Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Michigan City, Indiana, UNITED STATES


MICHIGAN CITY, Ind., Oct. 23, 2019 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and nine-month periods ended September 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 September 30, 2019 was $20.5 million, or $0.46 diluted earnings per share, compared to $13.1 million, or $0.34 diluted earnings per share, for the quarter ended September 30, 2018. This represents the highest quarterly net income and diluted earnings per share in the Company’s history.

  • Core net income for the quarter ended September 30, 2019 increased 54.4% to $20.3 million, or $0.45 diluted earnings per share, compared to $13.2 million, or $0.34 diluted earnings per share, for the same period in 2018. This represents the highest quarterly 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 nine months of 2019 was $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the first nine months of 2018. This represents the highest year-to-date net income and diluted earnings per share as of September 30th in the Company’s history.  

  • Core net income for the first nine months of 2019 was $52.1 million, or $1.21 diluted earnings per share, compared to $39.9 million, or $1.04 diluted earnings per share, for the first nine months of 2018. This represents the highest year-to-date core net income and core diluted earnings per share as of September 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 September 30, 2019 was 3.82% compared to 3.73% and 3.67% for the quarters ended June 30, 2019 and September 30, 2018, respectively. The increase in net interest margin from the second quarter of 2019 and third quarter of 2018 reflects an increase in the yield of interest-earning assets as loans continue to reprice upwards and a decrease in cost of borrowings, along with a stabilization in deposit pricing.

  • Core net interest margin for the quarter ended September 30, 2019 was 3.67% compared to 3.61% and 3.59% for the quarters ended June 30, 2019 and September 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 1.60% for the third quarter of 2019 compared to 1.26% for the third quarter of 2018. Return on average assets was 1.33% for both the first nine months of 2019 and 2018.

  • Core return on average assets for the third quarter of 2019 was 1.58% compared to 1.27% for the third quarter of 2018. Core return on average assets was 1.44% for the first nine months of 2019 compared to 1.32% for the first nine months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)

  • Return on average equity was 12.72% for the third quarter of 2019 compared to 10.87% for the third quarter of 2018. Return on average equity was 10.88% for the first nine months of 2019 compared to 11.43% for the first nine months of 2018.

  • Core return on average equity for the third quarter of 2019 was 12.59% compared to 10.95% for the third quarter of 2018. Core return on average equity was 11.83% for the first nine months of 2019 compared to 11.41% for the first nine months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)

  • Horizon’s tangible book value per share increased to $10.31 at September 30, 2019 compared to $9.91 and $9.04 at June 30, 2019 and September 30, 2018, respectively. This represents the highest tangible book value per share in the Company’s history.

  • 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. As of September 30, 2019, Horizon had repurchased a total of 99,407 shares at an average price per share of $16.04.

  • Horizon consolidated its two Midland, Michigan full-service branches into one location on September 6, 2019.

Craig Dwight, Chairman and CEO of Horizon, commented: “Horizon’s 2019 third quarter and year-to-date performance resulted in record earnings and demonstrate that our long range strategic plan to improve efficiency through an increase in mass and scale is working. Third quarter 2019 earnings increased to $20.5 million, or $0.46 diluted earnings per share, when compared to prior year period earnings of $13.1 million, or $0.34 diluted earnings per share. Year-to-date earnings increased to $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the prior year period.”

Dwight added, “Horizon’s growth story continues with total assets now reaching approximately $5.2 billion at September 30, 2019. In addition to the loans acquired from our acquisition of Salin Bank and Trust Company during the first quarter of 2019, which totaled approximately $568.9 million, we continue to experience year-to-date loan growth of $118.3 million from the markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo.”

Dwight concluded, “Horizon continues to maximize operational leverage through an increase in mass and scale as evident by the decrease in our adjusted efficiency ratio. Horizon’s adjusted efficiency ratio, excluding merger expenses, loss on sale of investment securities and death benefit on bank owned life insurance decreased to 54.89% for the third quarter of 2019 compared to 57.62% for the second quarter of 2019 and 60.17% for the third quarter of 2018. In addition, annualized non-interest expense to average assets, excluding merger expenses, fell to 2.34% for the third quarter of 2019 compared to 2.39% for the second quarter of 2019 and 2.48% for the third quarter of 2018. Our team continues to leverage new technologies and develop operational efficiencies. In addition, Horizon consolidated its two Midland, Michigan full-service branches into one location on September 6, 2019 in our continued efforts to improve branch efficiencies.”

Income Statement Highlights

Net income for the third quarter of 2019 was $20.5 million, or $0.46 diluted earnings per share, compared to $16.6 million, or $0.37 diluted earnings per share, for the second quarter of 2019 and $13.1 million, or $0.34 diluted earnings per share, for the third quarter of 2018. Excluding acquisition-related expenses, loss on sale of investment securities and death benefit on bank owned life insurance (“core net income”), core net income for the third quarter of 2019 was $20.3 million, or $0.46 diluted earnings per share, compared to $17.6 million, or $0.39 diluted earnings per share, for the second quarter of 2019 and $13.2 million, or $0.34 diluted earnings per share, for the third quarter of 2018.

The increase in net income and diluted earnings per share from the second quarter of 2019 to the third quarter of 2019 reflects increases in net interest income of $1.9 million and non-interest income of $616,000, in addition to decreases in non-interest expense of $1.5 million and provision for loan losses of $520,000, offset by an increase in income tax expense of $699,000.

