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Horizon Bank's profits slide 15.5% because of acquisition costs

Horizon Bank headquarters in Michigan City. The bank's profit dropped by 15.5% in the first quarter largely because of the cost of acquiring Salin Bank.

Horizon Bancorp, the parent company of Horizon Bank, saw its profits drop by 15.5% to $10.8 million in the first quarter, largely because of one-time expenses of $3.4 million related to its purchase of Indianapolis-based Salin Bank.

The Michigan City-based bank made $0.28 in earnings per share, compared to $0.33 per share during the first quarter of 2019.

"Excluding merger expenses and other non-core items, Horizon’s core net income totaled $13.0 million, or $0.34 diluted earnings per share," Horizon Chairman and CEO Craig Dwight said. "This represents an increase in core diluted earnings per share of 3% and 17.2% when compared to the fourth and first quarters of 2018, respectively.”

Horizon's core net income of $13 million and core earnings per share of $0.34 were the highest in the company's 145-year history. The bank also attained tangible book value per share of $9.60, the highest in its history.

The bank delivered a 1.02% percent return on average assets and a 1.23% core return on average assets in the first three months of the year.

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

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Horizon Bank grew total loans by 5% to $36.8 million during the first quarter, and increased its net margin by 3.62%.

The bank's core net interest margin rose to 3.46% in the first quarter, as compared to 3.43% the previous quarter.

“Horizon’s strategy to build mass and scale in order to maximize operational leverage is working as we continue to experience lower costs as a percent of average assets," Dwight said. "Excluding merger expenses, we reduced total non-interest expenses by $10,000 and $217,000 when comparing the first quarter of 2019 to the fourth and first quarters of 2018. This decrease in expenses is the result of focus by our entire team to pursue operational efficiencies and leverage new technologies."

Horizon, whose footprint currently extends across Indiana and Michigan, is looking at merger opportunities that will let it enter Central Illinois and Northwest Ohio. It continues to grow downstate in Indiana.

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

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.