Horizon Bancorp Announces Record Earnings for 2012
MICHIGAN CITY, Ind.--(BUSINESS WIRE)--
(NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited financial
results for the three and twelve month periods ended December 31, 2012.
All share data has been adjusted to reflect the three-for-two stock
split paid on November 9, 2012.
SUMMARY:
Horizon’s net income of $19.5 million for the twelve months ending
2012 surpasses the $12.8 million earned in the prior year and
represents the highest annual net income in the Company’s history.
Fourth quarter 2012 net income was $5.2 million or $. 56 diluted
earnings per share, a 22% increase in diluted earnings per share
compared to 2011. In addition, this represents the highest quarterly
net income in the Company’s history.
Horizon’s net income for 2012 was $19.5 million or $2.30 diluted
earnings per share, a 52% increase in diluted earnings per share
compared to the same period in 2011.
On July 17, 2012 Horizon completed its acquisition of Heartland
Bancshares, Inc. (“Heartland”). On that date, Horizon recorded $229.5
million in assets and $218.7 million in liabilities.
As a result of the acquisition and organic growth, total assets
increased to a record $1.8 billion at December 31, 2012, compared with
$1.5 billion at December 31, 2011.
Total loans increased $207.5 million during 2012, consisting of $92.9
million in organic loan growth and $114.6 million net loans
acquired from Heartland.
Total deposits increased $283.7 million during 2012, consisting of $72.5
million in organic deposit growth and $211.2 million in
deposits acquired from Heartland.
Net interest income, after provisions for loan losses, for 2012 was
$54.7 million compared with $42.8 million for 2011.
The provision for loan losses decreased to $3.5 million for the year
ended December 31, 2012 compared to $5.3 million for 2011.
Net charge-offs in 2012 were $4.1 million compared to $5.5 million in
2011.
Substandard and 30 to 89 day delinquent loans in total decreased by
$1.9 million during 2012 from $60.8 million at December 31, 2011 to
$58.9 million at December 31, 2012 including $21.5 million at December
31, 2012 acquired from the Heartland merger.
Return on average assets was 1.13% in the fourth quarter of 2012 and
1.19% the year ended December 31, 2012.
Return on average common equity was 13.70% in fourth quarter 2012 and
14.72% for the year ended December 31, 2012.
Horizon Bank’s capital ratios continue to be well above the regulatory
standards for well-capitalized banks.
Performance Highlights
Net income for the fourth quarter of 2012 was $5.2 million or $. 56
diluted earnings per share, which reflects a 22% increase in diluted
earnings per share over the $3.5 million or $. 46 diluted earnings per
share in the fourth quarter of 2011. Net income for 2012 rose to $19.5
million or $2.30 diluted earnings per share, which reflects a 52%
increase in diluted earnings per share over the net income of $12.8
million or $1.51 diluted earnings per share for 2011.
Craig M. Dwight, President and CEO, stated: “It was gratifying that in a
year in which we made a substantial acquisition, the entire Horizon team
maintained a strong focus on growing the bank’s established business
that consequently contributed to increased shareholder value. Our
success in serving customers, expanding customer relationships and
winning new customers led to organic year-over-year growth. In addition
to the growth provided by Heartland, we continued to expand Horizon’s
size, scope, and access to new market opportunities in our other
markets.”
“We believe Horizon’s continued success reflects our business expansion
strategy and focus on a balanced mix of five revenue streams – business
banking, retail banking, residential mortgage lending, mortgage
warehouse lending and investment management. Being somewhat
counter-cyclical sectors in nature, these are designed to deliver
consistent and stable performance over time.”
“In 2012, despite a sluggish economy and suppressed interest rates, all
five business sectors delivered growth and strong performance.
Commercial lending, which was a key focus in 2012, grew significantly,
particularly in the Indianapolis, Indiana and Kalamazoo, Michigan
markets. The midyear addition of Heartland’s Indianapolis area locations
and the 2012 opening of a new commercial banking office in Indianapolis
offer the potential to further expand commercial lending.”
Dwight continued, “Horizon had strong production in residential mortgage
lending, and related increases from the gain on sale primarily of
long-term, low fixed-rate loans which we did not retain in order to
manage interest rate risk. Also due to the active mortgage and
refinancing market, our mortgage warehousing business, which generates
low-cost capital for the Company, grew considerably in 2012.”
“We also continued our diligence in managing expenses. Productivity
enhancements in past years have contributed to Horizon’s efficiency in
recent years and continue to support efficient growth. We anticipate
continuing productivity improvements related to the acquired Heartland
business. The ongoing low interest rate environment will continue to
present challenges, however, we were satisfied with our ability to
maintain net interest margin in 2012.”
