HORIZON BANCORP INC /IN/ - FORM 8-K - EX-99.1 - PRESS RELEASE ISSUED ON JANUARY 29, 2020 - January 29, 2020

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Exhibit 99.1



Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: January 29, 2020

FOR IMMEDIATE RELEASE

Horizon Bancorp, Inc. Announces Record Earnings for 2019

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and twelve-month periods ended December 31, 2019. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective June 15, 2018.

SUMMARY:

 •
Net income for the year ended December 31, 2019 was $66.5 million, or $1.53 diluted earnings per share, compared to $53.1 million, or $1.38 diluted earnings per share, for the year ended December 31, 2018. This represents the highest annual net income and diluted earnings per share in the Company’s history.

•
Core net income for the year 2019 increased 31.6% to $70.7 million, or $1.63 diluted earnings per share, compared to $53.7 million, or $1.40 diluted earnings per share, for the year 2018. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for the definition of core net income.)

•
Net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $13.1 million, or $0.34 diluted earnings per share, for the fourth quarter of 2018.

•
Core net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $13.8 million, or $0.36 diluted earnings per share, for the fourth quarter of 2018.

•
Return on average assets was 1.35% for the year ended December 31, 2019 compared to 1.31% for the year ended December 31, 2018.

•
Core return on average assets for the year ended December 31, 2019 was 1.43% compared to 1.33% for the year ended December 31, 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the definition of core return on average assets.)

•
Consumer loans increased at a rate of 21.8%, or $119.7 million, during the year ended December 31, 2019. Excluding acquired loans, consumer loans increased at a rate of 6.3%, or $34.6 million during the year ended December 31, 2019.

•
Net interest income increased $7.7 million, or 22.7%, to $41.5 million for the fourth quarter of 2019 compared to $33.8 million for the fourth quarter of 2018. Net interest income increased $26.2 million, or 19.5%, to $160.8 million for the year ended December 31, 2019 compared to $134.6 million, for the year ended December 31, 2018.

•
Net interest margin was 3.58% for the fourth quarter of 2019 compared to 3.60% for the fourth quarter of 2018. Net interest margin was 3.69% for the year ended December 31, 2019 compared to 3.71% for the year ended December 31, 2018.

Pg. 2 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

 •
Core net interest margin was 3.49% for the fourth quarter of 2019 compared to 3.43% for the fourth quarter of 2018. For the year ended December 31, 2019, core net interest margin was 3.57% compared to 3.54% for the year ended December 31, 2018. (See the “Non-GAAP Reconciliation of Net Interest Margin” table on page 5 for the definition of core net interest margin.)

•
Return on average equity was 11.26% for the fourth quarter of 2019 compared to 10.73% for the fourth quarter of 2018. Return on average equity was 10.98% for the year ended December 31, 2019 compared to 11.22% for the year ended December 31, 2018.

•
Core return on average equity for the fourth quarter of 2019 was 11.25% compared to 11.26% for the fourth quarter of 2018. Core return on average equity was 11.66% for the year ended December 31, 2019 compared to 11.34% for the year ended December 31, 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)

•
Horizon’s tangible book value per share increased to $10.63 at December 31, 2019 compared to $10.31 and $9.43 at September 30, 2019 and December 31, 2018, respectively. This represents the highest tangible book value per share in the Company’s history. (See the “Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share” table on page 10 for a reconciliation of tangible book value to its most comparable GAAP measure.)

•
On July 16, 2019, Horizon’s Board of Directors authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of December 31, 2019, Horizon had repurchased a total of 99,407 shares at an average price per share of $16.04.
Craig Dwight, Chairman and CEO of Horizon, commented:  “I am pleased to announce another record year of earnings for Horizon. The 2019 results are attributed to the hard work and dedication of our entire team and their focus on the customer and executing a smooth integration of Salin Bancshares, Inc. and its wholly owned subsidiary Salin Bank and Trust Company (“Salin Bank”). As a result of this acquisition and organic growth, Horizon’s operational leverage and efficiency ratio continued to exhibit improvement, which is evidence that our mass and scale strategy is working.”

Dwight added, “At December 31, 2019, Horizon’s total assets were $5.2 billion, which is an increase of $997.7 million when compared to year-end 2018. In addition to the loans acquired from Salin Bank during the first quarter of 2019, which totaled approximately $568.9 million, Horizon continued to experience loan growth of $153.3 million from our key growth markets in Indiana and Michigan.”

Dwight concluded, “The improvement in Horizon’s core efficiency ratio demonstrates our ability to gain operational leverage through an increase in mass and scale. Horizon’s adjusted efficiency ratio, excluding merger expenses, gain/loss on sale of investment securities and death benefit on bank owned life insurance, decreased to 57.23% for the year ended December 31, 2019 from 60.28% for the same prior year period. Along with an improved adjusted efficiency ratio, Horizon has also experienced a decrease in non-interest expense, excluding merger expenses, as a percentage of average assets from 2.51% for the year ended December 31, 2018 to 2.36% for the year ended December 31, 2019, a 15 basis point improvement. Horizon improved branch efficiencies during 2019 by closing four full-service branches and one loan production office, and consolidating five full-service branches acquired from Salin.”

Pg. 3 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Income Statement Highlights

Net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $20.5 million, or $0.46 diluted earnings per share, for the third quarter of 2019 and $13.1 million, or $0.34 diluted earnings per share, for the fourth quarter of 2018. Excluding acquisition-related expenses, gain (loss) on sale of investment securities and death benefit on bank owned life insurance (“core net income”), core net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $20.3 million, or $0.45 diluted earnings per share, for the third quarter of 2019 and $13.8 million, or $0.36 diluted earnings per share, for the fourth quarter of 2018.

The decrease in net income and diluted earnings per share from the third quarter of 2019 to the fourth quarter of 2019 reflects a decrease in net interest income of $1.9 million primarily due to $697,000 less in acquisition-related purchase accounting adjustments, $783,000 lower commercial loan fees and the reduction in the net interest margin. Non-interest expense increased $590,000 during the fourth quarter of 2019 as a result of the reversal of previously recorded FDIC insurance expense during the third quarter of $273,000 and an increase in other losses due to write-downs of other real estate owned properties on closed offices or vacant land acquired for future expansion during the fourth quarter totaling $222,000. Offsetting these decreases was an increase in non-interest income of $420,000, in addition to decreases in provision for loan losses of $36,000 and income tax expense of $84,000.

The increase in net income from the fourth quarter of 2018 when compared to the same period of 2019 reflects increases in net interest income of $7.7 million and non-interest income of $3.5 million, in addition to a decrease in provision for loan losses of $188,000, offset by increases in non-interest expense of $4.5 million and income tax expense of $1.4 million due to overall company growth and the Salin acquisition.

Net income for the year ended December 31, 2019 was $66.5 million, or $1.53 diluted earnings per share, compared to $53.1 million, or $1.38 diluted earnings per share, for the year ended December 31, 2018. Core net income for the year ended December 31, 2019 was $70.7 million, or $1.63 diluted earnings per share, compared to $53.7 million, or $1.40 diluted earnings per share, for the year ended December 31, 2018. This represents a 16.4% increase in core diluted earnings per share for the year ended December 31, 2019 compared to the same period in 2018 due to overall company growth, gained efficiencies and the Salin acquisition.

