Form 8-K HORIZON BANCORP /IN/ For: Jul 23

 

Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date: July 23, 2015

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces its 2015 Second Quarter Earnings

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and six-month periods ended June 30, 2015.

SUMMARY:

·	On July 1, 2015, Horizon closed the acquisition of Peoples Bancorp and its wholly-owned subsidiary, Peoples Federal Savings Bank of DeKalb County, headquartered in Auburn, Indiana. Peoples’ results are not included in Horizon’s June 30, 2015 financial results.

·	Total loans increased 16.2% on an annualized basis during the second quarter of 2015.

·	Commercial loans increased 8.2% on an annualized basis during the second quarter of 2015.

·	Second quarter 2015 net income was $4.7 million or $.49 diluted earnings per share.

·	Excluding merger expenses, net income for the second quarter of 2015 was $5.2 million or $.53 diluted earnings per share.

·	Pre-tax, pre-provision income for the second quarter of 2015 was $8.4 million, an increase of 19.7% compared to the same period of 2014 and 6.4% compared to the previous quarter.

·	Net income for the first six months of 2015 increased 23.1% compared to the same period of 2014 to $10.1 million or $1.04 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 six months of 2015 was $10.4 million or $1.08 diluted earnings per share.

·	Pre-tax, pre-provision income for the first six months of 2015 was $16.3 million, an increase of 44.1% compared to the first six months of 2014.

·	Net interest income for the first six months of 2015 increased 15.6% or $4.7 million compared to the same period in 2014.

·	The net interest margin, excluding the impact of acquisitions (“core net interest margin”), increased 4 basis points from the linked quarter and 5 basis points in the first six months of 2015 compared to the same period of 2014.

·	Non-interest income for the first six months of 2015 increased 17.3% or $2.1 million compared to the same period in 2014.

·	Horizon’s tangible book value per share rose to $17.06 at June 30, 2015, compared to $16.26 at December 31, 2014 and $15.47 at June 30, 2014.

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Pg. 2 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

Craig Dwight, Chairman and CEO, commented: “Horizon’s 2015 second quarter and year-to-date results showed our continued ability to generate organic growth and solid returns across all four revenue streams - retail banking, business banking, mortgage banking and wealth management.  Previous investments in people, resources and market expansion, coupled with our strategic partnership through the Peoples Bancorp acquisition, has created a strong foundation to continue our successful growth story in the future.”

Mr. Dwight continued, “Horizon’s net income of $4.7 million for the second quarter of 2015 was down from $5.4 million in the previous quarter and $4.8 million in the same period of 2014.  An increase in the provision for loan losses due to a $1.3 million commercial loan charge-off was the primary reason for this decline.  However, pre-tax, pre-provision income for the second quarter of 2015 increased 19.7% from the same period in 2014 and 6.4% from the previous quarter.  This increase in pre-tax, pre-provision income demonstrates the earnings power garnered from our organic and strategic growth strategy.”

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollar in Thousands Except per Share Data, Unaudited)
		Three Months Ended								Six Months Ended
		June 30								June 30
Non-GAAP Reconciliation of Net Income		2015				2014				2015				2014
Net income as reported		$	4,728			$	4,778			$	10,086			$	8,195
Merger expenses			570				900				716				1,211
Tax effect			(132	)			(315	)			(183	)			(424	)
Net income excluding merger expenses			5,166				5,363				10,619				8,982
Gain on sale of investment securities			-				-				(124	)			-
Tax effect			-				-				43				-
Net income excluding gain on sale of investment securities			5,166				5,363				10,538				8,982
Death benefit on bank owned life insurance ("BOLI")			-				-				(145	)			-
Tax effect			-				-				51				-
Net income excluding death benefit on BOLI			5,166				5,363				10,444				8,982
Acquisition-related purchase accounting adjustments ("PAUs")			(797	)			(1,199	)			(1,880	)			(1,588	)
Tax effect			279				420				658				556
Net income excluding PAUs		$	4,648			$	4,584			$	9,222			$	7,950
Non-GAAP Reconciliation of Diluted Earnings per Share
Diluted earnings per share as reported		$	0.49			$	0.50			$	1.04			$	0.88
Merger expenses			0.06				0.09				0.07				0.13
Tax effect			(0.01	)			(0.03	)			(0.02	)			(0.05	)
Diluted earnings per share excluding merger expenses			0.53				0.56				1.10				0.96
Gain on sale of investment securities			-				-				(0.01	)			-
Tax effect			-				-				0.00				-
Net income excluding gain on sale of investment securities			0.53				0.56				1.09				0.96
Death benefit on BOLI			-				-				(0.02	)			-
Tax effect			-				-				0.01				-
Net income excluding death benefit on BOLI			0.53				0.56				1.08				0.96
Acquisition-related PAUs			(0.08	)			(0.13	)			(0.20	)			(0.17	)
Tax effect			0.03				0.04				0.07				0.06
Diluted earnings per share excluding PAUs		$	0.48			$	0.48			$	0.95			$	0.85

