MICHIGAN CITY, Ind., Oct. 29, 2018 (GLOBE NEWSWIRE) — (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and nine-month periods ended September 30, 2018. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective June 15, 2018.
SUMMARY:
- Net income for the quarter ended September 30, 2018 was $13.1 million, or $0.34 diluted earnings per share, compared to $8.2 million, or $0.24 diluted earnings per share, for the quarter ended September 30, 2017 resulting in a 41.7% increase in diluted earnings per share.
- Net income for the first nine months of 2018 was $40.0 million, or $1.04 diluted earnings per share, compared to $25.5 million, or $0.75 diluted earnings per share, for the first nine months of 2017 resulting in a 38.7% increase in diluted earnings per share. This represents the highest year-to-date net income and diluted earnings per share as of September 30th in the Company’s 145-year history.
- Return on average assets was 1.26% for the third quarter of 2018 compared to 0.96% for the third quarter of 2017. Return on average assets for the first nine months of 2018 was 1.33% compared to 1.05% for the first nine months of 2017.
- Return on average equity was 10.87% for the third quarter of 2018 compared to 8.92% for the third quarter of 2017. Return on average equity was 11.43% for the first nine months of 2018 compared to 9.59% for the first nine months of 2017.
- Total loans increased by an annualized rate of 4.3%, or $31.8 million, during the three months ended September 30, 2018. Total loans, excluding loans held for sale and mortgage warehouse loans, increased by an annualized rate of 9.9%, or $70.5 million, during the three months ended September 30, 2018.
- Total loans increased by an annualized rate of 5.9%, or $124.3 million, during the first nine months of 2018. Total loans, excluding loans held for sale and mortgage warehouse loans, increased by an annualized rate of 7.3%, or $148.5 million, during the first nine months of 2018.
- Commercial loans increased by an annualized rate of 6.1%, or $25.6 million, during the third quarter of 2018.
- Residential mortgage loans increased by an annualized rate of 10.4%, or $16.6 million, during the third quarter of 2018.
- Consumer loans increased by an annualized rate of 22.1%, or $28.3 million, during the third quarter of 2018.
- Total deposits increased by an annualized rate of 11.5%, or $247.6 million, during the first nine months of 2018.
- Net interest income increased $5.9 million, or 21.1%, to $33.8 million for the three months ended September 30, 2018 compared to $27.9 million for the three months ended September 30, 2017. Net interest income increased $20.1 million, or 24.9%, to $100.7 million for the nine months ended September 30, 2018 compared to $80.6 million for the nine months ended September 30, 2017.
- Net interest margin was 3.67% for the three months ended September 30, 2018 compared to 3.71% for the three months ended September 30, 2017. Net interest margin was 3.74% for the nine months ended September 30, 2018 and 3.77% for the nine months ended September 30, 2017.
- Horizon’s tangible book value per share increased to $9.04 at September 30, 2018 compared to $8.48 and $8.25 at December 31, 2017 and September 30, 2017, respectively. This represents the highest tangible book value per share in the Company’s 145-year history.
Craig Dwight, Chairman and CEO of Horizon, commented: “Horizon’s 2018 third quarter and year-to-date results demonstrate our ability to generate organic growth and produce solid returns, through increased mass and scale and investments in growth markets. Horizon’s 2018 third quarter earnings of $0.34 diluted earnings per share is a 41.7% increase from our 2017 third quarter earnings of $0.24 diluted earnings per share. Net income increased $4.9 million, or 59.9%, to $13.1 million when compared to the prior year period.”
Dwight added, “Total assets increased to over $4.1 billion at September 30, 2018 which reflects Horizon’s solid loan growth of $124.3 million since the beginning of the year. Total loans have increased at an annualized rate of 5.9% with increases in consumer loans of $75.1 million, mortgage loans of $44.5 million and commercial loans of $28.9 million. Commercial loan growth continues to be tempered by loan payoffs totaling approximately $134.5 million during 2018. Horizon originated approximately $257.0 million in commercial loans during the first nine months of 2018; however, only 63.4%, or $163.0 million, of these originations had been funded as of September 30, 2018. Our investments in the growth markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo experienced an increase in loan balances of $70.6 million, or an annualized rate of 18.6%, during the first nine months of 2018.”
Dwight concluded, “The impact of cost savings from our 2017 acquisitions of Lafayette Community Bancorp and Wolverine Bancorp, Inc., in addition to other operational leverage strategies have resulted in an improved efficiency ratio. Horizon’s efficiency ratio has decreased from 68.30% for the third quarter of 2017, which included merger expenses, to 60.34% for the third quarter of 2018.”
Income Statement Highlights
Net income for the third quarter of 2018 was $13.1 million, or $0.34 diluted earnings per share, compared to $14.1 million, or $0.37 diluted earnings per share, for the second quarter of 2018 and $8.2 million, or $0.24 diluted earnings per share, for the third quarter of 2017. Net income excluding acquisition-related expenses, gain/loss on sale of investment securities, death benefit on bank owned life insurance and purchase accounting adjustments (“core net income”), for the third quarter of 2018 was $12.5 million, or $0.32 diluted earnings per share, compared to $12.7 million, or $0.33 diluted earnings per share, for the second quarter of 2018 and $9.2 million, or $0.27 diluted earnings per share, for the third quarter of 2017.
The decrease in net income and diluted earnings per share from the second quarter of 2018 to the third quarter of 2018 reflects increases in non-interest expense of $678,000 and provision for loan losses of $541,000 and decreases in acquisition-related purchase accounting adjustments (“PAUs”) of $845,000 and non-interest income of $246,000, partially offset by an increase in net interest income, excluding PAUs (“core net interest income”) of $1.1 million. The decrease in non-interest income during the third quarter was primarily due to a death benefit on bank owned life insurance of $154,000 recorded during the second quarter and $122,000 in losses on the sale of investment securities recorded during the third quarter.
The increase in net income and diluted earnings per share from the third quarter of 2017 to the same 2018 period reflects an increase in core net interest income of $5.8 million and an increase in non-interest income of $665,000, partially offset by increases in non-interest expense of $1.1 million and provision for loan losses of $466,000.