The net interest margin was 4.16% in the fourth quarter of 2012, up from
3.95% for the three-month period ending December 31, 2011. The net
interest margin was 3.89% for the year ended December 31, 2012, up from
3.74% for 2011. The increase in the margin in 2012 compared to 2011 was
due to the recognition of approximately $1.5 million of interest income
during the fourth quarter from the Heartland loan discounts along with
the reduction in the rate paid on interest bearing liabilities.
Excluding the interest income recognized from the loan discounts, the
margin would have been 3.81% and 3.79% for the three and twelve month
periods ending December 31, 2012, respectively.
During the fourth quarter of 2012, residential mortgage loan activity
generated $4.0 million in income from the gain on sale of mortgage
loans, an increase of $1.5 million from the same period in 2011.
Lending Activity
Total loans increased by $207.5 million from $983.2 million at December
31, 2011 to $1.2 billion at December 31, 2012. For 2012, commercial
loans increased by $108.1 million, mortgage warehouse loans increased by
$43.1 million, consumer loans increased by $23.7 million and residential
mortgage loans increased by $32.6 million compared to December 31, 2011
loan levels. The acquisition of Heartland increased total loans by
$114.6 million, and Horizon generated an additional $92.9 million in net
organic loan growth during 2012.
“In a very competitive environment for quality lending prospects, it was
encouraging to demonstrate meaningful organic loan growth,” explained
Dwight. “In addition, we made considerable progress in improving overall
credit quality in 2012, measured by net charge-offs, which declined 25%
in 2012 compared to the prior year, also lower loan delinquency, and
effectively disposing of repossessed collateral and other real estate
owned.”
“Although loans past due 30 to 89 days and non-performing loans
increased primarily as a result of the acquisition, this was expected
and we are working diligently with borrowers to resolve issues and
return loans to current status. We have deployed a seasoned expert in
handling troubled loans to address these challenged credits. Horizon is
also seeing progress from its loan collection efforts.”
The provision for loan losses was $1.7 million for the fourth quarter of
2012, which was $877,000 more than the provision for the same period of
the prior year. For the year ended 2012, the provision for loan losses
was $3.5 million, which was $1.8 million less than the provision for the
prior year. The higher provision for loan losses during the fourth
quarter was related to organic growth in the Company’s loan portfolio
and $431,000 of charge-offs related to the credit losses resulting from
the Heartland loans acquired that exceeded the loan discounts recorded
at the time of the acquisition. As a percentage of total loans,
non-performing loans were 1.97% on December 31, 2012, down from 2.08% on
September 30, 2012, and 2.02% on December 31, 2011.
The ratio of allowance for loan losses to total loans decreased to 1.52%
as of December 31, 2012 from 1.89% as of December 31, 2011. The decrease
in the ratio was primarily due to the increase in total loans resulting
from the Heartland acquisition in which loans were recorded at fair
value with no allowance allocated to them at December 31, 2012.
Non-performing loans totaled $23.8 million on December 31, 2012, down
from $24.4 million on September 30, 2012, and up from $20.1 million on
December 31, 2011. The increase from December 31, 2011 was due to the
Heartland acquisition. Excluding Heartland, non-performing loans would
have declined to $16.5 million at December 31, 2012 from $19.1 million
at September 30, 2012.
At December 31, 2012, loans acquired in the Heartland acquisition
represented $7.3 million in non-performing, $18.1 million in substandard
and $3.4 million in delinquent loans, which compares to $5.3 million in
non-performing, $20.0 million in substandard and $4.6 million in
delinquent loans at September 30, 2012.
Other Real Estate Owned (OREO) totaled $2.6 million on December 31,
2012, representing no change from September 30, 2012, but down from $2.8
million on December 31, 2011. During the fourth quarter, eight
properties with a book value of $866,000 as of September 30, 2012 were
sold, and seven properties with a book value of $975,000 as of December
31, 2012 were transferred into OREO. Another four properties were
written down by $109,000. On December 31, 2012, OREO was comprised of 20
properties. Of these properties, five totaling $1.3 million were
commercial real estate and 15 totaling $1.3 million were residential
real estate.
Expense Management
Total non-interest expense was $7.9 million higher for the year ending
December 31, 2012 compared to 2011 and $2.8 million higher for the three
months ending December 31, 2012 compared to the three months ending
December 31, 2011. Salaries and employee benefits increased $5.5 million
for the year ending December 31, 2012 compared to 2011 and were $2.0
million higher for the three months ending December 31, 2012 compared to
2011. These increases were primarily the result of changes to annual
merit pay, employee benefits costs, commissions earned and bonus
accruals. In addition, compensation expense was higher due to the
Heartland merger and directly related to Horizon’s investment in growth
markets. Included in 2012’s non-interest expense was approximately $1.5
million of transaction expenses related to the Heartland acquisition.
