Horizon Bancorp, Inc. Announces Record 2019 Second Quarter and Year-to-Date Net Income

Michigan City, Indiana, UNITED STATES


MICHIGAN CITY, Ind., July 24, 2019 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and six-month periods ended June 30, 2019. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective June 15, 2018. 

SUMMARY:

  • Net income for the quarter ended June 30, 2019 was $16.6 million, or $0.37 diluted earnings per share, compared to $14.1 million, or $0.37 diluted earnings per share, for the quarter ended June 30, 2018. This represents the highest quarterly net income in the Company’s history.

  • Core net income for the quarter ended June 30, 2019 increased 26.0% to $17.6 million, or $0.39 diluted earnings per share, compared to $14.0 million, or $0.37 diluted earnings per share, for the same period in 2018. This represents the highest quarter-to-date core net income and core diluted earnings per share in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for a description of the elements of core net income) 

  • Net income for the first six months of 2019 was $27.5 million, or $0.65 diluted earnings per share, compared to $26.9 million, or $0.70 diluted earnings per share for the first six months of 2018. This represents the highest year-to-date net income as of June 30th in the Company’s history.  

  • Core net income for the first six months of 2019 was $31.8 million, or $0.75 diluted earnings per share, compared to $26.8 million, or $0.70 diluted earnings per share, for the first six months of 2018. This represents the highest year-to-date core net income and core diluted earnings per share as of June 30th in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for a description of the elements of core net income)

  • Net interest margin for the quarter ended June 30, 2019 was 3.73% compared to 3.62% and 3.78% for the quarters ended March 31, 2019 and June 30, 2018, respectively. The increase in net interest margin from the first quarter of 2019 reflects an increase in the yield of interest-earning assets as loans continue to reprice upwards and a decrease in interest-bearing liabilities from reducing short-term borrowings with the liquidity obtained from the Salin acquisition, along with a stabilization in deposit pricing.

  • Core net interest margin for the quarter ended June 30, 2019 was 3.61% compared to 3.46% and 3.60% for the quarters ended March 31, 2019 and June 30, 2018, respectively. (See the “Non-GAAP Reconciliation of Net Interest Margin” table on page 5 for a description of the elements of core net interest margin)

  • Return on average assets was 1.32% for the second quarter of 2019 compared to 1.41% for the second quarter of 2018. Return on average assets was 1.18% for the first six months of 2019 compared to 1.36% for the first six months of 2018.

  • Core return on average assets for the second quarter of 2019 was 1.40% compared to 1.39% for the second quarter of 2018. Core return on average assets was 1.36% for the first six months of 2019 compared to 1.35% for the first six months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 10 for the description of core return on average assets) 

  • Return on average equity was 10.73% for the second quarter of 2019 compared to 12.15% for the second quarter of 2018. Return on average equity was 9.82% for the first six months of 2019 compared to 11.72% for the first six months of 2018. 

  • Core return on average equity for the second quarter of 2019 was 11.34% compared to 12.02% for the second quarter of 2018. Core return on average equity was 11.38% for the first six months of 2019 compared to 11.65% for the first six months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 10 for the description of core return on average assets) 

  • Horizon’s tangible book value per share increased to $9.91 at June 30, 2019 compared to $9.60 and $8.84 at March 31, 2019 and June 30, 2018, respectively. This represents the highest tangible book value per share in the Company’s history. 

  • Horizon closed three full-service branches on April 19, 2019 and one loan production office on April 26, 2019. Horizon also plans to close one additional full-service branch on September 6, 2019. 

  • Horizon consolidated five full-service branches acquired in the March 2019 acquisition of Salin Bancshares, Inc. and Salin Bank and Trust Company (“Salin”), in coordination with the core data conversion from the acquisition occurring on April 26, 2019. 

  • On June 18, 2019, Horizon’s Board of Directors approved an increase in the Company’s quarterly cash dividend from $0.10 to $0.12 per share, paid on July 19, 2019, to shareholders of record as of July 5, 2019. 

  • On July 16, 2019, Horizon’s Board of Directors authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value.

Craig Dwight, Chairman and CEO of Horizon, commented:  “I am pleased to announce Horizon’s record 2019 second quarter and year-to-date core earnings of $17.6 million, or $0.39 per diluted share, and $31.8 million, or $0.75 per diluted share. Core earnings, exclude merger expenses and other non-core items.”

Dwight added, “Horizon’s total assets continued to grow reaching approximately $5.1 billion at June 30, 2019, as a result of the Salin acquisition and organic loan growth since the beginning of the year. We have experienced organic loan growth at an annualized rate of 5.7% during the first six months of 2019. Along with approximately $568.9 million in loans acquired from Salin, loan growth in the markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo totaled $99.7 million as of June 30, 2019.”

Dwight continued, “During the second quarter of 2019, Horizon continued to maximize operational leverage as a result of increased mass and scale. Annualized non-interest expense to average assets, excluding merger expenses, decreased to 2.39% for the second quarter of 2019 compared to 2.41% for the first quarter of 2019 and 2.49% for the second quarter of 2018. Although the anticipated cost savings from the Salin acquisition have not been fully-realized, our team has been able to leverage new technologies and develop operational efficiencies. In our efforts to improve efficiencies, we closed three legacy full-service branches on April 19, 2019 and we consolidated our existing Fort Wayne loan production office with the acquired Salin locations. We also closed five Salin full-service branches which were in close proximity to an existing Horizon office or that did not meet our branch hurdle rates in conjunction with our data conversion on April 26, 2019. We also plan to consolidate our Midland, Michigan full-service branches into one location on September 6, 2019.”

