Press Release

Horizon Bancorp, Inc. Announces 2019 First Quarter Earnings

Company Release - 4/24/2019 4:35 PM ET

MICHIGAN CITY, Ind., April 24, 2019 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month period ended March 31, 2019. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective June 15, 2018. 

SUMMARY:

  • On March 26, 2019, Horizon announced the completion of the previously announced acquisition of Salin Bancshares, Inc. (“Salin”) and its wholly-owned subsidiary, Salin Bank and Trust Company (“Salin Bank”), headquartered in Indianapolis, Indiana. The 2019 first quarter results include merger related expense of approximately $3.4 million, after tax.
  • Net income for the quarter ended March 31, 2019 decreased 15.5% to $10.8 million, or $0.28 diluted earnings per share, compared to $12.8 million, or $0.33 diluted earnings per share for the quarter ended March 31, 2018.
  • Core net income for the quarter ended March 31, 2019 increased 16.5% to $13.0 million, or $0.34 diluted earnings per share, compared to $11.2 million, or $0.29 diluted earnings per share, for the same period in 2018. This represents the highest quarter-to-date core net income and core diluted earnings per share in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 3 for a description of the elements of core net income)
  • Return on average assets was 1.02% for the first quarter of 2019 compared to 1.32% for the first quarter of 2018.
  • Core return on average assets for the first quarter of 2019 was 1.23% compared to 1.15% for the first quarter of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 8 for the description of core return on average assets)
  • Total loans, excluding acquired loans, increased by an annualized rate of 5.0%, or $36.8 million, during the first quarter of 2019.
  • Net interest margin was 3.62% for the three months ended March 31, 2019 compared to 3.60% for the three months ended December 31, 2018 and 3.81% for the three months ended March 31, 2018.
  • Core net interest margin (defined as net interest margin excluding acquisition-related purchase accounting adjustments) was 3.46% for the three months ended March 31, 2019 compared to 3.43% for the three months ended December 31, 2018 and 3.55% for the three months ended March 31, 2018.
  • Horizon’s tangible book value per share increased to $9.60 at March 31, 2019 compared to $9.43 and $8.57 at December 31, 2018 and March 31, 2018, respectively. This represents the highest tangible book value per share in the Company’s history.
  • Horizon to close three full-service branches on April 19, 2019 and one loan production office on April 26, 2019.
  • Horizon to consolidate five Salin full-service branches on April 26, 2019 in coordination with the core data conversion.

Craig Dwight, Chairman and CEO of Horizon, commented:  “Horizon’s 2019 first quarter earnings of $10.8 million, or $0.28 per diluted share, includes approximately $3.4 million, after tax, in merger expenses related to the acquisition of Salin Bancshares, Inc. which was completed on March 26, 2019. Excluding these merger expenses and other non-core items, Horizon’s core net income totaled $13.0 million, or $0.34 diluted earnings per share.  This represents an increase in core diluted earnings per share of 3.0% and 17.2% when compared to the fourth and first quarters of 2018, respectively.”

Dwight added, “Horizon’s total assets at March 31, 2019 surpassed $5.0 billion, as a result of the Salin acquisition and organic loan growth since the beginning of the year. In addition to approximately $571.8 million in loans acquired from Salin, we also experienced organic loan growth at an annualized rate of 5.0% during the first quarter of 2019. The markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo continue to experience solid growth with an increase in loan balances of $77.7 million, or 11.5%, during the first quarter of 2019. This growth is due to the credit of our seasoned lending team who live and work within these expanding and robust communities that we serve.”

Dwight continued, “Horizon’s strategy to build mass and scale in order to maximize operational leverage is working as we continue to experience lower costs as a percent of average assets. Excluding merger expenses, we reduced total non-interest expenses by $10,000 and $217,000 when comparing the first quarter of 2019 to the fourth and first quarters of 2018. This decrease in expenses is the result of focus by our entire team to pursue operational efficiencies and leverage new technologies. In addition, the acquisition of Salin continues our efforts to maximize operational leverage through mass and scale. As part of our strategy to improve efficiencies, we will close three legacy full-service branches on April 19, 2019 and will consolidate our existing Fort Wayne loan production office with the acquired Salin locations. In addition, we plan to close five Salin full-service branches which are in close proximity to an existing Horizon office or that do not meet our branch hurdle rates. The Salin branches will close in conjunction with our data conversion on April 26, 2019.”

