☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2019
0000-10792
Inc.
Indiana | 35-1562417 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
515 Franklin Street, Michigan City, Indiana | 46360 | |
(Address of principal executive offices) | (Zip Code) |
Stock,stock, no par value
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to the Form10-K ☐
Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer | ☐ | Smaller Reporting Company | ☐ | |||
Emerging Growth Company | ☐ | |||||
Document | Part of Form 10-K into whichportion of document is incorporated | |
Portions of the Registrant’s Proxy Statement to be filed for its | Part III | |
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2016
HORIZON BANCORP
cash for each outstanding share of Wolverine common stock. Wolverine shares outstanding at the closing to be exchanged were 2,129,331, and the shares of Horizon common stock issued to Wolverine shareholders totaled 3,241,045. Based upon the October 16, 2017 closing price of $19.37 per share of Horizon common stock immediately prior to the effectiveness of the merger, less the consideration used to pay off Wolverine Bancorp’s ESOP loan receivable, the transaction has an implied valuation of approximately $93.8 million. As a result of the acquisition, the Company was able to increase its loan and deposit base and expects to reduce costs through economies of scale.
HORIZON BANCORP
transaction had an implied valuation of approximately $98.6 million. As a result of the acquisition, the Company was able to increase its loan and deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale.
On April 3, 2014 Horizon completed its acquisition of SCB Bancorp, Inc. (“Summit”) and the Bank’s acquisition of Summit Community Bank, through mergers effective as of that date. Under the final terms of the acquisition, the exchange ratio was 0.7356 shares of Horizon’s common stock and $5.15 in cash for each share of Summit common stock outstanding. Summit shares outstanding at the closing were 1,164,442, and the shares of Horizon common stock issued to Summit shareholders totaled 856,230. Horizon’s stock price was $14.82 per share at the close of business on April 3, 2014. Based upon these numbers, the total value of the consideration for the acquisition was $18.9 million (not including the retirement of Summit debt). As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale.
On July 17, 2012, Horizon completed its acquisition of Heartland Bancshares, Inc. (“Heartland”) and Heartland’s wholly owned subsidiary, Heartland Community Bank (“Heartland Bank”). Heartland was merged into Horizon, and Heartland Bank was merged into the Bank. The exchange ratio was 1.215 shares of Horizon’s common stock for each share of Heartland common stock outstanding. Horizon acquired the 1,442,449 outstanding shares of Heartland common stock in exchange for 1,752,574 shares of Horizon common stock, which had a market price of $11.22 per share at the close of business on July 17, 2012. Horizon also purchased and retired all shares of preferred stock that Heartland had issued pursuant to the Troubled Asset Relief Program Capital Purchase Program (“TARP”). Based upon the $11.22 market price and the TARP preferred stock purchase, the total value of the consideration for the acquisition was $26.9 million. As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale.
HORIZON BANCORP
2019.
Based Many
INDIANA | MICHIGAN | |||||||||||||||||
County | Number of Institutions | Horizon Market Share | County | Number of Institutions | Horizon Market Share | |||||||||||||
Allen | 21 | 0.68 | % | Berrien | 9 | 9.21 | % | |||||||||||
Bartholomew | 9 | 7.92 | % | Cass | 5 | 5.84 | % | |||||||||||
Carroll | 6 | 27.23 | % | Ingham | 17 | 2.38 | % | |||||||||||
Cass | 6 | 19.91 | % | Kalamazoo | 15 | 1.58 | % | |||||||||||
DeKalb | 11 | 18.69 | % | Kent | 26 | 0.45 | % | |||||||||||
Elkhart | 17 | 0.30 | % | Midland | 8 | 13.99 | % | |||||||||||
Fountain | 4 | 10.40 | % | Ottawa | 16 | 0.32 | % | |||||||||||
Grant | 7 | 9.11 | % | Saginaw | 13 | 0.89 | % | |||||||||||
Hamilton | 27 | 0.29 | % | St. Joseph | 9 | 5.18 | % | |||||||||||
Howard | 10 | 3.83 | % | |||||||||||||||
Johnson | 19 | 11.92 | % | |||||||||||||||
Kosciusko | 10 | 5.90 | % | |||||||||||||||
La Porte | 8 | 59.15 | % | |||||||||||||||
LaGrange | 4 | 4.79 | % | |||||||||||||||
Lake | 16 | 1.65 | % | |||||||||||||||
Marion | 23 | 0.79 | % | |||||||||||||||
Noble | 6 | 7.17 | % | |||||||||||||||
Porter | 11 | 11.00 | % | |||||||||||||||
St. Joseph | 15 | 0.23 | % | |||||||||||||||
Tippecanoe | 16 | 7.57 | % | |||||||||||||||
Whitley | 8 | 7.28 | % |
HORIZON BANCORP
Indiana, where Horizon acquired the branches of Heartland Bank, the Bank enjoys a 12.15% market share as the third largest of the 209 institutions in that county. In Berrien County, Michigan, Horizon was the fifth largest of the 11 bank and thrift institutions with a 8.22% market share. Horizon’s market share of deposits in Lake County, Indiana was just over 1% at 1.53%, a little over 1% at 1.40% in Kalamazoo County, Michigan, and less than 1% in each of St. Joseph, Elkhart, Marion, and Hamilton Counties in Indiana. The branches the Bank acquired in the acquisition of Summit Community Bank are located in Ingham County, Michigan and had a 2.62% market share. (Source: FDIC Summary of Deposits Market Share Reports, available at www.fdic.gov.)
County.
Horizon also is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. Horizon’s common stock is listed on Thethe NASDAQ Global Select Stock Market under the trading symbol “HBNC,” and Horizon is subject to the NASDAQ rules applicable to listed companies.
For a bank holding company to remain qualified as a financial holding company, the company and all of its depository institution subsidiaries must be “well capitalized” and “well managed.”
HORIZON BANCORP
institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the Community Reinvestment Act. The Federal
National BankAcquisitions
As a national bank, and the Bank isMerger Act restrict certain types of expansion by the Company and the Bank. The Company and the Bank may be required to apply for prior approval from (or give prior notice and an opportunity for review to) the Federal Reserve, the DFI and the FDIC, and or other regulatory agencies as a condition to the acquisition or establishment of new offices, or the acquisition by merger, purchase or otherwise of the stock, business or assets of other banks or companies.
no longer required.
HORIZON BANCORP
designated reserve ratio from 1.15% to 1.35% on insured depository institutions of less than $10 billion and may declare dividends to depository institutions when the reserve ratio at the end of a calendar quarter is at least 1.5%, although the FDIC has the authority to suspend or limit such permitted dividend declarations. In December 2010,The FDIC has set the FDIC adopted a final rule settinglong term goal for the designated reserve ratio forof the deposit insurance fund at 2% of estimated insured deposits.
Adjustments are made to the initial assessment rates based on long-term unsecured debt, depository institution debt, and brokered deposits.
However, effective
Horizon’s FDIC deposit insurance expense increased slightly during 2016 compared to 2015. The FDIC continued to offset the regular insurance assessments until the earlier of the exhaustion of an institution’s prepaid assessments or June 30, 2013. Any prepaid assessment remaining after collection of the amount due on June 30, 2013, was returned to the institution. The FDIC returned to the Bank $2.0 million in prepaid assessments.
ratings (
March 29, 2019, FDIC Quarterly Certified Statement Invoice.
Effective July 21, 2011, among other changes, In general, extensions of credit (i) must be made on substantially the Dodd-Frank Act eliminated the exceptions under Section 23A of the Federal Reserve Act for transactions with financial subsidiariessame terms, including interest rates and expanded the scope of transactions treated as “covered transactions” to include derivatives transactionscollateral, and securities repurchase agreements. The Dodd-Frank Act also expands the types of transactions subject to insider lending limits.
HORIZON BANCORP
credit underwriting procedures that are at least as stringent as those prevailing at the time for comparable transactions with
A risk-based ratio represents the applicable measure of capital divided by total risk-weighted assets. The leverage ratio is a measure of the Company’s core capital divided by total assets adjusted as specified in the guidelines.
In July 2013,
The final rules.
These new minimum
HORIZON BANCORP
Actual | Required For Capital1 Adequacy Purposes | Required For Capital1 Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt1 Corrective Action Provisions | |||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||||||||||
Total capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 316,576 | 13.87 | % | $ | 182,596 | 8.00 | % | $ | 196,976 | 8.63 | % | N/A | N/A | ||||||||||||||||||
Bank | 319,013 | 13.98 | % | $ | 182,541 | 8.00 | % | 196,916 | 8.63 | % | $ | 228,176 | 10.00 | % | ||||||||||||||||||
Tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 301,739 | 13.22 | % | $ | 136,947 | 6.00 | % | 151,326 | 6.63 | % | N/A | N/A | ||||||||||||||||||||
Bank | 304,176 | 13.33 | % | $ | 136,905 | 6.00 | % | 151,280 | 6.63 | % | 182,540 | 8.00 | % | |||||||||||||||||||
Common equity tier 1 capital1 (torisk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 263,313 | 11.50 | % | $ | 103,036 | 4.50 | % | 117,460 | 5.13 | % | N/A | N/A | ||||||||||||||||||||
Bank | 304,176 | 13.33 | % | $ | 102,679 | 4.50 | % | 117,054 | 5.13 | % | 148,314 | 6.50 | % | |||||||||||||||||||
Tier 1 capital1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 301,739 | 10.44 | % | $ | 115,609 | 4.00 | % | 115,609 | 4.00 | % | N/A | N/A | ||||||||||||||||||||
Bank | 304,176 | 9.93 | % | $ | 122,521 | 4.00 | % | 122,521 | 4.00 | % | 153,151 | 5.00 | % |
Actual | Required for Capital 1 Adequacy Purposes | Required For Capital 1 Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt 1 Corrective Action Provisions | |||||||||||||||||||||||||||||
December 31, 2019 | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 548,364 | 13.95 | % | $ | 314,395 | 8.00 | % | $ | 412,644 | 10.50 | % | N/A | N/A | ||||||||||||||||||
Bank | 497,227 | 12.65 | % | 314,452 | 8.00 | % | 412,718 | 10.50 | % | $ | 393,065 | 10.00 | % | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 13.50 | % | 235,796 | 6.00 | % | 334,044 | 8.50 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 235,823 | 6.00 | % | 334,082 | 8.50 | % | 314,430 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 473,150 | 12.04 | % | 176,846 | 4.50 | % | 275,094 | 7.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 176,867 | 4.50 | % | 275,126 | 7.00 | % | 255,475 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 10.50 | % | 202,111 | 4.00 | % | 202,111 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 9.49 | % | 202,110 | 4.00 | % | 202,110 | 4.00 | % | 252,638 | 5.00 | % |
1 | As defined by regulatory agencies |
Dividends received
In 2011, Horizon issued 12,500 shares of SeniorNon-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”) to the U. S. Department of the Treasury (the “Treasury”). The issuance to the Treasury of the Series B Preferred Stock resulted in the imposition of limitations on Horizon’s ability to pay dividends. Under the terms of the Series B Preferred Stock, no repurchases may be effected, and no dividends may be declared or paid on preferred shares rankingparipassu with the Series B Preferred Stock, junior preferred shares, or other junior securities, including the common stock, during the current quarter and for the next three quarters following the failure to declare and pay dividends on the Series B Preferred Stock, except that, in any such quarter in which the dividend is paid, dividend payments on shares rankingparipassu may be paid to the extent necessary to avoid any resulting material covenant breach. Effective February 1, 2016, Horizon redeemed all the Series B Preferred Stock and, accordingly, the restrictions imposed onopinion, the payment of dividends would constitute an unsafe or unsound practice in light of the financial condition of the Bank.
bank holding companies like Horizon.
Federal law provides the
HORIZON BANCORP
(ii) placing limits on asset growth and restrictions on activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; (iv) restricting transactions with affiliates; (v) restricting the interest rate the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, for critically undercapitalized institutions, appointing a receiver for the institution.
and the Bank Secrecy Act
The regulations promulgated under the USA PATRIOT Act of 2001 require financial institutions such as the Bank to adopt controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of their customers.
Bancorp, Inc.
2018 Regulatory Relief Act
HORIZON BANCORP
other statutes. In July 2011, many of the consumer financial protection functions formerly assigned to the federal banking and other designated agencies were transferred to the CFBP. The CFBP has a large budget and staff, and has the authority to implement regulations under federal consumer protection laws and enforce those laws against financial institutions. The CFPB has examination and primary enforcement authority over depository institutions with $10 billion or more in assets. Smaller institutions are subject to rules promulgated by the CFPB but continue to be examined and supervised by the federal banking regulators for consumer compliance purposes. The CFPB also has authority to prevent unfair, deceptive or abusive practices in connection with offering consumer financial products. Additionally, the CFPB is authorized to collect fines and provide consumer restitution in the event of violations, engage in consumer financial education, track consumer complaints, request data, and promote the availability of financial services to underserved consumers and communities.
for financial institutions, most of which became effective as of January 1, 2018.
Act, interchange fees for bank card transactions must be reasonable and proportional to the issuer’s incremental cost incurred with respect to the transaction plus certain fraud related costs. Interchange fees are transaction fees between banks for each bank card transaction, designed to reimburse the card-issuing bank for the costs of handling and credit risk inherent in a bank credit or debit card transaction. Although institutions with total assets of less than $10 billion, like the Bank, are exempt from this requirement, competitive pressures are likely to require smaller depository institutions to reduce fees with respect to these bank card transactions.
Both federal and state law extensively regulate various aspects of the banking business, such as reserve requirements,
Federal Home Loan Bank (“FHLB”) System
The Bank is a member of the FHLB of Indianapolis, which is one of twelve regional FHLBs. Each FHLB serves as a reserve or central bank for its members within its assigned region. The FHLB is funded primarily from funds deposited by banks and savings associations and proceeds derived from the sale of consolidated obligations of the FHLB system. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Directors of the FHLB. All FHLB advances must be fully secured by sufficient collateral as determined by the FHLB. The Federal Housing Finance Board (“FHFB”), an independent agency, controls the FHLB System, including the FHLB of Indianapolis.
HORIZON BANCORP
As a member of the FHLB, the Bank is required to purchase and maintain stock in the FHLB of Indianapolis in an amount equal to at least 1% of its aggregate unpaid residential mortgage loans, home purchase contracts, or similar obligations at the beginning of each year. At December 31, 2016, the Bank’s investment in stock of the FHLB of Indianapolis was $14.9 million. The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral to 30% of a member’s capital and limiting total advances to a member. Interest rates charged for advances vary depending upon maturity, the cost of funds to the FHLB of Indianapolis and the purpose of the borrowing.
The FHLBs are required to provide funds for the resolution of troubled savings associations and to contribute to affordable housing programs through direct loans or interest subsidies on advances targeted for community investment and low and moderate income housing projects. For the year ended December 31, 2016, dividends paid by the FHLB of Indianapolis to the Bank totaled approximately $529,000, for an annualized rate paid in dividends of 4.3%.
Limitations on Rates Paid for Deposits; Restrictions on Brokered Deposits
FDIC regulations restrict the interest rates that less than well-capitalized insured depository institutions may pay on deposits and also restrict the ability of such institutions to accept brokered deposits. These regulations permit a “well capitalized” depository institution to accept, renew or roll over brokered deposits without restriction, and an “adequately capitalized” depository institution to accept, renew or roll over brokered deposits with a waiver from the FDIC (subject to certain restrictions on payments of rates). The regulations prohibit an “undercapitalized” depository institution from accepting, renewing or rolling over brokered deposits. These regulations contemplate that the definitions of “well capitalized,” “adequately capitalized” and “undercapitalized” will be the same as the definitions adopted by the agencies to implement the prompt corrective action provisions of FDICIA. Management does not believe that these regulations will have a materially adverse effect on the Bank’s current operations.
HORIZON BANCORP
I. | DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL |
II. | INVESTMENT PORTFOLIO |
A. | The following is a schedule of the amortized cost and fair value of investment securities available for sale and held to maturity. |
December 31, 2016 | December 31, 2015 | December 31, 2014 | ||||||||||||||||||||||
(dollars in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | 8,051 | $ | 7,989 | $ | 5,940 | $ | 5,926 | $ | 26,996 | $ | 26,823 | ||||||||||||
State and municipal | 117,327 | 116,592 | 73,829 | 75,095 | 46,535 | 47,952 | ||||||||||||||||||
Federal agency collateralized mtg. obligations | 139,040 | 137,195 | 157,291 | 156,203 | 122,930 | 122,860 | ||||||||||||||||||
Federal agency mortgage-backed pools | 180,183 | 176,726 | 206,970 | 207,704 | 122,583 | 125,395 | ||||||||||||||||||
Private labeled mortgage-backed pools | — | — | — | — | 670 | 689 | ||||||||||||||||||
Corporate notes | 1,238 | 1,329 | 32 | 54 | 32 | 45 | ||||||||||||||||||
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Total available for sale | 445,839 | 439,831 | 444,062 | 444,982 | 319,746 | 323,764 | ||||||||||||||||||
Total held to maturity | 193,194 | 194,086 | 187,629 | 193,703 | 165,767 | 169,904 | ||||||||||||||||||
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Total investment securities | $ | 639,033 | $ | 633,917 | $ | 631,691 | $ | 638,685 | $ | 485,513 | $ | 493,668 | ||||||||||||
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December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
(dollars in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,415 | $ | 1,413 | $ | 16,815 | $ | 16,608 | $ | 19,277 | $ | 19,052 | ||||||||||||
State and municipal | 396,931 | 405,768 | 210,386 | 209,303 | 148,045 | 149,564 | ||||||||||||||||||
Federal agency collateralized mortgage obligations | 267,272 | 269,252 | 187,563 | 185,003 | 132,871 | 130,365 | ||||||||||||||||||
Federal agency mortgage-backed pools | 145,623 | 146,572 | 183,479 | 178,736 | 211,487 | 208,657 | ||||||||||||||||||
Private labeled mortgage-backed pools | — | — | — | — | 1,650 | 1,642 | ||||||||||||||||||
Corporate notes | 10,848 | 11,771 | 10,666 | 10,698 | 272 | 385 | ||||||||||||||||||
Total available for sale | 822,089 | 834,776 | 608,909 | 600,348 | 513,602 | 509,665 | ||||||||||||||||||
Total held to maturity | 207,899 | 215,147 | 210,112 | 208,273 | 200,448 | 201,085 | ||||||||||||||||||
Total investment securities | $ | 1,029,988 | $ | 1,049,923 | $ | 819,021 | $ | 808,621 | $ | 714,050 | $ | 710,750 | ||||||||||||
B. | The following is a schedule of maturities of each category of available for sale and held-to-maturity debt securities and the related weighted-average yield of such securities as of December 31, |
One Year or Less | After One Year Through Five Years | After Five Years Through Ten Years | After Ten Years | |||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||
Available for sale | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies(1) | $ | — | 0.00 | % | $ | 7,643 | 1.43 | % | $ | 346 | 2.06 | % | $ | — | 0.00 | % | ||||||||||||||||
State and municipal | 7,480 | 2.27 | % | 29,836 | 2.91 | % | 20,638 | 3.88 | % | 58,638 | 4.42 | % | ||||||||||||||||||||
Federal agency collateralized mtg. obligations(2) | — | 0.00 | % | 5,559 | 3.10 | % | 27,655 | 2.93 | % | 103,980 | 2.55 | % | ||||||||||||||||||||
Federal agency mortgage-backed pools(2) | — | 0.00 | % | 3,390 | 3.26 | % | 23,946 | 2.47 | % | 149,391 | 2.53 | % | ||||||||||||||||||||
Corporate notes | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | 1,329 | 0.00 | % | ||||||||||||||||||||
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Total available for sale | $ | 7,480 | 2.27 | % | $ | 46,428 | 2.71 | % | $ | 72,585 | 3.04 | % | $ | 313,338 | 2.88 | % | ||||||||||||||||
Total held to maturity | $ | — | 0.00 | % | $ | 35,446 | 4.08 | % | $ | 95,872 | 3.77 | % | $ | 62,768 | 4.09 | % | ||||||||||||||||
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Total investment securities | $ | 7,480 | 2.27 | % | $ | 81,874 | 3.31 | % | $ | 168,457 | 3.46 | % | $ | 376,106 | 3.08 | % | ||||||||||||||||
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One Year or Less | After One Year Through Five Years | After Five Years Through Ten Years | After Ten Years | |||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||
Available for sale | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies (1) | $ | — | 0.00 | % | $ | 1,413 | 1.50 | % | $ | — | 0.00 | % | $ | — | 0.00 | % | ||||||||||||||||
State and municipal | 36,006 | 2.04 | % | 39,661 | 2.44 | % | 112,412 | 3.68 | % | 217,689 | 3.39 | % | ||||||||||||||||||||
Federal agency collateralized mortgage obligations (2) | — | 0.00 | % | — | 0.00 | % | 48,207 | 2.55 | % | 221,045 | 3.42 | % | ||||||||||||||||||||
Federal agency mortgage-backed pools (2) | — | 0.00 | % | 5,038 | 2.75 | % | 70,750 | 2.48 | % | 70,784 | 3.25 | % | ||||||||||||||||||||
Corporate notes | — | 0.00 | % | 1,535 | 3.24 | % | 9,732 | 2.88 | % | 503 | 0.00 | % | ||||||||||||||||||||
Total available for sale | 36,006 | 2.04 | % | 47,647 | 2.47 | % | 241,101 | 3.07 | % | 510,021 | 3.38 | % | ||||||||||||||||||||
Total held to maturity | 7,874 | 3.52 | % | 66,048 | 3.52 | % | 100,110 | 3.83 | % | 41,115 | 3.33 | % | ||||||||||||||||||||
Total investment securities | $ | 43,880 | 2.30 | % | $ | 113,695 | 3.08 | % | $ | 341,211 | 3.29 | % | $ | 551,136 | 3.38 | % | ||||||||||||||||
(1) | Fair value is based on contractual maturity or call date where a call option exists |
(2) | Maturity based upon final maturity date |
HORIZON BANCORP
III. | LOAN PORTFOLIO |
A. | TypesofLoans Total loans on the balance sheet are comprised of the following classifications for the years indicated. |
(dollars in thousands) | December 31 2016 | December 31 2015 | December 31 2014 | December 31 2013 | December 31 2012 | |||||||||||||||
Commercial | $ | 1,069,956 | $ | 804,995 | $ | 674,314 | $ | 505,189 | $ | 460,471 | ||||||||||
Real estate | 531,874 | 437,144 | 254,625 | 185,958 | 189,714 | |||||||||||||||
Mortgage warehouse | 135,727 | 144,692 | 129,156 | 98,156 | 251,448 | |||||||||||||||
Consumer | 398,429 | 362,300 | 320,459 | 279,525 | 289,084 | |||||||||||||||
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2,135,986 | 1,749,131 | 1,378,554 | 1,068,828 | 1,190,717 | ||||||||||||||||
Allowance for loan losses | (14,837 | ) | (14,534 | ) | (16,501 | ) | (15,992 | ) | (18,270 | ) | ||||||||||
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Total loans | $ | 2,121,149 | $ | 1,734,597 | $ | 1,362,053 | $ | 1,052,836 | $ | 1,172,447 | ||||||||||
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(dollars in thousands) | December 31 2019 | December 31 2018 | December 31 2017 | December 31 2016 | December 31 2015 | |||||||||||||||
Commercial | $ | 2,046,651 | $ | 1,721,590 | $ | 1,669,934 | $ | 1,069,956 | $ | 804,995 | ||||||||||
Real estate | 770,717 | 668,141 | 609,739 | 531,874 | 437,144 | |||||||||||||||
Mortgage warehouse | 150,293 | 74,120 | 94,508 | 135,727 | 144,692 | |||||||||||||||
Consumer | 669,180 | 549,481 | 460,999 | 398,429 | 362,300 | |||||||||||||||
Total loans | 3,636,841 | 3,013,332 | 2,835,180 | 2,135,986 | 1,749,131 | |||||||||||||||
Allowance for loan losses | (17,667) | (17,820) | (16,394) | (14,837) | (14,534) | |||||||||||||||
Loans, net | $ | 3,619,174 | $ | 2,995,512 | $ | 2,818,786 | $ | 2,121,149 | $ | 1,734,597 | ||||||||||
B. | MaturitiesandSensitivitiesofLoanstoChangesinInterestRates The following is a schedule of maturities and sensitivities of loans to changes in interest rates, excluding real estate mortgage, mortgage warehouse and consumer loans, as of December 31, |
(dollars in thousands) Maturing or repricing | One Year or Less | One Through Five Years | After Five Years | Total | ||||||||||||
Commercial, financial, agricultural and commercialtax-exempt loans | $ | 658,783 | $ | 365,370 | $ | 45,803 | $ | 1,069,956 |
(dollars in thousands) | One Year or Less | One Through Five Years | After Five Years | Total | ||||||||||||
Maturing or repricing Commercial, financial, agricultural and commercial tax-exempt loans | $ | 1,303,544 | $ | 676,459 | $ | 66,648 | $ | 2,046,651 |
(dollars in thousands) | Fixed Rate | Variable Rate | ||||||
Total commercial, financial, agricultural and commercialtax-exempt loans due after one year | $ | 297,424 | $ | 113,749 |
HORIZON BANCORP
(dollars in thousands) | Fixed Rate | Variable Rate | ||||||
Total commercial, financial, agricultural, and commercial tax-exempt loansdue after one year | $ | 479,727 | $ | 263,380 |
(dollars in thousands) | December 31 2016 | December 31 2015 | December 31 2014 | December 31 2013 | December 31 2012 | |||||||||||||||
Non-performing loans | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
More than 90 days past due | $ | 183 | $ | — | $ | — | $ | 45 | $ | — | ||||||||||
Non-accrual | 2,249 | 5,030 | 10,024 | 4,014 | 5,754 | |||||||||||||||
Trouble debt restructuring - accruing | — | 60 | 610 | 1,296 | 1,265 | |||||||||||||||
Trouble debt restructuring -non-accrual | — | 1,915 | 1,221 | 2,116 | 3,674 | |||||||||||||||
Real estate | ||||||||||||||||||||
More than 90 days past due | — | 1 | 40 | 2 | 2 | |||||||||||||||
Non-accrual | 2,959 | 4,354 | 2,297 | 2,459 | 4,565 | |||||||||||||||
Trouble debt restructuring - accruing | 1,254 | 808 | 2,526 | 2,686 | 1,761 | |||||||||||||||
Trouble debt restructuring -non-accrual | 809 | 1,074 | 1,031 | 999 | 2,827 | |||||||||||||||
Mortgage warehouse | ||||||||||||||||||||
More than 90 days past due | — | — | — | — | — | |||||||||||||||
Non-accrual | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring - accruing | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring -non-accrual | — | — | — | — | — | |||||||||||||||
Consumer | ||||||||||||||||||||
More than 90 days past due | 58 | 27 | 75 | 2 | 52 | |||||||||||||||
Non-accrual | 2,728 | 2,878 | 2,991 | 3,275 | 3,055 | |||||||||||||||
Trouble debt restructuring - accruing | 238 | 350 | 1,236 | 1,072 | 676 | |||||||||||||||
Trouble debt restructuring -non-accrual | 205 | 183 | 391 | 311 | 148 | |||||||||||||||
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Totalnon-performing loans | 10,683 | 16,680 | 22,442 | 18,277 | 23,779 | |||||||||||||||
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Other real estate owned and repossessed collateral | ||||||||||||||||||||
Commercial | 542 | 161 | 411 | 830 | 1,337 | |||||||||||||||
Real estate | 2,648 | 3,046 | 636 | 1,277 | 1,228 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Consumer | 26 | — | 154 | 14 | 11 | |||||||||||||||
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Total other real estate owned and repossessed collateral | 3,216 | 3,207 | 1,201 | 2,121 | 2,576 | |||||||||||||||
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Totalnon-performing assets | $ | 13,899 | $ | 19,887 | $ | 23,643 | $ | 20,398 | $ | 26,355 | ||||||||||
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(dollars in thousands) | ||||
Gross interest income that would have been recorded onnon-accrual loans outstanding as of December 31, 2016, in the period if the loans had been current, in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period. | $ | 690 | ||
Interest income actually recorded onnon-accrual loans outstanding as of December 31, 2016, and included in net income for the period. | 204 | |||
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Interest income not recognized during the period onnon-accrual loans outstanding as of December 31, 2016. | $ | 486 | ||
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December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Non-performing loans | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
More than 90 days past due | $ | — | $ | 208 | $ | — | $ | 183 | $ | — | ||||||||||
Non-accrual | 4,782 | 6,094 | 6,902 | 2,249 | 5,030 | |||||||||||||||
Trouble debt restructuring - accruing | 1,484 | 109 | 1 | — | 60 | |||||||||||||||
Trouble debt restructuring - non-accrual | 1,081 | 492 | 451 | — | 1,915 | |||||||||||||||
Real estate | ||||||||||||||||||||
More than 90 days past due | 1 | 180 | — | — | 1 | |||||||||||||||
Non-accrual | 7,614 | 2,846 | 3,693 | 2,959 | 4,354 | |||||||||||||||
Trouble debt restructuring - accruing | 1,561 | 1,558 | 1,672 | 1,254 | 808 | |||||||||||||||
Trouble debt restructuring - non-accrual | 708 | 423 | 351 | 809 | 1,074 | |||||||||||||||
Mortgage warehouse | ||||||||||||||||||||
More than 90 days past due | — | — | — | — | — | |||||||||||||||
Non-accrual | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring - accruing | — | — | — | — | — | |||||||||||||||
Trouble debt restructuring - non-accrual | — | — | — | — | — | |||||||||||||||
Consumer | ||||||||||||||||||||
More than 90 days past due | 145 | 180 | 167 | 58 | 27 | |||||||||||||||
Non-accrual | 3,283 | 2,608 | 2,681 | 2,728 | 2,878 | |||||||||||||||
Trouble debt restructuring - accruing | 309 | 335 | 285 | 238 | 350 | |||||||||||||||
Trouble debt restructuring - non-accrual | 217 | 142 | 211 | 205 | 183 | |||||||||||||||
Total non-performing loans | 21,185 | 15,175 | 16,414 | 10,683 | 16,680 | |||||||||||||||
Other real estate owned and repossessed collateral | ||||||||||||||||||||
Commercial | 3,698 | 1,967 | 578 | 542 | 161 | |||||||||||||||
Real estate | 28 | 60 | 200 | 2,648 | 3,046 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Consumer | — | 48 | 60 | 26 | — | |||||||||||||||
Total other real estate owned and repossessed collateral | 3,726 | 2,075 | 838 | 3,216 | 3,207 | |||||||||||||||
Total non-performing assets | $ | 24,911 | $ | 17,250 | $ | 17,252 | $ | 13,899 | $ | 19,887 |
(dollars in thousands) | ||||
Gross interest income that would have been recorded on non-accrual loans outstanding as of December 31, 2019, in the period if the loans had been current, in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period. | $ | 1,129 | ||
Interest income actually recorded on non-accrual loans outstanding as of December 31, 2019, and included in net income for the period. | 808 | |||
Interest income not recognized during the period on non-accrual loans outstanding as of December 31, 2019. | $ | 321 | ||
1. | From time to time, the Bank obtains information which may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of such, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. Further, it is management’s policy to place a commercial loan on anon-accrual status when delinquent in excess of 90 days or non-accrual status. |
HORIZON BANCORP
2. | Potential Problem Loans: |
3. | Foreign Outstandings: |
4. | Loan Concentrations: |
D. | OtherInterest-BearingAssets |
IV. | SUMMARY OF LOAN LOSS EXPERIENCE |
A. | The following is an analysis of the activity in the allowance for loan losses account: |
(dollars in thousands) | December 31 2016 | December 31 2015 | December 31 2014 | December 31 2013 | December 31 2012 | |||||||||||||||
Loans outstanding at the end of the period(1) | $ | 2,135,986 | $ | 1,749,131 | $ | 1,378,554 | $ | 1,068,828 | $ | 1,190,717 | ||||||||||
Average loans outstanding during the period (1) | 1,948,580 | 1,593,790 | 1,247,510 | 1,092,662 | 1,043,620 |
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Loans outstanding at the end of the period (1) | $ | 3,636,841 | $ | 3,013,332 | $ | 2,835,180 | $ | 2,135,986 | $ | 1,749,131 | ||||||||||
Average loans outstanding during the period (1) | 3,500,649 | 2,910,741 | 2,335,126 | 1,948,580 | 1,593,790 |
(1) | Net of unearned income and deferred loan fees |
(dollars in thousands) | December 31 2016 | December 31 2015 | December 31 2014 | December 31 2013 | December 31 2012 | |||||||||||||||
Balance at beginning of the period | $ | 14,534 | $ | 16,501 | $ | 15,992 | $ | 18,270 | $ | 18,882 | ||||||||||
Loanscharged-off: | ||||||||||||||||||||
Commercial | 758 | 3,437 | 1,802 | 2,532 | 2,388 | |||||||||||||||
Real estate | 213 | 288 | 328 | 1,055 | 597 | |||||||||||||||
Consumer | 1,689 | 2,374 | 1,999 | 2,663 | 2,958 | |||||||||||||||
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Total loanscharged-off | 2,660 | 6,099 | 4,129 | 6,250 | 5,943 | |||||||||||||||
Recoveries of loans previouslycharged-off: | ||||||||||||||||||||
Commercial | 210 | 192 | 773 | 668 | 782 | |||||||||||||||
Real estate | 97 | 69 | 21 | 114 | 77 | |||||||||||||||
Consumer | 814 | 709 | 786 | 1,270 | 948 | |||||||||||||||
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Total loan recoveries | 1,121 | 970 | 1,580 | 2,052 | 1,807 | |||||||||||||||
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Net loanscharged-off | 1,539 | 5,129 | 2,549 | 4,198 | 4,136 | |||||||||||||||
Provision charged to operating expense | 1,842 | 3,162 | 3,058 | 1,920 | 3,524 | |||||||||||||||
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Balance at the end of the period | $ | 14,837 | $ | 14,534 | $ | 16,501 | $ | 15,992 | $ | 18,270 | ||||||||||
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Percent of net charge-offs to average loans outstanding for the period | 0.08 | % | 0.32 | % | 0.20 | % | 0.38 | % | 0.40 | % |
HORIZON BANCORP
December 31 | December 31 | December 31 | December 31 | December 31 | ||||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Balance at beginning of the period | $ | 17,820 | $ | 16,394 | $ | 14,837 | $ | 14,534 | $ | 16,501 | ||||||||||
Loans charged-off: | ||||||||||||||||||||
Commercial | 863 | 473 | 629 | 758 | 3,437 | |||||||||||||||
Real estate | 93 | 76 | 89 | 213 | 288 | |||||||||||||||
Consumer | 2,312 | 2,003 | 1,535 | 1,689 | 2,374 | |||||||||||||||
Total loans charged-off | 3,268 | 2,552 | 2,253 | 2,660 | 6,099 | |||||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||||||||
Commercial | 199 | 176 | 298 | 210 | 192 | |||||||||||||||
Real estate | 46 | 27 | 44 | 97 | 69 | |||||||||||||||
Consumer | 894 | 869 | 998 | 814 | 709 | |||||||||||||||
Total loan recoveries | 1,139 | 1,072 | 1,340 | 1,121 | 970 | |||||||||||||||
Net loans charged-off | 2,129 | 1,480 | 913 | 1,539 | 5,129 | |||||||||||||||
Provision charged to operating expense | 1,976 | 2,906 | 2,470 | 1,842 | 3,162 | |||||||||||||||
Balance at end of the period | $ | 17,667 | $ | 17,820 | $ | 16,394 | $ | 14,837 | $ | 14,534 | ||||||||||
Percent of net charge-offs to average loans outstanding for the period | 0.06 | % | 0.05 | % | 0.04 | % | 0.07 | % | 0.26 | % |
B. | The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and the percentage of loans in each category to total loans. |
December 31 2016 | December 31 2015 | December 31 2014 | December 31 2013 | December 31 2012 | ||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | ||||||||||||||||||||||||||||||
Commercial, financial and agricultural | $ | 6,579 | 50 | % | $ | 7,195 | 46 | % | $ | 7,910 | 50 | % | $ | 6,663 | 48 | % | $ | 7,771 | 39 | % | ||||||||||||||||||||
Real estate | 2,090 | 25 | % | 2,476 | 25 | % | 2,508 | 18 | % | 3,462 | 17 | % | 3,204 | 16 | % | |||||||||||||||||||||||||
Mortgage warehousing | 1,254 | 6 | % | 1,007 | 8 | % | 1,132 | 9 | % | 1,638 | 9 | % | 1,705 | 21 | % | |||||||||||||||||||||||||
Consumer | 4,914 | 19 | % | 3,856 | 21 | % | 4,951 | 23 | % | 4,229 | 26 | % | 5,590 | 24 | % | |||||||||||||||||||||||||
Unallocated | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
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Total | $ | 14,837 | 100 | % | $ | 14,534 | 100 | % | $ | 16,501 | 100 | % | $ | 15,992 | 100 | % | $ | 18,270 | 100 | % | ||||||||||||||||||||
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December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
(dollars in thousands) | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | ||||||||||||||||||
Commercial, financial and agricultural | $ | 11,996 | 68 | % | $ | 10,495 | 59 | % | $ | 9,093 | 56 | % | ||||||||||||
Real estate | 923 | 5 | % | 1,676 | 9 | % | 2,188 | 13 | % | |||||||||||||||
Mortgage warehousing | 1,077 | 6 | % | 1,006 | 6 | % | 1,030 | 6 | % | |||||||||||||||
Consumer | 3,671 | 21 | % | 4,643 | 26 | % | 4,083 | 25 | % | |||||||||||||||
Unallocated | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 17,667 | 100 | % | $ | 17,820 | 100 | % | $ | 16,394 | 100 | % | ||||||||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||
(dollars in thousands) | Allowance Amount | % of Loans to Total Loans | Allowance Amount | % of Loans to Total Loans | ||||||||||||
Commercial, financial and agricultural | $ | 6,579 | 45 | % | $ | 7,195 | 49 | % | ||||||||
Real estate | 2,090 | 14 | % | 2,476 | 17 | % | ||||||||||
Mortgage warehousing | 1,254 | 8 | % | 1,007 | 7 | % | ||||||||||
Consumer | 4,914 | 33 | % | 3,856 | 27 | % | ||||||||||
Unallocated | — | — | — | — | ||||||||||||
Total | $ | 14,837 | 100 | % | $ | 14,534 | 100 | % | ||||||||
V. | DEPOSITS |
VI. | RETURN ON EQUITY AND ASSETS |
SHORT TERM BORROWINGS |
(dollars in thousands) | December 31 2016 | December 31 2015 | ||||||
Outstanding at year end | $ | 57,144 | $ | 59,399 | ||||
Approximate weighted-average interest rate atyear-end | 0.18 | % | 0.13 | % | ||||
Highest amount outstanding as of anymonth-end during the year | $ | 62,703 | $ | 61,205 | ||||
Approximate average outstanding during the year | $ | 54,737 | $ | 54,899 | ||||
Approximate weighted-average interest during the year | 0.17 | % | 0.13 | % |
HORIZON BANCORP
December 31 | December 31 | |||||||
(dollars in thousands) | 2019 | 2018 | ||||||
Outstanding at year-end | $ | 90,941 | $ | 52,116 | ||||
Approximate weighted-average interest rate at year-end | 0.70 | % | 0.64 | % | ||||
Highest amount outstanding as of any month-end during the year | $ | 97,301 | $ | 61,383 | ||||
Approximate average outstanding during the year | 81,264 | 51,385 | ||||||
Approximate weighted-average interest during the year | 0.84 | % | 0.43 | % |
We are operating
Continuedlocal declines in real estate values, home sales volumes, and financial stress onloss of confidence in the U.S. economy or loss of employment by borrowers, as a result of the uncertain economic environment, including job loss, could have an adverse effect on our borrowers or their customers, which could adversely affect our financial condition and results of operations. Further deteriorationIn general, any loss confidence in the U.S. or local economic conditions in our
HORIZON BANCORP
marketseconomy could drivecause financial stress on borrowers and their customers, driving losses beyond that which is provided for in our allowance for loan losses and resultpotentially resulting in the following otheradditional consequences: increases in loan delinquencies, problem assets and foreclosures; declining demand for our products and services may decline;services; decreased deposits, may decrease, which would adverselynegatively impact our liquidity position; and collateral for our loans, especially real estate, may decline in value, in turn reducing customers’ borrowing power, and reducing the value of assetsdeclining asset and collateral values associated with our existing loans, reducing a customer’s borrowing power and our security for the loans.
Our commercial
We have a large percentage of commercialunions and consumer loans. Commercial loans generally have greater credit risk than residential mortgage loans because repayment of these loans often depends on the successful business operations of the borrowers. These loans also typically have much larger loan balances than residential mortgage loans. Consumer loans generally involve greater risk than residential mortgage loans because theyFinTech companies are unsecured or secured bynow actively pursuing small bank acquisitions. Increased competition for bank acquisitions may slow Horizon’s ability to grow earning assets that depreciate in value. Although we undertake a variety of underwriting, monitoring and reserving protections with respect to these types of loans, there can be no guarantee that we will not suffer unexpected losses.