The increase in net income when comparing the year ended December 31, 2019 to the prior year period reflects increases in net interest income of $26.2 million and non-interest income of $8.6 million, in addition to a decrease in provision for loan losses of $930,000, offset by increases in non-interest expense of $19.5 million and income tax expense of $2.9 million.




Pg. 4 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
  
(Dollars in Thousands, Except per Share Data, Unaudited)

  
   
Three Months Ended
          
Twelve Months Ended
  
   
December 31
    
September 30
    
December 31
    
December 31
    
December 31
  
   
2019
    
2019
    
2018
    
2019
    
2018
  
Non-GAAP Reconciliation of Net Income
                              
Net income as reported
  
$
18,543
    
$
20,537
    
$
13,133
    
$
66,538
    
$
53,117
  
Merger expenses
    
-
      
-
      
487
      
5,650
      
487
  
Tax effect
    
-
      
-
      
(102
)
    
(987
)
    
(102
)
Net income excluding merger expenses
    
18,543
      
20,537
      
13,518
      
71,201
      
53,502
  
(Gain)/loss on sale of investment securities
    
(10
)
    
-
      
332
      
75
      
443
  
Tax effect
    
2
      
-
      
(70
)
    
(16
)
    
(93
)
Net income excluding loss on sale of investment securities
    
18,535
      
20,537
      
13,780
      
71,260
      
53,852
  
Death benefit on bank owned life insurance (“BOLI”)
    
-
      
(213
)
    
-
      
(580
)
    
(154
)
Net income excluding death benefit on BOLI
    
18,535
      
20,324
      
13,780
      
70,680
      
53,698
  
Core Net Income
  
$
18,535
    
$
20,324
    
$
13,780
    
$
70,680
    
$
53,698
  
                                         
Non-GAAP Reconciliation of Diluted Earnings per Share
                                        
Diluted earnings per share (“EPS”) as reported
  
$
0.41
    
$
0.46
    
$
0.34
    
$
1.53
    
$
1.38
  
Merger expenses
    
-
      
-
      
0.01
      
0.13
      
0.01
  
Tax effect
    
-
      
-
      
-
      
(0.02
)
    
-
  
Diluted EPS excluding merger expenses
    
0.41
      
0.46
      
0.35
      
1.64
      
1.39
  
(Gain)/loss on sale of investment securities
    
-
      
-
      
0.01
      
-
      
0.01
  
Tax effect
    
-
      
-
      
-
      
-
      
-
  
Diluted EPS excluding loss on sale of investment securities
    
0.41
      
0.46
      
0.36
      
1.64
      
1.40
  
Death benefit on BOLI
    
-
      
(0.01
)
    
-
      
(0.01
)
    
-
  
Diluted EPS excluding death benefit on BOLI
    
0.41
      
0.45
      
0.36
      
1.63
      
1.40
  
Core Diluted EPS
  
$
0.41
    
$
0.45
    
$
0.36
    
$
1.63
    
$
1.40
  

Horizon’s net interest margin decreased to 3.58% for the fourth quarter of 2019 when compared to 3.82% for the third quarter of 2019. The decrease in net interest margin reflects a decrease in commercial loan fees of $783,000 and a decrease of $697,000 in acquisition-related purchase accounting adjustments when compared to the third quarter of 2019. The cost of interest-bearing liabilities decreased by 11 basis points as the cost of deposits, borrowings and subordinated debentures all decreased when compared to the third quarter of 2019. Deposit pricing continues to reduce within the markets we serve in alignment with the recent decline in general market short-term interest rates.

Net interest margin decreased to 3.58% for the fourth quarter of 2019 when compared to 3.60% for the fourth quarter of 2018. The decrease in net interest margin was due to a decrease in yield on interest-earning assets, offset by a decrease in the cost of interest-bearing liabilities. Interest income from acquisition-related purchase accounting adjustments was $587,000 lower for the fourth quarter of 2019 when compared to the same prior year period. The rate on interest-bearing liabilities decreased due to lower rates on borrowings and subordinated debentures, partially offset by higher rates on interest-bearing deposits.

Net interest margin decreased to 3.69% for the year ended December 31, 2019 when compared to 3.71% for the year ended December 31, 2018. The lower net interest margin for 2019 reflects an increase in the cost of interest-bearing liabilities of 28 basis points due to an increase in the cost of interest-bearing deposits and borrowings. The increase in the cost of interest-bearing liabilities was offset by an increase in the yield of interest-earning assets.


Pg. 5 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.49% for the fourth quarter of 2019 compared to 3.67% for the prior quarter and 3.43% for the fourth quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.0 million, $1.7 million and $1.6 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
   
Three Months Ended
    
Twelve Months Ended
  
   
December 31
    
September 30
    
December 31
    
December 31
    
December 31
  
   
2019
    
2019
    
2018
    
2019
    
2018
  
Non-GAAP Reconciliation of Net Interest Margin
                              
Net interest income as reported
  
$
41,519
    
$
43,463
    
$
33,836
    
$
160,791
    
$
134,569
  
Average interest-earning assets
    
4,748,217
      
4,623,985
      
3,808,822
      
4,470,450
      
3,697,938
  
Net interest income as a percentage of average interest-earning assets (“Net Interest Margin”)
    
3.58
%
    
3.82
%
    
3.60
%
    
3.69
%
    
3.71
%
Acquisition-related purchase accounting adjustments (“PAUs”)
  
$
(1,042
)
  
$
(1,739
)
  
$
(1,629
)
  
$
(5,590
)
  
$
(6,089
)
Core net interest income
  
$
40,477
    
$
41,724
    
$
32,207
    
$
155,201
    
$
128,480
  
Core net interest margin
    
3.49
%
    
3.67
%
    
3.43
%
    
3.57
%
    
3.54
%

Lending Activity

Total loans increased $626.6 million from $3.014 billion as of December 31, 2018 to $3.641 billion as of December 31, 2019. Excluding acquired loans, total loans increased $57.6 million during 2019 as consumer loans increased by $34.6 million and mortgage warehouse loans increased by $76.2 million, offset by a decrease in commercial loans of $27.7 million and residential mortgage loans of $28.4 million.

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
   
December 31
2019
    
December 31
2018
    
Amount
Change
    
Acquired
Loans
    
Amount
Change
    
Percent
Change
  
Commercial
  
$
2,046,651
    
$
1,721,590
    
$
325,061
    
$
(352,798
)
  
$
(27,737
)
    
-1.6
%
Residential mortgage
    
770,717
      
668,141
      
102,576
      
(131,008
)
    
(28,432
)
    
-4.3
%
Consumer
    
669,180
      
549,481
      
119,699
      
(85,112
)
    
34,587
      
6.3
%
Subtotal
    
3,486,548
      
2,939,212
      
547,336
      
(568,918
)
    
(21,582
)
    
-0.7
%
Held for sale loans
    
4,088
      
1,038
      
3,050
      
-
      
3,050
      
293.8
%
Mortgage warehouse loans
    
150,293
      
74,120
      
76,173
      
-
      
76,173
      
102.8
%
Total loans
  
$
3,640,929
    
$
3,014,370
    
$
626,559
    
$
(568,918
)
  
$
57,641
      
1.9
%



Pg. 6 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

During 2019, Horizon Bank (the “Bank”) originated approximately $380.0 million of commercial loans, which is an 11% increase compared to the same period in 2018; however, only 57.9%, or $220.1 million, of these loan originations had been funded as of December 31, 2019. These originations were offset by commercial loan payoffs totaling approximately $315.5 million during 2019, which is a 73.6% increase in payoffs compared to the same period in 2018, as there was an increase in clients moving projects that had reached stabilization into the long-term, fixed rate conduit financing market and properties being sold. During 2018, the Bank originated approximately $337.0 million of commercial loans; however, only 58.2%, or $196.0 million, of these loan originations had been funded as of December 31, 2018. These originations were offset by commercial loan payoffs totaling approximately $181.7 million during 2018.