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Pg. 3 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

 

Non-GAAP Reconciliation of Pre-tax, Pre-Provision Income
(Dollar in Thousands, Unaudited)
		Three Months Ended												Six Months Ended
		June 30				March 31				June 30				June 30
		2015				2015				2014				2015				2014
Net income as reported		$	4,728			$	5,358			$	4,778			$	10,086			$	8,195
Income tax expense			1,752				1,912				1,890				3,664				2,753
Provision for loan losses			1,906				614				339				2,520				339
Pre-tax, pre-provision income		$	8,386			$	7,884			$	7,007			$	16,270			$	11,287

 

 

 

Loan Growth by Type
Three Months Ended June 30, 2015
(Dollars in Thousands, Unaudited)
																		Annualized
		June 30				March 31				Amount				Percent				Percent
		2015				2015				Change				Change				Change
Commercial loans		$	709,946			$	695,736			$	14,210				2.0	%			8.2	%
Residential mortgage loans			277,407				260,390				17,017				6.5	%			26.2	%
Consumer loans			336,006				326,334				9,672				3.0	%			11.9	%
Held for sale loans			7,677				6,229				1,448				23.2	%			93.2	%
Subtotal			1,331,036				1,288,689				42,347				3.3	%			13.2	%
Mortgage warehouse loans			195,924				178,899				17,025				9.5	%			38.2	%
Total loans		$	1,526,960			$	1,467,588			$	59,372				4.0	%			16.2	%

 

 

 

Loan Growth by Type
Six Months Ended June 30, 2015
(Dollars in Thousands)
																		Annualized
		June 30				December 31				Amount				Percent				Percent
		2015				2014				Change				Change				Change
		(Unaudited)
Commercial loans		$	709,946			$	674,314			$	35,632				5.3	%			10.7	%
Residential mortgage loans			277,407				254,625				22,782				8.9	%			18.0	%
Consumer loans			336,006				320,459				15,547				4.9	%			9.8	%
Held for sale loans			7,677				6,143				1,534				25.0	%			50.4	%
Subtotal			1,331,036				1,255,541				75,495				6.0	%			12.1	%
Mortgage warehouse loans			195,924				129,156				66,768				51.7	%			104.2	%
Total loans		$	1,526,960			$	1,384,697			$	142,263				10.3	%			20.7	%

 

“Once again, our continued loan growth in the second quarter was critical in combatting persistent margin pressure,” Mr. Dwight commented.  “Horizon’s core net interest margin, excluding income from acquisition-related purchase accounting adjustments, increased 4 basis points from the linked quarter and 5 basis points in the first six months of 2015 compared to the same period of 2014.”