The increase in net income from the third quarter of 2018 when compared to the same period of 2019 reflects increases in net interest income of $9.7 million and non-interest income of $2.8 million, in addition to a decrease in provision for loan losses of $800,000, offset by increases in non-interest expense of $4.4 million and income tax expense of $1.4 million.

Net income for the nine months ended September 30, 2019 was $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the nine months ended September 30, 2018. Core net income for the nine months ended September 30, 2019 was $52.1 million, or $1.21 diluted earnings per share, compared to $39.9 million, or $1.04 diluted earnings per share, for the nine months ended September 30, 2018. This represents a 16.3% increase in core diluted earnings per share for the first nine months of 2019 compared to the same period in 2018.

The increase in net income when comparing the first nine months of 2019 to the prior year period reflects increases in net interest income of $18.5 million and non-interest income of $5.2 million, in addition to a decrease in provision for loan losses of $742,000, offset by increases in non-interest expense of $15.0 million and income tax expense of $1.5 million.

 
Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands, Except per Share Data, Unaudited)
 Three Months Ended Nine Months Ended
 September 30 June 30 September 30 September 30 September 30
  2019   2019   2018   2019   2018 
Non-GAAP Reconciliation of Net Income         
Net income as reported$20,537  $16,642  $13,065  $47,995  $39,984 
Merger expenses -   1,532   -   5,650   - 
Tax effect -   (295)  -   (987)  - 
Net income excluding merger expenses 20,537   17,879   13,065   52,658   39,984 
          
Loss on sale of investment securities -   100   122   85   111 
Tax effect -   (21)  (25)  (18)  (23)
Net income excluding loss on sale of investment securities 20,537   17,958   13,162   52,725   40,072 
          
Death benefit on bank owned life insurance ("BOLI") (213)  (367)  -   (580)  (154)
Net income excluding death benefit on BOLI 20,324   17,591   13,162   52,145   39,918 
          
Core Net Income$20,324  $17,591  $13,162  $52,145  $39,918 
          
Non-GAAP Reconciliation of Diluted Earnings per Share         
Diluted earnings per share ("EPS") as reported$0.46  $0.37  $0.34  $1.11  $1.04 
Merger expenses -   0.03   -   0.13   - 
Tax effect -   -   -   (0.02)  - 
Diluted EPS excluding merger expenses 0.46   0.40   0.34   1.22   1.04 
          
Loss on sale of investment securities -   -   -   -   - 
Tax effect -   -   -   -   - 
Diluted EPS excluding loss on sale of investment securities 0.46   0.40   0.34   1.22   1.04 
          
Death benefit on BOLI (0.01)  (0.01)  -   (0.01)  - 
Diluted EPS excluding death benefit on BOLI 0.45   0.39   0.34   1.21   1.04 
          
Core Diluted EPS$0.45  $0.39  $0.34  $1.21  $1.04 
          

Horizon’s net interest margin increased to 3.82% for the third quarter of 2019 when compared to 3.73% for the second quarter of 2019. The increase in net interest margin reflects an increase in the yield on interest-earning assets of six basis points as loans continued to reprice upwards along with an increase in commercial loan fees of $811,000 when compared to the second quarter of 2019. The cost of interest-bearing liabilities decreased by three basis points primarily from a decrease in the cost of borrowings. In addition, deposit pricing is reducing within the markets we serve in alignment with the recent decline in general market short-term interest rates.

Net interest margin increased to 3.82% for the third quarter of 2019 when compared to 3.67% for the third quarter of 2018. The increase in net interest margin was due to an increase in yield on interest-earning assets of 29 basis points, offset by an increase in the cost on interest-bearing liabilities of 22 basis points. The increase in the yield of interest-earning assets was primarily due to the increase in the yields on loans receivable of 34 basis points and non-taxable investment securities of 25 basis points. The increase in the yields on loans receivable was the result of loans repricing upwards along with an increase in commercial loan fees of $1.2 million when comparing the third quarter of 2019 to the third quarter of 2018. The cost of interest-bearing deposits increased by 33 basis points and was partially offset by a decrease in the cost on borrowings of 12 basis points.

Net interest margin decreased to 3.72% during the first nine months of 2019 when compared to 3.74% for the first nine months of 2018. This decrease reflects an increase in the cost of interest-bearing liabilities of 40 basis points, offset by an increase in the yield of interest-earning assets of 26 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 48 basis points and borrowings of 28 basis points. The increase in the yield of interest-earning assets was due to increases in the yields on loans receivable of 26 basis points, non-taxable investment securities of 37 basis points and taxable investment securities of 15 basis points.

Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.67% for the third quarter of 2019 compared to 3.61% for the prior quarter and 3.59% for the third quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.7 million, $1.3 million and $789,000 for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. The increase in the core net interest margin during the third quarter of 2019 was due to a decrease of the cost on borrowings 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 Nine Months Ended
 September 30 June 30 September 30 September 30 September 30
  2019   2019   2018   2019   2018 
Non-GAAP Reconciliation of Net Interest Margin         
Net interest income as reported$43,463  $41,529  $33,772  $119,272  $100,733 
          
Average interest-earning assets 4,623,985   4,566,674   3,717,139   4,376,841   3,610,277 
          
Net interest income as a percentage of average interest-earning assets ("Net Interest Margin") 3.82%  3.73%  3.67%  3.72%  3.74%
          
Acquisition-related purchase accounting adjustments ("PAUs")$(1,739) $(1,299) $(789) $(4,548) $(4,460)
          
Core net interest income$41,724  $40,230  $32,983  $114,724  $96,273 
          
Core net interest margin 3.67%  3.61%  3.59%  3.58%  3.58%
          

Lending Activity

Total loans increased $653.3 million from $3.014 billion as of December 31, 2018 to $3.668 billion as of September 30, 2019. Excluding acquired loans, total loans increased $84.4 million during the first nine months of 2019 as consumer loans increased by $33.7 million and mortgage warehouse loans increased by $81.5 million, offset by a decrease in commercial loans of $28.2 million and residential mortgage loans of $2.7 million.

