Horizon Bancorp, Inc. Reports Record Second Quarter 2022 EPS of $0.57

Horizon Bancorp, Inc. Reports Record Second Quarter 2022 EPS of $0.57

GlobeNewswire

Published

MICHIGAN CITY, Ind., July 27, 2022 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) — Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three– and six–months ending June 30, 2022.“We are extremely pleased with our performance during the second quarter of fiscal 2022. Record earnings and profitability can be attributed to strong loan growth and the higher interest rate environment which led to a meaningful increase in pre–tax, pre–provision net income,” Chairman and CEO Craig M. Dwight said. “This level of organic growth would not have been possible without the hard work and dedication from our team to meet the evolving needs of our customers. We remain committed to driving organic growth through our investments in commercial and consumer loan production, finding strategic opportunities to deploy capital, and leveraging our asset sensitive balance sheet and strong credit quality to achieve long–term shareholder value.”

*Second Quarter 2022 Highlights*

· Net income grew to a record $24.9 million, up 5.5% from the linked quarter and 12.1% from the prior year period. Diluted earnings per share (“EPS”) of $0.57 was up from $0.54 for the first quarter of 2022 and $0.50 for the second quarter of 2021.· Pre–tax, pre–provision net income grew to $29.1 million, up 13.1% from the linked quarter and 18.9% from the prior year period. This non–GAAP financial measure is utilized by banks to provide a greater understanding of pre–tax profitability before giving effect to credit loss expense. (See the “Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income” table below.) Horizon recorded a provision expense of $240,000 in the quarter compared to a provision release of $1.4 million in the linked quarter, and a provision release of $1.5 million in the prior year period.· Reported net interest margin (“NIM”) was 3.19% and adjusted NIM was 3.12%, with reported NIM increasing by 20 basis points and adjusted NIM increasing by 19 basis points from the first quarter of 2022. (See the “Non-GAAP Reconciliation of Net Interest Margin” table below for the definition of this non–GAAP calculation of adjusted NIM.)· Total loans, excluding Federal Paycheck Protection Program (“PPP”) loans and sold commercial participation loans, grew by 6.2%, or 25.1% annualized, during the second quarter to $3.89 billion at period end compared to $3.66 billion on March 31, 2022.· Commercial loans, excluding PPP loans and sold commercial participation loans, grew by 4.9%, or 19.7% annualized, during the second quarter to a record $2.31 billion from $2.20 billion on March 31, 2022.· Consumer loans grew by 12.6%, or 50.5% annualized, during the second quarter to a record $848.7 million at period end.· Non–interest expense was $36.4 million in the quarter, or 1.95% of average assets on an annualized basis, compared to $36.6 million, or 2.03%, in the first quarter of 2022 and $33.4 million, or 2.18%, in the second quarter of 2021. Non–interest expense was $73.0 million, or 1.99% of average assets on an annualized basis for the six months ended June 30, 2022 compared to $65.6 million, or 2.19% of average assets on an annualized basis for the six months ended June 30, 2021.· The efficiency ratio for the period was 55.57% compared to 58.74% for the first quarter of 2022 and 57.73% for the second quarter of 2021. The adjusted efficiency ratio was 56.13% compared to 58.74% for the first quarter of 2022 and 57.45% for the second quarter of 2021. (See the “Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below.)· As part of the Company’s annual branch performance review of Horizon Bank’s (the “Bank”) retail network, Horizon’s Board of Directors approved the permanent closure of seven branch locations in the second half of 2022. A one–time charge of approximately $380,000 was recorded during the second quarter to record these branch locations’ fixed assets at fair value.· Asset quality remains favorable as evidenced by non–performing loans at 0.51% of total loans at period end and net charge–offs to average loans represented 0.01% for the second quarter of 2022.· The Company was more asset sensitive as of June 30, 2022 compared to the previous quarter end, as deposit BETA’s have lagged rising rates and an increase in adjustable rate assets. Current estimates for parallel rate shocks to the balance sheet, at a 100 basis point shock and 200 basis point shock, increase net interest income by approximately $7.0 million and $12.8 million, respectively.· Since March 31, 2022, deposit betas have significantly lagged our modeled betas at a 3% beta on total deposits over the last three months compared to our model using a beta of 35% for total deposits.· During the second quarter of 2022, the continued steepening of the yield curve resulted in unrealized losses on available for sale investments of $122.0 million compared to unrealized losses of $73.6 million at March 31, 2022. The impact to the tangible capital ratio was a decrease of 46 basis points from 6.94% at March 31, 2022 to 6.48% at June 30, 2022, a 6.63% decrease.· The Bank's capital is still robust with leverage and risk based capital ratios of 9.17% and 14.81%, respectively.*Summary*
  *For the Three Months Ended*   *June 30,*   *March 31,*   *June 30,*
*Net Interest Income and Net Interest Margin*     *2022*       *2022*       *2021*  
Net interest income   $ 53,008     $ 48,171     $ 42,632  
Net interest margin     3.19 %     2.99 %     3.14 %
Adjusted net interest margin     3.12 %     2.93 %     3.13 %Mr. Dwight continued, “Net interest margin continues to expand, illustrating the Company’s highly asset sensitive balance sheet position. Both the expected additional rate increases, and loan volume will continue to positively impact net interest income and NIM through 2022. Pressure on deposit pricing so far has been limited and we believe will remain in line with or better than our competitors. This expectation reflects our confidence in the strength of our commercial and retail relationships.”
  *For the Three Months Ended*   *June 30,*   *March 31,*   *June 30,*
*Asset Yields and Funding Costs*   *2022*   *2022*   *2021*
Interest earning assets   3.46 %   3.22 %   3.48 %
Interest bearing liabilities   0.34 %   0.30 %   0.45 %
  *For the Three Months Ended*
*Non–interest Income and *   *June 30,*   *March 31,*   *June 30,*
*Mortgage Banking Income*   *2022*     *2022*     *2021**
*
Total non–interest income   $ 12,434     $ 14,155     $ 15,207  
Gain on sale of mortgage loans     2,501       2,027       5,612  
Mortgage servicing income net of impairment     319       3,489       1,503  
  *For the Three Months Ended*   *June 30,*   *March 31,*   *June 30,*
*Non–interest Expense*     *2022*       *2022*       *2021*  
Total non–interest expense   $ 36,368     $ 36,610     $ 33,388  
Annualized non–interest expense to average assets     1.95 %     2.03 %     2.18 %
  *For the Three Months Ended*   *June 30,*   *March 31,*   *June 30,*
*Credit Quality*   *2022*   *2022*   *2021*
Allowance for credit losses to total loans   1.33 %   1.41 %   1.58 %
Non–performing loans to total loans   0.51 %   0.54 %   0.63 %
Percent of net charge–offs to average loans outstanding for the period   0.01 %   0.00 %   0.00 %

