Horizon Bancorp (HBNC, Financial) filed Quarterly Report for the period ended 2009-09-30.
HORIZON BNCP-IN is a bank holding company. Through subsidiaries, they are engaged as a full-service commercial bank offering a broad range of commercial and retail banking services, corporate and individual trust and agency services, commercial and personal property and casualty insurance services and other services incident to banking. Horizon Bancorp has a market cap of $51.5 million; its shares were traded at around $15.7501 with a P/E ratio of 6.4 and P/S ratio of 0.6. The dividend yield of Horizon Bancorp stocks is 4.4%. Horizon Bancorp had an annual average earning growth of 9% over the past 5 years.
On September 30, 2009, Horizons total assets were $1.3 billion, an increase of $14.4 million from December 31, 2008 but a decrease of $22.1 million from June 30, 2009 and a decrease of $121.6 million from March 31, 2009. Due to the economic environment the financial institution industry was experiencing at the beginning of 2009, management determined it would be prudent to maintain higher liquidity levels. During that same time the Companys mortgage warehouse business line was experiencing significant growth due to the increase in mortgage loan refinancing activity, and this also created a need for additional liquidity. Management put into place several successful strategies during the first quarter of 2009 to generate the additional liquidity. As a result, the Company maintained excess cash and cash equivalents at the end of the first quarter and throughout most of the second quarter of 2009. A significant portion of that additional liquidity was generated from municipal money market deposits. This funding was designed to match the growth of assets in the mortgage warehouse business line and provide additional liquidity without utilizing asset based collateral borrowings or federal fund lines. During the second and third quarters the additional funding from the municipal money market accounts was moved out of the Bank and cash and cash equivalents and the municipal money market accounts were back to more historic levels. The Bank does not anticipate a need to maintain the level of excess liquidity during the fourth quarter as it did in the first half of the year.
Stockholders equity totaled $113.8 million at September 30, 2009 compared to $103.4 million at December 31, 2008. The increase in stockholders equity during the period was the result of generating net income and an increase in the market value of investment securities available for sale, reduced by dividends declared. At September 30, 2009, the ratio of average stockholders equity to average assets was 8.53% compared to 6.65% at December 31, 2008. Book value per common share at September 30, 2009 increased to $27.46 compared to $24.68 at December 31, 2008.
Consolidated net income for the three-month period ended September 30, 2009 was $2.4 million, an increase of 77.0% from the $1.3 million for the same period in 2008. Earnings per common share for the three months ended September 30, 2009 increased to $0.62 basic and $0.61 diluted, compared to $0.42 basic and $0.41 diluted for the same three-month period in 2008. Diluted earnings per share were reduced by $0.11 per share due to the preferred stock dividends and the accretion of the discount on preferred stock, which is not available to common stockholders. The preferred stock was issued in the fourth quarter of 2008 and therefore did not affect the third quarter of 2008.
Consolidated net income for the nine-month period ended September 30, 2009 was $7.1 million, an increase of 3.0% from the $6.9 million for the same period in 2008. However, earnings per common share for the nine months ended September 30, 2009 decreased to $1.86 basic and $1.84 diluted, compared to $2.14 basic and $2.11 diluted for the same nine-month period in 2008. Diluted earnings per share were reduced in 2009 by $0.32 per share due to the preferred stock dividends and the accretion of the discount on preferred stock, which is not available to common stockholders.
Net interest income during the three months ended September 30, 2009 was $10.7 million, an increase of $1.3 million or 14.0% over the $9.4 million earned during the same period in 2008. Yields on the Companys interest-earning assets decreased by 42 basis points to 5.83% for the three months ended September 30, 2009, from 6.25% for the same period in 2008. Interest income increased $320,000 from $17.2 million for the three months ended September 30, 2008 to $17.5 million for the same period in 2009. This increase was due to the increased volume of interest earning assets partially offset by the decrease in the yield on interest earning assets. However, the asset yields on loans receivable has not declined at the same pace as some market indices partially due to interest rate floors that are in place on approximately $330.5 million out of the $476.7 million of the Companys adjustable rate loans.
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HORIZON BNCP-IN is a bank holding company. Through subsidiaries, they are engaged as a full-service commercial bank offering a broad range of commercial and retail banking services, corporate and individual trust and agency services, commercial and personal property and casualty insurance services and other services incident to banking. Horizon Bancorp has a market cap of $51.5 million; its shares were traded at around $15.7501 with a P/E ratio of 6.4 and P/S ratio of 0.6. The dividend yield of Horizon Bancorp stocks is 4.4%. Horizon Bancorp had an annual average earning growth of 9% over the past 5 years.