 
Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
            
 September 30 December 31 Amount Acquired Amount Percent
  2019  2018 Change Loans Change Change
Commercial$2,046,165 $1,721,590 $324,575 $(352,798) $(28,223) -1.6%
Residential mortgage 796,497  668,141  128,356  (131,008)  (2,652) -0.4%
Consumer 668,332  549,481  118,851  (85,112)  33,739  6.1%
Subtotal 3,510,994  2,939,212  571,782  (568,918)  2,864  0.1%
Held for sale loans 1,060  1,038  22  -   22  2.1%
Mortgage warehouse loans 155,631  74,120  81,511  -   81,511  110.0%
Total loans$3,667,685 $3,014,370 $653,315 $(568,918) $84,397  2.8%
            

During the first nine months of 2019, Horizon Bank (the “Bank”) originated approximately $299.5 million of commercial loans, which is a 17% increase compared to the same period in 2018; however, only 56.5%, or $169.1 million, of these loan originations had been funded as of September 30, 2019. These originations were offset by commercial loan payoffs totaling approximately $226.0 million during the first nine months of 2019, which is a 69% increase in payoffs compared to the same period in 2018, as there was an increase in clients moving projects that had reached stabilization into the long-term, fixed rate conduit financing market and properties being sold. During the first nine months of 2018, the Bank originated approximately $256.5 million of commercial loans; however, only 56.2%, or $144.1 million, of these loan originations had been funded as of September 30, 2018. These originations were offset by commercial loan payoffs totaling approximately $134.1 million during the first nine months of 2018.

Residential mortgage lending activity for the three months ended September 30, 2019 generated $2.7 million in income from the gain on sale of mortgage loans, an increase of $624,000 from the second quarter of 2019 and $863,000 from the third quarter of 2018. Total origination volume for the third quarter of 2019, including loans placed into portfolio, totaled $121.1 million, representing an increase of 8.7% from the second quarter of 2019 and an increase of 20.4% from the third quarter of 2018. Total origination volume for the third quarter of 2019 of loans sold to the secondary market totaled $95.0 million, representing an increase of 56.7% from the second quarter of 2019 and an increase of 60.3% from the third quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was 5.8% of Horizon’s total revenue for the nine months ended September 30, 2019, which is comparable to the same prior year period.

The provision for loan losses totaled $376,000 for the third quarter of 2019 compared to $896,000 for the second quarter of 2019 and $1.2 million for the third quarter of 2018.

The provision for loan losses totaled $1.6 million for the first nine months of 2019 compared to $2.4 million for the first nine months of 2018.

The ratio of the allowance for loan losses to total loans decreased to 0.49% as of September 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 0.65% as of September 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 1.07% as of September 30, 2019 compared to 0.98% as of December 31, 2018.

 
Non-GAAP Allowance for Loan and Lease Loss Detail
As of September 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$2,779,961 $17,946 N/A $17,946 $2,762,015 0.65% 0.00% 0.65%
Heartland 5,244  -  589  589  4,655 0.00% 11.23% 11.23%
Summit 16,191  -  987  987  15,204 0.00% 6.10% 6.10%
Peoples 71,941  -  1,669  1,669  70,272 0.00% 2.32% 2.32%
Kosciusko 30,580  -  528  528  30,052 0.00% 1.73% 1.73%
LaPorte 70,442  10  2,461  2,471  67,971 0.01% 3.49% 3.50%
CNB 3,498  -  88  88  3,410 0.00% 2.52% 2.52%
Lafayette 63,805  -  519  519  63,286 0.00% 0.81% 0.81%
Wolverine 136,829  -  729  729  136,100 0.00% 0.53% 0.53%
Salin 489,194  -  13,797  13,797  475,397 0.00% 2.82% 2.82%
Total$3,667,685 $17,956 $21,367 $39,323 $3,628,362 0.49% 0.58% 1.07%
                

As of September 30, 2019, non-performing loans totaled $19.2 million, which reflects a two basis point increase in non-performing loans to total loans, or a $4.0 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 $1.3 million, non-performing real estate loans increased by $2.2 million and non-performing consumer loans increased by $485,000. Other real estate owned and repossessed assets totaled $4.0 million as of September 30, 2019 which is an increase of $2.0 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.

As of September 30, 2019, substandard loans totaled $62.1 million, which is an increase of $14.4 million from June 30, 2019. This increase in substandard loans was primarily due to four unrelated relationships, each from a different industry, being downgraded during the quarter. We do not believe this increase to be an indication of the overall quality of our loan portfolio as evident by our steady non-performing loans to total loans ratio of 0.52% as of September 30, 2019 and other non-performing and substandard relationships showing improvement. 

Expense Management

Total non-interest expense was $1.5 million lower in the third quarter of 2019 when compared to the second quarter of 2019. FDIC insurance, other expense, professional fees, and outside services and consultants decreased by $638,000, $572,000, $263,000 and $103,000, respectively. Offsetting these decreases was an increase in loan expense of $150,000. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense held steady at $30.1 million when comparing the third quarter of 2019 to the second quarter of 2019.

