Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date: October 26, 2016

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and nine-month periods ended September 30, 2016.  All share data has been adjusted to reflect Horizon’s three-for-two stock split announced on October 19, 2016 to be issued on November 14, 2016.

SUMMARY:

·

Net income for the third quarter of 2016 was $6.6 million or $.30 diluted earnings per share compared to $4.3 million or $.24 diluted earnings per share for the third quarter of 2015.

·

Excluding acquisition-related expenses and purchase accounting adjustments, net income for the third quarter of 2016 increased 29.6% compared to the same period of 2015 to $8.4 million or $.39 diluted earnings per share.

·

Net income for the first nine months of 2016 was $18.3 million or $.94 diluted earnings per share compared to $14.4 million or $.92 diluted earnings per share for the first nine months of 2015.

·

Excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the first nine months of 2016 increased 32.1% compared to the same period of 2015 to $20.7 million or $1.07 diluted earnings per share.

·

Excluding the LaPorte Bancorp, Inc. (“LaPorte Bancorp”) acquisition, mortgage warehouse loans and loans held for sale, loans increased 4.1% on an annualized basis during the third quarter of 2016.

·

Net interest income for the first nine months of 2016 increased 19.3% or $10.5 million compared to the same period in 2015.

·

Net interest margin, excluding the impact of acquisitions (“core net interest margin”), was 3.31% for the third quarter of 2016 compared to 3.42% for the prior quarter and 3.44% for the same period in 2015.

·

Non-interest income for the first nine months of 2016 increased 22.7% or $5.1 million compared to the same period in 2015.

·

Horizon’s tangible book value per share rose to $11.76 at September 30, 2016, compared to $11.02 at December 31, 2015 and $10.89 at September 30, 2015.

 

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·

Horizon opened its first commercial office in Fort Wayne, Indiana on September 14, 2016.  The new location will offer commercial loans and cash management services and will be led by Greg Haney, Horizon’s Fort Wayne Market President.

Craig Dwight, Chairman and CEO, commented: “The Horizon team was very busy in the third quarter of 2016 and we are proud of what they have accomplished.  Our balanced strategy of organic growth, expansion into new markets and well-executed acquisitions contributed to Horizon’s increase in net income and earnings per share during the quarter.  Core net income, excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, was $8.4 million for the third quarter and $20.7 million for the first nine months of 2016. Core diluted earnings per share was $.39 for the third quarter and $1.07 for the first nine months of 2016, an increase over the same periods of 2015 of 7.3% and 7.1%, respectively.”

 

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands Except per Share Data, Unaudited)
		Three Months Ended								Nine Months Ended
		September 30								September 30
Non-GAAP Reconciliation of Net Income		2016				2015				2016				2015
Net income as reported		$	6,602			$	4,288			$	18,309			$	14,374
Merger expenses			2,953				3,648				5,472				4,364
Tax effect			(886	)			(1,219	)			(1,582	)			(1,402	)
Net income excluding merger expenses			8,668				6,717				22,199				17,336
Gain on sale of investment securities			-				-				(875	)			(124	)
Tax effect			-				-				306				43
Net income excluding gain on sale of investment securities			8,668				6,717				21,630				17,255
Death benefit on bank owned life insurance (“BOLI”)			-				-				-				(145	)
Tax effect			-				-				-				51
Net income excluding death benefit on BOLI			8,668				6,717				21,630				17,161
Acquisition-related purchase accounting adjustments (“PAUs”)			(459	)			(402	)			(1,404	)			(2,282	)
Tax effect			161				141				491				799
Net income excluding PAUs		$	8,370			$	6,456			$	20,717			$	15,678
Non-GAAP Reconciliation of Diluted Earnings per Share
Diluted earnings per share as reported		$	0.30			$	0.24			$	0.94			$	0.92
Merger expenses			0.14				0.20				0.28				0.28
Tax effect			(0.04	)			(0.07	)			(0.08	)			(0.09	)
Diluted earnings per share excluding merger expenses			0.40				0.37				1.14				1.11
Gain on sale of investment securities			-				-				(0.05	)			(0.01	)
Tax effect			-				-				0.02				0.00
Net income excluding gain on sale of investment securities			0.40				0.37				1.11				1.10
Death benefit on BOLI			-				-				-				(0.01	)
Tax effect			-				-				-				0.00
Net income excluding death benefit on BOLI			0.40				0.37				1.11				1.09
Acquisition-related PAUs			(0.02	)			(0.02	)			(0.07	)			(0.15	)
Tax effect			0.01				0.01				0.03				0.05
Diluted earnings per share excluding PAUs		$	0.39			$	0.36			$	1.07			$	0.99