Outlook
Dwight concluded: “In an eventful year with numerous potential
distractions, Horizon grew its existing banking business while
integrating acquired assets and positioning the Company to pursue
additional expansion opportunities. In addition to the acquisition,
Horizon opened two new full service branches: one in Valparaiso,
Indiana, which was our third branch in this market, and relocated a loan
and deposit office in Kalamazoo, Michigan. We also opened the loan and
deposit office in Indianapolis, Indiana, which grew total assets to $35
million in approximately six months of operations.”
“We very are diligent in analyzing opportunities before opening offices
or branches. We anticipate leasing an empty bank building in downtown
Kalamazoo and opening a new office in the coming months to serve this
strong-performing market. We have also started construction on a branch
in the Indianapolis suburb of Greenwood, Indiana. When completed, we
plan to relocate a current branch to this location, which we believe is
far superior.”
“Horizon continues to consider opportunities to expand in our existing
and new markets and to further leverage our capabilities and business
model. We remain focused on growing shareholder value, including
returning a portion of earnings as cash dividends. We were gratified
that during a time of great uncertainty, speculation and volatility in
the stock market, investors recognized and rewarded our performance with
a significantly higher stock price. We are making strategic investments
in people and capabilities which, we believe, will allow us to be more
productive and generate business, creating a balanced approach to
building the Horizon franchise.”
Horizon Bancorp is a locally owned, independent, commercial bank holding
company serving Northern and Central Indiana and Southwest Michigan
through its commercial banking subsidiary, Horizon Bank, which also
operates under the “Heartland Community Bank a Horizon Bank Company”
name in certain markets. Horizon also offers mortgage-banking services
throughout the Midwest. Horizon Bancorp may be reached online at www.accesshorizon.com.
Its common stock is traded on the NASDAQ Global Market under the symbol
HBNC.
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 “Item 1A Risk Factors” of Part I of
Horizon’s Annual Report on Form 10-K for the fiscal year ended December
31, 2011. 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
2012
2012
2012
2012
2011
Balance sheet:
Total assets
$
1,847,677
$
1,846,776
$
1,563,265
$
1,546,831
$
1,547,162
Investment securities
482,801
503,804
441,715
440,601
438,145
Commercial loans
460,471
447,414
356,549
350,463
352,376
Mortgage warehouse loans
251,448
244,233
215,478
213,152
208,299
Residential mortgage loans
189,714
176,553
156,675
155,550
157,141
Consumer loans
289,084
286,848
268,437
269,388
265,377
Earning assets
1,700,595
1,690,348
1,460,544
1,451,746
1,447,818
Non-interest bearing deposit accounts
208,650
211,935
136,979
138,618
130,673
Interest bearing transaction accounts
769,822
767,202
634,907
641,128
538,083
Time deposits
315,131
327,834
273,903
284,875
341,109
Borrowings
345,764
333,150
339,880
310,889
370,111
Subordinated debentures
32,331
32,282
30,722
30,699
30,676
Common stockholders' equity
146,468
143,362
118,112
113,738
108,965
Total stockholders’ equity
158,968
155,862
130,612
126,238
121,465
Income statement:
Three months ended
Net interest income
$
17,003
$
14,999
$
13,006
$
13,198
$
13,592
Provision for loan losses
1,715
1,041
209
559
838
Other income
7,924
7,710
6,555
5,142
4,999
Other expenses
15,844
14,840
12,180
11,160
13,089
Income tax expense
2,198
1,978
2,262
2,008
1,142
Net income
5,170
4,850
4,910
4,613
3,522
Preferred stock dividend
(156
)
(63
)
(106
)
(156
)
(63
)
Net income available to common shareholders
$
5,014
$
4,787
$
4,804
$
4,457
$
3,459
Per share data:
Basic earnings per share
$
0.58
$
0.56
$
0.65
$
0.60
$
0.47
Diluted earnings per share
0.56
0.54
0.62
0.59
0.46
Cash dividends declared per common share
0.10
0.10
0.09
0.09
0.08