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Pg. 4 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

 

Non-GAAP Reconciliation of Net Interest Margin
(Dollar Amounts in Thousands, Unaudited)
		Three Months Ended												Six Months Ended
		June 30				March 31				June 30				June 30
Net Interest Margin As Reported		2015				2015				2014				2015				2014
Net interest income		$	17,850			$	16,886			$	16,788			$	34,736			$	30,060
Average interest-earning assets			2,008,191				1,899,870				1,832,576				1,954,287				1,715,939
Net interest income as a percent of average interest-
earning assets ("Net Interest Margin")			3.67	%			3.70	%			3.78	%			3.68	%			3.62	%
Impact of Acquisitions
Interest income from acquisition-related PAUs		$	(797	)		$	(1,083	)		$	(1,199	)		$	(1,880	)		$	(1,588	)
Excluding Impact of Acquisitions
Net interest income		$	17,053			$	15,803			$	15,589			$	32,856			$	28,472
Average interest-earning assets			2,008,191				1,899,870				1,832,576				1,954,287				1,715,939
Core Net Interest Margin			3.51	%			3.47	%			3.51	%			3.49	%			3.44	%

 

With respect to the increase in the provision for loan losses for the three and six-month periods ending June 30, 2015 compared to the same periods of the previous year, Mr. Dwight stated, “This increase reflects loan growth as well as a $1.3 million commercial loan charge-off during the second quarter related to a legacy workout credit which recently became impaired.  Non-performing loans increased $609,000 compared to December 31, 2014; however, non-performing loans to total loans was down 11 basis points to 1.51% as of June 30, 2015.  The increase in non-performing loans reflects our continued loan growth as credit conditions remain stable across the portfolio.”

Horizon’s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, was 1.15% as of June 30, 2015.

 

Allowance for Loan and Lease Loss Detail
As of June 30, 2015
(Dollars in Thousands, Unaudited)
		Horizon
		Legacy				Heartland				Summit				Total
Pre-discount loan balance		$	1,403,809			$	31,777			$	88,908			$	1,524,494
Allowance for loan losses (ALLL)			16,138				276				7				16,421
Loan discount			N/A				1,903				3,308				5,211
ALLL+loan discount			16,138				2,179				3,315				21,632
Loans, net		$	1,387,671			$	29,598			$	85,593			$	1,502,862
ALLL/ pre-discount loan balance			1.15	%			0.87	%			0.01	%			1.08	%
Loan discount/ pre-discount loan balance			N/	A			5.99	%			3.72	%			0.34	%
ALLL+loan discount/ pre-discount loan balance			1.15	%			6.86	%			3.73	%			1.42	%

 

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Pg. 5 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

On July 1, 2015, Horizon completed its acquisition of Peoples Bancorp and its wholly-owned subsidiary, Peoples Federal Savings Bank of DeKalb County (collectively, “Peoples”).  Dwight noted, “Peoples fits well into Horizon’s strategic plan to expand in the states of Indiana and Michigan by expanding our footprint further into northeast Indiana and southwest Michigan.  The integration process is well under way, and we are thrilled to have this talented and dedicated group of individuals join our growing organization.  We look forward to bringing the Peoples’ customer base an expanded product and service suite with a continued focus on community banking and participation.”

Income Statement Highlights

Net income for the second quarter of 2015 was $4.7 million or $.49 diluted earnings per share compared to $4.8 million or $.50 diluted earnings per share in the second quarter of 2014.  The decrease in net income and earnings per share from the previous year reflects an increase in the provision for loan losses of $1.6 million primarily due to one commercial loan charge-off of $1.3 million, and an increase in non-interest expenses of $242,000 primarily due to an increase in salaries and employee benefits, professional fees and loan expense.  Excluding acquisition-related expenses and purchase accounting adjustments, net income for the second quarter of 2015 was $4.6 million or $.48 diluted earnings per share compared to $4.6 million or $.48 diluted earnings per share in the second quarter of 2014.

Net income for the six months ended June 30, 2015 was $10.1 million or $1.04 diluted earnings per share compared to $8.2 million or $.88 diluted earnings per share for the six months ended June 30, 2014.  The increase in net income from the previous year reflects an increase in net interest income of $4.7 million or 15.6% and an increase in non-interest income of $2.1 million or 17.3%, partially offset by an increase in provision for loan losses of $2.2 million, an increase in non-interest expenses of $1.8 million and an increase in income tax expense of $911,000.  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 six months of 2015 was $9.2 million or $.95 diluted earnings per share compared to $8.0 million or $.85 diluted earnings per share in the same period of 2014.

