(NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and twelve-month periods ended December 31, 2014.

SUMMARY:

  • Assets surpassed $2.0 billion during 2014, ending the year at $2.1 billion as of December 31, 2014.
  • Net income for the year ending December 31, 2014 was $18.1 million or $1.90 diluted earnings per share.
  • Fourth quarter 2014 net income was $4.9 million or $.51 diluted earnings per share.
  • Total loans, excluding mortgage warehouse loans, increased 28.9% or $281.6 million during the year ended December 31, 2014.
  • The quarterly dividend was increased twice during the year ended December 31, 2014 from 11 cents to 13 cents in the second quarter and to 14 cents in the fourth quarter.
  • Return on average assets was 0.96% for the fourth quarter of 2014 and 0.93% for the year ending December 31, 2014.
  • Return on average common equity was 10.72% for the fourth quarter of 2014 and 10.60% for the year ending December 31, 2014.
  • Non-performing loans to total loans as of December 31, 2014 were 1.62% compared to 1.70% as of December 31, 2013.
  • Substandard loans totaled $27.7 million as of December 31, 2014, a decrease of $7.1 million from $34.7 million as of December 31, 2013.
  • Horizon’s full-service Carmel, Indiana office is expected to open in February of 2015.

Craig M. Dwight, Chairman and CEO, commented: “I am pleased to announce Horizon’s 2014 results, a year in which tremendous progress was made across the company. Headlining the year is the growth we achieved throughout the loan portfolio and the successful integration of the Summit Community Bank (“Summit”) acquisition in East Lansing, Michigan. All loan product types experienced significant growth during the year, allowing us to combat industry-wide net interest margin pressure. Additionally, the increase in assets from both organic loan growth and the Summit acquisition enabled us to spread operating costs across a larger and more diversified revenue stream.”

Dwight continued, “Excluding one-time expenses related to the Summit acquisition, the decrease in income from acquisition-related purchase accounting adjustments and gains on the sale of investment securities, Horizon’s net income and diluted earnings per share increased by 6.4% and 3.0%, respectively, for the year ended December 31, 2014 compared to the previous year. This increase is a notable accomplishment given the lower mortgage volume and poor weather conditions which decreased net income and earnings per share during the first quarter of 2014. The increase in core net income and diluted earnings per share illustrate the incremental operating leverage Horizon achieved through our strategic growth initiative. We believe our investments in technology, new markets, and talented employees have created a solid base to maintain this momentum into 2015.”

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollar Amounts in Thousands Except per Share Data)
       
Three Months Ended Twelve Months Ended
December 31 December 31
2014   2013   2014   2013
(Unaudited)   (Unaudited)

Non-GAAP Reconciliation of Net Income

Net income as reported $ 4,948 $ 4,115 $ 18,101 $ 19,876
Summit expenses - - 1,335 -
Tax effect   -       -       (467 )     -  
Net income excluding Summit expenses $ 4,948 $ 4,115 $ 18,969 $ 19,876
 
Acquisition related purchase accounting adjustments ("PAUs") (719 ) (850 ) (2,745 ) (6,294 )
Tax effect   252       298       961       2,203  
Net income excluding Summit expenses and PAUs $ 4,481 3,563 $ 17,185 $ 15,785
 
Gain on sale of investment securities - - (988 ) (374 )
Tax effect   -       -       346       131  
Net income excluding gain on sale of investment securities $ 4,481     $ 3,563     $ 16,543     $ 15,542  
 

Non-GAAP Reconciliation of Diluted Earnings per Share

Diluted earnings per share as reported $ 0.51 $ 0.45 $ 1.90 $ 2.17
Summit expenses - - 0.14 -
Tax effect   -       -       (0.05 )     -  
Diluted earnings per share excluding Summit expenses $ 0.51 $ 0.45 $ 1.99 $ 2.17
 
Acquisition related PAUs (0.07 ) (0.09 ) (0.29 ) (0.70 )
Tax effect   0.03       0.03       0.10       0.24  
Diluted earnings per share excluding Summit expenses and PAUs $ 0.46     $ 0.39     $ 1.80     $ 1.71  
 
Gain on sale of investment securities - - (0.10 ) (0.04 )
Tax effect   -       -       0.04       0.01  
Net income excluding gain on sale of investment securities $ 0.46     $ 0.39     $ 1.74     $ 1.69  

The following tables present the amount and growth rate of loans by product type for the three and twelve months ended December 31, 2014.

