Attached files
| file | filename |
|---|---|
| 8-K - HORIZON BANCORP INC /IN/ | hb_8k0725.htm |
Exhibit 99.1
Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: July 25, 2018
FOR IMMEDIATE RELEASE
Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and six-month periods ended June 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 June 30, 2018 was $14.1 million, or $0.37 diluted earnings per share, compared to $9.1 million, or $0.27 diluted earnings per share, for the quarter ended June 30, 2017 resulting in a 37.0% increase in diluted earnings per share. This represents the highest quarterly net income and diluted earnings per share in the Company’s 145-year history.
|
|
·
|
Net income for the first six months of 2018 was $26.9 million, or $0.70 diluted earnings per share, compared to $17.3 million, or $0.51 diluted earnings per share, for the first six months of 2017 resulting in a 34.6% increase in diluted earnings per share. This represents the highest year-to-date net income and diluted earnings per share as of June 30th in the Company’s 145-year history.
|
|
·
|
Return on average assets was 1.41% for the second quarter of 2018 compared to 1.12% for the second quarter of 2017. Return on average assets for the first six months of 2018 was 1.36% compared to 1.10% for the first six months of 2017.
|
|
·
|
Return on average equity was 12.15% for the second quarter of 2018 compared to 10.24% for the second quarter of 2017. Return on average equity was 11.72% for the first six months of 2018 compared to 9.96% for the first six months of 2017.
|
|
·
|
Total loans increased by an annualized rate of 6.6%, or $92.4 million, during the first six months of 2018.
|
|
·
|
Consumer loans increased by an annualized rate of 20.5%, or $46.9 million, during the first six months of 2018.
|
|
·
|
Residential mortgage loans increased by an annualized rate of 9.3%, or $27.9 million, during the first six months of 2018.
|
|
·
|
Total deposits increased by an annualized rate of 9.5%, or $135.2 million, during the first six months of 2018.
|
|
·
|
Net interest income increased $6.4 million, or 23.4%, to $33.6 million for the three months ended June 30, 2018 compared to $27.2 million for the three months ended June 30, 2017. Net interest income increased $14.2 million, or 26.9%, to $67.0 million for the six months ended June 30, 2018 compared to $52.8 million for the six months ended June 30, 2017.
|
Pg. 2 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
|
·
|
Net interest margin was 3.78% for the three months ended June 30, 2018 compared to 3.84% for the three months ended June 30, 2017. Net interest margin for the six months ended June 30, 2018 and 2017 was 3.81%.
|
|
·
|
Horizon’s tangible book value per share increased to $8.84 at June 30, 2018 compared to $8.48 and $8.13 at December 31, 2017 and June 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: “I am very pleased to announce record quarterly and year-to-date earnings for Horizon. Net income for the second quarter of 2018 increased $5.0 million, or 55.6%, to $14.1 million when compared to the prior year. Diluted earnings per share for the quarter increased to $0.37 per share compared to $0.27 per share during the same quarter last year. Horizon’s net income and diluted earnings per share for the six months ended June 30, 2018 increased to $26.9 million and $0.70 per share compared to $17.3 million and $0.51 per share for the prior year.”
Dwight continued, “For the first time in our 145-year history, Horizon surpassed $4.0 billion in total assets. We continue to experience modest loan growth during 2018 as total loans increased at an annualized rate of 6.6% during the first six months of the year. Loan growth was led by consumer and mortgage loan annualized growth of 20.5% and 9.3%, respectively. Commercial loan payoffs totaling approximately $97.8 million during 2018 have tempered commercial loan growth. The majority of these payoffs were as a result of business and/or real estate assets being sold. The Bank did originate approximately $141.0 million in commercial loans during the first six months of 2018; however, only 59.6%, or $84.0 million, of these loan originations had been funded as of June 30, 2018. Horizon’s growth markets are still producing solid results as Fort Wayne, Grand Rapids, Indianapolis and the Kalamazoo markets grew loan balances by $34.3 million, for an annualized rate of 13.7%, during the first six months of 2018.”
Dwight added, “During the second quarter, we continued to expand our footprint with the opening of two loan production offices, one in Holland, Michigan and the other in Noblesville, Indiana. The Noblesville office will be converted to a full-service branch location in the third quarter of 2018. Noblesville, Indiana is the county seat for Hamilton County, one of the fastest growing counties in the State of Indiana and contiguous to Indianapolis, Indiana. We look forward to providing Horizon’s exceptional service to both of these communities.”
Dwight concluded, “Horizon continued to fully realize the cost savings from our 2017 acquisitions of Lafayette Community Bancorp and Wolverine Bancorp, Inc. during the first six months of 2018. The realization of these cost savings, in addition to other operational leveraging strategies implemented during 2018 have resulted in a continued decrease in our quarterly efficiency ratio from 64.44% for the fourth quarter of 2017 to 58.71% for the second quarter of 2018.”
Income Statement Highlights
Net income for the second quarter of 2018 was $14.1 million, or $0.37 diluted earnings per share, compared to $12.8 million, or $0.33 diluted earnings per share, for the first quarter of 2018 and $9.1 million, or $0.27 diluted earnings per share, for the second quarter of 2017. Excluding acquisition-related expenses, gain on sale of investment securities, death benefit on bank owned life insurance and purchase accounting adjustments (“core net income”), core net income for the second quarter of 2018 was $12.7 million, or $0.33 diluted earnings per share, compared to $11.2 million, or $0.29 diluted earnings per share, for the first quarter of 2018 and $8.6 million, or $0.26 diluted earnings per share, for the second quarter of 2017. This represents an increase in core diluted earnings per share of 13.8% and 26.9% when compared to the quarters ending March 31, 2018 and June 30, 2017, respectively.
Pg. 3 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
The increase in net income and diluted earnings per share from the first quarter of 2018 to the second quarter of 2018 reflects increases in net interest income of $139,000 and non-interest income of $614,000 and a decrease in non-interest expense of $895,000, partially offset by an increase in income tax expense of $269,000.
The increase in non-interest income from the first quarter of 2018 to the second quarter of 2018 was due to an increase in the gain on sale of mortgage loans, mortgage servicing income, interchange fees and a death benefit received on bank owned life insurance.
The increase in net income and diluted earnings per share from the second quarter of 2017 to the same 2018 period reflects an increase in net interest income of $6.4 million, an increase in non-interest income of $720,000 and a decrease in income tax expense of $730,000, partially offset by increases in non-interest expense of $2.5 million and provision for loan losses of $305,000.