Horizon’s net interest margin was 3.67% during the second quarter of 2015, down from 3.70% for the prior quarter and 3.78% 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 purchase accounting adjustments related to the 2012 Heartland Bancshares, Inc. and the 2014 SCB Bancorp, Inc. acquisitions, the margin would have been 3.51% for the second quarter of 2015 compared to 3.47% for the prior quarter and 3.51% for the same period of 2014.  Interest income from acquisition-related purchase accounting adjustments was $797,000, $1.1 million, and $1.2 million for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

Horizon’s net interest margin was 3.68% for the six months ending June 30, 2015, up from 3.62% for same period of 2014.  Excluding interest income from acquisition-related purchase accounting

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Pg. 6 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

adjustments, the margin would have been 3.49% for the six months ending June 30, 2015 compared to 3.44% for same period of 2014. Interest income from acquisition-related purchase accounting adjustments was $1.9 million and $1.6 million for the six months ended June 30, 2015 and June 30, 2014, respectively.

Residential mortgage lending activity during the second quarter of 2015 generated $2.6 million in income from the gain on sale of mortgage loans, an increase of $105,000 from the same period of 2014.  Total origination volume in the second quarter of 2015, including loans placed into portfolio, totaled $114.4 million, representing an increase of 38.8% from the same period of 2014 of $82.4 million.  Purchase money mortgage originations during the second quarter of 2015 represented 71.8% of total originations compared to 50.2% of originations during the previous quarter and 77.5% during the second quarter of 2014.

Lending Activity

Total loans increased $142.3 million from $1.4 billion as of December 31, 2014 to $1.5 billion as of June 30, 2015 as mortgage warehouse loans increased by $66.8 million, residential mortgage loans increased by $22.8 million and consumer loans increased by $15.5 million.  Commercial loans increased $35.6 million or 10.7% on an annualized basis from $674.3 million at December 31, 2014 to $709.9 million at June 30, 2015.

Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during the second quarter of 2015 to $154.4 million and $145.4 million, respectively, as of June 30, 2015. Kalamazoo’s aggregate loan balances increased $8.6 million or 5.9%, and Indianapolis’ aggregate loan balances increased $12.6 million or 9.4%. Combined, these markets contributed $21.2 million in loan growth during the second quarter of 2015 or 7.6%.

The provision for loan losses was $1.9 million for the second quarter and $2.5 million for the first six months of 2015, which was $1.6 million and $2.2 million higher than the provision for the second quarter and first six months of 2014, respectively.  The higher provision for loan losses in the second quarter and for the first six months of 2015 compared to the same periods of 2014 was due to the charge-off of one commercial credit of $1.3 million as well as continued loan growth.  The $1.3 million commercial charge-off was a legacy workout loan that was recently 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 1.08% as of June 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 $16.4 million as of June 30, 2015.  The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 1.15% as of June 30, 2015.

Non-performing loans totaled $23.1 million as of June 30, 2015 and $22.4 million as of December 31, 2014.  Compared to December 31, 2014, non-performing commercial loans increased by $1.5 million and non-performing real estate and consumer loans decreased by $75,000 and $845,000, respectively.  As a percentage of total loans, non-performing loans were 1.51% at June 30, 2015, down 11 basis points from 1.62% at December 31, 2014.

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Pg. 7 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

 

Expense Management

Total non-interest expense was $242,000 higher in the second quarter of 2015 compared to the same period of 2014.  The increase was primarily due to an increase in salaries and employee benefits, professional fees and loan expense related to overall company growth.

Total non-interest expense was $1.8 million higher in the first six months of 2015 compared to the same period of 2014.  The increase in non-interest expense was primarily related to an increase in salaries and employee benefits costs of $1.1 million and net occupancy expenses of $142,000 due to overall company growth as well as the Summit acquisition.  The increase was also due to an increase in professional fees, loan expense, FDIC insurance expense and other expense due to overall company growth.  The increase was partially offset by a decrease in outside services and consultants of $415,000 due to the expense associated with the Summit acquisition in the second quarter of 2014.