Residential mortgage lending activity for the three months ended December 31, 2019 generated $3.1 million in income from the gain on sale of mortgage loans, an increase of $417,000 from the third quarter of 2019 and $1.7 million from the fourth quarter of 2018. Total origination volume for the fourth quarter of 2019, including loans placed into portfolio, totaled $114.0 million, representing a decrease of 5.9% from the third quarter of 2019 and an increase of 35.8% from the fourth quarter of 2018. Total origination volume for the fourth quarter of 2019 of loans sold to the secondary market totaled $83.6 million, representing a decrease of 12.1% from the third quarter of 2019 and an increase of 95.5% from the fourth quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was 6.4% of Horizon’s total revenue for the year ended December 31, 2019, which is comparable to the same prior year period.

The provision for loan losses totaled $340,000 for the fourth quarter of 2019 compared to $376,000 for the third quarter of 2019 and $528,000 for the fourth quarter of 2018.

The provision for loan losses totaled $2.0 million for the year ended December 31, 2019 compared to $2.9 million for the same period in 2018.

The ratio of the allowance for loan losses to total loans decreased to 0.49% as of December 31, 2019 from 0.59% at December 31, 2018. The decrease in the ratio of the allowance for loan losses to total loans is primarily due to increased loan balances from the Salin acquisition. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.61% as of December 31, 2019 compared to 0.72% as of December 31, 2018. Loan loss reserves plus credit-related loan discounts on acquired loans as a percentage of total loans was 1.04% as of December 31, 2019 compared to 0.98% as of December 31, 2018.


Pg. 7 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Non-GAAP Allowance for Loan and Lease Loss Detail
As of December 31, 2019
(Dollars in Thousands, Unaudited)
   
Loan Balance
    
Allowance
for Loan Losses
(ALLL)
    
Acquired
Loan
Discount
    
ALLL
+
Acquired
Loan Discount
    
Loans, net
    
ALLL/
Loan Balance
    
Acquired Loan
Discount/
Loan Balance
    
ALLL+
Acquired Loan Discount/
Loan Balance
  
Horizon Legacy
  
$
2,881,650
    
$
17,534
      
N/A
    
$
17,534
    
$
2,864,116
      
0.61
%
    
0.00
%
    
0.61
%
Heartland
    
4,863
      
-
      
549
      
549
      
4,314
      
0.00
%
    
11.29
%
    
11.29
%
Summit
    
14,309
      
-
      
835
      
835
      
13,474
      
0.00
%
    
5.84
%
    
5.84
%
Peoples
    
66,983
      
-
      
1,550
      
1,550
      
65,433
      
0.00
%
    
2.31
%
    
2.31
%
Kosciusko
    
28,249
      
-
      
417
      
417
      
27,832
      
0.00
%
    
1.48
%
    
1.48
%
LaPorte
    
62,580
      
-
      
2,229
      
2,229
      
60,351
      
0.00
%
    
3.56
%
    
3.56
%
CNB
    
3,210
      
-
      
78
      
78
      
3,132
      
0.00
%
    
2.43
%
    
2.43
%
Lafayette
    
57,003
      
-
      
496
      
496
      
56,507
      
0.00
%
    
0.87
%
    
0.87
%
Wolverine
    
120,654
      
-
      
699
      
699
      
119,955
      
0.00
%
    
0.58
%
    
0.58
%
Salin
    
401,428
      
133
      
13,375
      
13,508
      
387,920
      
0.03
%
    
3.33
%
    
3.36
%
Total
  
$
3,640,929
    
$
17,667
    
$
20,228
    
$
37,895
    
$
3,603,034
      
0.49
%
    
0.56
%
    
1.04
%

As of December 31, 2019, non-performing loans totaled $21.2 million, which reflects a three basis point increase in non-performing loans to total loans, or a $6.0 million increase from $15.2 million in non-performing loans as of December 31, 2018. Compared to December 31, 2018, non-performing commercial loans increased by $444,000, non-performing real estate loans increased by $4.9 million and non-performing consumer loans increased by $689,000. Other real estate owned and repossessed assets totaled $3.7 million as of December 31, 2019, which is an increase of $1.7 million from December 31, 2018. The majority of this increase was due to other real estate owned properties acquired in the Salin transaction, including the closed branches, totaling $1.7 million.

Expense Management

Total non-interest expense was $590,000 higher in the fourth quarter of 2019 when compared to the third quarter of 2019. Other losses increased $287,000 primarily due to write-downs of other real estate owned properties during the fourth quarter totaling $222,000. Loan expense and professional fees increased $240,000 and $185,000, respectively, during the fourth quarter of 2019. In addition, the reversal of previously recorded FDIC insurance expense during the third quarter resulted in an increase to total non-interest expense of $273,000 during the fourth quarter. The Bank received assessment credits during the third quarter of 2019 as the FDIC reserve is currently overfunded. Offsetting these increases were decreases in other expense of $221,000 and in other services and consultants of $137,000.

Pg. 8 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

   
Three Months Ended
              
   
December 31
    
September 30
              
   
2019
    
2019
    
Adjusted
Non-interest Expense
  
Actual
    
Merger
Expenses
    
Adjusted
    
Actual
    
Merger
Expenses
    
Adjusted
    
Amount
Change
    
Percent
Change
Salaries and employee benefits
  
$
16,841
    
$
-
    
$
16,841
    
$
16,948
    
$
-
    
$
16,948
    
$
(107
)
    
-0.6
%
Net occupancy expenses
    
3,106
      
-
      
3,106
      
3,131
      
-
      
3,131
      
(25
)
    
-0.8
%
Data processing
    
2,235
      
-
      
2,235
      
2,140
      
-
      
2,140
      
95
      
4.4
%
Professional fees
    
520
      
-
      
520
      
335
      
-
      
335
      
185
      
55.2
%
Outside services and consultants
    
1,415
      
-
      
1,415
      
1,552
      
-
      
1,552
      
(137
)
    
-8.8
%
Loan expense
    
2,438
      
-
      
2,438
      
2,198
      
-
      
2,198
      
240
      
10.9
%
FDIC deposit insurance
    
-
      
-
      
-
      
(273
)
    
-
      
(273
)
    
273
      
-100.0
%
Other losses
    
377
      
-
      
377
      
90
      
-
      
90
      
287
      
318.9
%
Other expense
    
3,718
      
-
      
3,718
      
3,939
      
-
      
3,939
      
(221
)
    
-5.6
%
Total non-interest expense
  
$
30,650
    
$
-
    
$
30,650
    
$
30,060
    
$
-
    
$
30,060
    
$
590
      
2.0
%
Annualized Non-interest Exp. to Avg. Assets
    
2.32
%
            
2.32
%
    
2.34
%
            
2.34
%
                

Total non-interest expense was $4.5 million higher during the fourth quarter of 2019 compared to the same period of 2018. Salaries and employee benefits, net occupancy expense, loan expense, data processing, other expense and other losses increased $2.7 million, $605,000, $601,000, $481,000, $421,000 and $288,000, respectively. These increases were offset by a decrease of $393,000 in FDIC insurance and $121,000 in outside services and consultants. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense increased $5.0 million during the fourth quarter of 2019 when compared to the same period of 2018.