Our holdings of construction, land and home equity loans may pose more credit risk than other types of mortgage loans.
Construction loans, loans secured by commercial real estate and home equity loans generally entail more risk than other types of mortgage loans. When real estate values decrease, the developers to whom we lend are likely to experience a decline in sales of new homes from their projects. Land and construction loans are more likely to becomenon-performing as developers are unable to build and sell homes in volumes large enough for orderly repayment of loans and as other owners of such real estate (including homeowners) are unable to keep up with their payments. We strive to establish what we believe are adequate reserves on our financial statements to cover the credit risk of these loan portfolios. However, there can be no assurance that losses will not exceed our reserves, and ultimately result in a material level of charge-offs, which could adversely impact our results of operations, liquidity and capital.
HORIZON BANCORP
The allowance for loan losses may prove inadequate or be negatively affected by credit risk exposures.
Our business depends on the creditworthiness of our customers. We periodically review the allowance for loan and lease losses for adequacy considering economic conditions and trends, collateral values, and credit quality indicators, including pastcharge-off experience and levels of past due loans andnon-performing assets. There is no certainty that the allowance for loan losses will be adequate over time to cover credit losses in the portfolio because of unanticipated adverse changes in the economy, market conditions or events adversely affecting specific customers, industries or markets. If the credit quality of the customer base materially decreases, if the risk profile of a market, industry or group of customers changes materially, or if the allowance for loan losses is not adequate, our business, financial condition, liquidity, capital, and results of operations could be materially adversely affected.
at comparable historical growth rates.
HORIZON BANCORP
An economic slowdown
asset quality or earnings were to deteriorate significantly. Although we are currently, and have historically been, “well capitalized” for regulatory purposes, in the past we have been required to maintain increased levels of capital in connection with certain acquisitions. Additionally, we periodically explore acquisition opportunities with other financial institutions, some of which are in distressed financial condition. Any future acquisition, particularly the acquisition of a significantly troubled institution or an institution of comparable size to us, may require us to raise additional capital in order to obtain regulatory approval and/or to remain well capitalized.
HORIZON BANCORP
We may need to raise additional capital in the future, and such capital may not be available when needed or at all.
We may need to raise additional capital in the future to fund acquisitions and to provide us with sufficient capital resources and liquidity to meet our commitments, regulatory capital requirements and business needs, particularly if our asset quality or earnings were to deteriorate significantly. Although we are currently, and have historically been, “well capitalized” for regulatory purposes, our capital levels are not far in excess of the well capitalized threshold, and in the past we have been required to maintain increased levels of capital in connection with certain acquisitions. Additionally, we periodically explore acquisition opportunities with other financial institutions, some of which are in distressed financial condition. Any future acquisition, particularly the acquisition of a significantly troubled institution or an institution of comparable size to us, may require us to raise additional capital in order to obtain regulatory approval and/or to remain well capitalized.
Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve.
We cannot guarantee that such capital will be available on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, our depositors or counterparties participating in the capital markets may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Moreover, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our businesses, financial condition and results of operations and may restrict our ability to grow.
The preparation of our financial statements requires the use of estimates that may vary from actual results.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates that affect the financial statements. One of our most critical estimates is the level of the allowance for loan losses. Due to the inherent nature of these estimates, we cannot provide absolute assurance that we will not have to increase the allowance for loan losses and/or sustain loan losses that are significantly higher than the provided allowance.
Our mortgage warehouse and indirect lending operations are subject to a higher fraud risk than our other lending operations.
We buy loans originated by mortgage bankers and automobile dealers. Because we must rely on the mortgage bankers and automobile dealers in making and documenting these loans, there is an increased risk of fraud to us on the part of the third-party originators and the underlying borrowers. In order to guard against this increased risk, we perform investigations on the mortgage companies with whom we do business, and we review the loan files and loan documents we purchase to attempt to detect any irregularities or legal noncompliance. However, there is no guarantee that our procedures will detect all cases of fraud or legal noncompliance.
Our mortgage lending profitability could be significantly reduced if we are not able to resell mortgages or experience other problems with the secondary market process or are unable to retain our mortgage loan sales force due to regulatory changes.
Currently, we sell a substantial portion of the mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to aggregate a high volume of loans and to sell them in the secondary market at a gain. Thus, we are dependent upon the existence of an active secondary market and our ability to profitably sell loans into that market.
HORIZON BANCORP
Our ability to sell mortgage loans readily is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and Ginnie Mae (the “Agencies”) and other institutional andnon-institutional investors. These entities account for a substantial portion of the secondary market in residential mortgage loans. Some of the largest participants in the secondary market, including the Agencies, are government-sponsored enterprises whose activities are governed by federal law. Any future changes in laws that significantly affect the activity of such government-sponsored enterprises could, in turn, adversely affect our operations.
In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. Although to date, the conservatorship has not had a significant or adverse effect on our operations, and during 2010 and 2012 the Federal Housing Finance Agency indicated that the Treasury Department is committed to fund Fannie Mae and Freddie Mac to levels needed in order to sufficiently meet their funding needs, it is currently unclear whether further changes would significantly and adversely affect our operations. Members of the present federal administration have expressed an intent to seek an end to the conservatorship and to privatize the Agencies, and it is unclear how that might impact us. In addition, our ability to sell mortgage loans readily is dependent upon our ability to remain eligible for the programs offered by the Agencies and other institutional andnon-institutional investors. Our ability to remain eligible may also depend on having an acceptable peer-relative delinquency ratio for the Federal Housing Administration (“FHA”) and maintaining a delinquency rate with respect to Ginnie Mae pools that are below Ginnie Mae guidelines. In the case of Ginnie Mae pools, we have repurchased delinquent loans from them in the past to maintain compliance with the minimum required delinquency ratios. Although these loans are typically insured as to principal by the FHA, such repurchases increase our capital and liquidity needs, and there can be no assurance that we will have sufficient capital or liquidity to continue to purchase such loans out of the Ginnie Mae pools if required to do so.
Any significant impairment of our eligibility with any of the Agencies could materially and adversely affect our operations. Further, the criteria for loans to be accepted under such programs may be changed fromtime-to-time by the sponsoring entity which could result in a lower volume of corresponding loan originations. The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria.
We are exposed to intangible asset risk in that our goodwill may become impaired.
As of December 31, 2016, we had $86.3 million of goodwill and other intangible assets. A significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate, or slower growth rates could result in impairment of goodwill. If we were to conclude that a future write-down of our goodwill is necessary, then we would record the appropriate charge, which could be materially adverse to our operating results and financial position. For further discussion, see Notes 1 and 11, “Nature of Operations and Summary of Significant Accounting Policies” and “Intangible Assets,” to the Consolidated Financial Statements included in Item 8 of our Annual Report on Form10-K for the year ended December 31, 2016.
We are subject to extensive regulation and changes in laws and regulatory policies could adversely affect our business.
Our operations are subject to extensive regulation by federal agencies. See “Regulation and Supervision” in the description of our Business in Item 1 of Part I of this report for detailed information on the laws and regulations to which we are subject. Changes in applicable laws, regulations or regulator policies can materially affect our business. The likelihood of any major changes in the future and their effects are impossible to determine. As an example, the Bank could experience higher credit losses because of federal or state legislation or by regulatory or bankruptcy court action that reduces the amount the Bank’s borrowers are otherwise contractually required to pay under existing loan contracts. Also, the Bank could experience higher credit losses because of federal or state legislation or regulatory action that limits its ability to foreclose on property or other collateral or makes foreclosure less economically feasible.
Corporate tax reform continues to be a priority in the U.S., and the present federal administration proposes reducing the corporate income tax rate. Changes to the U.S. tax system could have significant effects, positive and negative, on our
HORIZON BANCORP
effective tax rate, and on our deferred tax assets and liabilities. In addition, changes to the tax system could impact our ability to utilize our federal and state net operating loss carryforwards. Accordingly, a decline in the U.S. corporate tax rate or other changes to the U.S. tax system could have a material adverse effect on Horizon’s earnings in the quarter and year in which the legislation is enacted.
We face other risks from recent actions of the U.S. Treasury and the Internal Revenue Service. In November 2016, these agencies issued a Notice making captive insurance company activities “transactions of interest” due to the potential for tax avoidance or evasion. We have two captive insurance companies (one was acquire in 2016 as part of the LaPorte Bancorp acquisition), and it is not certain at this point how the Notice may impact us on our operation of the captive insurance companies as a risk management tool.
Legislation enacted in recent years, together with additional actions announced by the U.S. Treasury and other regulatory agencies, continue to develop. It is not clear at this time what impact legislation and liquidity and funding initiatives of the U.S. Treasury and other bank regulatory agencies, and additional programs that may be initiated in the future, will have on the financial markets and the financial services industry.
Our inability to continue to accurately process large volumes of transactions could adversely impact our business and financial results.
In the normal course of business, we process large volumes of transactions. If systems of internal control should fail to work as expected, if systems are used in an unauthorized manner, or if employees subvert the system of internal controls, significant losses could result.
We process large volumes of transactions on a daily basis and are exposed to numerous types of operational risk. Operational risk resulting from inadequate or failed internal processes, people and systems includes the risk of fraud by persons inside or outside Horizon, the execution of unauthorized transactions by employees, errors relating to transaction processing and systems, and breaches of the internal control system and compliance requirements. This risk of loss also includes the potential legal actions that could arise as a result of the operational deficiency or as a result of noncompliance with applicable regulatory standards.
We establish and maintain systems of internal operational controls that are designed to provide us with timely and accurate information about our level of operational risk. While not foolproof, these systems have been designed to manage operational risk at appropriate, cost-effective levels. Procedures also exist that are designed to ensure that policies relating to conduct, ethics and business practices are followed. From time to time, losses from operational risk may occur, including the consequences of operational errors.
While we continually monitor and improve the system of internal controls, data processing systems and corporate-wide processes and procedures, there can be no assurance that future losses will not occur.
Our information systems may experience cyber-attacks or an interruption or breach in security.
We rely heavily on internal and outsourced technologies, communications, and information systems to conduct our business. Additionally, in the normal course of business, we collect, process and retain sensitive and confidential information regarding our customers. As our reliance on technology has increased, so have the potential risks of a technology-related operation interruption (such as disruptions in our customer relationship management, general ledger, deposit, loan, or other systems) or the occurrence of cyber-attacks (such as unauthorized access to our systems, computer viruses or other malicious code). These risks have increased for all financial institutions as new technologies, including the use of the Internet and telecommunications technologies (including mobile devices), have become commonly used to conduct financial and other business transactions, during a time of increased technological sophistication of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions, particularly denial of service attacks, that are designed to disrupt key business services, such as customer-facing web sites. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources, both domestic and foreign. However, we have analyzed and will continue to analyze security related to device-specific considerations, user access topics, transaction-processing and network integrity.
HORIZON BANCORP
We also face risks related to cyber-attacks and other security breaches in connection with credit card and debit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including merchant acquiring banks, payment processors, payment card networks and our processors. Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them. Further cyber-attacks or other breaches in the future, whether affecting us or others, could intensify consumer concern and regulatory focus and result in reduced use of payment cards and increased costs, all of which could have a material adverse effect on our business.
To the extent we are involved in any future cyber-attacks or other breaches, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance we maintain. We could also suffer significant damage to our reputation. Although we are insured against many of these risks, including privacy breach response costs, notification expenses, breach support and credit monitoring expenses, cyber extortion and cyber terrorism, there can be no assurances that such insurance will be sufficient to cover all costs arising from a data or information technology breach and our exposure may exceed our coverage.
We continually encounter technological changes.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements, and we may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
We rely on other companies to provide key components of our business infrastructure.
Third-party vendors provide key components of our business infrastructure, including Internet connections, mobile and internet banking, network access and transaction and other processing services. Although we have selected these third-party vendors carefully, we do not control their actions. Any problems caused by these third parties, including as a result of inadequate or interrupted service or breach of customer information, could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. In addition, any breach in customer information could affect our reputation and cause a loss of business. Replacing these third-party vendors also could result in significant delay and expense.
Damage to our reputation could damage our business.
Our business depends upon earning and maintaining the trust and confidence of our customers, investors and employees. Damage to our reputation could cause significant harm to our business and prospects. Harm to our reputation can arise from numerous sources, including, among others, employee misconduct, compliance failures, litigation or regulatory outcomes or governmental investigations. In addition, a failure to deliver appropriate standards of service and quality, or a failure or perceived failure to treat customers and clients fairly, can result in customer dissatisfaction, litigation, privacy breach and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs and harm to our reputation. Adverse publicity about Horizon, whether or not true, may result in harm to our existing business, customer relationships and prospects. Should any events or factors that can undermine our reputation occur, there is no assurance that the additional costs and expenses that we may need to incur to address the issues giving rise to the reputational harm would not adversely affect our earnings and results of operations.
HORIZON BANCORP
The soundness of other financial institutions could adversely affect us.
Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Many of these transactions expose us to credit risk in the event of default by our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings.
HORIZON BANCORP
HORIZON BANCORP
in various cities and towns in northern and central Indiana and southern and central Michigan. Horizon maintains such branches and offices as it believes are necessary for the convenience of its customers and the community, and Horizon frequently assesses the suitability of all its business locations.
HORIZON BANCORP
Craig M. Dwight | 63 | Chairman of Horizon since July 2014; Chairman and Chief Executive Officer of the Bank since January 2003; Chief Executive Officer of Horizon and the Bank since July 2001; President of the Bank from 1998 to January 2003. | ||||
James D. Neff | 60 | President of Horizon and the Bank since January 2018; Executive Vice President – Consumer and Mortgage Banking of the Bank from 2016 to January 2018; Executive Vice President – Mortgage Banking of the Bank from January 2004 to 2016; Senior Vice President of the Bank | ||||
Mark E. Secor | 53 | Executive Vice President of Horizon since January 2014 ; | ||||
Kathie A. DeRuiter | 58 | Executive Vice President of Horizon and Senior Bank Operations Officer since January 2014; Senior Vice President, Senior Bank Operations Officer from January 2003 to January 2014; Vice President, Senior Bank Operations Officer from January 2000 to January 2003. | ||||
Dennis J. Kuhn | 60 | Executive Vice President and Chief Commercial Banking Officer since October 2017; Regional Market President for Michigan and Northeast Indiana from February 2014 to October 2017; Chair of the Regional Loan Committee; Market President for Kalamazoo, Michigan from May 2010 to October 2017. | ||||
Todd A. Etzler | 53 | Senior Vice President and General Counsel since July 2018; Vice President and General Counsel since March 2017; Corporate Secretary since January 2018. General Counsel of Family Express Corporation from July 2011 to March 2017. |
2019.
Period Ending | ||||||||||||||||||||||||
Index | December 31 2011 | December 31 2012 | December 31 2013 | December 31 2014 | December 31 2015 | December 31 2016 | ||||||||||||||||||
Horizon Bancorp | 100.00 | 173.93 | 228.51 | 240.98 | 262.38 | 403.16 | ||||||||||||||||||
Russell 2000 | 100.00 | 116.35 | 161.52 | 169.43 | 161.95 | 196.45 | ||||||||||||||||||
SNL Bank$1B-$5B | 100.00 | 123.31 | 179.31 | 187.48 | 209.86 | 301.92 | ||||||||||||||||||
SNL Micro Cap Bank | 100.00 | 126.37 | 163.04 | 184.90 | 205.62 | 252.77 |
HORIZON BANCORP
Index | December 31 2014 | December 31 2015 | December 31 2016 | December 31 2017 | December 31 2018 | December 31 2019 | ||||||||||||||||||
Horizon Bancorp, Inc. | 100.00 | 108.88 | 167.30 | 169.07 | 146.83 | 181.60 | ||||||||||||||||||
Russell 2000 Index | 100.00 | 95.59 | 115.95 | 132.94 | 118.30 | 148.49 | ||||||||||||||||||
SNL Bank $1B-$5B Index | 100.00 | 111.94 | 161.04 | 171.69 | 150.42 | 182.85 | ||||||||||||||||||
SNL Micro Cap Bank Index | 100.00 | 111.20 | 136.72 | 167.25 | 158.70 | 177.22 |
Period Ending | ||||||||||||||||||||||||
Index | December 31 2011 | December 31 2012 | December 31 2013 | December 31 2014 | December 31 2015 | December 31 2016 | ||||||||||||||||||
Horizon Bancorp | 100.00 | 170.08 | 219.24 | 226.26 | 242.01 | 363.53 | ||||||||||||||||||
Indiana Banks(1) | 100.00 | 110.30 | 144.28 | 153.88 | 172.82 | 225.46 | ||||||||||||||||||
Michigan Banks(1) | 100.00 | 123.05 | 147.57 | 158.96 | 173.88 | 209.68 |
Index | December 31 2014 | December 31 2015 | December 31 2016 | December 31 2017 | December 31 2018 | December 31 2019 | ||||||||||||||||||
Horizon Bancorp, Inc. | 100.00 | 106.96 | 160.67 | 159.53 | 135.83 | 163.54 | ||||||||||||||||||
Indiana Banks (1) | 100.00 | 111.81 | 156.16 | 186.91 | 190.71 | 201.38 | ||||||||||||||||||
Michigan Banks (1) | 100.00 | 110.52 | 130.62 | 140.61 | 157.23 | 179.68 |
(1) | excludes merger targets |
The other information regarding Horizon’s common stock, including the approximate number of holders of the common stock, is included under the caption “Horizon’s Common Stock and Related Stockholders Matters” in Item 8 below, which is incorporated by reference.
Years Ended December 31 | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
Earnings | ||||||||||||||||||||
Net interest income | $ | 160,791 | $ | 134,569 | $ | 112,100 | $ | 85,992 | $ | 74,734 | ||||||||||
Provision for loan losses | 1,976 | 2,906 | 2,470 | 1,842 | 3,162 | |||||||||||||||
Non-interest income | 43,058 | 34,413 | 33,136 | 35,455 | 30,402 | |||||||||||||||
Non-interest expense | 122,032 | 102,516 | 94,813 | 86,892 | 74,193 | |||||||||||||||
Income tax expense | 13,303 | 10,443 | 14,836 | 8,801 | 7,232 | |||||||||||||||
Net income | 66,538 | 53,117 | 33,117 | 23,912 | 20,549 | |||||||||||||||
Preferred stock dividend | — | — | — | (42 | ) | (125 | ) | |||||||||||||
Net income available to common shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | $ | 23,870 | $ | 20,424 | ||||||||||
Cash dividends declared | $ | 20,835 | $ | 15,418 | $ | 11,720 | $ | 8,382 | $ | 6,216 | ||||||||||
Per Share Data | ||||||||||||||||||||
Basic earnings per share (1) | $ | 1.53 | $ | 1.39 | $ | 0.96 | $ | 0.79 | $ | 0.87 | ||||||||||
Diluted earnings per share (1) | 1.53 | 1.38 | 0.95 | 0.79 | 0.84 | |||||||||||||||
Cash dividends declared per common share (1) | 0.46 | 0.40 | 0.33 | 0.27 | 0.26 | |||||||||||||||
Book value per common share (1) | 14.59 | 12.82 | 11.93 | 10.25 | 9.47 | |||||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic (1) | 43,493,316 | 38,347,059 | 34,553,736 | 29,981,592 | 23,648,166 | |||||||||||||||
Diluted (1) | 43,597,595 | 38,495,231 | 34,760,439 | 30,123,615 | 24,295,968 | |||||||||||||||
Period End Totals | ||||||||||||||||||||
Loans, net of deferred loan fees and unearned income | $ | 3,636,841 | $ | 3,013,332 | $ | 2,831,995 | $ | 2,135,986 | $ | 1,749,131 | ||||||||||
Allowance for loan losses | 17,667 | 17,820 | 16,394 | 14,837 | 14,534 | |||||||||||||||
Total assets | 5,246,829 | 4,246,688 | 3,964,303 | 3,141,156 | 2,652,401 | |||||||||||||||
Total deposits | 3,931,002 | 3,139,376 | 2,881,003 | 2,471,210 | 1,880,153 | |||||||||||||||
Total borrowings | 606,052 | 588,221 | 601,810 | 304,945 | 482,144 | |||||||||||||||
Ratios | ||||||||||||||||||||
Loan to deposit | 92.62 | % | 96.02 | % | 98.30 | % | 86.43 | % | 93.03 | % | ||||||||||
Loan to total funding | 80.25 | % | 80.87 | % | 81.31 | % | 76.94 | % | 74.04 | % | ||||||||||
Return on average assets | 1.35 | % | 1.31 | % | 0.97 | % | 0.81 | % | 0.87 | % | ||||||||||
Average stockholders’ equity to average total assets | 12.28 | % | 11.65 | % | 11.15 | % | 10.22 | % | 9.30 | % | ||||||||||
Return on average stockholders’ equity | 10.98 | % | 11.22 | % | 8.74 | % | 7.92 | % | 9.87 | % | ||||||||||
Dividend payout ratio (dividends divided by basic earnings per share) | 31.31 | % | 29.03 | % | 34.78 | % | 34.33 | % | 29.85 | % | ||||||||||
Price to book value ratio | 130.27 | % | 123.09 | % | 155.28 | % | 182.13 | % | 131.26 | % | ||||||||||
Price to earnings ratio | 12.42x | 11.35x | 19.45x | 23.56x | 14.78x |
(1) | Adjusted for 3:2 stock splits on June 15, 2018 and November 14, 2016. |
June 15, 2018.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
2019.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
Future changes in management’s assessment of the impairment of these servicing assets, as a result of changes in observable market data relating to market interest rates, loan prepayment speeds, and other factors, could impact Horizon’s financial condition and results of operations either positively or negatively.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
2018. The increase was primarily in net loans of $623.7 million, investment securities available for sale of $234.4 million, cash and due from banks of $40.3 million, goodwill of $31.4 million, other intangible assets of $16.3 million and premises and equipment of $17.9 million primarily due to the acquisition of Salin Bancshares, Inc.
2018.
Level 1 | Quoted prices in active markets for identical assets or liabilities. | |||
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
details as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, interest rate spreads on relevant benchmark securities and certain prepayment assumptions. To verify the reasonableness of the fair value determination by the service, Horizon has a portion of the Level 2 securities priced by an independent securities broker-dealer.
$18.1 million, respectively.
December 31 2016 | December 31 2015 | Dollar Change | Percent Change | |||||||||||||
Commercial | ||||||||||||||||
Working capital and equipment | $ | 539,403 | $ | 381,245 | $ | 158,158 | 41.5 | % | ||||||||
Real estate, including agriculture | 485,620 | 391,668 | 93,952 | 24.0 | % | |||||||||||
Tax exempt | 15,486 | 8,674 | 6,812 | 78.5 | % | |||||||||||
Other | 29,447 | 23,408 | 6,039 | 25.8 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 1,069,956 | 804,995 | 264,961 | 32.9 | % | |||||||||||
Real estate | ||||||||||||||||
1–4 family | 526,024 | 433,015 | 93,009 | 21.5 | % | |||||||||||
Other | 5,850 | 4,129 | 1,721 | 41.7 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 531,874 | 437,144 | 94,730 | 21.7 | % | |||||||||||
Consumer | ||||||||||||||||
Auto | 174,773 | 168,397 | 6,376 | 3.8 | % | |||||||||||
Recreation | 5,669 | 5,365 | 304 | 5.7 | % | |||||||||||
Real estate/home improvement | 53,898 | 47,015 | 6,883 | 14.6 | % | |||||||||||
Home equity | 144,508 | 127,113 | 17,395 | 13.7 | % | |||||||||||
Unsecured | 3,875 | 4,120 | (245 | ) | -5.9 | % | ||||||||||
Other | 15,706 | 10,290 | 5,416 | 52.6 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 398,429 | 362,300 | 36,129 | 10.0 | % | |||||||||||
Mortgage warehouse | 135,727 | 144,692 | (8,965 | ) | -6.2 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Total loans | 2,135,986 | 1,749,131 | 386,855 | 22.1 | % | |||||||||||
Allowance for loan losses | (14,837 | ) | (14,534 | ) | (303 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Loans, net | $ | 2,121,149 | $ | 1,734,597 | $ | 386,552 | ||||||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
December 31 2019 | December 31 2018 | Dollar Change | Percent Change | |||||||||||||
Commercial | ||||||||||||||||
Working capital and equipment | $ | 938,317 | $ | 804,083 | $ | 134,234 | 16.7 | % | ||||||||
Real estate, including agriculture | 978,891 | 834,037 | 144,854 | 17.4 | % | |||||||||||
Tax exempt | 63,571 | 48,975 | 14,596 | 29.8 | % | |||||||||||
Other | 65,872 | 34,495 | 31,377 | 91.0 | % | |||||||||||
Total | 2,046,651 | 1,721,590 | 325,061 | 18.9 | % | |||||||||||
Real estate | ||||||||||||||||
1-4 family | 762,571 | 659,754 | 102,817 | 15.6 | % | |||||||||||
Other | 8,146 | 8,387 | (241 | ) | -2.9 | % | ||||||||||
Total | 770,717 | 668,141 | 102,576 | 15.4 | % | |||||||||||
Consumer | ||||||||||||||||
Auto | 362,729 | 327,413 | 35,316 | 10.8 | % | |||||||||||
Recreation | 16,262 | 13,975 | 2,287 | 16.4 | % | |||||||||||
Real estate/home improvement | 43,585 | 39,587 | 3,998 | 10.1 | % | |||||||||||
Home equity | 237,979 | 163,209 | 74,770 | 45.8 | % | |||||||||||
Unsecured | 7,286 | 4,043 | 3,243 | 80.2 | % | |||||||||||
Other | 1,339 | 1,254 | 85 | 6.8 | % | |||||||||||
Total | 669,180 | 549,481 | 119,699 | 21.8 | % | |||||||||||
Mortgage warehouse | 150,293 | 74,120 | 76,173 | 102.8 | % | |||||||||||
Total loans | 3,636,841 | 3,013,332 | 623,509 | 20.7 | % | |||||||||||
Allowance for loan losses | (17,667 | ) | (17,820 | ) | 153 | -0.9 | % | |||||||||
Loans, net | $ | 3,619,174 | $ | 2,995,512 | $ | 623,662 | 20.8 | % | ||||||||
December 31 2016 | December 31 2015 | December 31 2014 | ||||||||||
Commercial | $ | 918,844 | $ | 743,175 | $ | 620,809 | ||||||
Real estate | 497,337 | 368,653 | 234,335 | |||||||||
Mortgage warehouse | 159,588 | 138,137 | 95,070 | |||||||||
Consumer | 372,811 | 343,825 | 297,296 | |||||||||
|
|
|
|
|
| |||||||
Total average loans | $ | 1,948,580 | $ | 1,593,790 | $ | 1,247,510 | ||||||
|
|
|
|
|
|
December 31 2019 | �� | December 31 2018 | December 31 2017 | |||||||||
Commercial | $ | 1,980,948 | $ | 1,676,013 | $ | 1,227,698 | ||||||
Real estate | 778,844 | 641,161 | 567,581 | |||||||||
Mortgage warehouse | 107,259 | 82,240 | 89,212 | |||||||||
Consumer | 633,598 | 511,327 | 450,635 | |||||||||
Total average loans | $ | 3,500,649 | $ | 2,910,741 | $ | 2,335,126 | ||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
Number | Amount | Percent of Portfolio | Number | Amount | Percent of Portfolio | |||||||||||||||||||
SBA guaranteed loans | 295 | $ | 61,503 | 5.7 | % | 251 | $ | 54,549 | 6.8 | % | ||||||||||||||
Municipal government | 1 | 344 | 0.0 | % | 1 | 447 | 0.1 | % | ||||||||||||||||
Lines of credit | 1,106 | 192,178 | 18.0 | % | 927 | 153,080 | 19.0 | % | ||||||||||||||||
Real estate and equipment term loans | 2,559 | 815,931 | 76.3 | % | 1,834 | 596,919 | 74.2 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 3,961 | $ | 1,069,956 | 100.0 | % | 3,013 | $ | 804,995 | 100.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Number | Amount | Percent of Portfolio | Number | Amount | Percent of Portfolio | |||||||||||||||||||
SBA guaranteed | 325 | $ | 65,661 | 3.2 | % | 322 | $ | 68,849 | 4.0 | % | ||||||||||||||
Municipal government | 73 | 63,572 | 3.1 | % | 2 | 11,600 | 0.7 | % | ||||||||||||||||
Lines of credit | 1,328 | 407,558 | 19.9 | % | 1,239 | 306,935 | 17.8 | % | ||||||||||||||||
Real estate and equipment | 4,456 | 1,509,860 | 73.8 | % | 4,022 | 1,334,206 | 77.5 | % | ||||||||||||||||
Total | 6,182 | $ | 2,046,651 | 100.0 | % | 5,585 | $ | 1,721,590 | 100.0 | % | ||||||||||||||
2019.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
(dollars in thousands) | Amount | Percent of Portfolio | Yield | Amount | Percent of Portfolio | Yield | ||||||||||||||||||
Fixed rate | ||||||||||||||||||||||||
Monthly payment | $ | 136,292 | 25.6 | % | 4.25 | % | $ | 114,035 | 26.1 | % | 4.20 | % | ||||||||||||
Biweekly payment | 104 | 0.0 | % | 6.27 | % | 151 | 0.0 | % | 6.20 | % | ||||||||||||||
Adjustable rate | ||||||||||||||||||||||||
Monthly payment | 395,478 | 74.4 | % | 3.77 | % | 322,959 | 73.9 | % | 3.84 | % | ||||||||||||||
Biweekly payment | — | 0.0 | % | 0.00 | % | — | 0.0 | % | 0.00 | % | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Sub total | 531,874 | 100.0 | % | 3.89 | % | 437,145 | 100.0 | % | 3.93 | % | ||||||||||||||
|
|
|
| |||||||||||||||||||||
Loans held for sale | 8,087 | 7,917 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total real estate loans | $ | 539,961 | $ | 445,062 | ||||||||||||||||||||
|
|
|
|
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Amount | Percent of Portfolio | Yield | Amount | Percent of Portfolio | Yield | |||||||||||||||||||
Fixed rate | ||||||||||||||||||||||||
Monthly payment | $ | 160,742 | 20.9 | % | 4.33 | % | $ | 116,102 | 17.4 | % | 4.38 | % | ||||||||||||
Biweekly payment | — | 0.0 | % | 0.00 | % | 3 | 0.0 | % | 7.13 | % | ||||||||||||||
Adjustable rate | ||||||||||||||||||||||||
Monthly payment | 609,975 | 79.1 | % | 3.96 | % | 552,036 | 82.6 | % | 3.90 | % | ||||||||||||||
Biweekly payment | — | 0.0 | % | 0.00 | % | — | 0.0 | % | 0.00 | % | ||||||||||||||
Subtotal | 770,717 | 100.0 | % | 4.06 | % | 668,141 | 100.0 | % | 3.99 | % | ||||||||||||||
Loans held for sale | 4,088 | 1,038 | ||||||||||||||||||||||
Total real estate loans | $ | 774,805 | $ | 669,179 | ||||||||||||||||||||
2018.
December 31 2016 | December 31 2015 | December 31 2014 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 9,271 | $ | 7,980 | $ | 7,428 | ||||||
Servicing rights capitalized | 3,426 | 2,974 | 2,280 | |||||||||
Amortization of servicing rights | (1,016 | ) | (1,683 | ) | (1,728 | ) | ||||||
|
|
|
|
|
| |||||||
Balances, December 31 | 11,681 | 9,271 | 7,980 | |||||||||
|
|
|
|
|
| |||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (397 | ) | (338 | ) | (389 | ) | ||||||
Additions | (236 | ) | (130 | ) | (95 | ) | ||||||
Reductions | 126 | 71 | 146 | |||||||||
|
|
|
|
|
| |||||||
Balances, December 31 | (507 | ) | (397 | ) | (338 | ) | ||||||
|
|
|
|
|
| |||||||
Mortgage servicing rights, net | $ | 11,174 | $ | 8,874 | $ | 7,642 | ||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
December 31 2019 | December 31 2018 | December 31 2017 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 12,876 | $ | 12,189 | $ | 11,681 | ||||||
Servicing rights capitalized | 3,547 | 1,883 | 2,109 | |||||||||
Amortization of servicing rights | (1,377 | ) | (1,196 | ) | (1,601 | ) | ||||||
Balances, December 31 | 15,046 | 12,876 | 12,189 | |||||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (527 | ) | (587 | ) | (507 | ) | ||||||
Additions | (234 | ) | (78 | ) | (85 | ) | ||||||
Reductions | 42 | 138 | 5 | |||||||||
Balances, December 31 | (719 | ) | (527 | ) | (587 | ) | ||||||
Mortgage servicing rights, net | $ | 14,327 | $ | 12,349 | $ | 11,602 | ||||||
This organic growth is a result of placing additional focus on consumer lending, in addition to recent merger activity providing entry into new market areas.
Losses
2019 compared to 0.72% as of December 31, 2018. The decrease in the ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments was due to all-time low historical loss rates and stable economic factors. Loan loss reserves and 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. (See the
HORIZON BANCORPAND SUBSIDIARIES
2019.
December 31 2016 | December 31 2015 | December 31 2014 | ||||||||||
Non-performing loans | $ | 10,683 | $ | 16,680 | $ | 22,442 |
December 31 2019 | December 31 2018 | December 31 2017 | ||||||||||
Non-performing loans | $ | 21,185 | $ | 15,175 | $ | 16,414 |
2017.
December 31 2016 | December 31 2015 | December 31 2014 | ||||||||||
Other real estate owned | $ | 3,190 | $ | 3,207 | $ | 1,047 |
December 31 2019 | December 31 2018 | December 31 2017 | ||||||||||
Other real estate owned | $ | 3,726 | $ | 2,027 | $ | 778 |
The majority of the increase in OREO during 2019 was because several bank owned properties acquired through acquisitions and listed for sale were
HORIZON BANCORPAND SUBSIDIARIES
2017.
December 31 2016 | December 31 2015 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 5,581 | $ | 5,329 | ||||
Net operating loss (from acquisitions) | 2,368 | 1,679 | ||||||
Director and employee benefits | 3,124 | 2,223 | ||||||
Unrealized loss on AFS securities and fair value hedge | 937 | 711 | ||||||
Accrued Pension | 1,323 | 1,725 | ||||||
Fair value adjustment on acquisitions | 2,340 | 756 | ||||||
Other | 1,593 | 273 | ||||||
|
|
|
| |||||
Total assets | 17,266 | 12,696 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Depreciation | (1,916 | ) | (2,180 | ) | ||||
State tax | (341 | ) | (192 | ) | ||||
Federal Home Loan Bank stock dividends | (474 | ) | (343 | ) | ||||
Difference in basis of intangible assets | (4,654 | ) | (2,938 | ) | ||||
FHLB Penalty | — | (123 | ) | |||||
Unrealized gain on securities available for sale | — | — | ||||||
Other | (431 | ) | (264 | ) | ||||
|
|
|
| |||||
Total liabilities | (7,816 | ) | (6,040 | ) | ||||
Valuation allowance | (2,018 | ) | (1,407 | ) | ||||
|
|
|
| |||||
Net deferred tax asset | $ | 7,432 | $ | 5,249 | ||||
|
|
|
|
December 31 2019 | December 31 2018 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 4,120 | $ | 3,831 | ||||
Net operating loss and tax credits (from acquisitions) | 54 | 1,038 | ||||||
Director and employee benefits | 1,890 | 2,392 | ||||||
Unrealized loss on AFS securities and fair value hedge | — | 2,165 | ||||||
Accrued pension | 775 | 801 | ||||||
Fair value adjustment on acquisitions | — | — | ||||||
Other | 2,145 | 670 | ||||||
Total assets | 8,984 | 10,897 | ||||||
Liabilities | ||||||||
Depreciation | (4,456 | ) | (1,850 | ) | ||||
State tax | (10 | ) | (137 | ) | ||||
Federal Home Loan Bank stock dividends | (368 | ) | (330 | ) | ||||
Difference in basis of intangible assets | (3,427 | ) | (2,919 | ) | ||||
Fair value adjustment on acquisitions | (2,488 | ) | (62 | ) | ||||
Unrealized gain on AFS securities and fair value hedge | (1,710 | ) | — | |||||
Other | (63 | ) | (119 | ) | ||||
Total liabilities | (12,522 | ) | (5,417 | ) | ||||
Valuation allowance | — | (1,038 | ) | |||||
Net deferred tax asset/(liability) | $ | (3,538 | ) | $ | 4,442 | |||
Average Balance Outstanding for the Year Ending December 31 | Average Rate Paid for the Year Ending December 31 | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||
Noninterest-bearing demand deposits | $ | 417,900 | $ | 314,840 | $ | 258,523 | ||||||||||||||||||
Interest-bearing demand deposits | 732,117 | 671,493 | 582,916 | 0.12 | % | 0.12 | % | 0.12 | % | |||||||||||||||
Savings deposits | 303,229 | 191,593 | 142,420 | 0.06 | % | 0.05 | % | 0.05 | % | |||||||||||||||
Money market | 254,453 | 205,119 | 161,146 | 0.26 | % | 0.24 | % | 0.23 | % | |||||||||||||||
Time deposits | 462,527 | 344,464 | 296,349 | 1.06 | % | 1.21 | % | 1.39 | % | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total deposits | $ | 2,170,226 | $ | 1,727,509 | $ | 1,441,354 | ||||||||||||||||||
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Average Balance Outstanding for the Years Ended December 31 | Average Rate Paid for the Years Ended December 31 | |||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Non-interest bearing demand deposits | $ | 757,389 | $ | 624,576 | $ | 533,852 | ||||||||||||||||||
Interest bearing demand deposits | 1,024,099 | 827,255 | 831,292 | 0.68 | % | 0.30 | % | 0.14 | % | |||||||||||||||
Savings deposits | 552,101 | 416,404 | 388,953 | 0.32 | % | 0.08 | % | 0.07 | % | |||||||||||||||
Money market | 483,187 | 403,475 | 310,310 | 1.09 | % | 0.72 | % | 0.35 | % | |||||||||||||||
Time deposits | 948,550 | 771,853 | 515,341 | 2.07 | % | 1.55 | % | 1.04 | % | |||||||||||||||
Total deposits | $ | 3,765,326 | $ | 3,043,563 | $ | 2,579,748 | ||||||||||||||||||
Due in three months or less | $ | 17,713 | ||
Due after three months through six months | 30,304 | |||
Due after six months through one year | 25,412 | |||
Due after one year | 31,932 | |||
|
| |||
$ | 105,361 | |||
|
|
2019:
Due in three months or less | $ | 186,089 | ||
Due after three months through six months | 85,555 | |||
Due after six months through one year | 115,967 | |||
Due after one year | 73,824 | |||
$ | 461,435 | |||
2017.
Total | Within One Year | One to Three Years | Three to Five Years | After Five Years | ||||||||||||||||
Certificates of Deposit | $ | 475,843 | $ | 257,071 | $ | 149,172 | $ | 47,380 | $ | 22,220 | ||||||||||
Borrowings (1) | 267,489 | 203,610 | 55,285 | 8,164 | 430 | |||||||||||||||
Subordinated debentures(2) | 37,456 | — | — | — | 37,456 |
Total | Within One Year | One to Three Years | Three to Five Years | After Five Years | ||||||||||||||||
Certificates of deposit | $ | 975,612 | $ | 747,022 | $ | 204,313 | $ | 22,995 | $ | 1,282 | ||||||||||
Borrowings (1) | 549,741 | 276,970 | 67,324 | 80,299 | 125,148 | |||||||||||||||
Subordinated debentures (2) | 56,311 | — | — | — | 56,311 |
(1) | Includes debt obligations to the Federal Home Loan Bank and term repurchase agreements with maturities beyond one year borrowed by Horizon’s banking subsidiary. See Note 13 in Horizon’s Consolidated Financial Statements at Item 8. |
(2) | Includes Trust Preferred Capital Securities issued by Horizon Statutory Trusts II and III and those assumed in the acquisitions of Alliance Bank in 2005, American Trust in 2009, Heartland in 2012, |
Expiration by Period | ||||||||
Within One Year | Greater Than One Year | |||||||
Letters of credit | $ | 2 | $ | 967 | ||||
Unfunded loan commitments | 254,063 | 554,236 |
HORIZON BANCORPAND SUBSIDIARIES
Expiration by Period | ||||||||
Within One Year | Greater Than One Year | |||||||
Letters of credit | $ | 7,053 | $ | 10,199 | ||||
Unfunded loan commitments | 310,025 | 648,665 |
The
In 2008, in connection with the issuance of preferred stock that was subsequently redeemed, Horizon issued a warrant to the Treasury to purchase shares of Horizon’s common stock. The Treasury sold the warrant to a third party, and at December 31, 2015, the warrant covered 481,510 shares with an exercise price of $7.79 per share. These warrants were exercised during 2015.
On August 25, 2011, the Company sold 12,500 shares of Series B Preferred Stock for aggregate consideration of $12.5 million, to the Treasury pursuant to the Small Business Lending Fund program. Concurrently with this transaction, Horizon redeemed all 18,750 shares of our Series A Preferred Stock that remained outstanding under the Treasury’s Capital Purchase Program. The redemption of the Series A Preferred Stock was funded by the $12.5 million in proceeds from the sale of the Series B Preferred Stock together with other available funds. On February 1, 2016 the Company redeemed all 12,500 shares of Series B Preferred Stock for $12,500,000 along with the final dividend payment of $10,417.