Net income for the six months ended June 30, 2018 was $26.9 million, or $0.70 diluted earnings per share, compared to $17.3 million, or $0.52 diluted earnings per share, for the six months ended June 30, 2017. Core net income for the six months ended June 30, 2018 was $23.9 million, or $0.62 diluted earnings per share, compared to $16.1 million, or $0.47 diluted earnings per share, for the six months ended June 30, 2017. This represents a 31.9% increase in core diluted earnings per share for the first six 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
|
Six Months Ended
|
|||||||||||||||||||
|
June 30
|
March 31
|
June 30
|
June 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
|
Non-GAAP Reconciliation of Net Income
|
||||||||||||||||||||
|
Net income as reported
|
$
|
14,115
|
$
|
12,804
|
$
|
9,072
|
$
|
26,919
|
$
|
17,296
|
||||||||||
|
Merger expenses
|
-
|
-
|
200
|
-
|
200
|
|||||||||||||||
|
Tax effect
|
-
|
-
|
(70
|
)
|
-
|
(70
|
)
|
|||||||||||||
|
Net income excluding merger expenses
|
14,115
|
12,804
|
9,202
|
26,919
|
17,426
|
|||||||||||||||
|
Gain on sale of investment securities
|
-
|
(11
|
)
|
3
|
(11
|
)
|
(32
|
)
|
||||||||||||
|
Tax effect
|
-
|
2
|
(1
|
)
|
2
|
11
|
||||||||||||||
|
Net income excluding gain on sale of investment securities
|
14,115
|
12,795
|
9,204
|
26,910
|
17,405
|
|||||||||||||||
|
Death benefit on bank owned life insurance ("BOLI")
|
(154
|
)
|
-
|
-
|
(154
|
)
|
-
|
|||||||||||||
|
Tax effect
|
32
|
-
|
-
|
32
|
-
|
|||||||||||||||
|
Net income excluding death benefit on BOLI
|
13,993
|
12,795
|
9,204
|
26,788
|
17,405
|
|||||||||||||||
|
Acquisition-related purchase accounting adjustments ("PAUs")
|
(1,634
|
)
|
(2,037
|
)
|
(939
|
)
|
(3,671
|
)
|
(1,955
|
)
|
||||||||||
|
Tax effect
|
343
|
428
|
329
|
771
|
684
|
|||||||||||||||
|
Core Net Income
|
$
|
12,702
|
$
|
11,186
|
$
|
8,594
|
$
|
23,888
|
$
|
16,134
|
||||||||||
|
Non-GAAP Reconciliation of Diluted Earnings per Share
|
||||||||||||||||||||
|
Diluted earnings per share ("EPS") as reported
|
$
|
0.37
|
$
|
0.33
|
$
|
0.27
|
$
|
0.70
|
$
|
0.51
|
||||||||||
|
Merger expenses
|
-
|
-
|
0.01
|
-
|
0.01
|
|||||||||||||||
|
Tax effect
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Diluted EPS excluding merger expenses
|
0.37
|
0.33
|
0.28
|
0.70
|
0.52
|
|||||||||||||||
|
Gain on sale of investment securities
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Tax effect
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Diluted EPS excluding gain on sale of investment securities
|
0.37
|
0.33
|
0.28
|
0.70
|
0.52
|
|||||||||||||||
|
Death benefit on BOLI
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Tax effect
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Diluted EPS excluding death benefit on BOLI
|
0.37
|
0.33
|
0.28
|
0.70
|
0.52
|
|||||||||||||||
|
Acquisition-related PAUs
|
(0.04
|
)
|
(0.05
|
)
|
(0.03
|
)
|
(0.10
|
)
|
(0.06
|
)
|
||||||||||
|
Tax effect
|
-
|
0.01
|
0.01
|
0.02
|
0.01
|
|||||||||||||||
|
Core Diluted EPS
|
$
|
0.33
|
$
|
0.29
|
$
|
0.26
|
$
|
0.62
|
$
|
0.47
|
||||||||||
Pg. 4 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
The increase in net income and diluted earnings per share during the first six months of 2018 when compared to the same period of 2017 reflects increases in net interest income of $14.2 million and non-interest income of $1.5 million and a decrease in income tax expense of $1.3 million, partially offset by increases in non-interest expense of $6.8 million and provision for loan losses of $542,000.
Horizon’s net interest margin decreased to 3.78% for the second quarter of 2018 when compared to 3.81% for the first quarter of 2018 and 3.84% for the second quarter of 2017. The decrease in net interest margin from the first quarter of 2018 reflects an increase in the cost of interest-bearing liabilities of 13 basis points, offset by an increase in the yield of interest-earning assets of 7 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 14 basis points, borrowings of 21 basis points and subordinated debentures of 14 basis points. The increase in the yield of interest-earning assets was due to an increase in the yield on loans receivable of 4 basis points, taxable investment securities of 11 basis points and non-taxable investment securities of 27 basis points.
The decrease in net interest margin from the second quarter of 2017 reflects an increase in the cost of interest-bearing liabilities of 37 basis points, offset by an increase in the yield of interest-earning assets of 24 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 30 basis points, borrowings of 70 basis points and subordinated debentures of 45 basis points. The increase in the yield of interest-earning assets was due to an increase in the yield on loans receivable of 14 basis points and taxable investment securities of 31 basis points, offset by a decrease in the yield on non-taxable investment securities of 25 basis points.
Excluding acquisition-related purchase accounting adjustments (“core net interest margin”), the core net interest margin was 3.60% for the second quarter of 2018 compared to 3.55% for the prior quarter and 3.71% for the second quarter of 2017. The increase in core net interest margin from the first quarter of 2018 to the second quarter of 2018 was due to an increase in the yield on interest-earning assets offset by an increase in the cost of interest-bearing liabilities. The decrease in core net interest margin from the second quarter of 2017 to the second quarter of 2018 was due to an increased cost of funding when comparing the periods. Interest income from acquisition-related purchase accounting adjustments was $1.6 million, $2.0 million and $939,000 for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017, respectively.
Horizon’s net interest margin held steady at 3.81% when comparing the six months ended June 30, 2018 to the six months ended June 30, 2017. The yield on interest-earning assets increased 26 basis points, primarily due to an increase in the yields earned on loans receivable of 20 basis points and taxable investment securities of 15 basis points, offset by a decrease in the yield earned on non-taxable securities of 27 basis points. The cost of interest-bearing liabilities increased 32 basis points, primarily due to an increase in the cost of interest-bearing deposits of 22 basis points and borrowings of 58 basis points.
Core net interest margin for the six months ended June 30, 2018 was 3.61% compared to 3.67% for the six months ended June 30, 2017. Interest income from acquisition-related purchase accounting adjustments was $3.7 million and $2.0 million for the six months ended June 30, 2018 and 2017, respectively.