*Allowance for*   *June 30,*   *Net Reserve* *December 31,*
*Credit Losses*     *2022*     *2Q22*   *1Q22*     *2021*  
Commercial   $ 34,802     $ (2,987 )   $ (2,986 )   $ 40,775  
Retail Mortgage     4,422       71       495       3,856  
Warehouse     1,067       12       (4 )     1,059  
Consumer     12,059       2,746       717       8,596  
Allowance for Credit Losses (“ACL”)   $ 52,350     $ (158 )   $ (1,778 )   $ 54,286  
ACL / Total Loans     1.33 %             1.51 %
Acquired Loan Discount (“ALD”)   $ 7,206     $ (1,122 )   $ (769 )   $ 9,097  “Our results this quarter were positively impacted by the significant progress towards achieving our goal of an annualized non–interest expense to average assets ratio of less than 2.00%. For the period ended June 30, 2022, our annualized non–interest expense to average assets ratio was 1.95%,” Mr. Dwight continued. “We remain disciplined with a focus on expense management which is critical given the economic uncertainty and rise in inflation, however; we are confident in our ability to continue to reduce our annualized target to less than 2.00%.”

*Income Statement Highlights*

Net income for the second quarter of 2022 was $24.9 million, or $0.57 diluted earnings per share, compared to $23.6 million, or $0.54, for the linked quarter and $22.2 million, or $0.50, for the prior year period. This represents the highest quarterly net income in the Company’s history.

Adjusted net income for the second quarter of 2022 was $24.2 million, or $0.56 diluted earnings per share, compared to $23.6 million, or $0.54, for the linked quarter and $22.2 million, or $0.50, for the prior year period. Adjusted net income, which is not calculated according to generally accepted accounting principles (“GAAP”), is a measure that Horizon uses to provide a greater understanding of operating profitability. (See the “Non–GAAP Reconciliation of Net Income” table below.)

The increase in net income for the second quarter of 2022 when compared to the first quarter of 2022 reflects an increase in net interest income of $4.8 million and a decrease in non–interest expense of $242,000. These items were offset by an increase in credit loss expense of $1.6 million and a decrease in non–interest income of $1.7 million and an increase in income tax expense of $436,000 for the second quarter of 2022 when compared to the first quarter of 2022.

Interest income includes the recognition of PPP loan interest and net loan processing fees totaling $198,000 in the second quarter of 2022, compared to $457,000 in the linked quarter. On June 30, 2022, the Company had $32,000 in net deferred PPP loan processing fees outstanding and $2.3 million in PPP loans outstanding. PPP loan net deferred fees and loans outstanding at March 31, 2021 were $141,000 and $6.7 million, respectively.

Second quarter 2022 income from the gain on sale of mortgage loans totaled $2.5 million, up from $2.0 million in the linked quarter and down from $5.6 million in the prior year period.

Certain revenue streams that generated higher income in the quarter ended June 30, 2021, were replaced in the most recent quarter with earning assets that had higher income margins and the increasing margin generated higher net interest income. For the quarter ending June 30, 2021, income from PPP lending, gain on sale of mortgage loans and mortgage servicing income net of impairment totaled $9.8 million. For the quarter ending June 30, 2022, the income from those same revenue streams totaled $3.0 million. The ability to replace this income and increase overall net income in the second quarter was attributed to the strategies management implemented to focus on higher earning assets.

Non–interest expense of $36.4 million in the second quarter of 2022 reflected a $371,000 decrease in net occupancy expenses and a $288,000 decrease in other expenses, offset by an increase in salaries and employee benefit expense of $222,000 and an increase in other losses of $194,000 from the linked quarter.

The increase in net income for the second quarter of 2022 when compared to the same prior year period reflects an increase in net interest income of $10.4 million, offset by an increase in credit loss expense of $1.7 million, a decrease in non–interest income of $2.8 million, an increase in non–interest expense of $3.0 million and an increase in income tax expense of $205,000.

