Horizon Bancorp, Inc. Announces Record Earnings for 2019

Michigan City, Indiana, UNITED STATES


MICHIGAN CITY, Ind., Jan. 29, 2020 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and twelve-month periods ended December 31, 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 year ended December 31, 2019 was $66.5 million, or $1.53 diluted earnings per share, compared to $53.1 million, or $1.38 diluted earnings per share, for the year ended December 31, 2018. This represents the highest annual net income and diluted earnings per share in the Company’s history.

  • Core net income for the year 2019 increased 31.6% to $70.7 million, or $1.63 diluted earnings per share, compared to $53.7 million, or $1.40 diluted earnings per share, for the year 2018. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for the definition of core net income.)

  • Net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $13.1 million, or $0.34 diluted earnings per share, for the fourth quarter of 2018.

  • Core net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $13.8 million, or $0.36 diluted earnings per share, for the fourth quarter of 2018.

  • Return on average assets was 1.35% for the year ended December 31, 2019 compared to 1.31% for the year ended December 31, 2018.

  • Core return on average assets for the year ended December 31, 2019 was 1.43% compared to 1.33% for the year ended December 31, 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the definition of core return on average assets.)

  • Consumer loans increased at a rate of 21.8%, or $119.7 million, during the year ended December 31, 2019. Excluding acquired loans, consumer loans increased at a rate of 6.3%, or $34.6 million during the year ended December 31, 2019.

  • Net interest income increased $7.7 million, or 22.7%, to $41.5 million for the fourth quarter of 2019 compared to $33.8 million for the fourth quarter of 2018. Net interest income increased $26.2 million, or 19.5%, to $160.8 million for the year ended December 31, 2019 compared to $134.6 million, for the year ended December 31, 2018.

  • Net interest margin was 3.58% for the fourth quarter of 2019 compared to 3.60% for the fourth quarter of 2018. Net interest margin was 3.69% for the year ended December 31, 2019 compared to 3.71% for the year ended December 31, 2018.

  • Core net interest margin was 3.49% for the fourth quarter of 2019 compared to 3.43% for the fourth quarter of 2018. For the year ended December 31, 2019, core net interest margin was 3.57% compared to 3.54% for the year ended December 31, 2018. (See the “Non-GAAP Reconciliation of Net Interest Margin” table on page 5 for the definition of core net interest margin.)

  • Return on average equity was 11.26% for the fourth quarter of 2019 compared to 10.73% for the fourth quarter of 2018. Return on average equity was 10.98% for the year ended December 31, 2019 compared to 11.22% for the year ended December 31, 2018.

  • Core return on average equity for the fourth quarter of 2019 was 11.25% compared to 11.26% for the fourth quarter of 2018. Core return on average equity was 11.66% for the year ended December 31, 2019 compared to 11.34% for the year ended December 31, 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 $10.63 at December 31, 2019 compared to $10.31 and $9.43 at September 30, 2019 and December 31, 2018, respectively. This represents the highest tangible book value per share in the Company’s history. (See the “Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share” table on page 10 for a reconciliation of tangible book value to its most comparable GAAP measure.)

  • 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 December 31, 2019, Horizon had repurchased a total of 99,407 shares at an average price per share of $16.04.

Craig Dwight, Chairman and CEO of Horizon, commented: “I am pleased to announce another record year of earnings for Horizon. The 2019 results are attributed to the hard work and dedication of our entire team and their focus on the customer and executing a smooth integration of Salin Bancshares, Inc. and its wholly owned subsidiary Salin Bank and Trust Company ('Salin Bank'). As a result of this acquisition and organic growth, Horizon’s operational leverage and efficiency ratio continued to exhibit improvement, which is evidence that our mass and scale strategy is working.”

Dwight added, “At December 31, 2019, Horizon’s total assets were $5.2 billion, which is an increase of $997.7 million when compared to year-end 2018. In addition to the loans acquired from Salin Bank during the first quarter of 2019, which totaled approximately $568.9 million, Horizon continued to experience loan growth of $153.3 million from our key growth markets in Indiana and Michigan.”

Dwight concluded, “The improvement in Horizon’s core efficiency ratio demonstrates our ability to gain operational leverage through an increase in mass and scale. Horizon’s adjusted efficiency ratio, excluding merger expenses, gain/loss on sale of investment securities and death benefit on bank owned life insurance, decreased to 57.23% for the year ended December 31, 2019 from 60.28% for the same prior year period. Along with an improved adjusted efficiency ratio, Horizon has also experienced a decrease in non-interest expense, excluding merger expenses, as a percentage of average assets from 2.51% for the year ended December 31, 2018 to 2.36% for the year ended December 31, 2019, a 15 basis point improvement. Horizon improved branch efficiencies during 2019 by closing four full-service branches and one loan production office, and consolidating five full-service branches acquired from Salin.”

Income Statement Highlights

Net income for the fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $20.5 million, or $0.46 diluted earnings per share, for the third quarter of 2019 and $13.1 million, or $0.34 diluted earnings per share, for the fourth 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 fourth quarter of 2019 was $18.5 million, or $0.41 diluted earnings per share, compared to $20.3 million, or $0.45 diluted earnings per share, for the third quarter of 2019 and $13.8 million, or $0.36 diluted earnings per share, for the fourth quarter of 2018.