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Pg. 3 cont. Horizon Bancorp Announces Record Quarterly and Nine-Month Net Income

Mr. Dwight continued, “The third quarter of 2016 was highlighted by commercial loan growth in our Kalamazoo and Indianapolis markets, continued asset quality improvement, the build-out of our new Fort Wayne, Indiana commercial team and the integrations of our recently closed Kosciusko Financial, Inc. (“Kosciusko”) and LaPorte Bancorp acquisitions.”

Horizon completed the systems conversion of LaPorte Bancorp on October 22, 2016 and announced on October 14, 2016 the receipt of all regulatory approvals required for its previously announced CNB Bancorp acquisition.  Horizon also opened its Fort Wayne, Indiana commercial office on September 14, 2016, led by Greg Haney, Horizon’s Fort Wayne Market President.  Dwight concluded, “We are thrilled to welcome these exceptional bankers to our team and look forward to continuing Horizon’s successful growth story.”

Income Statement Highlights

Net income for the third quarter of 2016 was $6.6 million or $.30 diluted earnings per share compared to $4.3 million or $.24 diluted earnings per share in the third quarter of 2015.  The increase in net income and earnings per share from the previous year reflects an increase in net interest income and non-interest income of $4.6 million and $1.7 million, respectively, partially offset by increases in non-interest expense of $2.6 million, income tax expense of $1.2 million and the diluted shares outstanding primarily due to the stock issued in the Kosciusko and LaPorte Bancorp acquisitions.  Excluding acquisition-related expenses and purchase accounting adjustments, net income for the third quarter of 2016 was $8.4 million or $.39 diluted earnings per share compared to $6.5 million or $.36 diluted earnings per share in the third quarter of 2015.

Net income for the nine months ended September 30, 2016 was $18.3 million or $.94 diluted earnings per share compared to $14.4 million or $.92 diluted earnings per share for the nine months ended September 30, 2015.  The increase in net income and earnings per share from the previous year reflects an increase in net interest income and non-interest income of $10.5 million and $5.1 million, respectively, and a decrease in the provision for loan losses of $1.6 million, partially offset by increases in non-interest expense of $11.2 million and income tax expense of $2.2 million and the diluted shares outstanding primarily due to the stock issued in the Kosciusko and LaPorte Bancorp acquisitions.  Excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the first nine months of 2016 was $20.7 million or $1.07 diluted earnings per share compared to $15.7 million or $.99 diluted earnings per share in the same period of 2015.

Horizon’s net interest margin was 3.37% during the third quarter of 2016, down from 3.48% for the prior quarter and 3.51% for same period of 2015.  The decrease in the net interest margin compared to the prior quarter and the same period of 2015 was due to lower yields on new loans and re-pricing earning assets, the impact of acquisitions and higher levels of cash during the quarter due to acquisitions, partially offset by lower rates on interest-bearing liabilities.  Excluding acquisition-related purchase accounting adjustments, the margin would have been 3.31% for the third quarter of 2016 compared to 3.42% for the prior quarter and 3.44% for the same period of 2015.  Interest income from acquisition-related purchase accounting adjustments was $459,000, $397,000 and

 

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$402,000 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively.

Horizon’s net interest margin was 3.43% for the nine months ending September 30, 2016, down from 3.59% for same period of 2015.  Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.36% for the nine months ending September 30, 2016 compared to 3.44% for same period of 2015. Interest income from acquisition-related purchase accounting adjustments was $1.4 million and $2.3 million for the nine months ended September 30, 2016 and September 30, 2015, respectively.

Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
		Three Months Ended												Nine Months Ended
		September 30				June 30				September 30				September 30
Net Interest Margin As Reported		2016				2016				2015				2016				2015
Net interest income		$	24,410			$	20,869			$	19,776			$	65,053			$	54,512
Average interest-earning assets			2,957,944				2,471,354				2,304,515				2,591,566				2,072,276
Net interest income as a percent of average interest-earning assets (“Net Interest Margin”)			3.37	%			3.48	%			3.51	%			3.43	%			3.59	%
Impact of Acquisitions
Interest income from acquisition-related purchase accounting adjustments		$	(459	)		$	(397	)		$	(402	)		$	(1,404	)		$	(2,282	)
Excluding Impact of Acquisitions
Net interest income		$	23,951			$	20,472			$	19,374			$	63,649			$	52,230
Average interest-earning assets			2,957,944				2,471,354				2,304,515				2,591,566				2,072,276
Core Net Interest Margin			3.31	%			3.42	%			3.44	%			3.36	%			3.44	%

 

Lending Activity

Total loans increased $440.8 million from $1.8 billion as of December 31, 2015 to $2.2 billion as of September 30, 2016 as commercial loans increased by $242.5 million, mortgage warehouse loans increased by $82.2 million, residential mortgage loans increased by $93.0 million and consumer loans increased by $23.7 million.  Total loans, excluding acquired loans, mortgage warehouse loans and loans held for sale, increased 1.0% during the third quarter of 2016 or 4.1% on an annualized and 2.7% during the first nine months of 2016 or 3.6% on an annualized basis.

Residential mortgage lending activity during the third quarter of 2016 generated $3.5 million in income from the gain on sale of mortgage loans, an increase of $734,000 from the same period of 2015.  Total origination volume in the third quarter of 2016, including loans placed into portfolio, totaled $129.0 million, representing an increase of 1.2% from the same period of 2015.  Purchase money mortgage originations during the third quarter of 2016 represented 66.5% of total originations compared to 78.2% of originations during the previous quarter and 81.0% during the third quarter of 2015.

Loan balances in the Kalamazoo and Indianapolis markets totaled $182.6 million and $197.7 million, respectively, as of September 30, 2016. Combined, these markets contributed $29.7 million in loan

 

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growth during the third quarter of 2016 or 33.8% on an annualized basis.

Loan Growth by Type, Excluding Acquired Loans
Three Months Ended September 30, 2016
(Dollars in Thousands, Unaudited)
																		Excluding Acquired Loans
														Acquired												Annualized
		September 30				June 30				Amount				LaPorte				Amount				Percent				Percent
		2016				2016				Change				Loans				Change				Change				Change
Commercial loans		$	1,047,450			$	874,580			$	172,870			$	(154,223	)		$	18,647				2.1	%			8.5	%
Residential mortgage loans			530,162				493,626				36,536				(42,603	)			(6,067	)			-1.2	%			-4.9	%
Consumer loans			386,031				363,920				22,111				(16,801	)			5,310				1.5	%			5.8	%
Subtotal			1,963,643				1,732,126				231,517				(213,627	)			17,890				1.0	%			4.1	%
Held for sale loans			7,369				7,812				(443	)			-				(443	)			-5.7	%			-22.6	%
Mortgage warehouse loans			226,876				205,699				21,177				(99,752	)			(78,575	)			-38.2	%			-152.0	%
Total loans		$	2,197,888			$	1,945,637			$	252,251			$	(313,379	)		$	(61,128	)			-3.1	%			-12.5	%

 

Loan Growth by Type, Excluding Acquired Loans
Nine Months Ended September 30, 2016
(Dollars in Thousands)
														Acquired				Excluding Acquired Loans
														Kosciusko												Annualized
		September 30				December 31				Amount				and LaPorte				Amount				Percent				Percent
		2016				2015				Change				Loans				Change				Change				Change
		(Unaudited)
Commercial loans		$	1,047,450			$	804,995			$	242,455			$	(224,229	)		$	18,226				2.3	%			3.0	%
Residential mortgage loans			530,162				437,144				93,018				(68,847	)			24,171				5.5	%			7.4	%
Consumer loans			386,031				362,300				23,731				(23,120	)			611				0.2	%			0.2	%
Subtotal			1,963,643				1,604,439				359,204				(316,196	)			43,008				2.7	%			3.6	%
Held for sale loans			7,369				7,917				(548	)			-				(548	)			-6.9	%			-9.2	%
Mortgage warehouse loans			226,876				144,692				82,184				(99,752	)			(17,568	)			-12.1	%			-16.2	%
Total loans		$	2,197,888			$	1,757,048			$	440,840			$	(415,948	)		$	24,892				1.4	%			1.9	%

 

The provision for loan losses was $455,000 for the third quarter of 2016 compared to $300,000 for the same period of 2015.  The increase in the provision for loan losses during the third quarter of 2016 was due to continued loan growth.  The provision for loan losses for the first nine months of 2016 was $1.2 million compared to $2.8 million for the same period of 2015.  The decrease in the provision for loan losses during the first nine months of 2016 was due to lower charge-offs, stable delinquency trends and a decrease in non-performing loans.