Horizon declared dividendsliquidity are discussed below in the amount of $0.41 per sharesection captioned “Liquidity” in 2016, $0.39 per share in 2015, and $0.34 per share in 2014. The dividend payout ratio (dividends as a percent of net income) was 34.3% for 2016, 29.9% for 2015, and 25.7% for 2014. For additional information regarding dividend conditions, see Note 1 of the Notes to the Consolidated Financial Statements atthis Item 8.
In October of 2004, Horizon formed Horizon Statutory Trust II (“Trust II”), a wholly owned statutory business trust. Trust II sold $10.3 million of Trust Preferred Capital Securities as a participant in a pooled trust preferred securities offering. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Horizon. The junior subordinated debentures are the sole assets of Trust II and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 1.95% (2.95% at December 31, 2016) and mature on October 21, 2034, and securities may be called at any quarterly interest payment date at par.
In December of 2006, Horizon formed Horizon Bancorp Capital Trust III (“Trust III”), a wholly owned statutory business trust. Trust III sold $12.4 million of Trust Preferred Capital Securities as a participant in a pooled trust preferred securities offering. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Horizon. The junior subordinated debentures are the sole assets of Trust III and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 1.65% (2.65% at December 31, 2016) and mature on January 30, 2037, and securities may be called at any quarterly interest payment date at par.
The Company assumed additional debentures as the result of the acquisition of Alliance Bank Corporation in 2005. In June 2004, Alliance formed Alliance Financial Statutory Trust I, a wholly owned business trust (“Alliance Trust”) to sell $5.2 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Alliance. The junior subordinated debentures are the sole assets of Alliance Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 2.65% (3.65% at December 31, 2016) and mature in June 2034, and securities may be called at any quarterly interest payment date at par.
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and 7.
(Table dollars in thousands except per share data)
The Company assumed additional debentures as the result of the American Trust & Savings Bank purchase and assumption in 2010. In March 2004, Am Tru Inc., the holding company for American Trust & Savings Bank, formed Am Tru Statutory Trust I a wholly owned business trust (“Am Tru Trust”), to sell $3.5 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Am Tru Inc. The junior subordinated debentures are the sole assets of Am Tru Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 2.85% (3.85% at December 31, 2016) and mature in March 2034, and securities may be called at any quarterly interest payment date at par. The carrying value was $3.2 million, net of the remaining purchase discount, at December 31, 2016.
The Company assumed additional debentures as the result of the Heartland merger in July 2013. In December 2006, Heartland formed Heartland (IN) Statutory Trust II a wholly owned business trust (“Heartland Trust”), to sell $3.0 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of junior subordinated debentures from Heartland. The junior subordinated debentures are the sole assets of Heartland Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 1.67% (2.67% at December 31, 2016) and mature in December 2036, and securities may be called at any quarterly interest payment date at par. The carrying value was $1.7 million, net of the remaining purchase discount, at December 31, 2016.
The Company assumed additional debentures as the result of the LaPorte merger in July 2016. In October 2007, LaPorte assumed debentures as the result of its acquisition of City Savings Financial Corporation (“City Savings”). In June 2003, City Savings formed City Savings Statutory Trust I a wholly owned business trust (“City Savings Trust”), to sell $5.0 million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from City Savings. The junior subordinated debentures are the sole assets of City Savings Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of90-day LIBOR plus 3.10% (4.10% at December 31, 2016) and mature in June 2033, and securities may be called at any quarterly interest payment date at par. The carrying value was $4.3 million, net of the remaining purchase discount, at December 31, 2016.
The Trust Preferred Capital Securities, subject to certain limitations, are included in Tier 1 Capital for regulatory purposes. Dividends on the Trust Preferred Capital Securities are recorded as interest expense.
Results of Operations
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
core net income.)
Rates paid on interest-bearing liabilities increased by 15 basis points during the same period due to the prepayment penalties on borrowings of $4.8 million in 2016. 2019.
HORIZON BANCORPAND SUBSIDIARIES
2018.
Twelve Months Ended December 31, 2016 | Twelve Months Ended December 31, 2015 | Twelve Months Ended December 31, 2014 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||
Interest-earning assets | ||||||||||||||||||||||||||||||||||||
Federal funds sold | $ | 17,142 | $ | 95 | 0.55 | % | $ | 10,264 | $ | 11 | 0.11 | % | $ | 6,246 | $ | 11 | 0.18 | % | ||||||||||||||||||
Interest-earning deposits | 34,506 | 278 | 0.81 | % | 14,045 | 10 | 0.07 | % | 7,087 | 10 | 0.14 | % | ||||||||||||||||||||||||
Investment securities - taxable | 490,274 | 9,666 | 1.97 | % | 394,976 | 8,700 | 2.20 | % | 387,013 | 9,323 | 2.41 | % | ||||||||||||||||||||||||
Investment securities -non-taxable (1) | 192,881 | 4,921 | 3.59 | % | 152,931 | 4,494 | 4.32 | % | 146,407 | 4,426 | 4.32 | % | ||||||||||||||||||||||||
Loans receivable (2)(3)(4) | 1,948,580 | 91,569 | 4.71 | % | 1,593,790 | 75,373 | 4.74 | % | 1,247,510 | 62,435 | 5.01 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total interest-earning assets (1) | 2,683,383 | 106,529 | 4.05 | % | 2,166,006 | 88,588 | 4.20 | % | 1,794,263 | 76,205 | 4.36 | % | ||||||||||||||||||||||||
Non-interest-earning assets | ||||||||||||||||||||||||||||||||||||
Cash and due from banks | 37,549 | 31,692 | 27,168 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (14,439 | ) | (16,351 | ) | (15,945 | ) | ||||||||||||||||||||||||||||||
Other assets | 255,129 | 179,138 | 144,803 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 2,961,622 | $ | 2,360,485 | $ | 1,950,289 | |||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 1,752,326 | $ | 6,616 | 0.38 | % | $ | 1,438,026 | $ | 5,559 | 0.39 | % | $ | 1,182,831 | $ | 5,257 | 0.44 | % | ||||||||||||||||||
Borrowings | 425,444 | 11,807 | 2.78 | % | 336,618 | 6,286 | 1.87 | % | 281,649 | 5,956 | 2.11 | % | ||||||||||||||||||||||||
Subordinated debentures | 49,834 | 2,114 | 4.24 | % | 32,717 | 2,009 | 6.14 | % | 32,561 | 2,009 | 6.17 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total interest-bearing liabilities | 2,227,604 | 20,537 | 0.92 | % | 1,807,361 | 13,854 | 0.77 | % | 1,497,041 | 13,222 | 0.88 | % | ||||||||||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Demand deposits | 417,900 | 317,246 | 258,523 | |||||||||||||||||||||||||||||||||
Accrued interest payable and other liabilities | 13,574 | 16,364 | 12,776 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 302,544 | 219,514 | 181,949 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 2,961,622 | $ | 2,360,485 | $ | 1,950,289 | |||||||||||||||||||||||||||||||
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|
|
|
|
| |||||||||||||||||||||||||||||||
Net interest income/spread | $ | 85,992 | 3.13 | % | $ | 74,734 | 3.43 | % | $ | 62,983 | 3.48 | % | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net interest income as a percent of average interest earning assets (1) | 3.29 | % | 3.56 | % | 3.62 | % |
Twelve Months Ended December 31, 2019 | Twelve Months Ended December 31, 2018 | Twelve Months Ended December 31, 2017 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Average Rate | 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 | % | $ | 5,450 | $ | 80 | 1.47 | % | ||||||||||||||||||
Interest-earning deposits | 19,601 | 342 | 1.74 | % | 24,491 | 393 | 1.60 | % | 23,865 | 301 | 1.26 | % | ||||||||||||||||||||||||
Investment securities - taxable | 474,833 | 11,753 | 2.48 | % | 431,970 | 10,113 | 2.34 | % | 417,993 | 8,705 | 2.08 | % | ||||||||||||||||||||||||
Investment securities - non-taxable (1) | 454,066 | 12,095 | 3.34 | % | 326,040 | 8,069 | 3.13 | % | 292,030 | 7,068 | 3.39 | % | ||||||||||||||||||||||||
Loans receivable (2)(3)(4) | 3,500,649 | 183,631 | 5.27 | % | 2,910,741 | 147,478 | 5.08 | % | 2,335,126 | 112,329 | 4.83 | % | ||||||||||||||||||||||||
Total interest-earning assets (1) | 4,470,450 | 208,332 | 4.75 | % | 3,697,938 | 166,168 | 4.56 | % | 3,074,464 | 128,483 | 4.29 | % | ||||||||||||||||||||||||
Non-interest-earning assets | ||||||||||||||||||||||||||||||||||||
Cash and due from banks | 62,920 | 44,645 | 42,578 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (18,019 | ) | (16,964 | ) | (15,226 | ) | ||||||||||||||||||||||||||||||
Other assets | 417,707 | 337,016 | 295,057 | |||||||||||||||||||||||||||||||||
Total average assets | $ | 4,933,058 | $ | 4,062,635 | $ | 3,396,873 | ||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 3,007,937 | $ | 33,690 | 1.12 | % | $ | 2,418,987 | $ | 18,225 | 0.75 | % | $ | 2,045,896 | $ | 7,901 | 0.39 | % | ||||||||||||||||||
Borrowings | 468,159 | 10,672 | 2.28 | % | 492,830 | 11,009 | 2.23 | % | 381,488 | 6,178 | 1.62 | % | ||||||||||||||||||||||||
Subordinated debentures | 50,134 | 3,179 | 6.34 | % | 36,547 | 2,365 | 6.47 | % | 36,362 | 2,304 | 6.34 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities | 3,526,230 | 47,541 | 1.35 | % | 2,948,364 | 31,599 | 1.07 | % | 2,463,746 | 16,383 | 0.66 | % | ||||||||||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||
Demand deposits | 757,389 | 624,576 | 533,852 | |||||||||||||||||||||||||||||||||
Accrued interest payable and other liabilities | 43,720 | 16,275 | 20,566 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 605,719 | 473,420 | 378,709 | |||||||||||||||||||||||||||||||||
Total average liabilities and stockholders’ equity | $ | 4,933,058 | $ | 4,062,635 | $ | 3,396,873 | ||||||||||||||||||||||||||||||
Net interest income/spread | $ | 160,791 | 3.40 | % | $ | 134,569 | 3.49 | % | $ | 112,100 | 3.63 | % | ||||||||||||||||||||||||
Net interest income as a percent of average interest-earning assets (1) | 3.69 | % | 3.71 | % | 3.75 | % |
(1) | Horizon has no foreign office and, accordingly, no assets or liabilities to foreign operations. Horizon’s subsidiary bank had no funds invested in Eurodollar Certificates of Deposit at December 31, |
(2) | Yields are presented on atax-equivalent basis. |
(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 |
(4) | Loan fees and late fees included in interest on loans aggregated |
2016-2015 | 2015-2014 | |||||||||||||||||||||||
Total Change | Change Due To Volume | Change Due To Rate | Total Change | Change Due To Volume | Change Due To Rate | |||||||||||||||||||
Interest Income | ||||||||||||||||||||||||
Federal funds sold | $ | 84 | $ | 12 | $ | 72 | $ | — | $ | 5 | $ | (5 | ) | |||||||||||
Interest-earning deposits | 268 | 33 | 235 | — | 7 | (7 | ) | |||||||||||||||||
Investment securities - taxable | 966 | 1,946 | (980 | ) | (623 | ) | 189 | (812 | ) | |||||||||||||||
Investment securities -non-taxable | 427 | 1,550 | (1,123 | ) | 68 | 282 | (214 | ) | ||||||||||||||||
Loans receivable | 16,196 | 16,711 | (515 | ) | 12,938 | 16,571 | (3,633 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest income | 17,941 | 20,252 | (2,311 | ) | 12,383 | 17,054 | (4,671 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
Interest Expense | ||||||||||||||||||||||||
Interest-bearing deposits | 1,057 | 1,189 | (132 | ) | 302 | 1,042 | (740 | ) | ||||||||||||||||
Borrowings | 5,521 | 1,942 | 3,579 | 330 | 1,077 | (747 | ) | |||||||||||||||||
Subordinated debentures | 105 | 847 | (742 | ) | — | 10 | (10 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest expense | 6,683 | 3,978 | 2,705 | 632 | 2,129 | (1,497 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net interest income | $ | 11,258 | $ | 16,274 | $ | (5,016 | ) | $ | 11,751 | $ | 14,925 | $ | (3,174 | ) | ||||||||||
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|
|
HORIZON BANCORPAND SUBSIDIARIES
Net interest income during 2015 was $74.7 million, an increase of $11.8 million or 18.7% over the $63.0 million earned in 2014. Yields on the Company’s interest-earning assets decreased by 16 basis points to 4.20% during 2015 from 4.36% in 2014. Interest income increased $12.4 million to $88.6 million for 2015 from $76.2 million in 2015. This increase was due to increased volume in interest-earning assets and an increase in the recognition of interest income from the acquisition-related purchase accounting adjustments of approximately $300,000 from $2.7 million in 2014 to $3.0 million in 2015, partially offset by the lower yield on interest-earnings assets.
Rates paid on interest-bearing liabilities decreased by 11 basis points during the same period due to the lower interest rate environment. Interest expense increased $632,000 from $13.2 million in 2014 to $13.9 million in 2015. This increase was due to increased volume of interest-bearing liabilities, partially offset by lower rates being paid. Due to a larger decrease in the yield on the Company’s interest-earning assets compared to the decrease in the rates paid on the Company’s interest-bearing liabilities, the net interest margin decreased 6 basis points from 3.62% for 2014 to 3.56% in 2015. Excluding the interest income recognized from the acquisition-related purchase accounting adjustments, the margin would have been 3.42% for 2015 compared to 3.47% for 2014. Management believes that the current level of interest rates is driven by external factors and therefore impacts the results of the Company’s net interest margin. Management does not expect a significant rise in interest rates in the short term, but an increase in rates is expected at some time in the future due to the current historically low interest rate environment.
2019 - 2018 | 2018 - 2017 | |||||||||||||||||||||||
Total Change | Change Due To Volume | Change Due To Rate | Total Change | Change Due To Volume | Change Due To Rate | |||||||||||||||||||
Interest Income | ||||||||||||||||||||||||
Federal funds sold | $ | 396 | $ | 398 | $ | (2 | ) | $ | 35 | $ | (12 | ) | $ | 47 | ||||||||||
Interest-earning deposits | (51 | ) | (83 | ) | 32 | 92 | 8 | 84 | ||||||||||||||||
Investment securities - taxable | 1,640 | 1,040 | 600 | 1,408 | 298 | 1,110 | ||||||||||||||||||
Investment securities - non-taxable | 4,026 | 4,239 | (213 | ) | 1,001 | 1,100 | (99 | ) | ||||||||||||||||
Loans receivable | 36,153 | 30,914 | 5,239 | 35,149 | 28,991 | 6,158 | ||||||||||||||||||
Total interest income | 42,164 | 36,508 | 5,656 | 37,685 | 30,385 | 7,300 | ||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||
Interest-bearing deposits | 15,465 | 5,137 | 10,328 | 10,324 | 1,677 | 8,647 | ||||||||||||||||||
Borrowings | (337 | ) | (559 | ) | 222 | 4,831 | 2,101 | 2,730 | ||||||||||||||||
Subordinated debentures | 814 | 862 | (48 | ) | 61 | 12 | 49 | |||||||||||||||||
Total interest expense | 15,942 | 5,440 | 10,502 | 15,216 | 3,790 | 11,426 | ||||||||||||||||||
Net interest income | $ | 26,222 | $ | 31,068 | $ | (4,846 | ) | $ | 22,469 | $ | 26,595 | $ | (4,126 | ) | ||||||||||
During 2015, the provision for loan losses totaled $3.2 million, compared to $3.1 million in 2014. The higher provision for loan losses in 2015 compared to 2014 was due to continued loan growth. Commercial loan net charge-offs were $3.2 million, residential mortgage loan net charge-offs were $219,000 and consumer loan net charge-offs were $1.6of $1.1 million for the year ending December 31, 2015.
2018.
Twelve Months Ended | 2014 - 2015 | |||||||||||||||||||||||||||
December 31 | December 31 | Amount | Percent | December 31 | Amount | Percent | ||||||||||||||||||||||
2016 | 2015 | Change | Change | 2014 | Change | Change | ||||||||||||||||||||||
Non-interest Income | ||||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 5,404 | $ | 4,807 | $ | 597 | 12.4 | % | $ | 4,085 | $ | 722 | 17.7 | % | ||||||||||||||
Wire transfer fees | 806 | 633 | 173 | 27.3 | % | 557 | 76 | 13.6 | % | |||||||||||||||||||
Interchange fees | 7,042 | 5,591 | 1,451 | 26.0 | % | 4,649 | 942 | 20.3 | % | |||||||||||||||||||
Fiduciary activities | 6,621 | 5,637 | 984 | 17.5 | % | 4,738 | 899 | 19.0 | % | |||||||||||||||||||
Gain on sale of investment securities | 1,836 | 189 | 1,647 | 871.4 | % | 988 | (799 | ) | -80.9 | % | ||||||||||||||||||
Gain on sale of mortgage loans | 11,675 | 10,055 | 1,620 | 16.1 | % | 8,395 | 1,660 | 19.8 | % | |||||||||||||||||||
Mortgage servicing net of impairment | 1,908 | 993 | 915 | 92.1 | % | 805 | 188 | 23.4 | % | |||||||||||||||||||
Increase in cash surrender value of bank owned life insurance | 1,643 | 1,249 | 394 | 31.5 | % | 1,047 | 202 | 19.3 | % | |||||||||||||||||||
Death benefit on officer life insurance | — | 145 | (145 | ) | 100.0 | % | — | 145 | 0.0 | % | ||||||||||||||||||
Other income | 1,039 | 1,103 | (64 | ) | -5.8 | % | 1,013 | 90 | 8.9 | % | ||||||||||||||||||
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|
|
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|
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|
| |||||||||||||||||||
Totalnon-interest income | $ | 37,974 | $ | 30,402 | $ | 7,572 | 24.9 | % | $ | 26,277 | $ | 4,125 | 15.7 | % | ||||||||||||||
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HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ended | 2018 - 2019 | Twelve Months Ended | 2017 - 2018 | |||||||||||||||||||||||||||||
Non-interest Income | December 31 2019 | December 31 2018 | Amount Change | Percent Change | December 31 2018 | December 31 2017 | Amount Change | Percent Change | ||||||||||||||||||||||||
Service charges on deposit accounts | $ | 9,959 | $ | 7,762 | $ | 2,197 | 28.3 | % | $ | 7,762 | $ | 6,383 | $ | 1,379 | 21.6 | % | ||||||||||||||||
Wire transfer fees | 653 | 612 | 41 | 6.7 | % | 612 | 658 | (46 | ) | -7.0 | % | |||||||||||||||||||||
Interchange fees | 7,655 | 5,715 | 1,940 | 33.9 | % | 5,715 | 5,104 | 611 | 12.0 | % | ||||||||||||||||||||||
Fiduciary activities | 8,580 | 7,827 | 753 | 9.6 | % | 7,827 | 7,894 | (67 | ) | -0.8 | % | |||||||||||||||||||||
Gain (loss) on sale of investment securities | (75 | ) | (443 | ) | 368 | -83.1 | % | (443 | ) | 38 | (481 | ) | -1265.8 | % | ||||||||||||||||||
Gain on sale of mortgage loans | 9,208 | 6,613 | 2,595 | 39.2 | % | 6,613 | 7,906 | (1,293 | ) | -16.4 | % | |||||||||||||||||||||
Mortgage servicing net of impairment | 1,914 | 2,120 | (206 | ) | -9.7 | % | 2,120 | 1,583 | 537 | 33.9 | % | |||||||||||||||||||||
Increase in cash surrender value of bank owned life insurance | 2,190 | 1,912 | 278 | 14.5 | % | 1,912 | 1,797 | 115 | 6.4 | % | ||||||||||||||||||||||
Death benefit on officer life insurance | 580 | 154 | 426 | 276.6 | % | 154 | — | 154 | 100.0 | % | ||||||||||||||||||||||
Other income | 2,394 | 2,141 | 253 | 11.8 | % | 2,141 | 1,773 | 368 | 20.8 | % | ||||||||||||||||||||||
Total non-interest income | $ | 43,058 | $ | 34,413 | $ | 8,645 | 25.1 | % | $ | 34,413 | $ | 33,136 | $ | 1,277 | 3.9 | % | ||||||||||||||||
The increase in service charges on deposit accounts and interchange fee income in 2016 compared to 2015 was the result of growth in transactional deposit accounts and volume during 2016. Fiduciary activities income increased $984,000 during 2016 as a result of an increase in assets under management.
The increase in service charges on deposit accounts and interchange fee income in 2015 compared to 2014 was the result of growth in transactional deposit accounts and volume during 2015. Fiduciary activities income increased $899,000 during 2015 as a result of an increase in assets under management. During 2015, the Company originated approximately $302.4 million of mortgage loans to be sold on the secondary market, compared to $229.2 million in 2014. This increase in volume, partially offset by a decrease in the percentage earned on the sale of mortgage loans, increasedresulted in an increase in the overall gain on sale of mortgage loans by $1.7of $2.6 million compared to the prior year. Gain on the sale of investment securities increased $368,000 in 2019. Mortgage servicing net of impairment increased by $188,000$206,000 during 20152019 compared to 2014 due2018. The increase in service charges on deposit accounts and interchange fee income in 2019 compared to a larger portfolio2018 was the result of the deposits acquired from Salin, in addition to organic growth in transactional deposit accounts and volume during 2019.
growth in transactional deposit accounts and volume during 2018.
Twelve Months Ended | 2014 - 2015 | |||||||||||||||||||||||||||
December 31 | December 31 | Amount | Percent | December 31 | Amount | Percent | ||||||||||||||||||||||
2016 | 2015 | Change | Change | 2014 | Change | Change | ||||||||||||||||||||||
Non-interest Expense | ||||||||||||||||||||||||||||
Salaries | $ | 30,445 | $ | 25,284 | $ | 5,161 | 20.4 | % | $ | 22,859 | $ | 2,425 | 10.6 | % | ||||||||||||||
Commission and bonuses | 6,484 | 6,008 | 476 | 7.9 | % | 4,111 | 1,897 | 46.1 | % | |||||||||||||||||||
Employee benefits | 7,084 | 6,420 | 664 | 10.3 | % | 5,712 | 708 | 12.4 | % | |||||||||||||||||||
Net occupancy expenses | 8,322 | 6,400 | 1,922 | 30.0 | % | 5,607 | 793 | 14.1 | % | |||||||||||||||||||
Data processing | 5,367 | 4,251 | 1,116 | 26.3 | % | 3,663 | 588 | 16.1 | % | |||||||||||||||||||
Professional fees | 2,752 | 2,070 | 682 | 32.9 | % | 1,731 | 339 | 19.6 | % | |||||||||||||||||||
Outside services and consultants | 7,863 | 5,735 | 2,128 | 37.1 | % | 3,250 | 2,485 | 76.5 | % | |||||||||||||||||||
Loan expense | 5,582 | 5,379 | 203 | 3.8 | % | 4,770 | 609 | 12.8 | % | |||||||||||||||||||
FDIC deposit insurance | 1,559 | 1,499 | 60 | 4.0 | % | 1,175 | 324 | 27.6 | % | |||||||||||||||||||
Other losses | 684 | 432 | 252 | 58.3 | % | (70 | ) | 502 | -717.1 | % | ||||||||||||||||||
Other expense | 13,269 | 10,715 | 2,554 | 23.8 | % | 9,138 | 1,577 | 17.3 | % | |||||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||||
Totalnon-interest expense | $ | 89,411 | $ | 74,193 | $ | 15,218 | 20.5 | % | $ | 61,946 | $ | 12,247 | 19.8 | % | ||||||||||||||
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|
HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ended | 2018 - 2019 | Twelve Months Ended | 2017 - 2018 | |||||||||||||||||||||||||||||
Non-interest Expense | December 31 2019 | December 31 2018 | Amount Change | Percent Change | December 31 2018 | December 31 2017 | Amount Change | Percent Change | ||||||||||||||||||||||||
Salaries | $ | 46,319 | $ | 40,857 | $ | 5,462 | 13.4 | % | $ | 40,857 | $ | 36,503 | $ | 4,354 | 11.9 | % | ||||||||||||||||
Commission and bonuses | 6,861 | 5,547 | 1,314 | 23.7 | % | 5,547 | 6,225 | (678 | ) | -10.9 | % | |||||||||||||||||||||
Employee benefits | 12,026 | 10,219 | 1,807 | 17.7 | % | 10,219 | 8,647 | 1,572 | 18.2 | % | ||||||||||||||||||||||
Net occupancy expenses | 12,157 | 10,482 | 1,675 | 16.0 | % | 10,482 | 9,535 | 947 | 9.9 | % | ||||||||||||||||||||||
Data processing | 8,480 | 6,816 | 1,664 | 24.4 | % | 6,816 | 5,914 | 902 | 15.3 | % | ||||||||||||||||||||||
Professional fees | 1,946 | 1,926 | 20 | 1.0 | % | 1,926 | 2,490 | (564 | ) | -22.7 | % | |||||||||||||||||||||
Outside services and consultants | 8,152 | 5,271 | 2,881 | 54.7 | % | 5,271 | 7,018 | (1,747 | ) | -24.9 | % | |||||||||||||||||||||
Loan expense | 8,633 | 6,341 | 2,292 | 36.1 | % | 6,341 | 4,970 | 1,371 | 27.6 | % | ||||||||||||||||||||||
FDIC deposit insurance | 252 | 1,444 | (1,192 | ) | -82.5 | % | 1,444 | 1,046 | 398 | 38.0 | % | |||||||||||||||||||||
Other losses | 740 | 665 | 75 | 11.3 | % | 665 | 368 | 297 | 80.7 | % | ||||||||||||||||||||||
Other expenses | 16,466 | 12,948 | 3,518 | 27.2 | % | 12,948 | 12,097 | 851 | 7.0 | % | ||||||||||||||||||||||
Total non-interest expense | $ | 122,032 | $ | 102,516 | $ | 19,516 | 19.0 | % | $ | 102,516 | $ | 94,813 | $ | 7,703 | 8.1 | % | ||||||||||||||||
Salary
Salary expense, commission and bonuses, employee benefits, net occupancy expense and other expense increased by $2.4 million $1.9 million, $708,000, $793,000 and $1.6 million, respectively, duewas recorded to the Peoples merger, Horizon’s investment in growth markets and overall growth. Data processing and other expenses increased during 2015 from the cost of continued growth and expansion and the Peoples merger. Outside services and consultants increased primarily due to the fees associated with the Peoples acquisition. Loan expense increased in 2015 compared to 2014 due to company growth and collection costs. Other losses increased in 2015 compared to 2014 due to the recovery of a previously recorded loss contingency in 2014 and higherone-time losses in 2015.
Income Taxes
Income tax expense for 2016 was $8.8 million, compared to $7.2 million ofincome tax expense during 2015. the fourth quarter of 2017. Partially offsetting these decreases to income tax expense was an increase in income before income tax expense of $15.6 million when comparing 2018 to the prior year.
reform of interest rate benchmarks on our operations, see “Risk Factors – Risks Related to Our Business.”
Non-GAAP Reconciliation See the following tables for reconciliations of Net Interest Margin
(Dollarsthe
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31 | September 30 | December 31 | December 31 | |||||||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net Interest Margin As Reported | ||||||||||||||||||||||||
Net interest income | $ | 20,939 | $ | 24,410 | $ | 20,222 | $ | 85,992 | $ | 74,734 | $ | 62,983 | ||||||||||||
Average interest-earning assets | 2,932,145 | 2,957,944 | 2,369,301 | 2,683,383 | 2,166,006 | 1,794,263 | ||||||||||||||||||
Net interest income as a percent of average interest- earning assets (“Net Interest Margin”) | 2.92 | % | 3.37 | % | 3.50 | % | 3.29 | % | 3.56 | % | 3.62 | % | ||||||||||||
Impact of Prepayment Penalties on Borrowings | ||||||||||||||||||||||||
Interest expense from prepayment penalties on borrowings | $ | 4,839 | $ | — | $ | — | $ | 4,839 | $ | — | $ | — | ||||||||||||
Impact of Acquisitions | ||||||||||||||||||||||||
Interest income from acquisition-related purchase accounting adjustments | $ | (900 | ) | $ | (459 | ) | $ | (695 | ) | $ | (2,304 | ) | $ | (2,977 | ) | $ | (2,745 | ) | ||||||
Excluding Impact of Prepayment Penalties and Acquisitions | ||||||||||||||||||||||||
Net interest income | $ | 24,878 | $ | 23,951 | $ | 19,527 | $ | 88,527 | $ | 71,757 | $ | 60,238 | ||||||||||||
Average interest-earning assets | 2,932,145 | 2,957,944 | 2,369,301 | 2,683,383 | 2,166,006 | 1,794,263 | ||||||||||||||||||
Core Net Interest Margin | 3.45 | % | 3.31 | % | 3.38 | % | 3.38 | % | 3.42 | % | 3.47 | % |
HORIZON BANCORPAND SUBSIDIARIES
this Form
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Non-GAAP Reconciliation of Net Interest Margin | ||||||||||||
Net interest income as reported | $ | 160,791 | $ | 134,569 | $ | 112,100 | ||||||
Average interest-earning assets | 4,470,450 | 3,697,938 | 3,074,464 | |||||||||
Net interest income as a percentage of average interest-earning assets (“Net Interest Margin”) | 3.69 | % | 3.71 | % | 3.75 | % | ||||||
Acquisition-related purchase accounting adjustments (“PAUs”) | (5,590 | ) | (6,089 | ) | (3,484 | ) | ||||||
Core net interest income | 155,201 | 128,480 | 108,616 | |||||||||
Core net interest margin | 3.57 | % | 3.54 | % | 3.64 | % | ||||||
December 31 2019 | September 30 2019 | June 30 2019 | March 31 2019 | December 31 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 |
Twelve Months Ended | ||||||||||||
December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Non-GAAP Reconciliation of Net Income | ||||||||||||
Net income as reported | $ | 23,912 | $ | 20,549 | $ | 18,101 | ||||||
Merger expenses | 6,827 | 4,889 | 1,335 | |||||||||
Tax effect | (1,998 | ) | (1,585 | ) | (467 | ) | ||||||
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Net income excluding merger expenses | 28,741 | 23,853 | 18,969 | |||||||||
Gain on sale of investment securities | (1,836 | ) | (189 | ) | (988 | ) | ||||||
Tax effect | 643 | 66 | 346 | |||||||||
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Net income excluding gain on sale of investment securities | 27,548 | 23,730 | 18,327 | |||||||||
Death benefit on bank owned life insurance (“BOLI”) | — | (145 | ) | — | ||||||||
Tax effect | — | 51 | — | |||||||||
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Net income excluding death benefit on BOLI | 27,548 | 23,636 | 18,327 | |||||||||
Prepayment penalties on borrowings | 4,839 | — | — | |||||||||
Tax effect | (1,694 | ) | — | — | ||||||||
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Net income excluding prepayment penalties on borrowings | $ | 30,693 | $ | 23,636 | $ | 18,327 | ||||||
Acquisition-related purchase accounting adjustments (“PAUs”) | (2,304 | ) | (2,977 | ) | (2,745 | ) | ||||||
Tax effect | 807 | 1,042 | 961 | |||||||||
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Net income excluding PAUs | $ | 29,196 | $ | 21,701 | $ | 16,543 | ||||||
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Non-GAAP Reconciliation of Diluted Earnings per Share | ||||||||||||
Diluted earnings per share as reported | $ | 1.19 | $ | 1.26 | $ | 1.27 | ||||||
Merger expenses | 0.34 | 0.30 | 0.09 | |||||||||
Tax effect | (0.10 | ) | (0.10 | ) | (0.03 | ) | ||||||
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Diluted earnings per share excluding merger expenses | 1.43 | 1.46 | 1.33 | |||||||||
Gain on sale of investment securities | (0.09 | ) | (0.01 | ) | (0.07 | ) | ||||||
Tax effect | 0.03 | 0.00 | 0.02 | |||||||||
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Net income excluding gain on sale of investment securities | 1.37 | 1.46 | 1.28 | |||||||||
Death benefit on BOLI | — | (0.01 | ) | — | ||||||||
Tax effect | — | 0.00 | — | |||||||||
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| |||||||
Net income excluding death benefit on BOLI | 1.37 | 1.45 | 1.28 | |||||||||
Prepayment penalties on borrowings | 0.24 | — | — | |||||||||
Tax effect | (0.08 | ) | — | — | ||||||||
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Net income excluding prepayment penalties on borrowings | 1.53 | 1.45 | 1.28 | |||||||||
Acquisition-related PAUs | (0.11 | ) | (0.18 | ) | (0.19 | ) | ||||||
Tax effect | 0.03 | 0.06 | 0.07 | |||||||||
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Diluted earnings per share excluding PAUs | $ | 1.45 | $ | 1.33 | $ | 1.16 | ||||||
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HORIZON BANCORPAND SUBSIDIARIES
Data, Unaudited)
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Non-GAAP Reconciliation of Net Income | ||||||||||||
Net income as reported | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Merger expenses | 5,650 | 487 | 3,656 | |||||||||
Tax effect | (987 | ) | (102 | ) | (1,003 | ) | ||||||
Net income excluding merger expenses | 71,201 | 53,502 | 35,770 | |||||||||
(Gain)/loss on sale of investment securities | 75 | 443 | (38 | ) | ||||||||
Tax effect | (16 | ) | (93 | ) | 13 | |||||||
Net income excluding loss on sale of investment securities | 71,260 | 53,852 | 35,745 | |||||||||
Death benefit on bank owned life insurance (“BOLI”) | (580 | ) | (154 | ) | — | |||||||
Net income excluding death benefit on BOLI | 70,680 | 53,698 | 35,745 | |||||||||
Core Net Income | $ | 70,680 | $ | 53,698 | $ | 37,719 | ||||||
Non-GAAP Reconciliation of Diluted Earnings per Share | ||||||||||||
Diluted earnings per share (“EPS”) as reported | $ | 1.53 | $ | 1.38 | $ | 0.95 | ||||||
Merger expenses | 0.13 | 0.01 | 0.11 | |||||||||
Tax effect | (0.02 | ) | — | (0.03 | ) | |||||||
Diluted EPS excluding merger expenses | 1.64 | 1.39 | 1.03 | |||||||||
(Gain)/loss on sale of investment securities | — | 0.01 | — | |||||||||
Tax effect | — | — | — | |||||||||
Diluted EPS excluding loss on sale of investment securities | 1.64 | 1.40 | 1.03 | |||||||||
Death benefit on BOLI | (0.01 | ) | — | — | ||||||||
Diluted EPS excluding death benefit on BOLI | 1.63 | 1.40 | 1.03 | |||||||||
Core Diluted EPS | $ | 1.63 | $ | 1.40 | $ | 1.09 | ||||||
Twelve Months Ended | ||||||||||||
December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Non-GAAP Reconciliation of Return on Average Assets | ||||||||||||
Average Assets | $ | 2,961,622 | $ | 2,360,485 | $ | 1,950,289 | ||||||
Return on average assets as reported | 0.81 | % | 0.87 | % | 0.93 | % | ||||||
Merger expenses | 0.23 | % | 0.21 | % | 0.07 | % | ||||||
Tax effect | -0.07 | % | -0.07 | % | -0.02 | % | ||||||
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Excluding merger expenses | 0.97 | % | 1.01 | % | 0.97 | % | ||||||
Gain on sale of investment securities | -0.06 | % | -0.01 | % | -0.05 | % | ||||||
Tax effect | 0.02 | % | 0.00 | % | 0.02 | % | ||||||
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| |||||||
Excluding gain on sale of investment securities | 0.93 | % | 1.01 | % | 0.94 | % | ||||||
Death benefit on BOLI | 0.00 | % | -0.01 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
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| |||||||
Excluding death benefit on BOLI | 0.93 | % | 1.00 | % | 0.94 | % | ||||||
Prepayment penalties on borrowings | 0.16 | % | 0.00 | % | 0.00 | % | ||||||
Tax effect | -0.06 | % | 0.00 | % | 0.00 | % | ||||||
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Excluding prepayment penalties on borrowings | 1.04 | % | 1.00 | % | 0.94 | % | ||||||
Acquisition-related PAUs | -0.08 | % | -0.13 | % | -0.14 | % | ||||||
Tax effect | 0.03 | % | 0.04 | % | 0.05 | % | ||||||
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Excluding PAUs | 0.99 | % | 0.92 | % | 0.85 | % | ||||||
Non-GAAP Reconciliation of Return on Average Common Equity | ||||||||||||
Average Common Equity | $ | 301,485 | $ | 207,014 | $ | 169,449 | ||||||
Return on average common equity as reported | 7.92 | % | 9.87 | % | 10.60 | % | ||||||
Merger expenses | 2.26 | % | 2.36 | % | 0.79 | % | ||||||
Tax effect | -0.66 | % | -0.77 | % | -0.28 | % | ||||||
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Excluding merger expenses | 9.52 | % | 11.46 | % | 11.12 | % | ||||||
Gain on sale of investment securities | -0.61 | % | -0.09 | % | -0.58 | % | ||||||
Tax effect | 0.21 | % | 0.03 | % | 0.20 | % | ||||||
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Excluding gain on sale of investment securities | 9.12 | % | 11.40 | % | 10.74 | % | ||||||
Death benefit on BOLI | 0.00 | % | -0.07 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | 0.02 | % | 0.00 | % | ||||||
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Excluding death benefit on BOLI | 9.12 | % | 11.36 | % | 10.74 | % | ||||||
Prepayment penalties on borrowings | 1.61 | % | 0.00 | % | 0.00 | % | ||||||
Tax effect | -0.56 | % | 0.00 | % | 0.00 | % | ||||||
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Excluding prepayment penalties on borrowings | 10.17 | % | 11.36 | % | 10.74 | % | ||||||
Acquisition-related PAUs | -0.76 | % | -1.44 | % | -1.62 | % | ||||||
Tax effect | 0.27 | % | 0.50 | % | 0.57 | % | ||||||
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Excluding PAUs | 9.67 | % | 10.42 | % | 9.68 | % |
HORIZON BANCORPAND SUBSIDIARIES
Thousands, Unaudited)
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Non-GAAP Reconciliation of Return on Average Assets | ||||||||||||
Average assets | $ | 4,933,058 | $ | 4,062,635 | $ | 3,396,873 | ||||||
Return on average assets (“ROAA”) as reported | 1.35 | % | 1.31 | % | 0.97 | % | ||||||
Merger expenses | 0.11 | % | 0.01 | % | 0.11 | % | ||||||
Tax effect | -0.02 | % | 0.00 | % | -0.03 | % | ||||||
ROAA excluding merger expenses | 1.44 | % | 1.32 | % | 1.05 | % | ||||||
(Gain)/loss on sale of investment securities | 0.00 | % | 0.01 | % | 0.00 | % | ||||||
Tax effect | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
ROAA excluding loss on sale of investment securities | 1.44 | % | 1.33 | % | 1.05 | % | ||||||
Death benefit on bank owned life insurance (“BOLI”) | -0.01 | % | 0.00 | % | 0.00 | % | ||||||
ROAA excluding death benefit on BOLI | 1.43 | % | 1.33 | % | 1.05 | % | ||||||
Core ROAA | 1.43 | % | 1.33 | % | 1.10 | % | ||||||
Non-GAAP Reconciliation of Return on Average Common Equity | ||||||||||||
Average Common Equity | $ | 605,719 | $ | 473,420 | $ | 378,709 | ||||||
Return on average common equity (“ROACE”) as reported | 10.98 | % | 11.22 | % | 8.74 | % | ||||||
Merger expenses | 0.93 | % | 0.10 | % | 0.97 | % | ||||||
Tax effect | -0.16 | % | -0.02 | % | -0.26 | % | ||||||
ROACE excluding merger expenses | 11.75 | % | 11.30 | % | 9.45 | % | ||||||
(Gain)/loss on sale of investment securities | 0.01 | % | 0.09 | % | -0.01 | % | ||||||
Tax effect | 0.00 | % | -0.02 | % | 0.00 | % | ||||||
ROACE excluding loss on sale of investment securities | 11.76 | % | 11.37 | % | 9.44 | % | ||||||
Death benefit on bank owned life insurance (“BOLI”) | -0.10 | % | -0.03 | % | 0.00 | % | ||||||
ROACE excluding death benefit on BOLI | 11.66 | % | 11.34 | % | 9.44 | % | ||||||
Core ROACE | 11.66 | % | 11.34 | % | 9.96 | % | ||||||
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 | % | ||||||||||||||||
Non- GAAP Allowance for Loan and Lease Loss Detail
As of December 31, 2016
(Dollars in Thousands, Unaudited)
Horizon | ||||||||||||||||||||||||||||||||
Legacy | Heartland | Summit | Peoples | Kosciusko | LaPorte | CNB | Total | |||||||||||||||||||||||||
Pre-discount loan balance | $ | 1,636,945 | $ | 16,046 | $ | 55,042 | $ | 148,467 | $ | 81,946 | $ | 202,407 | $ | 10,303 | $ | 2,151,156 | ||||||||||||||||
Allowance for loan losses (ALLL) | 14,833 | 4 | — | — | — | — | — | 14,837 | ||||||||||||||||||||||||
Loan discount | N/A | 1,083 | 2,475 | 3,323 | 997 | 6,971 | 321 | 15,170 | ||||||||||||||||||||||||
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ALLL+loan discount | 14,833 | 1,087 | 2,475 | 3,323 | 997 | 6,971 | 321 | 30,007 | ||||||||||||||||||||||||
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Loans, net | $ | 1,622,112 | $ | 14,959 | $ | 52,567 | $ | 145,144 | $ | 80,949 | $ | 195,436 | $ | 9,982 | $ | 2,121,149 | ||||||||||||||||
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ALLL/pre-discount loan balance | 0.91 | % | 0.02 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.69 | % | ||||||||||||||||
Loan discount/pre-discount loan balance | N/A | 6.75 | % | 4.50 | % | 2.24 | % | 1.22 | % | 3.44 | % | 3.12 | % | 0.71 | % | |||||||||||||||||
ALLL+loan discount/pre-discount loan balance | 0.91 | % | 6.77 | % | 4.50 | % | 2.24 | % | 1.22 | % | 3.44 | % | 3.12 | % | 1.39 | % |
HORIZON BANCORPAND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(Table dollars in thousands except per share data)
2019.