Dwight concluded, “We continue to look for opportunities to provide value for our shareholders. On June 18, 2019, our Board of Directors approved a 20.0% dividend increase from 10 cents to 12 cents per share. This was followed by the Board of Directors authorizing a stock repurchase program of up to 2,250,000 shares of Horizon’s issued and outstanding common stock on July 16, 2019. We believe that at current price levels, Horizon’s shares are an attractive investment and our repurchase program reflects our continuing confidence in Horizon’s financial strength. Given our strong balance sheet, we believe we can implement this program and continue to retain sufficient liquidity and capital to execute business strategies.”

Income Statement Highlights

Net income for the second quarter of 2019 was $16.6 million, or $0.37 diluted earnings per share, compared to $10.8 million, or $0.28 diluted earnings per share, for the first quarter of 2019 and $14.1 million, or $0.37 diluted earnings per share, for the second quarter of 2018. Excluding acquisition-related expenses, gain (loss) on sale of investment securities and death benefit on bank owned life insurance (“core net income”), core net income for the second quarter of 2019 was $17.6 million, or $0.39 diluted earnings per share, compared to $14.2 million, or $0.37 diluted earnings per share, for the first quarter of 2019 and $14.0 million, or $0.37 diluted earnings per share for the second quarter of 2018. 

The increase in net income and diluted earnings per share from the first quarter of 2019 to the second quarter of 2019 reflects increases in net interest income of $7.2 million and non-interest income of $2.2 million, offset by increases in non-interest expense of $1.8 million, income tax expense of $1.2 million and provision for loan losses of $532,000.

The increase in net income from the second quarter of 2018 when compared to the same period of 2019 reflects increases in net interest income of $8.0 million and non-interest income of $2.0 million, offset by increases in non-interest expense of $6.6 million, income tax expense of $515,000 and provision for loan losses of $261,000.

Net income for the six months ended June 30, 2019 was $27.5 million, or $0.65 diluted earnings per share, compared to $26.9 million, or $0.70 diluted earnings per share for the six months ended June 30, 2018. Core net income for the six months ended June 30, 2019 was $31.8 million, or $0.75 diluted earnings per share, compared to $26.8 million, or $0.70 diluted earnings per share, for the six months ended June 30, 2018. This represents a 7.1% increase in core diluted earnings per share for the first six months of 2019 compared to the same period in 2018.

The increase in net income when comparing the first six months of 2019 to the prior year period reflects increases in net interest income of $8.8 million and non-interest income of $2.4 million, offset by an increase in non-interest expense of $10.5 million.

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands, Except per Share Data, Unaudited)
 Three Months Ended Six Months Ended
 June 30 March 31 June 30 June 30 June 30
  2019   2018   2018   2019   2018 
Non-GAAP Reconciliation of Net Income         
Net income as reported$16,642  $10,816  $14,115  $27,458  $26,919 
Merger expenses 1,532   4,118   -   5,650   - 
Tax effect (295)  (692)  -   (987)  - 
Net income excluding merger expenses 17,879   14,242   14,115   32,121   26,919 
          
Loss (gain) on sale of investment securities 100   (15)  -   85   (11)
Tax effect (21)  3   -   (18)  2 
Net income excluding gain on sale of investment securities 17,958   14,230   14,115   32,188   26,910 
          
Death benefit on bank owned life insurance ("BOLI") (367)  -   (154)  (367)  (154)
Net income excluding death benefit on BOLI 17,591   14,230   13,961   31,821   26,756 
          
Core Net Income$17,591  $14,230  $13,961  $31,821  $26,756 
          
Non-GAAP Reconciliation of Diluted Earnings per Share         
Diluted earnings per share ("EPS") as reported$0.37  $0.28  $0.37  $0.65  $0.70 
Merger expenses 0.03   0.11   -   0.13   - 
Tax effect -   (0.02)  -   (0.02)  - 
Diluted EPS excluding merger expenses 0.40   0.37   0.37   0.76   0.70 
          
Loss (gain) on sale of investment securities -   -   -   -   - 
Tax effect -   -   -   -   - 
Diluted EPS excluding gain on sale of investment securities 0.40   0.37   0.37   0.76   0.70 
          
Death benefit on BOLI (0.01)  -   -   (0.01)  - 
Diluted EPS excluding death benefit on BOLI 0.39   0.37   0.37   0.75   0.70 
          
Core Diluted EPS$0.39  $0.37  $0.37  $0.75  $0.70 
          

Horizon’s net interest margin increased to 3.73% for the second quarter of 2019 when compared to 3.62% for the first quarter of 2019. The increase in net interest margin from the first quarter of 2019 reflects an increase in the yield on interest-earning assets of five basis points as loans continue to reprice upwards. The cost of interest-bearing liabilities decreased by six basis points primarily from reducing short-term borrowings during the second quarter with the liquidity obtained through the Salin acquisition. In addition, we are seeing a stabilization in deposit pricing within the markets we serve.

Net interest margin decreased to 3.73% for the second quarter of 2019 when compared to 3.78% for the second quarter of 2018. The decrease in net interest margin was due to an increase in the cost of interest-bearing liabilities of 40 basis points, offset by an increase in the yield on interest-earning assets of 24 basis points. The cost of interest-bearing deposits, borrowings and subordinated debentures increased by 50, 32 and 15 basis points, respectively. The increase in the yield of interest-earning assets was due to increases in the yields on loans receivable of 21 basis points, taxable investment securities of 22 basis points and non-taxable investment securities of 29 basis points.

Net interest margin decreased to 3.68% during the first six months of 2019 when compared to 3.81% for the first six months of 2018. This decrease reflects an increase in the cost of interest-bearing liabilities of 49 basis points, offset by an increase in the yield of interest-earning assets of 24 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 55 basis points and borrowings of 45 basis points. The increase in the yield of interest-earning assets was due to increases in the yields on loans receivable of 23 basis points, taxable investment securities of 25 basis points and non-taxable investment securities of 30 basis points.

Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.61% for the second quarter of 2019 compared to 3.46% for the prior quarter and 3.60% for the second quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.3 million, $1.5 million and $1.6 million for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively. The increase in the core net interest margin during the second quarter of 2019 was due to the pay-down of short-term borrowings with the liquidity obtained through the acquisition of Salin and an increase in the yield on earning assets from higher mortgage warehouse lending balances, loans continuing to reprice higher and the addition of acquired Salin loans.

Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
 Three Months Ended Six Months Ended
 June 30 March 31 June 30 June 30 June 30
  2019   2018   2018   2019   2018 
Non-GAAP Reconciliation of Net Interest Margin         
Net interest income as reported$41,529  $34,280  $33,550  $75,809  $66,961 
          
Average interest-earning assets 4,566,674   3,929,296   3,638,801   4,249,644   3,600,676 
          
Net interest income as a percentage of average interest-earning assets
  ("Net Interest Margin")
 3.73%   3.62%   3.78%   3.68%   3.81% 
          
Acquisition-related purchase accounting adjustments ("PAUs")$(1,299) $(1,510) $(1,634) $(2,809) $(3,671)
          
Core net interest income$40,230  $32,770  $31,916  $73,000  $63,290 
          
Core net interest margin 3.61%   3.46%   3.60%   3.55%   3.61% 
          

Lending Activity

Total loans increased $653.5 million from $3.014 billion as of December 31, 2018 to $3.668 billion as of June 30, 2019. Excluding acquired loans, total loans increased $84.6 million during the first six months of 2019 as residential mortgage loans increased by $14.9 million, consumer loans increased by $20.0 million and mortgage warehouse loans increased by $59.3 million, offset by a decrease in commercial loans of $11.8 million.

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
            
 June 30 December 31 Amount Acquired Amount Percent
  2019  2018 Change Loans Change Change
Commercial$2,062,623 $1,721,590 $341,033 $(352,798) $(11,765) -0.7% 
Residential mortgage 814,065  668,141  145,924  (131,008)  14,916  2.2% 
Consumer 654,552  549,481  105,071  (85,112)  19,959  3.6% 
Subtotal 3,531,240  2,939,212  592,028  (568,918)  23,110  0.8% 
Held for sale loans 3,185  1,038  2,147  -   2,147  206.8% 
Mortgage warehouse loans 133,428  74,120  59,308  -   59,308  80.0% 
Total loans$3,667,853 $3,014,370 $653,483 $(568,918) $84,565  2.8% 
            

Total loans increased $44.8 million from $3.623 billion as of March 31, 2019 to $3.668 billion as of June 30, 2019. During the second quarter of 2019, consumer loans increased by $14.8 million and mortgage warehouse loans increased $61.5 million, offset by a decrease in commercial loans of $27.0 million and a decrease in residential mortgage loans of $5.8 million.

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
            
 June 30 March 31 Amount Acquired Amount Percent
  2019  2018 Change Loans Change Change
Commercial$2,062,623 $2,089,579 $(26,956) $- $(26,956) -1.3% 
Residential mortgage 814,065  819,824  (5,759)  -  (5,759) -0.7% 
Consumer 654,552  639,710  14,842   -  14,842  2.3% 
Subtotal 3,531,240  3,549,113  (17,873)  -  (17,873) -0.5% 
Held for sale loans 3,185  1,979  1,206   -  1,206  60.9% 
Mortgage warehouse loans 133,428  71,944  61,484   -  61,484  85.5% 
Total loans$3,667,853 $3,623,036 $44,817  $- $44,817  1.2% 
            

During the first six months of 2019, the Bank originated approximately $206.0 million of commercial loans; however, only 54.4%, or $112.1 million, of these loan originations had been funded as of June 30, 2019. These originations were offset by commercial loan payoffs totaling approximately $157.8 million during the first six months of 2019, as there was an increase in clients moving projects that had reached stabilization into the long-term, fixed rate conduit financing market.

Residential mortgage lending activity for the three months ended June 30, 2019 generated $2.1 million in income from the gain on sale of mortgage loans, an increase of $769,000 from the first quarter of 2019 and $182,000 from the second quarter of 2018. Total origination volume for the second quarter of 2019, including loans placed into portfolio, totaled $111.4 million, representing an increase of 78.1% from the first quarter of 2019 and an increase of 2.1% from the second quarter of 2018. Total origination volume for the second quarter of 2019 of loans sold to the secondary market totaled $60.6 million, representing an increase of 99.3% from the first quarter of 2019 and an increase of 18.8% from the second quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was 5.6% of Horizon’s total revenue for the second quarter of 2019. 

The provision for loan losses totaled $896,000 for the second quarter of 2019 compared to $364,000 for the first quarter of 2019 and $635,000 for the second quarter of 2018. The increase in the provision for loan losses from the first quarter of 2019 and the second quarter of 2018 when compared to the second quarter of 2019 was primarily due to a specific reserve placed on a single credit.

The provision for loan losses totaled $1.3 million for the first six months of 2019 compared to $1.2 million for the first six months of 2018. The increase in provision for loan losses from 2018 was primarily due to organic loan growth experienced from June 30, 2018 until June 30, 2019.

The ratio of the allowance for loan losses to total loans decreased to 0.50% as of June 30, 2019 from 0.59% at December 31, 2018. The decrease in the ratio of the allowance for loan losses to total loans is primarily due to increased loan balances from the Salin acquisition. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.68% as of June 30, 2019 compared to 0.72% as of December 31, 2018. Loan loss reserves plus credit-related loan discounts on acquired loans as a percentage of total loans was 1.14% as of June 30, 2019 compared to 0.98% as of December 31, 2018.