Pg. 5 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
|
Non-GAAP Reconciliation of Net Interest Margin
|
||||||||||||||||||||
|
(Dollars in Thousands, Unaudited)
|
||||||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||
|
June 30
|
March 31
|
June 30
|
June 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
|
Non-GAAP Reconciliation of Net Interest Margin
|
||||||||||||||||||||
|
Net interest income as reported
|
$
|
33,550
|
$
|
33,411
|
$
|
27,198
|
$
|
66,961
|
$
|
52,766
|
||||||||||
|
Average interest-earning assets
|
3,638,801
|
3,580,143
|
2,943,627
|
3,600,676
|
2,870,884
|
|||||||||||||||
|
Net interest income as a percentage of average interest-earning assets
("Net Interest Margin") |
3.78
|
%
|
3.81
|
%
|
3.84
|
%
|
3.81
|
%
|
3.81
|
%
|
||||||||||
|
Acquisition-related purchase accounting adjustments ("PAUs")
|
$
|
(1,634
|
)
|
$
|
(2,037
|
)
|
$
|
(939
|
)
|
(3,671
|
)
|
(1,955
|
)
|
|||||||
|
Core net interest income
|
$
|
31,916
|
$
|
31,374
|
$
|
26,259
|
63,290
|
50,811
|
||||||||||||
|
Core net interest margin
|
3.60
|
%
|
3.55
|
%
|
3.71
|
%
|
3.61
|
%
|
3.67
|
%
|
||||||||||
Lending Activity
Total loans increased $92.4 million from $2.835 billion as of December 31, 2017 to $2.928 billion as of June 30, 2018 as consumer loans increased by $46.9 million, residential mortgage loans increased by $27.9 million, mortgage warehouse loans increased by $14.5 million and commercial loans increased by $3.3 million. Consumer loans increased at an annualized rate of 20.5%, primarily due to our experienced consumer loan team and increased focus on growing this portfolio. During the first six months of 2018, the Bank originated approximately $141.0 million in commercial loans; however, only $84.0 million, or 59.6%, of the total originated loans were funded as of June 30, 2018. This growth was offset by approximately $97.8 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)
|
|||||||||||||||
|
June 30
2018 |
December 31
2017 |
Amount
Change |
Percent
Change |
||||||||||||
|
Commercial
|
$
|
1,672,998
|
$
|
1,669,728
|
$
|
3,270
|
0.2
|
%
|
|||||||
|
Residential mortgage
|
634,636
|
606,760
|
27,876
|
4.6
|
%
|
||||||||||
|
Consumer
|
507,866
|
460,999
|
46,867
|
10.2
|
%
|
||||||||||
|
Subtotal
|
2,815,500
|
2,737,487
|
78,013
|
2.8
|
%
|
||||||||||
|
Held for sale loans
|
3,000
|
3,094
|
(94
|
)
|
-3.0
|
%
|
|||||||||
|
Mortgage warehouse loans
|
109,016
|
94,508
|
14,508
|
15.4
|
%
|
||||||||||
|
Total loans
|
$
|
2,927,516
|
$
|
2,835,089
|
$
|
92,427
|
3.3
|
%
|
|||||||
Residential mortgage lending activity for the three months ended June 30, 2018 generated $1.9 million in income from the gain on sale of mortgage loans, an increase of $473,000 from the first quarter of 2018 and a decrease of $158,000 from the second quarter of 2017. Total origination volume for the second quarter of 2018, including loans placed into portfolio, totaled $109.0 million, representing an increase of 50.8% from the first quarter of 2018 and a decrease of 1.2% from the second quarter of 2017. Revenue derived from Horizon’s residential mortgage lending activities was only 6.9% and 6.1% of Horizon’s total revenue for the second quarter of 2018 and the six months ended June 30, 2018, respectively.
Purchase money mortgage originations during the second quarter of 2018 represented 85.6% of total originations compared to 76.6% of total originations during the first quarter of 2018 and 78.4% during the second quarter of 2017.
Pg. 6 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
The provision for loan losses totaled $635,000 for the second quarter of 2018 compared to $567,000 for the first quarter of 2018 and $330,000 for the second quarter of 2017. The increase in the provision for loan losses from the second quarter of 2017 to the second quarter of 2018 was due to 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 $1.2 million for the six months ended June 30, 2018 compared to $660,000 for the six months ended June 30, 2017. The increase in the provision for loan losses from 2017 to 2018 was due to 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 was 0.58% as of June 30, 2018 and 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 June 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 1.08% as of June 30, 2018 compared to 1.23% as of December 31, 2017.
|
Non-GAAP Allowance for Loan and Lease Loss Detail
|
||||||||||||||||||||||||||||||||
|
As of June 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
|
$
|
2,280,089
|
$
|
17,071
|
N/A
|
$
|
17,071
|
$
|
2,263,018
|
0.75
|
%
|
0.00
|
%
|
0.75
|
%
|
|||||||||||||||||
|
Heartland
|
10,290
|
-
|
725
|
725
|
9,565
|
0.00
|
%
|
7.05
|
%
|
7.05
|
%
|
|||||||||||||||||||||
|
Summit
|
31,357
|
-
|
1,858
|
1,858
|
29,499
|
0.00
|
%
|
5.93
|
%
|
5.93
|
%
|
|||||||||||||||||||||
|
Peoples
|
99,586
|
-
|
2,259
|
2,259
|
97,327
|
0.00
|
%
|
2.27
|
%
|
2.27
|
%
|
|||||||||||||||||||||
|
Kosciusko
|
46,070
|
-
|
700
|
700
|
45,370
|
0.00
|
%
|
1.52
|
%
|
1.52
|
%
|
|||||||||||||||||||||
|
LaPorte
|
108,429
|
-
|
3,283
|
3,283
|
105,146
|
0.00
|
%
|
3.03
|
%
|
3.03
|
%
|
|||||||||||||||||||||
|
CNB
|
5,293
|
-
|
144
|
144
|
5,149
|
0.00
|
%
|
2.72
|
%
|
2.72
|
%
|
|||||||||||||||||||||
|
Lafayette
|
112,352
|
-
|
2,036
|
2,036
|
110,316
|
0.00
|
%
|
1.81
|
%
|
1.81
|
%
|
|||||||||||||||||||||
|
Wolverine
|
234,050
|
-
|
3,447
|
3,447
|
230,603
|
0.00
|
%
|
1.47
|
%
|
1.47
|
%
|
|||||||||||||||||||||
|
Total
|
$
|
2,927,516
|
$
|
17,071
|
$
|
14,452
|
$
|
31,523
|
$
|
2,895,993
|
0.58
|
%
|
0.49
|
%
|
1.08
|
%
|
||||||||||||||||
As of June 30, 2018, non-performing loans totaled $15.4 million, which reflects a five basis point decrease in non-performing loans to total loans, or a $1.0 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 $1.6 million, non-performing real estate loans decreased by $1.8 million and non-performing consumer loans decreased by $837,000. Other real estate owned and repossessed assets totaled $3.0 million as of June 30, 2018 which is an increase of $2.2 million from December 31, 2017. The majority of this increase was due to several bank owned properties acquired through acquisitions and listed for sale being 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 $895,000 lower in the second quarter of 2018 when compared to the first quarter of 2018. The decrease in non-interest expense was due to decreases in salaries and employee benefits, net occupancy expenses and professional fees. These decreases were offset by increases in loan expense and other losses when comparing the second quarter of 2018 to the first quarter of 2018.
Pg. 7 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
Salaries and employee benefits expense was $564,000 lower during the second quarter of 2018 when compared to the first quarter of 2018, due to lower employment and unemployment taxes, health insurance, 401K and supplemental employee retirement plan match expenses. Employment and unemployment taxes and health insurance expense is typically higher during the first quarter of the year due to the nature of these expenses. Expenses related to the Company’s match on 401K and supplemental employee retirement plans were higher during the first quarter as a result of the 2017 bonuses paid in March 2018. Net occupancy expense was $446,000 lower when compared to the first quarter of 2018 due to reduced snow removal expenses during the second quarter of 2018. Professional fees decreased $125,000 during the second quarter of 2018 when compared to the first quarter of 2018. These decreases were offset by increases in loan expense of $268,000 due to an increase in loan collection expense and other losses of $123,000 due to write-downs on other bank owned properties and a $150,000 accrual for a potential loss on a fiduciary account during the second quarter of 2018.