The ratio of the allowance for loan losses to total loans decreased to 0.66% as of September 30, 2016 from 0.83% as of December 31, 2015 due to an increase in total loans.  The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.87% as of September 30, 2016.  Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 1.40% as of September 30, 2016.

 

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Non-performing loans to total loans declined 37 basis points to 0.58% at September 30, 2016 from 0.95% at December 31, 2015.  Non-performing loans totaled $12.8 million as of September 30, 2016 a decrease of $3.9 million from $16.7 million as of December 31, 2015.  Compared to December 31, 2015, non-performing commercial loans decreased by $1.6 million, non-performing real estate loans decreased by $2.0 million and non-performing consumer loans decreased $330,000.

Non- GAAP Allowance for Loan and Lease Loss Detail
As of September 30, 2016
(Dollars in Thousands, Unaudited)
		Horizon
		Legacy				Heartland				Summit				Peoples				Kosciusko				LaPorte				Total
Pre-discount loan balance		$	1,673,722			$	15,719			$	57,214			$	155,318			$	89,490			$	215,531			$	2,206,994
Allowance for loan losses (ALLL)			14,524				-				-				-				-				-				14,524
Loan discount			N/A				1,067				2,645				3,545				1,132				8,086				16,475
ALLL+loan discount			14,524				1,067				2,645				3,545				1,132				8,086				30,999
Loans, net		$	1,659,198			$	14,652			$	54,569			$	151,773			$	88,358			$	207,445			$	2,175,995
ALLL/ pre-discount loan balance			0.87	%			0.00	%			0.00	%			0.00	%			0.00	%			0.00	%			0.66	%
Loan discount/ pre-discount loan balance			N/A				6.79	%			4.62	%			2.28	%			1.26	%			3.75	%			0.75	%
ALLL+loan discount/ pre-discount loan balance			0.87	%			6.79	%			4.62	%			2.28	%			1.26	%			3.75	%			1.40	%

 

Expense Management

Total non-interest expense was $2.6 million higher in the third quarter of 2016 compared to the same period of 2015.  The increase was primarily due to an increase in salaries, employee benefits, net occupancy expenses, data processing, professional fees, loan expense, and other expense reflecting overall company growth.  Outside services and consultants expense decreased primarily due to the expense associated with the Peoples Bancorp acquisition that occurred in the third quarter of 2015.  Non-interest expense for the third quarter of 2016 included $2.9 million of one- time merger-related expenses due to the Kosciusko, LaPorte Bancorp and CNB Bancorp acquisitions compared to $3.6 million in one-time merger-related expenses during the same period of 2015 due to the Peoples Bancorp acquisition.

Total non-interest expense was $11.2 million higher in the first nine months of 2016 compared to the same period of 2015.  The increase in non-interest expense was due to an increase in salaries expense of $4.0 million, employee benefits of $1.3 million, net occupancy expenses of $1.4 million, data processing expense of $685,000, professional fees of $594,000, loan expense of $111,000, FDIC deposit insurance expense of $180,000, other losses of $159,000 and other expense of $1.8 million due to overall company growth.  Commission and bonus expense decreased by $261,000 due to decrease in incentive pay.  Outside services and consultants expense increased $1.2 million primarily due to the expense associated with the Kosciusko, LaPorte Bancorp and CNB Bancorp acquisitions.  Non-interest expense for the first nine months of 2016 included $5.5 million of one-time merger-related expenses due to the Kosciusko, LaPorte Bancorp and CNB Bancorp acquisitions compared to $4.4 million in one-time merger-related expenses in the same period of 2015 due to the Peoples Bancorp acquisition.