Net income for the nine months ended September 30, 2018 was $40.0 million, or $1.04 diluted earnings per share, compared to $25.5 million, or $0.75 diluted earnings per share, for the nine months ended September 30, 2017. Core net income for the nine months ended September 30, 2018 was $36.4 million, or $0.94 diluted earnings per share, compared to $25.4 million, or $0.75 diluted earnings per share, for the nine months ended September 30, 2017. This represents a 25.3% increase in core diluted earnings per share for the first nine months of 2018 compared to the same period in 2017.
| Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share | |||||||||||||||||||
| (Dollars in Thousands, Except per Share Data, Unaudited) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30 | September 30 | September 30 | September 30 | |||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Non-GAAP Reconciliation of Net Income | |||||||||||||||||||
| Net income as reported | $ | 13,065 | $ | 14,115 | $ | 8,171 | $ | 39,984 | $ | 25,467 | |||||||||
| Merger expenses | – | – | 2,013 | – | 2,213 | ||||||||||||||
| Tax effect | – | – | (516 | ) | – | (586 | ) | ||||||||||||
| Net income excluding merger expenses | 13,065 | 14,115 | 9,668 | 39,984 | 27,094 | ||||||||||||||
| Loss (gain) on sale of investment securities | 122 | – | (6 | ) | 111 | (38 | ) | ||||||||||||
| Tax effect | (25 | ) | – | 2 | (23 | ) | 13 | ||||||||||||
| Net income excluding gain on sale of investment securities | 13,162 | 14,115 | 9,664 | 40,072 | 27,069 | ||||||||||||||
| Death benefit on bank owned life insurance (“BOLI”) | – | (154 | ) | – | (154 | ) | – | ||||||||||||
| Tax effect | – | 32 | – | 32 | – | ||||||||||||||
| Net income excluding death benefit on BOLI | 13,162 | 13,993 | 9,664 | 39,950 | 27,069 | ||||||||||||||
| Acquisition-related purchase accounting adjustments (“PAUs”) | (789 | ) | (1,634 | ) | (661 | ) | (4,460 | ) | (2,616 | ) | |||||||||
| Tax effect | 166 | 343 | 231 | 937 | 916 | ||||||||||||||
| Core Net Income | $ | 12,539 | $ | 12,702 | $ | 9,234 | $ | 36,427 | $ | 25,369 | |||||||||
| Non-GAAP Reconciliation of Diluted Earnings per Share | |||||||||||||||||||
| Diluted earnings per share (“EPS”) as reported | $ | 0.34 | $ | 0.37 | $ | 0.24 | $ | 1.04 | $ | 0.75 | |||||||||
| Merger expenses | – | – | 0.06 | – | 0.07 | ||||||||||||||
| Tax effect | – | – | (0.01 | ) | – | (0.01 | ) | ||||||||||||
| Diluted EPS excluding merger expenses | 0.34 | 0.37 | 0.29 | 1.04 | 0.81 | ||||||||||||||
| Loss (gain) on sale of investment securities | – | – | – | – | – | ||||||||||||||
| Tax effect | – | – | – | – | – | ||||||||||||||
| Diluted EPS excluding gain on sale of investment securities | 0.34 | 0.37 | 0.29 | 1.04 | 0.81 | ||||||||||||||
| Death benefit on BOLI | – | – | – | – | – | ||||||||||||||
| Tax effect | – | – | – | – | – | ||||||||||||||
| Diluted EPS excluding death benefit on BOLI | 0.34 | 0.37 | 0.29 | 1.04 | 0.81 | ||||||||||||||
| Acquisition-related PAUs | (0.02 | ) | (0.04 | ) | (0.02 | ) | (0.12 | ) | (0.08 | ) | |||||||||
| Tax effect | – | – | – | 0.02 | 0.02 | ||||||||||||||
| Core Diluted EPS | $ | 0.32 | $ | 0.33 | $ | 0.27 | $ | 0.94 | $ | 0.75 | |||||||||
The increase in net income and diluted earnings per share during the first nine months of 2018 when compared to the same period of 2017 reflects increases in core net interest income of $18.2 million and non-interest income of $2.1 million and a decrease in income tax expense of $1.2 million, partially offset by increases in non-interest expense of $7.9 million and provision for loan losses of $1.0 million.
Horizon’s net interest margin decreased to 3.67% for the third quarter of 2018 when compared to 3.78% for the second quarter of 2018 and 3.71% for the third quarter of 2017. The decrease in net interest margin from the second quarter of 2018 reflects an increase in the cost of interest-bearing liabilities of 15 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 17 basis points and borrowings of 11 basis points.
The decrease in net interest margin from the third quarter of 2017 reflects an increase in the cost of interest-bearing liabilities of 45 basis points, offset by an increase in the yield of interest-earning assets of 33 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 45 basis points and borrowings of 79 basis points. The increase in the yield of interest-earning assets was due to an increase in the yield on loans receivable of 25 basis points and taxable investment securities of 51 basis points, offset by a decrease in the yield on non-taxable investment securities of 25 basis points.
Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.59% for the third quarter of 2018 compared to 3.60% for the prior quarter and 3.63% for the third quarter of 2017. Interest income from acquisition-related purchase accounting adjustments was $789,000, $1.6 million and $661,000 for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively.
Horizon’s net interest margin decreased to 3.74% for the nine months ended September 30, 2018 when compared to 3.77% for the nine months ended September 30, 2017. The cost of interest-bearing liabilities increased 36 basis points, primarily due to an increase in the cost of interest-bearing deposits of 30 basis points and borrowings of 65 basis points. The yield on interest-earning assets increased 28 basis points, primarily due to an increase in the yields earned on loans receivable of 23 basis points and taxable investment securities of 28 basis points, offset by a decrease in the yield earned on non-taxable securities of 39 basis points.
Core net interest margin for the nine months ended September 30, 2018 was 3.58% compared to 3.65% for the nine months ended September 30, 2017. Interest income from acquisition-related purchase accounting adjustments was $4.5 million and $2.6 million for the nine months ended September 30, 2018 and 2017, respectively.
| Non-GAAP Reconciliation of Net Interest Margin | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30 | September 30 | September 30 | September 30 | |||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Non-GAAP Reconciliation of Net Interest Margin | |||||||||||||||||||
| Net interest income as reported | $ | 33,772 | $ | 33,550 | $ | 27,879 | $ | 100,733 | $ | 80,645 | |||||||||
| Average interest-earning assets | 3,717,139 | 3,638,801 | 3,078,611 | 3,610,277 | 2,940,659 | ||||||||||||||
| Net interest income as a percentage of average interest-earning assets (“Net Interest Margin”) |
3.67 | % | 3.78 | % | 3.71 | % | 3.74 | % | 3.77 | % | |||||||||
| Acquisition-related purchase accounting adjustments (“PAUs”) | $ | (789 | ) | $ | (1,634 | ) | $ | (661 | ) | $ | (4,460 | ) | $ | (2,616 | ) | ||||
| Core net interest income | $ | 32,983 | $ | 31,916 | $ | 27,218 | $ | 96,273 | $ | 78,029 | |||||||||
| Core net interest margin | 3.59 | % | 3.60 | % | 3.63 | % | 3.58 | % | 3.65 | % | |||||||||
Lending Activity
Total loans increased $124.3 million from $2.835 billion as of December 31, 2017 to $2.959 billion as of September 30, 2018 as consumer loans increased by $75.1 million, residential mortgage loans increased by $44.5 million and commercial loans increased by $28.9 million, offset by a decrease in mortgage warehouse loans of $23.1 million. Consumer loans increased at an annualized rate of 21.8%, primarily due to our experienced consumer loan team and increased focus on growing this portfolio. During the first nine months of 2018, Horizon originated approximately $257.0 million in commercial loans; however, only $163.0 million, or 63.4%, of the total originated loans were funded as of September 30, 2018. This growth was offset by approximately $134.5 million in commercial loan payoffs, the majority of which were as a result of business and/or real estate assets being sold.