Total non-interest expense was $2.5 million higher during the second quarter of 2018 compared to the same period of 2017. The increase was primarily due to an increase in salaries and employee benefits of $1.3 million, net occupancy expense of $324,000, loan expense of $275,000, other expense of $271,000, other losses of $191,000, data processing of $105,000 and FDIC insurance expense of $102,000. The increase in salaries and employee benefits, net occupancy expense, other expense, data processing expense 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 second quarter of 2017. Other losses increased primarily due to write-downs on other bank owned properties and an accrual for a potential loss on a fiduciary account recorded during the second quarter of 2018.
Total non-interest expense was $6.8 million higher for the six months ended June 30, 2018 when compared to the six months ended June 30, 2017. The increase was primarily due to increases in salaries and employee benefits of $4.0 million, net occupancy expenses of $838,000, other expense of $797,000, data processing of $494,000 and loan expense of $425,000. The increase in salaries and employee benefits, net occupancy expense, other expense and data processing expense reflect overall company growth and recent acquisitions, in addition to the higher first quarter 2018 expenses mentioned above. Loan expense increased due to a higher level of loan originations and collection expenses during the six months ended June 30, 2018 when compared to the same period of 2017. Offsetting these increases was a decrease of $271,000 in professional fees primarily due to a lack of acquisition-related expenses in 2018.
Income tax expense totaled $2.8 million for the second quarter of 2018, an increase of $269,000 when compared to the first quarter of 2018 and a decrease of $730,000 when compared to the second quarter of 2017. The increase in income tax expense from the first quarter of 2018 was primarily due to an increase in income before income tax of $1.6 million during the second quarter of 2018. The decrease when comparing the second quarter of 2018 to the same prior year period 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.
Income tax expense totaled $5.3 million for the six months ended June 30, 2018, a decrease of $1.3 million when compared to the six months ended June 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 $8.4 million when comparing the first six months of 2018 to the prior year.
Pg. 8 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
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)
|
||||||||||||||||||||
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
|
Total stockholders' equity
|
$
|
470,535
|
$
|
460,416
|
$
|
457,078
|
$
|
392,055
|
$
|
357,259
|
||||||||||
|
Less: Intangible assets
|
131,239
|
131,724
|
132,282
|
103,244
|
86,726
|
|||||||||||||||
|
Total tangible stockholders' equity
|
$
|
339,296
|
$
|
328,692
|
$
|
324,796
|
$
|
288,811
|
$
|
270,533
|
||||||||||
|
Common shares outstanding
|
38,362,640
|
38,332,853
|
38,294,729
|
34,988,189
|
33,264,698
|
|||||||||||||||
|
Tangible book value per common share
|
$
|
8.84
|
$
|
8.57
|
$
|
8.48
|
$
|
8.25
|
$
|
8.13
|
||||||||||
Pg. 9 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
|
Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
|
||||||||||||||||||||
|
(Dollars in Thousands, Unaudited)
|
||||||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||
|
June 30
|
March 31
|
June 30
|
June 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
|
Non-GAAP Reconciliation of Return on Average Assets
|
||||||||||||||||||||
|
Average assets
|
$
|
4,017,551
|
$
|
3,942,837
|
$
|
3,249,851
|
$
|
3,980,864
|
$
|
3,177,134
|
||||||||||
|
Return on average assets ("ROAA") as reported
|
1.41
|
%
|
1.32
|
%
|
1.12
|
%
|
1.36
|
%
|
1.10
|
%
|
||||||||||
|
Merger expenses
|
0.00
|
%
|
0.00
|
%
|
0.02
|
%
|
0.00
|
%
|
0.01
|
%
|
||||||||||
|
Tax effect
|
0.00
|
%
|
0.00
|
%
|
-0.01
|
%
|
0.00
|
%
|
0.00
|
%
|
||||||||||
|
ROAA excluding merger expenses
|
1.41
|
%
|
1.32
|
%
|
1.13
|
%
|
1.36
|
%
|
1.11
|
%
|
||||||||||
|
Gain on sale of investment securities
|
0.00
|
%
|
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
|
1.41
|
%
|
1.32
|
%
|
1.13
|
%
|
1.36
|
%
|
1.11
|
%
|
||||||||||
|
Death benefit on bank owned life insurance ("BOLI")
|
-0.02
|
%
|
0.00
|
%
|
0.00
|
%
|
-0.01
|
%
|
0.00
|
%
|
||||||||||
|
Tax effect
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
||||||||||
|
ROAA excluding death benefit on BOLI
|
1.39
|
%
|
1.32
|
%
|
1.13
|
%
|
1.35
|
%
|
1.11
|
%
|
||||||||||
|
Acquisition-related purchase accounting adjustments ("PAUs")
|
-0.16
|
%
|
-0.21
|
%
|
-0.12
|
%
|
-0.19
|
%
|
-0.12
|
%
|
||||||||||
|
Tax effect
|
0.03
|
%
|
0.04
|
%
|
0.04
|
%
|
0.04
|
%
|
0.04
|
%
|
||||||||||
|
Core ROAA
|
1.26
|
%
|
1.15
|
%
|
1.05
|
%
|
1.20
|
%
|
1.03
|
%
|
||||||||||
|
Non-GAAP Reconciliation of Return on Average Common Equity
|
||||||||||||||||||||
|
Average Common Equity
|
$
|
465,968
|
$
|
460,076
|
$
|
355,435
|
$
|
463,156
|
$
|
350,305
|
||||||||||
|
Return on average common equity ("ROACE") as reported
|
12.15
|
%
|
11.29
|
%
|
10.24
|
%
|
11.72
|
%
|
9.96
|
%
|
||||||||||
|
Merger expenses
|
0.00
|
%
|
0.00
|
%
|
0.23
|
%
|
0.00
|
%
|
0.12
|
%
|
||||||||||
|
Tax effect
|
0.00
|
%
|
0.00
|
%
|
-0.08
|
%
|
0.00
|
%
|
-0.04
|
%
|
||||||||||
|
ROACE excluding merger expenses
|
12.15
|
%
|
11.29
|
%
|
10.39
|
%
|
11.72
|
%
|
10.04
|
%
|
||||||||||
|
Gain on sale of investment securities
|
0.00
|
%
|
-0.01
|
%
|
0.00
|
%
|