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

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Pg. 8 cont. Horizon Bancorp Announces 2015 Second Quarter Earnings

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.

 

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HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)

		June 30				March 31				December 31				September 30				June 30
		2015				2015				2014				2014				2014
Balance sheet:
Total assets		$	2,219,307			$	2,153,965			$	2,076,922			$	2,037,045			$	2,073,251
Investment securities			493,631				495,315				489,531				495,941				537,618
Commercial loans			709,946				695,736				674,314				677,349				648,202
Mortgage warehouse loans			195,924				178,899				129,156				105,133				140,896
Residential mortgage loans			277,407				260,390				254,625				251,739				235,523
Consumer loans			336,006				326,334				320,459				308,800				296,873
Earning assets			2,031,671				1,974,251				1,885,576				1,860,041				1,882,724
Non-interest bearing deposit accounts			307,215				285,181				267,667				278,527				270,023
Interest bearing transaction accounts			983,912				905,216				930,582				881,299				919,024
Time deposits			293,596				274,699				284,070				289,837				310,056
Borrowings			385,236				440,415				351,198				350,113				340,201
Subordinated debentures			32,719				32,680				32,642				32,603				32,564
Common stockholders' equity			189,631				186,991				181,914				177,280				174,836
Total stockholders’ equity			202,131				199,491				194,414				189,780				187,336
Income statement:		Three months ended
Net interest income		$	17,850			$	16,886			$	16,523			$	16,400			$	16,788
Provision for loan losses			1,906				614				978				1,741				339
Non-interest income			7,186				7,066				6,738				7,390				6,627
Non-interest expenses			16,650				16,068				15,671				15,353				16,408
Income tax expense			1,752				1,912				1,664				1,738				1,890
Net income			4,728				5,358				4,948				4,958				4,778
Preferred stock dividend			(31	)			(31	)			(31	)			(40	)			(32	)
Net income available to common shareholders		$	4,697			$	5,327			$	4,917			$	4,918			$	4,746
Per share data:
Basic earnings per share		$	0.51			$	0.58			$	0.53			$	0.53			$	0.52
Diluted earnings per share			0.49				0.55				0.51				0.51				0.50
Cash dividends declared per common share			0.14				0.14				0.14				0.13				0.13
Book value per common share			20.49				20.25				19.75				19.25				19.00
Tangible book value per common share			17.06				16.80				16.26				15.75				15.47
Market value - high			26.03				25.86				26.73				23.67				22.58
Market value - low		$	22.85			$	22.38			$	22.83			$	20.65			$	19.57
Weighted average shares outstanding - Basic			9,240,005				9,216,011				9,212,156				9,208,707				9,182,986
Weighted average shares outstanding - Diluted			9,637,586				9,609,506				9,628,240				9,588,332				9,560,939
Key ratios:
Return on average assets			0.87	%			1.05	%			0.96	%			0.96	%			0.97	%
Return on average common stockholders' equity			9.88				11.66				10.72				10.95				11.82
Net interest margin			3.67				3.70				3.64				3.59				3.78
Loan loss reserve to total loans			1.08				1.13				1.19				1.20				1.18
Non-performing loans to loans			1.51				1.52				1.62				1.47				1.41
Average equity to average assets			9.32				9.56				9.56				9.33				8.79
Bank only capital ratios:
Tier 1 capital to average assets			8.18				8.75				8.80				8.63				8.78
Tier 1 capital to risk weighted assets			11.04				11.47				11.96				12.13				11.47
Total capital to risk weighted assets			12.08				12.54				13.08				13.26				12.53
Loan data:
Substandard loans		$	28,220			$	27,355			$	27,661			$	35,023			$	35,495
30 to 89 days delinquent			3,326				3,945				5,082				3,310				3,671
90 days and greater delinquent - accruing interest		$	207			$	19			$	115			$	62			$	42
Trouble debt restructures - accruing interest			3,271				4,368				4,372				5,838				5,614
Trouble debt restructures - non-accrual			4,523				4,711				2,643				3,061				3,178
Non-accrual loans			15,050				13,282				15,312				10,828				9,844
Total non-performing loans		$	23,051			$	22,380			$	22,442			$	19,789			$	18,678