*Non–GAAP Reconciliation of Net Income*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Net income as reported   $ 24,859     $ 23,563     $ 21,425     $ 23,071     $ 22,173     $ 48,422     $ 42,595  
Acquisition expenses     —       —       884       799       242       —       242  
Tax effect     —       —       (184 )     (166 )     (51 )     —       (51 )
Net income excluding acquisition expenses     24,859       23,563       22,125       23,704       22,364       48,422       42,786  
Credit loss expense acquired loans     —       —       —       2,034       —       —       —  
Tax effect     —       —       —       (427 )     —       —       —  
Net income excluding credit loss expense acquired loans     24,859       23,563       22,125       25,311       22,364       48,422       42,786  
Gain on sale of ESOP trustee accounts     —       —       —       (2,329 )     —       —       —  
Tax effect     —       —       —       489       —       —       —  
Net income excluding gain on sale of ESOP trustee accounts     24,859       23,563       22,125       23,471       22,364       48,422       42,786  
DOL ESOP settlement expenses     —       —       1,900       —       —       —       —  
Tax effect     —       —       (315 )     —       —       —       —  
Net income excluding DOL ESOP settlement expenses     24,859       23,563       23,710       23,471       22,364       48,422       42,786  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (914 )
Tax effect     —       —       —       —       —       —       192  
Net income excluding (gain) / loss on sale of investment securities     24,859       23,563       23,710       23,471       22,364       48,422       42,064  
Death benefit on bank owned life insurance (“BOLI”)     (644 )     —       —       (517 )     (266 )     (644 )     (266 )
Net income excluding death benefit on BOLI     24,215       23,563       23,710       22,954       22,098       47,778       41,798  
Prepayment penalties on borrowings     —       —       —       —       125       —       125  
Tax effect     —       —       —       —       (26 )     —       (26 )
Net income excluding prepayment penalties on borrowings     24,215       23,563       23,710       22,954       22,197       47,778       41,897  
Adjusted net income   $ 24,215     $ 23,563     $ 23,710     $ 22,954     $ 22,197     $ 47,778     $ 41,897  

*Non–GAAP Reconciliation of Diluted Earnings per Share*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Diluted earnings per share (“EPS”) as reported   $ 0.57     $ 0.54     $ 0.49     $ 0.52     $ 0.50     $ 1.11     $ 0.97  
Acquisition expenses     —       —       0.02       0.02       0.01       —       0.01  
Tax effect     —       —       —       —       —       —       —  
Diluted EPS excluding acquisition expenses     0.57       0.54       0.51       0.54       0.51       1.11       0.98  
Credit loss expense acquired loans     —       —       —       0.05       —       —       —  
Tax effect     —       —       —       (0.01 )     —       —       —  
Diluted EPS excluding credit loss expense acquired loans     0.57       0.54       0.51       0.58       0.51       1.11       0.98  
Gain on sale of ESOP trustee accounts     —       —       —       (0.05 )     —       —       —  
Tax effect     —       —       —       0.01       —       —       —  
Diluted EPS excluding gain on sale of ESOP trustee accounts     0.57       0.54       0.51       0.54       0.51       1.11       0.98  
DOL ESOP settlement expenses     —       —       0.04       —       —       —       —  
Tax effect     —       —       (0.01 )     —       —       —       —  
Diluted EPS excluding DOL ESOP settlement expenses     0.57       0.54       0.54       0.54       0.51       1.11       0.98  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (0.02 )
Tax effect     —       —       —       —       —       —       —  
Diluted EPS excluding (gain) / loss on sale of investment securities     0.57       0.54       0.54       0.54       0.51       1.11       0.96  
Death benefit on bank owned life insurance (“BOLI”)     (0.01 )     —       —       (0.02 )     (0.01 )     (0.01 )     (0.01 )
Diluted EPS excluding death benefit on BOLI     0.56       0.54       0.54       0.52       0.50       1.10       0.95  
Prepayment penalties on borrowings     —       —       —       —       —       —       —  
Tax effect     —       —       —       —       —       —       —  
Diluted EPS excluding prepayment penalties on borrowings     0.56       0.54       0.54       0.52       0.50       1.10       0.95  
Adjusted diluted EPS   $ 0.56     $ 0.54     $ 0.54     $ 0.52     $ 0.50     $ 1.10     $ 0.95  

*Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Pre–tax income   $ 28,834     $ 27,102     $ 25,505     $ 27,127     $ 25,943     $ 55,936     $ 49,815  
Credit loss expense     240       (1,386 )     (2,071 )     1,112       (1,492 )     (1,146 )     (1,125 )
Pre–tax, pre–provision net income   $ 29,074     $ 25,716     $ 23,434     $ 28,239     $ 24,451     $ 54,790     $ 48,690                              
Pre–tax, pre–provision net income   $ 29,074     $ 25,716     $ 23,434     $ 28,239     $ 24,451     $ 54,790     $ 48,690  
Acquisition expenses     —       —       884       799       242       —       242  
Gain on sale of ESOP trustee accounts     —       —       —       (2,329 )     —       —       —  
DOL ESOP settlement expenses     —       —       1,900       —       —       —       —  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (914 )
Death benefit on BOLI     (644 )     —       —       (517 )     (266 )     (644 )     (266 )
Prepayment penalties on borrowings     —       —       —       —       125       —       125  
Adjusted pre–tax, pre–provision net income   $ 28,430     $ 25,716     $ 26,218     $ 26,192     $ 24,552     $ 54,146     $ 47,752  Pre–tax, pre–provision net income grew to $29.1 million, up 13.1% from the linked quarter and 18.9% from the prior year period. This non–GAAP financial measure is utilized by banks to provide a greater understanding of pre–tax profitability before giving effect to credit loss expense. Horizon recorded a provision expense of $240,000 in the quarter and provision release of $1.4 million in the linked quarter, and a provision release of $1.5 million in the prior year period.