| Loan Growth by Type, Excluding Acquired Loans | ||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||
| September 30 | December 31 | Amount | Percent | |||||||||||
| 2018 | 2017 | Change | Change | |||||||||||
| Commercial | $ | 1,698,582 | $ | 1,669,728 | $ | 28,854 | 1.7% | |||||||
| Residential mortgage | 651,250 | 606,760 | 44,490 | 7.3% | ||||||||||
| Consumer | 536,132 | 460,999 | 75,133 | 16.3% | ||||||||||
| Subtotal | 2,885,964 | 2,737,487 | 148,477 | 5.4% | ||||||||||
| Held for sale loans | 1,980 | 3,094 | (1,114 | ) | -36.0% | |||||||||
| Mortgage warehouse loans | 71,422 | 94,508 | (23,086 | ) | -24.4% | |||||||||
| Total loans | $ | 2,959,366 | $ | 2,835,089 | $ | 124,277 | 4.4% | |||||||
Residential mortgage lending activity for the three months ended September 30, 2018 generated $1.8 million in income from the gain on sale of mortgage loans, a decrease of $57,000 from the second quarter of 2018 and a decrease of $111,000 from the third quarter of 2017. Total origination volume for the third quarter of 2018, including loans placed into portfolio, totaled $100.6 million, representing a decrease of 7.7% from the second quarter of 2018 and an increase of 5.8% from the third quarter of 2017. Revenue derived from Horizon’s residential mortgage lending activities was only 6.5% and 6.3% of Horizon’s total revenue for the third quarter of 2018 and the nine months ended September 30, 2018, respectively.
Purchase money mortgage originations during the third quarter of 2018 represented 80.0% of total originations compared to 85.6% of total originations during the second quarter of 2018 and 80.2% during the third quarter of 2017.
The provision for loan losses totaled $1.2 million for the third quarter of 2018 compared to $635,000 for the second quarter of 2018 and $710,000 for the third quarter of 2017. The increase in the provision for loan losses from the second quarter of 2018 and the third quarter of 2017 when compared to the third quarter of 2018 was due to an increase in specific allocations of approximately $485,000, along with additional general and non-specific allocations for loan growth in new markets, higher than anticipated growth of the indirect loan portfolio and an increase in allocation for other economic factors, including the potential of a recession.
The provision for loan losses totaled $2.4 million for the nine months ended September 30, 2018 compared to $1.4 million for the nine months ended September 30, 2017. The increase in the provision for loan losses from 2017 to 2018 was due to an increase in specific allocations of approximately $485,000, along with additional general and non-specific allocations for loan growth in new markets, higher than anticipated growth of the indirect loan portfolio and an increase in allocation for other economic factors, including the potential of a recession.
The ratio of the allowance for loan losses to total loans increased to 0.60% as of September 30, 2018 from 0.58% at December 31, 2017. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.75% as of September 30, 2018 compared to 0.81% as of December 31, 2017. Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 1.06% as of September 30, 2018 compared to 1.23% as of December 31, 2017.
| Non-GAAP Allowance for Loan and Lease Loss Detail | |||||||||||||||||||||||
| As of September 30, 2018 | |||||||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||||||
| Pre-discount Loan Balance |
Allowance for Loan Losses (ALLL) |
Loan Discount |
ALLL + Loan Discount |
Loans, net | ALLL/ Pre-discount Loan Balance |
Loan Discount/ Pre-discount Loan Balance |
ALLL + Loan Discount/ Pre-discount Loan Balance |
||||||||||||||||
| Horizon Legacy | $ | 2,362,215 | $ | 17,677 | N/A | $ | 17,677 | $ | 2,344,538 | 0.75% | 0.00% | 0.75% | |||||||||||
| Heartland | 9,572 | – | 702 | 702 | 8,870 | 0.00% | 7.33% | 7.33% | |||||||||||||||
| Summit | 26,226 | – | 1,617 | 1,617 | 24,609 | 0.00% | 6.17% | 6.17% | |||||||||||||||
| Peoples | 93,282 | – | 2,081 | 2,081 | 91,201 | 0.00% | 2.23% | 2.23% | |||||||||||||||
| Kosciusko | 42,790 | – | 677 | 677 | 42,113 | 0.00% | 1.58% | 1.58% | |||||||||||||||
| LaPorte | 99,931 | 106 | 3,136 | 3,242 | 96,689 | 0.11% | 3.14% | 3.25% | |||||||||||||||
| CNB | 5,076 | – | 136 | 136 | 4,940 | 0.00% | 2.68% | 2.68% | |||||||||||||||
| Lafayette | 105,797 | 15 | 1,935 | 1,950 | 103,847 | 0.01% | 1.83% | 1.84% | |||||||||||||||
| Wolverine | 214,477 | – | 3,245 | 3,245 | 211,232 | 0.00% | 1.51% | 1.51% | |||||||||||||||
| Total | $ | 2,959,366 | $ | 17,798 | $ | 13,529 | $ | 31,327 | $ | 2,928,039 | 0.60% | 0.46% | 1.06% | ||||||||||
As of September 30, 2018, non-performing loans totaled $14.5 million, which reflects a 12 basis point decrease in non-performing loans to total loans, or a $1.9 million decline from $16.4 million in non-performing loans as of December 31, 2017. Compared to December 31, 2017, non-performing commercial loans increased by $1.0 million, non-performing real estate loans decreased by $2.0 million and non-performing consumer loans decreased by $927,000. Other real estate owned and repossessed assets totaled $2.3 million as of September 30, 2018 which is an increase of $1.4 million from December 31, 2017. The majority of this increase was due to several bank owned properties acquired through acquisitions and listed for sale were re-classified to other real estate owned and recorded at fair value during the second quarter of 2018.
Expense Management
Total non-interest expense was $678,000 higher in the third quarter of 2018 when compared to the second quarter of 2018. Salaries and employee benefits increased $534,000 primarily due to $376,000 in salary costs from one additional working day during the third quarter when compared to the second quarter and an increase in employee health costs of $266,000 during the third quarter. Loan expense increased $197,000 when compared to the second quarter primarily due to the increased volume in indirect lending and the timing of related origination and amortization costs. Data processing increased $152,000 from the second quarter primarily due to $70,000 of one-time costs and incremental costs from growth and new services. These increases were offset by decreases in other expense of $121,000 and other losses of $108,000 when comparing the third quarter of 2018 to the second quarter of 2018.