Dwight concluded, “Our merger with Salin provides entry into the attractive growth markets of Fort Wayne and Columbus, Indiana and complements our current Indiana locations. Salin Bank’s presence in the dynamic markets of Indianapolis and Lafayette, Indiana will add to Horizon’s current footprint. In addition, Salin has a talented team who will add depth and experience to our current sales, call center and operational network. Horizon’s strategic plan calls for continued expansion in the States of Indiana and Michigan with an emphasis on strong core deposit growth, investment in growth markets and to add mass and scale to gain additional efficiencies. Horizon’s merger with Salin fits well with our strategic plan.”

In 2019, Horizon plans to cast a wider net to maximize our merger opportunities and in order to seek lower cost funding by including Central Illinois and Northwest Ohio. These markets complement Horizon’s current Indiana and Michigan markets and will assist in our strategy to build shareholder value.

Income Statement Highlights

Net income for the first quarter of 2019 was $10.8 million, or $0.28 diluted earnings per share, compared to $12.8 million, or $0.33 diluted earnings per share, for the first quarter of 2018. Core net income for the first quarter of 2019 was $13.0 million, or $0.34 diluted earnings per share, compared to $11.2 million, or $0.29 diluted earnings per share, for the first quarter of 2018.

The decrease in net income and diluted earnings per share from the first quarter of 2018 when compared to the same period of 2019 reflects an increase in non-interest expense of $3.9 million, primarily due to merger expenses totaling $4.1 million (before tax expense), offset by increases in net interest income of $869,000 and non-interest income of $394,000 in addition to decreases in provision for loan losses of $203,000 and income tax expense of $447,000.

 
Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands, Except per Share Data, Unaudited)
 Three Months Ended
 March 31 December 31 March 31
  2019   2018   2018 
Non-GAAP Reconciliation of Net Income           
Net income as reported$10,816  $13,133  $12,804 
Merger expenses 4,118   487   - 
Tax effect (692)  (102)  - 
Net income excluding merger expenses 14,242   13,518   12,804 
            
Loss (gain) on sale of investment securities (15)  332   (11)
Tax effect 3   (70)  2 
Net income excluding gain on sale of investment securities 14,230   13,780   12,795 
            
Acquisition-related purchase accounting adjustments ("PAUs") (1,510)  (1,629)  (2,037)
Tax effect 317   342   428 
Core Net Income$13,037  $12,493  $11,186 
            
Non-GAAP Reconciliation of Diluted Earnings per Share           
Diluted earnings per share ("EPS") as reported$0.28  $0.34  $0.33 
Merger expenses 0.11   0.01   - 
Tax effect (0.02)  -   - 
Diluted EPS excluding merger expenses 0.37   0.35   0.33 
            
Loss (gain) on sale of investment securities -   0.01   - 
Tax effect -   -   - 
Diluted EPS excluding gain on sale of investment securities 0.37   0.36   0.33 
            
Acquisition-related PAUs (0.04)  (0.04)  (0.05)
Tax effect 0.01   0.01   0.01 
Core Diluted EPS$0.34  $0.33  $0.29 
            

Horizon’s net interest margin increased to 3.62% for the first quarter of 2019 when compared to 3.60% for the fourth quarter of 2018. The increase in net interest margin from the fourth quarter of 2018 reflects an increase in the yield on interest-earning assets of 13 basis points as loans continue to reprice. The increase in yield on earning assets was offset by an increase in the cost of interest-bearing liabilities of 14 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 10 basis points and borrowings of 5 basis points.

Net interest margin decreased to 3.62% for the first quarter of 2019 when compared to 3.81% for the first quarter of 2018. This decrease reflects an increase in the cost of interest-bearing liabilities of 59 basis points, offset by an increase in the yield of interest-earning assets of 26 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 60 basis points and borrowings of 56 basis points. The increase in the yield of interest-earning assets was due to increases in the yields on loans receivable of 23 basis points, taxable investment securities of 39 basis points and non-taxable investment securities of 52 basis points.

Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.46% for the first quarter of 2019 compared to 3.43% for the prior quarter and 3.55% for the first quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.5 million, $1.6 million and $2.0 million for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

 
Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
 Three Months Ended
 March 31 December 31 March 31
  2019   2018   2018 
Non-GAAP Reconciliation of Net Interest Margin           
Net interest income as reported$34,280  $33,836  $33,411 
            
Average interest-earning assets 3,929,296   3,808,822   3,580,143 
            
Net interest income as a percentage of average interest-earning assets           
("Net Interest Margin") 3.62%  3.60%  3.81%
            
Acquisition-related purchase accounting adjustments ("PAUs")$(1,510) $(1,629) $(2,037)
            
Core net interest income$32,770  $32,207  $31,374 
            
Core net interest margin 3.46%  3.43%  3.55%
            

Lending Activity

Total loans increased $608.7 million from $3.014 billion as of December 31, 2018 to $3.623 billion as of March 31, 2019. Excluding acquired loans, total loans increased $36.8 million during the first quarter of 2019 as commercial loans increased by $17.1 million, residential mortgage loans increased by $15.6 million and consumer loans increased by $5.4 million, offset by a decrease in mortgage warehouse loans of $2.2 million.

 
Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
  
 March 31 December 31 Amount Acquired Amount Percent
 2019 2018 Change Loans Change Change
Commercial$2,089,579 $1,721,590 $367,989  $(350,916) $17,073  1.0%
Residential mortgage 819,824  668,141  151,683   (136,089)  15,594  2.3%
Consumer 639,710  549,481  90,229   (84,814)  5,415  1.0%
Subtotal 3,549,113  2,939,212  609,901   (571,819)  38,082  1.3%
Held for sale loans 1,979  1,038  941   -   941  90.7%
Mortgage warehouse loans 71,944  74,120  (2,176)  -   (2,176) -2.9%
Total loans$3,623,036 $3,014,370 $608,666  $(571,819) $36,847  1.2%
              

Residential mortgage lending activity for the three months ended March 31, 2019 generated $1.3 million in income from the gain on sale of mortgage loans, a decrease of $146,000 from the fourth quarter of 2018 and a decrease of $114,000 from the first quarter of 2018. Total origination volume for the first quarter of 2019, including loans placed into portfolio, totaled $62.5 million, representing a decrease of 25.5% from the fourth quarter of 2018 and a decrease of 13.5% from the first quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was only 4.3% of Horizon’s total revenue for the first quarter of 2019. 

The provision for loan losses totaled $364,000 for the first quarter of 2019 compared to $528,000 for the fourth quarter of 2018 and $567,000 for the first quarter of 2018. The decrease in the provision for loan losses from the fourth and first quarters of 2018 when compared to the first quarter of 2019 was primarily due to improving credit trends and a continued low level of charge-offs.

The ratio of the allowance for loan losses to total loans decreased to 0.49% as of March 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 0.69% as of March 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 1.10% as of March 31, 2019 compared to 0.98% as of December 31, 2018.

 
Non-GAAP Allowance for Loan and Lease Loss Detail
As of March 31, 2019
(Dollars in Thousands, Unaudited)
          
 Pre-discount
Loan
Balance
 Allowance
for Loan
Losses
(ALLL)
 Loan
Discount
 ALLL
+
Loan
Discount
 Loans, net ALLL/
Pre-discount
Loan Balance
 Loan
Discount/
Pre-discount
Loan Balance
 ALLL + Loan
Discount/
Pre-discount
Loan Balance
Horizon Legacy$2,547,794 $17,525 N/A $17,525 $2,530,269 0.69% 0.00% 0.69%
Heartland 7,202  -  641  641  6,561 0.00% 8.90% 8.90%
Summit 18,396  -  1,007  1,007  17,389 0.00% 5.47% 5.47%
Peoples 81,713  -  1,861  1,861  79,852 0.00% 2.28% 2.28%
Kosciusko 35,182  296  569  865  34,317 0.84% 1.62% 2.46%
LaPorte 84,230  -  2,838  2,838  81,392 0.00% 3.37% 3.37%
CNB 4,321  -  112  112  4,209 0.00% 2.59% 2.59%
Lafayette 82,448  -  1,008  1,008  81,440 0.00% 1.22% 1.22%
Wolverine 178,573  -  2,136  2,136  176,437 0.00% 1.20% 1.20%
Salin 583,177  -  11,918  11,918  571,259 0.00% 2.04% 2.04%
Total$3,623,036 $17,821 $22,090 $39,911 $3,583,125 0.49% 0.61% 1.10%
            

As of March 31, 2019, non-performing loans totaled $19.4 million, which reflects a three basis point increase in non-performing loans to total loans, or a $4.2 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 $2.8 million, non-performing real estate loans increased by $988,000 and non-performing consumer loans increased by $376,000. Other real estate owned and repossessed assets totaled $3.7 million as of March 31, 2019 which is an increase of $1.6 million from December 31, 2018. The majority of this increase was due to other real estate owned properties acquired in the Salin transaction totaling $1.6 million. 