*Non–GAAP Reconciliation of Net Interest Margin*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Net interest income as reported   $ 53,008     $ 48,171     $ 49,976     $ 46,544     $ 42,632     $ 101,179     $ 85,170  
Average interest earning assets     6,927,310       6,800,549       6,938,258       6,033,088       5,659,384       6,864,280       5,550,116  
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”)     3.19 %     2.99 %     2.97 %     3.17 %     3.14 %     3.03 %     3.21 %                            
Net interest income as reported   $ 53,008     $ 48,171     $ 49,976     $ 46,544     $ 42,632     $ 101,179     $ 85,170  
Acquisition–related purchase accounting adjustments (“PAUs”)     (1,223 )     (916 )     (1,819 )     (875 )     (230 )     (2,139 )     (1,809 )
Prepayment penalties on borrowings     —       —       —       —       125       —       125  
Adjusted net interest income   $ 51,785     $ 47,255     $ 48,157     $ 45,669     $ 42,527     $ 99,040     $ 83,361  
Adjusted net interest margin     3.12 %     2.93 %     2.86 %     3.12 %     3.13 %     2.97 %     3.15 %Horizon’s net interest margin increased to 3.19% for the second quarter of 2022 compared to 2.99% for the first quarter of 2022. The increase in net interest margin reflects an increase in the yield on interest earning assets of 24 basis points offset by an increase in the cost of interest bearing liabilities of four basis points. Interest income from acquisition–related purchase accounting adjustments was $307,000 higher during the second quarter of 2022 when compared to the first quarter of 2022.

Horizon’s net interest margin increased to 3.19% for the second quarter of 2022 compared to 3.14% for the second quarter of 2021. The increase in net interest margin reflects a decrease in the cost of interest bearing liabilities of 11 basis points offset by a decrease in the yield on interest earning assets of two basis points.

Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 3.12% for the second quarter of 2021, compared to 2.93% for the linked quarter and 3.13% for the second quarter of 2021. Interest income from acquisition–related purchase accounting adjustments was $1.2 million, $916,000 and $230,000 for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

*Lending Activity*

Total loan balances were $3.94 billion, or $3.89 billion excluding PPP loans and sold commercial participation loans, on June 30, 2022. Total loans were $3.72 billion, or $3.66 billion excluding PPP loans and sold commercial participation loans, on March 31, 2022. During the three months ended June 30, 2022, commercial loans, excluding PPP loans and sold commercial participation loans, increased $108.0 million, consumer loans increased $94.8 million, mortgage warehouse loans increased $11.4 million, residential mortgage loans increased $15.2 million and sold commercial participation loans increased $1.0 million, offset by decreases in PPP loans of $4.4 million and loans held for sale of $838,000. PPP loan income was $198,000, $457,000 and $2.7 million for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

*Loan Growth by Type, Excluding Acquired Loans*
(Dollars in Thousands, Unaudited)   *June 30,*   *March 31,*   *Amount*   *QTD*   *Annualized*   *2022*   *2022*   *Change*   *% Change*   *% Change*
Commercial, excluding PPP loans and sold commercial participation loans   $ 2,310,605     $ 2,202,568     $ 108,037     4.9%   19.9%
PPP loans     2,343       6,705       (4,362 )   (65.1)%   (263.8)%
Sold commercial participation loans     51,043       50,054       989     2.0%   8.0%
Residential mortgage     608,582       593,372       15,210     2.6%   10.4%
Consumer     848,749       753,900       94,849     12.6%   51.0%
Subtotal     3,821,322       3,606,599       214,723     6.0%   24.1%
Loans held for sale     2,943       3,781       (838 )   (22.2)%   (89.9)%
Mortgage warehouse     116,488       105,118       11,370     10.8%   43.9%
Total loans   $ 3,940,753     $ 3,715,498     $ 225,255     6.1%   24.6%                    
Total loans, excluding PPP loans and sold commercial participation loans   $ 3,887,367     $ 3,658,739     $ 228,628     6.2%   25.3%Residential mortgage lending activity for the three months ended June 30, 2022 generated $2.5 million in income from the gain on sale of mortgage loans, increasing $474,000 from the first quarter of 2022 and decreasing $3.1 million from the second quarter of 2021. Total mortgage origination volume for the second quarter of 2022, including loans placed into the portfolio, totaled $115.1 million, representing a decrease of 3.2% from first quarter 2022 levels, and a decrease of 33.5% from the second quarter of 2021. As a percentage of total mortgage loan originations, 17% of the volume was from refinancings and 83% was from loans for new home purchases during the second quarter of 2022. Total origination volume of mortgage loans sold to the secondary market totaled $67.3 million, representing a decrease of 17.2% from the first quarter of 2022 and a decrease of 40.5% from the second quarter of 2021.

Gain on sale of mortgage loans and mortgage warehousing income was 5.6% of total revenue for the three months ended June 30, 2022, compared to 4.7% for the linked quarter and 12.3% for the three months ended June 30, 2021.

*Deposit Activity*

Total deposit balances were $5.85 billion on June 30, 2022 compared to $5.85 billion on March 31, 2022, a decrease of $5.9 million.

*Deposit Growth by Type, Excluding Acquired Deposits*
(Dollars in Thousands, Unaudited) *June 30,*   *March 31,*   *Amount *   *QTD*   *Annualized*   *2022*       *2022*     *Change*   *% Change*   *% Change*
Non–interest bearing $ 1,328,213     $ 1,325,570     $ 2,643     0.2%   0.8%
Interest bearing   3,760,890       3,782,644       (21,754 )   (0.6)%   (2.3)%
Time deposits   756,482       743,283       13,199     1.8%   7.2%
Total deposits $ 5,845,585     $ 5,851,497     $ (5,912 )   (0.1)%   (0.4)%