      
 Three Months Ended    
 September 30 June 30    
  2019   2019  Adjusted
               
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted
  Amount
Change
 Percent
Change
Salaries and employee benefits$16,948  $- $ 16,948  $16,951  $(482) $16,469  $479  2.9%
Net occupancy expenses 3,131   -  3,131   3,148   (75)  3,073   58  1.9%
Data processing 2,140   -  2,140   2,139   (68)  2,071   69  3.3%
Professional fees 335   -  335   598   (153)  445   (110) -24.7%
Outside services and consultants 1,552   -  1,552   1,655   (176)  1,479   73  4.9%
Loan expense 2,198   -  2,198   2,048   (2)  2,046   152  7.4%
FDIC deposit insurance (273)  -  (273)  365   -   365   (638) -174.8%
Other losses 90   -  90   169   (69)  100   (10) -10.0%
Other expenses 3,939   -  3,939   4,511   (507)  4,004   (65) -1.6%
Total non-interest expense$30,060  $- $ 30,060  $31,584  $(1,532) $30,052  $8  0.0%
Annualized Non-interest Exp. to Avg. Assets 2.34%    2.34%  2.51%    2.39%    
                        

Total non-interest expense was $4.4 million higher during the third quarter of 2019 compared to the same period of 2018. Salaries and employee benefits, other expense, net occupancy expense, loan expense, data processing and outside services and consultants increased $2.6 million, $836,000, $636,000, $476,000, $381,000 and $348,000, respectively. These increases were offset by a decrease of $669,000 in FDIC insurance and $102,000 in professional fees. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded.

      
 Three Months Ended    
 September 30 September 30    
  2019   2018  Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 AdjustedAmount
Change
 Percent
Change
Salaries and employee benefits$16,948  $- $ 16,948  $14,343  $- $14,343  $2,605  18.2%
Net occupancy expenses 3,131   -  3,131   2,495   -  2,495   636  25.5%
Data processing 2,140   -  2,140   1,759   -  1,759   381  21.7%
Professional fees 335   -  335   437   -  437   (102) -23.3%
Outside services and consultants 1,552   -  1,552   1,204   -  1,204   348  28.9%
Loan expense 2,198   -  2,198   1,722   -  1,722   476  27.6%
FDIC deposit insurance (273)  -  (273)  396   -  396   (669) -168.9%
Other losses 90   -  90   161   -  161   (71) -44.1%
Other expenses 3,939   -  3,939   3,103   -  3,103   836  26.9%
Total non-interest expense$30,060  $- $ 30,060  $25,620  $- $25,620  $4,440  17.3%
Annualized Non-interest Exp. to Avg. Assets 2.34%    2.34%  2.48%    2.48%    
                        

Total non-interest expense was $15.0 million higher during the first nine months of 2019 when compared to the first nine months of 2018. Salaries and employee benefits, other expenses, outside services and consultants, loan expense, data processing and net occupancy increased $5.8 million, $3.1 million, $3.0 million, $1.7 million, $1.2 million and $1.1 million, respectively. Offsetting these increases was a decrease in FDIC insurance of $799,000 and other losses of $213,000. FDIC insurance decreased due to the assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense increased $9.3 million during the first nine months of 2019 when compared to the same period of 2018.

      
 Nine Months Ended    
 September 30 September 30    
  2019   2018  Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 AdjustedAmount
Change
 Percent
Change
Salaries and employee benefits$48,365  $(484) $ 47,881  $42,525  $- $42,525  $5,356  12.6%
Net occupancy expenses 9,051   (75)  8,976   7,981   -  7,981   995  12.5%
Data processing 6,245   (360)  5,885   5,062   -  5,062   823  16.3%
Professional fees 1,426   (392)  1,034   1,314   -  1,314   (280) -21.3%
Outside services and consultants 6,737   (2,466)  4,271   3,735   -  3,735   536  14.4%
Loan expense 6,195   (2)  6,193   4,504   -  4,504   1,689  37.5%
FDIC deposit insurance 252   -   252   1,051   -  1,051   (799) -76.0%
Other losses 363   (71)  292   576   -  576   (284) -49.3%
Other expenses 12,748   (1,800)  10,948   9,651   -  9,651   1,297  13.4%
Total non-interest expense$91,382  $(5,650) $ 85,732  $76,399  $- $76,399  $9,333  12.2%
Annualized Non-interest Exp. to Avg. Assets 2.53%    2.38%  2.54%    2.54%    
                        

Annualized non-interest expense as a percent of average assets were 2.34%, 2.51% and 2.48% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.34%, 2.39% and 2.48% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively.

Annualized non-interest expense as a percent of average assets were 2.53% and 2.54% for the first nine months of 2019 and 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.38% and 2.54% for the first nine months of 2019 and 2018, respectively. Horizon’s strategy to build mass and scale continues to prove effective.

Income tax expense totaled $4.0 million for the third quarter of 2019, an increase of $699,000 when compared to the second quarter of 2019 and an increase of $1.4 million when compared to the third quarter of 2018. The increase in income tax expense from the second quarter of 2019 and the third quarter of 2018 was primarily due to increases in income before income taxes of $4.6 million and $8.9 million, respectively, when compared to the third quarter of 2019.