Non-GAAP Allowance for Loan and Lease Loss Detail
As of June 30, 2019
(Dollars in Thousands, Unaudited)
                
 Pre-discount
Loan
Balance
 Allowance
for Loan
Losses
(ALLL)
 Loan
Discount
 ALLL
+
Loan
Discount
 Loans, net ALLL/
Pre-discount
Loan Balance
 Loan
Discount/
Pre-discount
Loan Balance
 ALLL + Loan
Discount/
Pre-discount
Loan Balance
Horizon Legacy$2,677,923 $18,091 N/A $18,091 $2,659,832 0.68% 0.00% 0.68%
Heartland 6,044  -  621  621  5,423 0.00% 10.27% 10.27%
Summit 17,194  -  1,003  1,003  16,191 0.00% 5.83% 5.83%
Peoples 75,918  -  1,732  1,732  74,186 0.00% 2.28% 2.28%
Kosciusko 34,056  195  567  762  33,294 0.57% 1.66% 2.24%
LaPorte 73,228  -  2,651  2,651  70,577 0.00% 3.62% 3.62%
CNB 3,701  -  94  94  3,607 0.00% 2.54% 2.54%
Lafayette 71,707  19  652  671  71,036 0.03% 0.91% 0.94%
Wolverine 161,066  -  2,120  2,120  158,946 0.00% 1.32% 1.32%
Salin 547,016  -  14,230  14,230  532,786 0.00% 2.60% 2.60%
Total$3,667,853 $18,305 $23,670 $41,975 $3,625,878 0.50% 0.65% 1.14%
                

As of June 30, 2019, non-performing loans totaled $18.9 million, which reflects a two basis point increase in non-performing loans to total loans, or a $3.8 million increase from $15.2 million in non-performing loans as of December 31, 2018. Compared to December 31, 2018, non-performing commercial loans increased by $1.8 million, non-performing real estate loans increased by $1.4 million and non-performing consumer loans increased by $523,000. Other real estate owned and repossessed assets totaled $3.9 million as of June 30, 2019 which is an increase of $1.8 million from December 31, 2018. The majority of this increase was due to other real estate owned properties acquired in the Salin transaction, including the closed branches, totaling $1.7 million. 

Expense Management

Total non-interest expense was $1.8 million higher in the second quarter of 2019 when compared to the first quarter of 2019. Salaries and employee benefits, net occupancy expenses, other expense and FDIC insurance expense increased by $2.5 million, $376,000, $213,000 and $205,000, respectively. Offsetting these increases was a decrease in outside services and consultants expense of $1.9 million. Excluding merger expenses, total non-interest expense increased by $4.4 million during the second quarter of 2019 when compared to the first quarter of 2019.

 Three Months Ended    
 June 30 March 31    
  2019   2019  Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$16,951  $(482) $  16,469   $14,466  $(2) $14,464  $2,005  13.9% 
Net occupancy expenses 3,148   (75)    3,073    2,772   -   2,772   301  10.9% 
Data processing 2,139   (68)    2,071    1,966   (292)  1,674   397  23.7% 
Professional fees 598   (153)    445    493   (239)  254   191  75.2% 
Outside services and consultants 1,655   (176)    1,479    3,530   (2,290)  1,240   239  19.3% 
Loan expense 2,048   (2)    2,046    1,949   -   1,949   97  5.0% 
FDIC deposit insurance 365   -     365    160   -   160   205  128.1% 
Other losses 169   (69)    100    104   (2)  102   (2) -2.0% 
Other expenses 4,511   (507)    4,004    4,298   (1,293)  3,005   999  33.2% 
Total non-interest expense$31,584  $(1,532) $  30,052   $29,738  $(4,118) $25,620  $4,432  17.3% 
Annualized Non-interest Exp. to Avg. Assets 2.51%     2.39%   2.80%     2.41%     

Total non-interest expense was $6.6 million higher during the second quarter of 2019 compared to the same period of 2018. Salaries and employee benefits, other expense, net occupancy expense, data processing and loan expense increased $3.1 million, $1.3 million, $628,000, $532,000 and $523,000, respectively. Excluding merger expenses, total non-interest expense increased $5.1 million during the second quarter of 2019 when compared to the second quarter of 2018.

 Three Months Ended    
 June 30 June 30    
  2019   2018  Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$16,951  $(482) $  16,469   $13,809  $- $13,809  $2,660  19.3% 
Net occupancy expenses 3,148   (75)    3,073    2,520   -  2,520   553  21.9% 
Data processing 2,139   (68)    2,071    1,607   -  1,607   464  28.9% 
Professional fees 598   (153)    445    376   -  376   69  18.4% 
Outside services and consultants 1,655   (176)    1,479    1,267   -  1,267   212  16.7% 
Loan expense 2,048   (2)    2,046    1,525   -  1,525   521  34.2% 
FDIC deposit insurance 365   -     365    345   -  345   20  5.8% 
Other losses 169   (69)    100    269   -  269   (169) -62.8% 
Other expenses 4,511   (507)    4,004    3,224   -  3,224   780  24.2% 
Total non-interest expense$31,584  $(1,532) $  30,052   $24,942  $- $24,942  $5,110  20.5% 
Annualized Non-interest Exp. to Avg. Assets 2.51%     2.39%   2.49%     2.49%     

Total non-interest expense was $10.5 million higher during the first six months of 2019 when compared to the first six months of 2018. Salaries and employee benefits, outside services and consultants expense, other expense, loan expense and data processing increased $3.2 million, $2.7 million, $2.3 million, $1.2 million and $802,000, respectively. Excluding merger expenses, total non-interest expense increased $4.9 million during the first six months of 2019 when compared to the same period of 2018.