Expense Management

Total non-interest expense was $3.6 million higher in the first quarter of 2019 when compared to the fourth quarter of 2018, primarily due to $4.1 million of merger expenses. Outside services and consultants, other expenses, salaries and employee benefits, net occupancy expenses, data processing and loan expense increased by $2.0 million, $1.0 million, $368,000, $271,000, $212,000 and $112,000, respectively. Offsetting these increases were decreases in FDIC insurance expense of $233,000 and professional fees of $119,000. Excluding merger expenses, total non-interest expense decreased slightly by $10,000 during the first quarter of 2019 when compared to the fourth quarter of 2018.

                
 Three Months Ended    
 March 31 December 31  
 2019 2018 Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$14,466  $(2) $  14,464   $14,098  $-  $14,098  $366  2.6%
Net occupancy expenses 2,772   -     2,772    2,501   -   2,501   271  10.8%
Data processing 1,966   (292)    1,674    1,754   -   1,754   (80) -4.6%
Professional fees 493   (239)    254    612   (219)  393   (139) -35.4%
Outside services and consultants 3,530   (2,290)    1,240    1,536   (252)  1,284   (44) -3.4%
Loan expense 1,949   -     1,949    1,837   -   1,837   112  6.1%
FDIC deposit insurance 160   -     160    393   -   393   (233) -59.3%
Other losses 104   (2)    102    89   -   89   13  14.6%
Other expenses 4,298   (1,293)    3,005    3,297   (16)  3,281   (276) -8.4%
Total non-interest expense$29,738  $(4,118) $  25,620   $26,117  $(487) $25,630  $(10) 0.0%
Annualized Non-interest Expense to Average Assets 2.80%  2.41%  2.48%  2.43% 
                 

Total non-interest expense was $3.9 million higher during the first quarter of 2019 compared to the same period of 2018, primarily due to merger expenses. Outside services and consultants, other expense, loan expense and data processing increased $2.3 million, $974,000, $692,000 and $270,000, respectively. Offsetting these increases was a decrease in net occupancy expense of $194,000 and FDIC insurance expense of $150,000. Excluding merger expenses, total non-interest expense decreased $217,000 during the first quarter of 2019 when compared to the first quarter of 2018.

                
 Three Months Ended    
 March 31 March 31  
 2019
 2018
 Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$14,466  $(2) $  14,464   $14,373  $- $14,373  $91  0.6%
Net occupancy expenses 2,772   -     2,772    2,966   -  2,966   (194) -6.5%
Data processing 1,966   (292)    1,674    1,696   -  1,696   (22) -1.3%
Professional fees 493   (239)    254    501   -  501   (247) -49.3%
Outside services and consultants 3,530   (2,290)    1,240    1,264   -  1,264   (24) -1.9%
Loan expense 1,949   -     1,949    1,257   -  1,257   692  55.1%
FDIC deposit insurance 160   -     160    310   -  310   (150) -48.4%
Other losses 104   (2)    102    146   -  146   (44) -30.1%
Other expenses 4,298   (1,293)    3,005    3,324   -  3,324   (319) -9.6%
Total non-interest expense$29,738  $(4,118) $  25,620   $25,837  $- $25,837  $(217) -0.8%
Annualized Non-interest Expense to Average Assets 2.80%  2.41%  2.66%  2.66% 
                 

Annualized non-interest expense as a percent of average assets were 2.80%, 2.48% and 2.66% for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.41%, 2.43% and 2.66% for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively. Horizon’s strategy to build mass and scale continues to prove effective.