Total non-interest expense was $1.1 million higher during the third quarter of 2018 compared to the same period of 2017. The increase was primarily due to an increase in salaries and employee benefits of $1.4 million, loan expense of $507,000, data processing of $257,000, FDIC insurance expense of $126,000 and other losses of $103,000. The increase in salaries and employee benefits, data processing and FDIC insurance expense reflect overall company growth and the acquisitions of Lafayette Community Bancorp and Wolverine Bancorp, Inc. during the third and fourth quarters of 2017. Loan expense increased due to a higher level of loan originations and loan collection expenses when compared to the third quarter of 2017. Other losses increased primarily due to write-downs on other bank owned properties and additional accruals for a potential loss on a fiduciary account recorded during the third quarter of 2018.
Total non-interest expense was $7.9 million higher for the nine months ended September 30, 2018 when compared to the nine months ended September 30, 2017. The increase was primarily due to increases in salaries and employee benefits of $5.4 million, net occupancy expenses of $933,000, loan expense of $932,000, other expense of $896,000, data processing of $751,000 and other losses of $390,000. The increase in salaries and employee benefits, net occupancy expense, other expense and data processing expense reflect overall company growth and recent acquisitions. Loan expense increased due to a higher level of loan originations and collection expenses during the nine months ended September 30, 2018 when compared to the same period of 2017. Offsetting these increases was a decrease of $1.3 million and $483,000 in outside services and consultants expense and professional fees, respectively, primarily due to a lack of acquisition-related expenses in 2018.
Income tax expense totaled $2.6 million for the third quarter of 2018, a decrease of $193,000 when compared to the second quarter of 2018 and an increase of $91,000 when compared to the third quarter of 2017. The decrease in income tax expense from the second quarter of 2018 was primarily due to a decrease in income before income tax of $1.2 million during the third quarter of 2018. The increase when comparing the third quarter of 2018 to the same prior year period was primarily due to an increase in income before income tax of $5.0 million which was offset by the impact of the new corporate tax rate which was signed into law at the end of 2017 and the benefits from the exercising of stock options.
Income tax expense totaled $7.9 million for the nine months ended September 30, 2018, a decrease of $1.2 million when compared to the nine months ended September 30, 2017. The decrease was primarily due to the impact of the new corporate tax rate which was signed into law at the end of 2017 and the benefits from the exercising of stock options. This decrease was offset by an increase in income before income tax expense of $13.3 million when comparing the first nine months of 2018 to the prior year.
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 relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for loan and lease losses, tangible stockholders’ equity, tangible book value per share, the return on average assets and the return on average equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them, to show the impact of such events as acquisition-related purchase accounting adjustments, prepayment penalties on borrowings and the tax reform bill, among others we have identified in our reconciliations. 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. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP figures identified herein and their most comparable GAAP measures.
| Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share | ||||||||||||||
| (Dollars in Thousands Except per Share Data, Unaudited) | ||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||
| Total stockholders’ equity | $ | 477,594 | $ | 470,535 | $ | 460,416 | $ | 457,078 | $ | 392,055 | ||||
| Less: Intangible assets | 130,755 | 131,239 | 131,724 | 132,282 | 103,244 | |||||||||
| Total tangible stockholders’ equity | $ | 346,839 | $ | 339,296 | $ | 328,692 | $ | 324,796 | $ | 288,811 | ||||
| Common shares outstanding | 38,367,890 | 38,362,640 | 38,332,853 | 38,294,729 | 34,988,189 | |||||||||
| Tangible book value per common share | $ | 9.04 | $ | 8.84 | $ | 8.57 | $ | 8.48 | $ | 8.25 | ||||
| Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30 | September 30 | September 30 | September 30 | |||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Non-GAAP Reconciliation of Return on Average Assets | |||||||||||||||||||
| Average Assets | $ | 4,105,096 | $ | 4,017,551 | $ | 3,383,662 | $ | 4,021,811 | $ | 3,247,300 | |||||||||
| Return on average assets (“ROAA”) as reported | 1.26 | % | 1.41 | % | 0.96 | % | 1.33 | % | 1.05 | % | |||||||||
| Merger expenses | 0.00 | % | 0.00 | % | 0.24 | % | 0.00 | % | 0.09 | % | |||||||||
| Tax effect | 0.00 | % | 0.00 | % | -0.06 | % | 0.00 | % | -0.03 | % | |||||||||
| ROAA excluding merger expenses | 1.26 | % | 1.41 | % | 1.14 | % | 1.33 | % | 1.11 | % | |||||||||
| Gain on sale of investment securities | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
| Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
| ROAA excluding gain on sale of investment securities | 1.27 | % | 1.41 | % | 1.14 | % | 1.33 | % | 1.11 | % | |||||||||
| Death benefit on bank owned life insurance (“BOLI”) | 0.00 | % | -0.02 | % | 0.00 | % | -0.01 | % | 0.00 | % | |||||||||
| Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
| ROAA excluding death benefit on BOLI | 1.27 | % | 1.39 | % | 1.14 | % | 1.32 | % | 1.11 | % | |||||||||
| Acquisition-related purchase accounting adjustments (“PAUs”) | -0.08 | % | -0.16 | % | -0.08 | % | -0.15 | % | -0.11 | % | |||||||||
| Tax effect | 0.02 | % | 0.03 | % | 0.03 | % | 0.03 | % | 0.04 | % | |||||||||
| Core ROAA | 1.21 | % | 1.26 | % | 1.09 | % | 1.20 | % | 1.04 | % | |||||||||
| Non-GAAP Reconciliation of Return on Average Common Equity | |||||||||||||||||||
| Average Common Equity | $ | 476,959 | $ | 465,968 | $ | 363,376 | $ | 467,867 | $ | 355,121 | |||||||||
| Return on average common equity (“ROACE”) as reported | 10.87 | % | 12.15 | % | 8.92 | % | 11.43 | % | 9.59 | % | |||||||||
| Merger expenses | 0.00 | % | 0.00 | % | 2.20 | % | 0.00 | % | 0.83 | % | |||||||||
| Tax effect | 0.00 | % | 0.00 | % | -0.56 | % | 0.00 | % | -0.22 | % | |||||||||
| ROACE excluding merger expenses | 10.87 | % | 12.15 | % | 10.56 | % | 11.43 | % | 10.20 | % | |||||||||
| Gain on sale of investment securities | 0.10 | % | 0.00 | % | -0.01 | % | 0.03 | % | -0.01 | % | |||||||||
| Tax effect | -0.02 | % | 0.00 | % | 0.00 | % | -0.01 | % | 0.00 | % | |||||||||
| ROACE excluding gain on sale of investment securities | 10.95 | % | 12.15 | % | 10.55 | % | 11.45 | % | 10.19 | % | |||||||||
| Death benefit on bank owned life insurance (“BOLI”) | 0.00 | % | -0.13 | % | 0.00 | % | -0.04 | % | 0.00 | % | |||||||||
| Tax effect | 0.00 | % | 0.03 | % | 0.00 | % | 0.01 | % | 0.00 | % | |||||||||
| ROACE excluding death benefit on BOLI | 10.95 | % | 12.05 | % | 10.55 | % | 11.42 | % | 10.19 | % | |||||||||
| Acquisition-related purchase accounting adjustments (“PAUs”) | -0.66 | % | -1.41 | % | -0.72 | % | -1.27 | % | -0.98 | % | |||||||||
| Tax effect | 0.14 | % | 0.30 | % | 0.25 | % | 0.27 | % | 0.34 | % | |||||||||
| Core ROACE | 10.43 | % | 10.94 | % | 10.08 | % | 10.42 | % | 9.55 | % | |||||||||
About Horizon
Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern, central and the Great Lakes Bay regions of Michigan through its commercial banking subsidiary Horizon Bank. Horizon also offers mortgage-banking services throughout the Midwest. Horizon 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.