The decrease in net income and diluted earnings per share from the third quarter of 2019 to the fourth quarter of 2019 reflects a decrease in net interest income of $1.9 million primarily due to $697,000 less in acquisition-related purchase accounting adjustments, $783,000 lower commercial loan fees and the reduction in the net interest margin. Non-interest expense increased $590,000 during the fourth quarter of 2019 as a result of the reversal of previously recorded FDIC insurance expense during the third quarter of $273,000 and an increase in other losses due to write-downs of other real estate owned properties on closed offices or vacant land acquired for future expansion during the fourth quarter totaling $222,000. Offsetting these decreases was an increase in non-interest income of $420,000, in addition to decreases in provision for loan losses of $36,000 and income tax expense of $84,000.

The increase in net income from the fourth quarter of 2018 when compared to the same period of 2019 reflects increases in net interest income of $7.7 million and non-interest income of $3.5 million, in addition to a decrease in provision for loan losses of $188,000, offset by increases in non-interest expense of $4.5 million and income tax expense of $1.4 million due to overall company growth and the Salin acquisition.

Net income for the year ended December 31, 2019 was $66.5 million, or $1.53 diluted earnings per share, compared to $53.1 million, or $1.38 diluted earnings per share, for the year ended December 31, 2018. Core net income for the year ended December 31, 2019 was $70.7 million, or $1.63 diluted earnings per share, compared to $53.7 million, or $1.40 diluted earnings per share, for the year ended December 31, 2018. This represents a 16.4% increase in core diluted earnings per share for the year ended December 31, 2019 compared to the same period in 2018 due to overall company growth, gained efficiencies and the Salin acquisition.

The increase in net income when comparing the year ended December 31, 2019 to the prior year period reflects increases in net interest income of $26.2 million and non-interest income of $8.6 million, in addition to a decrease in provision for loan losses of $930,000, offset by increases in non-interest expense of $19.5 million and income tax expense of $2.9 million.

 
Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands, Except per Share Data, Unaudited)
 
 Three Months Ended Twelve Months Ended
 December 31 September 30 December 31 December 31 December 31
  2019   2019   2018   2019   2018 
Non-GAAP Reconciliation of Net Income         
Net income as reported$18,543  $20,537  $13,133  $66,538  $53,117 
Merger expenses -   -   487   5,650   487 
Tax effect -   -   (102)  (987)  (102)
Net income excluding merger expenses 18,543   20,537   13,518   71,201   53,502 
          
(Gain)/loss on sale of investment securities (10)  -   332   75   443 
Tax effect 2   -   (70)  (16)  (93)
Net income excluding loss on sale of investment securities 18,535   20,537   13,780   71,260   53,852 
          
Death benefit on bank owned life insurance ("BOLI") -   (213)  -   (580)  (154)
Net income excluding death benefit on BOLI 18,535   20,324   13,780   70,680   53,698 
          
Core Net Income$18,535  $20,324  $13,780  $70,680  $53,698 
          
Non-GAAP Reconciliation of Diluted Earnings per Share         
Diluted earnings per share ("EPS") as reported$0.41  $0.46  $0.34  $1.53  $1.38 
Merger expenses -   -   0.01   0.13   0.01 
Tax effect -   -   -   (0.02)  - 
Diluted EPS excluding merger expenses 0.41   0.46   0.35   1.64   1.39 
          
(Gain)/loss on sale of investment securities -   -   0.01   -   0.01 
Tax effect -   -   -   -   - 
Diluted EPS excluding loss on sale of investment securities 0.41   0.46   0.36   1.64   1.40 
          
Death benefit on BOLI -   (0.01)  -   (0.01)  - 
Diluted EPS excluding death benefit on BOLI 0.41   0.45   0.36   1.63   1.40 
          
Core Diluted EPS$0.41  $0.45  $0.36  $1.63  $1.40 
          

Horizon’s net interest margin decreased to 3.58% for the fourth quarter of 2019 when compared to 3.82% for the third quarter of 2019. The decrease in net interest margin reflects a decrease in commercial loan fees of $783,000 and a decrease of $697,000 in acquisition-related purchase accounting adjustments when compared to the third quarter of 2019. The cost of interest-bearing liabilities decreased by 11 basis points as the cost of deposits, borrowings and subordinated debentures all decreased when compared to the third quarter of 2019. Deposit pricing continues to reduce within the markets we serve in alignment with the recent decline in general market short-term interest rates.

Net interest margin decreased to 3.58% for the fourth quarter of 2019 when compared to 3.60% for the fourth quarter of 2018. The decrease in net interest margin was due to a decrease in yield on interest-earning assets, offset by a decrease in the cost of interest-bearing liabilities. Interest income from acquisition-related purchase accounting adjustments was $587,000 lower for the fourth quarter of 2019 when compared to the same prior year period. The rate on interest-bearing liabilities decreased due to lower rates on borrowings and subordinated debentures, partially offset by higher rates on interest-bearing deposits.

Net interest margin decreased to 3.69% for the year ended December 31, 2019 when compared to 3.71% for the year ended December 31, 2018. The lower net interest margin for 2019 reflects an increase in the cost of interest-bearing liabilities of 28 basis points due to an increase in the cost of interest-bearing deposits and borrowings. The increase in the cost of interest-bearing liabilities was offset by an increase in the yield of interest-earning assets.

Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.49% for the fourth quarter of 2019 compared to 3.67% for the prior quarter and 3.43% for the fourth quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.0 million, $1.7 million and $1.6 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

 
Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
 
 Three Months Ended Twelve Months Ended
 December 31 September 30 December 31 December 31 December 31
  2019   2019   2018   2019   2018 
Non-GAAP Reconciliation of Net Interest Margin         
Net interest income as reported$41,519  $43,463  $33,836  $160,791  $134,569 
          
Average interest-earning assets 4,748,217   4,623,985   3,808,822   4,470,450   3,697,938 
          
Net interest income as a percentage of average interest-earning assets ("Net Interest Margin") 3.58%  3.82%  3.60%  3.69%  3.71%
          
Acquisition-related purchase accounting adjustments ("PAUs")$(1,042) $(1,739) $(1,629) $(5,590) $(6,089)
          
Core net interest income$40,477  $41,724  $32,207  $155,201  $128,480 
          
Core net interest margin 3.49%  3.67%  3.43%  3.57%  3.54%
          

Lending Activity

Total loans increased $626.6 million from $3.014 billion as of December 31, 2018 to $3.641 billion as of December 31, 2019. Excluding acquired loans, total loans increased $57.6 million during 2019 as consumer loans increased by $34.6 million and mortgage warehouse loans increased by $76.2 million, offset by a decrease in commercial loans of $27.7 million and residential mortgage loans of $28.4 million.

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
            
 December 31 December 31 Amount Acquired Amount Percent
  2019  2018 Change Loans Change Change
Commercial$2,046,651 $1,721,590 $325,061 $(352,798) $(27,737) -1.6%
Residential mortgage 770,717  668,141  102,576  (131,008)  (28,432) -4.3%
Consumer 669,180  549,481  119,699  (85,112)  34,587  6.3%
Subtotal 3,486,548  2,939,212  547,336  (568,918)  (21,582) -0.7%
Held for sale loans 4,088  1,038  3,050  -   3,050  293.8%
Mortgage warehouse loans 150,293  74,120  76,173  -   76,173  102.8%
Total loans$3,640,929 $3,014,370 $626,559 $(568,918) $57,641  1.9%
            

During 2019, Horizon Bank (the “Bank”) originated approximately $380.0 million of commercial loans, which is an 11% increase compared to the same period in 2018; however, only 57.9%, or $220.1 million, of these loan originations had been funded as of December 31, 2019. These originations were offset by commercial loan payoffs totaling approximately $315.5 million during 2019, which is a 73.6% 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 2018, the Bank originated approximately $337.0 million of commercial loans; however, only 58.2%, or $196.0 million, of these loan originations had been funded as of December 31, 2018. These originations were offset by commercial loan payoffs totaling approximately $181.7 million during 2018.

Residential mortgage lending activity for the three months ended December 31, 2019 generated $3.1 million in income from the gain on sale of mortgage loans, an increase of $417,000 from the third quarter of 2019 and $1.7 million from the fourth quarter of 2018. Total origination volume for the fourth quarter of 2019, including loans placed into portfolio, totaled $114.0 million, representing a decrease of 5.9% from the third quarter of 2019 and an increase of 35.8% from the fourth quarter of 2018. Total origination volume for the fourth quarter of 2019 of loans sold to the secondary market totaled $83.6 million, representing a decrease of 12.1% from the third quarter of 2019 and an increase of 95.5% from the fourth quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was 6.4% of Horizon’s total revenue for the year ended December 31, 2019, which is comparable to the same prior year period.

The provision for loan losses totaled $340,000 for the fourth quarter of 2019 compared to $376,000 for the third quarter of 2019 and $528,000 for the fourth quarter of 2018.

The provision for loan losses totaled $2.0 million for the year ended December 31, 2019 compared to $2.9 million for the same period in 2018.

The ratio of the allowance for loan losses to total loans decreased to 0.49% as of December 31, 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 0.61% as of December 31, 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 1.04% as of December 31, 2019 compared to 0.98% as of December 31, 2018.

 
Non-GAAP Allowance for Loan and Lease Loss Detail
As of December 31, 2019
(Dollars in Thousands, Unaudited)
                
 Loan
Balance
 Allowance
for Loan
Losses
(ALLL)
 Acquired
Loan
Discount
 ALLL
+
Acquired
Loan
Discount
 Loans, net ALLL/
Loan Balance
 Acquired Loan Discount/
Loan Balance
 ALLL +
Acquired Loan Discount/
Loan Balance
Horizon Legacy$2,881,650 $17,534 N/A $17,534 $2,864,116 0.61% 0.00% 0.61%
Heartland 4,863  -  549  549  4,314 0.00% 11.29% 11.29%
Summit 14,309  -  835  835  13,474 0.00% 5.84% 5.84%
Peoples 66,983  -  1,550  1,550  65,433 0.00% 2.31% 2.31%
Kosciusko 28,249  -  417  417  27,832 0.00% 1.48% 1.48%
LaPorte 62,580  -  2,229  2,229  60,351 0.00% 3.56% 3.56%
CNB 3,210  -  78  78  3,132 0.00% 2.43% 2.43%
Lafayette 57,003  -  496  496  56,507 0.00% 0.87% 0.87%
Wolverine 120,654  -  699  699  119,955 0.00% 0.58% 0.58%
Salin 401,428  133  13,375  13,508  387,920 0.03% 3.33% 3.36%
Total$3,640,929 $17,667 $20,228 $37,895 $3,603,034 0.49% 0.56% 1.04%
                

As of December 31, 2019, non-performing loans totaled $21.2 million, which reflects a three basis point increase in non-performing loans to total loans, or a $6.0 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 $444,000, non-performing real estate loans increased by $4.9 million and non-performing consumer loans increased by $689,000. Other real estate owned and repossessed assets totaled $3.7 million as of December 31, 2019, which is an increase of $1.7 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 $590,000 higher in the fourth quarter of 2019 when compared to the third quarter of 2019. Other losses increased $287,000 primarily due to write-downs of other real estate owned properties during the fourth quarter totaling $222,000. Loan expense and professional fees increased $240,000 and $185,000, respectively, during the fourth quarter of 2019. In addition, the reversal of previously recorded FDIC insurance expense during the third quarter resulted in an increase to total non-interest expense of $273,000 during the fourth quarter. The Bank received assessment credits during the third quarter of 2019 as the FDIC reserve is currently overfunded. Offsetting these increases were decreases in other expense of $221,000 and in other services and consultants of $137,000.