After one | After three | After | ||||||||||||||||||
Within | but within | but within | five | |||||||||||||||||
Total | one year | three years | five years | years | ||||||||||||||||
Remaining contractual maturities of time deposits | $ | 475,843 | $ | 257,071 | $ | 149,172 | $ | 47,380 | $ | 22,220 | ||||||||||
Borrowings | 267,489 | 203,610 | 55,285 | 8,164 | 430 | |||||||||||||||
Subordinated debentures | 37,456 | — | — | — | 37,456 | |||||||||||||||
Loan Commitments | 808,299 | 254,063 | 554,236 | — | — | |||||||||||||||
Letters of credit | 969 | 2 | 967 | — | — | |||||||||||||||
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Total | $ | 1,590,056 | $ | 714,746 | $ | 752,161 | $ | 57,543 | $ | 65,606 | ||||||||||
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Total | Within One Year | After one but within three years | After three but within five years | After five years | ||||||||||||||||
Remaining contractual maturities of time deposits | $ | 975,612 | $ | 747,022 | $ | 204,313 | $ | 22,995 | $ | 1,282 | ||||||||||
Borrowings | 549,741 | 276,970 | 67,324 | 80,299 | 125,148 | |||||||||||||||
Subordinated debentures | 56,311 | — | — | — | 56,311 | |||||||||||||||
Loan commitments | 958,690 | 310,025 | 648,665 | — | — | |||||||||||||||
Letters of credit | 17,252 | 7,053 | 10,199 | — | — | |||||||||||||||
Total | $ | 2,557,606 | $ | 1,340,728 | $ | 930,844 | $ | 103,189 | $ | 182,845 | ||||||||||
HORIZON BANCORPAND SUBSIDIARIES
3 Months or Less | > 3 Months & </= 6 Months | > 6 Months & </= 1 Year | Greater Than 1 Year | Total | ||||||||||||||||
Loans | $ | 1,429,780 | $ | 213,752 | $ | 350,923 | $ | 1,646,474 | $ | 3,640,929 | ||||||||||
Federal funds sold | 5,646 | — | — | — | 5,646 | |||||||||||||||
Interest-earning balances with banks | 17,343 | — | — | — | 17,343 | |||||||||||||||
Investment securities and FHLB stock | 49,549 | 36,893 | 84,662 | 894,018 | 1,065,122 | |||||||||||||||
Other assets | — | — | — | 517,789 | 517,789 | |||||||||||||||
Total assets | $ | 1,502,318 | $ | 250,645 | $ | 435,585 | $ | 3,058,281 | $ | 5,246,829 | ||||||||||
Noninterest-bearing deposits | $ | 16,786 | $ | 16,786 | $ | 33,572 | $ | 642,616 | $ | 709,760 | ||||||||||
Interest-bearing deposits | 376,119 | 292,509 | 399,566 | 2,153,048 | 3,221,242 | |||||||||||||||
Borrowed funds | 117,874 | 98,950 | 6,086 | 383,142 | 606,052 | |||||||||||||||
Other liabilities | — | — | — | 53,752 | 53,752 | |||||||||||||||
Stockholders’ equity | — | — | — | 656,023 | 656,023 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 510,779 | $ | 408,245 | $ | 439,224 | $ | 3,888,581 | $ | 5,246,829 | ||||||||||
GAP | $ | 991,539 | $ | (157,600 | ) | $ | (3,639 | ) | $ | (830,300 | ) | |||||||||
Cumulative GAP | $ | 991,539 | $ | 833,939 | $ | 830,300 |
Rate Sensitivity | ||||||||||||||||||||
> 3 Months | Greater | |||||||||||||||||||
3 Months | & < 6 | > 6 Months | Than 1 | |||||||||||||||||
or Less | Months | & < 1 Year | Year | Total | ||||||||||||||||
Loans | $ | 825,794 | $ | 150,925 | $ | 223,235 | $ | 944,119 | $ | 2,144,073 | ||||||||||
Federal Funds Sold | 3,098 | — | — | — | 3,098 | |||||||||||||||
Interest-Bearing balances with Banks | 19,022 | — | — | — | 19,022 | |||||||||||||||
Investment securities and FRB and FHLB stock | 52,524 | 26,609 | 45,498 | 532,326 | 656,957 | |||||||||||||||
Other assets | — | — | — | 318,006 | 318,006 | |||||||||||||||
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Total Assets | $ | 900,438 | $ | 177,534 | $ | 268,733 | $ | 1,794,451 | $ | 3,141,156 | ||||||||||
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Noninterest-bearing deposits | $ | 13,498 | $ | 13,498 | $ | 26,996 | $ | 442,256 | $ | 496,248 | ||||||||||
Interest-bearing deposits | 116,459 | 116,287 | 176,047 | 1,566,169 | 1,974,962 | |||||||||||||||
Borrowed Funds | 124,105 | 7,978 | 20,939 | 151,923 | 304,945 | |||||||||||||||
Other Liabilities | — | — | — | 24,146 | 24,146 | |||||||||||||||
Stockholders’ equity | — | — | — | 340,855 | 340,855 | |||||||||||||||
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Total liabilities and stockholder’s equity | $ | 254,062 | $ | 137,763 | $ | 223,982 | $ | 2,525,349 | $ | 3,141,156 | ||||||||||
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GAP | $ | 646,376 | $ | 39,771 | $ | 44,751 | $ | (730,898 | ) | |||||||||||
Cumulative GAP | $ | 646,376 | $ | 686,147 | $ | 730,898 |
HORIZON BANCORPAND SUBSIDIARIES
2025 | Fair Value December 31 | |||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | & Beyond | Total | 2019 | |||||||||||||||||||||||||
Rate-sensitive assets | ||||||||||||||||||||||||||||||||
Fixed interest rate loans | $ | 689,022 | $ | 367,287 | $ | 215,722 | $ | 131,021 | $ | 69,181 | $ | 109,563 | $ | 1,581,796 | $ | 1,420,685 | ||||||||||||||||
Average interest rate | 4.89 | % | 4.83 | % | 4.96 | % | 5.01 | % | 4.97 | % | 4.78 | % | 4.89 | % | ||||||||||||||||||
Variable interest rate loans | 1,319,167 | 148,803 | 133,360 | 107,601 | 99,296 | 250,906 | 2,059,133 | 2,138,354 | ||||||||||||||||||||||||
Average interest rate | 4.70 | % | 4.36 | % | 4.46 | % | 4.52 | % | 4.27 | % | 3.87 | % | 4.53 | % | ||||||||||||||||||
Total loans | 2,008,189 | 516,090 | 349,082 | 238,622 | 168,477 | 360,469 | 3,640,929 | 3,559,039 | ||||||||||||||||||||||||
Average interest rate | 4.76 | % | 4.69 | % | 4.77 | % | 4.79 | % | 4.56 | % | 4.15 | % | 4.68 | % | ||||||||||||||||||
Securities, including FHLB stock | 177,407 | 106,642 | 83,685 | 69,485 | 62,792 | 565,111 | 1,065,122 | 1,071,425 | ||||||||||||||||||||||||
Average interest rate | 2.47 | % | 3.17 | % | 3.18 | % | 3.08 | % | 3.16 | % | 3.54 | % | 3.24 | % | ||||||||||||||||||
Other interest-earning assets | 22,989 | — | — | — | — | — | 22,989 | 22,989 | ||||||||||||||||||||||||
Average interest rate | 5.61 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 5.61 | % | ||||||||||||||||||
Total earning assets | $ | 2,208,585 | $ | 622,732 | $ | 432,767 | $ | 308,107 | $ | 231,269 | $ | 925,580 | $ | 4,729,040 | $ | 4,653,453 | ||||||||||||||||
Average interest rate | 4.59 | % | 4.43 | % | 4.46 | % | 4.40 | % | 4.18 | % | 3.77 | % | 4.36 | % | ||||||||||||||||||
Rate-sensitive liabilities | ||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 67,145 | $ | 60,792 | $ | 55,041 | $ | 49,834 | $ | 45,120 | $ | 431,828 | $ | 709,760 | $ | 709,760 | ||||||||||||||||
NOW accounts | 77,857 | 67,689 | 58,849 | 51,163 | 44,481 | 296,109 | 596,148 | 574,709 | ||||||||||||||||||||||||
Average interest rate | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | ||||||||||||||||||
Savings and money market accounts | 243,331 | 206,992 | 176,134 | 149,924 | 127,656 | 745,445 | 1,649,482 | 1,627,824 | ||||||||||||||||||||||||
Average interest rate | 0.82 | % | 0.81 | % | 0.80 | % | 0.80 | % | 0.79 | % | 0.74 | % | 0.78 | % | ||||||||||||||||||
Certificates of deposit | 747,006 | 122,957 | 48,181 | 33,175 | 22,995 | 1,298 | 975,612 | 978,235 | ||||||||||||||||||||||||
Average interest rate | 2.05 | % | 2.15 | % | 1.90 | % | 2.28 | % | 1.93 | % | 0.76 | % | 2.06 | % | ||||||||||||||||||
Total deposits | 1,135,339 | 458,430 | 338,205 | 284,096 | 240,252 | 1,474,680 | 3,931,002 | 3,890,528 | ||||||||||||||||||||||||
Average interest rate | 1.53 | % | 0.96 | % | 0.71 | % | 0.71 | % | 0.63 | % | 0.40 | % | 0.86 | % | ||||||||||||||||||
Fixed interest rate borrowings | 174,015 | 26,692 | 127,933 | 80 | 80,047 | 50,033 | 458,800 | 460,631 | ||||||||||||||||||||||||
Average interest rate | 1.04 | % | 2.21 | % | 1.80 | % | 3.32 | % | 1.66 | % | 2.69 | % | 1.60 | % | ||||||||||||||||||
Variable interest rate borrowings | 147,252 | — | — | — | — | — | 147,252 | 138,172 | ||||||||||||||||||||||||
Average interest rate | 2.35 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 2.35 | % | ||||||||||||||||||
Total funds | $ | 1,456,606 | $ | 485,122 | $ | 466,138 | $ | 284,176 | $ | 320,299 | $ | 1,524,713 | $ | 4,537,054 | $ | 4,489,331 | ||||||||||||||||
Average interest rate | 1.56 | % | 1.03 | % | 1.01 | % | 0.71 | % | 0.89 | % | 0.48 | % | 0.98 | % |
Fair Value | ||||||||||||||||||||||||||||||||
2022 | December 31 | |||||||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | & Beyond | Total | 2016 | |||||||||||||||||||||||||
Rate-sensitive assets | ||||||||||||||||||||||||||||||||
Fixed interest rate loans | $ | 442,447 | $ | 210,532 | $ | 137,396 | $ | 83,172 | $ | 45,380 | $ | 74,691 | $ | 993,618 | $ | 895,233 | ||||||||||||||||
Average interest rate | 4.50 | % | 4.55 | % | 4.54 | % | 4.52 | % | 4.53 | % | 4.57 | % | 4.52 | % | ||||||||||||||||||
Variable interest rate loans | 751,349 | 80,145 | 70,570 | 57,912 | 52,088 | 138,391 | 1,150,455 | 1,201,126 | ||||||||||||||||||||||||
Average interest rate | 4.13 | % | 4.26 | % | 4.22 | % | 4.14 | % | 4.08 | % | 3.66 | % | 4.08 | % | ||||||||||||||||||
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| |||||||||||||||||
Total loans | 1,193,796 | 290,677 | 207,966 | 141,084 | 97,468 | 213,082 | 2,144,073 | 2,096,359 | ||||||||||||||||||||||||
Average interest rate | 4.26 | % | 4.47 | % | 4.43 | % | 4.36 | % | 4.29 | % | 3.98 | % | 4.29 | % | ||||||||||||||||||
Securities, including FRB and FHLB stock | 124,632 | 79,663 | 61,179 | 53,727 | 43,832 | 293,923 | 656,957 | 661,093 | ||||||||||||||||||||||||
Average interest rate | 2.42 | % | 2.55 | % | 2.42 | % | 2.92 | % | 3.27 | % | 3.83 | % | 3.16 | % | ||||||||||||||||||
Other interest-bearing assets | 22,120 | — | — | — | — | — | 22,120 | 22,120 | ||||||||||||||||||||||||
Average interest rate | 2.38 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 2.38 | % | ||||||||||||||||||
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Total earnings assets | $ | 1,340,548 | $ | 370,340 | $ | 269,145 | $ | 194,811 | $ | 141,300 | $ | 507,005 | $ | 2,823,149 | $ | 2,779,572 | ||||||||||||||||
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| |||||||||||||||||
Average interest rate | 4.06 | % | 4.06 | % | 3.98 | % | 3.97 | % | 4.06 | % | 3.89 | % | 4.01 | % | ||||||||||||||||||
Rate-sensitive liabilities | ||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 53,992 | $ | 48,117 | $ | 42,882 | $ | 38,217 | $ | 34,059 | $ | 278,981 | $ | 496,248 | $ | 496,248 | ||||||||||||||||
NOW accounts | 45,964 | 41,794 | 38,004 | 34,557 | 31,422 | 315,021 | 506,762 | 468,264 | ||||||||||||||||||||||||
Average interest rate | 0.09 | % | 0.09 | % | 0.09 | % | 0.09 | % | 0.09 | % | 0.09 | % | 0.09 | % | ||||||||||||||||||
Savings and money market accounts | 105,526 | 93,984 | 83,740 | 74,646 | 66,568 | 567,894 | 992,358 | 907,801 | ||||||||||||||||||||||||
Average interest rate | 0.18 | % | 0.18 | % | 0.18 | % | 0.17 | % | 0.17 | % | 0.16 | % | 0.17 | % | ||||||||||||||||||
Certificates of deposit | 257,304 | 75,178 | 73,602 | 31,629 | 15,632 | 22,498 | 475,843 | 463,104 | ||||||||||||||||||||||||
Average interest rate | 0.81 | % | 1.10 | % | 1.36 | % | 1.58 | % | 1.47 | % | 1.57 | % | 1.05 | % | ||||||||||||||||||
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Total deposits | 462,786 | 259,073 | 238,228 | 179,049 | 147,681 | 1,184,394 | 2,471,211 | 2,335,415 | ||||||||||||||||||||||||
Average interest rate | 0.50 | % | 0.40 | % | 0.50 | % | 0.37 | % | 0.25 | % | 0.13 | % | 0.29 | % | ||||||||||||||||||
Fixed interest rate borrowings | 134,065 | 32,019 | 10,856 | 1,333 | 10,642 | 1,930 | 190,845 | 191,662 | ||||||||||||||||||||||||
Average interest rate | 0.54 | % | 1.17 | % | 1.69 | % | 1.94 | % | 2.48 | % | 2.82 | % | 0.85 | % | ||||||||||||||||||
Variable interest rate borrowings | 114,100 | — | — | — | — | — | 114,100 | 111,905 | ||||||||||||||||||||||||
Average interest rate | 2.46 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 2.46 | % | ||||||||||||||||||
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| |||||||||||||||||
Total funds | $ | 710,951 | $ | 291,092 | $ | 249,084 | $ | 180,382 | $ | 158,323 | $ | 1,186,324 | $ | 2,776,156 | $ | 2,638,982 | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
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|
|
| |||||||||||||||||
Average interest rate | 0.82 | % | 0.48 | % | 0.55 | % | 0.38 | % | 0.40 | % | 0.14 | % | 0.42 | % |
HORIZON BANCORPAND SUBSIDIARIES
Page | ||||
Consolidated Financial Statements | ||||
65 | ||||
66 | ||||
67 | ||||
68 | ||||
69 | ||||
70 | ||||
133 | ||||
| ||||
138 |
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Cash and due from banks | $ | 70,832 | $ | 48,650 | ||||
Investment securities, available for sale | 439,831 | 444,982 | ||||||
Investment securities, held to maturity (fair value of $194,086 and $193,703) | 193,194 | 187,629 | ||||||
Loans held for sale | 8,087 | 7,917 | ||||||
Loans, net of allowance for loan losses of $14,837 and $14,534 | 2,121,149 | 1,734,597 | ||||||
Premises and equipment, net | 66,357 | 60,798 | ||||||
Federal Reserve and Federal Home Loan Bank stock | 23,932 | 13,823 | ||||||
Goodwill | 76,941 | 49,600 | ||||||
Other intangible assets | 9,366 | 7,371 | ||||||
Interest receivable | 12,713 | 10,535 | ||||||
Cash value of life insurance | 74,134 | 54,504 | ||||||
Other assets | 44,620 | 31,995 | ||||||
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| |||||
Total assets | $ | 3,141,156 | $ | 2,652,401 | ||||
|
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| |||||
Liabilities | ||||||||
Deposits | ||||||||
Non-interest bearing | $ | 496,248 | $ | 335,955 | ||||
Interest bearing | 1,974,962 | 1,544,198 | ||||||
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|
|
| |||||
Total deposits | 2,471,210 | 1,880,153 | ||||||
Borrowings | 267,489 | 449,347 | ||||||
Subordinated debentures | 37,456 | 32,797 | ||||||
Interest payable | 472 | 507 | ||||||
Other liabilities | 23,674 | 22,765 | ||||||
|
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|
| |||||
Total liabilities | 2,800,301 | 2,385,569 | ||||||
|
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| |||||
Commitments and contingent liabilities | ||||||||
Stockholders’ Equity | ||||||||
Preferred stock, Authorized, 1,000,000 shares | ||||||||
Series B shares $.01 par value, $1,000 liquidation value | ||||||||
Issued 0 and 12,500 shares | — | 12,500 | ||||||
Common stock, no par value | ||||||||
Authorized, 66,000,000 shares (1) | ||||||||
Issued, 22,192,530 and 17,992,986 shares (1) | ||||||||
Outstanding, 22,171,596 and 17,909,831 shares (1) | — | — | ||||||
Additionalpaid-in capital | 182,326 | 106,370 | ||||||
Retained earnings | 164,173 | 148,685 | ||||||
Accumulated other comprehensive loss | (5,644 | ) | (723 | ) | ||||
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| |||||
Total stockholders’ equity | 340,855 | 266,832 | ||||||
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| |||||
Total liabilities and stockholders’ equity | $ | 3,141,156 | $ | 2,652,401 | ||||
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|
|
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 | 834,776 | 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 | 66,628 | 40,467 | ||||||
Total assets | 5,246,829 | $ | 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 | 50,690 | 25,068 | ||||||
Total liabilities | 4,590,806 | 3,754,696 | ||||||
Commitments and contingent liabilities | ||||||||
Stockholders’ Equity | ||||||||
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares | — | — | ||||||
Common stock, 0 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 | 5,246,829 | $ | 4,246,688 | |||||
Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Interest Income | ||||||||||||
Loans receivable | $ | 91,569 | $ | 75,373 | $ | 62,435 | ||||||
Investment securities | ||||||||||||
Taxable | 10,039 | 8,721 | 9,344 | |||||||||
Tax exempt | 4,921 | 4,494 | 4,426 | |||||||||
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| |||||||
Total interest income | 106,529 | 88,588 | 76,205 | |||||||||
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Interest Expense | ||||||||||||
Deposits | 6,616 | 5,559 | 5,257 | |||||||||
Borrowed funds | 11,807 | 6,286 | 5,956 | |||||||||
Subordinated debentures | 2,114 | 2,009 | 2,009 | |||||||||
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| |||||||
Total interest expense | 20,537 | 13,854 | 13,222 | |||||||||
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| |||||||
Net Interest Income | 85,992 | 74,734 | 62,983 | |||||||||
Provision for loan losses | 1,842 | 3,162 | 3,058 | |||||||||
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| |||||||
Net Interest Income after Provision for Loan Losses | 84,150 | 71,572 | 59,925 | |||||||||
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| |||||||
Non-interest Income | ||||||||||||
Service charges on deposit accounts | 5,404 | 4,807 | 4,085 | |||||||||
Wire transfer fees | 806 | 633 | 557 | |||||||||
Interchange fees | 7,042 | 5,591 | 4,649 | |||||||||
Fiduciary activities | 6,621 | 5,637 | 4,738 | |||||||||
Gain on sale of investment securities (includes $1,836, $189 and $988 for the years ended December 31, 2016, 2015 and | ||||||||||||
2014 related to accumulated other comprehensive earnings reclassifications) | 1,836 | 189 | 988 | |||||||||
Gain on sale of mortgage loans | 11,675 | 10,055 | 8,395 | |||||||||
Mortgage servicing income net of impairment | 1,908 | 993 | 805 | |||||||||
Increase in cash value of bank owned life insurance | 1,643 | 1,249 | 1,047 | |||||||||
Death benefit on bank owned life insurance | — | 145 | — | |||||||||
Other income | 1,039 | 1,103 | 1,013 | |||||||||
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| |||||||
Totalnon-interest income | 37,974 | 30,402 | 26,277 | |||||||||
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Non-interest Expense | ||||||||||||
Salaries and employee benefits | 44,013 | 37,712 | 32,682 | |||||||||
Net occupancy expenses | 8,322 | 6,400 | 5,607 | |||||||||
Data processing | 5,367 | 4,251 | 3,663 | |||||||||
Professional fees | 2,752 | 2,070 | 1,731 | |||||||||
Outside services and consultants | 7,863 | 5,735 | 3,250 | |||||||||
Loan expense | 5,582 | 5,379 | 4,770 | |||||||||
FDIC insurance expense | 1,559 | 1,499 | 1,175 | |||||||||
Other losses | 684 | 432 | (70 | ) | ||||||||
Other expense | 13,269 | 10,715 | 9,138 | |||||||||
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|
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| |||||||
Totalnon-interest expense | 89,411 | 74,193 | 61,946 | |||||||||
|
|
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|
|
| |||||||
Income Before Income Tax | 32,713 | 27,781 | 24,256 | |||||||||
Income tax expense (includes $643, $66 and $346 for the years ended December 31, 2016, 2015 and 2014 related to income tax expense from reclassification items) | 8,801 | 7,232 | 6,155 | |||||||||
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|
|
|
|
| |||||||
Net Income | 23,912 | 20,549 | 18,101 | |||||||||
Preferred stock dividend | (42 | ) | (125 | ) | (133 | ) | ||||||
|
|
|
|
|
| |||||||
Net Income Available to Common Shareholders | $ | 23,870 | $ | 20,424 | $ | 17,968 | ||||||
|
|
|
|
|
| |||||||
Basic Earnings Per Share (1) | $ | 1.19 | $ | 1.30 | $ | 1.32 | ||||||
Diluted Earnings Per Share (1) | 1.19 | 1.26 | 1.27 |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Interest Income | ||||||||||||
Loans receivable | $ | 183,631 | $ | 147,478 | $ | 112,329 | ||||||
Investment securities | ||||||||||||
Taxable | 12,606 | 10,621 | 9,086 | |||||||||
Tax exempt | 12,095 | 8,069 | 7,068 | |||||||||
Total interest income | 208,332 | 166,168 | 128,483 | |||||||||
Interest Expense | ||||||||||||
Deposits | 33,690 | 18,225 | 7,901 | |||||||||
Borrowed funds | 10,672 | 11,009 | 6,178 | |||||||||
Subordinated debentures | 3,179 | 2,365 | 2,304 | |||||||||
Total interest expense | 47,541 | 31,599 | 16,383 | |||||||||
Net Interest Income | 160,791 | 134,569 | 112,100 | |||||||||
Provision for loan losses | 1,976 | 2,906 | 2,470 | |||||||||
Net Interest Income after Provision for Loan Losses | 158,815 | 131,663 | 109,630 | |||||||||
Non-interest Income | ||||||||||||
Service charges on deposit accounts | 9,959 | 7,762 | 6,383 | |||||||||
Wire transfer fees | 653 | 612 | 658 | |||||||||
Interchange fees | 7,655 | 5,715 | 5,104 | |||||||||
Fiduciary activities | 8,580 | 7,827 | 7,894 | |||||||||
Gains (losses) on sale of investment securities (includes $(75), $(443) and $38 for the years ended December 31, 2019, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassificiations) | (75 | ) | (443 | ) | 38 | |||||||
Gain on sale of mortgage loans | 9,208 | 6,613 | 7,906 | |||||||||
Mortgage servicing income net of impairment | 1,914 | 2,120 | 1,583 | |||||||||
Increase in cash value of bank owned life insurance | 2,190 | 1,912 | 1,797 | |||||||||
Death benefit on bank owned life insurance | 580 | 154 | — | |||||||||
Other income | 2,394 | 2,141 | 1,773 | |||||||||
Total non-interest income | 43,058 | 34,413 | 33,136 | |||||||||
Non-interest Expense | ||||||||||||
Salaries and employee benefits | 65,206 | 56,623 | 51,375 | |||||||||
Net occupancy expenses | 12,157 | 10,482 | 9,535 | |||||||||
Data processing | 8,480 | 6,816 | 5,914 | |||||||||
Professional fees | 1,946 | 1,926 | 2,490 | |||||||||
Outside services and consultants | 8,152 | 5,271 | 7,018 | |||||||||
Loan expense | 8,633 | 6,341 | 4,970 | |||||||||
FDIC insurance expense | 252 | 1,444 | 1,046 | |||||||||
Other losses | 740 | 665 | 368 | |||||||||
Other expense | 16,466 | 12,948 | 12,097 | |||||||||
Total non-interest expense | 122,032 | 102,516 | 94,813 | |||||||||
Income Before Income Taxes | 79,841 | 63,560 | 47,953 | |||||||||
Income tax expense (includes $(16), $(93) and $13 for the years ended December 31, 2019, 2018 and 2017, respectively, related to income tax expense (benefit) from reclassification items) | 13,303 | 10,443 | 14,836 | |||||||||
Net Income Available to Common Shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Basic Earnings Per Share | $ | 1.53 | $ | 1.39 | $ | 0.96 | ||||||
Diluted Earnings Per Share | 1.53 | 1.38 | 0.95 |
Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Net Income | $ | 23,912 | $ | 20,549 | $ | 18,101 | ||||||
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| |||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments: | ||||||||||||
Change in fair value of derivative instruments for the period | 9 | 195 | (511 | ) | ||||||||
Income tax effect | (3 | ) | (68 | ) | 179 | |||||||
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| |||||||
Changes from derivative instruments | 6 | 127 | (332 | ) | ||||||||
|
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| |||||||
Change in securities: | ||||||||||||
Unrealized appreciation (depreciation) for the period on AFS securities | (5,091 | ) | (2,910 | ) | 4,841 | |||||||
Amortization from transfer of securities fromavailable-for-sale toheld-to-maturity securities | (653 | ) | (549 | ) | 1,658 | |||||||
Reclassification adjustment for securities gains realized in income | (1,836 | ) | (189 | ) | (988 | ) | ||||||
Income tax effect | 2,653 | 1,277 | (1,929 | ) | ||||||||
|
|
|
|
|
| |||||||
Unrealized gains (losses) on securities | (4,927 | ) | (2,371 | ) | 3,582 | |||||||
|
|
|
|
|
| |||||||
Other Comprehensive Income (Loss), Net of Tax | (4,921 | ) | (2,244 | ) | 3,250 | |||||||
|
|
|
|
|
| |||||||
Comprehensive Income | $ | 18,991 | $ | 18,305 | $ | 21,351 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net Income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments: | ||||||||||||
Change in fair value of derivative instruments for the period | (2,680 | ) | (32 | ) | 1,404 | |||||||
Income tax effect | 563 | 7 | (491 | ) | ||||||||
Changes from derivative instruments | (2,117 | ) | (25 | ) | 913 | |||||||
Change in securities: | ||||||||||||
Unrealized appreciation (depreciation) for the period on AFS securities | 21,173 | (5,067 | ) | 2,110 | ||||||||
Amortization from transfer of securities from available for sale to held to maturity securities | (117 | ) | (190 | ) | (256 | ) | ||||||
Reclassification adjustment for securities (gains) losses realized in income | 75 | 443 | (38 | ) | ||||||||
Income tax effect | (4,438 | ) | 1,012 | (636 | ) | |||||||
Unrealized gains (losses) on securities | 16,693 | (3,802 | ) | 1,180 | ||||||||
Other Comprehensive Income (Loss), Net of Tax | 14,576 | (3,827 | ) | 2,093 | ||||||||
Comprehensive Income | $ | 81,114 | $ | 49,290 | $ | 35,210 | ||||||
Accumulated | ||||||||||||||||||||
Additional | Other | |||||||||||||||||||
Preferred | Paid-in | Retained | Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
Balances, January 1, 2014 | $ | 12,500 | $ | 32,496 | $ | 121,253 | $ | (1,729 | ) | $ | 164,520 | |||||||||
Net income | 18,101 | 18,101 | ||||||||||||||||||
Other comprehensive income, net of tax | 3,250 | 3,250 | ||||||||||||||||||
Amortization of unearned compensation | 363 | 363 | ||||||||||||||||||
Stock issued stock plans | 165 | 165 | ||||||||||||||||||
Stock option expense | 203 | 203 | ||||||||||||||||||
Stock issued from acquisition | 12,689 | 12,689 | ||||||||||||||||||
Cash dividends on preferred stock (1.06%) | (133 | ) | (133 | ) | ||||||||||||||||
Cash dividends on common stock ($0.34 per share) | (4,744 | ) | (4,744 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balances, December 31, 2014 | $ | 12,500 | $ | 45,916 | $ | 134,477 | $ | 1,521 | $ | 194,414 | ||||||||||
Net income | 20,549 | 20,549 | ||||||||||||||||||
Other comprehensive loss, net of tax | (2,244 | ) | (2,244 | ) | ||||||||||||||||
Amortization of unearned compensation | 355 | 355 | ||||||||||||||||||
Stock issued stock plans | 554 | 554 | ||||||||||||||||||
Exercise of stock warrants | 3,751 | 3,751 | ||||||||||||||||||
Stock option expense | 288 | 288 | ||||||||||||||||||
Stock issued from acquisition | 55,506 | 55,506 | ||||||||||||||||||
Cash dividends on preferred stock (1.00%) | (125 | ) | (125 | ) | ||||||||||||||||
Cash dividends on common stock ($0.39 per share) | (6,216 | ) | (6,216 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balances, December 31, 2015 | $ | 12,500 | $ | 106,370 | $ | 148,685 | $ | (723 | ) | $ | 266,832 | |||||||||
Net income | 23,912 | 23,912 | ||||||||||||||||||
Other comprehensive income, net of tax | (4,921 | ) | (4,921 | ) | ||||||||||||||||
Redemption of preferred stock | (12,500 | ) | (12,500 | ) | ||||||||||||||||
Amortization of unearned compensation | 284 | 284 | ||||||||||||||||||
Stock option expense | 324 | 324 | ||||||||||||||||||
Stock issued stock plans | 572 | 572 | ||||||||||||||||||
Stock issued in Kosciusko acquisition | 14,470 | 14,470 | ||||||||||||||||||
Stock issued in LaPorte acquisition | 60,306 | 60,306 | ||||||||||||||||||
Cash dividends on preferred stock (1.00%) | (42 | ) | (42 | ) | ||||||||||||||||
Cash dividends on common stock ($0.41 per share) | (8,382 | ) | (8,382 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balances, December 31, 2016 | $ | — | $ | 182,326 | $ | 164,173 | $ | (5,644 | ) | $ | 340,855 | |||||||||
|
|
|
|
|
|
|
|
|
|
Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balances, January 1, 2017 | $ | — | $ | — | $ | 182,326 | $ | 164,173 | $ | (5,644 | ) | $ | 340,855 | |||||||||||
Net income | — | — | — | 33,117 | — | 33,117 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | 2,093 | 2,093 | ||||||||||||||||||
Amortization of unearned compensation | — | — | 135 | — | — | 135 | ||||||||||||||||||
Exercise of stock options | — | — | 1,604 | — | — | 1,604 | ||||||||||||||||||
Stock option expense | — | — | 325 | — | — | 325 | ||||||||||||||||||
Stock issued in Lafayette acquisition | — | — | 28,558 | — | — | 28,558 | ||||||||||||||||||
Stock issued in Wolverine acquisition | — | — | 62,111 | — | — | 62,111 | ||||||||||||||||||
Cash dividends on common stock ($0.33 per share) (Restated - See Note 1) | — | — | — | (11,720 | ) | — | (11,720 | ) | ||||||||||||||||
Balances, December 31, 2017 | $ | — | $ | — | $ | 275,059 | $ | 185,570 | $ | (3,551 | ) | $ | 457,078 | |||||||||||
Net income | — | — | — | 53,117 | — | 53,117 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (3,827 | ) | (3,827 | ) | ||||||||||||||||
Amortization of unearned compensation | — | — | 169 | — | — | 169 | ||||||||||||||||||
Exercise of stock options | — | — | 493 | — | — | 493 | ||||||||||||||||||
Stock option expense | — | — | 251 | — | — | 251 | ||||||||||||||||||
Stock issued stock plans | — | — | 129 | — | — | 129 | ||||||||||||||||||
Reclassification of tax adjustment on accumulated other comprehensive loss | — | — | — | 766 | (766 | ) | — | |||||||||||||||||
Cash dividends on common stock ($0.40 per share) (Restated - See Note 1) | — | — | — | (15,418 | ) | — | (15,418 | ) | ||||||||||||||||
Balances, December 31, 2018 | $ | — | $ | — | $ | 276,101 | $ | 224,035 | $ | (8,144 | ) | $ | 491,992 | |||||||||||
Net income | — | — | — | 66,538 | — | 66,538 | ||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 14,576 | 14,576 | ||||||||||||||||||
Amortization of unearned compensation | — | — | 705 | — | — | 705 | ||||||||||||||||||
Exercise of stock options | — | — | 236 | — | — | 236 | ||||||||||||||||||
Stock option expense | — | — | 215 | — | — | 215 | ||||||||||||||||||
Stock issued stock plans | — | — | 1,469 | — | — | 1,469 | ||||||||||||||||||
Stock issued in Salin acquisition | — | — | 102,722 | — | — | 102,722 | ||||||||||||||||||
Repurchase of outstanding stock | — | — | (1,595 | ) | — | — | (1,595 | ) | ||||||||||||||||
Cash dividends on common stock ($0.46 per share) | — | — | — | (20,835 | ) | — | (20,835 | ) | ||||||||||||||||
Balances, December 31, 2019 | $ | — | $ | — | $ | 379,853 | $ | 269,738 | $ | 6,432 | $ | 656,023 | ||||||||||||
Twelve Months Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 23,912 | $ | 20,549 | $ | 18,101 | ||||||
Items not requiring (providing) cash | ||||||||||||
Provision for loan losses | 1,842 | 3,162 | 3,058 | |||||||||
Depreciation and amortization | 5,275 | 4,152 | 3,779 | |||||||||
Share based compensation | 324 | 288 | 203 | |||||||||
Mortgage servicing rights net (recovery) impairment | 110 | 59 | (51 | ) | ||||||||
Premium amortization on securities available for sale, net | 6,162 | 3,420 | 2,299 | |||||||||
Gain on sale of investment securities | (1,836 | ) | (189 | ) | (988 | ) | ||||||
Gain on sale of mortgage loans | (11,675 | ) | (10,055 | ) | (8,395 | ) | ||||||
Proceeds from sales of loans | 328,377 | 310,700 | 234,776 | |||||||||
Loans originated for sale | (316,875 | ) | (302,419 | ) | (229,243 | ) | ||||||
Change in cash value of life insurance | (1,618 | ) | (1,224 | ) | (1,007 | ) | ||||||
Gain (Loss) on sale of other real estate owned | 261 | (289 | ) | (186 | ) | |||||||
Net change in | ||||||||||||
Interest receivable | (544 | ) | (1,010 | ) | (398 | ) | ||||||
Interest payable | (275 | ) | (11 | ) | (50 | ) | ||||||
Other assets | 489 | 8,569 | (4,945 | ) | ||||||||
Other liabilities | (8,381 | ) | (472 | ) | 712 | |||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 25,548 | 35,230 | 17,665 | |||||||||
|
|
|
|
|
| |||||||
Investing Activities | ||||||||||||
Purchases of securities available for sale | (225,555 | ) | (244,195 | ) | (93,375 | ) | ||||||
Proceeds from sales, maturities, calls, and principal repayments of securities available for sale | 269,587 | 121,724 | 117,533 | |||||||||
Purchases of securities held to maturity | (45,832 | ) | (32,605 | ) | (4,839 | ) | ||||||
Proceeds from maturities of securities held to maturity | 30,843 | 7,155 | 13,851 | |||||||||
Change in FHLB stock | (5,448 | ) | 268 | 4,972 | ||||||||
Net change in loans | 32,099 | (156,340 | ) | (190,838 | ) | |||||||
Proceeds on the sale of OREO and repossessed assets | 2,572 | 3,014 | 2,726 | |||||||||
Change in premises and equipment, net | (1,383 | ) | (5,622 | ) | (6,255 | ) | ||||||
Acquisition of SCB, net of cash received | — | — | 7,914 | |||||||||
Acquisition of Peoples, net of cash received | — | 182,413 | — | |||||||||
Acquisition of Kosciusko, net of cash received | 30,437 | — | — | |||||||||
Acquisition of LaPorte, net of cash received | 116,521 | — | — | |||||||||
Acquisition of CNB, net of cash received | 22,549 | — | — | |||||||||
Purchase of Mortgage Company | — | — | (735 | ) | ||||||||
|
|
|
|
|
| |||||||
Net cash provided by (used in) investing activities | 226,390 | (124,188 | ) | (149,046 | ) | |||||||
|
|
|
|
|
| |||||||
Financing Activities | ||||||||||||
Net change in | ||||||||||||
Deposits | 46,590 | 46,747 | 69,780 | |||||||||
Borrowings | (255,994 | ) | 49,421 | 78,068 | ||||||||
Redemption of preferred stock | (12,500 | ) | — | — | ||||||||
Proceeds from issuance of stock | 572 | 4,305 | 165 | |||||||||
Dividends paid on common shares | (8,382 | ) | (6,216 | ) | (4,744 | ) | ||||||
Dividends paid on preferred shares | (42 | ) | (125 | ) | (133 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash provided by (used in) financing activities | (229,756 | ) | 94,132 | 143,136 | ||||||||
|
|
|
|
|
| |||||||
Net Change in Cash and Cash Equivalents | 22,182 | 5,174 | 11,755 | |||||||||
Cash and Cash Equivalents, Beginning of Period | 48,650 | 43,476 | 31,721 | |||||||||
|
|
|
|
|
| |||||||
Cash and Cash Equivalents, End of Period | $ | 70,832 | $ | 48,650 | $ | 43,476 | ||||||
|
|
|
|
|
|
Continued
HORIZON BANCORPAND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollar Amounts in Thousands)
Twelve Months Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Additional Supplemental Information | ||||||||||||
Interest paid | $ | 20,572 | $ | 13,844 | $ | 13,230 | ||||||
Income taxes paid | 6,916 | 4,123 | 2,800 | |||||||||
Transfer of loans to other real estate owned | 3,679 | 5,567 | 3,905 | |||||||||
Transfer ofavailable-for-sale securities toheld-to-maturity | — | — | 167,047 | |||||||||
The Company purchased all of the capital stock of Kosciusko for $22,983 on June 1, 2016. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | 155,873 | — | — | |||||||||
Less: common stock issued | 14,470 | — | — | |||||||||
Cash paid for the capital stock | 8,513 | — | — | |||||||||
Liabilities assumed | 132,890 | — | — | |||||||||
The Company purchased all of the capital stock of LaPorte Bancorp for $98,634 on July 18, 2016. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | 549,412 | — | — | |||||||||
Less: common stock issued | 60,306 | — | — | |||||||||
Cash paid for the capital stock | 38,328 | — | — | |||||||||
Liabilities assumed | 450,778 | — | — | |||||||||
The Company purchased all of the capital stock of CNB Bancorp for $5,311 on November 7, 2016. In conjunction with the acquisition, liabilities were assumed as follows: | — | — | ||||||||||
Fair value of assets acquired | 56,219 | — | — | |||||||||
Less: cash paid for the capital stock | 5,311 | — | — | |||||||||
Liabilities assumed | 50,908 | — | — | |||||||||
The Company purchased all of the capital stock of Summit for $18,896 on April 3, 2014 and Peoples for $78,147 on July 1, 2015. In conjunction with the acquisition, liabilities were assumed as follows: | ||||||||||||
Fair value of assets acquired | — | 485,077 | 158,585 | |||||||||
Cash paid to retire debt | — | — | 1,029 | |||||||||
Less: common stock issued | — | 55,506 | 12,689 | |||||||||
Cash paid for the capital stock | — | 22,641 | 6,207 | |||||||||
Liabilities assumed | — | 406,930 | 138,660 |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Items not requiring (providing) cash | ||||||||||||
Provision for loan losses | 1,976 | 2,906 | 2,470 | |||||||||
Depreciation and amortization | 9,688 | 6,813 | 5,936 | |||||||||
Share based compensation | 215 | 251 | 325 | |||||||||
Mortgage servicing rights, net impairment | 192 | (60 | ) | 80 | ||||||||
Premium amortization on securities, net | 5,929 | 5,798 | 6,024 | |||||||||
Loss (gain) on sale of investment securities | 75 | 443 | (38 | ) | ||||||||
Gain on sale of mortgage loans | (9,208 | ) | (6,613 | ) | (7,906 | ) | ||||||
Proceeds from sales of loans | 275,809 | 197,492 | 231,410 | |||||||||
Loans originated for sale | (269,651 | ) | (188,823 | ) | (218,511 | ) | ||||||
Change in cash value life insurance | (2,190 | ) | (1,912 | ) | (1,797 | ) | ||||||
Death benefit on bank owned life insurance | 580 | 154 | — | |||||||||
Loss (gain) on other real estate owned | (126 | ) | (209 | ) | (4 | ) | ||||||
Net change in: | ||||||||||||
Interest receivable | (2,101 | ) | (1,180 | ) | (2,591 | ) | ||||||
Interest payable | 205 | 1,145 | 152 | |||||||||
Other assets | 97,629 | 2,460 | 6,173 | |||||||||
Other liabilities | (608 | ) | 658 | (5,776 | ) | |||||||
Net cash provided by operating activities | 174,952 | 72,440 | 49,064 | |||||||||
Investing Activities | ||||||||||||
Purchases of securities available for sale | (425,879 | ) | (214,706 | ) | (149,376 | ) | ||||||
Proceeds from sales, maturities, calls and principal repayments of securities available for sale | 248,422 | 123,377 | 85,587 | |||||||||
Purchases of securities held to maturity | — | (28,374 | ) | (31,794 | ) | |||||||
Proceeds from maturities of securities held to maturity | 8,384 | 8,301 | 13,376 | |||||||||
Net change in interest-earning time deposits | 7,289 | 717 | 950 | |||||||||
Change in Federal Reserve and FHLB stock | (803 | ) | 32 | 8,987 | ||||||||
Net change in loans | (59,420 | ) | (182,637 | ) | (251,821 | ) | ||||||
Proceeds on the sale of OREO and repossessed assets | 4,744 | 3,258 | 4,238 | |||||||||
Change in premises and equipment, net | (4,612 | ) | (3,434 | ) | (2,689 | ) | ||||||
Purchases of bank owned life insurance | — | (10,450 | ) | — | ||||||||
Net cash received in acquisition of branch | — | — | 11,000 | |||||||||
Net cash received in acquisition, Lafayette | — | — | 20,425 | |||||||||
Gain on remeasurement of equity interest in Lafayette | — | — | (530 | ) | ||||||||
Net cash received in acquisition, Wolverine | — | — | 12,723 | |||||||||
Net cash received in acquisition, Salin | 128,745 | — | — | |||||||||
Repurchase of outstanding stock | (1,595 | ) | — | — | ||||||||
Net cash provided by (used in) investing activities | (94,725 | ) | (303,916 | ) | (278,924 | ) | ||||||
Financing Activities | ||||||||||||
Net change in: | ||||||||||||
Deposits | 50,282 | 258,373 | (13,360 | ) | ||||||||
Borrowings | (71,040 | ) | (13,589 | ) | 259,895 | |||||||
Proceeds from issuance of stock | 1,705 | 622 | 1,604 | |||||||||
Dividends paid on common stock | (20,835 | ) | (15,418 | ) | (11,720 | ) | ||||||
Net cash provided by (used in) financing activities | (39,888 | ) | 229,988 | 236,419 | ||||||||
Net Change in Cash and Cash Equivalents | 40,339 | (1,488 | ) | 6,559 | ||||||||
Cash and Cash Equivalents, Beginning of Period | 58,492 | 59,980 | 53,421 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 98,831 | $ | 58,492 | $ | 59,980 | ||||||
Additional Supplemental Information | ||||||||||||
Interest paid | $ | 46,510 | $ | 30,454 | $ | 15,969 | ||||||
Income taxes paid | 13,219 | 6,819 | 10,350 | |||||||||
Transfer of loans to other real estate and repossessed assets | 2,700 | 3,005 | 2,411 | |||||||||
Transfer of premises to other real estate | 1,705 | — | — | |||||||||
Right-of-use assets exchanged for lease obligations | 3,411 | — | — | |||||||||
Sale of securities available for sale not yet settled | 6,303 | — | — |
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
in determining fair value. Horizon values its assets and liabilities in the principal market where it sells the particular asset or transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability).