| Contact: | Horizon Bancorp, Inc. |
| Mark E. Secor | |
| Chief Financial Officer | |
| (219) 873-2611 | |
| Fax: (219) 874-9280 |
| HORIZON BANCORP, INC. | |||||||||||||||||||
| Financial Highlights | |||||||||||||||||||
| (Dollars in thousands except share and per share data and ratios, Unaudited) | |||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||||||
| Balance sheet: | |||||||||||||||||||
| Total assets | $ | 4,150,561 | $ | 4,076,611 | $ | 3,969,750 | $ | 3,964,303 | $ | 3,519,501 | |||||||||
| Investment securities | 766,153 | 735,962 | 714,425 | 710,113 | 708,449 | ||||||||||||||
| Commercial loans | 1,698,582 | 1,672,998 | 1,656,374 | 1,669,728 | 1,322,953 | ||||||||||||||
| Mortgage warehouse loans | 71,422 | 109,016 | 101,299 | 94,508 | 95,483 | ||||||||||||||
| Residential mortgage loans | 651,250 | 634,636 | 618,131 | 606,760 | 571,062 | ||||||||||||||
| Consumer loans | 536,132 | 507,866 | 480,989 | 460,999 | 436,327 | ||||||||||||||
| Earnings assets | 3,743,592 | 3,681,583 | 3,591,296 | 3,563,307 | 3,153,230 | ||||||||||||||
| Non-interest bearing deposit accounts | 621,475 | 615,018 | 602,175 | 601,805 | 563,536 | ||||||||||||||
| Interest bearing transaction accounts | 1,611,693 | 1,644,758 | 1,619,859 | 1,712,246 | 1,536,169 | ||||||||||||||
| Time deposits | 895,386 | 756,387 | 711,642 | 566,952 | 508,570 | ||||||||||||||
| Borrowings | 477,719 | 524,846 | 520,300 | 564,157 | 458,152 | ||||||||||||||
| Subordinated debentures | 37,791 | 37,745 | 37,699 | 37,653 | 37,607 | ||||||||||||||
| Total stockholders’ equity | 477,594 | 470,535 | 460,416 | 457,078 | 392,055 | ||||||||||||||
| Income statement: | Three months ended | ||||||||||||||||||
| Net interest income | $ | 33,772 | $ | 33,550 | $ | 33,411 | $ | 31,455 | $ | 27,879 | |||||||||
| Provision for loan losses | 1,176 | 635 | 567 | 1,100 | 710 | ||||||||||||||
| Non-interest income | 8,686 | 8,932 | 8,318 | 9,344 | 8,021 | ||||||||||||||
| Non-interest expense | 25,620 | 24,942 | 25,837 | 26,291 | 24,513 | ||||||||||||||
| Income tax expense | 2,597 | 2,790 | 2,521 | 5,758 | 2,506 | ||||||||||||||
| Net income | $ | 13,065 | $ | 14,115 | $ | 12,804 | $ | 7,650 | $ | 8,171 | |||||||||
| Per share data:(1) | |||||||||||||||||||
| Basic earnings per share | $ | 0.34 | $ | 0.37 | $ | 0.33 | $ | 0.20 | $ | 0.24 | |||||||||
| Diluted earnings per share | 0.34 | 0.37 | 0.33 | 0.20 | 0.24 | ||||||||||||||
| Cash dividends declared per common share | 0.10 | 0.10 | 0.10 | 0.09 | 0.09 | ||||||||||||||
| Book value per common share | 12.45 | 12.27 | 12.01 | 11.93 | 11.21 | ||||||||||||||
| Tangible book value per common share | 9.04 | 8.84 | 8.57 | 8.48 | 8.25 | ||||||||||||||
| Market value – high | 21.39 | 21.94 | 20.59 | 19.47 | 19.45 | ||||||||||||||
| Market value – low | $ | 19.44 | $ | 19.17 | $ | 17.87 | $ | 17.33 | $ | 16.87 | |||||||||
| Weighted average shares outstanding – Basic | 38,365,379 | 38,347,612 | 38,306,395 | 37,711,200 | 33,870,240 | ||||||||||||||
| Weighted average shares outstanding – Diluted | 38,534,784 | 38,519,401 | 38,468,811 | 37,897,012 | 34,072,909 | ||||||||||||||
| Key ratios: | |||||||||||||||||||
| Return on average assets | 1.26 | % | 1.41 | % | 1.32 | % | 0.79 | % | 0.96 | % | |||||||||
| Return on average common stockholders’ equity | 10.87 | 12.15 | 11.29 | 6.75 | 8.92 | ||||||||||||||
| Net interest margin | 3.67 | 3.78 | 3.81 | 3.71 | 3.71 | ||||||||||||||
| Loan loss reserve to total loans | 0.60 | 0.58 | 0.58 | 0.58 | 0.64 | ||||||||||||||
| Average equity to average assets | 11.62 | 11.60 | 11.67 | 11.70 | 10.74 | ||||||||||||||
| Bank only capital ratios: | |||||||||||||||||||
| Tier 1 capital to average assets | 9.58 | 9.65 | 9.66 | 9.89 | 9.90 | ||||||||||||||
| Tier 1 capital to risk weighted assets | 12.12 | 12.21 | 12.32 | 12.29 | 12.33 | ||||||||||||||
| Total capital to risk weighted assets | 12.69 | 12.77 | 12.87 | 12.85 | 12.93 | ||||||||||||||
| Loan data: | |||||||||||||||||||
| Substandard loans | $ | 34,655 | $ | 40,941 | $ | 43,035 | $ | 46,162 | $ | 36,883 | |||||||||
| 30 to 89 days delinquent | 6,878 | 3,978 | 8,932 | 9,329 | 6,284 | ||||||||||||||
| 90 days and greater delinquent – accruing interest | $ | 202 | $ | 49 | $ | 30 | $ | 167 | $ | 162 | |||||||||
| Trouble debt restructures – accruing interest | 1,830 | 1,911 | 1,899 | 1,958 | 2,015 | ||||||||||||||
| Trouble debt restructures – non-accrual | 1,077 | 894 | 1,090 | 1,013 | 1,192 | ||||||||||||||
| Non-accural loans | 11,417 | 12,555 | 12,062 | 13,276 | 9,065 | ||||||||||||||
| Total non-performing loans | $ | 14,526 | $ | 15,409 | $ | 15,081 | $ | 16,414 | $ | 12,434 | |||||||||
| Non-performing loans to total loans | 0.49 | % | 0.53 | % | 0.53 | % | 0.58 | % | 0.51 | % | |||||||||
| (1)Adjusted for 3:2 stock split on June 15, 2018 | |||||||||||||||||||
| HORIZON BANCORP, INC. | |||||||
| Financial Highlights | |||||||
| (Dollars in thousands except share and per share data and ratios, Unaudited) | |||||||
| September 30 | September 30 | ||||||
| 2018 | 2017 | ||||||
| Balance sheet: | |||||||
| Total assets | $ | 4,150,561 | $ | 3,519,658 | |||
| Investment securities | 766,153 | 708,449 | |||||
| Commercial loans | 1,698,582 | 1,322,953 | |||||