*
Expense Management*
  *Three Months Ended*   *June 30,* *March 31,*             *2022*   *2022*      
*Non–interest Expense*   *Actual*   *Actual*   *Amount*
*Change*   *Percent*
*Change*
Salaries and employee benefits   $ 19,957     $ 19,735     $ 222     1.1%
Net occupancy expenses     3,190       3,561       (371 )   (10.4)%
Data processing     2,607       2,537       70     2.8%
Professional fees     283       314       (31 )   (9.9)%
Outside services and consultants     2,485       2,525       (40 )   (1.6)%
Loan expense     2,497       2,545       (48 )   (1.9)%
FDIC insurance expense     775       725       50     6.9%
Other losses     362       168       194     115.5%
Other expense     4,212       4,500       (288 )   (6.4)%
Total non–interest expense   $ 36,368     $ 36,610     $ (242 )   (0.7)%
Annualized non–interest expense to average assets     1.95 %     2.03 %        Total non–interest expense was $242,000 lower in the second quarter of 2022 when compared to the first quarter of 2022. The decrease was primarily due to a decrease in net occupancy expenses of $371,000 and a decrease in other expense $288,000, offset by an increase in salaries and employee benefits expense of $222,000.
  *Three Months Ended*   *June 30,*   *June 30,*           *2022*   *2021*   *Adjusted*
*Non–interest Expense*   *Actual*   *Acquisition*
*Expenses*   *Adjusted*   *Actual*   *Acquisition*
*Expenses*   *Adjusted*   *Amount*
*Change*   *Percent*
*Change*
Salaries and employee benefits   $ 19,957     $ —     $ 19,957     $ 17,730     $ —     $ 17,730     $ 2,227     12.6%
Net occupancy expenses     3,190       —       3,190       3,084       —       3,084       106     3.4%
Data processing     2,607       —       2,607       2,388       —       2,388       219     9.2%
Professional fees     283       —       283       588       (51 )     537       (254 )   (47.3)%
Outside services and consultants     2,485       —       2,485       2,220       (187 )     2,033       452     22.2%
Loan expense     2,497       —       2,497       3,107       —       3,107       (610 )   (19.6)%
FDIC insurance expense     775       —       775       500       —       500       275     55.0%
Other losses     362       —       362       6       —       6       356     5933.3%
Other expense     4,212       —       4,212       3,765       (4 )     3,761       451     12.0%
Total non–interest expense   $ 36,368     $ —     $ 36,368     $ 33,388     $ (242 )   $ 33,146     $ 3,222     9.7%
Annualized non–interest expense to average assets     1.95 %         1.95 %     2.18 %         2.16 %        Total non–interest expense was $3.0 million higher in the second quarter of 2022 when compared to the second quarter of 2021. The increases in expenses was primarily due to an increase in salaries and employee benefits of $2.2 million due to additional employees hired as a result of the 2021 branch acquisition, an increase in other expense of $447,000, an increase in other losses of $356,000, an increase in FDIC insurance expense of $275,000 and an increase in outside services and consultants expense of $265,000, offset by a decrease of $610,000 in loan expense and a decrease of $305,000 in professional fees.

Annualized non–interest expense as a percent of average assets was 1.95%, 2.03% and 2.18% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively. Annualized non–interest expense, excluding acquisition expenses, as a percent of average assets was 1.95%, 2.03% and 2.16% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively. (See the “Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below for these non–GAAP calculations.)
  *Six Months Ended*   *June 30,*   *June 30,*             *2022*     *2021*   *Adjusted*
*Non–interest Expense*   *Actual*   *Acquisition*
*Expenses*   *Adjusted*   *Actual*   *Acquisition*
*Expenses*   *Adjusted*   *Amount*
*Change*   *Percent*
*Change*
Salaries and employee benefits   $ 39,692     $ —     $ 39,692     $ 34,601     $ —     $ 34,601     $ 5,091     14.7%
Net occupancy expenses     6,751       —       6,751       6,402       —       6,402       349     5.5%
Data processing     5,144       —       5,144       4,764       —       4,764       380     8.0%
Professional fees     597       —       597       1,132       (51 )     1,081       (484 )   (44.8)%
Outside services and consultants     5,010       —       5,010       3,922       (187 )     3,735       1,275     34.1%
Loan expense     5,042       —       5,042       5,929       —       5,929       (887 )   (15.0)%
FDIC insurance expense     1,500       —       1,500       1,300       —       1,300       200     15.4%
Other losses     530       —       530       289       —       289       241     83.4%
Other expense     8,712       —       8,712       7,221       (4 )     7,217       1,495     20.7%
Total non–interest expense   $ 72,978     $ —     $ 72,978     $ 65,560     $ (242 )   $ 65,318     $ 7,660     11.7%
Annualized non–interest expense to average assets     1.99 %         1.99 %     2.19 %         2.18 %        Total non–interest expense was $7.4 million higher in the first six months of 2022 when compared to the first six months of 2021. The increases in expenses was primarily due to an increase in salaries and employee benefits of $5.1 million primarily due to additional employees hired as a result of the 2021 branch acquisition, an increase in other expense of $1.5 million, an increase in outside services and consultants expense of $1.1 million, offset by a decrease of $887,000 in loan expense and a decrease of $535,000 in professional fees.

Annualized non–interest expense as a percent of average assets was 1.99% for the first six months of 2022 compared to 2.19% for the first six months of 2021. Annualized non–interest expense, excluding acquisition expenses, as a percent of average assets was 1.99% and 2.18% for the six months ended June 30, 2022 and June 30, 2021, respectively. (See the “Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below for these non–GAAP calculations.)

Income tax expense totaled $4.0 million for the second quarter of 2022, an increase of $436,000 when compared to the first quarter of 2022 and an increase of $205,000 when compared to the second quarter of 2021.

Income tax expense totaled $7.5 million for the six months ended June 30, 2022, an increase of $294,000 when compared to the six months ended June 30, 2021.

*Capital*

The capital resources of the Company and the Bank exceeded regulatory capital ratios for “well capitalized” banks at June 30, 2022. Stockholders’ equity totaled $657.9 million at June 30, 2022 and the ratio of average stockholders’ equity to average assets was 9.43% for the six months ended June 30, 2022.