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Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)

		June 30				June 30
		2015				2014
Balance sheet:
Total assets		$	2,219,307			$	2,073,251
Investment securities			493,631				537,618
Commercial loans			709,946				648,202
Mortgage warehouse loans			195,924				140,896
Residential mortgage loans			277,407				235,523
Consumer loans			336,006				296,873
Earning assets			2,031,671				1,882,724
Non-interest bearing deposit accounts			307,215				270,023
Interest bearing transaction accounts			983,912				919,024
Time deposits			293,596				310,056
Borrowings			385,236				340,201
Subordinated debentures			32,719				32,564
Common stockholders' equity			189,631				174,836
Total stockholders’ equity			202,131				187,336
Income statement:		Six Months Ended
Net interest income		$	34,736			$	30,060
Provision for loan losses			2,520				339
Non-interest income			14,252				12,149
Non-interest expenses			32,718				30,922
Income tax expense			3,664				2,753
Net income			10,086				8,195
Preferred stock dividend			(63	)			(63	)
Net income available to common shareholders		$	10,023			$	8,132
Per share data:
Basic earnings per share		$	1.09			$	0.91
Diluted earnings per share			1.04				0.88
Cash dividends declared per common share			0.28				0.24
Book value per common share			20.49				19.00
Tangible book value per common share			17.06				15.47
Market value - high			26.14				24.91
Market value - low		$	22.38			$	19.57
Weighted average shares outstanding - Basic			9,228,075				8,908,492
Weighted average shares outstanding - Diluted			9,615,551				9,293,423
Key ratios:
Return on average assets			0.96	%			0.89	%
Return on average common stockholders' equity			10.73				10.40
Net interest margin			3.68				3.62
Loan loss reserve to total loans			1.08				1.18
Non-performing loans to loans			1.51				1.41
Average equity to average assets			9.45				9.20
Bank only capital ratios:
Tier 1 capital to average assets			8.18				8.82
Tier 1 capital to risk weighted assets			11.04				11.48
Total capital to risk weighted assets			12.08				12.54
Loan data:
Substandard loans		$	28,220			$	35,495
30 to 89 days delinquent			3,326				3,671
90 days and greater delinquent - accruing interest		$	207			$	42
Trouble debt restructures - accruing interest			3,271				5,614
Trouble debt restructures - non-accrual			4,523				3,178
Non-accrual loans			15,050				9,844
Total non-performing loans		$	23,051			$	18,678

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HORIZON BANCORP

Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

 

		June 30				March 31				December 31				September 30				June 30
		2015				2015				2014				2014				2014
Commercial		$	8,386			$	7,876			$	7,910			$	7,515			$	6,958
Real estate			3,044				3,281				2,508				3,304				2,367
Mortgage warehousing			1,319				1,272				1,132				1,300				1,559
Consumer			3,672				4,205				4,951				4,041				4,776
Total		$	16,421			$	16,634			$	16,501			$	16,160			$	15,660

 

Net Charge-offs (Recoveries)

(Dollars in Thousands, Unaudited)

 

	Three months ended
	June 30				March 31				December 31				September 30				June 30
	2015				2015				2014				2014				2014
Commercial		$	1,584			$	(11	)		$	199			$	1,006			$	185
Real estate			160				20				101				19				169
Mortgage warehousing			-				-				-				-				-
Consumer			375				472				336				217				426
Total		$	2,119			$	481			$	636			$	1,242			$	780

 

Total Non-performing Loans

(Dollars in Thousands, Unaudited)

 

		June 30				March 31				December 31				September 30				June 30
		2015				2015				2014				2014				2014
Commercial		$	13,384			$	11,540			$	11,855			$	9,323			$	8,243
Real estate			5,819				6,062				5,894				6,312				6,672
Mortgage warehousing			-				-				-				-				-
Consumer			3,848				4,778				4,693				4,154				3,763
Total		$	23,051			$	22,380			$	22,442			$	19,789			$	18,678