| Mortgage warehouse loans | 71,422 | 95,483 | |||||
| Residential mortgage loans | 651,250 | 571,062 | |||||
| Consumer loans | 536,132 | 436,327 | |||||
| Earnings assets | 3,743,592 | 3,153,230 | |||||
| Non-interest bearing deposit accounts | 621,475 | 563,536 | |||||
| Interest bearing transaction accounts | 1,611,693 | 1,536,169 | |||||
| Time deposits | 895,386 | 508,570 | |||||
| Borrowings | 477,719 | 458,152 | |||||
| Subordinated debentures | 37,791 | 37,607 | |||||
| Total stockholders’ equity | 477,594 | 392,212 | |||||
| Nine Months Ended | |||||||
| Income statement: | |||||||
| Net interest income | $ | 100,733 | $ | 80,645 | |||
| Provision for loan losses | 2,378 | 1,370 | |||||
| Non-interest income | 25,936 | 23,792 | |||||
| Non-interest expense | 76,399 | 68,522 | |||||
| Income tax expense | 7,908 | 9,078 | |||||
| Net income | $ | 39,984 | $ | 25,467 | |||
| Per share data:(1) | |||||||
| Basic earnings per share | $ | 1.04 | $ | 0.76 | |||
| Diluted earnings per share | 1.04 | 0.75 | |||||
| Cash dividends declared per common share | 0.30 | 0.25 | |||||
| Book value per common share | 12.45 | 11.21 | |||||
| Tangible book value per common share | 9.04 | 8.25 | |||||
| Market value – high | 21.94 | 19.45 | |||||
| Market value – low | $ | 17.87 | $ | 16.49 | |||
| Weighted average shares outstanding – Basic | 38,340,012 | 33,489,681 | |||||
| Weighted average shares outstanding – Diluted | 38,502,129 | 33,686,832 | |||||
| Key ratios: | |||||||
| Return on average assets | 1.33 | % | 1.05 | % | |||
| Return on average common stockholders’ equity | 11.43 | 9.59 | |||||
| Net interest margin | 3.74 | 3.77 | |||||
| Loan loss reserve to total loans | 0.60 | 0.64 | |||||
| Average equity to average assets | 11.63 | 10.94 | |||||
| Bank only capital ratios: | |||||||
| Tier 1 capital to average assets | 9.58 | 9.90 | |||||
| Tier 1 capital to risk weighted assets | 12.12 | 12.33 | |||||
| Total capital to risk weighted assets | 12.69 | 12.93 | |||||
| Loan data: | |||||||
| Substandard loans | $ | 34,655 | $ | 36,883 | |||
| 30 to 89 days delinquent | 6,878 | 6,284 | |||||
| 90 days and greater delinquent – accruing interest | $ | 202 | $ | 162 | |||
| Trouble debt restructures – accruing interest | 1,830 | 2,015 | |||||
| Trouble debt restructures – non-accrual | 1,077 | 1,192 | |||||
| Non-accural loans | 11,417 | 9,065 | |||||
| Total non-performing loans | $ | 14,526 | $ | 12,434 | |||
| Non-performing loans to total loans | 0.49 | % | 0.51 | % | |||
| (1)Adjusted for 3:2 stock split on June 15, 2018 | |||||||
| HORIZON BANCORP, INC. | |||||||||||||||||||
| Allocation of the Allowance for Loan and Lease Losses | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||||||
| Commercial | $ | 10,581 | $ | 8,865 | $ | 7,840 | $ | 9,093 | $ | 8,335 | |||||||||
| Real estate | 1,574 | 1,761 | 1,930 | 2,188 | 2,129 | ||||||||||||||
| Mortgage warehousing | 1,030 | 1,084 | 1,030 | 1,030 | 1,048 | ||||||||||||||
| Consumer | 4,613 | 5,361 | 5,674 | 4,083 | 4,074 | ||||||||||||||
| Total | $ | 17,798 | $ | 17,071 | $ | 16,474 | $ | 16,394 | $ | 15,586 | |||||||||
| Net Charge-Offs (Recoveries) | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||||||
| Commercial | $ | 179 | $ | (40 | ) | $ | (38 | ) | $ | 84 | $ | 158 | |||||||
| Real estate | (2 | ) | (2 | ) | 6 | (9 | ) | 24 | |||||||||||
| Mortgage warehousing | – | – | – | – | – | ||||||||||||||
| Consumer | 272 | 80 | 519 | 217 | (31 | ) | |||||||||||||
| Total | $ | 449 | $ | 38 | $ | 487 | $ | 292 | $ | 151 | |||||||||
| Percent of net charge-offs to average loans outstanding for the period | 0.02 | % | 0.00 | % | 0.01 | % | 0.01 | % | 0.01 | % | |||||||||
| Total Non-performing Loans | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||||||
| Commercial | $ | 8,355 | $ | 8,987 | $ | 6,778 | $ | 7,354 | $ | 3,582 | |||||||||
| Real estate | 3,754 | 3,915 | 5,276 | 5,716 | 5,545 | ||||||||||||||
| Mortgage warehousing | – | – | – | – | – | ||||||||||||||
| Consumer | 2,417 | 2,507 | 3,027 | 3,344 | 3,307 | ||||||||||||||
| Total | $ | 14,526 | $ | 15,409 | $ | 15,081 | $ | 16,414 | $ | 12,434 | |||||||||
| Non-performing loans to total loans | 0.49 | % | 0.53 | % | 0.53 | % | 0.58 | % | 0.51 | % | |||||||||
| Other Real Estate Owned and Repossessed Assets | |||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||||||
| Commercial | $ | 2,181 | $ | 2,628 | $ | 547 | $ | 578 | $ | 324 | |||||||||
| Real estate | 58 | 302 | 281 | 200 | 1,443 | ||||||||||||||
| Mortgage warehousing | – | – | – | – | – | ||||||||||||||
| Consumer | 26 | 62 | 42 | 60 | 26 | ||||||||||||||
| Total | $ | 2,265 | $ | 2,992 | $ | 870 | $ | 838 | $ | 1,793 | |||||||||
| HORIZON BANCORP, INC. | ||||||||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| (Dollar Amounts in Thousands, Unaudited) | ||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||
| September 30, 2018 | September 30, 2017 | |||||||||||||||||||
| Average Balance |
Interest | Average Rate |
Average Balance |
Interest | Average Rate |
|||||||||||||||
| Assets | ||||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||||
| Federal funds sold | $ | 3,840 | $ | 24 | 2.48 | % | $ | 6,770 | $ | 24 | 1.41 | % | ||||||||