 Three Months Ended    
 December 31 September 30    
 2019 2019 Adjusted
Non-interest ExpenseActual Merger Expenses Adjusted
 Actual Merger Expenses Adjusted
 Amount
Change
 Percent
Change
Salaries and employee benefits$16,841  $- $ 16,841  $16,948  $- $16,948  $(107) -0.6%
Net occupancy expenses 3,106   -  3,106   3,131   -  3,131   (25) -0.8%
Data processing 2,235   -  2,235   2,140   -  2,140   95  4.4%
Professional fees 520   -  520   335   -  335   185  55.2%
Outside services and consultants 1,415   -  1,415   1,552   -  1,552   (137) -8.8%
Loan expense 2,438   -  2,438   2,198   -  2,198   240  10.9%
FDIC deposit insurance -   -  -   (273)  -  (273)  273  -100.0%
Other losses 377   -  377   90   -  90   287  318.9%
Other expenses 3,718   -  3,718   3,939   -  3,939   (221) -5.6%
Total non-interest expense$30,650  $- $ 30,650  $30,060  $- $30,060  $590  2.0%
Annualized Non-interest Exp. to Avg. Assets 2.32%    2.32%  2.34%    2.34%    

Total non-interest expense was $4.5 million higher during the fourth quarter of 2019 compared to the same period of 2018. Salaries and employee benefits, net occupancy expense, loan expense, data processing, other expense and other losses increased $2.7 million, $605,000, $601,000, $481,000, $421,000 and $288,000, respectively. These increases were offset by a decrease of $393,000 in FDIC insurance and $121,000 in outside services and consultants. 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 increased $5.0 million during the fourth quarter of 2019 when compared to the same period of 2018.

 Three Months Ended    
 December 31 December 31    
 2019 2018 Adjusted
Non-interest ExpenseActual Merger Expenses Adjusted
 Actual Merger
Expenses
 Adjusted
 Amount
Change
 Percent
Change
Salaries and employee benefits$16,841  $- $ 16,841  $14,098  $-  $14,098  $2,743  19.5%
Net occupancy expenses 3,106   -  3,106   2,501   -   2,501   605  24.2%
Data processing 2,235   -  2,235   1,754   -   1,754   481  27.4%
Professional fees 520   -  520   612   (219)  393   127  32.3%
Outside services and consultants 1,415   -  1,415   1,536   (252)  1,284   131  10.2%
Loan expense 2,438   -  2,438   1,837   -   1,837   601  32.7%
FDIC deposit insurance -   -  -   393   -   393   (393) -100.0%
Other losses 377   -  377   89   -   89   288  323.6%
Other expenses 3,718   -  3,718   3,297   (16)  3,281   437  13.3%
Total non-interest expense$30,650  $- $ 30,650  $26,117  $(487) $25,630  $5,020  19.6%
Annualized Non-interest Exp. to Avg. Assets 2.32%    2.32%  2.48%    2.43%    

Total non-interest expense was $19.5 million higher during the year ended December 31, 2019 when compared to the same period of 2018. Salaries and employee benefits, other expense, outside services and consultants, loan expense, net occupancy and data processing increased $8.6 million, $3.5 million, $2.9 million, $2.3 million, $1.7 million and $1.7 million, respectively. Offsetting these increases was a decrease in FDIC insurance of $1.2 million. 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 $14.4 million during the year ended December 31, 2019 when compared to the same period of 2018.

 Twelve Months Ended    
 December 31 December 31    
 2019 2018 Adjusted
Non-interest ExpenseActual Merger
Expenses
 Adjusted Actual Merger
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$65,206  $(484) $ 64,722  $56,623  $-  $56,623  $8,099  14.3%
Net occupancy expenses 12,157   (75)  12,082   10,482   -   10,482   1,600  15.3%
Data processing 8,480   (360)  8,120   6,816   -   6,816   1,304  19.1%
Professional fees 1,946   (392)  1,554   1,926   (219)  1,707   (153) -9.0%
Outside services and consultants 8,152   (2,466)  5,686   5,271   (252)  5,019   667  13.3%
Loan expense 8,633   (2)  8,631   6,341   -   6,341   2,290  36.1%
FDIC deposit insurance 252   -   252   1,444   -   1,444   (1,192) -82.5%
Other losses 740   (71)  669   665   -   665   4  0.6%
Other expenses 16,466   (1,800)  14,666   12,948   (16)  12,932   1,734  13.4%
Total non-interest expense$122,032  $(5,650) $ 116,382  $102,516  $(487) $102,029  $14,353  14.1%
Annualized Non-interest Exp. to Avg. Assets 2.47%    2.36%  2.52%    2.51%    

Annualized non-interest expense as a percent of average assets were 2.32%, 2.34% and 2.48% for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.32%, 2.34% and 2.43% for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

Annualized non-interest expense as a percent of average assets were 2.47% and 2.52% for the years ended December 31, 2019 and 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.36% and 2.51% for the years ended December 31, 2019 and 2018, respectively. Management believes that Horizon’s strategy to build mass and scale continues to prove effective for expense management.