HORIZON BANCORPAND SUBSIDIARIES
Notes
(Table dollars in thousands except for per share data)
InvestmentSecuritiesHeldtoMaturity
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
loan portfolio. The allowance is increased by the provision for credit losses, which is charged against current period operating results and decreased by the amount of charge offs, net of recoveries. Horizon’s methodology for assessing the appropriateness of the allowance consists of several key elements, which include the general allowance, specific allowances for identified problem loans and the qualitative allowance.
Acquired loans not accounted for under ASC
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Salin.
HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Basic earnings per share | ||||||||||||
Net income | $ | 23,912 | $ | 20,549 | $ | 18,101 | ||||||
Less: Preferred stock dividends | 42 | 125 | 133 | |||||||||
|
|
|
|
|
| |||||||
Net income available to common shareholders | $ | 23,870 | $ | 20,424 | $ | 17,968 | ||||||
Weighted average common shares outstanding(1) | 19,987,728 | 15,765,444 | 13,591,053 | |||||||||
Basic earnings per share | $ | 1.19 | $ | 1.30 | $ | 1.32 | ||||||
|
|
|
|
|
| |||||||
Diluted earnings per share | ||||||||||||
Net income available to common shareholders | $ | 23,870 | $ | 20,424 | $ | 17,968 | ||||||
Weighted average common shares outstanding(1) | 19,987,728 | 15,765,444 | 13,591,053 | |||||||||
Effect of dilutive securities: | ||||||||||||
Warrants | — | 330,474 | 473,519 | |||||||||
Restricted stock | 26,553 | 48,015 | 59,214 | |||||||||
Stock options | 68,129 | 53,379 | 57,402 | |||||||||
|
|
|
|
|
| |||||||
Weighted average shares outstanding | 20,082,410 | 16,197,312 | 14,181,188 | |||||||||
Diluted earnings per share | $ | 1.19 | $ | 1.26 | $ | 1.27 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Basic earnings per share | ||||||||||||
Net income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Weighted average common shares outstanding (1) | 43,493,316 | 38,347,059 | 34,553,736 | |||||||||
Basic earnings per share | $ | 1.53 | $ | 1.39 | $ | 0.96 | ||||||
Diluted earnings per share | ||||||||||||
Net income available to common shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Weighted average common shares outstanding (1) | 43,493,316 | 38,347,059 | 34,553,736 | |||||||||
Effect of dilutive securities: | ||||||||||||
Restricted stock | 23,006 | 36,185 | 46,981 | |||||||||
Stock options | 81,273 | 111,987 | 159,721 | |||||||||
Weighted average common shares outstanding | 43,597,595 | 38,495,231 | 34,760,438 | |||||||||
$ | 1.53 | $ | 1.38 | $ | 0.95 | |||||||
(1) | Adjusted for 3:2 stock split on |
At
DividendRestrictions — Regulations
HORIZON BANCORPAND SUBSIDIARIES
2017, respectively.
Reclassifications — Certain reclassifications
Recent Accounting Pronouncements
retained earnings at January 1, 2018.
842)
FASB Accounting Standards UpdatesNo. 2017-01,BusinessCombinations805):ClarifyingtheDefinitionofaBusinessThe FASB has issued Accounting Standards Update (ASU)No. 2017-01,BusinessCombinations(Topic805):ClarifyingtheDefinitionofaBusiness. The amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business. Because the current definition of a business is interpreted broadly and can be difficult to apply, stakeholders indicated that analyzing transactions is inefficient and costly and that the definition does not permit the use of reasonable judgment. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.HORIZON BANCORPAND SUBSIDIARIESNotes to Consolidated Financial Statements(Table dollars in thousands except for per share data)FASB Accounting Standards UpdatesNo. 2016-15,StatementofCashFlows (Topic 230)The FASB has issued Accounting Standards Update (ASU)No. 2016-15,StatementofCashFlows(Topic230)842). This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flow. In November 2016, the FASB issued ASUNo. 2016-18, which gave clarification on how restricted cash was to be presented in the cash flow statement. The Company elected to adopt these updates as of December 31, 2016, and there was no material impact on the consolidated financial statements.FASB Accounting Standards UpdatesNo. 2016-13,FinancialInstruments–CreditLosses (Topic 326):MeasurementofCreditLossesonFinancialInstrumentsThe FASB has issued Accounting Standards Update (ASU)No. 2016-13,FinancialInstruments–CreditLosses(Topic326):MeasurementofCreditLossesonFinancialInstruments. The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates. The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the ASU amends the accounting for credit losses onavailable-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. Early adoption will be permitted beginning after December 15, 2018. We have formed a cross functional committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. We expect to recognize aone-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any suchone-time adjustment or the overall impact of the new guidance on the consolidated financial statements.HORIZON BANCORPAND SUBSIDIARIESNotes to Consolidated Financial Statements(Table dollars in thousands except for per share data)FASB Accounting Standards UpdatesNo. 2016-09,Compensation–StockCompensation (Topic 718):ImprovementstoEmployeeShare-BasedPaymentAccountingThe FASB has issued Accounting Standards Update (ASU)No. 2016-09,Compensation–StockCompensation(Topic718):ImprovementstoEmployeeShared-BasePaymentAccounting. The amendments are intended to improve the accounting for employee shared-base payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The amendments in this update became effective on January 1, 2017 and did not have a material impact on the consolidated financial statements.HORIZON BANCORPAND SUBSIDIARIESNotes to Consolidated Financial Statements(Table dollars in thousands except for per share data)FASB Accounting Standards UpdatesNo. 2016-05,DerivativesandHedging (Topic 815):EffectofDerivativeContractNovationsandExistingHedgeAccountingRelationshipsThe FASB has issued Accounting Standards Update (ASU)No. 2016-05,DerivativesandHedging(Topic815):EffectofDerivativeContractNovationsandExistingHedgeAccountingRelationships. The amendments apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument. The amendments clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, requirede-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in this update became effective for annual periods and interim periods within those annual periods beginning after December 15, 2016, and did not have a material impact on the consolidated financial statements.FASB Accounting Standards UpdatesNo. 2016-02,Leases (Topic 842)The FASB has issued Accounting Standards Update (ASU)No. 2016-02,Leases.Based on leases outstanding asDecember 31, 2016, we do not expectJanuary 1, 2019, the new standard to haveCompany recorded a material impact on our income statement, but anticipate$80 million to $100 million increase in our assetsoperating lease liability of $3.4 million.
FASB Accounting Standards UpdatesNo. 2016-01,FinancialInstruments–Overall (Subtopic825-10):Recognition Assets andMeasurementofFinancialAssetsandFinancialLiabilities
HORIZON BANCORPAND SUBSIDIARIES
FASB
The FASB has issued Accounting Standards Update (ASU)No. 2015-16,BusinessCombinations(Topic805):SimplifyingtheAccountingforMeasurement-PeriodAdjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments.
U.S. GAAP currently requires that during the measurement period, the acquirer retrospectively adjust the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill. Those adjustments are required when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. The acquirer also must revise comparative information for prior periods presented in financial statements as needed, including revising depreciation, amortization, or other income effects as a result of changes made to provisional amounts.
The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.
The amendments require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.
For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.
The only disclosures required at transition should be the nature of and reason for the change in accounting principle. An entity should disclose that information in the first annual period of adoption and in the interim periods within the first annual period if there is a measurement-period adjustment during the first annual period in which the changes are effective.
FASB Accounting Standards UpdateNo. 2015-15,Interest—ImputationofInterest (Subtopic835-30),PresentationandSubsequentMeasurementofDebtIssuanceCostsAssociatedwithLine-of-CreditArrangements
The FASB has issued Accounting Standards Update (ASU)No. 2015-15,Interest-ImputationofInterest(Subtopic835-30):PresentationandSubsequentMeasurementofDebtIssuanceCostsAssociatedwithLine-of-CreditArrangements-AmendmentstoSECParagraphsPursuanttoStaffAnnouncementatJune18,2015EITFMeeting. This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated withline-of-credit arrangements.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
In April 2015, the FASB issued ASUNo. 2015-03,Interest-ImputationofInterest(Subtopic835-30):SimplifyingthePresentationofDebtIssuanceCosts, which requires the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. ASU2015-03 does not address presentation or subsequent measurement of debt issuance costs related toline-of-credit arrangements.
Given the absence of authoritative guidance within ASU2015-03 for debt issuance costs related toline-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of theline-of-credit arrangement, regardless of whether there are any outstanding borrowings on theline-of-credit arrangement. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.
FASB Accounting Standards UpdateNo. 2015-01,EliminatingtheConceptofExtraordinaryItems
The FASB has issued Accounting Standards Update (ASU)No. 2015-01,IncomeStatement-ExtraordinaryandUnusualItems(Subtopic225-20):SimplifyingIncomeStatementPresentationbyEliminatingtheConceptofExtraordinaryItems. The FASB issued this ASU as part of its initiative to reduce complexity in accounting standards. The objective of the simplification initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements.
This ASU eliminates from U.S. GAAP the concept of extraordinary items. Subtopic225-20,IncomeStatement-ExtraordinaryandUnusualItems, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item.
If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or discloseearnings-per-share data applicable to the extraordinary item. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.
FASB Accounting Standards UpdateNo. 2014-12,Compensation–StockCompensation (Topic 718):AccountingforShare-BasedPaymentsWhentheTermsofanAwardProvideThataPerformanceTargetCouldBeAchievedaftertheRequisiteServicePeriod
The FASB has issued Accounting Standards Update (ASU)No. 2014-12,Compensation–StockCompensation(Topic718):AccountingforShare-BasedPaymentsWhentheTermsofanAwardProvideThataPerformanceTargetCouldBeAchievedaftertheRequisiteServicePeriod. Generally, an award with a performance target also requires an employee to render service until the performance target is achieved. In some cases, however, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. An entity should apply guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the service has already been rendered. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.
FASB Accounting Standards Update No. 2014-09,Codification 606,Customers – (TopicCustomers”
The FASB has issued Accounting Standards Update (ASU) No. 2014-09 creating,RevenuefromContractswithCustomers(Topic606).The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance providesenumerates five steps tothat entities should follow to achieve thein achieving this core principle. An entity should disclose sufficient informationRevenue generated from financial instruments, including loans and investment securities, are not included in the scope of ASC 606. The adoption of ASC 606 did not result in a change to enable usersthe accounting of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We do not expect the new standard, or any of the amendments detailed below, to result in a material change from our current accounting forCompany’s revenue as recognitionstreams that are within the scope of interest income and the larger sourcesamendments. Revenue-gathering activities that are within the scope of non-interest income from Horizon’s current financial instruments would not be impacted by the guidance.
In May 2016, the FASB issued ASU No. 2016-12,RevenuefromContractswithCustomers(Topic606):Narrow-ScopeImprovementsandPracticalExpedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients.
In December 2016, the FASB issued ASU No. 2016-20,Revenue fromContractswithCustomers(Topic606):TechnicalCorrectionsandImprovements.The FASB board decided to issue a separate update for technical corrections and improvements to TopicASC 606 and other Topics amended by ASU No. 2014-09 to increase awarenessthat are presented as
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77
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
customers’ financial assets. Fees are charged based on a standard agreement and are recognized as they are earned.
ASSETS | LIABILITIES | |||||||||||||
Cash and due from banks | $ | 27,860 | Deposits | |||||||||||
Investment securities, available for sale | 16,393 | Non-interest bearing | $ | 24,079 | ||||||||||
NOW accounts | 9,038 | |||||||||||||
Commercial | 2,267 | Savings and money market | 13,829 | |||||||||||
Residential mortgage | 6,624 | Certificates of deposits | 3,342 | |||||||||||
|
| |||||||||||||
Consumer | 1,579 | Total deposits | 50,288 | |||||||||||
|
| |||||||||||||
Total loans | 10,470 | |||||||||||||
Borrowings | 459 | |||||||||||||
Premises and equipment, net | 444 | Interest payable | 7 | |||||||||||
FHLB stock | 50 | Other liabilities | 154 | |||||||||||
Goodwill | 609 | |||||||||||||
Core deposit intangible | 190 | |||||||||||||
Interest receivable | 154 | |||||||||||||
Other assets | 49 | |||||||||||||
|
|
|
| |||||||||||
Total assets purchased | $ | 56,219 | Total liabilities assumed | $ | 50,908 | |||||||||
|
|
|
| |||||||||||
Cash paid | 5,311 | |||||||||||||
|
| |||||||||||||
Total estimated purchase price | $ | 5,311 | ||||||||||||
|
|
if the accounting had been completed as of the acquisition date.
Assets | Liabilities | |||||||||
Cash and due from banks | $ | 152,745 | Deposits | |||||||
Investment securities, available for sale | 54,319 | Non-interest bearing | $ | 188,744 | ||||||
NOW accounts | 207,567 | |||||||||
Loans | Savings and money market | 274,504 | ||||||||
Commercial | 352,798 | Certificates of deposit | 70,529 | |||||||
Residential mortgage | 131,008 | Total deposits | 741,344 | |||||||
Consumer | 85,112 | |||||||||
Total loans | 568,918 | |||||||||
Borrowings | 70,495 | |||||||||
Premises and equipment, net | 20,425 | Subordinated debentures | 18,376 | |||||||
FRB and FHLB stock | 3,571 | Interest payable | 826 | |||||||
Goodwill | 31,358 | Other liabilities | 8,759 | |||||||
Core deposit intangible | 19,818 | |||||||||
Interest receivable | 2,488 | |||||||||
Other assets | 112,880 | |||||||||
Total liabilities assumed | $ | 839,800 | ||||||||
Total assets purchased | $ | 966,522 | ||||||||
Common shares issued | $ | 102,722 | ||||||||
Cash paid | 24,000 | |||||||||
Total purchase price | $ | 126,722 | ||||||||
HORIZON BANCORPAND SUBSIDIARIES
Evidence of credit quality deterioration as of the purchase date may include information such as
Contractually required principal and interest at acquisition | $ | 22,672 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 6,694 | |||
Expected cash flows at acquisition | 15,978 | |||
Interest component of expected cash flows (accretable discount) | 735 | |||
Fair value of acquired loans accounted for under ASC 310-30 | $ | 15,243 | ||
Assets | Liabilities | |||||||||
Cash and due from banks | $ | 44,450 | Deposits | |||||||
Non-interest bearing | $ | 25,221 | ||||||||
Loans | NOW accounts | 8,026 | ||||||||
Commercial | 276,167 | Savings and money market | 129,044 | |||||||
Residential mortgage | 30,603 | Certificates of deposit | 94,688 | |||||||
Consumer | 3,897 | Total deposits | 256,979 | |||||||
Total loans | 310,667 | |||||||||
Premises and equipment, net | 2,941 | Borrowings | 36,970 | |||||||
FRB and FHLB stock | 2,700 | Interest payable | 214 | |||||||
Goodwill | 26,827 | Other liabilities | 6,154 | |||||||
Core deposit intangible | 2,024 | |||||||||
Interest receivable | 584 | |||||||||
Other assets | 3,897 | |||||||||
Total assets purchased | $ | 394,090 | Total liabilities assumed | $ | 300,317 | |||||
Common shares issued | $ | 62,111 | ||||||||
Cash paid | 31,662 | |||||||||
Total purchase price | $ | 93,773 | ||||||||
Contractually required principal and interest at acquisition | $ | 21,912 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 1,832 | |||
Expected cash flows at acquisition | 20,080 | |||
Interest component of expected cash flows (accretable discount) | 2,267 | |||
Fair value of acquired loans accounted for under ASC 310-30 | $ | 17,813 | ||
ASSETS | LIABILITIES | |||||||||||||
Cash and due from banks | $ | 154,849 | Deposits | |||||||||||
Investment securities, available for sale | 23,779 | Non-interest bearing | $ | 66,733 | ||||||||||
NOW accounts | 99,346 | |||||||||||||
Commercial | 153,750 | Savings and money market | 117,688 | |||||||||||
Residential mortgage | 42,603 | Certificates of deposits | 87,605 | |||||||||||
|
| |||||||||||||
Consumer | 16,801 | Total deposits | 371,372 | |||||||||||
Mortgage Warehousing | 99,752 | |||||||||||||
|
| |||||||||||||
Total loans | 312,906 | |||||||||||||
Borrowings | 64,793 | |||||||||||||
Premises and equipment, net | 6,022 | Interest payable | 178 | |||||||||||
FHLB stock | 4,029 | Subordinated debt | 4,504 | |||||||||||
Goodwill | 20,290 | Other liabilities | 9,931 | |||||||||||
Core deposit intangible | 2,514 | |||||||||||||
Interest receivable | 844 | |||||||||||||
Cash value of life insurance | 15,267 | |||||||||||||
Other assets | 8,912 | |||||||||||||
|
|
|
| |||||||||||
Total assets purchased | $ | 549,412 | Total liabilities assumed | $ | 450,778 | |||||||||
|
|
|
| |||||||||||
Common shares issued | $ | 60,306 | ||||||||||||
Cash paid | 38,328 | |||||||||||||
|
| |||||||||||||
Total estimated purchase price | $ | 98,634 | ||||||||||||
|
|
Assets | Liabilities | |||||||||||
Cash and due from banks | $ | 24,846 | Deposits | |||||||||
Investment securities, available for sale | 6 | Non-interest bearing | $ | 34,990 | ||||||||
NOW accounts | 30,174 | |||||||||||
Loans | Savings and money market | 53,663 | ||||||||||
Commercial | 116,258 | Certificates of deposit | 32,520 | |||||||||
Residential mortgage | 12,761 | Total deposits | 151,347 | |||||||||
Consumer | 5,280 | |||||||||||
Total loans | 134,299 | |||||||||||
Premises and equipment, net | 7,818 | Interest payable | 42 | |||||||||
FHLB stock | 395 | Other liabilities | 990 | |||||||||
Goodwill | 15,408 | |||||||||||
Core deposit intangible | 2,085 | |||||||||||
Interest receivable | 338 | |||||||||||
Other assets | 1,649 | |||||||||||
Total assets purchased | $ | 186,844 | Total liabilities assumed | $ | 152,379 | |||||||
Common shares issued | $ | 30,044 | (1) | |||||||||
Cash paid | 4,421 | |||||||||||
Total purchase price | $ | 34,465 | ||||||||||
(1) | This includes $955,000 of common shares previously held by Horizon. |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Contractually required principal and interest at acquisition | $ | 12,545 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 4,492 | |||
|
| |||
Expected cash flows at acquisition | 8,053 | |||
Interest component of expected cash flows (accretable discount) | 1,258 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 6,795 | ||
|
|
September 1, 2017.
Contractually required principal and interest at acquisition | $ | 6,128 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 1,326 | |||
Expected cash flows at acquisition | 4,802 | |||
Interest component of expected cash flows (accretable discount) | 933 | |||
Fair value of acquired loans accounted for under ASC 310-30 | $ | 3,869 | ||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Kosciusko acquisition is detailed in the following table.
ASSETS | LIABILITIES | |||||||||||||
Cash and due from banks | $ | 38,950 | Deposits | |||||||||||
Investment securities, available for sale | 1,191 | Non-interest bearing | $ | 27,871 | ||||||||||
NOW accounts | 35,213 | |||||||||||||
Commercial | 70,006 | Savings and money market | 26,953 | |||||||||||
Residential mortgage | 26,244 | Certificates of deposits | 32,771 | |||||||||||
|
| |||||||||||||
Consumer | 6,319 | Total deposits | 122,808 | |||||||||||
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| |||||||||||||
Total loans | 102,569 | |||||||||||||
Borrowings | 9,038 | |||||||||||||
Premises and equipment, net | 1,466 | Interest payable | 55 | |||||||||||
FRB and FHLB stock | 582 | Other liabilities | 989 | |||||||||||
Goodwill | 6,443 | |||||||||||||
Core deposit intangible | 526 | |||||||||||||
Interest receivable | 636 | |||||||||||||
Cash value of life insurance | 2,745 | |||||||||||||
Other assets | 765 | |||||||||||||
|
|
|
| |||||||||||
Total assets purchased | $ | 155,873 | Total liabilities assumed | $ | 132,890 | |||||||||
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|
|
| |||||||||||
Common shares issued | $ | 14,470 | ||||||||||||
Cash paid | 8,513 | |||||||||||||
|
| |||||||||||||
Total estimated purchase price | $ | 22,983 | ||||||||||||
|
|
Of the total estimated purchase price of $23.0 million, $526,000 has been allocated to core deposit intangible. Additionally, $6.4 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible of $452,000 was recorded in the transaction, which will be amortized over 10 years on a straight line basis.
The Company acquired certain loans There was no goodwill generated in the acquisition and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such aspast-due andnon-accrual status, borrower credit scores and recentloan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.
Loans with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
The following table details the acquired loans that are accounted for in accordance with ASC310-30 as of June 1, 2016.
Contractually required principal and interest at acquisition | $ | 2,682 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 25 | |||
|
| |||
Expected cash flows at acquisition | 2,657 | |||
Interest component of expected cash flows (accretable discount) | 634 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 2,023 | ||
|
|
Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
transaction.
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Summary of Operations: | ||||||||
Net Interest Income | $ | 95,451 | $ | 91,986 | ||||
Provision for loan losses | 1,842 | 3,417 | ||||||
Net Interest Income after Provision for Loan Losses | 93,609 | 88,569 | ||||||
Non-interest Income | 43,237 | 33,301 | ||||||
Non-interest Expense | 104,226 | 87,779 | ||||||
Income before Income Taxes | 32,620 | 34,091 | ||||||
Income Tax Expense | 9,679 | 8,528 | ||||||
Net Income | 22,941 | 25,563 | ||||||
Net Income Available to Common Shareholders | $ | 22,899 | $ | 25,438 | ||||
|
|
|
| |||||
Basic Earnings Per Share | $ | 1.15 | $ | 1.61 | ||||
Diluted Earnings Per Share | $ | 1.14 | $ | 1.57 |
periods.
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Summary of Operations: | ||||||||||||
Net Interest Income | $ | 168,693 | $ | 157,194 | $ | 153,376 | ||||||
Provision for Loan Losses | 2,276 | 3,706 | 3,438 | |||||||||
Net Interest Income after Provision for Loan Losses | 166,417 | 153,488 | 149,938 | |||||||||
Non-interest Income | 43,472 | 39,918 | 42,456 | |||||||||
Non-interest Expense | 134,446 | 124,944 | 138,752 | |||||||||
Income before Income Taxes | 75,443 | 68,462 | 53,642 | |||||||||
Income Tax Expense | 13,246 | 10,216 | 15,978 | |||||||||
Net Income | $ | 62,197 | $ | 58,246 | $ | 37,664 | ||||||
Basic Earnings per Share | $ | 1.43 | $ | 1.52 | $ | 1.09 | ||||||
Diluted Earnings per Share | $ | 1.43 | $ | 1.51 | $ | 1.08 |
per share data)
On July 1, 2015, Horizon completed the acquisition of Peoples Bancorp, an Indiana corporation (“Peoples”) and the Bank’s acquisition of Peoples Federal Savings Bank of DeKalb County (“Peoples FSB”), through mergers effective July 1, 2015. Under the terms of the acquisition, the exchange ratio was 1.425 shares of Horizon common stock and $9.75 in cash for each outstanding share of Peoples common stock. Peoples shareholders owning fewer than 100 shares of common stock received $33.14 in cash for each common share. Peoples shares outstanding at the closing were 2,311,858, and the shares of Horizon common stock issued to Peoples shareholders totaled 3,288,303. Horizon’s stock price was $16.88 per share at the close of business on July 1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1 million. The Company had approximately $4.9 million in costs related to the acquisition as of December 31, 2015. These expenses are classified in thenon-interest expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the purchase method of accounting, the total estimated purchase price is allocated to Peoples net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Peoples acquisition is allocated as follows:
ASSETS | LIABILITIES | |||||||||||||
Cash and due from banks | $ | 205,054 | Deposits | |||||||||||
Investment securities, available for sale | 2,038 | Non-interest bearing | $ | 28,251 | ||||||||||
NOW accounts | 65,771 | |||||||||||||
Commercial | 67,435 | Savings and money market | 125,176 | |||||||||||
Residential mortgage | 137,331 | Certificates of deposits | 131,889 | |||||||||||
|
| |||||||||||||
Consumer | 19,593 | Total deposits | 351,087 | |||||||||||
|
| |||||||||||||
Total loans | 224,359 | |||||||||||||
Borrowings | 48,884 | |||||||||||||
Premises and equipment, net | 5,524 | Interest payable | 21 | |||||||||||
FRB and FHLB stock | 2,743 | Other liabilities | 6,938 | |||||||||||
Goodwill | 21,424 | |||||||||||||
Core deposit intangible | 4,394 | |||||||||||||
Interest receivable | 1,279 | |||||||||||||
Cash value of life insurance | 13,898 | |||||||||||||
Other assets | 4,364 | |||||||||||||
|
|
|
| |||||||||||
Total assets purchased | $ | 485,077 | Total liabilities assumed | $ | 406,930 | |||||||||
|
|
|
| |||||||||||
Common shares issued | $ | 55,506 | ||||||||||||
Cash paid | 22,641 | |||||||||||||
|
| |||||||||||||
Total estimated purchase price | $ | 78,147 | ||||||||||||
|
|
Of the total purchase price of $78.1 million, $4.4 million has been allocated to core deposit intangible. Additionally, $21.4 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis.
The Company acquired the $228.6 million loan portfolio at a fair value discount of $4.8 million. The performing portion of the portfolio, $223.4 million, had an estimated fair value of $220.0 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC310-20.
The Company acquired certain loans in the acquisition and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
The loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such aspast-due andnon-accrual status, borrower credit scores and recentloan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.
Loan with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
The following table details the acquired loans that are accounted for in accordance with ASC310-30 as of July 1, 2015.
Contractually required principal and interest at acquisition | $ | 5,730 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 715 | |||
|
| |||
Expected cash flows at acquisition | 5,015 | |||
Interest component of expected cash flows (accretable discount) | 647 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 4,368 | ||
|
|
The results of operations of Peoples and Peoples FSB have been included in the Company’s consolidated financial statements since the acquisition dates. The following schedule includes pro forma results for the periods ended December 31, 2015 and December 31, 2014 as if the Peoples and Peoples FSB acquisitions had occurred as of the beginning of the comparable prior reporting period.
December 31 2015 | December 31 2014 | |||||||
Summary of Operations: | ||||||||
Net Interest Income | $ | 80,688 | $ | 75,442 | ||||
Provision for Loan Losses | 3,222 | 3,443 | ||||||
Net Interest Income after Provision for Loan Losses | 77,466 | 71,999 | ||||||
Non-interest Income | 32,295 | 29,928 | ||||||
Non-Interest Expense | 80,489 | 74,010 | ||||||
Income before Income Taxes | 29,272 | 27,917 | ||||||
Income Tax Expense | 7,359 | 6,560 | ||||||
Net Income | 21,913 | 21,357 | ||||||
Net Income Available to Common Shareholders | $ | 21,788 | $ | 21,342 | ||||
|
|
|
| |||||
Basic Earnings Per Share | $ | 1.27 | $ | 1.25 | ||||
Diluted Earnings Per Share | $ | 1.23 | $ | 1.21 |
The pro forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits acquired, premises expense for the banking centers acquired and the related income tax effects. The pro forma information for the year ended 2015 includes $2.3 million, net of tax, of operating revenue from Peoples since the acquisition and approximately $3.3 million, net of tax, ofnon-recurring expenses directly attributable to the Peoples acquisition.
The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, nor is it intended to be a projection of future results.
On April 3, 2014 Horizon closed its acquisition of SCB Bancorp, Inc. (“Summit”) and the Bank’s acquisition of Summit Community Bank, through mergers effective as of that date. Under the final terms of the acquisition, the exchange ratio was 0.7356 shares of Horizon’s common stock and $5.15 in cash for each share of Summit common stock outstanding. Summit shares outstanding at the closing were 1,164,442, and the shares of Horizon common stock issued to Summit shareholders totaled 856,230. Horizon’s stock price was $14.82 per share at the close of business on April 3, 2014. Based upon these numbers, the total value of the consideration for the acquisition was $18.9 million (not including the retirement of Summit debt). For the year ended December 31, 2014, the Company had approximately $1.3 million in costs related to the acquisition. These expenses are classified in the other expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base and reductions in transaction costs. The Company also expects to reduce costs through economies of scale.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Under the purchase method of accounting, the total estimated purchase price is allocated to Summit’s net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the preliminary purchase price for the Summit acquisition is allocated as follows:
ASSETS | LIABILITIES | |||||||||||||
Cash and due from banks | $ | 15,161 | Deposits | |||||||||||
Non-interest bearing | $ | 27,274 | ||||||||||||
Commercial | 70,441 | NOW accounts | 16,332 | |||||||||||
Residential mortgage | 43,448 | Savings and money market | 35,045 | |||||||||||
Consumer | 10,192 | Certificates of deposits | 42,368 | |||||||||||
|
|
|
| |||||||||||
Total loans | 124,081 | Total deposits | 121,019 | |||||||||||
Premises and equipment, net | 2,548 | Borrowings | 16,990 | |||||||||||
FRB and FHLB stock | 2,136 | Interest payable | 52 | |||||||||||
Goodwill | 8,428 | Other liabilities | 599 | |||||||||||
Core deposit intangible | 822 | |||||||||||||
Interest receivable | 347 | |||||||||||||
Cash value of life insurance | 2,185 | |||||||||||||
Other assets | 2,877 | |||||||||||||
|
|
|
| |||||||||||
Total assets purchased | $ | 158,585 | Total liabilities assumed | $ | 138,660 | |||||||||
|
|
|
|
Of the total estimated purchase price of $19.9 million, $822,000 has been allocated to core deposit intangible. Additionally, $8.4 million has been allocated to goodwill and $4.4 million of the purchase price is deductible and was assigned to the business assets. The core deposit intangible will be amortized over 10 years on a straight line basis.
The Company acquired loans in the acquisition and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such aspast-due andnon-accrual status, borrower credit scores and recentloan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.
The Company acquired the $130.5 million loan portfolio at a fair value discount of $6.4 million. The performing portion of the portfolio, $106.2 million, had an estimated fair value of $104.6 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC310-20.
Final estimates of loans for which specific credit-related deterioration has been identified, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
The following table details the acquired loans that are accounted for in accordance with ASC310-30 as of April 3, 2014.
Contractually required principal and interest at acquisition | $ | 14,460 | ||
Contractual cash flows not expected to be collected (nonaccretable differences) | 3,146 | |||
|
| |||
Expected cash flows at acquisition | 11,314 | |||
Interest component of expected cash flows (accretable discount) | 1,688 | |||
|
| |||
Fair value of acquired loans accounted for under ASC310-30 | $ | 9,626 | ||
|
|
Pro-forma statements were not presented due to the materiality of the transaction.
Approximately $6.7 million of this amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Indianapolis, which is not federally insured.
December 31, 2016 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 8,051 | $ | 2 | $ | (64 | ) | $ | 7,989 | |||||||
State and municipal | 117,327 | 324 | (1,059 | ) | 116,592 | |||||||||||
Federal agency collateralized mortgage obligations | 139,040 | 254 | (2,099 | ) | 137,195 | |||||||||||
Federal agency mortgage-backed pools | 180,183 | 251 | (3,707 | ) | 176,726 | |||||||||||
Corporate notes | 1,238 | 91 | — | 1,329 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total available for sale investment securities | $ | 445,839 | $ | 922 | $ | (6,929 | ) | $ | 439,831 | |||||||
|
|
|
|
|
|
|
| |||||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 165,607 | $ | 2,700 | $ | (2,485 | ) | $ | 165,822 | |||||||
Federal agency collateralized mortgage obligations | 6,530 | 31 | (71 | ) | 6,490 | |||||||||||
Federal agency mortgage-backed pools | 21,057 | 897 | (180 | ) | 21,774 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total held to maturity investment securities | $ | 193,194 | $ | 3,628 | $ | (2,736 | ) | $ | 194,086 | |||||||
|
|
|
|
|
|
|
| |||||||||
December 31, 2015 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 5,940 | $ | 3 | $ | (17 | ) | $ | 5,926 | |||||||
State and municipal | 73,829 | 1,299 | (33 | ) | 75,095 | |||||||||||
Federal agency collateralized mortgage obligations | 157,291 | 567 | (1,655 | ) | 156,203 | |||||||||||
Federal agency mortgage-backed pools | 206,970 | 2,080 | (1,346 | ) | 207,704 | |||||||||||
Corporate notes | 32 | 22 | — | 54 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total available for sale investment securities | $ | 444,062 | $ | 3,971 | $ | (3,051 | ) | $ | 444,982 | |||||||
|
|
|
|
|
|
|
| |||||||||
Held to maturity | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 5,859 | $ | 93 | $ | — | $ | 5,952 | ||||||||
State and municipal | 146,331 | 5,375 | (253 | ) | 151,453 | |||||||||||
Federal agency collateralized mortgage obligations | 9,051 | 27 | (124 | ) | 8,954 | |||||||||||
Federal agency mortgage-backed pools | 26,388 | 1,141 | (185 | ) | 27,344 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total held to maturity investment securities | $ | 187,629 | $ | 6,636 | $ | (562 | ) | $ | 193,703 | |||||||
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,415 | $ | — | $ | (2 | ) | $ | 1,413 | |||||||
State and municipal | 396,931 | 11,288 | (2,451 | ) | 405,768 | |||||||||||
Federal agency collateralized mortgage obligations | 267,272 | 2,543 | (563 | ) | 269,252 | |||||||||||
Federal agency mortgage-backed pools | 145,623 | 1,207 | (258 | ) | 146,572 | |||||||||||
Corporate notes | 10,848 | 923 | — | 11,771 | ||||||||||||
Total available for sale investment securities | $ | 822,089 | $ | 15,961 | $ | (3,274 | ) | $ | 834,776 | |||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 190,767 | $ | 7,129 | $ | (54 | ) | $ | 197,842 | |||||||
Federal agency collateralized mortgage obligations | 4,560 | 13 | (5 | ) | 4,568 | |||||||||||
Federal agency mortgage-backed pools | 12,572 | 194 | (29 | ) | 12,737 | |||||||||||
Total held to maturity investment securities | $ | 207,899 | $ | 7,336 | $ | (88 | ) | $ | 215,147 | |||||||
December 31, 2018 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 16,815 | $ | 1 | $ | (208 | ) | $ | 16,608 | |||||||
State and municipal | 210,386 | 1,495 | (2,578 | ) | 209,303 | |||||||||||
Federal agency collateralized mortgage obligations | 187,563 | 625 | (3,185 | ) | 185,003 | |||||||||||
Federal agency mortgage-backed pools | 183,479 | 80 | (4,823 | ) | 178,736 | |||||||||||
Corporate notes | 10,666 | 107 | (75 | ) | 10,698 | |||||||||||
Total available for sale investment securities | $ | 608,909 | $ | 2,308 | $ | (10,869 | ) | $ | 600,348 | |||||||
Held to maturity | ||||||||||||||||
State and municipal | $ | 191,269 | $ | 1,773 | $ | (3,366 | ) | $ | 189,676 | |||||||
Federal agency collateralized mortgage obligations | 5,144 | 6 | (120 | ) | 5,030 | |||||||||||
Federal agency mortgage-backed pools | 13,699 | 74 | (206 | ) | 13,567 | |||||||||||
Total held to maturity investment securities | $ | 210,112 | $ | 1,853 | $ | (3,692 | ) | $ | 208,273 | |||||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2019.