Book value per common share
17.00
16.64
15.88
15.33
14.68
Tangible book value per common share
14.23
13.85
14.81
14.24
13.58
Market value - high
19.68
19.08
17.73
12.33
11.97
Market value - low
$
16.54
$
17.67
$
11.76
$
11.53
$
10.82
Weighted average shares outstanding - Basic
8,617,466
8,503,475
7,434,537
7,422,860
7,421,544
Weighted average shares outstanding - Diluted
8,964,315
8,838,659
7,728,519
7,598,490
7,576,052
Key ratios:
Return on average assets
1.13
%
1.09
%
1.31
%
1.23
%
0.93
%
Return on average common stockholders' equity
13.70
13.96
16.43
15.90
12.74
Net interest margin
4.16
3.79
3.79
3.87
3.95
Loan loss reserve to total loans
1.52
1.58
1.83
1.94
1.89
Non-performing loans to loans
1.97
2.08
2.07
2.11
2.02
Average equity to average assets
8.71
8.45
8.61
8.33
7.96
Bank only capital ratios:
Tier 1 capital to average assets
7.87
8.58
8.74
8.53
8.50
Tier 1 capital to risk weighted assets
10.91
11.25
12.01
11.82
11.86
Total capital to risk weighted assets
12.16
12.50
13.27
13.08
13.12
Loan data:
Substandard loans
$
52,114
$
57,079
$
35,634
$
46,643
$
57,489
30 to 89 days delinquent
6,759
8,351
3,773
2,932
3,282
90 days and greater delinquent - accruing interest
$
51
$
109
$
13
$
28
$
37
Trouble debt restructures - accruing interest
3,702
3,356
3,092
3,188
3,540
Trouble debt restructures - non-accrual
6,649
5,062
2,786
2,439
2,198
Non-accrual loans
13,374
15,887
14,925
15,451
14,368
Total non-performing loans
$
23,776
$
24,414
$
20,816
$
21,106
$
20,143
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and
ratios, Unaudited)
December 31
December 31
2012
2011
Balance sheet:
Total assets
$
1,847,677
$
1,547,162
Investment securities
482,801
438,145
Commercial loans
460,471
352,376
Mortgage warehouse loans
251,448
208,299
Residential mortgage loans
189,714
157,141
Consumer loans
289,084
265,377
Earning assets
1,700,595
1,447,818
Non-interest bearing deposit accounts
208,650
130,673
Interest bearing transaction accounts
769,822
538,083
Time deposits
315,131
341,109
Borrowings
345,764
370,111
Subordinated debentures
32,331
30,676
Common stockholders' equity
146,468
108,965
Total stockholders’ equity
158,968
121,465
Income statement:
Twelve months ended
Net interest income
$
58,206
$
48,113
Provision for loan losses
3,524
5,282
Other income
27,331
20,299
Other expenses
54,024
46,147
Income tax expense
8,446
4,186
Net income
19,543
12,797
Preferred stock dividend
(481
)
(1,325
)
Net income available to common shareholders
$
19,062
$
11,472
Per share data:
Basic earnings per share
$
2.39
$
1.55
Diluted earnings per share
2.30
1.51
Cash dividends declared per common share
0.38
0.31
Book value per common share
17.00
14.68
Tangible book value per common share
14.23
13.58
Market value - high
19.68
12.97
Market value - low
$
11.53
$
10.82
Weighted average shares outstanding - Basic
7,974,241
7,407,258
Weighted average shares outstanding - Diluted
8,271,177
7,588,394
Key ratios:
Return on average assets
1.19
%
0.90
%
Return on average common stockholders' equity
14.72
11.20
Net interest margin
3.89
3.74
Loan loss reserve to total loans
1.52
1.89
Non-performing loans to loans
1.97
2.02
Average equity to average assets
8.63
8.30
Bank only capital ratios:
Tier 1 capital to average assets
7.87
8.52
Tier 1 capital to risk weighted assets
10.91
11.89
Total capital to risk weighted assets
12.16
13.14
Loan data:
Substandard loans
$
52,114
$
57,489
30 to 89 days delinquent
6,759
3,282
90 days and greater delinquent - accruing interest
$
51
$
37
Trouble debt restructures - accruing interest
3,702
3,540
Trouble debt restructures - non-accrual
6,649
2,198
Non-accrual loans
13,374
14,368
Total non-performing loans
$
23,776
$
20,143
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
2012
2012
2012
2012
2011
Commercial
$
7,771
$
8,058
$
7,766
$
8,435
$
8,017
Real estate
3,204
2,974
2,946
3,025
2,472
Mortgage warehousing
1,705
1,716
1,695
1,694
1,695
Consumer
5,590
5,820
5,967
6,258
6,698
Unallocated
-
-
-
-
-
Total
$
18,270
$
18,568
$
18,374
$
19,412
$
18,882
Net Charge-offs
(Dollars in Thousands, Unaudited)