 Six Months Ended    
 June 30 June 30    
  2019   2018  Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$31,417  $(484) $  30,933   $28,182  $- $28,182  $2,751  9.8% 
Net occupancy expenses 5,920   (75)    5,845    5,486   -  5,486   359  6.5% 
Data processing 4,105   (360)    3,745    3,303   -  3,303   442  13.4% 
Professional fees 1,091   (392)    699    877   -  877   (178) -20.3% 
Outside services and consultants 5,185   (2,466)    2,719    2,531   -  2,531   188  7.4% 
Loan expense 3,997   (2)    3,995    2,782   -  2,782   1,213  43.6% 
FDIC deposit insurance 525   -     525    655   -  655   (130) -19.8% 
Other losses 273   (71)    202    415   -  415   (213) -51.3% 
Other expenses 8,809   (1,800)    7,009    6,548   -  6,548   461  7.0% 
Total non-interest expense$61,322  $(5,650) $  55,672   $50,779  $- $50,779  $4,893  9.6% 
Annualized Non-interest Exp. to Avg. Assets 2.64%     2.40%   2.57%     2.57%     

Annualized non-interest expense as a percent of average assets were 2.51%, 2.80% and 2.49% for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.39%, 2.41% and 2.49% for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively.

Annualized non-interest expense as a percent of average assets were 2.64% and 2.57% for the first six months of 2019 and 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.40% and 2.57% for the first six months of 2019 and 2018, respectively. Horizon’s strategy to build mass and scale continues to prove effective.

Income tax expense totaled $3.3 million for the second quarter of 2019, an increase of $1.2 million when compared to the first quarter of 2019 and an increase of $515,000 when compared to the second quarter of 2018. The increase in income tax expense from the first quarter of 2019 and the second quarter of 2018 was primarily due to increases in income before income taxes of $7.1 million and $3.0 million, respectively, when compared to the second quarter of 2019.

Use of Non-GAAP Financial Measures

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

Non-GAAP Reconciliation of Tangible Stockholders' Equity and Tangible Book Value per Share
(Dollars in Thousands Except per Share Data, Unaudited)
          
 June 30 March 31 December 31 September 30 June 30
  2019  2019  2018  2018  2018
Total stockholders' equity$626,461 $609,468 $491,992 $477,594 $470,535
Less: Intangible assets 179,776  176,864  130,270  130,755  131,239
Total tangible stockholders' equity$446,685 $432,604 $361,722 $346,839 $339,296
          
Common shares outstanding 45,061,372  45,052,747  38,375,407  38,367,890  38,362,640
          
Tangible book value per common share$9.91 $9.60 $9.43 $9.04 $8.84

 

Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
(Dollars in Thousands, Unaudited)
 Three Months Ended Six Months Ended
 June 30 March 31 June 30 June 30 June 30
  2019   2019   2018   2019   2018 
Non-GAAP Reconciliation of Return on Average Assets         
Average Assets$5,047,365  $4,307,189  $4,017,551  $4,679,423  $3,980,864 
          
Return on average assets ("ROAA") as reported 1.32%   1.02%   1.41%   1.18%   1.36% 
Merger expenses 0.12%   0.39%   0.00%   0.24%   0.00% 
Tax effect -0.02%   -0.07%   0.00%   -0.04%   0.00% 
ROAA excluding merger expenses 1.42%   1.34%   1.41%   1.38%   1.36% 
          
Loss (gain) on sale of investment securities 0.01%   0.00%   0.00%   0.00%   0.00% 
Tax effect 0.00%   0.00%   0.00%   0.00%   0.00% 
ROAA excluding gain on sale of investment securities 1.43%   1.34%   1.41%   1.38%   1.36% 
          
Death benefit on bank owned life insurance ("BOLI") -0.03%   0.00%   -0.02%   -0.02%   -0.01% 
ROAA excluding death benefit on BOLI 1.40%   1.34%   1.39%   1.36%   1.35% 
          
Core ROAA 1.40%   1.34%   1.39%   1.36%   1.35% 
          
Non-GAAP Reconciliation of Return on Average Common Equity         
Average Common Equity$622,028  $506,449  $465,968  $563,862  $463,156 
          
Return on average common equity ("ROACE") as reported 10.73%   8.66%   12.15%   9.82%   11.72% 
Merger expenses 0.99%   3.30%   0.00%   2.02%   0.00% 
Tax effect -0.19%   -0.55%   0.00%   -0.35%   0.00% 
ROACE excluding merger expenses 11.53%   11.41%   12.15%   11.49%   11.72% 
          
Loss (gain) on sale of investment securities 0.06%   -0.01%   0.00%   0.03%   0.00% 
Tax effect -0.01%   0.00%   0.00%   -0.01%   0.00% 
ROACE excluding gain on sale of investment securities 11.58%   11.40%   12.15%   11.51%   11.72% 
          
Death benefit on bank owned life insurance ("BOLI") -0.24%   0.00%   -0.13%   -0.13%   -0.07% 
ROAA excluding death benefit on BOLI 11.34%   11.40%   12.02%   11.38%   11.65% 
          
