GlobeNewswire

Horizon Bancorp, Inc. Announces Record Earnings for 2022

MICHIGAN CITY, Ind., Jan. 25, 2023 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) — Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three and twelve months ended December 31, 2022.

“Horizon closed 2022 with record annual earnings reflecting continued strong growth in commercial and consumer loans through the fourth quarter, solid asset quality metrics and continued disciplined expense management,” Chairman and CEO Craig M. Dwight said. “We have continued to produce consistent and strong returns with ROAA of 1.24% and ROATE of 18.33% for 2022. As we enter 2023, we believe we are well–positioned with talent, technology and solid pipelines to continue to support our loan growth goals for the year, and focus on reinvesting our cash flows into higher yielding assets. Our well diversified balance sheet and low credit risk profile has performed well through previous economic cycles and, given the strong markets we operate in, we expect similar performance throughout the current economic cycle.”

Fourth Quarter and Full Year 2022 Highlights

  • Return on average assets (“ROAA”) was 1.24% for the year ended 2022.

  • Return on average tangible equity was 18.33% for the year ended 2022.

  • Total loans grew 13.4% year–to–date and 12.8% annualized during the fourth quarter.

  • Commercial loans grew to a record $2.42 billion, up 13.4% year–to–date and 10.8% annualized during the fourth quarter.

  • Consumer loans grew to a record $967.8 million, up 30.6% year–to–date and 21.0% annualized during the fourth quarter.

  • Asset quality remained solid with total loan delinquency at 0.26% of total loans, net charge–offs to average loans of 0.01% and non–performing loans to total loans at 0.52%.

  • Total deposits remained strong increasing $26.9 million during the quarter at an average cost of 71 basis points and $54.8 million year–to–date at an average cost of 30 basis points.

  • Fourth quarter net interest income was $48.8 million compared to $51.9 million in the previous quarter. Lower loan fees, less purchase accounting accretion and higher dealer reserve amortization represented $2.2 million of this decrease.

  • An accounting revision was made to amounts reported in previously issued financial statements covering the third quarter of 2022 related to immaterial errors discovered in the fourth quarter of 2022. The errors relate to the inclusion of the dealer reserve amortization expense in loan expense in non–interest expenses for the third quarter of 2022 rather than loan interest income. The previously issued financial statements for the three and nine months dated September 30, 2022 have been revised to correct this error, which resulted in lowering both interest income and non–interest expense by $1.5 million for the quarter and lowering net interest margin by ten basis points from the historical presentation of these amounts (See Exhibit 1 – Revision of Previously Issued Financial Statements for details). All periods presented reflect this adjustment, and there was no impact to net income.

  • Non–interest income increased by 4.8% from $10.2 million to $10.7 million from the third quarter to the fourth quarter of 2022.

  • Non-interest expense was $35.7 million in the quarter, or 1.84% of average assets on an annualized basis, compared to $36.8 million, or 1.91%, in the third quarter of 2022. Year–to–date non–interest expense continued to be well managed at $143.2 million, or 1.90% of average assets.

  • Net income totaled $21.2 million, compared to $23.8 million in the third quarter and $21.4 million in the prior year period. Diluted earnings per share (“EPS”) was $0.48 compared to $0.55 for the third quarter of 2022 and $0.49 for the fourth quarter of 2021.

  • The Bank’s capital position continues to be robust with leverage and risk based capital ratios of 9.55% and 13.59%, respectively. The annualized dividend yield was 4.24% as of December 31, 2022.

Summary

  For the Three Months Ended
  December 31, September 30, December 31,
Net Interest Income and Net Interest Margin  2022   2022   2021 
Net interest income $48,782  $51,861  $48,477 
Net interest margin  2.85%  3.04%  2.87%
Adjusted net interest margin  2.83%  2.99%  2.77%

“Horizon's net interest income of approximately $48.8 million in the fourth quarter was a reduction from the third quarter due to rapidly rising short term interest rates, some lag in repricing adjustable rate loans and lower fee and non–interest related income. In addition, Horizon's deposit betas increased at a faster pace in the fourth quarter due to the magnitude and velocity of the Federal Reserve Bank's Open Market Committee raising the targeted federal funds rate. We expect funding costs to stabilize in 2023 as the Federal Reserve Bank tempers the velocity of future rate increases,” Mr. Dwight commented.