Income tax expense totaled $9.4 million for the first nine months of 2019, an increase of $1.5 million when compared to the first nine months of 2018. The increase in income tax expense from the first nine months of 2018 was primarily due to an increase in income before income taxes of $9.5 million when compared to the same period 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)
          
 September 30 June 30 March 31 December 31 September 30
  2019  2019  2019  2018  2018
Total stockholders' equity$642,711 $626,461 $609,468 $491,992 $477,594
Less: Intangible assets 178,896  179,776  176,864  130,270  130,755
Total tangible stockholders' equity$463,815 $446,685 $432,604 $361,722 $346,839
          
Common shares outstanding 44,969,021  45,061,372  45,052,747  38,375,407  38,367,890
          
Tangible book value per common share$10.31 $9.91 $9.60 $9.43 $9.04
               


 
Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
 Three Months Ended Nine Months Ended
 September 30 June 30 September 30 September 30 September 30
  2019   2019   2018   2019   2018 
Non-GAAP Calculation of Efficiency Ratio         
Non-interest expense as reported$30,060  $31,584  $25,620  $91,382  $76,399 
          
Net interest income as reported 43,463   41,529   33,772   119,272   100,733 
          
Non-interest income as reported 11,514   10,898   8,686   31,124   25,936 
          
Non-interest expense/(Net interest income + Non-interest income) ("Efficiency Ratio") 54.68%  60.24%  60.34%  60.76%  60.31%
          
Non-GAAP Reconciliation of Adjusted Efficiency Ratio         
Non-interest expense as reported$30,060  $31,584  $25,620  $91,382  $76,399 
Merger expenses -   (1,532)  -   (5,650)  - 
Non-interest expense excluding merger expenses 30,060   30,052   25,620   85,732   76,399 
          
Net interest income as reported 43,463   41,529   33,772   119,272   100,733 
          
Non-interest income as reported 11,514   10,898   8,686   31,124   25,936 
Loss on sale of investment securities -   100   122   85   111 
Death benefit on bank owned life insurance ("BOLI") (213)  (367)  -   (580)  (154)
Non-interest income excluding loss on sale of investment securities and death benefit on BOLI 11,301   10,631   8,808   30,629   25,893 
          
Adjusted efficiency ratio 54.89%  57.62%  60.17%  57.19%  60.33%
          


Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
(Dollars in Thousands, Unaudited)
 Three Months Ended Six Months Ended
 September 30 June 30 September 30 September 30 September 30
  2019   2019   2018   2019   2018 
Non-GAAP Reconciliation of Return on Average Assets         
Average Assets$5,107,259  $5,047,365  $4,105,096  $4,823,601  $4,021,811 
          
Return on average assets ("ROAA") as reported 1.60%  1.32%  1.26%  1.33%  1.33%
Merger expenses 0.00%  0.12%  0.00%  0.16%  0.00%
Tax effect 0.00%  -0.02%  0.00%  -0.03%  0.00%
ROAA excluding merger expenses 1.60%  1.42%  1.26%  1.46%  1.33%
          
Loss on sale of investment securities 0.00%  0.01%  0.01%  0.00%  0.00%
Tax effect 0.00%  0.00%  0.00%  0.00%  0.00%
ROAA excluding gain on sale of investment securities 1.60%  1.43%  1.27%  1.46%  1.33%
          
Death benefit on bank owned life insurance ("BOLI") -0.02%  -0.03%  0.00%  -0.02%  -0.01%
ROAA excluding death benefit on BOLI 1.58%  1.40%  1.27%  1.44%  1.32%
          
Core ROAA 1.58%  1.40%  1.27%  1.44%  1.32%
          
Non-GAAP Reconciliation of Return on Average Common Equity         
Average Common Equity$640,770  $622,028  $476,959  $589,766  $467,867 
          
Return on average common equity ("ROACE") as reported 12.72%  10.73%  10.87%  10.88%  11.43%
Merger expenses 0.00%  0.99%  0.00%  1.28%  0.00%
Tax effect 0.00%  -0.19%  0.00%  -0.22%  0.00%
ROACE excluding merger expenses 12.72%  11.53%  10.87%  11.94%  11.43%
          
Loss on sale of investment securities 0.00%  0.06%  0.10%  0.02%  0.03%
Tax effect 0.00%  -0.01%  -0.02%  0.00%  -0.01%
ROACE excluding gain on sale of investment securities 12.72%  11.58%  10.95%  11.96%  11.45%
          
Death benefit on bank owned life insurance ("BOLI") -0.13%  -0.24%  0.00%  -0.13%  -0.04%
ROAA excluding death benefit on BOLI 12.59%  11.34%  10.95%  11.83%  11.41%
          
Core ROACE 12.59%  11.34%  10.95%  11.83%  11.41%
          

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern and central Michigan through its commercial banking subsidiary, Horizon Bank. 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)

 September 30 June 30 March 31 December 31 September 30
  2019   2019   2019   2018   2018 
Balance sheet:         
Total assets$5,186,714  $5,098,682  $5,051,639  $4,246,688  $4,150,561 
Investment securities 977,536   887,187   893,469   810,460   766,153 
Commercial loans 2,046,165   2,062,623   2,089,579   1,721,590   1,698,582 
Mortgage warehouse loans 155,631   133,428   71,944   74,120   71,422 
Residential mortgage loans 796,497   814,065   819,824   668,141   651,250 
Consumer loans 668,332   654,552   639,710   549,481   536,132 
Earnings assets 4,667,668   4,577,487   4,538,952   3,842,903   3,743,592 
Non-interest bearing deposit accounts 756,707   810,350   811,768   642,129   621,475 
Interest bearing transaction accounts 2,173,100   2,153,189   2,115,847   1,684,336   1,605,825 
Time deposits 986,150   967,236   960,408   812,911   901,254 
Borrowings 516,591   436,233   457,788   550,384   477,719 
Subordinated debentures 56,250   56,194   55,310   37,837   37,791 
Total stockholders' equity 642,711   626,461   609,468   491,992   477,594 
          