Loan Growth by Type
Three Months Ended December 31, 2014
(Dollars in Thousands)
          Annualized
December 31 September 30 Amount Percent Percent
2014   2014   Change   Change   Change
(Unaudited)   (Unaudited)            
Commercial loans $ 674,314 $ 677,349 $ (3,035 ) -0.4 % -1.8 %
Residential mortgage loans 254,625 251,739 2,886 1.1 % 4.5 %
Consumer loans 320,459 308,800 11,659 3.8 % 15.0 %
Held for sale loans   6,143     4,167     1,976   47.4 % 188.1 %
Subtotal 1,255,541 1,242,055 13,486 1.1 % 4.3 %
Mortgage warehouse loans   129,156     105,133     24,023   22.9 % 90.7 %
Total loans $ 1,384,697   $ 1,347,188   $ 37,509   2.8 % 11.0 %
 
Loan Growth by Type
Twelve Months Ended December 31, 2014
(Dollars in Thousands)
Annualized
December 31 December 31 Amount Percent Percent
2014   2013   Change   Change   Change
(Unaudited)                
Commercial loans $ 674,314 $ 505,189 $ 169,125 33.5 % 33.5 %
Residential mortgage loans 254,625 185,958 68,667 36.9 % 36.9 %
Consumer loans 320,459 279,525 40,934 14.6 % 14.6 %
Held for sale loans   6,143     3,281     2,862   87.2 % 87.2 %
Subtotal 1,255,541 973,953 281,588 28.9 % 28.9 %
Mortgage warehouse loans   129,156     98,156     31,000   31.6 % 31.6 %
Total loans $ 1,384,697   $ 1,072,109   $ 312,588   29.2 % 29.2 %

“The resiliency of our net interest margin throughout the year illustrates the positive impact our loan growth has made,” Dwight continued. “Horizon’s core net interest margin, excluding income from acquisition-related purchase accounting adjustments, increased from 3.39% in the fourth quarter of 2013 to 3.48% in the fourth quarter of 2014. For the year ended December 31, 2014, the net interest margin decreased only 10 basis points to 3.47% in an environment with margin pressure persisting throughout the banking industry.”

Non-GAAP Reconciliation of Net Interest Margin
(Dollar Amounts in Thousands)
  Three Months Ended   Twelve Months Ended
December 31  

September 30

   December 31 December 31
2014   2014   2013 2014   2013
(Unaudited)   (Unaudited)     (Unaudited)    

Net Interest Margin As Reported

  
Net interest income $ 16,523 $ 16,400 $ 14,129 $ 62,983 $ 61,383
Average interest-earning assets 1,865,750 1,877,066 1,616,461 1,794,263 1,617,028
Net interest income as a percent of average interest-earning assets 3.64 % 3.59 % 3.60 % 3.62 % 3.96 %
 

Impact of Acquisitions

Interest income from acquisition-related purchase accounting
adjustments $ (719 ) $ (438 ) $ (850 ) $ (2,745 ) $ (6,294 )
 

Net Interest Margin Excluding Impact of Acquisitions

Net interest income $ 15,804 $ 15,962 $ 13,279 $ 60,238 $ 55,089
Average interest-earning assets 1,865,750 1,877,066 1,616,461 1,794,263 1,617,028
Net interest income as a percent of average interest-earning assets 3.49 % 3.50 % 3.39 % 3.47 % 3.57 %

Dwight commented on the increase in provision for loan losses in the fourth quarter and for the year ending December 31, 2014 compared to the same periods of the previous year. “This increase reflects loan growth as well as a loan loss reserve to loan ratio in-line with current credit conditions. Non-performing loans increased $2.7 million during the fourth quarter; however, total substandard loans decreased by $7.3 million from $35.0 million as of September 30, 2014 to $27.7 million as of December 31, 2014. The increase in non-performing loans was due to one commercial real estate loan totaling $5.4 million that was moved to non-accrual status during the fourth quarter of 2014. Credit conditions continue to improve across the portfolio.”