December 31, 2016 | December 31, 2015 | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
Available for sale | ||||||||||||||||
Within one year | $ | 7,455 | $ | 7,480 | $ | 7,192 | $ | 7,232 | ||||||||
One to five years | 37,483 | 37,479 | 38,197 | 38,894 | ||||||||||||
Five to ten years | 21,112 | 20,984 | 16,807 | 17,152 | ||||||||||||
After ten years | 60,566 | 59,967 | 17,605 | 17,797 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
126,616 | 125,910 | 79,801 | 81,075 | |||||||||||||
Federal agency collateralized mortgage obligations | 139,040 | 137,195 | 157,291 | 156,203 | ||||||||||||
Federal agency mortgage-backed pools | 180,183 | 176,726 | 206,970 | 207,704 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total available for sale investment securities | $ | 445,839 | $ | 439,831 | $ | 444,062 | $ | 444,982 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Held to maturity | ||||||||||||||||
Within one year | $ | — | $ | — | $ | — | $ | — | ||||||||
One to five years | 24,594 | 25,271 | 17,815 | 18,403 | ||||||||||||
Five to ten years | 87,645 | 88,805 | 106,167 | 110,026 | ||||||||||||
After ten years | 53,368 | 51,746 | 28,208 | 28,976 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
165,607 | 165,822 | 152,190 | 157,405 | |||||||||||||
Federal agency collateralized mortgage obligations | 6,530 | 6,490 | 9,051 | 8,954 | ||||||||||||
Federal agency mortgage-backed pools | 21,057 | 21,774 | 26,388 | 27,344 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total held to maturity investment securities | $ | 193,194 | $ | 194,086 | $ | 187,629 | $ | 193,703 | ||||||||
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2019 | December 31, 2018 | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
Within one year | $ | 37,386 | $ | 37,321 | $ | 20,532 | $ | 20,448 | ||||||||
One to five years | 41,230 | 41,293 | 42,476 | 41,705 | ||||||||||||
Five to ten years | 117,004 | 122,145 | 107,839 | 107,107 | ||||||||||||
After ten years | 213,574 | 218,193 | 67,020 | 67,349 | ||||||||||||
409,194 | 418,952 | 237,867 | 236,609 | |||||||||||||
Federal agency collateralized mortgage obligations | 267,272 | 269,252 | 187,563 | 185,003 | ||||||||||||
Federal agency mortgage-backed pools | 145,623 | 146,572 | 183,479 | 178,736 | ||||||||||||
Total available for sale investment securities | $ | 822,089 | $ | 834,776 | $ | 608,909 | $ | 600,348 | ||||||||
Held to maturity | ||||||||||||||||
Within one year | $ | 7,811 | $ | 7,874 | $ | 70 | $ | 70 | ||||||||
One to five years | 56,037 | 57,048 | 48,732 | 49,324 | ||||||||||||
Five to ten years | 94,756 | 98,480 | 101,809 | 101,533 | ||||||||||||
After ten years | 32,163 | 34,440 | 40,658 | 38,749 | ||||||||||||
190,767 | 197,842 | 191,269 | 189,676 | |||||||||||||
Federal agency collateralized mortgage obligations | 4,560 | 4,568 | 5,144 | 5,030 | ||||||||||||
Federal agency mortgage-backed pools | 12,572 | 12,737 | 13,699 | 13,567 | ||||||||||||
Total held to maturity investment securities | $ | 207,899 | $ | 215,147 | $ | 210,112 | $ | 208,273 | ||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
December 31, 2016 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
U.S. Treasury and federal agencies | $ | 6,987 | $ | (64 | ) | $ | — | $ | — | $ | 6,987 | $ | (64 | ) | ||||||||||
State and municipal | 142,466 | (3,544 | ) | — | — | 142,466 | (3,544 | ) | ||||||||||||||||
Federal agency collateralized mortgage obligations | 112,414 | (1,918 | ) | 10,199 | (252 | ) | 122,613 | (2,170 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 163,768 | (3,887 | ) | — | — | 163,768 | (3,887 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total temporarily impaired securities | $ | 425,635 | $ | (9,413 | ) | $ | 10,199 | $ | (252 | ) | $ | 435,834 | $ | (9,665 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
December 31, 2015 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
U.S. Treasury and federal agencies | $ | 5,468 | $ | (17 | ) | $ | — | $ | — | $ | 5,468 | $ | (17 | ) | ||||||||||
State and municipal | 17,353 | (280 | ) | 446 | (6 | ) | 17,799 | (286 | ) | |||||||||||||||
Federal agency collateralized mortgage obligations | 89,459 | (1,124 | ) | 25,428 | (655 | ) | 114,887 | (1,779 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 113,244 | (1,212 | ) | 16,506 | (319 | ) | 129,750 | (1,531 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total temporarily impaired securities | $ | 225,524 | $ | (2,633 | ) | $ | 42,380 | $ | (980 | ) | $ | 267,904 | $ | (3,613 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
Investment Securities | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,413 | $ | (2 | ) | $ | — | $ | — | $ | 1,413 | $ | (2 | ) | ||||||||||
State and municipal | 129,942 | (2,374 | ) | 6,279 | (131 | ) | 136,221 | (2,505 | ) | |||||||||||||||
Federal agency collateralized mortgage obligations | 68,043 | (308 | ) | 23,301 | (260 | ) | 91,344 | (568 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 24,740 | (104 | ) | 37,822 | (183 | ) | 62,562 | (287 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 224,138 | $ | (2,788 | ) | $ | 67,402 | $ | (574 | ) | $ | 291,540 | $ | (3,362 | ) | |||||||||
December 31, 2018 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
Investment Securities | ||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | — | $ | — | $ | 9,707 | $ | (208 | ) | $ | 9,707 | $ | (208 | ) | ||||||||||
State and municipal | 75,163 | (1,628 | ) | 106,335 | (4,316 | ) | 181,498 | (5,944 | ) | |||||||||||||||
Federal agency collateralized mortgage obligations | 6,450 | (25 | ) | 106,257 | (3,280 | ) | 112,707 | (3,305 | ) | |||||||||||||||
Federal agency mortgage-backed pools | 5,739 | (39 | ) | 175,865 | (4,990 | ) | 181,604 | (5,029 | ) | |||||||||||||||
Corporate notes | 5,263 | (75 | ) | — | — | 5,263 | (75 | ) | ||||||||||||||||
Total temporarily impaired securities | $ | 92,615 | $ | (1,767 | ) | $ | 398,164 | $ | (12,794 | ) | $ | 490,779 | $ | (14,561 | ) | |||||||||
2019.
2019.
Years ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Sales of securities available for sale | ||||||||||||
Proceeds | $ | 182,549 | $ | 43,051 | $ | 45,228 | ||||||
Gross gains | 2,646 | 254 | 988 | |||||||||
Gross losses | (810 | ) | (65 | ) | — |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Sales of securities available for sale | ||||||||||||
Proceeds | $ | 98,425 | $ | 38,519 | $ | 5,490 | ||||||
Gross gains | 168 | 37 | 151 | |||||||||
Gross losses | (243 | ) | (480 | ) | (113 | ) |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
agreements, $92.5$98.7 million of fair value or $92.4$94.7 million of amortized cost, in securities as collateral for borrowing availability at the Federal Reserve with no$0 current outstanding borrowings and $16.2$33.4 million of fair value or $16.0$33.1 million of amortized cost, in securities as collateral for $3.1$14.8 million in settlements on the fair value of swap agreements.
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Commercial | ||||||||
Working capital and equipment | $ | 539,403 | $ | 381,245 | ||||
Real estate, including agriculture | 485,620 | 391,668 | ||||||
Tax exempt | 15,486 | 8,674 | ||||||
Other | 29,447 | 23,408 | ||||||
|
|
|
| |||||
Total | 1,069,956 | 804,995 | ||||||
Real estate | ||||||||
1–4 family | 526,024 | 433,015 | ||||||
Other | 5,850 | 4,129 | ||||||
|
|
|
| |||||
Total | 531,874 | 437,144 | ||||||
Consumer | ||||||||
Auto | 174,773 | 168,397 | ||||||
Recreation | 5,669 | 5,365 | ||||||
Real estate/home improvement | 53,898 | 47,015 | ||||||
Home equity | 144,508 | 127,113 | ||||||
Unsecured | 3,875 | 4,120 | ||||||
Other | 15,706 | 10,290 | ||||||
|
|
|
| |||||
Total | 398,429 | 362,300 | ||||||
Mortgage warehouse | 135,727 | 144,692 | ||||||
|
|
|
| |||||
Total loans | 2,135,986 | 1,749,131 | ||||||
Allowance for loan losses | (14,837 | ) | (14,534 | ) | ||||
|
|
|
| |||||
Loans, net | $ | 2,121,149 | $ | 1,734,597 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Commercial | ||||||||
Working capital and equipment | $ | 938,317 | $ | 804,083 | ||||
Real estate, including agriculture | 978,891 | 834,037 | ||||||
Tax exempt | 63,571 | 48,975 | ||||||
Other | 65,872 | 34,495 | ||||||
Total | 2,046,651 | 1,721,590 | ||||||
Real estate | ||||||||
1-4 family | 762,571 | 659,754 | ||||||
Other | 8,146 | 8,387 | ||||||
Total | 770,717 | 668,141 | ||||||
Consumer | ||||||||
Auto | 362,729 | 327,413 | ||||||
Recreation | 16,262 | 13,975 | ||||||
Real estate/home improvement | 43,585 | 39,587 | ||||||
Home equity | 237,979 | 163,209 | ||||||
Unsecured | 7,286 | 4,043 | ||||||
Other | 1,339 | 1,254 | ||||||
Total | 669,180 | 549,481 | ||||||
Mortgage warehouse | 150,293 | 74,120 | ||||||
Total loans | 3,636,841 | 3,013,332 | ||||||
Allowance for loan losses | (17,667 | ) | (17,820 | ) | ||||
Loans, net | $ | 3,619,174 | $ | 2,995,512 | ||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
real estate loans based on collateral, cash flow and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2016 | Loan Balance | Interest Due | Deferred Fees / (Costs) | Recorded Investment | ||||||||||||
Owner occupied real estate | $ | 337,548 | $ | 899 | $ | 1,022 | $ | 339,469 | ||||||||
Non owner occupied real estate | 461,897 | 624 | 2,176 | 464,697 | ||||||||||||
Residential spec homes | 5,006 | 8 | (2 | ) | 5,012 | |||||||||||
Development & spec land loans | 31,228 | 56 | 119 | 31,403 | ||||||||||||
Commercial and industrial | 230,520 | 1,906 | 442 | 232,868 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial | 1,066,199 | 3,493 | 3,757 | 1,073,449 | ||||||||||||
Residential mortgage | 508,233 | 1,492 | 3,030 | 512,755 | ||||||||||||
Residential construction | 20,611 | 33 | — | 20,644 | ||||||||||||
Mortgage warehouse | 135,727 | 480 | — | 136,207 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total real estate | 664,571 | 2,005 | 3,030 | 669,606 | ||||||||||||
Direct installment | 71,150 | 199 | (385 | ) | 70,964 | |||||||||||
Direct installment purchased | 119 | — | — | 119 | ||||||||||||
Indirect installment | 153,204 | 345 | — | 153,549 | ||||||||||||
Home equity | 175,126 | 703 | (785 | ) | 175,044 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total consumer | 399,599 | 1,247 | (1,170 | ) | 399,676 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total loans | 2,130,369 | 6,745 | 5,617 | 2,142,731 | ||||||||||||
Allowance for loan losses | (14,837 | ) | — | — | (14,837 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loans | $ | 2,115,532 | $ | 6,745 | $ | 5,617 | $ | 2,127,894 | ||||||||
|
|
|
|
|
|
|
| |||||||||
December 31, 2015 | Loan Balance | Interest Due | Deferred Fees / (Costs) | Recorded Investment | ||||||||||||
Owner occupied real estate | $ | 268,281 | $ | 613 | $ | 1,328 | $ | 270,222 | ||||||||
Non owner occupied real estate | 326,399 | 306 | 497 | 327,202 | ||||||||||||
Residential spec homes | 5,018 | 9 | 17 | 5,044 | ||||||||||||
Development & spec land loans | 18,183 | 33 | 26 | 18,242 | ||||||||||||
Commercial and industrial | 184,911 | 1,246 | 335 | 186,492 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial | 802,792 | 2,207 | 2,203 | 807,202 | ||||||||||||
Residential mortgage | 414,924 | 1,275 | 2,470 | 418,669 | ||||||||||||
Residential construction | 19,751 | 34 | — | 19,785 | ||||||||||||
Mortgage warehouse | 144,692 | 480 | — | 145,172 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total real estate | 579,367 | 1,789 | 2,470 | 583,626 | ||||||||||||
Direct installment | 54,341 | 168 | (359 | ) | 54,150 | |||||||||||
Direct installment purchased | 153 | — | — | 153 | ||||||||||||
Indirect installment | 151,523 | 323 | — | 151,846 | ||||||||||||
Home equity | 157,164 | 628 | (522 | ) | 157,270 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total consumer | 363,181 | 1,119 | (881 | ) | 363,419 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total loans | 1,745,340 | 5,115 | 3,792 | 1,754,247 | ||||||||||||
Allowance for loan losses | (14,534 | ) | — | — | (14,534 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loans | $ | 1,730,806 | $ | 5,115 | $ | 3,792 | $ | 1,739,713 | ||||||||
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||
Loan Balance | Interest Due | Deferred Costs/ (Fees) | Recorded Investment | |||||||||||||
Owner occupied real estate | $ | 519,577 | $ | 784 | $ | (148 | ) | $ | 520,213 | |||||||
Non-owner occupied real estate | 973,331 | 1,752 | (763 | ) | 974,320 | |||||||||||
Residential spec homes | 12,925 | 15 | (2 | ) | 12,938 | |||||||||||
Development & spec land | 35,954 | 101 | (14 | ) | 36,041 | |||||||||||
Commercial and industrial | 505,859 | 4,600 | (68 | ) | 510,391 | |||||||||||
Total commercial | 2,047,646 | 7,252 | (995 | ) | 2,053,903 | |||||||||||
Residential mortgage | 751,019 | 2,245 | 12 | 753,276 | ||||||||||||
Residential construction | 19,686 | 40 | — | 19,726 | ||||||||||||
Mortgage warehouse | 150,293 | 242 | — | 150,535 | ||||||||||||
Total real estate | 920,998 | 2,527 | 12 | 923,537 | ||||||||||||
Direct installment | 41,079 | 148 | 678 | 41,905 | ||||||||||||
Indirect installment | 348,658 | 911 | — | 349,569 | ||||||||||||
Home equity | 276,215 | 1,304 | 2,550 | 280,069 | ||||||||||||
Total consumer | 665,952 | 2,363 | 3,228 | 671,543 | ||||||||||||
Total loans | 3,634,596 | 12,142 | 2,245 | 3,648,983 | ||||||||||||
Allowance for loan losses | (17,667 | ) | — | — | (17,667 | ) | ||||||||||
Net loans | $ | 3,616,929 | $ | 12,142 | $ | 2,245 | $ | 3,631,316 | ||||||||
December 31, 2018 | ||||||||||||||||
Loan Balance | Interest Due | Deferred Costs/ (Fees) | Recorded Investment | |||||||||||||
Owner occupied real estate | $ | 444,834 | $ | 931 | $ | (130 | ) | $ | 445,635 | |||||||
Non-owner occupied real estate | 852,855 | 1,436 | (747 | ) | 853,544 | |||||||||||
Residential spec homes | 5,195 | 13 | — | 5,208 | ||||||||||||
Development & spec land | 50,706 | 153 | (15 | ) | 50,844 | |||||||||||
Commercial and industrial | 368,962 | 3,063 | (70 | ) | 371,955 | |||||||||||
Total commercial | 1,722,552 | 5,596 | (962 | ) | 1,727,186 | |||||||||||
Residential mortgage | 644,094 | 1,861 | 17 | 645,972 | ||||||||||||
Residential construction | 24,030 | 42 | — | 24,072 | ||||||||||||
Mortgage warehouse | 74,120 | 132 | — | 74,252 | ||||||||||||
Total real estate | 742,244 | 2,035 | 17 | 744,296 | ||||||||||||
Direct installment | 35,103 | 108 | 593 | 35,804 | ||||||||||||
Indirect installment | 314,177 | 738 | — | 314,915 | ||||||||||||
Home equity | 197,494 | 968 | 2,114 | 200,576 | ||||||||||||
Total consumer | 546,774 | 1,814 | 2,707 | 551,295 | ||||||||||||
Total loans | 3,011,570 | 9,445 | 1,762 | 3,022,777 | ||||||||||||
Allowance for loan losses | (17,820 | ) | — | — | (17,820 | ) | ||||||||||
Net loans | $ | 2,993,750 | $ | 9,445 | $ | 1,762 | $ | 3,004,957 | ||||||||
Interest marks are accreted to income over the remaining life of the loan. Credit marks are evaluated using the practical expedient method.
December 31 2016 Heartland | December 31 2016 Summit | December 31 2016 Peoples | December 31 2016 Kosciusko | December 31 2016 LaPorte | December 31 2016 CNB | December 31 2016 Total | ||||||||||||||||||||||
Commercial | $ | 774 | $ | 5,245 | $ | 692 | $ | 1,652 | $ | 3,200 | $ | — | $ | 11,563 | ||||||||||||||
Real estate | 534 | 967 | 165 | 457 | 1,114 | — | 3,237 | |||||||||||||||||||||
Consumer | 2 | 0 | — | — | 41 | — | 43 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Outstanding balance | $ | 1,310 | $ | 6,213 | $ | 856 | $ | 2,109 | $ | 4,355 | $ | — | $ | 14,843 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Carrying amount, net of allowance of $0 | $ | 14,843 | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
December 31 2015 Heartland | December 31 2015 Summit | December 31 2015 Peoples | December 31 2015 Kosciusko | December 31 2015 LaPorte | December 31 2015 CNB | December 31 2015 Total | ||||||||||||||||||||||
Commercial | $ | 1,633 | $ | 5,567 | $ | 1,061 | $ | — | $ | — | $ | — | $ | 8,261 | ||||||||||||||
Real estate | 693 | 1,216 | 179 | — | — | — | 2,088 | |||||||||||||||||||||
Consumer | 6 | 35 | — | — | — | — | 41 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Outstanding balance | $ | 2,332 | $ | 6,818 | $ | 1,240 | $ | — | $ | — | $ | — | $ | 10,390 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Carrying amount, net of allowance of $63 | $ | 10,327 | ||||||||||||||||||||||||||
|
|
December 31, 2019 | ||||||||||||||||||||||||
Commercial | Real Estate | Consumer | Outstanding Balance | Allowance for Loan Losses | Carrying Amount | |||||||||||||||||||
Heartland | $ | 197 | $ | 99 | $ | — | $ | 296 | $ | — | $ | 296 | ||||||||||||
Summit | 88 | 473 | — | 561 | — | 561 | ||||||||||||||||||
Peoples | 229 | 35 | — | 264 | — | 264 | ||||||||||||||||||
Kosciusko | 244 | 131 | — | 375 | — | 375 | ||||||||||||||||||
LaPorte | 353 | 793 | 20 | 1,166 | — | 1,166 | ||||||||||||||||||
Lafayette | 1,867 | — | — | 1,867 | — | 1,867 | ||||||||||||||||||
Wolverine | 2,289 | — | — | 2,289 | — | 2,289 | ||||||||||||||||||
Salin | 4,938 | 1,912 | 962 | 7,812 | 133 | 7,679 | ||||||||||||||||||
Total | $ | 10,205 | $ | 3,443 | $ | 982 | $ | 14,630 | $ | 133 | $ | 14,497 | ||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Commercial | Real Estate | Consumer | Outstanding Balance | Allowance for Loan Losses | Carrying Amount | |||||||||||||||||||
Heartland | $ | 232 | $ | 175 | $ | — | $ | 407 | $ | — | $ | 407 | ||||||||||||
Summit | 323 | 555 | — | 878 | — | 878 | ||||||||||||||||||
Peoples | 270 | 58 | — | 328 | — | 328 | ||||||||||||||||||
Kosciusko | 746 | 155 | — | 901 | — | 901 | ||||||||||||||||||
LaPorte | 753 | 947 | 27 | 1,727 | 60 | 1,667 | ||||||||||||||||||
Lafayette | 3,080 | — | — | 3,080 | — | 3,080 | ||||||||||||||||||
Wolverine | 7,841 | — | — | 7,841 | — | 7,841 | ||||||||||||||||||
�� | ||||||||||||||||||||||||
Total | $ | 13,245 | $ | 1,890 | $ | 27 | $ | 15,162 | $ | 60 | $ | 15,102 | ||||||||||||
Twelve Months Ended December 31, 2016 | ||||||||||||||||||||||||||||
Heartland | Summit | Peoples | Kosciusko | LaPorte | CNB | Total | ||||||||||||||||||||||
Balance at January 1 | $ | 795 | $ | 708 | $ | 555 | $ | — | $ | — | $ | — | $ | 2,058 | ||||||||||||||
Additions | — | — | — | 634 | 1,636 | 2,270 | ||||||||||||||||||||||
Accretion | (164 | ) | (171 | ) | (106 | ) | (72 | ) | (147 | ) | — | (660 | ) | |||||||||||||||
Reclassification from nonaccretable difference | — | — | — | — | — | — | — | |||||||||||||||||||||
Disposals | (74 | ) | (35 | ) | (60 | ) | (32 | ) | (10 | ) | — | (211 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at December 31 | $ | 557 | $ | 502 | $ | 389 | $ | 530 | $ | 1,479 | $ | — | $ | 3,457 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Twelve Months Ended December 31, 2015 | ||||||||||||||||||||||||||||
Heartland | Summit | Peoples | Kosciusko | LaPorte | CNB | Total | ||||||||||||||||||||||
Balance at January 1 | $ | 2,400 | $ | 1,268 | $ | — | $ | — | $ | — | $ | — | $ | 3,668 | ||||||||||||||
Additions | — | — | 647 | — | — | — | 647 | |||||||||||||||||||||
Accretion | (327 | ) | (315 | ) | (83 | ) | — | — | — | (725 | ) | |||||||||||||||||
Reclassification from nonaccretable difference | — | — | — | — | — | — | — | |||||||||||||||||||||
Disposals | (1,278 | ) | (245 | ) | (9 | ) | — | — | — | (1,532 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at December 31 | $ | 795 | $ | 708 | $ | 555 | $ | — | $ | — | $ | — | $ | 2,058 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019 | ||||||||||||||||||||||||
Beginning balance | Additions | Accretion | Reclassification from nonaccretable difference | Disposals | Ending balance | |||||||||||||||||||
Heartland | $ | 174 | $ | — | $ | (32 | ) | $ | — | $ | — | $ | 142 | |||||||||||
Summit | 42 | — | (9 | ) | — | (11 | ) | 22 | ||||||||||||||||
Kosciusko | 300 | — | (63 | ) | — | (2 | ) | 235 | ||||||||||||||||
LaPorte | 829 | — | (111 | ) | — | 4 | 722 | |||||||||||||||||
Lafayette | 609 | — | (126 | ) | — | (193 | ) | 290 | ||||||||||||||||
Wolverine | 698 | — | (272 | ) | — | (306 | ) | 120 | ||||||||||||||||
Salin | — | 2,002 | (590 | ) | — | (37 | ) | 1,375 | ||||||||||||||||
Total | $ | 2,652 | $ | 2,002 | $ | (1,203 | ) | $ | — | $ | (545 | ) | $ | 2,906 | ||||||||||
Twelve Months Ended December 31, 2018 | ||||||||||||||||||||||||
Beginning balance | Additions | Accretion | Reclassification from nonaccretable difference | Disposals | Ending balance | |||||||||||||||||||
Heartland | $ | 452 | $ | — | $ | (85 | ) | $ | — | $ | (193 | ) | $ | 174 | ||||||||||
Summit | 147 | — | (54 | ) | — | (51 | ) | 42 | ||||||||||||||||
Kosciusko | 386 | — | (78 | ) | — | (8 | ) | 300 | ||||||||||||||||
LaPorte | 980 | — | (144 | ) | — | (7 | ) | 829 | ||||||||||||||||
Lafayette | 933 | — | (275 | ) | — | (49 | ) | 609 | ||||||||||||||||
Wolverine | 2,267 | — | (812 | ) | — | (757 | ) | 698 | ||||||||||||||||
Total | $ | 5,165 | $ | — | $ | (1,448 | ) | $ | — | $ | (1,065 | ) | $ | 2,652 | ||||||||||
HORIZON BANCORPAND SUBSIDIARIES
2018.
December 31 | December 31 | December 31 | ||||||||||
2016 | 2015 | 2014 | ||||||||||
|
|
|
|
|
| |||||||
Balance at beginning of the period | $ | 14,534 | $ | 16,501 | $ | 15,992 | ||||||
Loanscharged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | 181 | 2,208 | 40 | |||||||||
Non owner occupied real estate | 471 | 556 | 136 | |||||||||
Residential development | — | — | — | |||||||||
Development & Spec Land Loans | — | — | 173 | |||||||||
Commercial and industrial | 106 | 673 | 1,453 | |||||||||
|
|
|
|
|
| |||||||
Total commercial | 758 | 3,437 | 1,802 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 213 | 288 | 328 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total real estate | 213 | 288 | 328 | |||||||||
Consumer | ||||||||||||
Direct Installment | 329 | 367 | 250 | |||||||||
Direct Installment Purchased | — | — | — | |||||||||
Indirect Installment | 1,051 | 1,081 | 1,233 | |||||||||
Home Equity | 309 | 926 | 516 | |||||||||
|
|
|
|
|
| |||||||
Total consumer | 1,689 | 2,374 | 1,999 | |||||||||
|
|
|
|
|
| |||||||
Total loanscharged-off | 2,660 | 6,099 | 4,129 | |||||||||
Recoveries of loans previouslycharged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | 31 | 104 | 13 | |||||||||
Non owner occupied real estate | 55 | 1 | 210 | |||||||||
Residential development | 8 | — | — | |||||||||
Development & Spec Land Loans | — | 35 | 55 | |||||||||
Commercial and industrial | 116 | 52 | 495 | |||||||||
|
|
|
|
|
| |||||||
Total commercial | 210 | 192 | 773 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 97 | 69 | 21 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total real estate | 97 | 69 | 21 | |||||||||
Consumer | ||||||||||||
Direct Installment | 81 | 106 | 67 | |||||||||
Direct Installment Purchased | — | — | — | |||||||||
Indirect Installment | 529 | 489 | 560 | |||||||||
Home Equity | 204 | 114 | 159 | |||||||||
|
|
|
|
|
| |||||||
Total consumer | 814 | 709 | 786 | |||||||||
|
|
|
|
|
| |||||||
Total loan recoveries | 1,121 | 970 | 1,580 | |||||||||
|
|
|
|
|
| |||||||
Net loanscharged-off (recovered) | 1,539 | 5,129 | 2,549 | |||||||||
|
|
|
|
|
| |||||||
Provision charged to operating expense | ||||||||||||
Commercial | (68 | ) | 2,531 | 2,277 | ||||||||
Real estate | (23 | ) | 62 | (1,153 | ) | |||||||
Consumer | 1,933 | 569 | 1,934 | |||||||||
|
|
|
|
|
| |||||||
Total provision charged to operating expense | 1,842 | 3,162 | 3,058 | |||||||||
|
|
|
|
|
| |||||||
Balance at the end of the period | $ | 14,837 | $ | 14,534 | $ | 16,501 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Balance at beginning of the period | $ | 17,820 | $ | 16,394 | $ | 14,837 | ||||||
Loans charged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | 41 | 109 | 12 | |||||||||
Non-owner occupied real estate | 64 | — | 75 | |||||||||
Residential spec homes | 3 | — | — | |||||||||
Development & spec land | — | — | 1 | |||||||||
Commercial and industrial | 755 | 364 | 541 | |||||||||
Total commercial | 863 | 473 | 629 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 93 | 76 | 89 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
Total real estate | 93 | 76 | 89 | |||||||||
Consumer | ||||||||||||
Direct installment | 208 | 154 | 137 | |||||||||
Indirect installment | 1,785 | 1,673 | 1,193 | |||||||||
Home equity | 319 | 176 | 205 | |||||||||
Total consumer | 2,312 | 2,003 | 1,535 | |||||||||
Total loans charged-off | 3,268 | 2,552 | 2,253 | |||||||||
Recoveries of loans previously charged-off: | ||||||||||||
Commercial | ||||||||||||
Owner occupied real estate | — | 55 | 8 | |||||||||
Non-owner occupied real estate | 15 | 33 | 32 | |||||||||
Residential spec homes | 5 | 8 | 8 | |||||||||
Development & spec land | — | — | — | |||||||||
Commercial and industrial | 179 | 80 | 250 | |||||||||
Total commercial | 199 | 176 | 298 | |||||||||
Real estate | ||||||||||||
Residential mortgage | 46 | 27 | 44 | |||||||||
Residential construction | — | — | — | |||||||||
Mortgage warehouse | — | — | — | |||||||||
Total real estate | 46 | 27 | 44 | |||||||||
Consumer | ||||||||||||
Direct installment | 97 | 53 | 501 | |||||||||
Indirect installment | 661 | 505 | 497 | |||||||||
Home equity | 136 | 311 | — | |||||||||
Total consumer | 894 | 869 | 998 | |||||||||
Total loan recoveries | 1,139 | 1,072 | 1,340 | |||||||||
Net loans charged-off | 2,129 | 1,480 | 913 | |||||||||
Provision charged to operating expense | ||||||||||||
Commercial | 2,165 | 1,699 | 2,164 | |||||||||
Real estate | (635 | ) | (487 | ) | (81 | ) | ||||||
Consumer | 446 | 1,694 | 387 | |||||||||
Total provision charged to operating expense | 1,976 | 2,906 | 2,470 | |||||||||
Balance at the end of the period | $ | 17,667 | $ | 17,820 | $ | 16,394 | ||||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2016 | Commercial | Real Estate | Mortgage Warehousing | Consumer | Total | |||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 4 | $ | — | $ | — | $ | — | $ | 4 | ||||||||||
Collectively evaluated for impairment | 6,575 | 2,090 | 1,254 | 4,914 | 14,833 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending allowance balance | $ | 6,579 | $ | 2,090 | $ | 1,254 | $ | 4,914 | $ | 14,837 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 2,250 | $ | — | $ | — | $ | — | $ | 2,250 | ||||||||||
Collectively evaluated for impairment | 1,071,199 | 533,399 | 136,207 | 399,676 | 2,140,481 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending loans balance | $ | 1,073,449 | $ | 533,399 | $ | 136,207 | $ | 399,676 | $ | 2,142,731 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
December 31, 2015 | Commercial | Real Estate | Mortgage Warehousing | Consumer | Total | |||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 202 | $ | — | $ | — | $ | — | $ | 202 | ||||||||||
Collectively evaluated for impairment | 6,739 | 2,476 | 1,007 | 3,856 | 14,078 | |||||||||||||||
Loans acquired with deteriorated credit quality | 254 | — | — | — | 254 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending allowance balance | $ | 7,195 | $ | 2,476 | $ | 1,007 | $ | 3,856 | $ | 14,534 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 7,019 | $ | — | $ | — | $ | — | $ | 7,019 | ||||||||||
Collectively evaluated for impairment | 798,454 | 438,454 | 145,172 | 363,419 | 1,745,499 | |||||||||||||||
Loans acquired with deteriorated credit quality | 1,729 | — | — | — | 1,729 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total ending loans balance | $ | 807,202 | $ | 438,454 | $ | 145,172 | $ | 363,419 | $ | 1,754,247 | ||||||||||
|
|
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||
Commercial | Real Estate | Mortgage Warehousing | Consumer | Total | ||||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 541 | $ | — | $ | — | $ | — | $ | 541 | ||||||||||
Collectively evaluated for impairment | 11,455 | 923 | 1,077 | 3,671 | 17,126 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending allowance balance | $ | 11,996 | $ | 923 | $ | 1,077 | $ | 3,671 | $ | 17,667 | ||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 7,347 | $ | — | $ | — | $ | — | $ | 7,347 | ||||||||||
Collectively evaluated for impairment | 2,040,299 | 770,705 | 150,293 | 665,952 | 3,627,249 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending loans balance | $ | 2,047,646 | $ | 770,705 | $ | 150,293 | $ | 665,952 | $ | 3,634,596 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Commercial | Real Estate | Mortgage Warehousing | Consumer | Total | ||||||||||||||||
Allowance For Loan Losses | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 1,035 | $ | — | $ | — | $ | — | $ | 1,035 | ||||||||||
Collectively evaluated for impairment | 9,460 | 1,676 | 1,006 | 4,643 | 16,785 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending allowance balance | $ | 10,495 | $ | 1,676 | $ | 1,006 | $ | 4,643 | $ | 17,820 | ||||||||||
Loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | 6,696 | $ | — | $ | — | $ | — | $ | 6,696 | ||||||||||
Collectively evaluated for impairment | 1,715,856 | 668,124 | 74,120 | 546,774 | 3,004,874 | |||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | |||||||||||||||
Total ending loans balance | $ | 1,722,552 | $ | 668,124 | $ | 74,120 | $ | 546,774 | $ | 3,011,570 | ||||||||||
December 31, 2016 | Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non- Performing TDRs | Performing TDRs | Total Non- Performing Loans | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,532 | $ | 183 | $ | — | $ | — | $ | 1,715 | ||||||||||
Non owner occupied real estate | 440 | — | — | — | 440 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 118 | — | — | — | 118 | |||||||||||||||
Commercial and industrial | 159 | — | — | — | 159 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 2,249 | 183 | — | — | 2,432 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 2,959 | — | 576 | 1,254 | 4,789 | |||||||||||||||
Residential construction | — | — | 233 | — | 233 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 2,959 | — | 809 | 1,254 | 5,022 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 512 | — | — | — | 512 | |||||||||||||||
Direct Installment Purchased | — | — | — | — | — | |||||||||||||||
Indirect Installment | 659 | 49 | — | — | 708 | |||||||||||||||
Home Equity | 1,557 | 9 | 205 | 238 | 2,009 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 2,728 | 58 | 205 | 238 | 3,229 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 7,936 | $ | 241 | $ | 1,014 | $ | 1,492 | $ | 10,683 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
December 31, 2015 | Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non- Performing TDRs | Performing TDRs | Total Non- Performing Loans | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,749 | $ | — | $ | — | $ | — | $ | 1,749 | ||||||||||
Non owner occupied real estate | 3,034 | — | 1,915 | 60 | 5,009 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 71 | — | — | — | 71 | |||||||||||||||
Commercial and industrial | 176 | — | — | — | 176 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 5,030 | — | 1,915 | 60 | 7,005 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 4,354 | 1 | 824 | 808 | 5,987 | |||||||||||||||
Residential construction | — | — | 250 | — | 250 | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 4,354 | 1 | 1,074 | 808 | 6,237 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 541 | — | — | — | 541 | |||||||||||||||
Direct Installment Purchased | — | — | — | — | — | |||||||||||||||
Indirect Installment | 601 | 27 | — | — | 628 | |||||||||||||||
Home Equity | 1,736 | — | 183 | 350 | 2,269 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 2,878 | 27 | 183 | 350 | 3,438 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 12,262 | $ | 28 | $ | 3,172 | $ | 1,218 | $ | 16,680 | ||||||||||
|
|
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2019 | ||||||||||||||||||||
Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non-peforming TDRs | Performing TDRs | Total Non-performing Loans | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 2,424 | $ | — | $ | 629 | $ | 139 | $ | 3,192 | ||||||||||
Non-owner occupied real estate | 682 | — | 374 | — | 1,056 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 73 | — | — | — | 73 | |||||||||||||||
Commercial and industrial | 1,603 | — | 78 | 1,345 | 3,026 | |||||||||||||||
Total commercial | 4,782 | — | 1,081 | 1,484 | 7,347 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 7,614 | 1 | 708 | 1,561 | 9,884 | |||||||||||||||
Residential construction | — | — | — | — | — | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Total real estate | 7,614 | 1 | 708 | 1,561 | 9,884 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 30 | 5 | — | — | 35 | |||||||||||||||
Indirect installment | 1,234 | 135 | — | — | 1,369 | |||||||||||||||
Home equity | 2,019 | 5 | 217 | 309 | 2,550 | |||||||||||||||
Total consumer | 3,283 | 145 | 217 | 309 | 3,954 | |||||||||||||||
Total | $ | 15,679 | $ | 146 | $ | 2,006 | $ | 3,354 | $ | 21,185 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non-peforming TDRs | Performing TDRs | Total Non-performing Loans | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 3,531 | $ | 208 | $ | — | $ | 109 | $ | 3,848 | ||||||||||
Non-owner occupied real estate | 554 | — | 492 | — | 1,046 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 68 | — | — | — | 68 | |||||||||||||||
Commercial and industrial | 1,941 | — | — | — | 1,941 | |||||||||||||||
Total commercial | 6,094 | 208 | 492 | 109 | 6,903 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 2,846 | 180 | 423 | 1,558 | 5,007 | |||||||||||||||
Residential construction | — | — | — | — | — | |||||||||||||||
Mortgage warehouse | — | — | — | — | — | |||||||||||||||
Total real estate | 2,846 | 180 | 423 | 1,558 | 5,007 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 35 | — | — | — | 35 | |||||||||||||||
Indirect installment | 916 | 173 | — | — | 1,089 | |||||||||||||||
Home equity | 1,657 | 7 | 142 | 335 | 2,141 | |||||||||||||||
Total consumer | 2,608 | 180 | 142 | 335 | 3,265 | |||||||||||||||
Total | $ | 11,548 | $ | 568 | $ | 1,057 | $ | 2,002 | $ | 15,175 | ||||||||||
three methods described above.