  For the Three Months Ended
  December 31, September 30, December 31,
Asset Yields and Funding Costs 2022  2022  2021 
Interest earning assets 3.88% 3.58% 3.11%
Interest bearing liabilities 1.29% 0.69% 0.31%


  For the Three Months Ended
Non–interest Income and  December 31, September 30, December 31,
Mortgage Banking Income  2022  2022  2021
Total non–interest income $10,674 $10,188 $12,828
Gain on sale of mortgage loans  1,196  1,441  4,167
Mortgage servicing income net of impairment  637  355  300


  For the Three Months Ended
  December 31, September 30, December 31,
Non–interest Expense  2022   2022   2021 
Total non–interest expense $35,711  $36,816  $37,871 
Annualized non–interest expense to average assets  1.84%  1.91%  2.01%


  For the Three Months Ended
  December 31, September 30, December 31,
Credit Quality 2022  2022  2021 
Allowance for credit losses to total loans 1.21% 1.27% 1.48%
Non–performing loans to total loans 0.52% 0.47% 0.52%
Percent of net charge–offs to average loans outstanding for the period 0.01% 0.00% 0.04%


Allowance for December 31, Net Reserve December 31,
Credit Losses  2022  4Q22 3Q22 2Q22 1Q22  2021 
Commercial $32,445  $(1,361) $(996) $(2,987) $(2,986) $40,775 
Retail Mortgage  5,577   440   715   71   495   3,856 
Warehouse  1,020   (4)  (43)  12   (4)  1,059 
Consumer  11,422   20   (657)  2,746   717   8,596 
Allowance for Credit Losses (“ACL”) $50,464  $(905) $(981) $(158) $(1,778) $54,286 
ACL / Total Loans  1.21%          1.48%
Acquired Loan Discount (“ALD”) $6,279  $(308) $(619) $(1,122) $(769) $9,097 

“We continued to report solid asset quality metrics, including low net charge–offs and modest levels of non–performing loans to total loans. Asset quality continued to remain a hallmark of our franchise and a credit to our seasoned loan underwriters”, said Mr. Dwight.

Exhibit 1 – Revision of Previously Issued Financial Statements

We have revised amounts reported in previously issued financial statements for our third quarter 2022 results reflected in this press release related to immaterial errors. Subsequent to the third quarter of 2022, the Company’s management determined that the dealer reserve amortization expense was incorrectly included in loan expense in non–interest expenses rather than loan interest income. In addition, the dealer reserve asset was incorrectly included with other assets on the balance sheet rather than included with loans. As a result, loan interest income for the three and nine months ended September 30, 2022 has been revised to include dealer reserve amortization expense, and we have reversed the impact of the inclusion of the dealer reserve amortization expense in loan expense in non–interest expenses for the three and nine months ended September 30, 2022 and for all other prior periods presented. This revision for the third quarter reduced both loan interest income and loan expense by $1.5 million, and lowered the net interest margin by ten basis points from the amounts previously reported in the interim condensed consolidated statements of income for the three and nine months ended September 30, 2022. Our financial statements for the quarter and year ended December 31, 2022 and December 31, 2021 set forth in this press release reflect the inclusion of the dealer reserve amortization expense in loan interest income for those periods.

We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in our Quarterly Reports on Form 10–Q for the quarterly period ended September 30, 2022.

  Three Months Ended
  December 31, December 31,
   2022   2021 
  Without
Dealer
Reserve
Change
 Dealer
Reserve

Change
 Actual Pre
Revision
 Revision Post
Revision
Balance Sheet            
Loans, net of allowance for credit losses $4,089,370  $18,164  $4,107,534  $3,590,331  $13,917  $3,604,248 
Other assets  157,445   (18,164)  139,281   80,753   (13,917)  66,836 
Total assets  7,872,518      7,872,518   7,411,889      7,411,889 
             
Income Statement            
Interest income  69,211   (2,024)  67,187   54,118   (1,499)  52,619 
Net interest income  50,806   (2,024)  48,782   49,976   (1,499)  48,477 
Non–interest expense  37,735   (2,024)  35,711   39,370   (1,499)  37,871 
Net income  21,165      21,165   21,425      21,425 
             
Average Balance Sheet            
Loans  4,019,744   18,912   4,038,656   3,630,896   13,792   3,644,688 
Interest earning assets  7,073,068   18,912   7,091,980   6,938,258   13,792   6,952,050 
Other assets  599,786   (18,912)  580,874   477,352   (13,792)  463,560 
Total assets $7,718,366  $  $7,718,366  $7,461,343  $  $7,461,343 
             