0.00
|
%
|
-0.02
|
%
|
||||||||||
|
Tax effect
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.01
|
%
|
||||||||||
|
ROACE excluding gain on sale of investment securities
|
12.15
|
%
|
11.28
|
%
|
10.39
|
%
|
11.72
|
%
|
10.03
|
%
|
||||||||||
|
Death benefit on bank owned life insurance ("BOLI")
|
-0.13
|
%
|
0.00
|
%
|
0.00
|
%
|
-0.07
|
%
|
0.00
|
%
|
||||||||||
|
Tax effect
|
0.03
|
%
|
0.00
|
%
|
0.00
|
%
|
0.01
|
%
|
0.00
|
%
|
||||||||||
|
ROACE excluding death benefit on BOLI
|
12.05
|
%
|
11.28
|
%
|
10.39
|
%
|
11.66
|
%
|
10.03
|
%
|
||||||||||
|
Acquisition-related purchase accounting adjustments ("PAUs")
|
-1.41
|
%
|
-1.80
|
%
|
-1.06
|
%
|
-1.60
|
%
|
-1.13
|
%
|
||||||||||
|
Tax effect
|
0.30
|
%
|
0.38
|
%
|
0.37
|
%
|
0.34
|
%
|
0.39
|
%
|
||||||||||
|
Core ROACE
|
10.94
|
%
|
9.86
|
%
|
9.70
|
%
|
10.40
|
%
|
9.29
|
%
|
||||||||||
Pg. 10 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings
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)
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
|
Balance sheet:
|
||||||||||||||||||||
|
Total assets
|
$
|
4,076,611
|
$
|
3,969,750
|
$
|
3,964,303
|
$
|
3,519,501
|
$
|
3,321,178
|
||||||||||
|
Investment securities
|
735,962
|
714,425
|
710,113
|
708,449
|
704,525
|
|||||||||||||||
|
Commercial loans
|
1,672,998
|
1,656,374
|
1,669,728
|
1,322,953
|
1,190,502
|
|||||||||||||||
|
Mortgage warehouse loans
|
109,016
|
101,299
|
94,508
|
95,483
|
123,757
|
|||||||||||||||
|
Residential mortgage loans
|
634,636
|
618,131
|
606,760
|
571,062
|
549,997
|
|||||||||||||||
|
Consumer loans
|
507,866
|
480,989
|
460,999
|
436,327
|
403,468
|
|||||||||||||||
|
Earning assets
|
3,681,583
|
3,591,296
|
3,563,307
|
3,153,230
|
2,990,924
|
|||||||||||||||
|
Non-interest bearing deposit accounts
|
615,018
|
602,175
|
601,805
|
563,536
|
508,305
|
|||||||||||||||
|
Interest bearing transaction accounts
|
1,644,758
|
1,619,859
|
1,712,246
|
1,536,169
|
1,401,407
|
|||||||||||||||
|
Time deposits
|
756,387
|
711,642
|
566,952
|
508,570
|
452,208
|
|||||||||||||||
|
Borrowings
|
524,846
|
520,300
|
564,157
|
458,152
|
485,304
|
|||||||||||||||
|
Subordinated debentures
|
37,745
|
37,699
|
37,653
|
37,607
|
37,562
|
|||||||||||||||
|
Total stockholders' equity
|
470,535
|
460,416
|
457,078
|
392,055
|
357,259
|
|||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||
|
Income statement:
|
||||||||||||||||||||
|
Net interest income
|
$
|
33,550
|
$
|
33,411
|
$
|
31,455
|
$
|
27,879
|
$
|
27,198
|
||||||||||
|
Provision for loan losses
|
635
|
567
|
1,100
|
710
|
330
|
|||||||||||||||
|
Non-interest income
|
8,932
|
8,318
|
9,344
|
8,021
|
8,212
|
|||||||||||||||
|
Non-interest expense
|
24,942
|
25,837
|
26,291
|
24,513
|
22,488
|
|||||||||||||||
|
Income tax expense
|
2,790
|
2,521
|
5,758
|
2,506
|
3,520
|
|||||||||||||||
|
Net income
|
$
|
14,115
|
$
|
12,804
|
$
|
7,650
|
$
|
8,171
|
$
|
9,072
|
||||||||||
|
Per share data: (1)
|
||||||||||||||||||||
|
Basic earnings per share
|
$
|
0.37
|
$
|
0.33
|
$
|
0.20
|
$
|
0.24
|
$
|
0.27
|
||||||||||
|
Diluted earnings per share
|
0.37
|
0.33
|
0.20
|
0.24
|
0.27
|
|||||||||||||||
|
Cash dividends delcared per common share
|
0.10
|
0.10
|
0.09
|
0.09
|
0.09
|
|||||||||||||||
|
Book value per common share
|
12.27
|
12.01
|
11.93
|
11.21
|
10.74
|
|||||||||||||||
|
Tangible book value per common share
|
8.84
|
8.57
|
8.48
|
8.25
|
8.13
|
|||||||||||||||
|
Market value - high
|
21.94
|
20.59
|
19.47
|
19.45
|
18.33
|
|||||||||||||||
|
Market value - low
|
$
|
19.17
|
$
|
17.87
|
$
|
17.33
|
$
|
16.87
|
$
|
16.49
|
||||||||||
|
Weighted average shares outstanding - Basic
|
38,347,612
|
38,306,395
|
37,711,200
|
33,870,240
|
33,264,697
|
|||||||||||||||
|
Weighted average shares outstanding - Diluted
|
38,519,689
|
38,468,811
|
37,897,012
|
34,072,909
|
33,483,585
|
|||||||||||||||
|
Key ratios:
|
||||||||||||||||||||
|
Return on average assets
|
1.41
|
%
|
1.32
|
%
|
0.79
|
%
|
0.96
|
%
|
1.12
|
%
|
||||||||||
|
Return on average common stockholders' equity
|
12.15
|
11.29
|
6.75
|
8.92
|
10.24
|
|||||||||||||||
|
Net interest margin
|
3.78
|
3.81
|
3.71
|
3.71
|
3.84
|
|||||||||||||||
|
Loan loss reserve to total loans
|
0.58
|
0.58
|
0.58
|
0.64
|
0.66
|
|||||||||||||||
|
Average equity to average assets
|
11.60
|
11.67
|
11.70
|
10.74
|
10.94
|
|||||||||||||||
|
Bank only capital ratios:
|
||||||||||||||||||||
|
Tier 1 capital to average assets
|
9.88
|
9.66
|
9.89
|
9.90
|
9.77
|
|||||||||||||||
|
Tier 1 capital to risk weighted assets
|
12.18
|
12.32
|
12.29
|
12.33
|
12.69
|
|||||||||||||||
|
Total capital to risk weighted assets
|
12.73
|
12.87
|
12.85
|
12.93
|
13.31
|
|||||||||||||||
|
Loan data:
|
||||||||||||||||||||
|
Substandard loans
|
$
|
40,941
|
$
|
43,035
|
$
|
46,162
|
$
|
36,883
|
$
|
34,870
|
||||||||||
|
30 to 89 days delinquent
|
3,978
|
8,932
|
9,329
|
6,284
|
4,555
|
|||||||||||||||
|
90 days and greater delinquent - accruing interest
|
$
|
49
|
$
|
30
|
$
|
167
|
$
|
162
|
$
|
160
|
||||||||||
|
Trouble debt restructures - accruing interest
|
1,911
|
1,899
|
1,958
|
2,015
|
1,924
|
|||||||||||||||
|
Trouble debt restructures - non-accrual
|
894
|
1,090
|
1,013
|
1,192
|
668
|
|||||||||||||||
|
Non-accrual loans
|
12,555
|
12,062
|
13,276
|
9,065
|
8,811
|
|||||||||||||||
|
Total non-performing loans
|
$
|
15,409
|
$
|
15,081
|
$
|
16,414
|
$
|
12,434
|
$
|
11,563
|
||||||||||
|
Non-performing loans to total loans
|
0.53
|
%
|
0.53
|
%
|
0.58
|
%
|
0.51
|
%
|
0.51
|
%
|
||||||||||
(1) Adjusted for 3:2 stock split on June 15, 2018
11
HORIZON BANCORP, INC.