HORIZON BANCORPAND SUBSIDIARIES
Twelve Months Ending | ||||||||||||||||||||
December 31, 2016 | Unpaid Principal Balance | Recorded Investment | Allowance For Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | |||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,533 | $ | 1,533 | $ | — | $ | 1,619 | $ | 58 | ||||||||||
Non owner occupied real estate | 440 | 440 | — | 871 | 18 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 118 | 118 | — | 61 | 16 | |||||||||||||||
Commercial and industrial | 128 | 127 | — | 349 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 2,219 | 2,218 | — | 2,900 | 93 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | — | — | — | — | — | |||||||||||||||
Non owner occupied real estate | — | — | — | — | — | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 31 | 32 | 4 | 5 | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 31 | 32 | 4 | 5 | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 2,250 | $ | 2,250 | $ | 4 | $ | 2,905 | $ | 95 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Twelve Months Ending | ||||||||||||||||||||
December 31, 2015 | Unpaid Principal Balance | Recorded Investment | Allowance For Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | |||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,340 | $ | 1,339 | $ | — | $ | 1,001 | $ | 22 | ||||||||||
Non owner occupied real estate | 4,938 | 4,953 | — | 5,417 | 8 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | 71 | 71 | — | 6 | 3 | |||||||||||||||
Commercial and industrial | 79 | 79 | — | 275 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 6,428 | 6,442 | — | 6,699 | 37 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 410 | 410 | 105 | 243 | 8 | |||||||||||||||
Non owner occupied real estate | 70 | 70 | 32 | 6 | 13 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 97 | 97 | 65 | 162 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 577 | 577 | 202 | 411 | 21 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 7,005 | $ | 7,019 | $ | 202 | $ | 7,110 | $ | 58 | ||||||||||
|
|
|
|
|
|
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | ||||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 3,192 | $ | 3,193 | $ | — | $ | 3,608 | $ | 246 | ||||||||||
Non-owner occupied real estate | 937 | 937 | — | 2,810 | 98 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 73 | 73 | — | 158 | — | |||||||||||||||
Commercial and industrial | 1,859 | 1,861 | — | 2,464 | 100 | |||||||||||||||
Total commercial | 6,061 | 6,064 | — | 9,040 | 444 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | — | — | — | — | — | |||||||||||||||
Non-owner occupied real estate | 119 | 119 | 25 | 130 | — | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 1,167 | 1,168 | 516 | 1,225 | 46 | |||||||||||||||
Total commercial | 1,286 | 1,287 | 541 | 1,355 | 46 | |||||||||||||||
Total | $ | 7,347 | $ | 7,351 | $ | 541 | $ | 10,395 | $ | 490 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | ||||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 2,814 | $ | 2,815 | $ | — | $ | 3,168 | $ | 77 | ||||||||||
Non-owner occupied real estate | 860 | 860 | — | 1,096 | 12 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 68 | 68 | — | 71 | — | |||||||||||||||
Commercial and industrial | 1,226 | 1,226 | — | 1,119 | 21 | |||||||||||||||
Total commercial | 4,968 | 4,969 | — | 5,454 | 110 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 827 | 827 | 145 | 864 | — | |||||||||||||||
Non-owner occupied real estate | 186 | 186 | 30 | 180 | 4 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 715 | 715 | 860 | 870 | 14 | |||||||||||||||
Total commercial | 1,728 | 1,728 | 1,035 | 1,914 | 18 | |||||||||||||||
Total | $ | 6,696 | $ | 6,697 | $ | 1,035 | $ | 7,368 | $ | 128 | ||||||||||
Twelve Months Ending | ||||||||||||||||||||
December 31, 2014 | Unpaid Principal Balance | Recorded Investment | Allowance For Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | |||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,169 | $ | 1,170 | $ | — | $ | 645 | $ | 65 | ||||||||||
Non owner occupied real estate | 1,193 | 1,194 | — | 1,341 | 51 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 854 | 854 | — | 357 | 27 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 3,216 | 3,218 | — | 2,343 | 143 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 422 | 422 | 165 | 141 | 16 | |||||||||||||||
Non owner occupied real estate | 6,453 | 6,453 | 744 | 1,995 | 208 | |||||||||||||||
Residential development | — | — | — | — | — | |||||||||||||||
Development & Spec Land Loans | — | — | — | — | — | |||||||||||||||
Commercial and industrial | 962 | 962 | 680 | 798 | 12 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 7,837 | 7,837 | 1,589 | 2,934 | 236 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 11,053 | $ | 11,055 | $ | 1,589 | $ | 5,277 | $ | 379 | ||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2017 | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Loss Allocated | Average Balance in Impaired Loans | Cash/Accrual Interest Income Recognized | ||||||||||||||||
With no recorded allowance | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 1,255 | $ | 1,270 | $ | — | $ | 1,168 | $ | 4 | ||||||||||
Non-owner occupied real estate | 3,123 | 3,139 | — | 850 | 7 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | 176 | 176 | — | 233 | 4 | |||||||||||||||
Commercial and industrial | 1,656 | 1,656 | — | 1,445 | 25 | |||||||||||||||
Total commercial | 6,210 | 6,241 | — | 3,696 | 40 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | 704 | 704 | 78 | 59 | 33 | |||||||||||||||
Non-owner occupied real estate | 227 | 227 | 106 | 19 | 13 | |||||||||||||||
Residential spec homes | — | — | — | — | — | |||||||||||||||
Development & spec land | — | — | — | — | — | |||||||||||||||
Commercial and industrial | — | — | — | — | — | |||||||||||||||
Total commercial | 931 | 931 | 184 | 78 | 46 | |||||||||||||||
Total | $ | 7,141 | $ | 7,172 | $ | 184 | $ | 3,774 | $ | 86 | ||||||||||
December 31, 2016 | 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Loans Not Past Due | Total | ||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Owner occupied real estate | $ | 1,068 | $ | — | $ | 183 | $ | 1,251 | $ | 336,297 | $ | 337,548 | ||||||||||||
Non owner occupied real estate | 357 | — | — | 357 | 461,540 | 461,897 | ||||||||||||||||||
Residential development | — | — | — | — | 5,006 | 5,006 | ||||||||||||||||||
Development & Spec Land Loans | 1 | — | — | 1 | 31,227 | 31,228 | ||||||||||||||||||
Commercial and industrial | 982 | — | — | 982 | 229,538 | 230,520 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial | 2,408 | — | 183 | 2,591 | 1,063,608 | 1,066,199 | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential mortgage | 886 | 123 | — | 1,009 | 507,224 | 508,233 | ||||||||||||||||||
Residential construction | — | — | — | — | 20,611 | 20,611 | ||||||||||||||||||
Mortgage warehouse | — | — | — | — | 135,727 | 135,727 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total real estate | 886 | 123 | — | 1,009 | 663,562 | 664,571 | ||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Direct Installment | 139 | 4 | — | 143 | 71,007 | 71,150 | ||||||||||||||||||
Direct Installment Purchased | — | — | — | — | 119 | 119 | ||||||||||||||||||
Indirect Installment | 1,339 | 237 | 49 | 1,625 | 151,579 | 153,204 | ||||||||||||||||||
Home Equity | 912 | 267 | 9 | 1,188 | 173,938 | 175,126 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer | 2,390 | 508 | 58 | 2,956 | 396,643 | 399,599 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 5,684 | $ | 631 | $ | 241 | $ | 6,556 | $ | 2,123,813 | $ | 2,130,369 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Percentage of total loans | 0.27 | % | 0.03 | % | 0.01 | % | 0.31 | % | 99.69 | % |
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||||||||||
Current | 30-59 DaysPast Due | 60-89 DaysPast Due | 90 Days or Greater Past Due | Non-accrual & Non-peforming TDRs | Total Past Due & Non-accrual Loans | Total | ||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||
Owner occupied real estate | $ | 515,604 | $ | 920 | $ | — | $ | — | $ | 3,053 | $ | 3,973 | $ | 519,577 | ||||||||||||||
Non-owner occupied realestate | 972,195 | 80 | — | — | 1,056 | 1,136 | 973,331 | |||||||||||||||||||||
Residential spec homes | 12,925 | — | — | — | — | — | 12,925 | |||||||||||||||||||||
Development & spec land | 35,881 | — | — | — | 73 | 73 | 35,954 | |||||||||||||||||||||
Commercial and industrial | 503,348 | 819 | 11 | — | 1,681 | 2,511 | 505,859 | |||||||||||||||||||||
Total commercial | 2,039,953 | 1,819 | 11 | — | 5,863 | 7,693 | 2,047,646 | |||||||||||||||||||||
Real estate | ||||||||||||||||||||||||||||
Residential mortgage | 740,712 | 1,984 | — | 1 | 8,322 | 10,307 | 751,019 | |||||||||||||||||||||
Residential construction | 19,686 | — | — | — | — | — | 19,686 | |||||||||||||||||||||
Mortgage warehouse | 150,293 | — | — | — | — | — | 150,293 | |||||||||||||||||||||
Total real estate | 910,691 | 1,984 | — | 1 | 8,322 | 10,307 | 920,998 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Direct installment | 40,864 | 175 | 5 | 5 | 30 | 215 | 41,079 | |||||||||||||||||||||
Indirect installment | 344,478 | 2,407 | 404 | 135 | 1,234 | 4,180 | 348,658 | |||||||||||||||||||||
Home equity | 273,050 | 904 | 20 | 5 | 2,236 | 3,165 | 276,215 | |||||||||||||||||||||
Total consumer | 658,392 | 3,486 | 429 | 145 | 3,500 | 7,560 | 665,952 | |||||||||||||||||||||
Total | $ | 3,609,036 | $ | 7,289 | $ | 440 | $ | 146 | $ | 17,685 | $ | 25,560 | $ | 3,634,596 | ||||||||||||||
Percentage of total loans | 99.30 | % | 0.20 | % | 0.01 | % | 0.00 | % | 0.49 | % | 0.70 | % | 100.00 | % |
December 31, 2015 | 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Loans Not Past Due | Total | ||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Owner occupied real estate | $ | 481 | $ | 18 | $ | — | $ | 499 | $ | 267,782 | $ | 268,281 | ||||||||||||
Non owner occupied real estate | 49 | — | — | 49 | 326,350 | 326,399 | ||||||||||||||||||
Residential development | — | — | — | — | 5,018 | 5,018 | ||||||||||||||||||
Development & Spec Land Loans | — | — | — | — | 18,183 | 18,183 | ||||||||||||||||||
Commercial and industrial | 32 | — | — | 32 | 184,879 | 184,911 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial | 562 | 18 | — | 580 | 802,212 | 802,792 | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential mortgage | 1,121 | 344 | 1 | 1,466 | 413,458 | 414,924 | ||||||||||||||||||
Residential construction | — | — | — | — | 19,751 | 19,751 | ||||||||||||||||||
Mortgage warehouse | — | — | — | — | 144,692 | 144,692 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total real estate | 1,121 | 344 | 1 | 1,466 | 577,901 | 579,367 | ||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Direct Installment | 106 | 10 | — | 116 | 54,225 | 54,341 | ||||||||||||||||||
Direct Installment Purchased | — | — | — | — | 153 | 153 | ||||||||||||||||||
Indirect Installment | 1,186 | 268 | 27 | 1,481 | 150,042 | 151,523 | ||||||||||||||||||
Home Equity | 1,193 | 203 | — | 1,396 | 155,768 | 157,164 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer | 2,485 | 481 | 27 | 2,993 | 360,188 | 363,181 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 4,168 | $ | 843 | $ | 28 | $ | 5,039 | $ | 1,740,301 | $ | 1,745,340 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Percentage of total loans | 0.24 | % | 0.05 | % | 0.00 | % | 0.29 | % | 99.71 | % |
December 31, 2018 | ||||||||||||||||||||||||||||
Current | 30-59 DaysPast Due | 60-89 DaysPast Due | 90 Days or Greater Past Due | Non-accrual & Non-peforming TDRs | Total Past Due & Non-accrual Loans | Total | ||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||
Owner occupied real estate | $ | 439,542 | $ | 537 | $ | 1,016 | $ | 208 | $ | 3,531 | $ | 5,292 | $ | 444,834 | ||||||||||||||
Non-owner occupied real estate | 851,587 | 203 | 19 | — | 1,046 | 1,268 | 852,855 | |||||||||||||||||||||
Residential spec homes | 4,703 | 492 | — | — | — | 492 | 5,195 | |||||||||||||||||||||
Development & spec land | 50,638 | — | — | — | 68 | 68 | 50,706 | |||||||||||||||||||||
Commercial and industrial | 365,817 | 487 | 717 | — | 1,941 | 3,145 | 368,962 | |||||||||||||||||||||
Total commercial | 1,712,287 | 1,719 | 1,752 | 208 | 6,586 | 10,265 | 1,722,552 | |||||||||||||||||||||
Real estate | ||||||||||||||||||||||||||||
Residential mortgage | 639,458 | 1,131 | 56 | 180 | 3,269 | 4,636 | 644,094 | |||||||||||||||||||||
Residential construction | 24,030 | — | — | — | — | — | 24,030 | |||||||||||||||||||||
Mortgage warehouse | 74,120 | — | — | — | — | — | 74,120 | |||||||||||||||||||||
Total real estate | 737,608 | 1,131 | 56 | 180 | 3,269 | 4,636 | 742,244 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Direct installment | 34,957 | 93 | 18 | — | 35 | 146 | 35,103 | |||||||||||||||||||||
Indirect installment | 311,494 | 1,396 | 198 | 173 | 916 | 2,683 | 314,177 | |||||||||||||||||||||
Home equity | 194,890 | 761 | 37 | 7 | 1,799 | 2,604 | 197,494 | |||||||||||||||||||||
Total consumer | 541,341 | 2,250 | 253 | 180 | 2,750 | 5,433 | 546,774 | |||||||||||||||||||||
Total | $ | 2,991,236 | $ | 5,100 | $ | 2,061 | $ | 568 | $ | 12,605 | $ | 20,334 | $ | 3,011,570 | ||||||||||||||
Percentage of total loans | 99.32 | % | 0.17 | % | 0.07 | % | 0.02 | % | 0.42 | % | 0.68 | % | 100.00 | % |
HORIZON BANCORPAND SUBSIDIARIES
Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:
HORIZON BANCORPAND SUBSIDIARIES
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2016 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 322,924 | $ | 4,960 | $ | 9,664 | $ | — | $ | 337,548 | ||||||||||
Non owner occupied real estate | 455,648 | 341 | 5,908 | — | 461,897 | |||||||||||||||
Residential development | 5,006 | — | — | — | 5,006 | |||||||||||||||
Development & Spec Land Loans | 31,057 | — | 171 | — | 31,228 | |||||||||||||||
Commercial and industrial | 220,424 | 3,728 | 6,368 | — | 230,520 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 1,035,059 | 9,029 | 22,111 | — | 1,066,199 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 503,444 | — | 4,789 | — | 508,233 | |||||||||||||||
Residential construction | 20,378 | — | 233 | — | 20,611 | |||||||||||||||
Mortgage warehouse | 135,727 | — | — | — | 135,727 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 659,549 | — | 5,022 | — | 664,571 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 70,638 | — | 512 | — | 71,150 | |||||||||||||||
Direct Installment Purchased | 119 | — | — | — | 119 | |||||||||||||||
Indirect Installment | 152,496 | — | 708 | — | 153,204 | |||||||||||||||
Home Equity | 173,117 | — | 2,009 | — | 175,126 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 396,370 | — | 3,229 | — | 399,599 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 2,090,978 | $ | 9,029 | $ | 30,362 | $ | — | $ | 2,130,369 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Percentage of total loans | 98.15 | % | 0.42 | % | 1.43 | % | 0.00 | % |
December 31, 2015 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 257,181 | $ | 4,954 | $ | 6,146 | $ | — | $ | 268,281 | ||||||||||
Non owner occupied real estate | 320,216 | 585 | 5,598 | — | 326,399 | |||||||||||||||
Residential development | 5,018 | — | — | — | 5,018 | |||||||||||||||
Development & Spec Land Loans | 18,112 | — | 71 | — | 18,183 | |||||||||||||||
Commercial and industrial | 180,581 | 693 | 3,637 | — | 184,911 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 781,108 | 6,232 | 15,452 | — | 802,792 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 408,937 | — | 5,987 | — | 414,924 | |||||||||||||||
Residential construction | 19,501 | — | 250 | — | 19,751 | |||||||||||||||
Mortgage warehouse | 144,692 | — | — | — | 144,692 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total real estate | 573,130 | — | 6,237 | — | 579,367 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct Installment | 53,800 | — | 541 | — | 54,341 | |||||||||||||||
Direct Installment Purchased | 153 | — | — | — | 153 | |||||||||||||||
Indirect Installment | 150,895 | — | 628 | — | 151,523 | |||||||||||||||
Home Equity | 154,895 | — | 2,269 | — | 157,164 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consumer | 359,743 | — | 3,438 | — | 363,181 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 1,713,981 | $ | 6,232 | $ | 25,127 | $ | — | $ | 1,745,340 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Percentage of total loans | 98.20 | % | 0.36 | % | 1.44 | % | 0.00 | % |
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 492,386 | $ | 8,328 | $ | 18,863 | $ | — | $ | 519,577 | ||||||||||
Non-owner occupied real estate | 957,990 | 7,824 | 7,517 | — | 973,331 | |||||||||||||||
Residential spec homes | 12,925 | — | — | — | 12,925 | |||||||||||||||
Development & spec land | 35,815 | — | 139 | — | 35,954 | |||||||||||||||
Commercial and industrial | 468,893 | 18,652 | 18,314 | — | 505,859 | |||||||||||||||
Total commercial | 1,968,009 | 34,804 | 44,833 | — | 2,047,646 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 741,136 | — | 9,883 | — | 751,019 | |||||||||||||||
Residential construction | 19,686 | — | — | — | 19,686 | |||||||||||||||
Mortgage warehouse | 150,293 | — | — | — | 150,293 | |||||||||||||||
Total real estate | 911,115 | — | 9,883 | — | 920,998 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 41,044 | — | 35 | — | 41,079 | |||||||||||||||
Indirect installment | 347,289 | — | 1,369 | — | 348,658 | |||||||||||||||
Home equity | 273,665 | — | 2,550 | — | 276,215 | |||||||||||||||
Total consumer | 661,998 | — | 3,954 | — | 665,952 | |||||||||||||||
Total | $ | 3,541,122 | $ | 34,804 | $ | 58,670 | $ | — | $ | 3,634,596 | ||||||||||
Percentage of total loans | 97.43 | % | 0.96 | % | 1.61 | % | 0.00 | % | 100.00 | % |
December 31, 2018 | ||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial | ||||||||||||||||||||
Owner occupied real estate | $ | 426,887 | $ | 3,664 | $ | 14,283 | $ | — | $ | 444,834 | ||||||||||
Non-owner occupied real estate | 834,582 | 9,682 | 8,591 | — | 852,855 | |||||||||||||||
Residential spec homes | 5,195 | — | — | — | 5,195 | |||||||||||||||
Development & spec land | 47,523 | 3,115 | 68 | — | 50,706 | |||||||||||||||
Commercial and industrial | 354,630 | 6,591 | 7,741 | — | 368,962 | |||||||||||||||
Total commercial | 1,668,817 | 23,052 | 30,683 | — | 1,722,552 | |||||||||||||||
Real estate | ||||||||||||||||||||
Residential mortgage | 639,267 | — | 4,827 | — | 644,094 | |||||||||||||||
Residential construction | 24,030 | — | — | — | 24,030 | |||||||||||||||
Mortgage warehouse | 74,120 | — | — | — | 74,120 | |||||||||||||||
Total real estate | 737,417 | — | 4,827 | — | 742,244 | |||||||||||||||
Consumer | ||||||||||||||||||||
Direct installment | 35,068 | — | 35 | — | 35,103 | |||||||||||||||
Indirect installment | 313,088 | — | 1,089 | — | 314,177 | |||||||||||||||
Home equity | 195,353 | — | 2,141 | — | 197,494 | |||||||||||||||
Total consumer | 543,509 | — | 3,265 | — | 546,774 | |||||||||||||||
Total | $ | 2,949,743 | $ | 23,052 | $ | 38,775 | $ | — | $ | 3,011,570 | ||||||||||
Percentage of total loans | 97.95 | % | 0.76 | % | 1.29 | % | 0.00 | % | 100.00 | % |
December 31 2016 | December 31 2015 | |||||||
Land | $ | 20,032 | $ | 19,475 | ||||
Buildings and improvements | 59,607 | 55,341 | ||||||
Furniture and equipment | 19,965 | 15,702 | ||||||
|
|
|
| |||||
Total cost | 99,604 | 90,518 | ||||||
Accumulated depreciation | (33,247 | ) | (29,720 | ) | ||||
|
|
|
| |||||
Net premise and equipment | $ | 66,357 | $ | 60,798 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Land | $ | 27,292 | $ | 21,604 | ||||
Buildings and improvements | 83,669 | 69,590 | ||||||
Furniture and equipment | 27,482 | 24,596 | ||||||
Total cost | 138,443 | 115,790 | ||||||
Accumulated depreciation | (46,234 | ) | (41,459 | ) | ||||
Net premises and equipment | $ | 92,209 | $ | 74,331 | ||||
2018.
December 31 2016 | December 31 2015 | December 31 2014 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 9,271 | $ | 7,980 | $ | 7,428 | ||||||
Servicing rights capitalized | 3,426 | 2,974 | 2,280 | |||||||||
Amortization of servicing rights | (1,016 | ) | (1,683 | ) | (1,728 | ) | ||||||
|
|
|
|
|
| |||||||
Balances, December 31 | 11,681 | 9,271 | 7,980 | |||||||||
|
|
|
|
|
| |||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (397 | ) | (338 | ) | (389 | ) | ||||||
Additions | (236 | ) | (130 | ) | (95 | ) | ||||||
Reductions | 126 | 71 | 146 | |||||||||
|
|
|
|
|
| |||||||
Balances, December 31 | (507 | ) | (397 | ) | (338 | ) | ||||||
|
|
|
|
|
| |||||||
Mortgage servicing rights, net | $ | 11,174 | $ | 8,874 | $ | 7,642 | ||||||
|
|
|
|
|
|
December 31 | December 31 | December 31 | ||||||||||
2019 | 2018 | 2017 | ||||||||||
Mortgage servicing rights | ||||||||||||
Balances, January 1 | $ | 12,876 | $ | 12,189 | $ | 11,681 | ||||||
Servicing rights capitalized | 3,547 | 1,883 | 2,109 | |||||||||
Amortization of servicing rights | (1,377 | ) | (1,196 | ) | (1,601 | ) | ||||||
Balances, December 31 | 15,046 | 12,876 | 12,189 | |||||||||
Impairment allowance | ||||||||||||
Balances, January 1 | (527 | ) | (587 | ) | (507 | ) | ||||||
Additions | (234 | ) | (78 | ) | (85 | ) | ||||||
Reductions | 42 | 138 | 5 | |||||||||
Balances, December 31 | (719 | ) | (527 | ) | (587 | ) | ||||||
Mortgage servicing rights, net | $ | 14,327 | $ | 12,349 | $ | 11,602 | ||||||
Nothousands except for per share data)
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2016 | 2015 | |||||||
Balance, January 1 | $ | 49,600 | $ | 28,176 | ||||
Goodwill acquired | 27,341 | 21,424 | ||||||
|
|
|
| |||||
Balance, December 31 | $ | 76,941 | $ | 49,600 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Balance, January 1 | $ | 119,880 | $ | 119,880 | ||||
Goodwill acquired | 31,358 | — | ||||||
Balance, December 31 | $ | 151,238 | $ | 119,880 | ||||
December 31, 2016 | December 31, 2015 | |||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||
Amortizable intangible assets | ||||||||||||||||
Core deposit intangible | $ | 16,151 | $ | (6,785 | ) | $ | 12,920 | $ | (5,549 | ) |
December 31, 2019 | December 31, 2018 | |||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||
Amortizable intangible assets | ||||||||||||||||
Core deposit intangible | $ | 40,590 | $ | (13,911 | ) | $ | 20,711 | $ | (10,321 | ) |
2017 | $ | 1,425 | ||
2018 | 1,422 | |||
2019 | 1,280 | |||
2020 | 984 | |||
2021 | 910 | |||
Thereafter | 3,345 | |||
|
| |||
$ | 9,366 | |||
|
|
2020 | $ | 3,723 | ||
2021 | 3,591 | |||
2022 | 3,516 | |||
2023 | 3,430 | |||
2024 | 3,225 | |||
Thereafter | 9,194 | |||
$ | 26,679 | |||
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Noninterest-bearing demand deposits | $ | 496,248 | $ | 335,955 | ||||
Interest-bearing demand deposits | 850,641 | 706,739 | ||||||
Money market (variable rate) | 290,896 | 231,956 | ||||||
Savings deposits | 357,582 | 238,956 | ||||||
Certificates of deposit of $250,000 or more | 105,361 | 67,697 | ||||||
Other certificates and time deposits | 370,482 | 298,850 | ||||||
|
|
|
| |||||
Total deposits | $ | 2,471,210 | $ | 1,880,153 | ||||
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
Leases
Year | Amount | |||
2020 | $ | 476 | ||
2021 | 476 | |||
2022 | 504 | |||
2023 | 504 | |||
2024 and thereafter | 1,105 | |||
Total lease payments | $ | 3,065 | ||
Less: Interest | (51 | ) | ||
Present value of lease liabilities | $ | 3,014 | ||
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Noninterest-bearing demand deposits | $ | 709,760 | $ | 642,129 | ||||
Interest-bearing demand deposits | 1,159,296 | 864,026 | ||||||
Money market (variable rate) | 522,382 | 420,123 | ||||||
Savings deposits | 563,952 | 400,187 | ||||||
Certificates of deposit of $250,000 or more | 461,435 | 371,824 | ||||||
Other certificates and time deposits | 514,177 | 441,087 | ||||||
Total deposits | $ | 3,931,002 | $ | 3,139,376 | ||||
Retail | Brokered | Total | ||||||||||
2017 | $ | 215,751 | $ | 41,320 | $ | 257,071 | ||||||
2018 | 74,148 | 1,250 | 75,398 | |||||||||
2019 | 73,774 | — | 73,774 | |||||||||
2020 | 31,702 | — | 31,702 | |||||||||
2021 | 12,528 | 3,150 | 15,678 | |||||||||
Thereafter | 19,741 | 2,479 | 22,220 | |||||||||
|
|
|
|
|
| |||||||
$ | 427,644 | $ | 48,199 | $ | 475,843 | |||||||
|
|
|
|
|
|
Retail | Brokered | Total | ||||||||||
2020 | $ | 722,672 | $ | 24,350 | $ | 747,022 | ||||||
2021 | 102,449 | 20,508 | 122,957 | |||||||||
2022 | 32,925 | 15,256 | 48,181 | |||||||||
2023 | 16,527 | 16,648 | 33,175 | |||||||||
2024 | 22,995 | — | 22,995 | |||||||||
Thereafter | 1,282 | — | 1,282 | |||||||||
$ | 898,850 | $ | 76,762 | $ | 975,612 | |||||||
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Federal Home Loan Bank advances, variable and fixed rates ranging from 0.74% to 7.53%, due at various dates through November 15, 2024 | $ | 124,034 | $ | 158,948 | ||||
Securities sold under agreements to repurchase | 57,144 | 154,399 | ||||||
Federal funds purchased | 66,811 | 136,000 | ||||||
Notes payable, variable rate of 2.75%, due at various dates through July 13, 2019 | 19,500 | — | ||||||
|
|
|
| |||||
Total borrowings | $ | 267,489 | $ | 449,347 | ||||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Federal Home Loan Bank advances, variable and fixed rates ranging from 0.68% to 7.53%, due at various dates through August 20, 2029 | $ | 390,800 | $ | 356,579 | ||||
Securities sold under agreements to repurchase | 90,941 | 52,116 | ||||||
Federal funds purchased | 68,000 | 141,689 | ||||||
Total borrowings | $ | 549,741 | $ | 550,384 | ||||
2017 | $ | 203,610 | ||
2018 | 33,328 | |||
2019 | 21,957 | |||
2020 | 2,847 | |||
2021 | 5,317 | |||
Thereafter | 430 | |||
|
| |||
$ | 267,489 | |||
|
|
2020 | $ | 276,970 | ||
2021 | 15,102 | |||
2022 | 52,222 | |||
2023 | 183 | |||
2024 | 80,116 | |||
Thereafter | 125,148 | |||
$ | 549,741 | |||
The Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remain under the Bank’s control. Securities sold under agreements to repurchase are secured by federal agency collateralized mortgage obligations and mortgage-backed pools.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
The following table shows repurchase agreements accounted for as secured borrowings (in thousands):
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||||||||||
December 31, 2016 | Overnight and Continuous | Up to one year | One to three years | Three to five years | Five to ten years | Beyond ten years | Total | |||||||||||||||||||||
Repurchase Agreements andrepurchase-to-maturity transactions | ||||||||||||||||||||||||||||
Repurchase Agreements | $ | 57,144 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 57,144 | ||||||||||||||
Securities pledged for Repurchase Agreements | ||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Federal agency collateralized mortgage obligations | 44,408 | — | — | — | — | — | 44,408 | |||||||||||||||||||||
Federal agency mortgage-backed pools | 19,980 | — | — | — | — | — | 19,980 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | 64,388 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 64,388 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||||||||||||||
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||||||||||
Overnight and Continuous | Up to one year | One to three years | Three to five years | Five to ten years | Beyond ten years | Total | ||||||||||||||||||||||
Repurchase Agreements and repurchase-to-maturity transactions | ||||||||||||||||||||||||||||
Repurchase Agreements | $ | 90,941 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 90,941 | ||||||||||||||
Securities pledged for Repurchase Agreements | ||||||||||||||||||||||||||||
Federal agency collateralized mortgage obligations | $ | 35,537 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 35,537 | ||||||||||||||
Federal agency mortgage-backed pools | 71,234 | — | — | — | — | — | 71,234 | |||||||||||||||||||||
Total | $ | 106,771 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 106,771 | ||||||||||||||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2019.
2019.
2019.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
2017.
2017.
shares as of December 31, 2019.
HORIZON BANCORPAND SUBSIDIARIES
December 31 | December 31 | December 31 | ||||||||||
2016 | 2015 | 2014 | ||||||||||
Income tax expense | ||||||||||||
Currently payable | ||||||||||||
Federal | $ | 7,467 | $ | 5,511 | $ | 4,561 | ||||||
Deferred | 1,334 | 1,721 | 1,594 | |||||||||
|
|
|
|
|
| |||||||
Total income tax expense | $ | 8,801 | $ | 7,232 | $ | 6,155 | ||||||
|
|
|
|
|
| |||||||
Reconciliation of federal statutory to actual tax expense | ||||||||||||
Federal statutory income tax at 35% | $ | 11,450 | $ | 9,724 | $ | 8,488 | ||||||
Tax exempt interest | (1,882 | ) | (1,708 | ) | (1,628 | ) | ||||||
Tax exempt income | (575 | ) | (488 | ) | (366 | ) | ||||||
Other tax exempt income | (608 | ) | (199 | ) | (309 | ) | ||||||
Nondeductible and other | 416 | (97 | ) | (30 | ) | |||||||
|
|
|
|
|
| |||||||
Actual tax expense | $ | 8,801 | $ | 7,232 | $ | 6,155 | ||||||
|
|
|
|
|
|
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 5,581 | $ | 5,329 | ||||
Net operating loss (from acquisitions) | 2,368 | 1,679 | ||||||
Director and employee benefits | 3,124 | 2,223 | ||||||
Unrealized loss on AFS securities and fair value hedge | 937 | 711 | ||||||
Accrued Pension | 1,323 | 1,725 | ||||||
Fair value adjustment on acquisitions | 2,340 | 756 | ||||||
Other | 1,593 | 273 | ||||||
|
|
|
| |||||
Total assets | 17,266 | 12,696 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Depreciation | (1,916 | ) | (2,180 | ) | ||||
State tax | (341 | ) | (192 | ) | ||||
Federal Home Loan Bank stock dividends | (474 | ) | (343 | ) | ||||
Difference in basis of intangible assets | (4,654 | ) | (2,938 | ) | ||||
FHLB Penalty | — | (123 | ) | |||||
Other | (431 | ) | (589 | ) | ||||
|
|
|
| |||||
Total liabilities | (7,816 | ) | (6,040 | ) | ||||
Valuation allowance | (2,018 | ) | (1,082 | ) | ||||
|
|
|
| |||||
Net deferred tax asset | $ | 7,432 | $ | 5,249 | ||||
|
|
|
|
December 31 | December 31 | December 31 | ||||||||||
2019 | 2018 | 2017 | ||||||||||
Income tax expense | ||||||||||||
Currently payable | ||||||||||||
Federal | $ | 11,143 | $ | 9,166 | $ | 12,079 | ||||||
State | 140 | — | — | |||||||||
Deferred | ||||||||||||
Federal | 1,787 | 1,277 | 331 | |||||||||
State | 233 | — | — | |||||||||
Revaluation of deferred tax assets | — | — | 2,426 | |||||||||
Total income tax expense | $ | 13,303 | $ | 10,443 | $ | 14,836 | ||||||
Reconciliation of federal statutory to actual tax expense | ||||||||||||
Federal statutory income tax at 21% in 201 9 and2 018 35% in 2017 | $ | 16,767 | $ | 13,348 | $ | 16,783 | ||||||
Tax exempt interest | (2,977 | ) | (1,982 | ) | (2,699 | ) | ||||||
Tax exempt income | (587 | ) | (448 | ) | (638 | ) | ||||||
Stock compensation | (324 | ) | (384 | ) | (546 | ) | ||||||
Revaluation of deferred tax assets | — | — | 2,426 | |||||||||
Other tax exempt income | (313 | ) | (260 | ) | (456 | ) | ||||||
State tax | 295 | — | — | |||||||||
Nondeductible and other | 442 | 169 | (34 | ) | ||||||||
Actual tax expense | $ | 13,303 | $ | 10,443 | $ | 14,836 | ||||||
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Allowance for loan losses | $ | 4,120 | $ | 3,831 | ||||
Net operating loss and tax credits (from acquisitions) | 54 | 1,038 | ||||||
Director and employee benefits | 1,890 | 2,392 | ||||||
Unrealized loss on AFS securities and fair value hedge | — | 2,165 | ||||||
Accrued pension | 775 | 801 | ||||||
Fair value adjustment on acquisitions | — | — | ||||||
Other | 2,145 | 670 | ||||||
Total assets | 8,984 | 10,897 | ||||||
Liabilities | ||||||||
Depreciation | (4,456 | ) | (1,850 | ) | ||||
State tax | (10 | ) | (137 | ) | ||||
Federal Home Loan Bank stock dividends | (368 | ) | (330 | ) | ||||
Difference in basis of intangible assets | (3,427 | ) | (2,919 | ) | ||||
Fair value adjustment on acquisitions | (2,488 | ) | (62 | ) | ||||
Unrealized gain on AFS securities and fair value hedge | (1,710 | ) | — | |||||
Other | (63 | ) | (119 | ) | ||||
Total liabilities | (12,522 | ) | (5,417 | ) | ||||
Valuation allowance | — | (1,038 | ) | |||||
Net deferred tax asset/(liability) | $ | (3,538 | ) | $ | 4,442 | |||
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
carryforwards.
2019.
2016.
Loss
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Unrealized gain (loss) on securities available for sale | $ | (6,007 | ) | $ | 920 | |||
Unamortized gain on securities held to maturity, previously transferred from AFS | 456 | 1,109 | ||||||
Unrealized loss on derivative instruments | (3,132 | ) | (3,141 | ) | ||||
Tax effect | 3,039 | 389 | ||||||
|
|
|
| |||||
Total accumulated other comprehensive income (loss) | $ | (5,644 | ) | $ | (723 | ) | ||
|
|
|
|
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Unrealized gain (loss) on securities available for sale | $ | 12,687 | $ | (8,561 | ) | |||
Unamortized gain (loss) on securities held to maturity, previously transferred from AFS | (107 | ) | 10 | |||||
Unrealized loss on derivative instruments | (4,440 | ) | (1,760 | ) | ||||
Tax effect | (1,708 | ) | 2,167 | |||||
Total accumulated other comprehensive income (loss) | $ | 6,432 | $ | (8,144 | ) | |||
Because of the nature of its activities, Horizon is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.
HORIZON BANCORPAND SUBSIDIARIES
Horizon and the Bank’s actual and required capital ratios as of December 31, 20162019 and 20152018 were as follows:
Actual | Required For Capital1 Adequacy Purposes | Required For Capital1 Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt1 Corrective Action Provisions | |||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||||||||||
Total capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 316,576 | 13.87 | % | $ | 182,596 | 8.00 | % | $ | 196,976 | 8.63 | % | N/A | N/A | ||||||||||||||||||
Bank | 319,013 | 13.98 | % | $ | 182,541 | 8.00 | % | 196,916 | 8.63 | % | $ | 228,176 | 10.00 | % | ||||||||||||||||||
Tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 301,739 | 13.22 | % | $ | 136,947 | 6.00 | % | 151,326 | 6.63 | % | N/A | N/A | ||||||||||||||||||||
Bank | 304,176 | 13.33 | % | $ | 136,905 | 6.00 | % | 151,280 | 6.63 | % | 182,540 | 8.00 | % | |||||||||||||||||||
Common equity tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 263,313 | 11.50 | % | $ | 103,036 | 4.50 | % | 117,460 | 5.13 | % | N/A | N/A | ||||||||||||||||||||
Bank | 304,176 | 13.33 | % | $ | 102,679 | 4.50 | % | 117,054 | 5.13 | % | 148,314 | 6.50 | % | |||||||||||||||||||
Tier 1 capital1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 301,739 | 10.44 | % | $ | 115,609 | 4.00 | % | 115,609 | 4.00 | % | N/A | N/A | ||||||||||||||||||||
Bank | 304,176 | 9.93 | % | $ | 122,521 | 4.00 | % | 122,521 | 4.00 | % | 153,151 | 5.00 | % | |||||||||||||||||||
As of December 31, 2015 | ||||||||||||||||||||||||||||||||
Total capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 264,452 | 13.99 | % | $ | 151,223 | 8.00 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Bank | 237,348 | 12.57 | % | 151,057 | 8.00 | % | N/A | N/A | $ | 188,821 | 10.00 | % | ||||||||||||||||||||
Tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 249,918 | 13.22 | % | 113,427 | 6.00 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Bank | 222,814 | 11.80 | % | 113,295 | 6.00 | % | N/A | N/A | 151,060 | 8.00 | % | |||||||||||||||||||||
Common equity tier 1 capital1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 204,350 | 10.81 | % | 85,067 | 4.50 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Bank | 222,814 | 11.80 | % | 84,971 | 4.50 | % | N/A | N/A | 122,737 | 6.50 | % | |||||||||||||||||||||
Tier 1 capital1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 249,918 | 9.82 | % | 101,800 | 4.00 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Bank | 222,814 | 8.77 | % | 101,626 | 4.00 | % | N/A | N/A | 127,032 | 5.00 | % |
Actual | Required for Capital 1 Adequacy Purposes | Required For Capital 1 Adequacy Purposes with Capital Buffer | Well Capitalized Under Prompt 1 Corrective Action Provisions | |||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 548,364 | 13.95 | % | $ | 314,395 | 8.00 | % | $ | 412,644 | 10.50 | % | N/A | N/A | ||||||||||||||||||
Bank | 497,227 | 12.65 | % | 314,452 | 8.00 | % | 412,718 | 10.50 | % | $ | 393,065 | 10.00 | % | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 13.50 | % | 235,796 | 6.00 | % | 334,044 | 8.50 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 235,823 | 6.00 | % | 334,082 | 8.50 | % | 314,430 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 473,150 | 12.04 | % | 176,846 | 4.50 | % | 275,094 | 7.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 12.20 | % | 176,867 | 4.50 | % | 275,126 | 7.00 | % | 255,475 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 530,643 | 10.50 | % | 202,111 | 4.00 | % | 202,111 | 4.00 | % | N/A | N/A | |||||||||||||||||||||
Bank | 479,506 | 9.49 | % | 202,110 | 4.00 | % | 202,110 | 4.00 | % | 252,638 | 5.00 | % | ||||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | $ | 427,616 | 13.39 | % | $ | 255,419 | 8.00 | % | $ | 315,283 | 9.875 | % | N/A | N/A | ||||||||||||||||||
Bank | 396,755 | 12.43 | % | 255,419 | 8.00 | % | 315,283 | 9.875 | % | $ | 319,274 | 10.00 | % | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 409,760 | 12.83 | % | 191,565 | 6.00 | % | 251,429 | 7.875 | % | N/A | N/A | |||||||||||||||||||||
Bank | 378,899 | 11.87 | % | 191,565 | 6.00 | % | 251,429 | 7.875 | % | 255,420 | 8.00 | % | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) | ||||||||||||||||||||||||||||||||
Consolidated | 371,297 | 11.63 | % | 143,673 | 4.50 | % | 203,537 | 6.375 | % | N/A | N/A | |||||||||||||||||||||
Bank | 378,899 | 11.87 | % | 143,674 | 4.50 | % | 203,537 | 6.375 | % | 207,528 | 6.50 | % | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) | ||||||||||||||||||||||||||||||||
Consolidated | 409,760 | 10.12 | % | 162,033 | 4.00 | % | 162,033 | 4.000 | % | N/A | N/A | |||||||||||||||||||||
Bank | 378,899 | 9.34 | % | 162,327 | 4.00 | % | 162,327 | 4.000 | % | 202,908 | 5.00 | % |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
June 15, 2018 (and for four additional stock splits in 2003, 2011, 2012 and 2016 after the 2003 Plan was adopted).
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding, beginning of year | 66,000 | $ | 7.38 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (25,990 | ) | 7.47 | |||||||||||||
Forfeited | (3,375 | ) | 8.22 | |||||||||||||
|
| |||||||||||||||
Outstanding, end of year | 36,635 | 7.25 | 3.69 | $ | 760,345 | |||||||||||
|
| |||||||||||||||
Exercisable, end of year | 35,285 | 7.11 | 3.63 | 736,963 |
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding, beginning of year | 21,300 | $ | 5.03 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (8,625 | ) | 4.45 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Outstanding, end of year | 12,675 | 5.42 | 1.04 | $ | 172,096 | |||||||||||
Exercisable, end of year | 12,675 | 5.42 | 1.04 | 172,096 |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
agreements.
December 31 | 2016 | 2015 | 2014 | |||||||||
Dividend yields | 2.34 | % | 2.35 | % | 2.01 | % | ||||||
Volatility factors of expected market price of common stock | 28.60 | % | 28.97 | % | 29.54 | % | ||||||
Risk-free interest rates | 1.83 | % | 2.10 | % | 2.66 | % | ||||||
Expected life of options | 8 years | 8 years | 8 years |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Dividend yields | 2.39 | % | 1.99 | % | 1.75 | % | ||||||
Volatility factors of expected market price of common stock | 28.67 | % | 28.60 | % | 28.52 | % | ||||||
Risk-free interest rates | 2.61 | % | 2.85 | % | 2.42 | % | ||||||
Expected life of options | 8 years | 8 years | 8 years |
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding, beginning of year | 181,627 | $ | 14.72 | |||||||||||||
Granted | 103,959 | 15.57 | ||||||||||||||
Exercised | (1,500 | ) | 13.49 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Outstanding, end of year | 284,086 | 15.04 | 7.99 | $ | 3,682,975 | |||||||||||
|
| |||||||||||||||
Exercisable, end of year | 120,957 | 14.33 | 7.00 | 1,653,164 | ||||||||||||
|
|
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding, beginning of year | 307,317 | $ | 12.28 | |||||||||||||
Granted | 35,966 | 16.74 | ||||||||||||||
Exercised | (24,256 | ) | 9.75 | |||||||||||||
Forfeited | (2,250 | ) | 10.38 | |||||||||||||
Outstanding, end of year | 316,777 | 12.99 | 6.37 | $ | 1,822,924 | |||||||||||
Exercisable, end of year | 242,814 | 11.58 | 5.74 | 1,802,010 |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
$4.83.
Shares | Weighted Average Grant Date Fair Value | |||||||
Non-vested beginning of year | 123,571 | $ | 12.13 | |||||
Vested | (72,563 | ) | 9.69 | |||||
Granted | 19,951 | 15.57 | ||||||
Forfeited | — | — | ||||||
|
| |||||||
Non-vested, end of year | 70,959 | 15.59 | ||||||
|
|
Grants vest at the end of three, four or five years of continuous employment.
Shares | Weighted Average Grant Date Fair Value | |||||||
Non-vested, beginning of year | 176,538 | $ | 16.90 | |||||
Vested | (43,358 | ) | 11.17 | |||||
Granted | 84,526 | 16.74 | ||||||
Forfeited | (4,137 | ) | 18.23 | |||||
Non-vested, end of year | 213,569 | 17.97 | ||||||
2017.