Income tax expense totaled $2.1 million for the first quarter of 2019, a decrease of $461,000 when compared to the fourth quarter of 2018 and a decrease of $447,000 when compared to the first quarter of 2018. The decrease in income tax expense from the fourth and first quarters of 2018 was primarily due to decreases in income before income taxes of $2.8 million and $2.4 million, respectively, when compared to the first quarter of 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, the return on average assets and the return on average equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them, to show the impact of such events as acquisition-related purchase accounting adjustments, 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)
         
 March 31 December 31 September 30 June 30 March 31
 2019 2018 2018 2018 2018
Total stockholders' equity$609,468 $491,992 $477,594 $470,535 $460,416
Less: Intangible assets 176,864  130,270  130,755  131,239  131,724
Total tangible stockholders' equity$432,604 $361,722 $346,839 $339,296 $328,692
               
Common shares outstanding 45,052,747  38,375,407  38,367,890  38,362,640  38,332,853
               
Tangible book value per common share$9.60 $9.43 $9.04 $8.84 $8.57


 
Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
(Dollars in Thousands, Unaudited)
 Three Months Ended
 March 31 December 31 March 31
  2019   2018   2018 
Non-GAAP Reconciliation of Return on Average Assets           
Average Assets$4,307,189  $4,179,140  $3,942,837 
            
Return on average assets ("ROAA") as reported 1.02%  1.25%  1.32%
Merger expenses 0.39%  0.05%  0.00%
Tax effect -0.07%  -0.01%  0.00%
ROAA excluding merger expenses 1.34%  1.29%  1.32%
            
Gain on sale of investment securities 0.00%  0.03%  0.00%
Tax effect 0.00%  -0.01%  0.00%
ROAA excluding gain on sale of investment securities 1.34%  1.31%  1.32%
            
Acquisition-related purchase accounting adjustments ("PAUs") -0.14%  -0.15%  -0.21%
Tax effect 0.03%  0.03%  0.04%
Core ROAA 1.23%  1.19%  1.15%
            
Non-GAAP Reconciliation of Return on Average Common Equity           
Average Common Equity$506,449  $485,662  $460,076 
            
Return on average common equity ("ROACE") as reported 8.66%  10.73%  11.29%
Merger expenses 3.30%  0.40%  0.00%
Tax effect -0.55%  -0.08%  0.00%
ROACE excluding merger expenses 11.41%  11.05%  11.29%
            
Gain on sale of investment securities -0.01%  0.27%  -0.01%
Tax effect 0.00%  -0.06%  0.00%
ROACE excluding gain on sale of investment securities 11.40%  11.26%  11.28%
            
Acquisition-related purchase accounting adjustments ("PAUs") -1.21%  -1.33%  -1.80%
Tax effect 0.25%  0.28%  0.38%
Core ROACE 10.44%  10.21%  9.86%
            

About Horizon

Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern, central and the Great Lakes Bay regions of Michigan through its commercial banking subsidiary Horizon Bank. Horizon also offers mortgage-banking services throughout the Midwest. Horizon may be reached online at www.horizonbank.com.  Its common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.

Forward Looking Statements

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

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

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

 

 

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

         
 March 31 December 31 September 30 June 30 March 31
  2019   2018   2018   2018   2018 
Balance sheet:         
Total assets$5,051,639  $4,246,688  $4,150,561  $4,076,611  $3,969,750 
Investment securities 893,469   810,460   766,153   735,962   714,425 
Commercial loans 2,089,579   1,721,590   1,698,582   1,672,998   1,656,374 
Mortgage warehouse loans 71,944   74,120   71,422   109,016   101,299 
Residential mortgage loans 819,824   668,141   651,250   634,636   618,131 
Consumer loans 639,710   549,481   536,132   507,866   480,989 
Earnings assets 4,538,952   3,842,903   3,743,592   3,681,583   3,591,296 
Non-interest bearing deposit accounts 811,768   642,129   621,475   615,018   602,175 
Interest bearing transaction accounts 2,115,847   1,684,336   1,605,825   1,644,758   1,619,859 
Time deposits 960,408   812,911   901,254   756,387   711,642 
Borrowings 457,788   550,384   477,719   524,846   520,300 
Subordinated debentures 55,310   37,837   37,791   37,745   37,699 
Total stockholders' equity 609,468   491,992   477,594   470,535   460,416 
            