Three months ended
December 31
September 30
June 30
March 31
December 31
2012
2012
2012
2012
2011
Commercial
$
1,326
$
334
$
278
$
(332
)
$
111
Real estate
143
205
113
59
118
Mortgage warehousing
-
-
-
-
-
Consumer
544
308
856
302
837
Total
$
2,013
$
847
$
1,247
$
29
$
1,066
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
December 31
September 30
June 30
March 31
December 31
2012
2012
2012
2012
2011
Commercial
$
10,693
$
11,957
$
8,796
$
9,035
$
7,958
Real estate
9,153
8,833
8,595
8,669
8,496
Mortgage warehousing
-
-
-
-
-
Consumer
3,930
3,624
3,425
3,402
3,689
Total
$
23,776
$
24,414
$
20,816
$
21,106
$
20,143
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
December 31
September 30
June 30
March 31
December 31
2012
2012
2012
2012
2011
Commercial
$
1,337
$
1,867
$
688
$
94
$
1,092
Real estate
1,228
716
338
709
1,708
Mortgage warehousing
-
-
-
-
-
Consumer
11
72
43
86
49
Total
$
2,576
$
2,655
$
1,069
$
889
$
2,849
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
Three Months Ended
Three Months Ended
December 31, 2012
December 31, 2011
Average
Average
Average
Average
Balance
Interest
Rate
Balance
Interest
Rate
ASSETS
Interest-earning assets
Federal funds sold
$
3,094
$
2
0.26
%
$
2,084
$
1
0.19
%
Interest-earning deposits
498
-
0.00
%
2,591
1
0.15
%
Investment securities - taxable
385,821
2,093
2.16
%
340,407
2,371
2.76
%
Investment securities - non-taxable (1)
126,265
1,024
4.68
%
111,344
1,007
5.28
%
Loans receivable (2)(3)(4)
1,157,474
17,341
5.97
%
957,651
14,080
5.84
%
Total interest-earning assets (1)
1,673,152
20,460
4.98
%
1,414,077
17,460
5.04
%
Noninterest-earning assets
Cash and due from banks
24,726
16,065
Allowance for loan losses
(18,049
)
(19,208
)
Other assets
135,803
99,631
$
1,815,632
$
1,510,565
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits
$
1,107,786
$
1,403
0.50
%
$
882,213
$
1,836
0.83
%
Borrowings
293,200
1,531
2.08
%
331,769
1,574
1.88
%
Subordinated debentures
33,799
523
6.16
%
31,446
458
5.78
%
Total interest-bearing liabilities
1,434,785
3,457
0.96
%
1,245,428
3,868
1.23
%
Noninterest-bearing liabilities
Demand deposits
203,393
131,523
Accrued interest payable and
other liabilities
19,317
13,372
Shareholders' equity
158,137
120,242
$
1,815,632
$
1,510,565
Net interest income/spread
$
17,003
4.02
%
$
13,592
3.80
%
Net interest income as a percent
of average interest earning assets (1)
4.16
%
3.95
%
(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 loans fees.
(4)
Loan fees and late fees included in interest on loans.
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
Twelve Months Ended
Twelve Months Ended
December 31, 2012
December 31, 2011
Average
Average
Average
Average
Balance
Interest
Rate
Balance
Interest
Rate
ASSETS
Interest-earning assets
Federal funds sold
$
5,609
$
13
0.23
%
$
20,307
$
49
0.24
%
Interest-earning deposits
2,770
6
0.22
%
7,262
2
0.03
%
Investment securities - taxable
365,693
8,814
2.41
%
332,551
10,150
3.05
%
Investment securities - non-taxable (1)
115,398
3,968
4.65
%
111,934
4,073
5.20
%
Loans receivable (2)(3)(4)
1,043,620
59,727
5.73
%
862,498
50,340
5.84
%
Total interest-earning assets (1)
1,533,090
72,528
4.83
%
1,334,552
64,614
4.98
%
Noninterest-earning assets
Cash and due from banks
19,365
15,834
Allowance for loan losses
(18,738
)
(19,047
)
Other assets
112,739
98,069
$
1,646,456
$
1,429,408
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits
$
992,880
$
6,206
0.63
%
$
887,687
$
8,346
0.94
%
Borrowings
297,597
6,166
2.07
%
261,255
6,334
2.42
%
Subordinated debentures
32,408
1,950
6.02
%
31,446
1,821
5.79
%
Total interest-bearing liabilities
1,322,885
14,322
1.08
%
1,180,388
16,501
1.40
%
Noninterest-bearing liabilities
Demand deposits
165,340
119,504
Accrued interest payable and
other liabilities
16,190
10,841
Shareholders' equity
142,041
118,675
$
1,646,456
$
1,429,408
Net interest income/spread
$
58,206
3.75
%
$
48,113
3.58
%
Net interest income as a percent
of average interest earning assets (1)
3.89
%
3.74
%
(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 loans fees.