Highlight of Business Operations:
Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. FASB ASC 350-10 establishes standards for the amortization of acquired intangible assets and impairment assessment of goodwill. At September 30, 2009, Horizon had core deposit intangibles of $1.5 million subject to amortization and $5.8 million of goodwill, which is not subject to amortization. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. Horizons goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Horizon to provide quality, cost effective banking services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely affect earnings in future periods. FASB ASC 350-10 requires an annual evaluation of goodwill for impairment. The evaluation of goodwill for impairment requires the use of estimates and assumptions. Market price at the close of business on September 30, 2009 was $17.10 per share compared to a book value of $27.46 per common share. Horizon reported record earnings for the ninth consecutive year in 2008 and has continued to report strong earnings through the first nine months of 2009 and believes the decline in market price relates to an overall decline in the financial industry sector and is not specific to Horizon. Horizon engaged a third party to perform an impairment test of its goodwill in 2008. The evaluation included three approaches: 1) income approach using a discounted cash flow based on earnings capacity, 2) price to earnings multiples and 3) price to book value ratios. Approaches two and three use median results from 17 bank sale transactions that occurred during 2007 and 2008. The selling banks ranged in size from $763.0 million to $2.1 billion. The impairment test was performed as of November 30, 2008 and provided support that no impairment to the Companys goodwill was required based on its results.On September 30, 2009, Horizons total assets were $1.3 billion, an increase of $14.4 million from December 31, 2008 but a decrease of $22.1 million from June 30, 2009 and a decrease of $121.6 million from March 31, 2009. Due to the economic environment the financial institution industry was experiencing at the beginning of 2009, management determined it would be prudent to maintain higher liquidity levels. During that same time the Companys mortgage warehouse business line was experiencing significant growth due to the increase in mortgage loan refinancing activity, and this also created a need for additional liquidity. Management put into place several successful strategies during the first quarter of 2009 to generate the additional liquidity. As a result, the Company maintained excess cash and cash equivalents at the end of the first quarter and throughout most of the second quarter of 2009. A significant portion of that additional liquidity was generated from municipal money market deposits. This funding was designed to match the growth of assets in the mortgage warehouse business line and provide additional liquidity without utilizing asset based collateral borrowings or federal fund lines. During the second and third quarters the additional funding from the municipal money market accounts was moved out of the Bank and cash and cash equivalents and the municipal money market accounts were back to more historic levels. The Bank does not anticipate a need to maintain the level of excess liquidity during the fourth quarter as it did in the first half of the year.
Stockholders equity totaled $113.8 million at September 30, 2009 compared to $103.4 million at December 31, 2008. The increase in stockholders equity during the period was the result of generating net income and an increase in the market value of investment securities available for sale, reduced by dividends declared. At September 30, 2009, the ratio of average stockholders equity to average assets was 8.53% compared to 6.65% at December 31, 2008. Book value per common share at September 30, 2009 increased to $27.46 compared to $24.68 at December 31, 2008.
Consolidated net income for the three-month period ended September 30, 2009 was $2.4 million, an increase of 77.0% from the $1.3 million for the same period in 2008. Earnings per common share for the three months ended September 30, 2009 increased to $0.62 basic and $0.61 diluted, compared to $0.42 basic and $0.41 diluted for the same three-month period in 2008. Diluted earnings per share were reduced by $0.11 per share due to the preferred stock dividends and the accretion of the discount on preferred stock, which is not available to common stockholders. The preferred stock was issued in the fourth quarter of 2008 and therefore did not affect the third quarter of 2008.
Consolidated net income for the nine-month period ended September 30, 2009 was $7.1 million, an increase of 3.0% from the $6.9 million for the same period in 2008. However, earnings per common share for the nine months ended September 30, 2009 decreased to $1.86 basic and $1.84 diluted, compared to $2.14 basic and $2.11 diluted for the same nine-month period in 2008. Diluted earnings per share were reduced in 2009 by $0.32 per share due to the preferred stock dividends and the accretion of the discount on preferred stock, which is not available to common stockholders.
Net interest income during the three months ended September 30, 2009 was $10.7 million, an increase of $1.3 million or 14.0% over the $9.4 million earned during the same period in 2008. Yields on the Companys interest-earning assets decreased by 42 basis points to 5.83% for the three months ended September 30, 2009, from 6.25% for the same period in 2008. Interest income increased $320,000 from $17.2 million for the three months ended September 30, 2008 to $17.5 million for the same period in 2009. This increase was due to the increased volume of interest earning assets partially offset by the decrease in the yield on interest earning assets. However, the asset yields on loans receivable has not declined at the same pace as some market indices partially due to interest rate floors that are in place on approximately $330.5 million out of the $476.7 million of the Companys adjustable rate loans.
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