Core ROACE 11.34%   11.40%   12.02%   11.38%   11.65% 
          

About Horizon

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

Forward Looking Statements

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

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

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

 June 30 March 31 December 31 September 30 June 30
  2019   2019   2018   2018   2018 
Balance sheet:         
Total assets$5,098,682  $5,051,639  $4,246,688  $4,150,561  $4,076,611 
Investment securities 887,187   893,469   810,460   766,153   735,962 
Commercial loans 2,062,623   2,089,579   1,721,590   1,698,582   1,672,998 
Mortgage warehouse loans 133,428   71,944   74,120   71,422   109,016 
Residential mortgage loans 814,065   819,824   668,141   651,250   634,636 
Consumer loans 654,552   639,710   549,481   536,132   507,866 
Earnings assets 4,577,487   4,538,952   3,842,903   3,743,592   3,681,583 
Non-interest bearing deposit accounts 810,350   811,768   642,129   621,475   615,018 
Interest bearing transaction accounts 2,153,189   2,115,847   1,684,336   1,605,825   1,644,758 
Time deposits 967,236   960,408   812,911   901,254   756,387 
Borrowings 436,233   457,788   550,384   477,719   524,846 
Subordinated debentures 56,194   55,310   37,837   37,791   37,745 
Total stockholders' equity 626,461   609,468   491,992   477,594   470,535 
          
 Three months ended
Income statement:         
Net interest income$41,529  $34,280  $33,836  $33,772  $33,550 
Provision for loan losses 896   364   528   1,176   635 
Non-interest income 10,898   8,712   8,477   8,686   8,932 
Non-interest expenses 31,584   29,738   26,117   25,620   24,942 
Income tax expense 3,305   2,074   2,535   2,597   2,790 
Net income$16,642  $10,816  $13,133  $13,065  $14,115 
          
Per share data:(1)         
Basic earnings per share$0.37  $0.28  $0.34  $0.34  $0.37 
Diluted earnings per share 0.37   0.28   0.34   0.34   0.37 
Cash dividends declared per common share 0.12   0.10   0.10   0.10   0.10 
Book value per common share 13.90   13.53   12.82   12.45   12.27 
Tangible book value per common share 9.91   9.60   9.43   9.04   8.84 
Market value - high 17.13   17.82   19.40   21.39   21.94 
Market value - low$15.51  $15.50  $14.94  $19.44  $19.17 
Weighted average shares outstanding - Basic 45,055,117   38,822,543   38,367,972   38,365,379   38,347,612 
Weighted average shares outstanding - Diluted 45,130,408   38,906,172   38,488,002   38,534,970   38,519,401 
          
Key ratios:         
Return on average assets 1.32%   1.02%   1.25%   1.26%   1.41% 
Return on average common stockholders' equity 10.73   8.66   10.73   10.87   12.15 
Net interest margin 3.73   3.62   3.60   3.67   3.78 
Loan loss reserve to total loans 0.50   0.49   0.59   0.60   0.58 
Average equity to average assets 12.32   11.76   11.62   11.62   11.60 
Bank only capital ratios:         
Tier 1 capital to average assets 9.78   10.99   9.38   9.53   9.65 
Tier 1 capital to risk weighted assets 12.22   11.84   11.91   12.09   12.21 
Total capital to risk weighted assets 12.69   12.30   12.47   12.66   12.77 
          
Loan data:         
Substandard loans$47,764  $41,728  $38,775  $34,655  $40,941 
30 to 89 days delinquent 9,633   9,980   7,161   6,878   3,978 
          
90 days and greater delinquent - accruing interest$391  $192  $568  $202  $49 
Trouble debt restructures - accruing interest 2,198   2,532   2,002   1,830   1,911 
Trouble debt restructures - non-accrual 1,576   1,349   1,057   1,077   894 
Non-accrual loans 14,764   15,313   11,548   11,417   12,555 
Total non-performing loans$18,929  $19,386  $15,175  $14,526  $15,409 
Non-performing loans to total loans 0.52%   0.54%   0.50%   0.49%   0.53% 
          
(1)Adjusted for 3:2 stock split on June 15, 2018         

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

 June 30 June 30 
  2019   2018  
Balance sheet:    
Total assets$  5,098,682  $  4,076,611  
Investment securities   887,187     735,962  
Commercial loans   2,062,623     1,672,998  
Mortgage warehouse loans   133,428     109,016  
Residential mortgage loans   814,065     634,636  
Consumer loans   654,552     507,866  
Earnings assets   4,577,487     3,681,583  
Non-interest bearing deposit accounts   810,350     615,018  
Interest bearing transaction accounts   2,153,189     1,644,758  
Time deposits   967,236     756,387  
Borrowings   436,233     524,846  
Subordinated debentures   56,194     37,745  
Total stockholders' equity   626,461     470,535  
     
 Six months ended
Income statement:    
Net interest income$  75,809  $  66,961  
Provision for loan losses   1,260     1,202  
Non-interest income   19,610     17,250  
Non-interest expenses   61,322     50,779  
Income tax expense   5,379     5,311  
Net income$  27,458  $  26,919  
     
Per share data:(1)    
Basic earnings per share$   0.65  $  0.70  
Diluted earnings per share   0.65     0.70  
Cash dividends declared per common share   0.22     0.20  
Book value per common share    13.90     12.27  
Tangible book value per common share   9.91     8.84  
Market value - high   17.82     21.94  
Market value - low$  15.50  $   17.87  
Weighted average shares outstanding - Basic   41,956,047     38,327,118  
Weighted average shares outstanding - Diluted   42,054,352     38,484,321  
     
Key ratios:    
Return on average assets 1.18%   1.36%  
Return on average common stockholders' equity   9.82     11.72  
Net interest margin   3.68     3.81  
Loan loss reserve to total loans   0.50     0.58  
Average equity to average assets   12.05     11.63  
Bank only capital ratios:    
Tier 1 capital to average assets   9.78     9.65  
Tier 1 capital to risk weighted assets    12.22     12.21  
Total capital to risk weighted assets   12.69     12.77  
     
Loan data:    
Substandard loans$  47,764  $  40,941  
30 to 89 days delinquent    9,633     3,978  
     
90 days and greater delinquent - accruing interest$  391  $  49  
Trouble debt restructures - accruing interest   2,198     1,911  
Trouble debt restructures - non-accrual   1,576     894  
Non-accrual loans   14,764     12,555  
Total non-performing loans$  18,929  $  15,409  
Non-performing loans to total loans 0.52%   0.53%  
     
(1)Adjusted for 3:2 stock split on June 15, 2018    
     

 HORIZON BANCORP, INC.