Other Financial Information            
Average rate on loans  5.22%  (0.20)%  5.02%  4.52%  (0.18)%  4.34%
Average rate on interest earning assets  4.01   (0.13)  3.88   3.20   (0.09)  3.11 
Net interest spread  2.72   (0.13)  2.59   2.89   (0.09)  2.80 
Net interest margin  2.97   (0.12)  2.85   2.97   (0.10)  2.87 
Efficiency ratio  61.38   (1.32)  60.06   62.69   (0.92)  61.77 
Non–interest expense to average assets  1.94%  (0.10)%  1.84%  2.09%  (0.08)%  2.01%


  Twelve Months Ended
  December 31, December 31,
   2022   2021 
  Without
Dealer
Reserve
Change
 Dealer
Reserve
Change
 Actual Pre
Revision
 Revision Post
Revision
Balance Sheet            
Loans, net of allowance for credit losses $4,089,370  $18,164  $4,107,534  $3,590,331  $13,917  $3,604,248 
Other assets  157,445   (18,164)  139,281   80,753   (13,917)  66,836 
Total assets  7,872,518      7,872,518   7,411,889      7,411,889 
             
Income Statement            
Interest income  241,895   (5,862)  236,033   199,995   (5,885)  194,110 
Net interest income  205,380   (5,862)  199,518   181,690   (5,885)  175,805 
Non–interest expense  149,063   (5,862)  143,201   139,279   (5,885)  133,394 
Net income  93,408      93,408   87,091      87,091 
             
Average Balance Sheet            
Loans  3,828,090   17,047   3,845,137   3,626,033   13,421   3,639,454 
Interest earning assets  6,960,360   17,047   6,977,407   6,021,740   13,421   6,035,161 
Other assets  526,276   (17,047)  509,229   459,316   (13,421)  445,895 
Total assets $7,533,915  $  $7,533,915  $6,514,251    $6,514,251 
             
Other Financial Information            
Average rate on loans  4.70%  (0.17)%  4.53%  4.47%  (0.17)%  4.30%
Average rate on interest earning assets  3.60   (0.10)  3.50   3.43   (0.10)  3.33 
Net interest spread  2.93   (0.10)  2.83   3.03   (0.10)  2.93 
Net interest margin  3.07   (0.09)  2.98   3.13   (0.10)  3.03 
Efficiency ratio  58.96   (0.98)  57.98   58.12   (1.05)  57.07 
Non–interest expense to average assets  1.98%  (0.08)%  1.90%  2.14%  (0.09)%  2.05%

Income Statement

Net income for the fourth quarter of 2022 was $21.2 million, or $0.48 diluted earnings per share, compared to $23.8 million, or $0.55, for the linked quarter and $21.4 million, or $0.49, for the prior year period.

The change in net income for the fourth quarter of 2022 when compared to the third quarter of 2022 reflects an increase in non–interest income of $486,000 and a decrease in non–interest expense of $1.1 million, offset by a decrease in net interest income of $3.1 million and an increase in credit loss expense of $532,000.

Non–interest expense of $35.7 million in the fourth quarter of 2022 reflected a $635,000 decrease in salaries and employee benefits, a $400,000 decrease in other expense, a $282,000 decrease in FDIC insurance expense and a $280,000 decrease in other losses, offset by a $345,000 increase in data processing expense and a $142,000 increase in professional fees from the linked quarter.

Net income for the fourth quarter of 2022 when compared to the same prior year period reflects a decrease in non–interest income of $2.2 million and an increase in credit loss expense of $2.0 million, offset by a decrease in non–interest expense of $2.2 million, a decrease in income tax expense of $1.4 million and an increase in net interest income of $305,000.

Net income for the year ended December 31, 2022 was $93.4 million, or $2.14 diluted earnings per share, compared to $87.1 million, or $1.98 diluted earnings per share, for the year ended December 31, 2021. Adjusted net income for the year ended December 31, 2022 was $92.8 million, or $2.13 diluted earnings per share, compared to $88.6 million, or $2.00 diluted earnings per share, for the year ended December 31, 2021. The increase in net income for the year ended December 31, 2022 when compared to the same prior year period reflects an increase in net interest income of $23.7 million and a decrease in income tax expense of $3.2 million, offset by an increase in non–interest expense of $9.8 million, a decrease in non–interest income of $10.5 million and an increase in credit loss expense of $268,000.