Income tax expense totaled $3.9 million for the fourth quarter of 2019, a decrease of $84,000 when compared to the third quarter of 2019 and an increase of $1.4 million when compared to the fourth quarter of 2018. The decrease in income tax expense from the third quarter of 2019 was primarily due to a decrease in income before income taxes of $2.1 million when compared to the fourth quarter of 2019. The increase in income tax expense from the fourth quarter of 2018 was primarily due to an increase in income before income taxes of $6.8 million fourth quarter of 2019.

Income tax expense totaled $13.3 million for the year ended December 31, 2019, an increase of $2.9 million when compared to the same period of 2018. The increase in income tax expense from the year ended December 31, 2018 was primarily due to an increase in income before income taxes of $16.3 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, efficiency ratio, 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. We believe that this shows 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)
          
 December 31 September 30 June 30 March 31 December 31
 2019 2019 2019 2019 2018
Total stockholders' equity$656,023 $642,711 $626,461 $609,468 $491,992
Less: Intangible assets 177,917  178,896  179,776  176,864  130,270
Total tangible stockholders' equity$478,106 $463,815 $446,685 $432,604 $361,722
          
Common shares outstanding 44,975,771  44,969,021  45,061,372  45,052,747  38,375,407
          
Tangible book value per common share$10.63 $10.31 $9.91 $9.60 $9.43
               

 

 
Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
 
 Three Months Ended Twelve Months Ended
 December 31 September 30 December 31 December 31 December 31
 2019 2019 2018 2019 2018
Non-GAAP Calculation of Efficiency Ratio         
Non-interest expense as reported$30,650  $30,060  $26,117  $122,032  $102,516 
          
Net interest income as reported 41,519   43,463   33,836   160,791   134,569 
          
Non-interest income as reported 11,934   11,514   8,477   43,058   34,413 
          
Non-interest expense/(Net interest income + Non-interest income) ("Efficiency Ratio") 57.34%  54.68%  61.72%  59.86%  60.67%
          
Non-GAAP Reconciliation of Adjusted Efficiency Ratio         
Non-interest expense as reported$30,650  $30,060  $26,117  $122,032  $102,516 
Merger expenses -   -   (487)  (5,650)  (487)
Non-interest expense excluding merger expenses 30,650   30,060   25,630   116,382   102,029 
          
Net interest income as reported 41,519   43,463   33,836   160,791   134,569 
          
Non-interest income as reported 11,934   11,514   8,477   43,058   34,413 
(Gain)/loss on sale of investment securities (10)  -   332   75   443 
Death benefit on bank owned life insurance ("BOLI") -   (213)  -   (580)  (154)
Non-interest income excluding loss on sale of investment securities and death benefit on BOLI 11,924   11,301   8,809   42,553   34,702 
          
Adjusted efficiency ratio 57.35%  54.89%  60.10%  57.23%  60.28%
          


 
Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
(Dollars in Thousands, Unaudited)
 
 Three Months Ended Twelve Months Ended
 December 31 September 30 December 31 December 31 December 31
 2019 2019 2018 2019 2018
Non-GAAP Reconciliation of Return on Average Assets         
Average Assets$5,250,574  $5,107,259  $4,179,140  $4,933,058  $4,062,635 
          
Return on average assets ("ROAA") as reported 1.40%  1.60%  1.25%  1.35%  1.31%
Merger expenses 0.00%  0.00%  0.05%  0.11%  0.01%
Tax effect 0.00%  0.00%  -0.01%  -0.02%  0.00%
ROAA excluding merger expenses 1.40%  1.60%  1.29%  1.44%  1.32%
          
(Gain)/loss on sale of investment securities 0.00%  0.00%  0.03%  0.00%  0.01%
Tax effect 0.00%  0.00%  -0.01%  0.00%  0.00%
ROAA excluding gain on sale of investment securities 1.40%  1.60%  1.31%  1.44%  1.33%
          
Death benefit on bank owned life insurance ("BOLI") 0.00%  -0.02%  0.00%  -0.01%  0.00%
ROAA excluding death benefit on BOLI 1.40%  1.58%  1.31%  1.43%  1.33%
          
Core ROAA 1.40%  1.58%  1.31%  1.43%  1.33%
          
Non-GAAP Reconciliation of Return on Average Common Equity         
Average Common Equity$653,071  $640,770  $485,662  $605,719  $473,420 
          
Return on average common equity ("ROACE") as reported 11.26%  12.72%  10.73%  10.98%  11.22%
Merger expenses 0.00%  0.00%  0.40%  0.93%  0.10%
Tax effect 0.00%  0.00%  -0.08%  -0.16%  -0.02%
ROACE excluding merger expenses 11.26%  12.72%  11.05%  11.75%  11.30%
          
(Gain)/loss on sale of investment securities -0.01%  0.00%  0.27%  0.01%  0.09%
Tax effect 0.00%  0.00%  -0.06%  0.00%  -0.02%
ROACE excluding gain on sale of investment securities 11.25%  12.72%  11.26%  11.76%  11.37%
          
Death benefit on bank owned life insurance ("BOLI") 0.00%  -0.13%  0.00%  -0.10%  -0.03%
ROAA excluding death benefit on BOLI 11.25%  12.59%  11.26%  11.66%  11.34%
          
Core ROACE 11.25%  12.59%  11.26%  11.66%  11.34%
          

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.