Tangible book value per common share (“TBVPS”) declined $0.43 in the first quarter of 2022 to $11.11 at period end, as unrealized net losses on securities available for sale (“AFS”) of $2.37 per common share reduced other comprehensive income (“OCI”) by $103.4 million in the first six months of this year. Fluctuations in the fair market value of AFS are widely expected to be recorded by banks in the first six months of 2022.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of June 30, 2022.
  *Actual*   *Required for Capital Adequacy Purposes*   *Required for Capital Adequacy Purposes with Capital Buffer*   *Well Capitalized *
*Under Prompt Corrective Action Provisions*   *Amount*   *Ratio*   *Amount*   *Ratio*   *Amount*   *Ratio*   *Amount*   *Ratio*
*Total capital (to risk–weighted assets)*                                
Consolidated   $ 749,948     15.83 %   $ 379,022     8.00 %   $ 497,467     10.50 %   N/A   N/A
Bank     701,422     14.81 %     378,939     8.00 %     497,358     10.50 %   $ 473,674     10.00 %
*Tier 1 capital (to risk–weighted assets)*                                
Consolidated     699,552     14.77 %     284,267     6.00 %     402,711     8.50 %   N/A   N/A
Bank     651,026     13.74 %     284,204     6.00 %     402,623     8.50 %     378,939     8.00 %
*Common equity tier 1 capital (to risk–weighted assets)*                                
Consolidated     583,199     12.31 %     213,200     4.50 %     331,645     7.00 %   N/A   N/A
Bank     651,026     13.74 %     213,153     4.50 %     331,572     7.00 %     307,888     6.50 %
*Tier 1 capital (to average assets)*                                
Consolidated     699,552     9.83 %     284,722     4.00 %     284,722     4.00 %   N/A   N/A
Bank     651,026     9.17 %     284,117     4.00 %     284,117     4.00 %     355,146     5.00 %

*
Liquidity*

The Bank maintains a stable base of core deposits provided by long–standing relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayment, investment security sales and maturities, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the Federal Home Loan Bank of Indianapolis (the “FHLB”). At June 30, 2022, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $917.6 million in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Discount Window. The Bank had approximately $2.2 billion of unpledged investment securities at June 30, 2022.

*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, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average equity and pre–tax, pre–provision net income. 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 these non–GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one–time costs of acquisitions and non–recurring 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 information identified herein and its most comparable GAAP measures.

*Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share*
(Dollars in Thousands, Unaudited)       *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*  
Total stockholders’ equity   $ 657,865     $ 677,450     $ 723,209     $ 708,542     $ 710,374  
Less: Intangible assets     173,662       174,588       175,513       183,938       172,398  
Total tangible stockholders’ equity   $ 484,203     $ 502,862     $ 547,696     $ 524,604     $ 537,976  
Common shares outstanding     43,572,796       43,572,796       43,547,942       43,520,694       43,950,720  
Book value per common share   $ 15.10     $ 15.55     $ 16.61     $ 16.28     $ 16.16  
Tangible book value per common share   $ 11.11     $ 11.54     $ 12.58     $ 12.05     $ 12.24  

*Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Non–interest expense as reported   $ 36,368     $ 36,610     $ 39,370     $ 34,349     $ 33,388     $ 72,978     $ 65,560  
Net interest income as reported     53,008       48,171       49,976       46,544       42,632       101,179       85,170  
Non–interest income as reported   $ 12,434     $ 14,155     $ 12,828     $ 16,044     $ 15,207     $ 26,589     $ 29,080  
Non–interest expense / (Net interest income + Non–interest income)
(“Efficiency Ratio”)     55.57 %     58.74 %     62.69 %     54.88 %     57.73 %     57.12 %     57.38 %                            
Non–interest expense as reported   $ 36,368     $ 36,610     $ 39,370     $ 34,349     $ 33,388     $ 72,978     $ 65,560  
Acquisition expenses     —       —       (884 )     (799 )     (242 )     —       (242 )
DOL ESOP settlement expenses     —       —       (1,900 )     —       —       —       —  
Non–interest expense excluding acquisition and DOL ESOP settlement expenses     36,368       36,610       36,586       33,550       33,146       72,978       65,318  
Net interest income as reported     53,008       48,171       49,976       46,544       42,632       101,179       85,170  
Prepayment penalties on borrowings     —       —       —       —       125       —       125  
Net interest income excluding prepayment penalties on borrowings     53,008       48,171       49,976       46,544       42,757       101,179       85,295  
Non–interest income as reported     12,434       14,155       12,828       16,044       15,207       26,589       29,080  
Gain on sale of ESOP trustee accounts     —       —       —       (2,329 )     —       —       —  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (914 )
Death benefit on BOLI     (644 )     —       —       (517 )     (266 )     (644 )     (266 )
Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI   $ 11,790     $ 14,155     $ 12,828     $ 13,198     $ 14,941     $ 25,945     $ 27,900  
Adjusted efficiency ratio     56.13 %     58.74 %     58.25 %     56.16 %     57.45 %     57.41 %     57.70 %

