan growth was solid across all product types, which continued to help offset net interest margin pressure. Mortgage activity increased as the recent decrease in interest rates boosted mortgage warehouse balances and the gain on sale of mortgage loans, continuing to validate this revenue stream as a quality source of capital generation.”

The following table presents the amount and growth rate of loans by product type for the three months ended March 31, 2015.

“The aforementioned loan growth has been critical in maintaining our net interest margin throughout the low interest rate environment that continues to persist,” Dwight continued. “Horizon’s core net interest margin, excluding income from acquisition-related purchase accounting adjustments, increased from 3.38% in the first quarter of 2014 to 3.47% in the first quarter of 2015. The core net interest margin decreased only two basis points from the previous quarter.”

Horizon’s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, stood at 1.22% as of March 31, 2015.

On February 18, 2015, Horizon entered into an agreement to acquire Peoples Bancorp and its wholly-owned subsidiary, Peoples Federal Savings Bank of DeKalb County (collectively, “Peoples”), in a cash and stock merger. The acquisition is expected to close early in the third quarter of 2015, subject to regulatory and shareholder approval. Headquartered in Auburn, Indiana, Peoples serves the greater northeast Indiana and southwest Michigan markets through 16 full-service banking locations. As of December 31, 2014, Peoples Bancorp had total assets of $486.6 million.

Dwight noted, “This acquisition aligns well with Horizon’s strategic growth plan by enhancing our existing presence in southwest Michigan and providing entry into the attractive northeast Indiana market. Peoples has proudly served its customers for eighty nine years with good advice and a commitment to community banking. We look forward to continuing this commitment and are thrilled to partner with their outstanding team of banking professionals.”

Income Statement Highlights

Net income for the first quarter of 2015 was $5.4 million or $.55 diluted earnings per share compared to $3.4 million or $.38 diluted earnings per share in the first quarter of 2014. The increase in net income from the previous year reflects an increase in interest income primarily due to loan growth and an increase in non-interest income due to an increase in gain on sale of mortgage loans, interchange fees and fiduciary activities partially offset by an increase in the provision expense and non-interest expenses.

Horizon’s net interest margin was 3.70% during the first quarter of 2015, up from 3.64% for the prior quarter and 3.48% for same period of 2014. The increase in net interest margin compared to the prior quarter and the same period of 2014 was due to acquisition-related purchase accounting adjustments, lower funding costs and a higher ratio of loans as a percentage of average earning assets. Excluding purchase accounting adjustments related to the 2012 Heartland Bancshares, Inc. and the 2014 SCB Bancorp, Inc. acquisitions, the margin would have been 3.47% for the first quarter of 2015 compared to 3.49% for the prior quarter and 3.38% for the same period of the prior year. Interest income from acquisition-related purchase accounting adjustments was $1.1 million, $719,000, and $389,000 for the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.

Residential mortgage lending activity during the first quarter of 2015 generated $2.4 million in income from the gain on sale of mortgage loans, an increase of $1.0 million from the first quarter of 2014. Total origination volume in the first quarter of 2015, including loans placed into portfolio, totaled $88.7 million, representing an increase of 40.7% from the first quarter of 2014 of $52.6 million. Purchase money mortgage originations during the first quarter of 2015 represented 50.2% of total originations compared to 67.6% of originations during the previous quarter and 70.6% during the first quarter of 2014.

Lending Activity

Total loans increased $82.9 million from $1.4 billion as of December 31, 2014 to $1.5 billion as of March 31, 2015 as mortgage warehouse loans increased by $50.0 million, residential mortgage loans increased by $5.8 million and consumer loans increased by $5.9 million. Commercial loans increased $21.4 million or 12.9% on an annualized basis from $674.3 million at December 31, 2014 to $695.7 million at March 31, 2015.

Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during the first quarter of 2015 to $145.8 million and $132.9 million, respectively, as of March 31, 2015. Kalamazoo’s aggregate loan balances increased $3.6 million or 10.1% on an annualized basis, and Indianapolis’ aggregate loan balances increased $9.5 million or 31.2% on an annualized basis. Combined, these markets contributed $13.1 million in loan growth during the first three months of 2015 or 19.9% on an annualized basis.

The provision for loan losses was $614,000 for the three months ended March 31, 2015 compared to no provision expense for the same period of 2014. The higher provision for loan losses for the first quarter of 2015 compared to the same period of 2014 was primarily due to continued loan growth.

The ratio of the allowance for loan losses to total loans decreased to 1.13% as of March 31, 2015 from 1.19% as of December 31, 2014 due to an increase in total loans, partially offset by an increase in the allowance for loan losses from $16.5 million as of December 31, 2014 to $16.6 million as of March 31, 2015. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 1.22% as of March 31, 2015.

Non-performing loans totaled $22.4 million as of March 31, 2015 and December 31, 2014. Compared to December 31, 2014, non-performing real estate loans and consumer loans increased by $168,000 and $85,000, respectively, and non-performing commercial loans decreased by $315,000. As a percentage of total loans, non-performing loans were 1.52% at March 31, 2015, down 10 basis points from 1.62% at December 31, 2014.

Expense Management

Total non-interest expense was $1.6 million higher in the first quarter of 2015 compared to the same period of 2014. The increase in the first quarter of 2015 compared to the same period of 2014 was primarily due to an increase in salaries expense, net occupancy expenses and other expenses due to overall company growth and market expansion and increases in commission and bonuses and loan expense due to an increase in loan volume.

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

Source: Horizon Bancorp

You May Also Be Interested In

• Progress Software Corporation (PRGS) Issues Statement on a Possible Offer for MariaDB
• Genetic Technologies (GENE) Announces $2 Million Registered Direct Offering
• Crown Castle (CCI) Issues Statement on "Ted Miller's Latest Attempt to Disrupt the Company's Momentum"