 Three months ended
Income statement:         
Net interest income$43,463  $41,529  $34,280  $33,836  $33,772 
Provision for loan losses 376   896   364   528   1,176 
Non-interest income 11,514   10,898   8,712   8,477   8,686 
Non-interest expenses 30,060   31,584   29,738   26,117   25,620 
Income tax expense 4,004   3,305   2,074   2,535   2,597 
Net income$20,537  $16,642  $10,816  $13,133  $13,065 
          
Per share data:(1)         
Basic earnings per share$0.46  $0.37  $0.28  $0.34  $0.34 
Diluted earnings per share 0.46   0.37   0.28   0.34   0.34 
Cash dividends declared per common share 0.12   0.12   0.10   0.10   0.10 
Book value per common share 14.29   13.90   13.53   12.82   12.45 
Tangible book value per common share 10.31   9.91   9.60   9.43   9.04 
Market value - high 17.77   17.13   17.82   19.40   21.39 
Market value - low$15.93  $15.51  $15.50  $14.94  $19.44 
Weighted average shares outstanding - Basic 45,038,021   45,055,117   38,822,543   38,367,972   38,365,379 
Weighted average shares outstanding - Diluted 45,113,730   45,130,408   38,906,172   38,488,002   38,534,970 
          
Key ratios:         
Return on average assets 1.60%  1.32%  1.02%  1.25%  1.26%
Return on average common stockholders' equity 12.72   10.73   8.66   10.73   10.87 
Net interest margin 3.82   3.73   3.62   3.60   3.67 
Loan loss reserve to total loans 0.49   0.50   0.49   0.59   0.60 
Average equity to average assets 12.55   12.32   11.76   11.62   11.62 
Bank only capital ratios:         
Tier 1 capital to average assets 9.39   9.52   10.99   9.38   9.53 
Tier 1 capital to risk weighted assets 11.69   11.76   11.84   11.91   12.09 
Total capital to risk weighted assets 12.14   12.23   12.30   12.47   12.66 
          
Loan data:         
Substandard loans$62,130  $47,764  $41,728  $38,775  $34,655 
30 to 89 days delinquent 10,204   9,633   9,980   7,161   6,878 
          
90 days and greater delinquent - accruing interest$34  $391  $192  $568  $202 
Trouble debt restructures - accruing interest 3,491   2,198   2,532   2,002   1,830 
Trouble debt restructures - non-accrual 1,807   1,576   1,349   1,057   1,077 
Non-accural loans 13,823   14,764   15,313   11,548   11,417 
Total non-performing loans$19,155  $18,929  $19,386  $15,175  $14,526 
Non-performing loans to total loans 0.52%  0.52%  0.54%  0.50%  0.49%
          
(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)

 September 30 September 30 
  2019   2018  
Balance sheet:    
Total assets$5,186,714  $4,150,561  
Investment securities 977,536   766,153  
Commercial loans 2,046,165   1,698,582  
Mortgage warehouse loans 155,631   71,422  
Residential mortgage loans 796,497   651,250  
Consumer loans 668,332   536,132  
Earnings assets 4,667,668   3,743,592  
Non-interest bearing deposit accounts 756,707   621,475  
Interest bearing transaction accounts 2,173,100   1,605,825  
Time deposits 986,150   901,254  
Borrowings 516,591   477,719  
Subordinated debentures 56,250   37,791  
Total stockholders' equity 642,711   477,594  
     
 Nine months ended
Income statement:    
Net interest income$119,272  $100,733  
Provision for loan losses 1,636   2,378  
Non-interest income 31,124   25,936  
Non-interest expenses 91,382   76,399  
Income tax expense 9,383   7,908  
Net income$47,995  $39,984  
     
Per share data:(1)    
Basic earnings per share$1.12  $1.04  
Diluted earnings per share 1.11   1.04  
Cash dividends declared per common share 0.34   0.30  
Book value per common share 14.29   12.45  
Tangible book value per common share 10.31   9.04  
Market value - high 17.82   21.94  
Market value - low$15.50  $17.87  
Weighted average shares outstanding - Basic 42,995,082   38,340,012  
Weighted average shares outstanding - Diluted 43,070,095   38,503,403  
     
Key ratios:    
Return on average assets 1.33%  1.33% 
Return on average common stockholders' equity 10.88   11.43  
Net interest margin 3.72   3.74  
Loan loss reserve to total loans 0.49   0.60  
Average equity to average assets 12.23   11.63  
Bank only capital ratios:    
Tier 1 capital to average assets 9.39   9.53  
Tier 1 capital to risk weighted assets 11.69   12.09  
Total capital to risk weighted assets 12.14   12.66  
     
Loan data:    
Substandard loans$62,130  $34,655  
30 to 89 days delinquent 10,204   6,878  
     