   
Three Months Ended
                  
   
December 31
    
December 31
              
   
2019
    
2018
    
Adjusted
Non-interest Expense
  
Actual
    
Merger
Expenses
    
Adjusted
    
Actual
    
Merger
Expenses
    
Adjusted
    
Amount
Change
    
Percent
Change
Salaries and employee benefits
  
$
16,841
    
$
-
    
$
16,841
    
$
14,098
    
$
-
    
$
14,098
    
$
2,743
      
19.5
%
Net occupancy expenses
    
3,106
      
-
      
3,106
      
2,501
      
-
      
2,501
      
605
      
24.2
%
Data processing
    
2,235
      
-
      
2,235
      
1,754
      
-
      
1,754
      
481
      
27.4
%
Professional fees
    
520
      
-
      
520
      
612
      
(219
)
    
393
      
127
      
32.3
%
Outside services and consultants
    
1,415
      
-
      
1,415
      
1,536
      
(252
)
    
1,284
      
131
      
10.2
%
Loan expense
    
2,438
      
-
      
2,438
      
1,837
      
-
      
1,837
      
601
      
32.7
%
FDIC deposit insurance
    
-
      
-
      
-
      
393
      
-
      
393
      
(393
)
    
-100.0
%
Other losses
    
377
      
-
      
377
      
89
      
-
      
89
      
288
      
323.6
%
Other expense
    
3,718
      
-
      
3,718
      
3,297
      
(16
)
    
3,281
      
437
      
13.3
%
Total non-interest expense
  
$
30,650
    
$
-
    
$
30,650
    
$
26,117
    
$
(487
)
  
$
25,630
    
$
5,020
      
19.6
%
Annualized Non-interest Exp. to Avg. Assets
    
2.32
%
            
2.32
%
    
2.48
%
            
2.43
%
                

Total non-interest expense was $19.5 million higher during the year ended December 31, 2019 when compared to the same period of 2018. Salaries and employee benefits, other expense, outside services and consultants, loan expense, net occupancy and data processing increased $8.6 million, $3.5 million, $2.9 million, $2.3 million, $1.7 million and $1.7 million, respectively. Offsetting these increases was a decrease in FDIC insurance of $1.2 million. FDIC insurance decreased due to the assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense increased $14.4 million during the year ended December 31, 2019 when compared to the same period of 2018.

Pg. 9 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

   
Twelve Months Ended
              
   
December 31
    
December 31
    

 
   
2019
    
2018
     Adjusted
Non-interest Expense
  
Actual
    
Merger
Expenses
    
Adjusted
    
Actual
    
Merger
Expenses
    
Adjusted
    
Amount
Change
    
Percent
Change
Salaries and employee benefits
  
$
65,206
    
$
(484
)
  
$
64,722
    
$
56,623
    
$
-
    
$
56,623
    
$
8,099
      
14.3
%
Net occupancy expenses
    
12,157
      
(75
)
    
12,082
      
10,482
      
-
      
10,482
      
1,600
      
15.3
%
Data processing
    
8,480
      
(360
)
    
8,120
      
6,816
      
-
      
6,816
      
1,304
      
19.1
%
Professional fees
    
1,946
      
(392
)
    
1,554
      
1,926
      
(219
)
    
1,707
      
(153
)
    
-9.0
%
Outside services and consultants
    
8,152
      
(2,466
)
    
5,686
      
5,271
      
(252
)
    
5,019
      
667
      
13.3
%
Loan expense
    
8,633
      
(2
)
    
8,631
      
6,341
      
-
      
6,341
      
2,290
      
36.1
%
FDIC deposit insurance
    
252
      
-
      
252
      
1,444
      
-
      
1,444
      
(1,192
)
    
-82.5
%
Other losses
    
740
      
(71
)
    
669
      
665
      
-
      
665
      
4
      
0.6
%
Other expense
    
16,466
      
(1,800
)
    
14,666
      
12,948
      
(16
)
    
12,932
      
1,734
      
13.4
%
Total non-interest expense
  
$
122,032
    
$
(5,650
)
  
$
116,382
    
$
102,516
    
$
(487
)
  
$
102,029
    
$
14,353
      
14.1
%
Annualized Non-interest Exp. to Avg. Assets
    
2.47
%
            
2.36
%
    
2.52
%
            
2.51
%
                

Annualized non-interest expense as a percent of average assets were 2.32%, 2.34% and 2.48% for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.32%, 2.34% and 2.43% for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

Annualized non-interest expense as a percent of average assets were 2.47% and 2.52% for the years ended December 31, 2019 and 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.36% and 2.51% for the years ended December 31, 2019 and 2018, respectively. Management believes that Horizon’s strategy to build mass and scale continues to prove effective for expense management.

Income tax expense totaled $3.9 million for the fourth quarter of 2019, a decrease of $84,000 when compared to the third quarter of 2019 and an increase of $1.4 million when compared to the fourth quarter of 2018. The decrease in income tax expense from the third quarter of 2019 was primarily due to a decrease in income before income taxes of $2.1 million when compared to the fourth quarter of 2019. The increase in income tax expense from the fourth quarter of 2018 was primarily due to an increase in income before income taxes of $6.8 million fourth quarter of 2019.

Income tax expense totaled $13.3 million for the year ended December 31, 2019, an increase of $2.9 million when compared to the same period of 2018. The increase in income tax expense from the year ended December 31, 2018 was primarily due to an increase in income before income taxes of $16.3 million when compared to the same period of 2019.

Pg. 10 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP.  Specifically, we have included non-GAAP financial measures relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for loan and lease losses, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets and the return on average equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them. We believe that this shows the impact of such events as acquisition-related purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure.  See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP figures identified herein and their most comparable GAAP measures.

