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 Expense	Actual				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 Expense	Actual				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 Expense	Actual				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