(4)
Loan fees and late fees included in interest on loans.
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
December 31
December 31
2012
2011
(Unaudited)
Assets
Cash and due from banks
$
30,735
$
20,447
Investment securities, available for sale
482,801
431,045
Investment securities, held to maturity
-
7,100
Loans held for sale
13,744
14,090
Loans, net of allowance for loan losses of $18,270 and $18,882
1,172,447
964,311
Premises and equipment
42,184
34,665
Federal Reserve and Federal Home Loan Bank stock
13,333
12,390
Goodwill
19,748
5,910
Other intangible assets
4,048
2,292
Interest receivable
7,716
6,671
Cash value life insurance
35,192
30,190
Other assets
25,729
18,051
Total assets
$
1,847,677
$
1,547,162
Liabilities
Deposits
Non-interest bearing
$
208,650
$
130,673
Interest bearing
1,084,953
879,192
Total deposits
1,293,603
1,009,865
Borrowings
345,764
370,111
Subordinated debentures
32,331
30,676
Interest payable
560
596
Other liabilities
16,451
14,449
Total liabilities
1,688,709
1,425,697
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, $. 01 par value, $1,000 liquidation value
Authorized, 1,000,000 Series B shares
Issued 12,500 and 12,500 shares
12,500
12,500
Common stock, no par value
Authorized, 22,500,000 shares
Issued, 8,693,471 and 7,450,794 shares
Outstanding, 8,617,466 and 7,421,544 shares
-
-
Additional paid-in capital
31,965
11,736
Retained earnings
105,402
89,387
Accumulated other comprehensive income
9,101
7,842
Total stockholders’ equity
158,968
121,465
Total liabilities and stockholders’ equity
$
1,847,677
$
1,547,162
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
Three Months Ended December 31
Twelve Months Ended December 31
2012
2011
2012
2011
(Unaudited)
(Unaudited)
(Unaudited)
Interest Income
Loans receivable
$
17,341
$
14,080
$
59,727
$
50,340
Investment securities
Taxable
2,095
2,373
8,833
10,201
Tax exempt
1,024
1,007
3,968
4,073
Total interest income
20,460
17,460
72,528
64,614
Interest Expense
Deposits
1,403
1,836
6,206
8,346
Borrowed funds
1,531
1,574
6,166
6,334
Subordinated debentures
523
458
1,950
1,821
Total interest expense
3,457
3,868
14,322
16,501
Net Interest Income
17,003
13,592
58,206
48,113
Provision for loan losses
1,715
838
3,524
5,282
Net Interest Income after Provision for Loan Losses
15,288
12,754
54,682
42,831
Other Income
Service charges on deposit accounts
993
742
3,470
3,164
Wire transfer fees
249
207
892
619
Interchange fees
895
689
3,122
2,594
Fiduciary activities
1,069
1,072
3,997
3,983
Gain on sale of securities
-
23
2
1,777
Gain on sale of mortgage loans
4,002
2,463
14,123
6,449
Mortgage servicing income net of impairment
329
(424
)
234
267
Increase in cash value of bank owned life insurance
265
230
1,025
891
Death benefit on officer life insurance
-
-
-
453
Other income
122
(3
)
466
102
Total other income
7,924
4,999
27,331
20,299
Other Expenses
Salaries and employee benefits
7,976
5,963
28,383
22,875
Net occupancy expenses
1,313
1,091
4,529
4,267
Data processing
834
556
2,717
2,006
Professional fees
507
458
1,990
1,497
Outside services and consultants
692
520
2,313
1,741
Loan expense
1,397
1,310
4,276
3,586
FDIC insurance expense
310
276
1,108
1,220
Other losses
118
1,018
619
2,383
Other expenses
2,697
1,897
8,089
6,572
Total other expenses
15,844
13,089
54,024
46,147
Income Before Income Tax
7,368
4,664
27,989
16,983
Income tax expense
2,198
1,142
8,446
4,186
Net Income
5,170
3,522
19,543
12,797
Preferred stock dividend and discount accretion
(156
)
(63
)
(481
)
(1,325
)
Net Income Available to Common Shareholders
$
5,014
$
3,459
$
19,062
$
11,472
Basic Earnings Per Share
$
0.58
$
0.47
$
2.39
$
1.55
Diluted Earnings Per Share
0.56
0.46
2.30
1.51
Horizon Bancorp Mark E. Secor, Chief Financial Officer (219)
873-2611 Fax: (219) 874-9280
Press Release $HBNC Horizon Bancorp.