 

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Use of Non-GAAP Financial Measures

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

Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands Except per Share Data)
		September 30				June 30				March 31				December 31				September 30
		2016				2016				2016				2015				2015
		(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
Total stockholders’ equity		$	345,525			$	281,002			$	261,417			$	266,832			$	264,738
Less: Preferred stock			-				-				-				12,500				12,500
Less: Intangible assets			85,179				65,144				56,695				56,971				57,248
Total tangible stockholder’s equity		$	260,346			$	215,858			$	204,722			$	197,361			$	194,990
Common shares outstanding			22,143,228				18,857,301				17,974,970				17,909,831				17,897,981
Tangible book value per common share		$	11.76			$	11.45			$	11.39			$	11.02			$	10.89

 

About Horizon

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

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon.  For these statements, Horizon 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

 

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performance.  The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties.  We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.  Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time

in Horizon’s reports filed with the Securities and Exchange Commission, including those described in its Form 10-K.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

#  #  #

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)

 

		September 30				June 30				March 31				December 31				September 30
		2016				2016				2016				2015				2015
Balance sheet:
Total assets		$	3,325,658			$	2,918,080			$	2,627,918			$	2,652,401			$	2,607,914
Investment securities			744,240				628,935				642,767				632,611				617,860
Commercial loans			1,047,450				874,580				797,754				804,995				795,271
Mortgage warehouse loans			226,876				205,699				119,876				144,692				138,974
Residential mortgage loans			530,162				493,626				442,806				437,144				430,946
Consumer loans			386,031				363,920				359,636				362,300				361,298
Earning assets			2,963,005				2,591,208				2,379,830				2,403,482				2,363,755
Non-interest bearing deposit accounts			479,771				397,412				343,025				335,955				338,436
Interest bearing transaction accounts			1,367,285				1,213,659				1,118,617				1,177,651				1,164,787
Time deposits			489,106				471,190				416,837				366,547				409,852
Borrowings			571,889				492,883				430,507				449,347				373,901
Subordinated debentures			37,418				32,874				32,836				32,797				32,758
Common stockholders’ equity			345,525				281,002				261,417				254,332				252,238
Total stockholders’ equity			345,525				281,002				261,417				266,832				264,738
Income statement:		Three months ended
Net interest income		$	24,410			$	20,869			$	19,774			$	20,222			$	19,776
Provision for loan losses			455				232				532				342				300
Non-interest income			10,056				9,869				7,864				7,750				8,400
Non-interest expenses			24,820				21,555				19,747				19,240				22,235
Income tax expense			2,589				2,625				1,978				2,215				1,353
Net income			6,602				6,326				5,381				6,175				4,288
Preferred stock dividend			-				-				(42	)			(31	)			(31	)
Net income available to common shareholders		$	6,602			$	6,326			$	5,339			$	6,144			$	4,257
Per share data:
Basic earnings per share		$	0.31			$	0.35			$	0.30			$	0.34			$	0.24
Diluted earnings per share			0.30				0.34				0.30				0.34				0.24
Cash dividends declared per common share			0.10				0.10				0.10				0.10				0.10
Book value per common share			15.60				14.90				14.54				14.20				14.09
Tangible book value per common share			11.76				11.45				11.39				11.02				10.89
Market value - high			20.01				16.76				18.59				18.77				17.43
Market value - low		$	16.61			$	15.87			$	15.41			$	15.72			$	15.07
Weighted average shares outstanding - Basic			21,538,752				18,268,880				17,924,124				17,905,871				17,408,964
Weighted average shares outstanding - Diluted			21,651,953				18,364,167				18,012,726				18,020,615				17,839,882
Key ratios:
Return on average assets			0.80	%			0.94	%			0.83	%			0.94	%			0.67	%
Return on average common stockholders’ equity			7.88				9.43				8.26				9.53				6.76
Net interest margin			3.37				3.48				3.45				3.50				3.51
Loan loss reserve to total loans			0.66				0.73				0.83				0.83				0.93
Non-performing loans to loans			0.58				0.68				0.87				0.95				1.21
Average equity to average assets			10.18				9.94				10.16				10.32				10.38
Bank only capital ratios:
Tier 1 capital to average assets			9.88				9.39				8.98				8.77				9.31
Tier 1 capital to risk weighted assets			12.35				12.51				12.33				11.80				12.30
Total capital to risk weighted assets			12.95				13.23				13.10				12.57				13.17
Loan data:
Substandard loans		$	33,914			$	28,629			$	23,600			$	25,127			$	26,073
30 to 89 days delinquent			3,821				2,887				2,149				5,011				4,868
90 days and greater delinquent - accruing interest		$	59			$	24			$	1			$	28			$	100
Trouble debt restructures - accruing interest			1,523				1,256				1,231				1,218				2,948
Trouble debt restructures - non-accrual			1,164				1,466				2,857				3,172				3,994
Non-accrual loans			10,032				10,426				10,895				12,262				13,956
Total non-performing loans		$	12,778			$	13,172			$	14,984			$	16,680			$	20,998