*Non–GAAP Reconciliation of Return on Average Assets*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Average assets   $ 7,476,238     $ 7,319,675     $ 7,461,343     $ 6,507,673     $ 6,142,507     $ 7,391,348     $ 6,039,897  
Return on average assets (“ROAA”) as reported     1.33 %     1.31 %     1.14 %     1.41 %     1.45 %     1.32 %     1.42 %
Acquisition expenses     —       —       0.05       0.05       0.02       —       0.01  
Tax effect     —       —       (0.01 )     (0.01 )     —       —       —  
ROAA excluding acquisition expenses     1.33       1.31       1.18       1.45       1.47       1.32       1.43  
Credit loss expense acquired loans     —       —       —       0.12       —       —       —  
Tax effect     —       —       —       (0.03 )     —       —       —  
ROAA excluding credit loss expense on acquired loans     1.33       1.31       1.18       1.54       1.47       1.32       1.43  
Gain on sale of ESOP trustee accounts     —       —       —       (0.14 )     —       —       —  
Tax effect     —       —       —       0.03       —       —       —  
ROAA excluding gain on sale of ESOP trustee accounts     1.33       1.31       1.18       1.43       1.47       1.32       1.43  
DOL ESOP settlement expenses     —       —       0.10       —       —       —       —  
Tax effect     —       —       (0.02 )     —       —       —       —  
ROAA excluding DOL ESOP settlement expenses     1.33       1.31       1.26       1.43       1.47       1.32       1.43  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (0.03 )
Tax effect     —       —       —       —       —       —       0.01  
ROAA excluding (gain) / loss on sale of investment securities     1.33       1.31       1.26       1.43       1.47       1.32       1.41  
Death benefit on BOLI     (0.03 )     —       —       (0.03 )     (0.02 )     (0.02 )     (0.01 )
ROAA excluding death benefit on BOLI     1.30       1.31       1.26       1.40       1.45       1.30       1.40  
Prepayment penalties on borrowings     —       —       —       —       0.01       —       —  
Tax effect     —       —       —       —       —       —       —  
ROAA excluding prepayment penalties on borrowings     1.30       1.31       1.26       1.40       1.46       1.30       1.40  
Adjusted ROAA     1.30 %     1.31 %     1.26 %     1.40 %     1.46 %     1.30 %     1.40 %

*Non–GAAP Reconciliation of Return on Average Common Equity*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Average common equity   $ 677,299     $ 716,341     $ 719,643     $ 724,412     $ 706,652     $ 697,004     $ 702,052  
Return on average common equity (“ROACE”) as reported     14.72 %     13.34 %     11.81 %     12.64 %     12.59 %     14.01 %     12.23 %
Acquisition expenses     —       —       0.49       0.44       0.14       —       0.07  
Tax effect     —       —       (0.10 )     (0.09 )     (0.03 )     —       (0.01 )
ROACE excluding acquisition expenses     14.72       13.34       12.20       12.99       12.70       14.01       12.29  
Credit loss expense acquired loans     —       —       —       1.11       —       —       —  
Tax effect     —       —       —       (0.23 )     —       —       —  
ROACE excluding credit loss expense acquired loans     14.72       13.34       12.20       13.87       12.70       14.01       12.29  
Gain on sale of ESOP trustee accounts     —       —       —       (1.28 )     —       —       —  
Tax effect     —       —       —       0.27       —       —       —  
ROACE excluding gain on sale of ESOP trustee accounts     14.72       13.34       12.20       12.86       12.70       14.01       12.29  
DOL ESOP settlement expenses     —       —       1.05       —       —       —       —  
Tax effect     —       —       (0.17 )     —       —       —       —  
ROACE excluding DOL ESOP settlement expenses     14.72       13.34       13.08       12.86       12.70       14.01       12.29  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (0.26 )
Tax effect     —       —       —       —       —       —       0.06  
ROACE excluding (gain) / loss on sale of investment securities     14.72       13.34       13.08       12.86       12.70       14.01       12.09  
Death benefit on BOLI     (0.38 )     —       —       (0.28 )     (0.15 )     (0.19 )     (0.08 )
ROACE excluding death benefit on BOLI     14.34       13.34       13.08       12.58       12.55       13.82       12.01  
Prepayment penalties on borrowings     —       —       —       —       0.07       —       0.04  
Tax effect     —       —       —       —       (0.01 )     —       (0.01 )
ROACE excluding prepayment penalties on borrowings     14.34 %     13.34 %     13.08 %     12.58 %     12.61 %     13.82 %     12.04 %
Adjusted ROACE     14.34 %     13.34 %     13.08 %     12.58 %     12.61 %     13.82 %     12.04 %

*Non–GAAP Reconciliation of Return on Average Tangible Equity*
(Dollars in Thousands, Unaudited)   *Three Months Ended*   *Six Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*   *June 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*       *2022*       *2021*  
Average common equity   $ 677,299     $ 716,341     $ 719,643     $ 724,412     $ 706,652     $ 697,004     $ 702,052  
Less: Average intangible assets     175,321       176,356       179,594       174,920       173,905       175,836       174,343  
Average tangible equity   $ 501,978     $ 539,985     $ 540,049     $ 549,492     $ 532,747     $ 521,168     $ 527,709  
Return on average tangible equity (“ROATE”) as reported     19.86 %     17.70 %     15.74 %     16.66 %     16.69 %     18.74 %     16.28 %
Acquisition expenses     —       —       0.65       0.58       0.18       —       0.09  
Tax effect     —       —       (0.14 )     (0.12 )     (0.04 )     —       (0.02 )
ROATE excluding acquisition expenses     19.86       17.70       16.25       17.12       16.83       18.74       16.35  
Credit loss expense acquired loans     —       —       —       1.47       —       —       —  
Tax effect     —       —       —       (0.31 )     —       —       —  
ROATE excluding credit loss expense acquired loans     19.86       17.70       16.25       18.28       16.83       18.74       16.35  
Gain on sale of ESOP trustee accounts     —       —       —       (1.68 )     —       —       —  
Tax effect     —       —       —       0.35       —       —       —  
ROATE excluding gain on sale of ESOP trustee accounts     19.86       17.70       16.25       16.95       16.83       18.74       16.35  
DOL ESOP settlement expenses     —       —       1.40       —       —       —       —  
Tax effect     —       —       (0.23 )     —       —       —       —  
ROATE excluding DOL ESOP settlement expenses     19.86       17.70       17.42       16.95       16.83       18.74       16.35  
(Gain) / loss on sale of investment securities     —       —       —       —       —       —       (0.35 )
Tax effect     —       —       —       —       —       —       0.07  
ROATE excluding (gain) / loss on sale of investment securities     19.86       17.70       17.42       16.95       16.83       18.74       16.07  
Death benefit on BOLI     (0.51 )     —       —       (0.37 )     (0.20 )     (0.25 )     (0.10 )
ROATE excluding death benefit on BOLI     19.35       17.70       17.42       16.58       16.63       18.49       15.97  
Prepayment penalties on borrowings     —       —       —       —       0.09       —       0.05  
Tax effect     —       —       —       —       (0.02 )     —       (0.01 )
ROATE excluding prepayment penalties on borrowings     19.35 %     17.70 %     17.42 %     16.58 %     16.70 %     18.49 %     16.01 %
Adjusted ROATE     19.35 %     17.70 %     17.42 %     16.58 %     16.70 %     18.49 %     16.01 %