Horizon’s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, stood at 1.29% as of December 31, 2014.

Allowance for Loan and Lease Loss Detail
As of December 31, 2014
(Dollars in Thousands, Unaudited)
       
Horizon
Legacy   Heartland   Summit   Total
Pre-discount loan balance $ 1,249,443 $ 36,489 $ 100,000 $ 1,385,932
 
Allowance for loan losses (ALLL) 16,177 289 35 16,501
Loan discount   N/A       2,734       4,644       7,378  
Total ALLL+loan discount 16,177 3,023 4,679 23,879
             
Loans, net $ 1,233,266     $ 33,466     $ 95,321     $ 1,362,053  
 
ALLL/ pre-discount loan balance 1.29 % 0.79 % 0.04 % 1.19 %
Loan discount/ pre-discount loan balance N/A 7.49 % 4.64 % 0.53 %
Total ALLL+loan discount/ pre-discount loan balance 1.29 % 8.28 % 4.68 % 1.72 %

Dwight concluded, “Horizon’s four key revenue sources – business banking, retail banking, residential mortgage lending and wealth management – all made positive contributions to our 2014 results. We remain focused on continuing this trend in 2015 in an effort to increase profitability and build shareholder value.”

Income Statement Highlights

Net income for the fourth quarter of 2014 was $4.9 million or $.51 diluted earnings per share compared to $4.1 million or $.45 diluted earnings per share in the fourth quarter of 2013. The increase in net income from the previous year reflects an increase in interest income primarily due to loan growth and an increase in non-interest income due to an increase in gain on sale of loans, interchange fees and fiduciary activities partially offset by an increase in the provision expense.

Net income for the year ended December 31, 2014 was $18.1 million or $1.90 diluted earnings per share compared to $19.9 million or $2.17 diluted earnings per share for the year ended December 31, 2013. The decrease in net income compared to the previous year was due to $1.3 million in expenses related to the Summit acquisition in 2014 and a decrease of $3.5 million in income from acquisition-related purchase accounting adjustments partially offset by an increase of $614,000 in income from the gain on sale of investment securities. Excluding these non-core items, net income for the year ending December 31, 2014 increased $998,000 or 6.4% to $16.5 million compared to $15.5 million in the previous year.

Horizon’s net interest margin was 3.64% during the fourth quarter of 2014, up from 3.59% for the prior quarter and 3.60% for same period of 2013. The increase in net interest margin compared to the prior quarter was due to acquisition-related purchase accounting adjustments and lower funding costs, and the increase compared to the same period of 2013 was primarily due to loan growth. Excluding purchase accounting adjustments related to the 2012 Heartland Bancshares, Inc. and the 2014 Summit acquisitions, the margin would have been 3.48% for the fourth quarter of 2014 compared to 3.50% for the prior quarter and 3.39% for the same period of the prior year. Interest income from acquisition-related purchase accounting adjustments was $719,000, $438,000, and $850,000 for the three months ended December 31, 2014, September 30, 2014 and December 31, 2013, respectively.

Horizon’s net interest margin was 3.62% for the year ending December 31, 2014, down from 3.96% for the year ending December 31, 2013. Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.47% for the twelve months ending December 31, 2014 compared to 3.57% for same period of 2013. Interest income from acquisition-related purchase accounting adjustments was $2.7 million and $6.3 million for the twelve months ended December 31, 2014 and December 31, 2013, respectively.

Residential mortgage lending activity during the fourth quarter of 2014 generated $2.3 million in income from the gain on sale of mortgage loans, an increase of $1.1 million from the fourth quarter of 2013. Total origination volume in the fourth quarter of 2014, including loans placed into portfolio, totaled $96.0 million, representing an increase of 36.4% from the fourth quarter of 2013 of $70.4 million. Purchase money mortgage originations during the fourth quarter of 2014 represented 67.6% of total originations compared to 77.6% of originations during the previous quarter and 75.6% during the fourth quarter of 2013.