Net Interest Margin

Horizon’s net interest margin was 2.85% for the fourth quarter of 2022 compared to 3.04% for the third quarter. The decrease in net interest margin reflects an increase in the cost of interest bearing liabilities of 60 basis points, offset by an increase in the yield on interest earning assets of 42 basis points. Additionally, interest income from acquisition–related purchase accounting adjustments was $475,000 lower during the fourth quarter of 2022 when compared to the third quarter of 2022.

Horizon’s net interest margin decreased to 2.98% for the year ended December 31, 2022 compared to 3.03% for the same prior year period. The decrease in net interest margin reflects an increase in the cost of interest bearing liabilities of 27 basis points, offset by an increase in the yield on interest earning assets of 28 basis points.

Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.83% for the fourth quarter of 2022, compared to 2.99% for the linked quarter and 2.77% for the fourth quarter of 2021. Interest income from acquisition–related purchase accounting adjustments was $431,000, $906,000 and $1.8 million for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

The adjusted net interest margin was 2.93% for the year ended December 31, 2022 compared to 2.96% for the same prior year period. Interest income from acquisition–related purchase accounting adjustments was $3.5 million and $4.5 million for the year ended December 31, 2022 and 2021, respectively.

Lending Activity

Total loan balances were $4.16 billion, or $4.11 billion excluding PPP loans and sold commercial participation loans, on December 31, 2022 compared to $4.03 billion, or $3.98 billion excluding PPP loans and sold commercial participation loans, on September 30, 2022. During the three months ended December 31, 2022, commercial loans, excluding PPP loans and sold commercial participation loans, increased $63.8 million, consumer loans increased $48.6 million, residential mortgage loans increased $18.4 million, and loans held for sale increased $4.0 million, offset by a decrease in mortgage warehouse loans of $4.2 million.

Loan Growth by Type
(Dollars in Thousands, Unaudited)
 December 31, September 30, QTD QTD Annualized
  2022  2022 $ Change % Change % Change
Commercial, excluding PPP loans and sold commercial participation loans$2,416,249 $2,352,446 $63,803  2.7% 10.8%
PPP loans 217  315  (98) (31.1)% (123.4)%
Sold commercial participation loans 50,956  50,982  (26) (0.1)% (0.2)%
Residential mortgage 653,292  634,901  18,391  2.9% 11.5%
Consumer 967,755  919,198  48,557  5.3% 21.0%
Subtotal 4,088,469  3,957,842  130,627  3.3% 13.1%
Loans held for sale 5,807  1,852  3,955  213.6% 847.2%
Mortgage warehouse 69,529  73,690  (4,161) (5.6)% (22.4)%
Total loans$4,163,805 $4,033,384 $130,421  3.2% 12.8%
          
Total loans, excluding PPP loans and sold commercial participation loans$4,112,632 $3,982,087 $130,545  3.3% 13.0%


Loan Growth by Type
(Dollars in Thousands, Unaudited)
 December 31, December 31, YTD YTD
  2022  2021 $ Change % Change
Commercial, excluding PPP loans and sold commercial participation loans$2,416,249 $2,131,644 $284,605  13.4%
PPP loans 217  25,844  (25,627) (99.2)%
Sold commercial participation loans 50,956  56,457  (5,501) (9.7)%
Residential mortgage 653,292  594,382  58,910  9.9%
Consumer 967,755  741,176  226,579  30.6%
Subtotal 4,088,469  3,549,503  538,966  15.2%
Loans held for sale 5,807  12,579  (6,772) (53.8)%
Mortgage warehouse 69,529  109,031  (39,502) (36.2)%
Total loans$4,163,805 $3,671,113 $492,692  13.4%
        
Total loans, excluding PPP loans and sold commercial participation loans$4,112,632 $3,588,812 $523,820  14.6%

Residential mortgage lending activity for the three months ended December 31, 2022 generated $1.2 million in income from the gain on sale of mortgage loans, decreasing $245,000 from the third quarter of 2022 and decreasing $3.0 million from the fourth quarter of 2021. Total mortgage origination volume for the fourth quarter of 2022, including loans placed into the portfolio, totaled $62.3 million, representing a decrease of 43.8% from third quarter 2022 levels, and a decrease of 58.6% from the fourth quarter of 2021. As a percentage of total mortgage loan originations, 8% of the volume was from refinancing and 92% was from new purchases during the fourth quarter of 2022. Total origination volume of loans sold to the secondary market totaled $23.0 million, compared to $50.2 million in the third quarter.