90 days and greater delinquent - accruing interest$34  $202  
Trouble debt restructures - accruing interest 3,491   1,830  
Trouble debt restructures - non-accrual 1,807   1,077  
Non-accural loans 13,823   11,417  
Total non-performing loans$19,155  $14,526  
Non-performing loans to total loans 0.52%  0.49% 
     
(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)
          
 September 30 June 30 March 31 December 31 September 30
  2019   2019   2019   2018   2018 
Commercial$ 12,082  $11,881  $11,556  $10,495  $10,581 
Real estate 1,449   1,732   1,588   1,676   1,574 
Mortgage warehousing 1,041   1,040   1,014   1,006   1,030 
Consumer 3,384   3,652   3,663   4,643   4,613 
Total$ 17,956  $18,305  $17,821  $17,820  $17,798 
          
 
Net Charge-Offs (Recoveries)
(Dollars in Thousands, Unaudited)
          
 Three Months Ended
 September 30 June 30 March 31 December 31 September 30
  2019   2019   2019   2018   2018 
Commercial$ 192  $265  $61  $196  $179 
Real estate (7)  41   (27)  47   (2)
Mortgage warehousing -   -   -   -   - 
Consumer 540   106   329   263   272 
Total$ 725  $412  $363  $506  $449 
Percent of net charge-offs to average loans outstanding for the period 0.02%  0.01%  0.01%  0.02%  0.02%
          
 
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
          
 September 30 June 30 March 31 December 31 September 30
  2019   2019   2019   2018   2018 
Commercial$ 8,193  $8,697  $9,750  $6,903  $8,355 
Real estate 7,212   6,444   5,995   5,007   3,754 
Mortgage warehousing -   -   -   -   - 
Consumer 3,750   3,788   3,641   3,265   2,417 
Total$ 19,155  $18,929  $19,386  $15,175  $14,526 
Non-performing loans to total loans 0.52%  0.52%  0.54%  0.55%  0.49%
          
 
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
          
 September 30 June 30 March 31 December 31 September 30
  2019   2019   2019   2018   2018 
Commercial$ 3,972  $3,694  $3,496  $1,967  $2,181 
Real estate 48   113   126   60   58 
Mortgage warehousing -   -   -   -   - 
Consumer 24   48   30   48   26 
Total$ 4,044  $3,855  $3,652  $2,075  $2,265 
          

 


HORIZON BANCORP, INC.

Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)

             
  Three Months Ended Three Months Ended
  September 30, 2019 September 30, 2018
  Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets           
 Interest-earning assets           
 Federal funds sold$18,133  $115 2.52% $3,840  $24 2.48%
 Interest-earning deposits 17,823   93 2.07%  24,494   104 1.68%
 Investment securities - taxable 478,764   2,949 2.44%  421,681   2,611 2.46%
 Investment securities - non-taxable(1) 462,997   3,099 3.36%  324,289   2,010 3.11%
 Loans receivable(2)(3) 3,646,268   49,455 5.41%  2,942,835   37,522 5.07%
 Total interest-earning assets(1) 4,623,985   55,711 4.87%  3,717,139   42,271 4.58%
             
 Non-interest-earning assets           
 Cash and due from banks 66,970       45,864     
 Allowance for loan losses (18,277)      (17,090)    
 Other assets 434,581       359,183     
             
 Total average assets$5,107,259      $4,105,096     
             
 Liabilities and Stockholders' Equity           
 Interest-bearing liabilities           
 Interest-bearing deposits$3,132,852  $9,109 1.15% $2,438,450  $5,023 0.82%
 Borrowings 413,859   2,275 2.18%  496,054   2,876 2.30%
 Subordinated debentures 54,433   864 6.30%  36,570   600 6.51%
 Total interest-bearing liabilities 3,601,144   12,248 1.35%  2,971,074   8,499 1.13%
             
 Non-interest-bearing liabilities           
 Demand deposits 818,164       640,983     
 Accrued interest payable and other liabilities 47,181       16,080     
 Stockholders' equity 640,770       476,959     
             
 Total average liabilities and stockholders' equity$5,107,259      $4,105,096     
             
 Net interest income/spread  $43,463 3.52%   $33,772 3.44%
 Net interest income as a percentage of average interest-earning assets(1)    3.82%     3.67%
             
(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)

             
  Nine Months Ended Nine Months Ended
  September 30, 2019 September 30, 2018
  Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets           
 Interest-earning assets           
 Federal funds sold$14,778  $339 3.07% $2,845  $53 2.49%
 Interest-earning deposits 21,938   284 1.73%  25,411   300 1.58%
 Investment securities - taxable 469,330   8,929 2.54%  413,617   7,379 2.39%
 Investment securities - non-taxable(1) 423,141   8,520 3.37%  313,168   5,745 3.00%
 Loans receivable(2)(3) 3,447,654   136,862 5.32%  2,855,236   108,961 5.06%
 Total interest-earning assets(1) 4,376,841   154,934 4.81%  3,610,277   122,438 4.55%
             
 Non-interest-earning assets           
 Cash and due from banks 58,890       44,605     
 Allowance for loan losses (18,053)      (16,686)    
 Other assets 405,923       383,615     
             
 Total average assets$4,823,601      $4,021,811     
             
 Liabilities and Stockholders' Equity           
 Interest-bearing liabilities           
 Interest-bearing deposits$2,924,433  $24,923 1.14% $2,382,864  $11,814 0.66%
 Borrowings 462,575   8,391 2.43%  504,349   8,127 2.15%
 Subordinated debentures 48,666   2,348 6.45%  36,524   1,764 6.46%
 Total interest-bearing liabilities 3,435,674   35,662 1.39%  2,923,737   21,705 0.99%
             