Lending Activity

Total loans increased $312.6 million from $1.1 billion as of December 31, 2013 to $1.4 billion as of December 31, 2014 as mortgage warehouse loans increased by $31.0 million, residential mortgage loans increased by $68.7 million and consumer loans increased by $40.9 million. Commercial loans increased $169.1 million or 33.5% from $505.2 million at December 31, 2013 to $674.3 million at December 31, 2014. Total loans increased 2.8% in the fourth quarter of 2014 with positive growth contributions from both the residential mortgage and consumer loan portfolios. Commercial loans decreased 0.4% over the linked quarter due to unanticipated payoffs during the quarter; however, the pipeline going into 2015 remains solid.

Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during 2014 to $142.2 million and $123.4 million, respectively, as of December 31, 2014. Kalamazoo’s aggregate loan balances increased $28.4 million or 24.9%, and Indianapolis’ aggregate loan balances increased $50.8 million or 69.9% compared to December 31, 2013.

The provision for loan losses was $978,000 for the fourth quarter of 2014 compared to a negative provision of $997,000 for the same period of 2013. The higher provision for loan losses for the fourth quarter of 2014 compared to the same period of 2013 was due to loan growth as well as a specific reserve of $560,000 placed on one commercial real estate loan that was moved to non-accrual status during the fourth quarter of 2014. The provision for loan losses was $3.1 million for the year ended December 31, 2014 compared to $1.9 million for the same period of 2013. The higher provision for loan losses for the year ending December 31, 2014 compared to the same period of 2013 was due to loan growth as well as $1.0 million in charge-off expense related to one commercial credit in the third quarter of 2014 and a specific reserve of $560,000 placed on one commercial real estate loan that was moved to non-accrual status during the fourth quarter of 2014.

The ratio of the allowance for loan losses to total loans decreased to 1.19% as of December 31, 2014 from 1.49% as of December 31, 2013 due to an increase in total loans from both organic growth and the Summit acquisition, partially offset by an increase in the allowance for loan losses from $16.0 million as of December 31, 2013 to $16.5 million as of December 31, 2014. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 1.29% as of December 31, 2014.

Non-performing loans totaled $22.4 million as of December 31, 2014, up from $18.3 million as of December 31, 2013. Compared to December 31, 2013, non-performing commercial loans and consumer loans increased by $4.4 million and $32,000, respectively, partially offset by a decrease of $252,000 in non-performing real estate loans. The increase in non-performing commercial loans was due to the Summit acquisition as well as a commercial real estate loan totaling $5.4 million that was moved to non-accrual status in the fourth quarter of 2014. As a percentage of total loans, non-performing loans were 1.62% at December 31, 2014, down 8 basis points from 1.70% at December 31, 2013. At December 31, 2014, loans acquired in the Summit acquisition represented $1.2 million in non-performing, $2.3 million in substandard and $173,000 in delinquent loans.

Expense Management

Total non-interest expense was $3.5 million higher in 2014 compared to 2013 and $62,000 lower in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase in 2014 compared to the previous year was primarily due to an increase in salaries, occupancy, data processing and outside services and consultant costs. In addition, some of the increase in 2014 compared to 2013 was related to the Summit acquisition.

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures of the net interest margin excluding the impact of acquisition-related purchase accounting adjustments and net income and diluted earnings per share excluding the impact of one-time costs related to the Summit acquisition, acquisition-related purchase accounting adjustments and gains on the sale of investment securities. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items, although these measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure.

About Horizon

Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern and Central Indiana and Southwest and Central Michigan through its commercial banking subsidiary Horizon Bank, NA. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Market under the symbol HBNC.