2017.
HORIZON BANCORPAND SUBSIDIARIES
Notes
(Table dollarsreceive interest from the counterparty at one month LIBOR and to pay interest to the counter party at a rate of 2.81% on a notional amount of $50.0 million at December 31, 2019 and 2018. Under the agreement, the Company pays or receives the net interest amount monthly, with the monthly settlements included in thousands except for per share data)
interest expense.
2018.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Asset Derivatives December 31, 2016 | Liability Derivatives December 31, 2016 | |||||||||||||||
Derivatives designated as hedging instruments (Unaudited) | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||
Interest rate contracts | Loans | $ | — | Other liabilities | $ | 6 | ||||||||||
Interest rate contracts | Other Assets | 6 | Other liabilities | 3,132 | ||||||||||||
|
|
|
| |||||||||||||
Total derivatives designated as hedging instruments | 6 | 3,138 | ||||||||||||||
|
|
|
| |||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Mortgage loan contracts | Other assets | 602 | Other liabilities | 22 | ||||||||||||
|
|
|
| |||||||||||||
Total derivatives not designated as hedging instruments | 602 | 22 | ||||||||||||||
|
|
|
| |||||||||||||
Total derivatives | $ | 608 | $ | 3,160 | ||||||||||||
|
|
|
| |||||||||||||
Asset Derivatives December 31, 2015 | Liability Derivatives December 31, 2015 | |||||||||||||||
Derivatives designated as hedging instruments (Unaudited) | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||
Interest rate contracts | Loans | $ | — | Other liabilities | $ | 1,782 | ||||||||||
Interest rate contracts | Other Assets | 1,782 | Other liabilities | 3,141 | ||||||||||||
|
|
|
| |||||||||||||
Total derivatives designated as hedging instruments | 1,782 | 4,923 | ||||||||||||||
|
|
|
| |||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Mortgage loan contracts | Other assets | 642 | Other liabilities | — | ||||||||||||
|
|
|
| |||||||||||||
Total derivatives not designated as hedging instruments | 642 | — | ||||||||||||||
|
|
|
| |||||||||||||
Total derivatives | $ | 2,424 | $ | 4,923 | ||||||||||||
|
|
|
|
Asset Derivatives | Liability Derivatives | |||||||||||||||
December 31, 2019 | December 31, 2019 | |||||||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Interest rate contracts | Other a ssets | $ | 11,422 | Other liabilities | $ | 15,861 | ||||||||||
Total derivatives desginated as hedging instruments | 11,422 | 15,861 | ||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Mortgage loan contracts | Other assets | 264 | Other liabilities | 38 | ||||||||||||
Total derivatives not designated as hedging instruments | 264 | 38 | ||||||||||||||
Total derivatives | $ | 11,686 | $ | 3,745 | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||
December 31, 2018 | December 31, 2018 | |||||||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Interest rate contracts | Other a ssets | $ | 42 | Other liabilities | $ | 1,802 | ||||||||||
Total derivatives desginated as hedging instruments | 42 | 1,802 | ||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Mortgage loan contracts | Other assets | 135 | Other liabilities | — | ||||||||||||
Total derivatives not designated as hedging instruments | 135 | — | ||||||||||||||
Total derivatives | $ | 177 | $ | 1,802 |
Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion) | ||||||||||||
Years Ended December 31 | ||||||||||||
Derivative in cash flow hedging relationship | 2016 | 2015 | 2014 | |||||||||
Interest rate contracts | $ | 6 | $ | 127 | $ | (332 | ) |
Amount of (Gain) Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion) | ||||||||||||
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Derivatives in cash flow hedging relationship | ||||||||||||
Interest rate contracts | $ | (2,117 | ) | $ | (25 | ) | $ | 913 |
HORIZON BANCORPAND SUBSIDIARIES
Location of gain (loss) recognized on | Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 | |||||||||||||
derivative | 2019 | 2018 | 2017 | |||||||||||
Derivative in fair value hedging relationship | ||||||||||||||
Interest rate contracts | Interest income - loans | $ | (11,380 | ) | $ | (852 | ) | $ | (817 | ) | ||||
Interest rate contracts | Interestincome | 11,380 | 852 | 817 | ||||||||||
Total | $ | — | $ | — | $ | — | ||||||||
Location of gain (loss) recognized on | Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 | |||||||||||||
derivative | 2019 | 2018 | 2017 | |||||||||||
Derivative not designated as hedging relationship | ||||||||||||||
Mortgage contracts | Other income - gain on sale of loans | $ | 91 | $ | (5 | ) | $ | (439 | ) |
Derivative in fair value hedging relationship | Location of gain (loss) recognized on derivative | Amount of Gain (Loss) Recognized on Derivative | ||||||||||||
Years Ended December 31 | ||||||||||||||
2016 | 2015 | 2014 | ||||||||||||
Interest rate contracts | Interest income - loans | $ | (1,776 | ) | $ | 574 | $ | 1,261 | ||||||
Interest rate contracts | Interest income - loans | 1,776 | (574 | ) | (1,261 | ) | ||||||||
|
|
|
|
|
| |||||||||
Total | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
| |||||||||
Derivative not designated as hedging relationship | Location of gain (loss) recognized on derivative | Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||||
Mortgage contracts | Other income - gain on sale of loans | $ | (62 | ) | $ | 195 | $ | 256 |
Level 1 | Quoted prices in active markets for identical assets or liabilities | |
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities | |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
2019.
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
December 31, 2016 | ||||||||||||||||
Available-for-sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 7,989 | $ | — | $ | 7,989 | $ | — | ||||||||
State and municipal | 116,592 | — | 116,592 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 137,195 | — | 137,195 | — | ||||||||||||
Federal agency mortgage-backed pools | 176,726 | — | 176,726 | — | ||||||||||||
Corporate notes | 1,329 | — | 1,329 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totalavailable-for-sale securities | 439,831 | — | 439,831 | — | ||||||||||||
Hedged loans | 122,345 | — | 122,345 | — | ||||||||||||
Forward sale commitments | 602 | — | 602 | — | ||||||||||||
Interest rate swap agreements | (3,138 | ) | — | (3,138 | ) | — | ||||||||||
Commitments to originate loans | (22 | ) | — | (22 | ) | — | ||||||||||
December 31, 2015 | ||||||||||||||||
Available-for-sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 5,926 | $ | — | $ | 5,926 | $ | — | ||||||||
State and municipal | 75,095 | — | 75,095 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 156,203 | — | 156,203 | — | ||||||||||||
Federal agency mortgage-backed pools | 207,704 | — | 207,704 | — | ||||||||||||
Corporate notes | 54 | — | 54 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totalavailable-for-sale securities | 444,982 | — | 444,982 | — | ||||||||||||
Hedged loans | 115,472 | — | 115,472 | — | ||||||||||||
Forward sale commitments | 642 | — | 642 | — | ||||||||||||
Interest rate swap agreements | (4,923 | ) | — | (4,923 | ) | — |
HORIZON BANCORPAND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Table dollars in thousands except for per share data)
December 31, 2019 | ||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Available for sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,413 | $ | — | $ | 1,413 | $ | — | ||||||||
State and municipal | 405,768 | — | 405,768 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 269,252 | — | 269,252 | — | ||||||||||||
Federal agency mortgage-backed pools | 146,572 | — | 146,572 | — | ||||||||||||
Corporate notes | 11,771 | — | 11,771 | — | ||||||||||||
Total available for sale securities | 834,776 | — | 834,776 | — | ||||||||||||
Interest rate swap agreements asset | 11,422 | — | 11,422 | — | ||||||||||||
Forward sale commitments | 264 | — | 264 | — | ||||||||||||
Interest rate swap agreements liability | (15,861 | ) | — | (15,861 | ) | — | ||||||||||
Commitments to originate loans | (38 | ) | — | (38 | ) | — |
December 31, 2018 | ||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Available for sale securities | ||||||||||||||||
U.S. Treasury and federal agencies | $ | 16,608 | $ | — | $ | 16,608 | $ | — | ||||||||
State and municipal | 209,303 | — | 209,303 | — | ||||||||||||
Federal agency collateralized mortgage obligations | 185,003 | — | 185,003 | — | ||||||||||||
Federal agency mortgage-backed pools | 178,736 | — | 178,736 | — | ||||||||||||
Corporate notes | 10,698 | — | 10,698 | — | ||||||||||||
Total available for sale securities | 600,348 | — | 600,348 | — | ||||||||||||
Interest rate swap agreements asset | 42 | — | 42 | — | ||||||||||||
Forward sale commitments | 135 | — | 135 | — | ||||||||||||
Interest rate swap agreements liability | (1,801 | ) | — | (1,801 | ) | — | ||||||||||
Commitments to originate loans | — | — | — | — |
Non Interest Income Total gains and losses from: | Years Ended December 31 | |||||||||||
2016 | 2015 | 2014 | ||||||||||
Hedged loans | $ | (1,776 | ) | $ | 574 | $ | 1,261 | |||||
Fair value interest rate swap agreements | 1,776 | (574 | ) | (1,261 | ) | |||||||
Derivative loan commitments | (62 | ) | 195 | 256 | ||||||||
|
|
|
|
|
| |||||||
$ | (62 | ) | $ | 195 | $ | 256 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
Non-interest Income | 2019 | 2018 | 2017 | |||||||||
Total gains and losses from: | ||||||||||||
Hedged loans | $ | (11,380 | ) | $ | (852 | ) | $ | (817 | ) | |||
Fair value interest rate swap agreements | 11,380 | 852 | 817 | |||||||||
Derivative loan commitments | 91 | (5 | ) | (439 | ) | |||||||
$ | 91 | $ | (5 | ) | $ | (439 | ) | |||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
December 31, 2016 | ||||||||||||||||
Impaired loans | $ | 2,246 | $ | — | $ | — | $ | 2,246 | ||||||||
Mortgage servicing rights | 11,174 | — | — | 11,174 | ||||||||||||
December 31, 2015 | ||||||||||||||||
Impaired loans | $ | 6,803 | $ | — | $ | — | $ | 6,803 | ||||||||
Mortgage servicing rights | 8,874 | — | — | 8,874 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
December 31, 2019 | ||||||||||||||||
Impaired loans | $ | 6,806 | $ | — | $ | — | $ | 6,806 | ||||||||
Mortgage servicing rights | 14,327 | — | — | 14,327 | ||||||||||||
December 31, 2018 | ||||||||||||||||
Impaired loans | $ | 5,661 | $ | — | $ | — | $ | 5,661 | ||||||||
Mortgage servicing rights | 12,349 | — | — | 12,349 |
HORIZON BANCORPAND SUBSIDIARIES
Fair Value at December 31, 2016 | Valuation Technique | Unobservable Inputs | Range (Weighted Average) | |||||||
Impaired loans | $ | 2,246 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 10% - 16% (13%) | |||||
Mortgage servicing rights | $ | 11,174 | Discounted cashflows | Discount rate, Constant prepayment rate, Probability of default | 10% - 16% (13%), 4% - 7% (4.6%), 1% - 10% (4.5%) | |||||
Fair Value at December 31, 2015 | Valuation Technique | Unobservable Inputs | Range (Weighted Average) | |||||||
Impaired loans | $ | 6,803 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 10% - 15% (12%) | |||||
Mortgage servicing rights | $ | 8,874 | Discounted cashflows | Discount rate, Constant prepayment rate, Probability of default | 10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%) |
December 31, 2019 | ||||||||||||
Fair | Valuation | Unobservable | Range | |||||||||
Value | Technique | Inputs | (Weighted Average) | |||||||||
Impaired loans | $ | 6,806 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 0%-100% (7.4%) | |||||||
Mortgage servicing rights | 14,327 | Discounted cash flows | Discount rate, Constant prepayment rate, Probability of default | 8.7%-9.0% (8.7%),10.2%-19.8% ( 12.2%), 0.1%-2.9% (0.7%) |
December 31, 2018 | ||||||||||||
Fair | Valuation | Unobservable | Range | |||||||||
Value | Technique | Inputs | (Weighted Average) | |||||||||
Impaired loans | $ | 5,661 | Collateral based measurement | Discount to reflect current market conditions and ultimate collectability | 0%-100% (15.5%) | |||||||
Mortgage servicing rights | 12,349 | Discounted cash flows | Discount rate, Constant prepayment rate, Probability of default | 10.2%-11.0% 10.3%),( 9.1%-21.9% (9.3%),0.1%-2.8% (0.6%) |
HORIZON BANCORPAND SUBSIDIARIES
marketability factors.
December 31, 2016 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Carrying | Assets | Inputs | Inputs | |||||||||||||
Amount | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 70,832 | $ | 70,832 | $ | — | $ | — | ||||||||
Investment securities, held to maturity | 193,194 | — | 194,086 | — | ||||||||||||
Loans held for sale | 8,087 | — | — | 8,087 | ||||||||||||
Loans excluding loan level hedges, net | 1,998,804 | — | — | 1,965,928 | ||||||||||||
Stock in FHLB and FRB | 23,932 | — | 23,932 | — | ||||||||||||
Interest receivable | 12,713 | — | 12,713 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 496,248 | $ | 496,248 | $ | — | $ | — | ||||||||
Interest-bearing deposits | 1,974,962 | — | 1,839,167 | — | ||||||||||||
Borrowings | 267,489 | — | 261,141 | — | ||||||||||||
Subordinated debentures | 37,456 | — | 36,371 | — | ||||||||||||
Interest payable | 472 | — | 472 | — |
HORIZON BANCORPAND SUBSIDIARIES
December 31, 2019 | ||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 98,831 | $ | 98,831 | $ | — | $ | — | ||||||||
Interest-earning time deposits | 8,455 | — | 8,537 | — | ||||||||||||
Investment securities, held to maturity | 207,899 | — | 215,147 | — | ||||||||||||
Loans held for sale | 4,088 | — | — | 4,088 | ||||||||||||
Loans (excluding loan level hedges), net | 3,619,174 | — | — | 3,554,951 | ||||||||||||
Stock in FHLB | 22,447 | — | 22,447 | — | ||||||||||||
Interest receivable | 18,828 | — | 18,828 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 709,760 | $ | 709,760 | $ | — | $ | — | ||||||||
Interest bearing deposits | 3,221,242 | — | 3,180,768 | — | ||||||||||||
Borrowings | 549,741 | — | 546,995 | — | ||||||||||||
Subordinated debentures | 56,311 | — | 51,809 | — | ||||||||||||
Interest payable | 3,062 | — | 3,062 | — |
December 31, 2015 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Carrying | Assets | Inputs | Inputs | |||||||||||||
Amount | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 48,650 | $ | 48,650 | $ | — | $ | — | ||||||||
Investment securities, held to maturity | 187,629 | — | 193,703 | — | ||||||||||||
Loans held for sale | 7,917 | — | — | 7,917 | ||||||||||||
Loans excluding loan level hedges, net | 1,619,125 | — | — | 1,703,506 | ||||||||||||
Stock in FHLB and FRB | 13,823 | — | 13,823 | — | ||||||||||||
Interest receivable | 10,535 | — | 10,535 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 335,955 | $ | 335,955 | $ | — | $ | — | ||||||||
Interest-bearing deposits | 1,544,198 | — | 1,461,314 | — | ||||||||||||
Borrowings | 449,347 | — | 441,547 | — | ||||||||||||
Subordinated debentures | 32,797 | — | 32,996 | — | ||||||||||||
Interest payable | 507 | — | 507 | — |
December 31, 2018 | ||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 58,492 | $ | 58,492 | $ | — | $ | — | ||||||||
Interest-earning time deposits | 15,744 | — | 15,542 | — | ||||||||||||
Investment securities, held to maturity | 210,112 | — | 208,273 | — | ||||||||||||
Loans held for sale | 1,038 | — | — | 1,038 | ||||||||||||
Loans (excluding loan level hedges), net | 2,786,351 | — | — | 2,681,741 | ||||||||||||
Stock in FHLB | 18,073 | — | 18,073 | — | ||||||||||||
Interest receivable | 14,239 | — | 14,239 | — | ||||||||||||
Liabilities | ||||||||||||||||
Non-interest bearing deposits | $ | 642,129 | $ | 642,129 | $ | — | $ | — | ||||||||
Interest bearing deposits | 2,497,247 | — | 2,377,274 | — | ||||||||||||
Borrowings | 550,384 | — | 542,311 | — | ||||||||||||
Subordinated debentures | 37,837 | — | 35,711 | — | ||||||||||||
Interest payable | 2,031 | — | 2,031 | — |
C
Bancorp, Inc.:
December 31 | December 31 | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Total cash and cash equivalents | $ | 15,736 | $ | 26,507 | ||||
Investment in Bank | 386,389 | 276,718 | ||||||
Other assets | 2,504 | 3,392 | ||||||
|
|
|
| |||||
Total assets | $ | 404,629 | $ | 306,617 | ||||
|
|
|
| |||||
Liabilities | ||||||||
Borrowings | $ | 19,500 | $ | — | ||||
Subordinated debentures | 37,456 | 32,797 | ||||||
Other liabilities | 6,818 | 6,988 | ||||||
Stockholders’ Equity | 340,855 | 266,832 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 404,629 | $ | 306,617 | ||||
|
|
|
|
HORIZON BANCORPAND SUBSIDIARIES
December 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Total cash and cash equivalents | $ | 50,961 | $ | 30,653 | ||||
Investment in subsidiaries | 666,639 | 502,844 | ||||||
Other assets | 3,882 | 1,186 | ||||||
Total assets | $ | 721,482 | $ | 534,683 | ||||
Liabilities | ||||||||
Subordinated debentures | $ | 56,311 | $ | 37,837 | ||||
Other liabilities | 9,148 | 4,854 | ||||||
Stockholders’ Equity | 656,023 | 491,992 | ||||||
Total liabilities and stockholders’ equity | $ | 721,482 | $ | 534,683 | ||||
Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Operating Income (Expense) | ||||||||||||
Dividend income from Bank | $ | 20,000 | $ | 30,470 | $ | 12,500 | ||||||
Investment income | 33 | 15 | 12 | |||||||||
Other income | 42 | 24 | 17 | |||||||||
Interest expense | (2,376 | ) | (2,009 | ) | (2,009 | ) | ||||||
Employee benefit expense | (1,158 | ) | (1,093 | ) | (965 | ) | ||||||
Other expense | 1,279 | 910 | 883 | |||||||||
|
|
|
|
|
| |||||||
Income Before Undistributed Income of Subsidiaries | 17,820 | 28,317 | 10,438 | |||||||||
Undistributed Income of Subsidiaries | 5,938 | (8,168 | ) | 6,814 | ||||||||
|
|
|
|
|
| |||||||
Income Before Tax | 23,758 | 20,149 | 17,252 | |||||||||
Income Tax Benefit | 154 | 400 | 849 | |||||||||
|
|
|
|
|
| |||||||
Net Income | 23,912 | 20,549 | 18,101 | |||||||||
Preferred stock dividend | (42 | ) | (125 | ) | (133 | ) | ||||||
|
|
|
|
|
| |||||||
Net Income Available to Common Shareholders | $ | 23,870 | $ | 20,424 | $ | 17,968 | ||||||
|
|
|
|
|
|
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Operating Income (Expense) | ||||||||||||
Dividend income from subsidiaries | $ | 46,150 | $ | 46,950 | $ | 27,000 | ||||||
Other income | — | — | 540 | |||||||||
Interest expense | (3,209 | ) | (2,475 | ) | (2,791 | ) | ||||||
Employee benefit expense | (1,687 | ) | (1,423 | ) | (1,094 | ) | ||||||
Other expense | (416 | ) | (357 | ) | (326 | ) | ||||||
Income Before Undistributed Income of Subsidiaries | 40,838 | 42,695 | 23,329 | |||||||||
Undistributed Income of Subsidiaries | 25,053 | 9,643 | 8,804 | |||||||||
Income Before Tax | 65,891 | 52,338 | 32,133 | |||||||||
Income Tax Benefit | 647 | 779 | 984 | |||||||||
Net Income Available to Common Shareholders | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Net Income | $ | 23,912 | $ | 20,549 | $ | 18,101 | ||||||
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Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments, net of taxes | 6 | 127 | (332 | ) | ||||||||
Unrealized appreciation for the period onheld-to-maturity securities, net of taxes | (424 | ) | (357 | ) | 1,078 | |||||||
Unrealized appreciation (depreciation) onavailable-for-sale securities, net of taxes | (3,310 | ) | (1,891 | ) | 3,146 | |||||||
Less: reclassification adjustment for realized gains included in net income, net of taxes | (1,193 | ) | (123 | ) | (642 | ) | ||||||
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(4,921 | ) | (2,244 | ) | 3,250 | ||||||||
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| |||||||
Comprehensive Income | $ | 18,991 | $ | 18,305 | $ | 21,351 | ||||||
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HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net Income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Change in fair value of derivative instruments, net of taxes | (2,117 | ) | (25 | ) | 913 | |||||||
Unrealized appreciation for the period on held to maturity securities, net of taxes | (92 | ) | (150 | ) | (166 | ) | ||||||
Unrealized appreciation (depreciation) on available for sale securities, net of taxes | 16,727 | (4,003 | ) | 1,371 | ||||||||
Less: reclassification adjustment for realized (gains) losses included in net income, net of taxes | 59 | 351 | (25 | ) | ||||||||
14,576 | (3,827 | ) | 2,093 | |||||||||
Comprehensive Income | $ | 81,114 | $ | 49,290 | $ | 35,210 | ||||||
Years Ended December 31 | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 23,912 | $ | 20,549 | $ | 18,101 | ||||||
Items not requiring (providing) cash | ||||||||||||
Equity in undistributed net income of subsidiaries | (5,938 | ) | 8,168 | (6,814 | ) | |||||||
Change in | ||||||||||||
Share based compensation | 284 | 288 | 203 | |||||||||
Amortization of unearned compensation | 324 | 355 | 363 | |||||||||
Other assets | 888 | (634 | ) | 906 | ||||||||
Other liabilities | (244 | ) | (13 | ) | 1,377 | |||||||
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| |||||||
Net cash provided by operating activities | 19,226 | 28,713 | 14,136 | |||||||||
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| |||||||
Investing Activities | ||||||||||||
Acquisition of Summit | — | — | (7,036 | ) | ||||||||
Acquisition of Peoples | — | (19,365 | ) | — | ||||||||
Acquisition of Kosciusko | (6,741 | ) | — | — | ||||||||
Acquisition of LaPorte | (17,108 | ) | — | — | ||||||||
Acquisition of CNB | (5,296 | ) | — | — | ||||||||
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| |||||||
Net cash used in investing activities | (29,145 | ) | (19,365 | ) | (7,036 | ) | ||||||
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| |||||||
Financing Activities | ||||||||||||
Redemption of preferred stock | (12,500 | ) | — | — | ||||||||
Net change in borrowings | 19,500 | — | — | |||||||||
Dividends paid on preferred shares | (42 | ) | (125 | ) | (133 | ) | ||||||
Dividends paid on common shares | (8,382 | ) | (6,216 | ) | (4,744 | ) | ||||||
Exercise of stock options | 572 | 4,305 | 165 | |||||||||
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| |||||||
Net cash used in financing activities | (852 | ) | (2,036 | ) | (4,712 | ) | ||||||
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| |||||||
Net Change in Cash and Cash Equivalents | (10,771 | ) | 7,312 | 2,388 | ||||||||
Cash and Cash Equivalents at Beginning of Year | 26,507 | 19,195 | 16,807 | |||||||||
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| |||||||
Cash and Cash Equivalents at End of Year | $ | 15,736 | $ | 26,507 | $ | 19,195 | ||||||
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|
HORIZON BANCORPAND SUBSIDIARIES
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 66,538 | $ | 53,117 | $ | 33,117 | ||||||
Items not requiring (providing) cash | ||||||||||||
Equity in undistributed net income of subsidiaries | (25,053 | ) | (9,643 | ) | (8,804 | ) | ||||||
Change in: | ||||||||||||
Share based compensation | 215 | 251 | 325 | |||||||||
Amortization of unearned compensation | 705 | 169 | 135 | |||||||||
Other assets | (5,449 | ) | 132 | 388 | ||||||||
Other liabilities | 1,629 | 378 | (1,675 | ) | ||||||||
Net cash provided by operating activities | 38,585 | 44,404 | 23,486 | |||||||||
Investing Activities | ||||||||||||
Repurchase of outstanding stock | (1,595 | ) | — | — | ||||||||
Acquisition of Lafayette | — | — | (1,254 | ) | ||||||||
Acquisition of Wolverine | — | — | (7,688 | ) | ||||||||
Acquisition of Salin | 2,350 | — | — | |||||||||
Net cash used in investing activities | 755 | — | (8,942 | ) | ||||||||
Financing Activities | ||||||||||||
Net change in borrowings | 98 | (12,316 | ) | (6,803 | ) | |||||||
Dividends paid on common shares | (20,835 | ) | (15,418 | ) | (11,720 | ) | ||||||
Proceeds from issuance of stock | 1,705 | 622 | 1,604 | |||||||||
Net cash used in financing activities | (19,032 | ) | (27,112 | ) | (16,919 | ) | ||||||
Net Change in Cash and Cash Equivalents | 20,308 | 17,292 | (2,375 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Year | 30,653 | 13,361 | 15,736 | |||||||||
Cash and Cash Equivalents at End of Year | $ | 50,961 | $ | 30,653 | $ | 13,361 | ||||||
Three Months Ended 2016 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Interest income | $ | 23,528 | $ | 24,650 | $ | 28,962 | $ | 29,390 | ||||||||
Interest expense | 3,754 | 3,781 | 4,552 | 8,450 | ||||||||||||
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| |||||||||
Net interest income | 19,774 | 20,869 | 24,410 | 20,940 | ||||||||||||
Provision for loan losses | 532 | 232 | 455 | 623 | ||||||||||||
Gain on sale of securities | 108 | 767 | — | 961 | ||||||||||||
Net income | 5,381 | 6,326 | 6,602 | 5,603 | ||||||||||||
Net income available to common shareholders | $ | 5,339 | $ | 6,326 | $ | 6,602 | $ | 5,603 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.35 | $ | 0.31 | $ | 0.25 | ||||||||
Diluted | 0.30 | 0.34 | 0.30 | 0.25 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 17,924,124 | 18,268,880 | 21,538,752 | 22,155,549 | ||||||||||||
Diluted | 18,012,726 | 18,364,167 | 21,651,953 | 22,283,722 | ||||||||||||
Three Months Ended 2015 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Interest income | $ | 20,093 | $ | 21,127 | $ | 23,578 | $ | 23,790 | ||||||||
Interest expense | 3,207 | 3,277 | 3,802 | 3,568 | ||||||||||||
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| |||||||||
Net interest income | 16,886 | 17,850 | 19,776 | 20,222 | ||||||||||||
Provision for loan losses | 614 | 1,906 | 300 | 342 | ||||||||||||
Gain on sale of securities | 124 | — | — | 65 | ||||||||||||
Net income | 5,358 | 4,728 | 4,288 | 6,175 | ||||||||||||
Net income available to common shareholders | $ | 5,327 | $ | 4,697 | $ | 4,257 | $ | 6,144 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.39 | $ | 0.34 | $ | 0.25 | $ | 0.34 | ||||||||
Diluted | 0.37 | 0.33 | 0.24 | 0.34 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 13,824,017 | 13,860,008 | 17,408,964 | 17,905,871 | ||||||||||||
Diluted | 14,414,259 | 14,456,379 | 17,839,881 | 18,020,615 |
Three Months Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2019 | 2019 | 2019 | 2019 | |||||||||||||
Interest income | $ | 45,373 | $ | 53,850 | $ | 55,711 | $ | 53,398 | ||||||||
Interest expense | 11,093 | 12,321 | 12,248 | 11,879 | ||||||||||||
Net interest income | 34,280 | 41,529 | 43,463 | 41,519 | ||||||||||||
Provision for loan losses | 364 | 896 | 376 | 340 | ||||||||||||
Gain (loss) on sale of securities | 15 | (100 | ) | — | 10 | |||||||||||
Net income | $ | 10,816 | $ | 16,642 | $ | 20,537 | $ | 18,543 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.28 | $ | 0.37 | $ | 0.46 | $ | 0.41 | ||||||||
Diluted | 0.28 | 0.37 | 0.46 | 0.41 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 38,822,543 | 45,055,117 | 45,038,021 | 44,971,676 | ||||||||||||
Diluted | 38,906,172 | 45,130,408 | 45,113,730 | 45,103,065 |
Three Months Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2018 | 2018 | 2018 | 2018 | |||||||||||||
Interest income | $ | 39,426 | $ | 40,741 | $ | 42,271 | $ | 43,730 | ||||||||
Interest expense | 6,015 | 7,191 | 8,499 | 9,894 | ||||||||||||
Net interest income | 33,411 | 33,550 | 33,772 | 33,836 | ||||||||||||
Provision for loan losses | 567 | 635 | 1,176 | 528 | ||||||||||||
Gain (loss) on sale of securities | 11 | — | (122 | ) | (332 | ) | ||||||||||
Net income | $ | 12,804 | $ | 14,115 | $ | 13,065 | $ | 13,133 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.37 | $ | 0.34 | $ | 0.35 | ||||||||
Diluted | 0.33 | 0.37 | 0.34 | 0.34 | ||||||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 38,306,395 | 38,347,612 | 38,365,379 | 38,367,972 | ||||||||||||
Diluted | 38,468,810 | 38,519,401 | 38,534,970 | 38,488,861 |
referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Internal Control – Integrated Framework: (2013) issued by COSO.
Indianapolis, Indiana
February 28, 2017
Report of Independent Registered Public Accounting Firm
Audit Committee, Board of Directors and Stockholders
Horizon Bancorp
Michigan City, Indiana
We have audited Horizon Bancorp’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). thereon.
In our opinion,
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Horizon Bancorp and our report dated February 28, 2017, expressed an unqualified opinion thereon.
Indianapolis, Indiana
February 28, 2017
Inc.
Summary of Selected Financial Data
(Dollars in thousands except for per share data)
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Earnings | ||||||||||||||||||||
Net interest income | $ | 85,992 | $ | 74,734 | $ | 62,983 | $ | 61,383 | $ | 58,206 | ||||||||||
Provision for loan losses | 1,842 | 3,162 | 3,058 | 1,920 | 3,524 | |||||||||||||||
Non-interest income | 37,974 | 30,402 | 26,277 | 25,906 | 27,331 | |||||||||||||||
Non-interest expenses | 89,411 | 74,193 | 61,946 | 58,445 | 54,024 | |||||||||||||||
Income tax expense | 8,801 | 7,232 | 6,155 | 7,048 | 8,446 | |||||||||||||||
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Net income | 23,912 | 20,549 | 18,101 | 19,876 | 19,543 | |||||||||||||||
Preferred stock dividend | (42 | ) | (125 | ) | (133 | ) | (370 | ) | (481 | ) | ||||||||||
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Net income available to common shareholders | $ | 23,870 | $ | 20,424 | $ | 17,968 | $ | 19,506 | $ | 19,062 | ||||||||||
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Cash dividend declared | $ | 8,382 | $ | 6,216 | $ | 4,744 | $ | 3,655 | $ | 3,047 | ||||||||||
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Per Share Data | ||||||||||||||||||||
Basic earnings per share(1) | $ | 1.19 | $ | 1.30 | $ | 1.32 | $ | 1.51 | $ | 1.59 | ||||||||||
Diluted earnings per share(1) | 1.19 | 1.26 | 1.27 | 1.45 | 1.54 | |||||||||||||||
Cash dividends declared per common share(1) | 0.41 | 0.39 | 0.34 | 0.28 | 0.25 | |||||||||||||||
Book value per common share(1) | 15.37 | 14.20 | 13.16 | 11.76 | 11.33 | |||||||||||||||
Weighted-average shares outstanding | ||||||||||||||||||||
Basic(1) | 19,987,728 | 15,765,444 | 13,591,053 | 12,928,995 | 11,961,362 | |||||||||||||||
Diluted(1) | 20,082,410 | 16,197,312 | 14,181,188 | 13,501,445 | 12,406,765 | |||||||||||||||
Period End Totals | ||||||||||||||||||||
Loans, net of deferred loan fees and unearned income | $ | 2,135,986 | $ | 1,749,131 | $ | 1,378,554 | $ | 1,068,828 | $ | 1,190,717 | ||||||||||
Allowance for loan losses | 14,837 | 14,534 | 16,501 | 15,992 | 18,270 | |||||||||||||||
Total assets | 3,141,156 | 2,652,401 | 2,076,922 | 1,758,276 | 1,848,227 | |||||||||||||||
Total deposits | 2,471,210 | 1,880,153 | 1,482,319 | 1,291,520 | 1,294,153 | |||||||||||||||
Total borrowings | 304,945 | 482,144 | 383,840 | 288,782 | 378,095 | |||||||||||||||
Ratios | ||||||||||||||||||||
Loan to deposit | 86.43 | % | 93.03 | % | 93.00 | % | 82.76 | % | 92.01 | % | ||||||||||
Loan to total funding | 76.94 | % | 74.04 | % | 73.87 | % | 67.63 | % | 71.20 | % | ||||||||||
Return on average assets | 0.81 | % | 0.87 | % | 0.93 | % | 1.13 | % | 1.19 | % | ||||||||||
Average stockholders’ equity to average total assets | 10.22 | % | 9.30 | % | 9.33 | % | 9.34 | % | 8.63 | % | ||||||||||
Return on average stockholders’ equity | 7.92 | % | 9.87 | % | 10.60 | % | 12.86 | % | 14.72 | % | ||||||||||
Dividend payout ratio (dividends divided by net income) | 34.33 | % | 29.85 | % | 25.72 | % | 18.56 | % | 15.90 | % | ||||||||||
Price to book value ratio | 182.13 | % | 131.26 | % | 132.39 | % | 143.59 | % | 115.61 | % | ||||||||||
Price to earnings ratio | 23.56 | 14.78 | 13.75 | 11.69 | 8.53 |
Horizon’s Common Stock and Related Stockholders Matters
Horizon common stock is traded on the NASDAQ Global Select Market under the symbol “HBNC.” The following table sets forth, for the periods indicated, the high and low prices per share. Also summarized below are the cash dividends declared by quarter for 2016 and 2015.
2016 | ||||||||||||
Common Stock Prices | Dividends Declared Per Share | |||||||||||
High | Low | |||||||||||
First Quarter | $ | 18.59 | $ | 15.41 | $ | 0.10 | ||||||
Second Quarter | 16.76 | 15.87 | 0.10 | |||||||||
Third Quarter | 20.01 | 16.61 | 0.10 | |||||||||
Fourth Quarter | 28.41 | 17.84 | 0.11 | |||||||||
2015 | ||||||||||||
Common Stock Prices | Dividends Declared Per Share | |||||||||||
High | Low | |||||||||||
First Quarter | $ | 17.24 | $ | 14.92 | $ | 0.09 | ||||||
Second Quarter | 17.35 | 15.23 | 0.09 | |||||||||
Third Quarter | 17.43 | 15.07 | 0.10 | |||||||||
Fourth Quarter | 18.77 | 15.72 | 0.10 |
The approximate number of holders of record of Horizon’s outstanding common stock as of December 31, 2016, was 1,364.
Horizon Bancorp
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | |||||||||
Equity compensation plans approved by security holders | 320,721 | $ | 14.15 | 691,482 | ||||||||
Equity compensation plans not approved by security holders | — | $ | — | — | ||||||||
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Total | 320,721 | $ | 14.15 | 691,482 | ||||||||
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2019.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | |||||||||
Equity compensation plans approved by security holders | 329,452 | $ | 12.70 | 657,612 | ||||||||
Equity compensation plans not approved by security holders | — | $ | — | — | ||||||||
329,452 | $ | 12.70 | 657,612 | |||||||||
1. | Financial Statements |
See the Financial Statements included in Item 8.
The following financial statements are filed as part of this document under Item 8: | ||
Consolidated Balance Sheets at December 31, 2019 and 2018 | ||
Consolidated Statements of Income, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Comprehensive Income, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Stockholders’ Equity, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Cash Flows, years ended December 31, 2019, 2018 and 2017 | ||
Notes to Consolidated Financial Statements | ||
Reports of Independent Registered Public Accounting Firm |
2. | Financial Statement Schedules |
3. | Exhibits |
Pursuantreference to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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Exhibit Number |
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Description |
Incorporated by Reference/Attached | |||
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3.1 |
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The following exhibits are included in this Form10-K or are incorporated by reference as noted in the following table:
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Restated Articles of Incorporation of Horizon Bancorp, | Incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K filed | |||||
on May 16, 2018 | ||||||
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3.2 | Incorporated by reference to Exhibit 8-K filed | |||||
on January 22, 2020 | ||||||
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4.1 | Attached | |||||
4.2 | Incorporated by reference to Exhibit 4.1 to Registrant’s Form 10-K for the year ended December 31, 2009 | |||||
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4.3 | Incorporated by reference to Exhibit 4.2 to Registrant’s Form 10-K for the year ended December 31, 2009 | |||||
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4.4 | Incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed on December 21, 2006 | |||||
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4.5 | Incorporated by reference to Exhibit 4.2 to Registrant’s Form 8-K filed on December 21, 2006 | |||||
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| 10.1* | Incorporated by reference to Appendix A to Registrant’s definitive Proxy Statement for its 2010 Annual Meeting of Shareholders | ||||
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| 10.2* | |||||
Incorporated by reference to Exhibit 10.7 to Registrant’s Form 10-K for the year ended December 31, 2009 |
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| 10.3* | Incorporated by reference to Exhibit 10.8 to Registrant’s Form 10-K for the year ended December 31, 2009 | ||||
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| 10.4* | |||||
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Incorporated by reference to Appendix A to Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders | ||||||
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10.5* | Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on June 18, 2013 |
Exhibit Number | Description | Incorporated by Reference/Attached | ||||
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10.6* | Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on June 18, 2013 | |||||
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10.7* | Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on March 27, 2017 | |||||
10.8* | Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on March 27, 2017 | |||||
10.9* | Incorporated by reference to Exhibit 10.9 to Registrant’s Form 10-K filed on February 28, 2018 | |||||
10.10* | Incorporated by reference to Exhibit 10.10 to Registrant’s Form 10-K filed on February 28, 2018 | |||||
10.11* | Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222329) | |||||
10.12* | Incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222329) | |||||
10.13* | Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222330) | |||||
10.14* | Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222330) | |||||
10.15* | Attached | |||||
10.16* | Incorporated by reference to Exhibit 10.7 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.17* | Incorporated by reference to Exhibit 10.8 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.18* | Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.19* | Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.20* | Incorporated by reference to Exhibit 10.3 to Registrant’s Form 8-K filed on | |||||
January 7, 2020 | ||||||
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10.21* | Incorporated by reference to Exhibit 10.4 to Registrant’s Form 8-K filed on |
Exhibit Number | Description | Incorporated by Reference/Attached | ||||
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10.22* | Incorporated by reference to Exhibit 8-K filed on | |||||
January 7, 2020 | ||||||
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| 10.23* | Incorporated by reference to Exhibit 10.6 to Registrant’s Form 8-K filed on January 7, 2020 | ||||
14 | Incorporated by reference to Exhibit 14 to Registrant’s Form 8-K filed on December 21, 2017 | |||||
21 | Attached | |||||
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23 | Attached | |||||
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31.1 | Attached | |||||
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31.2 | Attached | |||||
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32.1 | Attached | |||||
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32.2 | Attached | |||||
101 | Inline Interactive Data Files | Attached | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Embedded Within the Inline XBRL Document |
* | Indicates exhibits that describe or evidence management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K. |
139
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized | ||||||
Horizon Bancorp, Inc. Registrant | ||||||
Date: February 28, 2020 | By: | /s/ Craig M. Dwight | ||||
Craig M. Dwight Chairman and Chief Executive Officer (Principal Executive Officer) | ||||||
Date: February 28, 2020 | By : | /s/ Mark E. Secor | ||||
Mark E. Secor Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. | ||||
Date | Signature and Title | |||
February 28, 2020 | /s/ Craig M. Dwight Craig M. Dwight, Chairman of the Board Chief Executive Officer and Director | |||
February 28, 2020 | /s/ Susan D. Aaron Susan D. Aaron, Director | |||
February 28, 2020 | /s/ Eric P. Blackhurst Eric P. Blackhurst, Director | |||
February 28, 2020 | /s/ Lawrence E. Burnell Lawrence E. Burnell, Director | |||
February 28, 2020 | /s/ James B. Dworkin James B. Dworkin, Director | |||
February 28, 2020 | /s/ Julie Scheck Freigang Julie Scheck Freigang, Director | |||
February 28, 2020 | /s/ Daniel F. Hopp Daniel F. Hopp, Director | |||
February 28, 2020 | /s/ Michele M. Magnuson Michele M. Magnuson, Director |
Date | Signature and Title | |||
February 28, 2020 | /s/ Peter L. Pairitz Peter L. Pairitz, Director | |||
February 28, 2020 | /s/ Steven W. Reed Steven W. Reed, Director | |||
February 28, 2020 | /s/ Spero W. Valavanis Spero W. Valavanis, Director |