 Non-interest-bearing liabilities           
 Demand deposits 760,717       613,866     
 Accrued interest payable and other liabilities 37,444       16,341     
 Stockholders' equity 589,766       467,867     
             
 Total average liabilities and stockholders' equity$4,823,601      $4,021,811     
             
 Net interest income/spread  $119,272 3.42%   $100,733 3.55%
 Net interest income as a percentage of average interest-earning assets(1)    3.72%     3.74%
             
(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)

    
 September 30 December 31
  2019  2018 
 (Unaudited)  
Assets   
Cash and due from banks$ 91,279 $58,492 
Interest-earning time deposits 8,455  15,744 
Investment securities, available for sale 767,230  600,348 
Investment securities, held to maturity (fair value of $217,718 and $208,273) 210,306  210,112 
Loans held for sale 1,060  1,038 
Loans, net of allowance for loan losses of $17,956 and $17,820 3,648,669  2,995,512 
Premises and equipment, net 92,800  74,331 
Federal Home Loan Bank stock 22,447  18,073 
Goodwill 151,238  119,880 
Other intangible assets 27,658  10,390 
Interest receivable 18,282  14,239 
Cash value of life insurance 95,011  88,062 
Other assets 52,279  40,467 
Total assets$ 5,186,714 $4,246,688 
Liabilities   
Deposits   
Non-interest bearing$ 756,707 $642,129 
Interest bearing 3,159,250  2,497,247 
Total deposits 3,915,957  3,139,376 
Borrowings 516,591  550,384 
Subordinated debentures 56,250  37,837 
Interest payable 2,725  2,031 
Other liabilities 52,480  25,068 
Total liabilities 4,544,003  3,754,696 
Commitments and contingent liabilities   
Stockholders' Equity   
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares -  - 
Common stock, no par value, Authorized 99,000,000 shares (1)   
Issued 44,994,090 and 38,400,476 shares (1), Outstanding 44,969,021 and 38,375,407 shares (1) -  - 
Additional paid-in capital 379,448  276,101 
Retained earnings 256,617  224,035 
Accumulated other comprehensive income (loss) 6,646  (8,144)
Total stockholders' equity 642,711  491,992 
Total liabilities and stockholders' equity$ 5,186,714 $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 Nine Months Ended
 September 30 September 30
  2019   2018   2019   2018 
Interest Income       
Loans receivable$ 49,455  $37,522  $ 136,862  $108,961 
Investment securities       
Taxable 3,157   2,739   9,552   7,732 
Tax exempt 3,099   2,010   8,520   5,745 
Total interest income 55,711   42,271   154,934   122,438 
Interest Expense       
Deposits 9,109   5,023   24,923   11,814 
Borrowed funds 2,275   2,876   8,391   8,127 
Subordinated debentures 864   600   2,348   1,764 
Total interest expense 12,248   8,499   35,662   21,705 
Net Interest Income 43,463   33,772   119,272   100,733 
Provision for loan losses 376   1,176   1,636   2,378 
Net Interest Income after Provision for Loan Losses 43,087   32,596   117,636   98,355 
Non-interest Income       
Service charges on deposit accounts 2,836   2,009   7,193   5,804 
Wire transfer fees 189   160   474   490 
Interchange fees 2,138   1,410   5,659   4,293 
Fiduciary activities 1,834   1,855   5,986   5,598 
Gains (losses) on sale of investment securities (includes $0 and $(122)       
for the three months ended September 30, 2019 and 2018, respectively, and $(85) and $(111) for the nine months ended September 30, 2019 and nine months ended September 30, 2018 related to accumulated other comprehensive earnings reclassifications) -   (122)  (85)  (111)
Gain on sale of mortgage loans 2,702   1,839   6,089   5,158 
Mortgage servicing income net of impairment 444   563   1,620   1,423 
Increase in cash value of bank owned life insurance 556   503   1,624   1,380 
Death benefit on bank owned life insurance 213   -   580   154 
Other income 602   469   1,984   1,747 
Total non-interest income 11,514   8,686   31,124   25,936 
Non-interest Expense       
Salaries and employee benefits 16,948   14,343   48,365   42,525 
Net occupancy expenses 3,131   2,495   9,051   7,981 
Data processing 2,140   1,759   6,245   5,062 
Professional fees 335   437   1,426   1,314 
Outside services and consultants 1,552   1,204   6,737   3,735 
Loan expense 2,198   1,722   6,195   4,504 
FDIC insurance expense (273)  396   252   1,051 
Other losses 90   161   363   576 
Other expense 3,939   3,103   12,748   9,651 
Total non-interest expense 30,060   25,620   91,382   76,399 
Income Before Income Taxes 24,541   15,662   57,378   47,892 
Income tax expense (includes $0 and $(25) for the three months ended       
September 30, 2019 and 2018, respectively, and $(18) and $(23) for the nine months ended September 30, 2019 and nine months ended September 30, 2018 related to income tax expense (benefit) from reclassification items) 4,004   2,597   9,383   7,908 
Net Income$ 20,537  $13,065  $ 47,995  $39,984 
Basic Earnings Per Share (1)$ 0.46  $0.34  $ 1.12  $1.04 
Diluted Earnings Per Share (1) 0.46   0.34   1.11   1.04 
        
(1) Adjusted for 3:2 stock split on June 15, 2018       

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