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon. For these statements, Horizon claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in its Form 10-K. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, unaudited)
         
December 31 September 30 June 30 March 31 December 31
2014   2014   2014   2013   2013
Balance sheet:
Total assets $ 2,076,922 $ 2,037,045 $ 2,073,251 $ 1,806,583 $ 1,758,276
Investment securities 489,531 495,941 537,618 529,340 518,501
Commercial loans 674,314 677,349 648,202 528,635 505,189
Mortgage warehouse loans 129,156 105,133 140,896 102,146 98,156
Residential mortgage loans 254,625 251,739 235,523 189,893 185,958
Consumer loans 320,459 308,800 296,873 280,120 279,525
Earning assets 1,885,576 1,860,041 1,882,724 1,649,653 1,604,794
Non-interest bearing deposit accounts 267,667 278,527 270,023 238,499 231,096
Interest bearing transaction accounts 930,582 881,299 919,024 840,258 779,966
Time deposits 284,070 289,837 310,056 276,814 280,458
Borrowings 351,198 350,113 340,201 236,043 256,296
Subordinated debentures 32,642 32,603 32,564 32,525 32,486
Common stockholders' equity 181,914 177,280 174,836 157,283 152,020
Total stockholders’ equity 194,414 189,780 187,336 169,783 164,520
 
Income statement: Three months ended
Net interest income $ 16,523 $ 16,400 $ 16,788 $ 13,272 $ 14,129
Provision for loan losses 978 1,741 339 - (997 )
Non-interest income 6,738 7,390 6,627 5,522 5,687
Non-interest expenses 15,671 15,353 16,408 14,514 15,610
Income tax expense   1,664       1,738       1,890       863       1,088  
Net income 4,948 4,958 4,778 3,417 4,115
Preferred stock dividend   (31 )     (40 )     (31 )     (31 )     (63 )
Net income available to common shareholders $ 4,917     $ 4,918     $ 4,747     $ 3,386     $ 4,052  
 
Per share data:
Basic earnings per share $ 0.53 $ 0.53 $ 0.52 $ 0.39 $ 0.47
Diluted earnings per share 0.51 0.51 0.50 0.38 0.45
Cash dividends declared per common share 0.14 0.13 0.13 0.11 0.11
Book value per common share 19.75 19.25 19.00 18.22 17.64
Tangible book value per common share 16.26 15.75 15.47 15.52 14.97
Market value - high 26.73 23.67 22.58 24.91 26.09
Market value - low $ 22.83 $ 20.65 $ 19.57 $ 20.27 $ 21.07
Weighted average shares outstanding - Basic 9,212,156 9,208,707 9,182,986 8,630,966 8,623,360
Weighted average shares outstanding - Diluted 9,628,240 9,588,332 9,560,939 9,021,786 9,020,289
 
Key ratios:
Return on average assets 0.96 % 0.96 % 0.97 % 0.79 % 0.93 %
Return on average common stockholders' equity 10.72 10.95 11.82 8.81 10.44
Net interest margin 3.64 3.59 3.78 3.48 3.60
Loan loss reserve to total loans 1.19 1.20 1.18 1.46 1.49
Non-performing loans to loans 1.62 1.47 1.41 1.59 1.70
Average equity to average assets 9.56 9.33 8.79 9.65 9.46
Bank only capital ratios:
Tier 1 capital to average assets 8.85 8.63 8.78 9.11 9.18
Tier 1 capital to risk weighted assets 12.00 12.13 11.47 12.87 13.42
Total capital to risk weighted assets 13.12 13.26 12.53 14.12 14.67
 
Loan data:
Substandard loans $ 27,661 $ 35,023 $ 35,495 $ 32,648 $ 34,721
30 to 89 days delinquent 5,082 3,310 3,671 2,613 3,452
 
90 days and greater delinquent - accruing interest $ 115 $ 62 $ 42 $ 202 $ 48
Trouble debt restructures - accruing interest 4,372 5,838 5,614 4,997 5,053
Trouble debt restructures - non-accrual 2,643 3,061 3,178 3,662 3,427
Non-accrual loans   15,312       10,828       9,844       8,775       9,749  
Total non-performing loans $ 22,442     $ 19,789     $ 18,678     $ 17,636     $ 18,277  
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
   
December 31 December 31
2014   2013
Balance sheet:
Total assets $ 2,076,922 $ 1,758,276
Investment securities 489,531 518,501
Commercial loans 674,314 505,189
Mortgage warehouse loans 129,156 98,156
Residential mortgage loans 254,625 185,958
Consumer loans 320,459 279,525
Earning assets 1,885,576 1,604,794
Non-interest bearing deposit accounts 267,667 231,096
Interest bearing transaction accounts 930,582 790,444
Time deposits 284,070 269,980
Borrowings 351,198 256,296
Subordinated debentures 32,642 32,486
Common stockholders' equity 181,914 152,020
Total stockholders’ equity 194,414 164,520
 