| Interest-earning deposits | 24,494 | 104 | 1.68 | % | 20,157 | 49 | 0.96 | % | ||||||||||||
| Investment securities – taxable | 421,681 | 2,611 | 2.46 | % | 426,145 | 2,094 | 1.95 | % | ||||||||||||
| Investment securities – non-taxable(1) | 324,289 | 2,010 | 3.11 | % | 296,716 | 1,790 | 3.36 | % | ||||||||||||
| Loans receivable(2)(3) | 2,942,835 | 37,522 | 5.07 | % | 2,328,823 | 28,113 | 4.82 | % | ||||||||||||
| Total interest-earning assets(1) | 3,717,139 | 42,271 | 4.58 | % | 3,078,611 | 32,070 | 4.25 | % | ||||||||||||
| Non-interest-earning assets | ||||||||||||||||||||
| Cash and due from banks | 45,864 | 41,465 | ||||||||||||||||||
| Allowance for loan losses | (17,090 | ) | (15,135 | ) | ||||||||||||||||
| Other assets | 359,183 | 278,721 | ||||||||||||||||||
| Total average assets | $ | 4,105,096 | $ | 3,383,662 | ||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||
| Interest-bearing deposits | $ | 2,438,450 | $ | 5,023 | 0.82 | % | $ | 1,961,998 | $ | 1,841 | 0.37 | % | ||||||||
| Borrowings | 496,054 | 2,876 | 2.30 | % | 460,878 | 1,753 | 1.51 | % | ||||||||||||
| Subordinated debentures | 36,570 | 600 | 6.51 | % | 36,386 | 597 | 6.51 | % | ||||||||||||
| Total interest-bearing liabilities | 2,971,074 | 8,499 | 1.13 | % | 2,459,262 | 4,191 | 0.68 | % | ||||||||||||
| Non-interest-bearing liabilities | ||||||||||||||||||||
| Demand deposits | 640,983 | 540,109 | ||||||||||||||||||
| Accrued interest payable and other liabilities | 16,080 | 20,915 | ||||||||||||||||||
| Stockholders’ equity | 476,959 | 363,376 | ||||||||||||||||||
| Total average liabilities and stockholders’ equity | $ | 4,105,096 | $ | 3,383,662 | ||||||||||||||||
| Net interest income/spread | $ | 33,772 | 3.44 | % | $ | 27,879 | 3.58 | % | ||||||||||||
| Net interest income as a percentage of average interest-earning assets(1) |
3.67 | % | 3.71 | % | ||||||||||||||||
| (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. The average rate is presented on a tax equivalent basis. | |||||||||||||||||||
| HORIZON BANCORP, INC. | ||||||||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| (Dollar Amounts in Thousands, Unaudited) | ||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2018 | September 30, 2017 | |||||||||||||||||||
| Average Balance |
Interest | Average Rate |
Average Balance |
Interest | Average Rate |
|||||||||||||||
| Assets | ||||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||||
| Federal funds sold | $ | 2,845 | $ | 53 | 2.49 | % | $ | 3,857 | $ | 35 | 1.21 | % | ||||||||
| Interest-earning deposits | 25,411 | 300 | 1.58 | % | 24,177 | 201 | 1.11 | % | ||||||||||||
| Investment securities – taxable | 413,617 | 7,379 | 2.39 | % | 416,323 | 6,581 | 2.11 | % | ||||||||||||
| Investment securities – non-taxable(1) | 313,168 | 5,745 | 3.00 | % | 286,007 | 5,193 | 3.39 | % | ||||||||||||
| Loans receivable(2)(3) | 2,855,236 | 108,961 | 5.06 | % | 2,210,295 | 79,699 | 4.83 | % | ||||||||||||
| Total interest-earning assets(1) | 3,610,277 | 122,438 | 4.55 | % | 2,940,659 | 91,709 | 4.27 | % | ||||||||||||
| Non-interest-earning assets | ||||||||||||||||||||
| Cash and due from banks | 44,605 | 42,004 | ||||||||||||||||||
| Allowance for loan losses | (16,686 | ) | (15,069 | ) | ||||||||||||||||
| Other assets | 383,615 | 279,706 | ||||||||||||||||||
| Total average assets | $ | 4,021,811 | $ | 3,247,300 | ||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||
| Interest-bearing deposits | $ | 2,382,864 | $ | 11,814 | 0.66 | % | $ | 1,967,457 | $ | 5,315 | 0.36 | % | ||||||||
| Borrowings | 504,349 | 8,127 | 2.15 | % | 357,932 | 4,028 | 1.50 | % | ||||||||||||
| Subordinated debentures | 36,524 | 1,764 | 6.46 | % | 36,339 | 1,721 | 6.33 | % | ||||||||||||
| Total interest-bearing liabilities | 2,923,737 | 21,705 | 0.99 | % | 2,361,728 | 11,064 | 0.63 | % | ||||||||||||
| Non-interest-bearing liabilities | ||||||||||||||||||||
| Demand deposits | 613,866 | 510,230 | ||||||||||||||||||
| Accrued interest payable and other liabilities | 16,341 | 20,221 | ||||||||||||||||||
| Stockholders’ equity | 467,867 | 355,121 | ||||||||||||||||||
| Total average liabilities and stockholders’ equity | $ | 4,021,811 | $ | 3,247,300 | ||||||||||||||||
| Net interest income/spread | $ | 100,733 | 3.55 | % | $ | 80,645 | 3.64 | % | ||||||||||||
| Net interest income as a percentage of average interest-earning assets(1) |
3.74 | % | 3.77 | % | ||||||||||||||||
| (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. The average rate is presented on a tax equivalent basis. | |||||||||||||||||||
| HORIZON BANCORP, INC. | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Dollar Amounts in Thousands) | |||||||
| September 30 | December 31 | ||||||
| 2018 | 2017 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Cash and due from banks | $ | 69,697 | $ | 76,441 | |||
| Investment securities, available for sale | 542,305 | 509,665 | |||||
| Investment securities, held to maturity (fair value of $219,158 and $201,085) | 223,848 | 200,448 | |||||
| Loans held for sale | 1,980 | 3,094 | |||||
| Loans, net of allowance for loan losses of $17,798 and $16,394 | 2,939,588 | 2,815,601 | |||||