Allocation of the Allowance for Loan and Lease Losses
(Dollars in Thousands, Unaudited)
          
 June 30 March 31 December 31 September 30 June 30
  2019   2019   2018   2018   2018 
Commercial$  11,881   $  11,556  $  10,495  $  10,581  $  8,865 
Real estate   1,732      1,588     1,676     1,574      1,761 
Mortgage warehousing   1,040      1,014     1,006     1,030     1,084 
Consumer   3,652      3,663     4,643     4,613     5,361 
Total$  18,305   $  17,821  $  17,820  $  17,798  $  17,071 
          
Net Charge-Offs (Recoveries)
(Dollars in Thousands, Unaudited)
          
 Three Months Ended
 June 30 March 31 December 31 September 30 June 30
  2019   2019   2018   2018   2018 
Commercial$  265   $  61  $  196  $  179  $  (40)
Real estate   41      (27)    47      (2)    (2)
Mortgage warehousing   -      -     -     -     - 
Consumer   106      329     263     272     80 
Total$  412   $  363  $  506  $  449  $  38 
Percent of net charge-offs to average
  loans outstanding for the period
 0.01%   0.01%   0.02%   0.02%   0.00% 
          
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
          
 June 30 March 31 December 31 September 30 June 30
  2019   2019   2018   2018   2018 
Commercial$  8,697   $  9,750  $  6,903  $  8,355  $  8,987 
Real estate   6,444      5,995     5,007     3,754     3,915 
Mortgage warehousing   -      -      -     -     - 
Consumer   3,788      3,641     3,265     2,417     2,507 
Total$  18,929   $  19,386  $  15,175  $  14,526  $  15,409 
Non-performing loans to total loans 0.52%   0.54%   0.55%   0.49%   0.53% 
          
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
          
 June 30 March 31 December 31 September 30 June 30
  2019   2019   2018   2018   2018 
Commercial$  3,694   $  3,496  $  1,967  $  2,181  $  2,628 
Real estate   113      126     60     58      302 
Mortgage warehousing   -      -     -     -     - 
Consumer   48      30     48     26     62 
Total$  3,855   $  3,652  $  2,075  $  2,265  $  2,992 
          

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

  Three Months Ended Three Months Ended
  June 30, 2019 June 30, 2018
  Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets           
 Interest-earning assets           
 Federal funds sold$18,251  $120 2.64%  $3,367  $15 1.79% 
 Interest-earning deposits 18,516   83 1.80%   25,946   107 1.65% 
 Investment securities - taxable 480,036   3,070 2.57%   416,182   2,441 2.35% 
 Investment securities - non-taxable(1) 411,944   2,793 3.44%   307,219   1,870 3.15% 
 Loans receivable(2)(3) 3,637,927   47,784 5.29%   2,886,087   36,308 5.08% 
 Total interest-earning assets(1) 4,566,674   53,850 4.81%   3,638,801   40,741 4.57% 
             
 Non-interest-earning assets           
 Cash and due from banks 67,537       44,213     
 Allowance for loan losses (18,036)      (16,617)    
 Other assets 431,190       351,154     
             
 Total average assets$5,047,365      $4,017,551     
             
 Liabilities and Stockholders' Equity           
 Interest-bearing liabilities           
 Interest-bearing deposits$3,118,821  $8,938 1.15%  $2,403,780  $3,920 0.65% 
 Borrowings 398,320   2,495 2.51%   489,608   2,679 2.19% 
 Subordinated debentures 53,572   888 6.65%   36,525   592 6.50% 
 Total interest-bearing liabilities 3,570,713   12,321 1.38%   2,929,913   7,191 0.98% 
             
 Non-interest-bearing liabilities           
 Demand deposits 818,872       605,188     
 Accrued interest payable and other liabilities 35,752       16,482     
 Stockholders' equity 622,028       465,968     
             
 Total average liabilities and stockholders' equity$5,047,365      $4,017,551     
             
 Net interest income/spread  $41,529 3.42%    $33,550 3.59% 
 Net interest income as a percentage of average
  interest-earning assets(1)
    3.73%      3.78% 
             
(1)Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2)Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.    
(3)Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

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

  Six Months Ended Six Months Ended
  June 30, 2019 June 30, 2018
  Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets           
 Interest-earning assets           
 Federal funds sold$  13,072  $  224 3.46%  $  3,560  $  29 1.64% 
 Interest-earning deposits   22,414     191 1.72%     24,749     197 1.61% 
 Investment securities - taxable   464,544     5,980 2.60%     409,669     4,767 2.35% 
 Investment securities - non-taxable(1)   402,883     5,421 3.43%     307,462     3,735 3.13% 
 Loans receivable(2)(3)   3,346,731     87,407 5.28%     2,855,236     71,439 5.05% 
 Total interest-earning assets(1)   4,249,644     99,223 4.79%     3,600,676     80,167 4.55% 
             
 Non-interest-earning assets           
 Cash and due from banks   56,160         43,984     
 Allowance for loan losses   (17,939)        (16,480)    
 Other assets   391,558         352,684     
             