Income statement: Twelve Months Ended
Net interest income $ 62,983 $ 61,383
Provision for loan losses 3,058 1,920
Non-interest income 26,277 25,906
Non-interest expenses 61,946 58,445
Income tax expense   6,155       7,048  
Net income 18,101 19,876
Preferred stock dividend   (133 )     (370 )
Net income available to common shareholders $ 17,968     $ 19,506  
 
Per share data:
Basic earnings per share $ 1.98 $ 2.26
Diluted earnings per share 1.90 2.17
Cash dividends declared per common share 0.51 0.42
Book value per common share 19.75 17.64
Tangible book value per common share 16.26 14.97
Market value - high 26.73 26.09
Market value - low $ 19.57 $ 18.97
Weighted average shares outstanding - Basic 9,060,702 8,619,330
Weighted average shares outstanding - Diluted 9,454,125 9,000,963
 
Key ratios:
Return on average assets 0.93 % 1.13 %
Return on average common stockholders' equity 10.60 12.86
Net interest margin 3.62 3.96
Loan loss reserve to total loans 1.19 1.49
Non-performing loans to loans 1.62 1.70
Average equity to average assets 9.33 9.34
Bank only capital ratios:
Tier 1 capital to average assets 8.85 9.18
Tier 1 capital to risk weighted assets 12.00 13.42
Total capital to risk weighted assets 13.12 14.67
 
Loan data:
Substandard loans $ 27,661 $ 34,721
30 to 89 days delinquent 5,082 3,452
 
90 days and greater delinquent - accruing interest $ 115 $ 48
Trouble debt restructures - accruing interest 4,372 5,053
Trouble debt restructures - non-accrual 2,643 3,427
Non-accrual loans   15,312       9,749  
Total non-performing loans $ 22,442     $ 18,277  
HORIZON BANCORP
 
Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

     
   
December 31

September 30

June 30 March 31 December 31
2014   2014   2014   2014     2013
Commercial $ 7,881 $ 7,515 $ 6,958 $ 7,236 $ 6,663
Real estate 3,180 3,304 2,367 2,813 3,462
Mortgage warehousing 1,272 1,300 1,559 1,665 1,638
Consumer 4,168 4,041 4,776 4,388 4,229
Unallocated   -     -     -     -       -
Total $ 16,501   $ 16,160   $ 15,660   $ 16,102     $ 15,992
 

Net Charge-offs (Recoveries)

(Dollars in Thousands, Unaudited)

 
Three months ended
December 31

September 30

June 30 March 31 December 31
2014   2014   2014   2014     2013
Commercial $ 199 $ 1,006 $ 185 $ (361 ) $ 214
Real estate 101 19 169 18 350
Mortgage warehousing - - - - -
Consumer   336     217     426     233       295
Total $ 636   $ 1,242   $ 780   $ (110 )   $ 859
 
Total Non-performing Loans

(Dollars in Thousands, Unaudited)

 
December 31

September 30

June 30 March 31 December 31
2014   2014   2014   2014     2013
Commercial $ 11,855 $ 9,323 $ 8,243 $ 7,313 $ 7,471
Real estate 5,894 6,312 6,672 6,357 6,146
Mortgage warehousing - - - - -
Consumer  

4,693

     4,154     3,763     3,966       4,660
Total $ 22,442   $ 19,789   $ 18,678   $ 17,636     $ 18,277
 
Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)

 
December 31

September 30

June 30 March 31 December 31
2014   2014   2014   2014     2013
Commercial $ 411 $ 376 $ 452 $ 812 $ 830
Real estate 636 875 752 867 1,277
Mortgage warehousing - - - - -
Consumer   154     3     23     39       14
Total $ 1,201   $ 1,254   $ 1,227   $ 1,718     $ 2,121
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
     
Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
Average     Average Average     Average
Balance   Interest   Rate Balance   Interest   Rate
 