Contact:

Horizon Bancorp, Inc.
Mark E. Secor
Chief Financial Officer
(219) 873-2611
Fax: (219) 874-9280

          
HORIZON BANCORP, INC.
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
          
 December 31 September 30 June 30 March 31 December 31
 2019 2019 2019 2019 2018
Balance sheet:         
Total assets$5,244,363  $5,186,714  $5,098,682  $5,051,639  $4,246,688 
Investment securities 1,048,978   977,536   887,187   893,469   810,460 
Commercial loans 2,046,651   2,046,165   2,062,623   2,089,579   1,721,590 
Mortgage warehouse loans 150,293   155,631   133,428   71,944   74,120 
Residential mortgage loans 770,717   796,497   814,065   819,824   668,141 
Consumer loans 669,180   668,332   654,552   639,710   549,481 
Earnings assets 4,712,354   4,667,668   4,577,487   4,538,952   3,842,903 
Non-interest bearing deposit accounts 709,760   756,707   810,350   811,768   642,129 
Interest bearing transaction accounts 2,245,631   2,173,100   2,153,189   2,115,847   1,684,336 
Time deposits 975,611   986,150   967,236   960,408   812,911 
Borrowings 549,741   516,591   436,233   457,788   550,384 
Subordinated debentures 56,311   56,250   56,194   55,310   37,837 
Total stockholders' equity 656,023   642,711   626,461   609,468   491,992 
          
 Three months ended
Income statement:         
Net interest income$41,519  $43,463  $41,529  $34,280  $33,836 
Provision for loan losses 340   376   896   364   528 
Non-interest income 11,934   11,514   10,898   8,712   8,477 
Non-interest expenses 30,650   30,060   31,584   29,738   26,117 
Income tax expense 3,920   4,004   3,305   2,074   2,535 
Net income$18,543  $20,537  $16,642  $10,816  $13,133 
          
Per share data:(1)         
Basic earnings per share$0.41  $0.46  $0.37  $0.28  $0.34 
Diluted earnings per share 0.41   0.46   0.37   0.28   0.34 
Cash dividends declared per common share 0.12   0.12   0.12   0.10   0.10 
Book value per common share 14.59   14.29   13.90   13.53   12.82 
Tangible book value per common share 10.63   10.31   9.91   9.60   9.43 
Market value - high 19.42   17.77   17.13   17.82   19.40 
Market value - low$16.60  $15.93  $15.51  $15.50  $14.94 
Weighted average shares outstanding - Basic 44,971,676   45,038,021   45,055,117   38,822,543   38,367,972 
Weighted average shares outstanding - Diluted 45,103,065   45,113,730   45,130,408   38,906,172   38,488,002 
          
Key ratios:         
Return on average assets 1.40%  1.60%  1.32%  1.02%  1.25%
Return on average common stockholders' equity 11.26   12.72   10.73   8.66   10.73 
Net interest margin 3.58   3.82   3.73   3.62   3.60 
Loan loss reserve to total loans 0.49   0.49   0.50   0.49   0.59 
Average equity to average assets 12.44   12.55   12.32   11.76   11.62 
Bank only capital ratios:         
Tier 1 capital to average assets 9.49   9.35   9.52   10.99   9.34 
Tier 1 capital to risk weighted assets 12.20   11.62   11.76   11.84   11.87 
Total capital to risk weighted assets 12.65   12.08   12.23   12.30   12.43 
          
Loan data:         
Substandard loans$58,670  $62,130  $47,764  $41,728  $38,775 
30 to 89 days delinquent 7,729   10,204   9,633   9,980   7,161 
          
90 days and greater delinquent - accruing interest 146   34   391   192   568 
Trouble debt restructures - accruing interest 3,354   3,491   2,198   2,532   2,002 
Trouble debt restructures - non-accrual 2,006   1,807   1,576   1,349   1,057 
Non-accural loans 15,679   13,823   14,764   15,313   11,548 
Total non-performing loans$21,185  $19,155  $18,929  $19,386  $15,175 
Non-performing loans to total loans 0.58%  0.52%  0.52%  0.54%  0.50%
          
(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)
    
 December 31 December 31
  2019   2018 
Balance sheet:   
Total assets$5,244,363  $4,246,688 
Investment securities 1,048,978   810,460 
Commercial loans 2,046,651   1,721,590 
Mortgage warehouse loans 150,293   74,120 
Residential mortgage loans 770,717   668,141 
Consumer loans 669,180   549,481 
Earnings assets 4,712,354   3,842,903 
Non-interest bearing deposit accounts 709,760   642,129 
Interest bearing transaction accounts 2,245,631   1,684,336 
Time deposits 975,611   812,911 
Borrowings 549,741   550,384 
Subordinated debentures 56,311   37,837 
Total stockholders' equity 656,023   491,992 
    
 Twelve months ended
Income statement:   
Net interest income$160,791  $134,569 
Provision for loan losses 1,976   2,906 
Non-interest income 43,058   34,413 
Non-interest expenses 122,032   102,516 
Income tax expense 13,303   10,443 
Net income$66,538  $53,117 
    
Per share data:(1)   
Basic earnings per share$1.53  $1.39 
Diluted earnings per share 1.53   1.38 
Cash dividends declared per common share 0.46   0.40 
Book value per common share 14.59   12.82 
Tangible book value per common share 10.63   9.43 
Market value - high 19.42   21.94 
Market value - low$15.50  $14.94 
Weighted average shares outstanding - Basic 43,493,316   38,347,059 
Weighted average shares outstanding - Diluted 43,598,373   38,495,231 
    
Key ratios:   
Return on average assets 1.35%  1.31%
Return on average common stockholders' equity 10.98   11.22 
Net interest margin 3.69   3.71 
Loan loss reserve to total loans 0.49   0.59 
Average equity to average assets 12.28   11.65 
Bank only capital ratios:   
Tier 1 capital to average assets 9.49   9.34 
Tier 1 capital to risk weighted assets 12.20   11.87 
Total capital to risk weighted assets 12.65   12.43 
    