 
Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands Except per Share Data, Unaudited)
                               
   
December 31
    
September 30
    
June 30
    
March 31
    
December 31
  
   
2019
    
2019
    
2019
    
2019
    
2018
  
Total stockholders’ equity
  
$
656,023
    
$
642,711
    
$
626,461
    
$
609,468
    
$
491,992
  
Less: Intangible assets
    
177,917
      
178,896
      
179,776
      
176,864
      
130,270
  
Total tangible stockholders’ equity
  
$
478,106
    
$
463,815
    
$
446,685
    
$
432,604
    
$
361,722
  
                                         
Common shares outstanding
    
44,975,771
      
44,969,021
      
45,061,372
      
45,052,747
      
38,375,407
  
                                         
Tangible book value per common share
  
$
10.63
    
$
10.31
    
$
9.91
    
$
9.60
    
$
9.43
  


Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Core Efficiency Ratio
  
(Dollars in Thousands, Unaudited)

  
   
Three Months Ended
    
Twelve Months Ended
  
   
December 31
    
September 30
    
December 31
    
December 31
    
December 31
  
   
2019
    
2019
    
2018
    
2019
    
2018
  
Non-GAAP Calculation of Efficiency Ratio
                              
Non-interest expense as reported
  
$
30,650
    
$
30,060
    
$
26,117
    
$
122,032
    
$
102,516
  
Net interest income as reported
    
41,519
      
43,463
      
33,836
      
160,791
      
134,569
  
Non-interest income as reported
    
11,934
      
11,514
      
8,477
      
43,058
      
34,413
  
Non-interest expense/(Net interest income + Non-interest income) (“Efficiency Ratio”)
    
57.34
%
    
54.68
%
    
61.72
%
    
59.86
%
    
60.67
%
                                         
Non-GAAP Reconciliation of Core Efficiency Ratio
                                        
Non-interest expense as reported
  
$
30,650
    
$
30,060
    
$
26,117
    
$
122,032
    
$
102,516
  
Merger expenses
    
-
      
-
      
(487
)
    
(5,650
)
    
(487
)
Non-interest expense excluding merger expenses
    
30,650
      
30,060
      
25,630
      
116,382
      
102,029
  
Net interest income as reported
    
41,519
      
43,463
      
33,836
      
160,791
      
134,569
  
Non-interest income as reported
    
11,934
      
11,514
      
8,477
      
43,058
      
34,413
  
(Gain)/loss on sale of investment securities
    
(10
)
    
-
      
332
      
75
      
443
  
Death benefit on bank owned life insurance (“BOLI”)
    
-
      
(213
)
    
-
      
(580
)
    
(154
)
Non-interest income excluding loss on sale of investment securities and death benefit on BOLI
    
11,924
      
11,301
      
8,809
      
42,553
      
34,702
  
                                         
Core efficiency ratio
    
57.35
%
    
54.89
%
    
60.10
%
    
57.23
%
    
60.28
%


Pg. 11 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
(Dollars in Thousands, Unaudited)
   
Three Months Ended
    
Twelve Months Ended
  
   
December 31
    
September 30
    
December 31
    
December 31
    
December 31
  
   
2019
    
2019
    
2018
    
2019
    
2018
  
Non-GAAP Reconciliation of Return on Average Assets
                              
Average assets
  
$
5,250,574
    
$
5,107,259
    
$
4,179,140
    
$
4,933,058
    
$
4,062,635
  
Return on average assets (“ROAA”) as reported
    
1.40
%
    
1.60
%
    
1.25
%
    
1.35
%
    
1.31
%
Merger expenses
    
0.00
%
    
0.00
%
    
0.05
%
    
0.11
%
    
0.01
%
Tax effect
    
0.00
%
    
0.00
%
    
-0.01
%
    
-0.02
%
    
0.00
%
ROAA excluding merger expenses
    
1.40
%
    
1.60
%
    
1.29
%
    
1.44
%
    
1.32
%
(Gain)/loss on sale of investment securities
    
0.00
%
    
0.00
%
    
0.03
%
    
0.00
%
    
0.01
%
Tax effect
    
0.00
%
    
0.00
%
    
-0.01
%
    
0.00
%
    
0.00
%
ROAA excluding loss on sale of investment securities
    
1.40
%
    
1.60
%
    
1.31
%
    
1.44
%
    
1.33
%
Death benefit on bank owned life insurance (“BOLI”)
    
0.00
%
    
-0.02
%
    
0.00
%
    
-0.01
%
    
0.00
%
ROAA excluding death benefit on BOLI
    
1.40
%
    
1.58
%
    
1.31
%
    
1.43
%
    
1.33
%
Core ROAA
    
1.40
%
    
1.58
%
    
1.31
%
    
1.43
%
    
1.33
%
                                         
Non-GAAP Reconciliation of Return on Average Common Equity
                                        
Average Common Equity
  
$
653,071
    
$
640,770
    
$
485,662
    
$
605,719
    
$
473,420
  
Return on average common equity (“ROACE”) as reported
    
11.26
%
    
12.72
%
    
10.73
%
    
10.98
%
    
11.22
%
Merger expenses
    
0.00
%
    
0.00
%
    
0.40
%
    
0.93
%
    
0.10
%
Tax effect
    
0.00
%
    
0.00
%
    
-0.08
%
    
-0.16
%
    
-0.02
%
ROACE excluding merger expenses
    
11.26
%
    
12.72
%
    
11.05
%
    
11.75
%
    
11.30
%
(Gain)/loss on sale of investment securities
    
-0.01
%
    
0.00
%
    
0.27
%
    
0.01
%
    
0.09
%
Tax effect
    
0.00
%
    
0.00
%
    
-0.06
%
    
0.00
%
    
-0.02
%
ROACE excluding loss on sale of investment securities
    
11.25
%
    
12.72
%
    
11.26
%
    
11.76
%
    
11.37
%
Death benefit on bank owned life insurance (“BOLI”)
    
0.00
%
    
-0.13
%
    
0.00
%
    
-0.10
%
    
-0.03
%
ROACE excluding death benefit on BOLI
    
11.25
%
    
12.59
%
    
11.26
%
    
11.66
%
    
11.34
%
Core ROACE
    
11.25
%
    
12.59
%
    
11.26
%
    
11.66
%
    
11.34
%

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern and central Michigan through its commercial banking subsidiary, Horizon Bank. Horizon may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.


Pg. 12 cont. Horizon Bancorp, Inc. Announces Record Earnings for 2019

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon.  For these statements, Horizon claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission.  Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance.  The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties.  We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in its Form 10-K.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.



Contact:
Horizon Bancorp, Inc.
 
Mark E. Secor
 
Chief Financial Officer
 
(219) 873-2611
 
Fax: (219) 874-9280






#  #  #

HORIZON BANCORP, INC.
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)

   
December 31
    
September 30
    
June 30
    
March 31
    
December 31
  
   
2019
    
2019
    
2019
    
2019
    
2018
  
Balance sheet:
                              
Total assets
  
$
5,244,363
    
$
5,186,714
    
$
5,098,682
    
$
5,051,639
    
$
4,246,688
  
Investment securities
    
1,048,978
      
977,536
      
887,187
      
893,469
      
810,460
  
Commercial loans
    
2,046,651
      
2,046,165
      
2,062,623
      
2,089,579
      
1,721,590
  
Mortgage warehouse loans
    
150,293
      
155,631
      
133,428
      
71,944
      
74,120
  
Residential mortgage loans
    
770,717
      
796,497
      
814,065
      
819,824
      
668,141
  
Consumer loans
    
669,180
      
668,332
      
654,552
      
639,710
      
549,481
  
Earning assets
    
4,712,354
      
4,667,668
      
4,577,487
      
4,538,952
      
3,842,903
  
Non-interest bearing deposit accounts
    
709,760
      
756,707
      
810,350
      
811,768
      
642,129
  
Interest bearing transaction accounts
    
2,245,631
      
2,173,100
      
2,153,189
      
2,115,847
      
1,684,336
  
Time deposits
    
975,611
      
986,150
      
967,236
      
960,408
      
812,911
  
Borrowings
    
549,741
      
516,591
      
436,233
      
457,788
      
550,384
  
Subordinated debentures
    
56,311
      
56,250
      
56,194
      
55,310
      
37,837
  
Total stockholders’ equity
    
656,023
      
642,711
      
626,461
      
609,468
      
491,992
  
                                         
   