| Premises and equipment, net | 75,348 | 75,529 | |||||
| Federal Home Loan Bank stock | 18,073 | 18,105 | |||||
| Goodwill | 119,880 | 119,880 | |||||
| Other intangible assets | 10,875 | 12,402 | |||||
| Interest receivable | 13,999 | 16,244 | |||||
| Cash value of life insurance | 87,530 | 75,931 | |||||
| Other assets | 47,438 | 40,963 | |||||
| Total assets | $ | 4,150,561 | $ | 3,964,303 | |||
| Liabilities | |||||||
| Deposits | |||||||
| Non-interest bearing | $ | 621,475 | $ | 601,805 | |||
| Interest bearing | 2,507,079 | 2,279,198 | |||||
| Total deposits | 3,128,554 | 2,881,003 | |||||
| Borrowings | 477,719 | 564,157 | |||||
| Subordinated debentures | 37,791 | 37,653 | |||||
| Interest payable | 1,688 | 886 | |||||
| Other liabilities | 27,215 | 23,526 | |||||
| Total liabilities | 3,672,967 | 3,507,225 | |||||
| Commitments and contingent liabilities | |||||||
| Stockholders’ Equity | |||||||
| Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares | – | – | |||||
| Common stock, no par value, Authorized 99,000,000 shares (1) | |||||||
| Issued 38,392,959 and 38,323,604 shares (1), Outstanding 38,367,890 and 38,294,729 shares (1) |
– | – | |||||
| Additional paid-in capital | 275,804 | 275,059 | |||||
| Retained earnings | 214,753 | 185,570 | |||||
| Accumulated other comprehensive loss | (12,963 | ) | (3,551 | ) | |||
| Total stockholders’ equity | 477,594 | 457,078 | |||||
| Total liabilities and stockholders’ equity | $ | 4,150,561 | $ | 3,964,303 | |||
| (1) Adjusted for 3:2 stock split on June 15, 2018 | |||||||
| HORIZON BANCORP, INC. | ||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||
| (Dollar Amounts in Thousands, Except Per Share Data, Unaudited) | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30 | September 30 | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Interest Income | ||||||||||||||
| Loans receivable | $ | 37,522 | $ | 28,113 | $ | 108,961 | $ | 79,699 | ||||||
| Investment securities | ||||||||||||||
| Taxable | 2,739 | 2,167 | 7,732 | 6,817 | ||||||||||
| Tax exempt | 2,010 | 1,790 | 5,745 | 5,193 | ||||||||||
| Total interest income | 42,271 | 32,070 | 122,438 | 91,709 | ||||||||||
| Interest Expense | ||||||||||||||
| Deposits | 5,023 | 1,841 | 11,814 | 5,315 | ||||||||||
| Borrowed funds | 2,876 | 1,753 | 8,127 | 4,028 | ||||||||||
| Subordinated debentures | 600 | 597 | 1,764 | 1,721 | ||||||||||
| Total interest expense | 8,499 | 4,191 | 21,705 | 11,064 | ||||||||||
| Net Interest Income | 33,772 | 27,879 | 100,733 | 80,645 | ||||||||||
| Provision for loan losses | 1,176 | 710 | 2,378 | 1,370 | ||||||||||
| Net Interest Income after Provision for Loan Losses | 32,596 | 27,169 | 98,355 | 79,275 | ||||||||||
| Non-interest Income | ||||||||||||||
| Service charges on deposit accounts | 2,009 | 1,672 | 5,804 | 4,638 | ||||||||||
| Wire transfer fees | 160 | 175 | 490 | 503 | ||||||||||
| Interchange fees | 1,410 | 1,251 | 4,293 | 3,809 | ||||||||||
| Fiduciary activities | 1,855 | 1,887 | 5,598 | 5,752 | ||||||||||
| Gains on sale of investment securities (includes $(122) and $6 for the three months ended September 30, 2018 and 2017, respectively, and $(111) and $38 for the nine months ended September 30, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassifications) |
(122 | ) | 6 | (111 | ) | 38 | ||||||||
| Gain on sale of mortgage loans | 1,839 | 1,950 | 5,158 | 5,918 | ||||||||||
| Mortgage servicing income net of impairment | 563 | 369 | 1,423 | 1,175 | ||||||||||
| Increase in cash value of bank owned life insurance | 503 | 474 | 1,380 | 1,346 | ||||||||||
| Death benefit on bank owned life insurance | – | – | 154 | – | ||||||||||
| Other income | 469 | 237 | 1,747 | 613 | ||||||||||
| Total non-interest income | 8,686 | 8,021 | 25,936 | 23,792 | ||||||||||
| Non-interest Expense | ||||||||||||||
| Salaries and employee benefits | 14,343 | 12,911 | 42,525 | 37,086 | ||||||||||
| Net occupancy expenses | 2,495 | 2,400 | 7,981 | 7,048 | ||||||||||
| Data processing | 1,759 | 1,502 | 5,062 | 4,311 | ||||||||||
| Professional fees | 437 | 649 | 1,314 | 1,797 | ||||||||||
| Outside services and consultants | 1,204 | 2,504 | 3,735 | 4,991 | ||||||||||
| Loan expense | 1,722 | 1,215 | 4,504 | 3,572 | ||||||||||
| FDIC insurance expense | 396 | 270 | 1,051 | 776 | ||||||||||
| Other losses | 161 | 58 | 576 | 186 | ||||||||||
| Other expense | 3,103 | 3,004 | 9,651 | 8,755 | ||||||||||
| Total non-interest expense | 25,620 | 24,513 | 76,399 | 68,522 | ||||||||||
| Income Before Income Tax | 15,662 | 10,677 | 47,892 | 34,545 | ||||||||||
| Income tax expense (includes $(25) and $2 for the three months ended September 30, 2018 and 2017, respectively, and $(23) and $13 for the nine months ended September 30, 2018 and 2017, respectively, related to income tax expense from reclassification items) |
2,597 | 2,506 | 7,908 | 9,078 | ||||||||||
| Net Income | $ | 13,065 | $ | 8,171 | $ | 39,984 | $ | 25,467 | ||||||
| Basic Earnings Per Share (1) | $ | 0.34 | $ | 0.24 | $ | 1.04 | $ | 0.76 | ||||||
| Diluted Earnings Per Share (1) | 0.34 | 0.24 | 1.04 | 0.75 | ||||||||||
| (1) Adjusted for 3:2 stock split on June 15, 2018 | ||||||||||||||
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