*
Earnings Conference Call*

As previously announced, Horizon will host a conference call to review its second quarter financial results and operating performance.

Participants may access the live conference call on July 28, 2022 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833–974–2379 from the United States, 866–450–4696 from Canada or 412–317–5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.

A telephone replay of the call will be available approximately one hour after the end of the conference through August 4, 2022. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 412–317–0088 from other international locations, and entering the access code 7261627.

*About Horizon Bancorp, Inc.*

Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.6 billion–asset bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon’s retail offerings include prime residential, indirect auto, and other secured consumer lending to in–market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in–market business banking and treasury management services, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana’s Michigan City, is available at horizonbank.com and investor.horizonbank.com.

*Forward Looking Statements*

This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection 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 Horizon’s Annual Report on Form 10–K and its quarterly reports on Form 10–Q. Further, statements about the effects of the COVID–19 pandemic on our business, operations, financial performance, and prospects may constitute forward–looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward–looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties, and us. 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.

*Financial Highlights*
(Dollars in Thousands, Unaudited)       *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*  
*Balance sheet:*                    
Total assets   $ 7,640,936     $ 7,420,328     $ 7,374,903     $ 7,534,240     $ 6,109,227  
Interest earning deposits & federal funds sold     5,646       20,827       502,364       872,540       209,304  
Interest earning time deposits     3,799       4,046       4,782       5,767       6,994  
Investment securities     3,093,792       3,118,641       2,713,255       2,438,874       1,844,470  
Commercial loans     2,363,991       2,259,327       2,213,945       2,173,200       2,104,627  
Mortgage warehouse loans     116,488       105,118       109,031       169,909       205,311  
Residential mortgage loans     608,582       593,372       594,382       603,540       559,437  
Consumer loans     848,749       753,900       727,259       713,432       650,144  
Total loans     3,937,810       3,711,717       3,644,617       3,660,081       3,519,519  
Earning assets     7,070,667       6,883,254       6,865,051       7,006,513       5,610,538  
Non–interest bearing deposit accounts     1,328,213       1,325,570       1,360,338       1,324,757       1,102,950  
Interest bearing transaction accounts     3,760,890       3,782,644       3,711,767       3,875,882       3,105,328  
Time deposits     756,482       743,283       730,886       779,260       573,348  
Total deposits     5,845,585       5,851,497       5,802,991       5,979,899       4,781,626  
Borrowings     959,222       728,664       712,739       670,753       439,094  
Subordinated notes     58,823       58,786       58,750       58,713       58,676  
Junior subordinated debentures issued to capital trusts     56,907       56,850       56,785       56,722       56,662  
Total stockholders’ equity     657,865       677,450       723,209       708,542       710,374  

*Financial Highlights*
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)   *Three Months Ended*   *June 30,*   *March 31,*   *December 31,*   *September 30,*   *June 30,*     *2022*       *2022*       *2021*       *2021*       *2021*  
*Income statement:*                    
Net interest income   $ 53,008     $ 48,171     $ 49,976     $ 46,544     $ 42,632  
Credit loss expense (recovery)     240       (1,386 )     (2,071 )     1,112       (1,492 )
Non–interest income     12,434       14,155       12,828       16,044       15,207  
Non–interest expense     36,368       36,610       39,370       34,349       33,388  
Income tax expense     3,975       3,539       4,080       4,056       3,770  
Net income   $ 24,859     $ 23,563     $ 21,425     $ 23,071     $ 22,173                      
*Per share data:*                    
Basic earnings per share   $ 0.57     $ 0.54     $ 0.49     $ 0.53     $ 0.50  
Diluted earnings per share     0.57       0.54       0.49       0.52       0.50  
Cash dividends declared per common share     0.16       0.15       0.15       0.15       0.13  
Book value per common share     15.10       15.55       16.61       16.28       16.16  
Tangible book value per common share     11.11       11.54       12.58       12.05       12.24  
Market value – high     19.21       23.45       21.14       18.47       19.13  
Market value – low   $ 16.72     $ 18.67     $ 18.01     $ 15.83     $ 16.98  
Weighted average shares outstanding – Basis     43,572,796       43,554,713       43,534,298       43,810,729       43,950,501  
Weighted average shares outstanding – Diluted     43,684,691       43,734,556       43,733,416       43,958,870       44,111,103                      
*Key ratios:*                    
Return on average assets     1.33 %     1.31 %     1.14 %     1.41 %     1.45 %
Return on average common stockholders’ equity     14.72       13.34       11.81       12.64       12.59  
Net intere

Full Article