Income statement:Three months ended
Net interest income$34,280  $33,836  $33,772  $33,550  $33,411 
Provision for loan losses 364   528   1,176   635   567 
Non-interest income 8,712   8,477   8,686   8,932   8,318 
Non-interest expenses 29,738   26,117   25,620   24,942   25,837 
Income tax expense 2,074   2,535   2,597   2,790   2,521 
Net income$10,816  $13,133  $13,065  $14,115  $12,804 
         
Per share data:(1)         
Basic earnings per share$0.28  $0.34  $0.34  $0.37  $0.33 
Diluted earnings per share 0.28   0.34   0.34   0.37   0.33 
Cash dividends declared per common share 0.10   0.10   0.10   0.10   0.10 
Book value per common share 13.53   12.82   12.45   12.27   12.01 
Tangible book value per common share 9.60   9.43   9.04   8.84   8.57 
Market value - high 17.82   19.40   21.39   21.94   20.59 
Market value - low$15.50  $14.94  $19.44  $19.17  $17.87 
Weighted average shares outstanding - Basic 38,822,543   38,367,972   38,365,379   38,347,612   38,306,395 
Weighted average shares outstanding - Diluted 38,906,172   38,488,002   38,534,970   38,519,401   38,468,811 
         
Key ratios:         
Return on average assets 1.02%  1.25%  1.26%  1.41%  1.32%
Return on average common stockholders' equity 8.66   10.73   10.87   12.15   11.29 
Net interest margin 3.62   3.60   3.67   3.78   3.81 
Loan loss reserve to total loans 0.49   0.59   0.60   0.58   0.58 
Average equity to average assets 11.76   11.62   11.62   11.60   11.67 
Bank only capital ratios:         
Tier 1 capital to average assets 11.13   9.38   9.53   9.65   9.66 
Tier 1 capital to risk weighted assets 12.07   11.91   12.09   12.21   12.32 
Total capital to risk weighted assets 12.54   12.47   12.66   12.77   12.87 
         
Loan data:         
Substandard loans$41,728  $38,775  $34,655  $40,941  $43,035 
30 to 89 days delinquent 9,980   7,161   6,878   3,978   8,932 
          
90 days and greater delinquent - accruing interest$192  $568  $202  $49  $30 
Trouble debt restructures - accruing interest 2,532   2,002   1,830   1,911   1,899 
Trouble debt restructures - non-accrual 1,349   1,057   1,077   894   1,090 
Non-accural loans 15,313   11,548   11,417   12,555   12,062 
Total non-performing loans$19,386  $15,175  $14,526  $15,409  $15,081 
Non-performing loans to total loans 0.54%  0.50%  0.49%  0.53%  0.53%
         
(1)Adjusted for 3:2 stock split on June 15, 2018         
          
          

 HORIZON BANCORP, INC.

Allocation of the Allowance for Loan and Lease Losses
(Dollars in Thousands, Unaudited)
         
 March 31 December 31 September 30 June 30 March 31
  2019   2018   2018   2018   2018 
Commercial$   11,556   $10,495  $10,581  $8,865  $7,840 
Real estate   1,588    1,676   1,574   1,761   1,930 
Mortgage warehousing   1,014    1,006   1,030   1,084   1,030 
Consumer   3,663    4,643   4,613   5,361   5,674 
Total$   17,821   $17,820  $17,798  $17,071  $16,474 
         
Net Charge-Offs (Recoveries)
(Dollars in Thousands, Unaudited)
         
 Three Months Ended
 March 31 December 31 September 30 June 30 March 31
  2019   2018   2018   2018   2018 
Commercial$   61   $196  $179  $(40) $(38)
Real estate   (27)  47   (2)  (2)  6 
Mortgage warehousing   -    -   -   -   - 
Consumer   329    263   272   80   519 
Total$   363   $506  $449  $38  $487 
Percent of net charge-offs to average                   
loans outstanding for the period 0.01%  0.02%  0.02%  0.00%  0.01%
         
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
         
 March 31 December 31 September 30 June 30 March 31
  2019   2018   2018   2018   2018 
Commercial$   9,750   $6,903  $8,355  $8,987  $6,778 
Real estate   5,995    5,007   3,754   3,915   5,276 
Mortgage warehousing   -    -   -   -   - 
Consumer   3,641    3,265   2,417   2,507   3,027 
Total$   19,386   $15,175  $14,526  $15,409  $15,081 
Non-performing loans to total loans 0.54%  0.55%  0.49%  0.53%  0.53%
         