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
|
June 30
|
June 30
|
|||||||
|
2018
|
2017
|
|||||||
|
Balance sheet:
|
||||||||
|
Total assets
|
$
|
4,076,611
|
$
|
3,321,178
|
||||
|
Investment securities
|
735,962
|
704,525
|
||||||
|
Commercial loans
|
1,672,998
|
1,190,502
|
||||||
|
Mortgage warehouse loans
|
109,016
|
123,757
|
||||||
|
Residential mortgage loans
|
634,636
|
549,997
|
||||||
|
Consumer loans
|
507,866
|
403,468
|
||||||
|
Earning assets
|
3,681,583
|
2,990,924
|
||||||
|
Non-interest bearing deposit accounts
|
615,018
|
508,305
|
||||||
|
Interest bearing transaction accounts
|
1,644,758
|
1,401,407
|
||||||
|
Time deposits
|
756,387
|
452,208
|
||||||
|
Borrowings
|
524,846
|
485,304
|
||||||
|
Subordinated debentures
|
37,745
|
37,562
|
||||||
|
Total stockholders' equity
|
470,535
|
357,259
|
||||||
|
Six Months Ended
|
||||||||
|
Income statement:
|
||||||||
|
Net interest income
|
$
|
66,961
|
$
|
52,766
|
||||
|
Provision for loan losses
|
1,202
|
660
|
||||||
|
Non-interest income
|
17,250
|
15,771
|
||||||
|
Non-interest expense
|
50,779
|
44,009
|
||||||
|
Income tax expense
|
5,311
|
6,572
|
||||||
|
Net income
|
$
|
26,919
|
$
|
17,296
|
||||
|
Per share data: (1)
|
||||||||
|
Basic earnings per share
|
$
|
0.70
|
$
|
0.52
|
||||
|
Diluted earnings per share
|
0.70
|
0.51
|
||||||
|
Cash dividends delcared per common share
|
0.20
|
0.16
|
||||||
|
Book value per common share
|
12.27
|
10.74
|
||||||
|
Tangible book value per common share
|
8.84
|
8.13
|
||||||
|
Market value - high
|
21.94
|
18.73
|
||||||
|
Market value - low
|
$
|
17.87
|
$
|
16.49
|
||||
|
Weighted average shares outstanding - Basic
|
38,327,118
|
33,263,997
|
||||||
|
Weighted average shares outstanding - Diluted
|
38,484,588
|
33,486,780
|
||||||
|
Key ratios:
|
||||||||
|
Return on average assets
|
1.36
|
%
|
1.10
|
%
|
||||
|
Return on average common stockholders' equity
|
11.72
|
9.96
|
||||||
|
Net interest margin
|
3.81
|
3.81
|
||||||
|
Loan loss reserve to total loans
|
0.58
|
0.66
|
||||||
|
Average equity to average assets
|
11.63
|
11.03
|
||||||
|
Bank only capital ratios:
|
||||||||
|
Tier 1 capital to average assets
|
9.88
|
9.77
|
||||||
|
Tier 1 capital to risk weighted assets
|
12.18
|
12.69
|
||||||
|
Total capital to risk weighted assets
|
12.73
|
13.31
|
||||||
|
Loan data:
|
||||||||
|
Substandard loans
|
$
|
40,941
|
$
|
34,870
|
||||
|
30 to 89 days delinquent
|
3,978
|
4,555
|
||||||
|
90 days and greater delinquent - accruing interest
|
$
|
49
|
$
|
160
|
||||
|
Trouble debt restructures - accruing interest
|
1,911
|
1,924
|
||||||
|
Trouble debt restructures - non-accrual
|
894
|
668
|
||||||
|
Non-accrual loans
|
12,555
|
8,811
|
||||||
|
Total non-performing loans
|
$
|
15,409
|
$
|
11,563
|
||||
|
Non-performing loans to total loans
|
0.53
|
%
|
0.51
|
%
|
||||
| (1) Adjusted for 3:2 stock split on June 15, 2018 | ||||||||
12
HORIZON BANCORP, INC.
|
Allocation of the Allowance for Loan and Lease Losses
|
||||||||||||||||||||
|
(Dollars in Thousands, Unaudited)
|
||||||||||||||||||||
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
|
Commercial
|
$
|
8,865
|
$
|
7,840
|
$
|
9,093
|
$
|
8,335
|
$
|
8,056
|
||||||||||
|
Real estate
|
1,761
|
1,930
|
2,188
|
2,129
|
1,750
|
|||||||||||||||
|
Mortgage warehousing
|
1,084
|
1,030
|
1,030
|
1,048
|
1,090
|
|||||||||||||||
|
Consumer
|
5,361
|
5,674
|
4,083
|
4,074
|
4,131
|
|||||||||||||||
|
Total
|
$
|
17,071
|
$
|
16,474
|
$
|
16,394
|
$
|
15,586
|
$
|
15,027
|
||||||||||
|
Net Charge-offs (Recoveries)
|
||||||||||||||||||||
|
(Dollars in Thousands, Unaudited)
|
||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
|
Commercial
|
$
|
(40
|
)
|
$
|
(38
|
)
|
$
|
84
|
$
|
158
|
$
|
219
|
||||||||
|
Real estate
|
(2
|
)
|
6
|
(9
|
)
|
24
|
(8
|
)
|
||||||||||||
|
Mortgage warehousing
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Consumer
|
80
|
519
|
217
|
(31
|
)
|
146
|
||||||||||||||
|
Total
|
$
|
38
|
$
|
487
|
$
|
292
|
$
|
151
|
$
|
357
|
||||||||||
|
Percent of net charge-offs to average loans outstanding for the period
|
0.00
|
%
|
0.01
|
%
|
0.01
|
%
|
0.01
|
%
|
0.02
|
%
|
||||||||||
|
Total Non-performing Loans
|
||||||||||||||||||||
|
(Dollars in Thousands, Unaudited)
|
||||||||||||||||||||
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
|
Commercial
|
$
|
8,987
|
$
|
6,778
|
$
|
7,354
|
$
|
3,582
|
$
|
3,033
|
||||||||||
|
Real estate
|
3,915
|
5,276
|
5,716
|
5,545
|
5,285
|
|||||||||||||||
|
Mortgage warehousing
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Consumer
|
2,507
|
3,027
|
3,344
|
3,307
|
3,245
|
|||||||||||||||
|
Total
|
$
|
15,409
|
$
|
15,081
|
$
|
16,414
|
$
|
12,434
|
$
|
11,563
|
||||||||||
|
Non-performing loans to total loans
|
0.53
|
%
|
0.53
|
%
|
0.58
|
%
|
0.51
|
%
|
0.51
|
%
|
||||||||||
|
Other Real Estate Owned and Repossessed Assets
|
||||||||||||||||||||
|
(Dollars in Thousands, Unaudited)
|
||||||||||||||||||||
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
||||||||||||||||
|
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
|
Commercial
|
$
|
2,628
|
$
|
547
|
$
|
578
|
$
|
324
|
$
|
409
|
||||||||||
|
Real estate
|
302
|
281
|
200
|
1,443
|
1,805
|
|||||||||||||||
|
Mortgage warehousing
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Consumer
|
62
|
42
|
60
|
26
|
21
|
|||||||||||||||
|
Total
|
$
|
2,992
|
$
|
870
|
$
|
838
|
$
|
1,793
|
$
|
2,235
|
||||||||||
13
HORIZON BANCORP, INC.