Three Months Ended
  
Income statement:
                                        
Net interest income
  
$
41,519
    
$
43,463
    
$
41,529
    
$
34,280
    
$
33,836
  
Provision for loan losses
    
340
      
376
      
896
      
364
      
528
  
Non-interest income
    
11,934
      
11,514
      
10,898
      
8,712
      
8,477
  
Non-interest expense
    
30,650
      
30,060
      
31,584
      
29,738
      
26,117
  
Income tax expense
    
3,920
      
4,004
      
3,305
      
2,074
      
2,535
  
Net income
  
$
18,543
    
$
20,537
    
$
16,642
    
$
10,816
    
$
13,133
  
                                         
Per share data: (1)
                                        
Basic earnings per share
  
$
0.41
    
$
0.46
    
$
0.37
    
$
0.28
    
$
0.34
  
Diluted earnings per share
    
0.41
      
0.46
      
0.37
      
0.28
      
0.34
  
Cash dividends declared per common share
    
0.12
      
0.12
      
0.12
      
0.10
      
0.10
  
Book value per common share
    
14.59
      
14.29
      
13.90
      
13.53
      
12.82
  
Tangible book value per common share
    
10.63
      
10.31
      
9.91
      
9.60
      
9.43
  
Market value - high
    
19.42
      
17.77
      
17.13
      
17.82
      
19.40
  
Market value - low
  
$
16.60
    
$
15.93
    
$
15.51
    
$
15.50
    
$
14.94
  
Weighted average shares outstanding - Basic
    
44,971,676
      
45,038,021
      
45,055,117
      
38,822,543
      
38,367,972
  
Weighted average shares outstanding - Diluted
    
45,103,065
      
45,113,730
      
45,130,408
      
38,906,172
      
38,488,002
  
                                         
Key ratios:
                                        
Return on average assets
    
1.40
%
    
1.60
%
    
1.32
%
    
1.02
%
    
1.25
%
Return on average common stockholders’ equity
    
11.26
      
12.72
      
10.73
      
8.66
      
10.73
  
Net interest margin
    
3.58
      
3.82
      
3.73
      
3.62
      
3.60
  
Loan loss reserve to total loans
    
0.49
      
0.49
      
0.50
      
0.49
      
0.59
  
Average equity to average assets
    
12.44
      
12.55
      
12.32
      
11.76
      
11.62
  
Bank only capital ratios:
                                        
Tier 1 capital to average assets
    
9.49
      
9.35
      
9.52
      
10.99
      
9.34
  
Tier 1 capital to risk weighted assets
    
12.20
      
11.62
      
11.76
      
11.84
      
11.87
  
Total capital to risk weighted assets
    
12.65
      
12.08
      
12.23
      
12.30
      
12.43
  
                                         
Loan data:
                                        
Substandard loans
  
$
58,670
    
$
62,130
    
$
47,764
    
$
41,728
    
$
38,775
  
30 to 89 days delinquent
    
7,729
      
10,204
      
9,633
      
9,980
      
7,161
  
                                         
90 days and greater delinquent - accruing interest
    
146
      
34
      
391
      
192
      
568
  
Trouble debt restructures - accruing interest
    
3,354
      
3,491
      
2,198
      
2,532
      
2,002
  
Trouble debt restructures - non-accrual
    
2,006
      
1,807
      
1,576
      
1,349
      
1,057
  
Non-accrual loans
    
15,679
      
13,823
      
14,764
      
15,313
      
11,548
  
Total non-performing loans
  
$
21,185
    
$
19,155
    
$
18,929
    
$
19,386
    
$
15,175
  
Non-performing loans to total loans
    
0.58
%
    
0.52
%
    
0.52
%
    
0.54
%
    
0.50
%
                                         
(1) Adjusted for 3:2 stock split on June 15, 2018
                                        
13

HORIZON BANCORP, INC.
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)

   
2019
    
2018
  
Balance sheet:
            
Total assets
  
$
5,244,363
    
$
4,246,688
  
Investment securities
    
1,048,978
      
810,460
  
Commercial loans
    
2,046,651
      
1,721,590
  
Mortgage warehouse loans
    
150,293
      
74,120
  
Residential mortgage loans
    
770,717
      
668,141
  
Consumer loans
    
669,180
      
549,481
  
Earning assets
    
4,712,354
      
3,842,903
  
Non-interest bearing deposit accounts
    
709,760
      
642,129
  
Interest bearing transaction accounts
    
2,245,631
      
1,684,336
  
Time deposits
    
975,611
      
812,911
  
Borrowings
    
549,741
      
550,384
  
Subordinated debentures
    
56,311
      
37,837
  
Total stockholders’ equity
    
656,023
      
491,992
  
                 
   
Twelve Months Ended
  
Income statement:
                
Net interest income
  
$
160,791
    
$
134,569
  
Provision for loan losses
    
1,976
      
2,906
  
Non-interest income
    
43,058
      
34,413
  
Non-interest expense
    
122,032
      
102,516
  
Income tax expense
    
13,303
      
10,443
  
Net income
  
$
66,538
    
$
53,117
  
                 
Per share data: (1)
                
Basic earnings per share
  
$
1.53
    
$
1.39
  
Diluted earnings per share
    
1.53
      
1.38
  
Cash dividends declared per common share
    
0.46
      
0.40
  
Book value per common share
    
14.59
      
12.82
  
Tangible book value per common share
    
10.63
      
9.43
  
Market value - high
    
19.42
      
21.94
  
Market value - low
  
$
15.50
    
$
14.94
  
Weighted average shares outstanding - Basic
    
43,493,316
      
38,347,059
  
Weighted average shares outstanding - Diluted
    
43,598,373
      
38,495,231
  
                 
Key ratios:
                
Return on average assets
    
1.35
%
    
1.31
%
Return on average common stockholders’ equity
    
10.98
      
11.22
  
Net interest margin
    
3.69
      
3.71
  
Loan loss reserve to total loans
    
0.49
      
0.59
  
Average equity to average assets
    
12.28
      
11.65
  
Bank only capital ratios:
                
Tier 1 capital to average assets
    
9.49
      
9.34
  
Tier 1 capital to risk weighted assets
    
12.20
      
11.87
  
Total capital to risk weighted assets
    
12.65
      
12.43
  
                 
Loan data:
                
Substandard loans
  
$
58,670
    
$
38,775
  
30 to 89 days delinquent
    
7,729
      
7,161
  
                 
90 days and greater delinquent - accruing interest
    
146
      
568
  
Trouble debt restructures - accruing interest
    
3,354
      
2,002
  
Trouble debt restructures - non-accrual
    
2,006
      
1,057
  
Non-accrual loans
    
15,679
      
11,548
  
Total non-performing loans
  
$
21,185
    
$
15,175
  
Non-performing loans to total loans
    
0.58
%
    
0.50
%
                 
(1) Adjusted for 3:2 stock split on June 15, 2018
                
14

HORIZON BANCORP, INC.