 

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)

 

		September 30				September 30
		2016				2015
Balance sheet:
Total assets		$	3,325,658			$	2,607,914
Investment securities			744,240				617,860
Commercial loans			1,047,450				795,271
Mortgage warehouse loans			226,876				138,974
Residential mortgage loans			530,162				430,946
Consumer loans			386,031				361,298
Earning assets			2,963,005				2,363,755
Non-interest bearing deposit accounts			479,771				338,436
Interest bearing transaction accounts			1,367,285				1,164,787
Time deposits			489,106				409,852
Borrowings			571,889				373,901
Subordinated debentures			37,418				32,758
Common stockholders’ equity			345,525				252,238
Total stockholders’ equity			345,525				264,738
Income statement:		Nine Months Ended
Net interest income		$	65,053			$	54,512
Provision for loan losses			1,219				2,820
Non-interest income			27,789				22,652
Non-interest expenses			66,122				54,953
Income tax expense			7,192				5,017
Net income			18,309				14,374
Preferred stock dividend			(42	)			(94	)
Net income available to common shareholders		$	18,267			$	14,280
Per share data:
Basic earnings per share		$	0.95			$	0.95
Diluted earnings per share			0.94				0.92
Cash dividends declared per common share			0.30				0.29
Book value per common share			15.60				14.09
Tangible book value per common share			11.76				10.89
Market value - high			20.01				17.43
Market value - low		$	15.41			$	14.92
Weighted average shares outstanding - Basic			19,252,295				15,044,129
Weighted average shares outstanding - Diluted			19,346,376				15,580,711
Key ratios:
Return on average assets			0.86	%			0.85	%
Return on average common stockholders’ equity			8.82				9.12
Net interest margin			3.43				3.59
Loan loss reserve to total loans			0.66				0.93
Non-performing loans to loans			0.58				1.21
Average equity to average assets			10.13				9.81
Bank only capital ratios:
Tier 1 capital to average assets			9.88				9.31
Tier 1 capital to risk weighted assets			12.35				12.30
Total capital to risk weighted assets			12.95				13.17
Loan data:
Substandard loans		$	33,914			$	25,898
30 to 89 days delinquent			3,821				4,868
90 days and greater delinquent - accruing interest		$	59			$	100
Trouble debt restructures - accruing interest			1,523				2,948
Trouble debt restructures - non-accrual			1,164				3,994
Non-accrual loans			10,032				13,956
Total non-performing loans		$	12,778			$	20,998

HORIZON BANCORP

Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

		September 30				June 30				March 31				December 31				September 30
		2016				2016				2016				2015				2015
Commercial		$	6,222			$	6,051			$	6,460			$	7,195			$	8,842
Real estate			1,947				2,102				1,794				2,476				2,297
Mortgage warehousing			1,337				1,080				1,014				1,007				1,015
Consumer			5,018				4,993				4,968				3,856				4,014
Total		$	14,524			$	14,226			$	14,236			$	14,534			$	16,168

 

Net Charge-offs (Recoveries)

(Dollars in Thousands, Unaudited)

		Three months ended
		September 30				June 30				March 31				December 31				September 30
		2016				2016				2016				2015				2015
Commercial		$	(5	)		$	101			$	403			$	1,595			$	77
Real estate			-				(31	)			83				(59	)			96
Mortgage warehousing			-				-				-				-				-
Consumer			162				172				344				440				380
Total		$	157			$	242			$	830			$	1,976			$	553

Total Non-performing Loans

(Dollars in Thousands, Unaudited)

 