MICHIGAN CITY, Ind.--(BUSINESS WIRE)-- (NASDAQ: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and twelve month periods ended December 31, 2012. All share data has been adjusted to reflect the three-for-two stock split paid on November 9, 2012.
SUMMARY:
Performance Highlights
Net income for the fourth quarter of 2012 was $5.2 million or $. 56 diluted earnings per share, which reflects a 22% increase in diluted earnings per share over the $3.5 million or $. 46 diluted earnings per share in the fourth quarter of 2011. Net income for 2012 rose to $19.5 million or $2.30 diluted earnings per share, which reflects a 52% increase in diluted earnings per share over the net income of $12.8 million or $1.51 diluted earnings per share for 2011.
Craig M. Dwight, President and CEO, stated: “It was gratifying that in a year in which we made a substantial acquisition, the entire Horizon team maintained a strong focus on growing the bank’s established business that consequently contributed to increased shareholder value. Our success in serving customers, expanding customer relationships and winning new customers led to organic year-over-year growth. In addition to the growth provided by Heartland, we continued to expand Horizon’s size, scope, and access to new market opportunities in our other markets.”
“We believe Horizon’s continued success reflects our business expansion strategy and focus on a balanced mix of five revenue streams – business banking, retail banking, residential mortgage lending, mortgage warehouse lending and investment management. Being somewhat counter-cyclical sectors in nature, these are designed to deliver consistent and stable performance over time.”
“In 2012, despite a sluggish economy and suppressed interest rates, all five business sectors delivered growth and strong performance. Commercial lending, which was a key focus in 2012, grew significantly, particularly in the Indianapolis, Indiana and Kalamazoo, Michigan markets. The midyear addition of Heartland’s Indianapolis area locations and the 2012 opening of a new commercial banking office in Indianapolis offer the potential to further expand commercial lending.”
Dwight continued, “Horizon had strong production in residential mortgage lending, and related increases from the gain on sale primarily of long-term, low fixed-rate loans which we did not retain in order to manage interest rate risk. Also due to the active mortgage and refinancing market, our mortgage warehousing business, which generates low-cost capital for the Company, grew considerably in 2012.”
“We also continued our diligence in managing expenses. Productivity enhancements in past years have contributed to Horizon’s efficiency in recent years and continue to support efficient growth. We anticipate continuing productivity improvements related to the acquired Heartland business. The ongoing low interest rate environment will continue to present challenges, however, we were satisfied with our ability to maintain net interest margin in 2012.”
The net interest margin was 4.16% in the fourth quarter of 2012, up from 3.95% for the three-month period ending December 31, 2011. The net interest margin was 3.89% for the year ended December 31, 2012, up from 3.74% for 2011. The increase in the margin in 2012 compared to 2011 was due to the recognition of approximately $1.5 million of interest income during the fourth quarter from the Heartland loan discounts along with the reduction in the rate paid on interest bearing liabilities. Excluding the interest income recognized from the loan discounts, the margin would have been 3.81% and 3.79% for the three and twelve month periods ending December 31, 2012, respectively.
During the fourth quarter of 2012, residential mortgage loan activity generated $4.0 million in income from the gain on sale of mortgage loans, an increase of $1.5 million from the same period in 2011.
Lending Activity
Total loans increased by $207.5 million from $983.2 million at December 31, 2011 to $1.2 billion at December 31, 2012. For 2012, commercial loans increased by $108.1 million, mortgage warehouse loans increased by $43.1 million, consumer loans increased by $23.7 million and residential mortgage loans increased by $32.6 million compared to December 31, 2011 loan levels. The acquisition of Heartland increased total loans by $114.6 million, and Horizon generated an additional $92.9 million in net organic loan growth during 2012.
“In a very competitive environment for quality lending prospects, it was encouraging to demonstrate meaningful organic loan growth,” explained Dwight. “In addition, we made considerable progress in improving overall credit quality in 2012, measured by net charge-offs, which declined 25% in 2012 compared to the prior year, also lower loan delinquency, and effectively disposing of repossessed collateral and other real estate owned.”
“Although loans past due 30 to 89 days and non-performing loans increased primarily as a result of the acquisition, this was expected and we are working diligently with borrowers to resolve issues and return loans to current status. We have deployed a seasoned expert in handling troubled loans to address these challenged credits. Horizon is also seeing progress from its loan collection efforts.”
The provision for loan losses was $1.7 million for the fourth quarter of 2012, which was $877,000 more than the provision for the same period of the prior year. For the year ended 2012, the provision for loan losses was $3.5 million, which was $1.8 million less than the provision for the prior year. The higher provision for loan losses during the fourth quarter was related to organic growth in the Company’s loan portfolio and $431,000 of charge-offs related to the credit losses resulting from the Heartland loans acquired that exceeded the loan discounts recorded at the time of the acquisition. As a percentage of total loans, non-performing loans were 1.97% on December 31, 2012, down from 2.08% on September 30, 2012, and 2.02% on December 31, 2011.