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
|
June 30, 2018
|
June 30, 2017
|
|||||||||||||||||||||||
|
Average
Balance |
Interest
|
Average
Rate |
Average
Balance |
Interest
|
Average
Rate |
|||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||
|
Interest-earning assets
|
||||||||||||||||||||||||
|
Federal funds sold
|
$
|
3,367
|
$
|
15
|
1.79
|
%
|
$
|
1,728
|
$
|
6
|
1.39
|
%
|
||||||||||||
|
Interest-earning deposits
|
25,946
|
107
|
1.65
|
%
|
27,677
|
83
|
1.20
|
%
|
||||||||||||||||
|
Investment securities - taxable
|
416,182
|
2,441
|
2.35
|
%
|
423,815
|
2,155
|
2.04
|
%
|
||||||||||||||||
|
Investment securities - non-taxable(1)
|
307,219
|
1,870
|
3.15
|
%
|
290,494
|
1,766
|
3.40
|
%
|
||||||||||||||||
|
Loans receivable(2)(3)
|
2,886,087
|
36,308
|
5.08
|
%
|
2,199,913
|
26,795
|
4.94
|
%
|
||||||||||||||||
|
Total interest-earning assets(1)
|
3,638,801
|
40,741
|
4.57
|
%
|
2,943,627
|
30,805
|
4.33
|
%
|
||||||||||||||||
|
Non-interest-earning assets
|
||||||||||||||||||||||||
|
Cash and due from banks
|
44,213
|
42,331
|
||||||||||||||||||||||
|
Allowance for loan losses
|
(16,617
|
)
|
(15,131
|
)
|
||||||||||||||||||||
|
Other assets
|
351,154
|
279,024
|
||||||||||||||||||||||
|
Total average assets
|
$
|
4,017,551
|
$
|
3,249,851
|
||||||||||||||||||||
|
Liabilities and Stockholders' Equity
|
||||||||||||||||||||||||
|
Interest-bearing liabilities
|
||||||||||||||||||||||||
|
Interest-bearing deposits
|
$
|
2,403,780
|
$
|
3,920
|
0.65
|
%
|
$
|
1,980,025
|
$
|
1,721
|
0.35
|
%
|
||||||||||||
|
Borrowings
|
489,608
|
2,679
|
2.19
|
%
|
359,462
|
1,338
|
1.49
|
%
|
||||||||||||||||
|
Subordinated debentures
|
36,525
|
592
|
6.50
|
%
|
36,340
|
548
|
6.05
|
%
|
||||||||||||||||
|
Total interest-bearing liabilities
|
2,929,913
|
7,191
|
0.98
|
%
|
2,375,827
|
3,607
|
0.61
|
%
|
||||||||||||||||
|
Non-interest-bearing liabilities
|
||||||||||||||||||||||||
|
Demand deposits
|
605,188
|
499,446
|
||||||||||||||||||||||
|
Accrued interest payable and other liabilities
|
16,482
|
19,143
|
||||||||||||||||||||||
|
Stockholders' equity
|
465,968
|
355,435
|
||||||||||||||||||||||
|
Total average liabilities and stockholders' equity
|
$
|
4,017,551
|
$
|
3,249,851
|
||||||||||||||||||||
|
Net interest income/spread
|
$
|
33,550
|
3.59
|
%
|
$
|
27,198
|
3.73
|
%
|
||||||||||||||||
|
Net interest income as a percent of average interest-earning assets(1)
|
3.78
|
%
|
3.84
|
%
|
||||||||||||||||||||
|
(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.
|
||||
14
HORIZON BANCORP, INC.
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
|
Six Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
|
June 30, 2018
|
June 30, 2017
|
|||||||||||||||||||||||
|
Average
Balance |
Interest
|
Average
Rate |
Average
Balance |
Interest
|
Average
Rate |
|||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||
|
Interest-earning assets
|
||||||||||||||||||||||||
|
Federal funds sold
|
$
|
3,560
|
$
|
29
|
1.64
|
%
|
$
|
2,377
|
$
|
11
|
0.93
|
%
|
||||||||||||
|
Interest-earning deposits
|
24,749
|
197
|
1.61
|
%
|
26,220
|
152
|
1.17
|
%
|
||||||||||||||||
|
Investment securities - taxable
|
409,669
|
4,767
|
2.35
|
%
|
411,417
|
4,487
|
2.20
|
%
|
||||||||||||||||
|
Investment securities - non-taxable(1)
|
307,462
|
3,735
|
3.13
|
%
|
280,563
|
3,403
|
3.40
|
%
|
||||||||||||||||
|
Loans receivable(2)(3)
|
2,855,236
|
71,439
|
5.05
|
%
|
2,150,307
|
51,586
|
4.85
|
%
|
||||||||||||||||
|
Total interest-earning assets(1)
|
3,600,676
|
80,167
|
4.55
|
%
|
2,870,884
|
59,639
|
4.29
|
%
|
||||||||||||||||
|
Non-interest-earning assets
|
||||||||||||||||||||||||
|
Cash and due from banks
|
43,984
|
41,788
|
||||||||||||||||||||||
|
Allowance for loan losses
|
(16,480
|
)
|
(15,035
|
)
|
||||||||||||||||||||
|
Other assets
|
352,684
|
279,497
|
||||||||||||||||||||||
|
Total average assets
|
$
|
3,980,864
|
$
|
3,177,134
|
||||||||||||||||||||
|
Liabilities and Stockholders' Equity
|
||||||||||||||||||||||||
|
Interest-bearing liabilities
|
||||||||||||||||||||||||
|
Interest-bearing deposits
|
$
|
2,354,578
|
$
|
6,791
|
0.58
|
%
|
$
|
1,970,235
|
$
|
3,474
|
0.36
|
%
|
||||||||||||
|
Borrowings
|
508,731
|
5,251
|
2.08
|
%
|
305,116
|
2,275
|
1.50
|
%
|
||||||||||||||||
|
Subordinated debentures
|
37,695
|
1,164
|
6.23
|
%
|
36,315
|
1,124
|
6.24
|
%
|
||||||||||||||||
|
Total interest-bearing liabilities
|
2,901,004
|
13,206
|
0.92
|
%
|
2,311,666
|
6,873
|
0.60
|
%
|
||||||||||||||||
|
Non-interest-bearing liabilities
|
||||||||||||||||||||||||
|
Demand deposits
|
600,214
|
495,262
|
||||||||||||||||||||||
|
Accrued interest payable and other liabilities
|
16,490
|
19,901
|
||||||||||||||||||||||
|
Stockholders' equity
|
463,156
|
350,305
|
||||||||||||||||||||||
|
Total average liabilities and stockholders' equity
|
$
|
3,980,864
|
$
|
3,177,134
|
||||||||||||||||||||
|
Net interest income/spread
|
$
|
66,961
|
3.64
|
%
|
$
|
52,766
|
3.69
|
%
|
||||||||||||||||
|
Net interest income as a percent of average interest-earning assets(1)
|
3.81
|
%
|
3.81
|
%
|
||||||||||||||||||||
|
(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.
|
||||
15
HORIZON BANCORP, INC.
