Form 8-K HORIZON BANCORP /IN/ For: Oct 22

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Item 2.02  Results of Operations and Financial Condition

This Current Report on Form 8-K is being filed to furnish the earnings release issued by the Registrant on October 22, 2015. A copy of the press release is attached as Exhibit 99.1 to this Current Report. The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01  Financial Statements and Exhibits

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

EXHIBIT INDEX

Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date: October 22, 2015

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces its 2015 Third Quarter Earnings

Michigan City, Indiana (NASDAQ GS: 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.

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

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
NNon-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

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

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	%

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

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	%

 

 

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

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.

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

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.

 

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

 

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

 

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

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	%

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	%