The ratio of allowance for loan losses to total loans decreased to 1.52% as of December 31, 2012 from 1.89% as of December 31, 2011. The decrease in the ratio was primarily due to the increase in total loans resulting from the Heartland acquisition in which loans were recorded at fair value with no allowance allocated to them at December 31, 2012.
Non-performing loans totaled $23.8 million on December 31, 2012, down from $24.4 million on September 30, 2012, and up from $20.1 million on December 31, 2011. The increase from December 31, 2011 was due to the Heartland acquisition. Excluding Heartland, non-performing loans would have declined to $16.5 million at December 31, 2012 from $19.1 million at September 30, 2012.
At December 31, 2012, loans acquired in the Heartland acquisition represented $7.3 million in non-performing, $18.1 million in substandard and $3.4 million in delinquent loans, which compares to $5.3 million in non-performing, $20.0 million in substandard and $4.6 million in delinquent loans at September 30, 2012.
Other Real Estate Owned (OREO) totaled $2.6 million on December 31, 2012, representing no change from September 30, 2012, but down from $2.8 million on December 31, 2011. During the fourth quarter, eight properties with a book value of $866,000 as of September 30, 2012 were sold, and seven properties with a book value of $975,000 as of December 31, 2012 were transferred into OREO. Another four properties were written down by $109,000. On December 31, 2012, OREO was comprised of 20 properties. Of these properties, five totaling $1.3 million were commercial real estate and 15 totaling $1.3 million were residential real estate.
Expense Management
Total non-interest expense was $7.9 million higher for the year ending December 31, 2012 compared to 2011 and $2.8 million higher for the three months ending December 31, 2012 compared to the three months ending December 31, 2011. Salaries and employee benefits increased $5.5 million for the year ending December 31, 2012 compared to 2011 and were $2.0 million higher for the three months ending December 31, 2012 compared to 2011. These increases were primarily the result of changes to annual merit pay, employee benefits costs, commissions earned and bonus accruals. In addition, compensation expense was higher due to the Heartland merger and directly related to Horizon’s investment in growth markets. Included in 2012’s non-interest expense was approximately $1.5 million of transaction expenses related to the Heartland acquisition.
Outlook
Dwight concluded: “In an eventful year with numerous potential distractions, Horizon grew its existing banking business while integrating acquired assets and positioning the Company to pursue additional expansion opportunities. In addition to the acquisition, Horizon opened two new full service branches: one in Valparaiso, Indiana, which was our third branch in this market, and relocated a loan and deposit office in Kalamazoo, Michigan. We also opened the loan and deposit office in Indianapolis, Indiana, which grew total assets to $35 million in approximately six months of operations.”
“We very are diligent in analyzing opportunities before opening offices or branches. We anticipate leasing an empty bank building in downtown Kalamazoo and opening a new office in the coming months to serve this strong-performing market. We have also started construction on a branch in the Indianapolis suburb of Greenwood, Indiana. When completed, we plan to relocate a current branch to this location, which we believe is far superior.”
“Horizon continues to consider opportunities to expand in our existing and new markets and to further leverage our capabilities and business model. We remain focused on growing shareholder value, including returning a portion of earnings as cash dividends. We were gratified that during a time of great uncertainty, speculation and volatility in the stock market, investors recognized and rewarded our performance with a significantly higher stock price. We are making strategic investments in people and capabilities which, we believe, will allow us to be more productive and generate business, creating a balanced approach to building the Horizon franchise.”
Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern and Central Indiana and Southwest Michigan through its commercial banking subsidiary, Horizon Bank, which also operates under the “Heartland Community Bank a Horizon Bank Company” name in certain markets. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at www.accesshorizon.com. Its common stock is traded on the NASDAQ Global Market under the symbol HBNC.
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 “Item 1A Risk Factors” of Part I of Horizon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011. 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)
HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
HORIZON BANCORP
(Dollars in Thousands, Unaudited)
(Dollars in Thousands, Unaudited)
(Dollars in Thousands, Unaudited)
(Dollars in Thousands, Unaudited)
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
Three Months Ended
Three Months Ended
December 31, 2012
December 31, 2011
HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
Twelve Months Ended
Twelve Months Ended
December 31, 2012
December 31, 2011
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
Horizon Bancorp
Mark E. Secor, Chief Financial Officer
(219) 873-2611
Fax: (219) 874-9280
Source: Horizon Bancorp