 Total average assets$  4,679,423      $  3,980,864     
             
 Liabilities and Stockholders' Equity           
 Interest-bearing liabilities           
 Interest-bearing deposits$  2,818,496  $  15,814 1.13%  $  2,354,578  $  6,791 0.58% 
 Borrowings   487,266     6,116 2.53%     508,731     5,251 2.08% 
 Subordinated debentures   45,735      1,484 6.54%     37,695     1,164 6.23% 
 Total interest-bearing liabilities   3,351,497     23,414 1.41%     2,901,004     13,206 0.92% 
             
 Non-interest-bearing liabilities           
 Demand deposits    731,556         600,214     
 Accrued interest payable and other liabilities   32,508         16,490     
 Stockholders' equity   563,862         463,156     
             
 Total average liabilities and stockholders' equity$  4,679,423      $  3,980,864     
             
 Net interest income/spread  $  75,809 3.38%    $  66,961 3.64% 
 Net interest income as a percentage of average
  interest-earning assets(1)
    3.68%      3.81% 
             
(1)Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2)Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.    
(3)Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

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

 June 30 December 31
  2019  2018 
 (Unaudited)  
Assets   
Cash and due from banks$  94,686  $58,492 
Interest-earning time deposits   8,090   15,744 
Investment securities, available for sale   673,419   600,348 
Investment securities, held to maturity (fair value of $219,891 and $208,273)   213,768   210,112 
Loans held for sale   3,185   1,038 
Loans, net of allowance for loan losses of $18,305 and $17,820   3,646,363   2,995,512 
Premises and equipment, net   91,469   74,331 
Federal Home Loan Bank stock   22,447   18,073 
Goodwill   151,111   119,880 
Other intangible assets   28,665   10,390 
Interest receivable   19,015   14,239 
Cash value of life insurance   94,613   88,062 
Other assets    51,851   40,467 
Total assets$  5,098,682  $4,246,688 
Liabilities   
Deposits   
Non-interest bearing$  810,350  $642,129 
Interest bearing   3,120,425   2,497,247 
Total deposits   3,930,775   3,139,376 
Borrowings   436,233   550,384 
Subordinated debentures   56,194   37,837 
Interest payable   3,005   2,031 
Other liabilities   46,014   25,068 
Total liabilities   4,472,221   3,754,696 
Commitments and contingent liabilities   
Stockholders' Equity   
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares   -   - 
Common stock, no par value, Authorized 99,000,000 shares (1)   
Issued 45,086,441 and 38,400,476 shares (1),
Outstanding 45,061,372 and 38,375,407 shares (1)
    -   - 
Additional paid-in capital   380,735   276,101 
Retained earnings   241,519   224,035 
Accumulated other comprehensive income (loss)    4,207   (8,144)
Total stockholders' equity   626,461   491,992 
Total liabilities and stockholders' equity$  5,098,682  $4,246,688 
    
(1) Adjusted for 3:2 stock split on June 15, 2018   

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

 Three Months Ended Six Months Ended
 June 30 June 30
  2019   2018  2019   2018
Interest Income       
Loans receivable$  47,784   $36,308 $  87,407   $71,439
Investment securities       
Taxable   3,273    2,563    6,395    4,993
Tax exempt   2,793    1,870    5,421    3,735
Total interest income   53,850    40,741    99,223    80,167
Interest Expense       
Deposits   8,938    3,920    15,814    6,791
Borrowed funds   2,495    2,679    6,116    5,251
Subordinated debentures   888    592    1,484    1,164
Total interest expense   12,321    7,191    23,414    13,206
Net Interest Income   41,529    33,550    75,809    66,961
Provision for loan losses   896    635     1,260    1,202
Net Interest Income after Provision for Loan Losses   40,633    32,915    74,549    65,759
Non-interest Income       
Service charges on deposit accounts   2,480    1,907    4,357    3,795
Wire transfer fees   167    180    285    330
Interchange fees   2,160    1,555    3,521    2,883
Fiduciary activities   2,063    1,818    4,152    3,743
Gains (losses) on sale of investment securities (includes $(100) and $0       
for the three months ended June 30, 2019 and 2018, respectively, and $(85) and $11 for the six months ended June 30, 2019 and six months ended June 30, 2018
related to accumulated other comprehensive earnings reclassifications)
   (100)  -    (85)  11
Gain on sale of mortgage loans   2,078    1,896    3,387    3,319
Mortgage servicing income net of impairment   570    511    1,176    860
Increase in cash value of bank owned life insurance   555    442    1,068    877
Death benefit on bank owned life insurance   367    154     367    154
Other income   558    469    1,382    1,278
Total non-interest income   10,898    8,932     19,610    17,250
Non-interest Expense       
Salaries and employee benefits   16,951    13,809    31,417    28,182
Net occupancy expenses    3,148    2,520    5,920    5,486
Data processing   2,139    1,607    4,105    3,303
Professional fees    598    376    1,091    877
Outside services and consultants   1,655    1,267    5,185    2,531
Loan expense   2,048    1,525    3,997    2,782
FDIC insurance expense   365    345    525    655
Other losses   169    269    273    415
Other expense   4,511    3,224    8,809    6,548
Total non-interest expense   31,584    24,942    61,322    50,779
Income Before Income Taxes   19,947    16,905    32,837    32,230
Income tax expense (includes $(21) and $0 for the three months ended       
June 30, 2019 and 2018, respectively, and $(18) and $2 for the six months ended June 30, 2019 and six months ended June 30, 2018 related to income tax
expense (benefit) from reclassification items)
   3,305    2,790    5,379    5,311
Net Income$  16,642   $14,115 $  27,458   $26,919
Basic Earnings Per Share (1)$  0.37   $0.37 $  0.65   $0.70
Diluted Earnings Per Share (1)   0.37    0.37     0.65    0.70
        
(1) Adjusted for 3:2 stock split on June 15, 2018       

 


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