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
|
June 30
|
December 31
|
|||||||
|
2018
|
2017
|
|||||||
|
(Unaudited)
|
||||||||
|
Assets
|
||||||||
|
Cash and due from banks
|
$
|
69,018
|
$
|
76,441
|
||||
|
Investment securities, available for sale
|
526,195
|
509,665
|
||||||
|
Investment securities, held to maturity (fair value of $206,730 and $201,085)
|
209,767
|
200,448
|
||||||
|
Loans held for sale
|
3,000
|
3,094
|
||||||
|
Loans, net of allowance for loan losses of $17,071 and $16,394
|
2,907,445
|
2,815,601
|
||||||
|
Premises and equipment, net
|
75,063
|
75,529
|
||||||
|
Federal Home Loan Bank stock
|
18,105
|
18,105
|
||||||
|
Goodwill
|
119,880
|
119,880
|
||||||
|
Other intangible assets
|
11,359
|
12,402
|
||||||
|
Interest receivable
|
12,993
|
16,244
|
||||||
|
Cash value of life insurance
|
76,576
|
75,931
|
||||||
|
Other assets
|
47,210
|
40,963
|
||||||
|
Total assets
|
$
|
4,076,611
|
$
|
3,964,303
|
||||
|
Liabilities
|
||||||||
|
Deposits
|
||||||||
|
Non-interest bearing
|
$
|
615,018
|
$
|
601,805
|
||||
|
Interest bearing
|
2,401,145
|
2,279,198
|
||||||
|
Total deposits
|
3,016,163
|
2,881,003
|
||||||
|
Borrowings
|
524,846
|
564,157
|
||||||
|
Subordinated debentures
|
37,745
|
37,653
|
||||||
|
Interest payable
|
1,441
|
886
|
||||||
|
Other liabilities
|
25,881
|
23,526
|
||||||
|
Total liabilities
|
3,606,076
|
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 (Restated - See Note 1)
|
||||||||
|
Issued 38,387,709 and 38,323,604 shares (Restated - See Note 1),
Outstanding 38,362,640 and 38,294,729 shares (Restated - See Note 1) |
-
|
-
|
||||||
|
Additional paid-in capital
|
275,587
|
275,059
|
||||||
|
Retained earnings
|
205,535
|
185,570
|
||||||
|
Accumulated other comprehensive loss
|
(10,587
|
)
|
(3,551
|
)
|
||||
|
Total stockholders' equity
|
470,535
|
457,078
|
||||||
|
Total liabilities and stockholders' equity
|
$
|
4,076,611
|
$
|
3,964,303
|
||||
|
(1) Adjusted for 3:2 stock split on June 15, 2018
|
|
16
HORIZON BANCORP, INC.
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data, Unaudited)
(Dollar Amounts in Thousands, Except Per Share Data, Unaudited)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
|
June 30
|
June 30
|
|||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
|||||||||||||
|
Interest Income
|
||||||||||||||||
|
Loans receivable
|
$
|
36,308
|
$
|
26,795
|
$
|
71,439
|
$
|
51,586
|
||||||||
|
Investment securities
|
||||||||||||||||
|
Taxable
|
2,563
|
2,244
|
4,993
|
4,650
|
||||||||||||
|
Tax exempt
|
1,870
|
1,766
|
3,735
|
3,403
|
||||||||||||
|
Total interest income
|
40,741
|
30,805
|
80,167
|
59,639
|
||||||||||||
|
Interest Expense
|
||||||||||||||||
|
Deposits
|
3,920
|
1,721
|
6,791
|
3,474
|
||||||||||||
|
Borrowed funds
|
2,679
|
1,338
|
5,251
|
2,275
|
||||||||||||
|
Subordinated debentures
|
592
|
548
|
1,164
|
1,124
|
||||||||||||
|
Total interest expense
|
7,191
|
3,607
|
13,206
|
6,873
|
||||||||||||
|
Net Interest Income
|
33,550
|
27,198
|
66,961
|
52,766
|
||||||||||||
|
Provision for loan losses
|
635
|
330
|
1,202
|
660
|
||||||||||||
|
Net Interest Income after Provision for Loan Losses
|
32,915
|
26,868
|
65,759
|
52,106
|
||||||||||||
|
Non-interest Income
|
||||||||||||||||
|
Service charges on deposit accounts
|
1,907
|
1,566
|
3,795
|
2,966
|
||||||||||||
|
Wire transfer fees
|
180
|
178
|
330
|
328
|
||||||||||||
|
Interchange fees
|
1,555
|
1,382
|
2,883
|
2,558
|
||||||||||||
|
Fiduciary activities
|
1,818
|
1,943
|
3,743
|
3,865
|
||||||||||||
|
Gains on sale of investment securities (includes $0 and $(3) for the three months ended June 30, 2018 and 2017, respectively, and $11 and $32 for the six months ended June 30, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassifications)
|
||||||||||||||||
|
Gain on sale of mortgage loans
|
1,896
|
2,054
|
3,319
|
3,968
|
||||||||||||
|
Mortgage servicing income net of impairment
|
511
|
359
|
860
|
806
|
||||||||||||
|
Increase in cash value of bank owned life insurance
|
442
|
408
|
877
|
872
|
||||||||||||
|
Death benefit on bank owned life insurance
|
154
|
-
|
154
|
-
|
||||||||||||
|
Other income
|
469
|
325
|
1,278
|
376
|
||||||||||||
|
Total non-interest income
|
8,932
|
8,212
|
17,250
|
15,771
|
||||||||||||
|
Non-interest Expense
|
||||||||||||||||
|
Salaries and employee benefits
|
13,809
|
12,466
|
28,182
|
24,175
|
||||||||||||
|
Net occupancy expenses
|
2,520
|
2,196
|
5,486
|
4,648
|
||||||||||||
|
Data processing
|
1,607
|
1,502
|
3,303
|
2,809
|
||||||||||||
|
Professional fees
|
376
|
535
|
877
|
1,148
|
||||||||||||
|
Outside services and consultants
|
1,267
|
1,265
|
2,531
|
2,487
|
||||||||||||
|
Loan expense
|
1,525
|
1,250
|
2,782
|
2,357
|
||||||||||||
|
FDIC insurance expense
|
345
|
243
|
655
|
506
|
||||||||||||
|
Other losses
|
269
|
78
|
415
|
128
|
||||||||||||
|
Other expense
|
3,224
|
2,953
|
6,548
|
5,751
|
||||||||||||
|
Total non-interest expense
|
24,942
|
22,488
|
50,779
|
44,009
|
||||||||||||
|
Income Before Income Taxes
|
16,905
|
12,592
|
32,230
|
23,868
|
||||||||||||
|
Income tax expense (includes $0 and $(1) for the three months ended months ended June 30, 2018 and 2017, respectively, related to income tax expense from reclassification items) June 30, 2018 and 2017, respectively, and $2 and $11 for the six
|
2,790
|
3,520
|
5,311
|
6,572
|
||||||||||||
|
Net Income
|
$
|
14,115
|
$
|
9,072
|
$
|
26,919
|
$
|
17,296
|
||||||||
|
Basic Earnings Per Share (1)
|
$
|
0.37
|
$
|
0.27
|
$
|
0.70
|
$
|
0.52
|
||||||||
|
Diluted Earnings Per Share (1)
|
0.37
|
0.27
|
0.70
|
0.51
|
||||||||||||
|
(1) Adjusted for 3:2 stock split on June 15, 2018
|
|
17