ASSETS
Interest-earning assets
Federal funds sold $ 5,317 $ 2 0.15 % $ 5,462 $ 3 0.22 %
Interest-earning deposits 8,689 3 0.14 % 6,337 4 0.25 %
Investment securities - taxable 362,550 2,215 2.42 % 389,481 2,281 2.32 %
Investment securities - non-taxable (1) 145,705 1,098 4.46 % 147,184 1,111 4.40 %
Loans receivable (2)(3)   1,343,489       16,447 4.87 %   1,067,997       14,040 5.22 %
Total interest-earning assets (1) 1,865,750 19,765 4.33 % 1,616,461 17,439 4.41 %
 
Noninterest-earning assets
Cash and due from banks 28,451 24,416
Allowance for loan losses (16,094 ) (17,795 )
Other assets   156,992     136,256  
 
$ 2,035,099   $ 1,759,338  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 1,216,920 $ 1,273 0.42 % $ 1,096,241 $ 1,352 0.49 %
Borrowings 303,390 1,463 1.91 % 221,882 1,452 2.60 %
Subordinated debentures   32,619       506 6.15 %   32,464       506 6.18 %
Total interest-bearing liabilities 1,552,929 3,242 0.83 % 1,350,587 3,310 0.97 %
 
Noninterest-bearing liabilities
Demand deposits 273,973 229,424
Accrued interest payable and
other liabilities 13,740 12,807
Shareholders' equity   194,457     166,520  
 
$ 2,035,099   $ 1,759,338  
 
Net interest income/spread $ 16,523 3.50 % $ 14,129 3.44 %
 
Net interest income as a percent
of average interest earning assets (1) 3.64 % 3.60 %
(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.
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

             
Twelve Months Ended Twelve Months Ended
December 31, 2014 December 31, 2013
Average Average Average Average
Balance   Interest   Rate Balance   Interest   Rate
ASSETS
Interest-earning assets
Federal funds sold $ 6,246 $ 11 0.18 % $ 8,468 $ 21 0.25 %
Interest-earning deposits 7,087 10 0.14 % 7,720 19 0.25 %
Investment securities - taxable 387,013 9,323 2.41 % 371,594 8,401 2.26 %
Investment securities - non-taxable (1) 146,407 4,426 4.32 % 136,584 4,216 4.98 %
Loans receivable (2)(3)   1,247,510       62,435 5.01 %   1,092,662       62,229 5.70 %
Total interest-earning assets (1) 1,794,263 76,205 4.36 % 1,617,028 74,886 4.80 %
 
Noninterest-earning assets
Cash and due from banks 27,168 24,548
Allowance for loan losses (15,945 ) (18,677 )
Other assets   144,803     134,220  
 
$ 1,950,289   $ 1,757,119  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits $ 1,182,831 $ 5,257 0.44 % $ 1,092,796 $ 5,672 0.52 %
Borrowings 281,649 5,956 2.11 % 234,927 5,821 2.48 %
Subordinated debentures   32,561       2,009 6.17 %   32,406       2,010 6.20 %
Total interest-bearing liabilities 1,497,041 13,222 0.88 % 1,360,129 13,503 0.99 %
 
Noninterest-bearing liabilities
Demand deposits 258,523 219,323
Accrued interest payable and
other liabilities 12,776 13,534
Shareholders' equity   181,949     164,133  
 
$ 1,950,289   $ 1,757,119  
 
Net interest income/spread $ 62,983 3.48 % $ 61,383 3.81 %
 
Net interest income as a percent
of average interest earning assets (1) 3.62 % 3.96 %
(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.
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
   