 

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)

		June 30				March 31				December 31				September 30				June 30
		2015				2015				2014				2014				2014
Commercial		$	376			$	307			$	411			$	376			$	452
Real estate			58				219				636				875				752
Mortgage warehousing			-				-				-				-				-
Consumer			37				223				154				3				23
Total		$	471			$	749			$	1,201			$	1,254			$	1,227

 

 

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HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

		Three Months Ended												Three Months Ended
		June 30, 2015												June 30, 2014
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
ASSETS
Interest-earning assets
Federal funds sold		$	3,597			$	2				0.22	%		$	9,062			$	5				0.22	%
Interest-earning deposits			8,608				5				0.23	%			7,987				4				0.20	%
Investment securities - taxable			363,919				2,060				2.27	%			403,910				2,386				2.37	%
Investment securities - non-taxable (1)			141,784				1,079				4.24	%			145,591				1,096				4.25	%
Loans receivable (2)(3)			1,490,283				17,981				4.87	%			1,266,026				16,631				5.27	%
Total interest-earning assets (1)			2,008,191				21,127				4.33	%			1,832,576				20,122				4.51	%
Non-interest-earning assets
Cash and due from banks			31,783												28,106
Allowance for loan losses			(16,756	)											(15,808	)
Other assets			157,795												129,608
		$	2,181,013											$	1,974,482
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	1,255,123			$	1,237				0.40	%		$	1,229,025			$	1,355				0.44	%
Borrowings			381,782				1,539				1.62	%			273,968				1,478				2.16	%
Subordinated debentures			32,699				501				6.15	%			32,541				501				6.18	%
Total interest-bearing liabilities			1,669,604				3,277				0.79	%			1,535,534				3,334				0.87	%
Non-interest-bearing liabilities
Demand deposits			294,425												253,093
Accrued interest payable and other liabilities			13,770												12,245
Shareholders' equity			203,214												173,610
		$	2,181,013											$	1,974,482
Net interest income/spread						$	17,850				3.54	%						$	16,788				3.63	%
Net interest income as a percent of average interest earning assets (1)											3.67	%											3.78	%

 

(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.

 

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HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

		Six Months Ended												Six Months Ended
		June 30, 2015												June 30, 2014
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
ASSETS
Interest-earning assets
Federal funds sold		$	4,198			$	11				0.53	%		$	7,842			$	9				0.23	%
Interest-earning deposits			9,684				10				0.21	%			6,855				7				0.21	%
Investment securities - taxable			362,250				4,200				2.34	%			395,406				4,769				2.43	%
Investment securities - non-taxable (1)			141,269				2,156				4.27	%			146,709				2,219				4.07	%
Loans receivable (2)(3)			1,436,886				34,843				4.90	%			1,159,127				29,585				5.15	%
Total interest-earning assets (1)			1,954,287				41,220				4.35	%			1,715,939				36,589				4.39	%
Non-interest-earning assets
Cash and due from banks			30,396												26,507
Allowance for loan losses			(16,623	)											(15,987	)
Other assets			157,669												133,408
		$	2,125,729											$	1,859,867
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	1,235,601			$	2,469				0.40	%		$	1,154,682			$	2,632				0.46	%
Borrowings			359,436				3,018				1.69	%			250,761				2,900				2.33	%
Subordinated debentures			32,678				997				6.15	%			32,522				997				6.18	%
Total interest-bearing liabilities			1,627,715				6,484				0.80	%			1,437,965				6,529				0.92	%
Non-interest-bearing liabilities
Demand deposits			282,796												238,579
Accrued interest payable and other liabilities			14,374												12,191
Shareholders' equity			200,844												171,132
		$	2,125,729											$	1,859,867
Net interest income/spread						$	34,736				3.55	%						$	30,060				3.47	%
Net interest income as a percent of average interest earning assets (1)											3.68	%											3.62	%