Loan data:   
Substandard loans$58,670  $38,775 
30 to 89 days delinquent 7,729   7,161 
    
90 days and greater delinquent - accruing interest 146   568 
Trouble debt restructures - accruing interest 3,354   2,002 
Trouble debt restructures - non-accrual 2,006   1,057 
Non-accural loans 15,679   11,548 
Total non-performing loans$21,185  $15,175 
Non-performing loans to total loans 0.58%  0.50%
    
(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)
          
 December 31 September 30 June 30 March 31 December 31
  2019   2019   2019   2019   2018 
Commercial$ 11,996  $12,082  $11,881  $11,556  $10,495 
Real estate 923   1,449   1,732   1,588   1,676 
Mortgage warehousing 1,077   1,041   1,040   1,014   1,006 
Consumer 3,671   3,384   3,652   3,663   4,643 
Total$ 17,667  $17,956  $18,305  $17,821  $17,820 
          
Net Charge-Offs (Recoveries)
(Dollars in Thousands, Unaudited)
          
 Three Months Ended
 December 31 September 30 June 30 March 31 December 31
  2019   2019   2019   2019   2018 
Commercial$ 146  $192  $265  $61  $196 
Real estate 40   (7)  41   (27)  47 
Mortgage warehousing -   -   -   -   - 
Consumer 443   540   106   329   263 
Total$ 629  $725  $412  $363  $506 
Percent of net charge-offs to average loans outstanding for the period 0.02%  0.02%  0.01%  0.01%  0.02%
          
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
          
 December 31 September 30 June 30 March 31 December 31
  2019   2019   2019   2019   2018 
Commercial$ 7,347  $8,193  $8,697  $9,750  $6,903 
Real estate 9,884   7,212   6,444   5,995   5,007 
Mortgage warehousing -   -   -   -   - 
Consumer 3,954   3,750   3,788   3,641   3,265 
Total$ 21,185  $19,155  $18,929  $19,386  $15,175 
Non-performing loans to total loans 0.58%  0.52%  0.52%  0.54%  0.55%
          
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
          
 December 31 September 30 June 30 March 31 December 31
  2019   2019   2019   2019   2018 
Commercial$ 3,698  $3,972  $3,694  $3,496  $1,967 
Real estate 28   48   113   126   60 
Mortgage warehousing -   -   -   -   - 
Consumer -   24   48   30   48 
Total$ 3,726  $4,044  $3,855  $3,652  $2,075 
          


             
 HORIZON BANCORP, INC.
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
             
  Three Months Ended Three Months Ended
  December 31, 2019 December 31, 2018
  Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets           
 Interest-earning assets           
 Federal funds sold$40,657  $172 1.68% $10,093  $62 2.44%
 Interest-earning deposits 12,665   58 1.82%  21,763   93 1.70%
 Investment securities - taxable 491,160   2,824 2.28%  432,620   2,734 2.51%
 Investment securities - non-taxable(1) 545,832   3,575 3.26%  364,236   2,324 3.20%
 Loans receivable(2)(3) 3,657,903   46,769 5.10%  2,980,110   38,517 5.14%
 Total interest-earning assets(1) 4,748,217   53,398 4.57%  3,808,822   43,730 4.63%
             
 Non-interest-earning assets           
 Cash and due from banks 75,248       44,732     
 Allowance for loan losses (17,916)      (17,792)    
 Other assets 445,025       343,378     
             
 Total average assets$5,250,574      $4,179,140     
             
 Liabilities and Stockholders' Equity           
 Interest-bearing liabilities           
 Interest-bearing deposits$3,255,725  $8,767 1.07% $2,526,209  $6,411 1.01%
 Borrowings 484,729   2,281 1.87%  458,485   2,882 2.49%
 Subordinated debentures 54,489   831 6.05%  36,616   601 6.51%
 Total interest-bearing liabilities 3,794,943   11,879 1.24%  3,021,310   9,894 1.30%
             
 Non-interest-bearing liabilities           
 Demand deposits 747,513       656,114     
 Accrued interest payable and other liabilities 55,047       16,054     
 Stockholders' equity 653,071       485,662     
             
 Total average liabilities and stockholders' equity$5,250,574      $4,179,140     
             
 Net interest income/spread  $41,519 3.33%   $33,836 3.33%
 Net interest income as a percentage of average interest-earning assets(1)    3.58%     3.60%
             
(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)
             
  Twelve Months Ended Twelve Months Ended
  December 31, 2019 December 31, 2018
  Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
 Assets           
 Interest-earning assets           
 Federal funds sold$21,301  $511 2.40% $4,696  $115 2.45%
 Interest-earning deposits 19,601   342 1.74%  24,491   393 1.60%
 Investment securities - taxable 474,833   11,753 2.48%  431,970   10,113 2.34%
 Investment securities - non-taxable(1) 454,066   12,095 3.34%  326,040   8,069 3.13%
 Loans receivable(2)(3) 3,500,649   183,631 5.27%  2,910,741   147,478 5.08%
 Total interest-earning assets(1) 4,470,450   208,332 4.75%  3,697,938   166,168 4.56%
             
 Non-interest-earning assets           
 Cash and due from banks 62,920       44,645     
 Allowance for loan losses (18,019)      (16,964)    
 Other assets 417,707       337,016     
             