Allocation of the Allowance for Loan and Lease Losses
  
(Dollars in Thousands, Unaudited)
  
                               
   
December 31
    
September 30
    
June 30
    
March 31
    
December 31
  
   
2019
    
2019
    
2019
    
2019
    
2018
  
Commercial
  
$
11,996
    
$
12,082
    
$
11,881
    
$
11,556
    
$
10,495
  
Real estate
    
923
      
1,449
      
1,732
      
1,588
      
1,676
  
Mortgage warehousing
    
1,077
      
1,041
      
1,040
      
1,014
      
1,006
  
Consumer
    
3,671
      
3,384
      
3,652
      
3,663
      
4,643
  
Total
  
$
17,667
    
$
17,956
    
$
18,305
    
$
17,821
    
$
17,820
  
                                         
                                         
Net Charge-offs (Recoveries)
  
(Dollars in Thousands, Unaudited)
  
                                         
   
Three Months Ended
  
   
December 31
2019
    
September 30
2019
    
June 30
2019
    
March 31
2019
    
December 31
2018
  
Commercial
  
$
146
    
$
192
    
$
265
    
$
61
    
$
196
  
Real estate
    
40
      
(7
)
    
41
      
(27
)
    
47
  
Mortgage warehousing
    
-
      
-
      
-
      
-
      
-
  
Consumer
    
443
      
540
      
106
      
329
      
263
  
Total
  
$
629
    
$
725
    
$
412
    
$
363
    
$
506
  
Percent of net charge-offs to average loans outstanding for the period
    
0.02
%
    
0.02
%
    
0.01
%
    
0.01
%
    
0.02
%
                                         
                                         
Total Non-performing Loans
  
(Dollars in Thousands, Unaudited)
  
                                         
   
December 31
2019
    
September 30
2019
    
June 30
2019
    
March 31
2019
    
December 31
2018
  
Commercial
  
$
7,347
    
$
8,193
    
$
8,697
    
$
9,750
    
$
6,903
  
Real estate
    
9,884
      
7,212
      
6,444
      
5,995
      
5,007
  
Mortgage warehousing
    
-
      
-
      
-
      
-
      
-
  
Consumer
    
3,954
      
3,750
      
3,788
      
3,641
      
3,265
  
Total
  
$
21,185
    
$
19,155
    
$
18,929
    
$
19,386
    
$
15,175
  
Non-performing loans to total loans
    
0.58
%
    
0.52
%
    
0.52
%
    
0.54
%
    
0.55
%
                                         
                                         
Other Real Estate Owned and Repossessed Assets
  
(Dollars in Thousands, Unaudited)
  
                                         
   
December 31
2019
    
September 30
209
    
June 30
2019
    
March 31
2019
    
December 31
2018
  
Commercial
  
$
3,698
    
$
3,972
    
$
3,694
    
$
3,496
    
$
1,967
  
Real estate
    
28
      
48
      
113
      
126
      
60
  
Mortgage warehousing
    
-
      
-
      
-
      
-
      
-
  
Consumer
    
-
      
24
      
48
      
30
      
48
  
Total
  
$
3,726
    
$
4,044
    
$
3,855
    
$
3,652
    
$
2,075
  





15

HORIZON BANCORP, INC.
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)

 
  
Three Months Ended
    
Three Months Ended
  
 
  
December 31, 2019
    
December 31, 2018
  
 
  
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
  
Assets
                                    
Interest-earning assets
                                    
Federal funds sold
  
$
40,657
    
$
172
      
1.68
%
  
$
10,093
    
$
62
      
2.44
%
Interest-earning deposits
    
12,665
      
58
      
1.82
%
    
21,763
      
93
      
1.70
%
Investment securities - taxable
    
491,160
      
2,824
      
2.28
%
    
432,620
      
2,734
      
2.51
%
Investment securities - non-taxable(1)
    
545,832
      
3,575
      
3.26
%
    
364,236
      
2,324
      
3.20
%
Loans receivable(2)(3)
    
3,657,903
      
46,769
      
5.10
%
    
2,980,110
      
38,517
      
5.14
%
Total interest-earning assets(1)
    
4,748,217
      
53,398
      
4.57
%
    
3,808,822
      
43,730
      
4.63
%
 
                                                
Non-interest-earning assets
                                                
Cash and due from banks
    
75,248
                      
44,732
                  
Allowance for loan losses
    
(17,916
)
                    
(17,792
)
                
Other assets
    
445,025
                      
343,378
                  
 
        
                         
                 
Total average assets
  
$
5,250,574
                    
$
4,179,140
                  
 
                                                
Liabilities and Stockholders’ Equity
                                                
Interest-bearing liabilities
                                                
Interest-bearing deposits
  
$
3,255,725
    
$
8,767
      
1.07
%
  
$
2,526,209
    
$
6,411
      
1.01
%
Borrowings
    
484,729
      
2,281
      
1.87
%
    
458,485
      
2,882
      
2.49
%
Subordinated debentures
    
54,489
      
831
      
6.05
%
    
36,616
      
601
      
6.51
%
Total interest-bearing liabilities
    
3,794,943
      
11,879
      
1.24
%
    
3,021,310
      
9,894
      
1.30
%
 
                                                
Non-interest-bearing liabilities
                                                
Demand deposits
    
747,513
                      
656,114
                  
Accrued interest payable and other liabilities
    
55,047
                      
16,054
                  
Stockholders’ equity
    
653,071
                      
485,662
                  
 
        
                         
                 
Total average liabilities and stockholders’ equity
  
$
5,250,574
                    
$
4,179,140
                  
 
                
                         
         
Net interest income/spread
          
$
41,519
      
3.33
%
          
$
33,836
      
3.33
%
Net interest income as a percent of averageinterest-earning assets(1)
                    
3.58
%
                    
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. The average rate is presented on a tax equivalent basis.
16

HORIZON BANCORP, INC.
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)


   
Twelve Months Ended
    
Twelve Months Ended
  
   
December 31, 2019
    
December 31, 2018
  
   
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
  
Assets
                                    
Interest-earning assets
                                    
Federal funds sold
  
$
21,301
    
$
511
      
2.40
%
  
$
4,696
    
$
115
      
2.45
%
Interest-earning deposits
    
19,601
      
342
      
1.74
%
    
24,491
      
393
      
1.60
%
Investment securities - taxable
    
474,833
      
11,753
      
2.48
%
    
431,970
      
10,113
      
2.34
%
Investment securities - non-taxable(1)
    
454,066
      
12,095
      
3.34
%
    
326,040
      
8,069
      
3.13
%
Loans receivable(2)(3)
    
3,500,649
      
183,631
      
5.27
%
    
2,910,741
      
147,478
      
5.08
%
Total interest-earning assets(1)
    
4,470,450
      
208,332
      
4.75
%
    
3,697,938
      
166,168
      
4.56
%
                                                 
Non-interest-earning assets
                                                
Cash and due from banks
    
62,920
                      
44,645
                  
Allowance for loan losses
    
(18,019
)
                    
(16,964
)
                
Other assets
    
417,707
                      
337,016
                  
         
                         
                 
Total average assets
  
$
4,933,058
                    
$
4,062,635
                  
                                                 
Liabilities and Stockholders’ Equity
                                                
Interest-bearing liabilities
                                                
Interest-bearing deposits
  
$
3,007,937
    
$
33,690
      
1.12
%
  
$
2,418,987
    
$
18,225
      
0.75
%
Borrowings
    
468,159
      
10,672
      
2.28
%
    
492,830
      
11,009
      
2.23
%
Subordinated debentures
    
50,134
      
3,179
      
6.34
%
    
36,547
      
2,365
      
6.47
%
Total interest-bearing liabilities
    
3,526,230
      
47,541
      
1.35
%
    
2,948,364
      
31,599
      
1.07
%
                                                 
Non-interest-bearing liabilities
                                                
Demand deposits
    
757,389
                      
624,576
                  
Accrued interest payable and other liabilities
    
43,720
                      
16,275
                  
Stockholders’ equity
    
605,719
                      
473,420
                  
         
                         
                 
Total average liabilities and stockholders’ equity
  
$
4,933,058
                    
$
4,062,635
                  
                 
                         
         
Net interest income/spread
          
$
160,791
      
3.40
%
          
$
134,569
      
3.49
%
Net interest income as a percent of average interest-earning assets(1)
                    
3.69
%
                    
3.71
%

(1)
Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2)
Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.
        