		September 30				June 30				March 31				December 31				September 30
		2016				2016				2016				2015				2015
Commercial		$	5,419			$	4,330			$	5,774			$	7,005			$	10,832
Real estate			4,251				5,659				5,974				6,237				6,315
Mortgage warehousing			-				-				-				-				-
Consumer			3,108				3,183				3,236				3,438				3,851
Total		$	12,778			$	13,172			$	14,984			$	16,680			$	20,998

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)

 

		September 30				June 30				March 31				December 31				September 30
		2016				2016				2016				2015				2015
Commercial		$	542			$	542			$	424			$	161			$	324
Real estate			3,182				2,925				3,393				3,046				958
Mortgage warehousing			-				-				-				-				-
Consumer			67				69				-				-				-
Total		$	3,791			$	3,536			$	3,817			$	3,207			$	1,282

HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

 

		Three Months Ended												Three Months Ended
		September 30, 2016												September 30, 2015
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
ASSETS
Interest-earning assets
Federal funds sold		$	35,492			$	20				0.22	%		$	23,086			$	2				0.03	%
Interest-earning deposits			55,047				32				0.23	%			16,340				5				0.12	%
Investment securities - taxable			530,228				2,446				1.84	%			401,702				2,149				2.12	%
Investment securities - non-taxable (1)			186,074				1,151				3.73	%			154,050				1,125				4.39	%
Loans receivable (2)(3)			2,151,103				25,313				4.69	%			1,709,337				20,297				4.72	%
Total interest-earning assets (1)			2,957,944				28,962				3.98	%			2,304,515				23,578				4.17	%
Non-interest-earning assets
Cash and due from banks			39,875												31,384
Allowance for loan losses			(14,301	)											(16,427	)
Other assets			290,100												206,545
		$	3,273,618											$	2,526,017
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	1,896,156			$	1,875				0.39	%		$	1,568,777			$	1,566				0.40	%
Borrowings			510,738				2,128				1.66	%			303,521				1,729				2.26	%
Subordinated debentures			37,092				549				5.89	%			32,737				507				6.14	%
Total interest-bearing liabilities			2,443,986				4,552				0.74	%			1,905,035				3,802				0.79	%
Non-interest-bearing liabilities
Demand deposits			462,253												343,780
Accrued interest payable and other liabilities			34,144												14,891
Stockholders’ equity			333,235												262,311
		$	3,273,618											$	2,526,017
Net interest income/spread						$	24,410				3.24	%						$	19,776				3.38	%
Net interest income as a percent of average interest earning assets (1)											3.37	%											3.51	%

(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)

		Nine Months Ended												Nine Months Ended
		September 30, 2016												September 30, 2015
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
ASSETS
Interest-earning assets
Federal funds sold		$	13,812			$	23				0.22	%		$	10,563			$	11				0.14	%
Interest-earning deposits			34,624				59				0.23	%			11,927				10				0.11	%
Investment securities - taxable			486,374				7,621				2.09	%			375,548				6,356				2.26	%
Investment securities - non-taxable (1)			183,142				3,583				3.63	%			145,576				3,281				3.96	%
Loans receivable (2)(3)			1,873,614				65,854				4.70	%			1,528,662				55,140				4.83	%
Total interest-earning assets (1)			2,591,566				77,140				4.05	%			2,072,276				64,798				4.25	%
Non-interest-earning assets
Cash and due from banks			36,220												30,729
Allowance for loan losses			(14,334	)											(16,557	)
Other assets			243,021												174,363
		$	2,856,473											$	2,260,811
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	1,680,560			$	4,923				0.39	%		$	1,347,882			$	4,035				0.40	%
Borrowings			438,324				5,608				1.71	%			340,593				4,747				1.86	%
Subordinated debentures			34,144				1,556				6.09	%			32,698				1,504				6.15	%
Total interest-bearing liabilities			2,153,028				12,087				0.75	%			1,721,173				10,286				0.80	%
Non-interest-bearing liabilities
Demand deposits			387,768												303,309
Accrued interest payable and other liabilities			26,397												14,582
Stockholders’ equity			289,280												221,747
		$	2,856,473											$	2,260,811
Net interest income/spread						$	65,053				3.30	%						$	54,512				3.45	%
Net interest income as a percent of average interest earning assets (1)											3.43	%											3.59	%