 Total average assets$4,933,058      $4,062,635     
             
 Liabilities and Stockholders' Equity           
 Interest-bearing liabilities           
 Interest-bearing deposits$3,007,937  $33,690 1.12% $2,418,987  $18,225 0.75%
 Borrowings 468,159   10,672 2.28%  492,830   11,009 2.23%
 Subordinated debentures 50,134   3,179 6.34%  36,547   2,365 6.47%
 Total interest-bearing liabilities 3,526,230   47,541 1.35%  2,948,364   31,599 1.07%
             
 Non-interest-bearing liabilities           
 Demand deposits 757,389       624,576     
 Accrued interest payable and other liabilities 43,720       16,275     
 Stockholders' equity 605,719       473,420     
             
 Total average liabilities and stockholders' equity$4,933,058      $4,062,635     
             
 Net interest income/spread  $160,791 3.40%   $134,569 3.49%
 Net interest income as a percentage of average interest-earning assets(1)    3.69%     3.71%
             
(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)
    
 December 31 December 31
 2019 2018
 (Unaudited)  
Assets   
Cash and due from banks$ 98,831 $58,492 
Interest-earning time deposits 8,455  15,744 
Investment securities, available for sale 841,079  600,348 
Investment securities, held to maturity (fair value of $215,147 and $208,273) 207,899  210,112 
Loans held for sale 4,088  1,038 
Loans, net of allowance for loan losses of $17,667 and $17,820 3,619,174  2,995,512 
Premises and equipment, net 92,209  74,331 
Federal Home Loan Bank stock 22,447  18,073 
Goodwill 151,238  119,880 
Other intangible assets 26,679  10,390 
Interest receivable 18,828  14,239 
Cash value of life insurance 95,577  88,062 
Other assets 57,859  40,467 
Total assets$ 5,244,363 $4,246,688 
Liabilities   
Deposits   
Non-interest bearing$ 709,760 $642,129 
Interest bearing 3,221,242  2,497,247 
Total deposits 3,931,002  3,139,376 
Borrowings 549,741  550,384 
Subordinated debentures 56,311  37,837 
Interest payable 3,062  2,031 
Other liabilities 48,224  25,068 
Total liabilities 4,588,340  3,754,696 
Commitments and contingent liabilities   
Stockholders' Equity   
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares -  - 
Common stock, no par value, Authorized 99,000,000 shares (1)   
Issued 45,000,840 and 38,400,476 shares (1), Outstanding 44,975,771 and 38,375,407 shares (1) -  - 
Additional paid-in capital 379,853  276,101 
Retained earnings 269,738  224,035 
Accumulated other comprehensive income (loss) 6,432  (8,144)
Total stockholders' equity 656,023  491,992 
Total liabilities and stockholders' equity$ 5,244,363 $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 Twelve Months Ended
 December 31 December 31
 2019 2018 2019 2018
Interest Income       
Loans receivable$ 46,769 $38,517  $ 183,631  $147,478 
Investment securities       
Taxable 3,054  2,889   12,606   10,621 
Tax exempt 3,575  2,324   12,095   8,069 
Total interest income 53,398  43,730   208,332   166,168 
Interest Expense       
Deposits 8,767  6,411   33,690   18,225 
Borrowed funds 2,281  2,882   10,672   11,009 
Subordinated debentures 831  601   3,179   2,365 
Total interest expense 11,879  9,894   47,541   31,599 
Net Interest Income 41,519  33,836   160,791   134,569 
Provision for loan losses 340  528   1,976   2,906 
Net Interest Income after Provision for Loan Losses 41,179  33,308   158,815   131,663 
Non-interest Income       
Service charges on deposit accounts 2,766  1,958   9,959   7,762 
Wire transfer fees 179  122   653   612 
Interchange fees 1,996  1,422   7,655   5,715 
Fiduciary activities 2,594  2,229   8,580   7,827 
Gains (losses) on sale of investment securities (includes $10 and $(332)       
for the three months ended December 31, 2019 and 2018, respectively, and $(75) and $(443) for the twelve months ended December 31, 2019 and 2018, respectively, related to accumulated other comprehensive earnings reclassifications) 10  (332)  (75)  (443)
Gain on sale of mortgage loans 3,119  1,455   9,208   6,613 
Mortgage servicing income net of impairment 294  697   1,914   2,120 
Increase in cash value of bank owned life insurance 566  532   2,190   1,912 
Death benefit on bank owned life insurance -  -   580   154 
Other income 410  394   2,394   2,141 
Total non-interest income 11,934  8,477   43,058   34,413 
Non-interest Expense       
Salaries and employee benefits 16,841  14,098   65,206   56,623 
Net occupancy expenses 3,106  2,501   12,157   10,482 
Data processing 2,235  1,754   8,480   6,816 
Professional fees 520  612   1,946   1,926 
Outside services and consultants 1,415  1,536   8,152   5,271 
Loan expense 2,438  1,837   8,633   6,341 
FDIC insurance expense -  393   252   1,444 
Other losses 377  89   740   665 
Other expense 3,718  3,297   16,466   12,948 
Total non-interest expense 30,650  26,117   122,032   102,516 
Income Before Income Taxes 22,463  15,668   79,841   63,560 
Income tax expense (includes $2 and $(70) for the three months ended       
December 31, 2019 and 2018, respectively, and $(16) and $(93) for the twelve months ended December 31, 2019 and 2018, respectivley, related to income tax expense (benefit) from reclassification items) 3,920  2,535   13,303   10,443 
Net Income$ 18,543 $13,133  $ 66,538  $53,117 
Basic Earnings Per Share (1)$ 0.41 $0.34  $ 1.53  $1.39 
Diluted Earnings Per Share (1) 0.41  0.34   1.53   1.38 
        
(1) Adjusted for 3:2 stock split on June 15, 2018