(3)
Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

17

HORIZON BANCORP, INC.
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)

   
December 31
    
December 31
  
   
2019
    
2018
  
Assets
            
Cash and due from banks
  
$
98,831
    
$
58,492
  
Interest-earning time deposits
    
8,455
      
15,744
  
Investment securities, available for sale
    
841,079
      
600,348
  
Investment securities, held to maturity (fair value of $215,147 and $208,273)
    
207,899
      
210,112
  
Loans held for sale
    
4,088
      
1,038
  
Loans, net of allowance for loan losses of $17,667 and $17,820
    
3,619,174
      
2,995,512
  
Premises and equipment, net
    
92,209
      
74,331
  
Federal Home Loan Bank stock
    
22,447
      
18,073
  
Goodwill
    
151,238
      
119,880
  
Other intangible assets
    
26,679
      
10,390
  
Interest receivable
    
18,828
      
14,239
  
Cash value of life insurance
    
95,577
      
88,062
  
Other assets
    
57,859
      
40,467
  
Total assets
  
$
5,244,363
    
$
4,246,688
  
Liabilities
                
Deposits
                
Non-interest bearing
  
$
709,760
    
$
642,129
  
Interest bearing
    
3,221,242
      
2,497,247
  
Total deposits
    
3,931,002
      
3,139,376
  
Borrowings
    
549,741
      
550,384
  
Subordinated debentures
    
56,311
      
37,837
  
Interest payable
    
3,062
      
2,031
  
Other liabilities
    
48,224
      
25,068
  
Total liabilities
    
4,588,340
      
3,754,696
  
Commitments and contingent liabilities
                
Stockholders’ Equity
                
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares
    
-
      
-
  
Common stock, no par value, Authorized 99,000,000 shares
                
Issued 45,000,840 and 38,400,476 shares,
Outstanding 44,975,771 and 38,375,407 shares
    
-
      
-
  
Additional paid-in capital
    
379,853
      
276,101
  
Retained earnings
    
269,738
      
224,035
  
Accumulated other comprehensive income (loss)
    
6,432
      
(8,144
)
Total stockholders’ equity
    
656,023
      
491,992
  
Total liabilities and stockholders’ equity
  
$
5,244,363
    
$
4,246,688
  

(1) Adjusted for 3:2 stock split on June 15, 2018         
18

HORIZON BANCORP, INC.
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data, Unaudited)

   
Three Months Ended
    
Twelve Months Ended
  
   
December 31
    
December 31
  
   
2019
    
2018
    
2019
    
2018
  
Interest Income
                        
Loans receivable
  
$
46,769
    
$
38,517
    
$
183,631
    
$
147,478
  
Investment securities
                                
Taxable
    
3,054
      
2,889
      
12,606
      
10,621
  
Tax exempt
    
3,575
      
2,324
      
12,095
      
8,069
  
Total interest income
    
53,398
      
43,730
      
208,332
      
166,168
  
Interest Expense
                                
Deposits
    
8,767
      
6,411
      
33,690
      
18,225
  
Borrowed funds
    
2,281
      
2,882
      
10,672
      
11,009
  
Subordinated debentures
    
831
      
601
      
3,179
      
2,365
  
Total interest expense
    
11,879
      
9,894
      
47,541
      
31,599
  
Net Interest Income
    
41,519
      
33,836
      
160,791
      
134,569
  
Provision for loan losses
    
340
      
528
      
1,976
      
2,906
  
Net Interest Income after Provision for Loan Losses
    
41,179
      
33,308
      
158,815
      
131,663
  
Non-interest Income
                                
Service charges on deposit accounts
    
2,766
      
1,958
      
9,959
      
7,762
  
Wire transfer fees
    
179
      
122
      
653
      
612
  
Interchange fees
    
1,996
      
1,422
      
7,655
      
5,715
  
Fiduciary activities
    
2,594
      
2,229
      
8,580
      
7,827
  
Gains (losses) on sale of investment securities (includes $10 and $(332) for the three months ended December 31, 2019 and 2018, respectively, and $(75) and $(443) for the twelve months ended December 31, 2019 and 2018, respectively, related to accumulated other comprehensive earnings reclassifications)
    
10
      
(332
)
    
(75
)
    
(443
)
Gain on sale of mortgage loans
    
3,119
      
1,455
      
9,208
      
6,613
  
Mortgage servicing income net of impairment
    
294
      
697
      
1,914
      
2,120
  
Increase in cash value of bank owned life insurance
    
566
      
532
      
2,190
      
1,912
  
Death benefit on bank owned life insurance
    
-
      
-
      
580
      
154
  
Other income
    
410
      
394
      
2,394
      
2,141
  
Total non-interest income
    
11,934
      
8,477
      
43,058
      
34,413
  
Non-interest Expense
                                
Salaries and employee benefits
    
16,841
      
14,098
      
65,206
      
56,623
  
Net occupancy expenses
    
3,106
      
2,501
      
12,157
      
10,482
  
Data processing
    
2,235
      
1,754
      
8,480
      
6,816
  
Professional fees
    
520
      
612
      
1,946
      
1,926
  
Outside services and consultants
    
1,415
      
1,536
      
8,152
      
5,271
  
Loan expense
    
2,438
      
1,837
      
8,633
      
6,341
  
FDIC insurance expense
    
-
      
393
      
252
      
1,444
  
Other losses
    
377
      
89
      
740
      
665
  
Other expense
    
3,718
      
3,297
      
16,466
      
12,948
  
Total non-interest expense
    
30,650
      
26,117
      
122,032
      
102,516
  
Income Before Income Taxes
    
22,463
      
15,668
      
79,841
      
63,560
  
Income tax expense (includes $2 and $(70) for the three months ended December 31, 2019 and 2018, respectively, and $(16) and $(93) for the twelve months ended December 31, 2019 and 2018, respectivley, related to income tax expense (benefit) from reclassification items)
    
3,920
      
2,535
      
13,303
      
10,443
  
Net Income
  
$
18,543
    
$
13,133
    
$
66,538
    
$
53,117
  
Basic Earnings Per Share
  
$
0.41
    
$
0.34
    
$
1.53
    
$
1.39
  
Diluted Earnings Per Share
    
0.41
      
0.34
      
1.53
      
1.38
 
                                 
(1) Adjusted for 3:2 stock split on June 15, 2018                                
19

HORIZON BANCORP INC /IN/ Reports