December 31 December 31
2014   2013
(Unaudited)    
Assets
Cash and due from banks $ 43,476 $ 31,721
Investment securities, available for sale 323,764 508,591
Investment securities, held to maturity (fair value of $169,904 and $9,910) 165,767 9,910
Loans held for sale 6,143 3,281
Loans, net of allowance for loan losses of $16,501 and $15,992 1,362,053 1,052,836
Premises and equipment, net 52,461 46,194
Federal Reserve and Federal Home Loan Bank stock 11,348 14,184
Goodwill 28,176 19,748
Other intangible assets 3,965 3,288
Interest receivable 8,246 7,501
Cash value life insurance 39,382 36,190
Other assets   32,141     24,832  
Total assets $ 2,076,922   $ 1,758,276  
Liabilities
Deposits
Non-interest bearing $ 267,667 $ 231,096
Interest bearing   1,214,652     1,060,424  
Total deposits 1,482,319 1,291,520
Borrowings 351,198 256,296
Subordinated debentures 32,642 32,486
Interest payable 497 506
Other liabilities   15,852     12,948  
Total liabilities   1,882,508     1,593,756  
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, Authorized, 1,000,000 shares
Series B shares $.01 par value, $1,000 liquidation value
Issued 12,500 shares 12,500 12,500
Common stock, no par value
Authorized, 22,500,000 shares
Issued, 9,278,916 and 8,706,971 shares
Outstanding, 9,213,036 and 8,630,966 shares - -
Additional paid-in capital 45,916 32,496
Retained earnings 134,477 121,253
Accumulated other comprehensive income (loss)   1,521     (1,729 )
Total stockholders’ equity   194,414     164,520  
Total liabilities and stockholders’ equity $ 2,076,922   $ 1,758,276  
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
   
Three Months Ended Twelve Months Ended
December 31   December 31
2014   2013   2014   2013
(Unaudited)   (Unaudited)
Interest Income    
Loans receivable $ 16,447 $ 14,040 $ 62,435 $ 62,229
Investment securities
Taxable 2,220 2,288 9,344 8,441
Tax exempt   1,098       1,111       4,426       4,216  
Total interest income   19,765       17,439       76,205       74,886  
Interest Expense
Deposits 1,273 1,352 5,257 5,672
Borrowed funds 1,463 1,452 5,956 5,821
Subordinated debentures   506       506       2,009       2,010  

Total interest expense

  3,242       3,310       13,222       13,503  
Net Interest Income 16,523 14,129 62,983 61,383
Provision for loan losses   978       (997 )     3,058       1,920  
Net Interest Income after Provision for Loan Losses   15,545       15,126       59,925       59,463  
Non-interest Income
Service charges on deposit accounts 1,048 1,005 4,085 3,989
Wire transfer fees 149 135 557 697
Interchange fees 1,213 1,007 4,649 4,056
Fiduciary activities 1,360 1,197 4,738 4,337

Gain on sale of investment securities (includes $0 for the three months

ended and $988 for the twelve months ended

December 31, 2014 and $0 for the three months ended and

$374 for the twelve months ended December 31, 2013, related

to accumulated other comprehensive earnings reclassifications) - - 988 374
Gain on sale of mortgage loans 2,294 1,214 8,395 8,794
Mortgage servicing income net of impairment 249 708 805 1,521
Increase in cash value of bank owned life insurance 266 248 1,047 1,035
Other income   159       173       1,013       1,103  
Total non-interest income   6,738       5,687       26,277       25,906  
Non-interest Expense
Salaries and employee benefits 8,691 8,113 32,682 31,032
Net occupancy expenses 1,419 1,206 5,607 4,984
Data processing 949 861 3,663 3,045
Professional fees 346 358 1,731 1,668
Outside services and consultants 696 778 3,250 2,412
Loan expense 1,281 1,112 4,770 4,668
FDIC insurance expense 321 268 1,175 1,089
Other losses (168 ) 661 (70 ) 807
Other expense   2,136       2,253       9,138       8,740  

Total non-interest expense

  15,671       15,610       61,946       58,445  
Income Before Income Tax 6,612 5,203 24,256 26,924
Income tax expense (includes $0 for the three months ended and
$346 for the twelve months ended December 31, 2014 and $0 for
the three months ended and $131 for the twelve months ended
December 31, 2013 related to income tax expense from
reclassification items)   1,664       1,088       6,155       7,048  
Net Income 4,948 4,115 18,101 19,876
Preferred stock dividend and discount accretion   (31 )     (63 )     (133 )     (370 )
Net Income Available to Common Shareholders $ 4,917     $ 4,052     $ 17,968     $ 19,506  
Basic Earnings Per Share $ 0.53 $ 0.47 $ 1.98 $ 2.26
Diluted Earnings Per Share 0.51 0.45 1.90 2.17