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
         
 March 31 December 31 September 30 June 30 March 31
  2019   2018   2018   2018   2018 
Commercial$   3,496   $1,967  $2,181  $2,628  $547 
Real estate   126    60   58   302   281 
Mortgage warehousing   -    -   -   -   - 
Consumer   30    48   26   62   42 
Total$   3,652   $2,075  $2,265  $2,992  $870 
         
         

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

 
 Three Months Ended Three Months Ended
 March 31, 2019 March 31, 2018
 Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets                   
 Interest-earning assets                   
 Federal funds sold$7,843  $57 2.95% $3,714  $14 1.53%
 Interest-earning deposits 26,355   155 2.39%  22,962   90 1.59%
 Investment securities - taxable 448,840   2,910 2.63%  421,068   2,326 2.24%
 Investment securities - non-taxable(1) 393,720   2,628 3.40%  307,921   1,865 2.88%
 Loans receivable(2)(3) 3,052,538   39,623 5.27%  2,824,478   35,131 5.04%
 Total interest-earning assets(1) 3,929,296   45,373 4.76%  3,580,143   39,426 4.50%
                     
 Non-interest-earning assets                   
 Cash and due from banks 44,527         43,809       
 Allowance for loan losses (17,836)        (16,342)      
 Other assets 351,202         335,227       
                     
 Total average assets$4,307,189        $3,942,837       
                     
 Liabilities and Stockholders' Equity                   
 Interest-bearing liabilities                   
 Interest-bearing deposits$2,514,841  $6,876 1.11% $2,304,829  $2,871 0.51%
 Borrowings 577,199   3,621 2.54%  528,066   2,572 1.98%
 Subordinated debentures 39,236   596 6.16%  36,477   572 6.36%
 Total interest-bearing liabilities 3,131,276   11,093 1.44%  2,869,372   6,015 0.85%
                     
 Non-interest-bearing liabilities                   
 Demand deposits 643,601         595,644       
 Accrued interest payable and other liabilities 25,863         17,745       
 Stockholders' equity 506,449         460,076       
                     
 Total average liabilities and stockholders' equity$4,307,189        $3,942,837       
                     
 Net interest income/spread    $34,280 3.32%     $33,411 3.65%
 Net interest income as a percentage of average                   
 interest-earning assets(1)       3.62%        3.81%
 
(1)Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2)Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. 
(3)Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.
  
  

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

 March 31 December 31
 2019 2018
 (Unaudited)  
Assets      
Cash and due from banks$   86,131  $58,492 
Interest-earning time deposits   15,987   15,744 
Investment securities, available for sale   687,142   600,348 
Investment securities, held to maturity (fair value of $208,223 and $208,273)   206,327   210,112 
Loans held for sale   1,979   1,038 
Loans, net of allowance for loan losses of $17,821 and $17,820   3,603,236   2,995,512 
Premises and equipment, net   93,822   74,331 
Federal Home Loan Bank stock   22,447   18,073 
Goodwill   145,690   119,880 
Other intangible assets   31,174   10,390 
Interest receivable   17,423   14,239 
Cash value of life insurance   94,449   88,062 
Other assets   45,832   40,467 
Total assets$   5,051,639  $4,246,688 
Liabilities      
Deposits      
Non-interest bearing$   811,768  $642,129 
Interest bearing   3,076,255   2,497,247 
Total deposits   3,888,023   3,139,376 
Borrowings   457,788   550,384 
Subordinated debentures   55,310   37,837 
Interest payable   2,471   2,031 
Other liabilities   38,579   25,068 
Total liabilities   4,442,171   3,754,696 
Commitments and contingent liabilities      
Stockholders' Equity      
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares   -   - 
Common stock, no par value, Authorized 99,000,000 shares (1)      
Issued 45,077,816 and 38,400,476 shares (1),
Outstanding 45,052,747 and 38,375,407 shares (1)
   -   - 
Additional paid-in capital   378,963     276,101 
Retained earnings   230,327     224,035 
Accumulated other comprehensive loss   178     (8,144)
Total stockholders' equity   609,468     491,992 
Total liabilities and stockholders' equity$   5,051,639  $  4,246,688 
       
(1) Adjusted for 3:2 stock split on June 15, 2018