Gain on sale of mortgage loans and mortgage warehousing income was 3.2% of total revenue for the three months ended December 31, 2022, compared to 3.8% for the linked quarter and 8.8% for the three months ended December 31, 2021.

Deposit Activity

Total deposit balances of $5.86 billion on December 31, 2022 increased 0.5% compared to $5.83 billion on September 30, 2022, or 1.8% annualized.

Deposit Growth by Type
(Dollars in Thousands, Unaudited)
 December 31, September 30, QTD QTD Annualized
 2022 2022 $ Change % Change % Change
Non–interest bearing$1,277,768 $1,315,155 $(37,387) (2.8)% (11.3)%
Interest bearing 3,582,891  3,736,798  (153,907) (4.1)% (16.3)%
Time deposits 997,115  778,885  218,230  28.0% 111.2%
Total deposits$5,857,774 $5,830,838 $26,936  0.5% 1.8%


Total deposit balances of $5.86 billion on December 31, 2022 increased 0.9% compared to $5.80 billion on December 31, 2021.

Deposit Growth by Type
(Dollars in Thousands, Unaudited)
 December 31, December 31, YTD YTD
  2022  2021 $ Change % Change
Non–interest bearing$1,277,768 $1,360,338 $(82,570) (6.1)%
Interest bearing 3,582,891  3,711,767  (128,876) (3.5)%
Time deposits 997,115  730,886  266,229  36.4%
Total deposits$5,857,774 $5,802,991 $54,783  0.9%


Expense Management

Non–Interest Expense
(Dollars in Thousands, Unaudited)
 Three Months Ended
 December 31,September 30,QTD QTD
Non–interest Expense20222022$ Change % Change
Salaries and employee benefits$19,978  $20,613  $(635) (3.1)%
Net occupancy expenses 3,279   3,293   (14) (0.4)%
Data processing 2,884   2,539   345  13.6%
Professional fees 694   552   142  25.7%
Outside services and consultants 2,985   2,855   130  4.6%
Loan expense 1,281   1,392   (111) (8.0)%
FDIC insurance expense 388   670   (282) (42.1)%
Other losses 118   398   (280) (70.4)%
Other expense 4,104   4,504   (400) (8.9)%
Total non–interest expense$35,711  $36,816  $(1,105) (3.0)%
Annualized non–interest expense to average assets 1.84%  1.91%    

Total non–interest expense was $1.1 million lower in the fourth quarter of 2022 when compared to the third quarter of 2022. The decrease in expenses was primarily due to a decrease in salaries and employee benefits of $635,000 from lower commissions and health care costs, a decrease in other expense of $400,000, a decrease in FDIC insurance expense of $282,000 and a decrease in other losses of $280,000, offset by an increase in data processing of $345,000 and professional fees of $142,000.

Non–GAAP Reconciliation of Non–Interest Expense
(Dollars in Thousands, Unaudited)
 Three Months Ended
 December 31, December 31,  
  2022   2021  Adjusted
Non–interest ExpenseActual Acquisition
&
Non–
Recurring
Expenses
 Adjusted Actual Acquisition
&
Non–
Recurring
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$19,978  $ $19,978  $20,549  $(202) $20,347  $(369) (1.8)%
Net occupancy expenses 3,279     3,279   3,204      3,204   75  2.3%
Data processing 2,884     2,884   2,672   (1)  2,671   213  8.0%
Professional fees 694     694   562   (45)  517   177  34.2%
Outside services and consultants 2,985     2,985   2,197   (162)  2,035   950  46.7%
Loan expense 1,281     1,281   1,304   (83)  1,221   60  4.9%
FDIC insurance expense 388     388   798   (6)  792   (404) (51.0)%
Other losses 118     118   1,925   (1,904)  21   97  461.9%
Other expense 4,104     4,104   4,660   (381)  4,279   (175) (4.1)%
Total non–interest expense$35,711  $ $35,711  $37,871  $(2,784) $35,087  $624  1.8%
Annualized non–interest expense to average assets 1.84%    1.84%  2.01%    1.87%    

Total adjusted non–interest expense was $624,000 higher in the fourth quarter of 2022 when compared to the fourth quarter of 2021. The increase in expenses was primarily due to an increase in outside services and consultants of $950,000 and an increase in data processing of $213,000, offset by a decrease in salaries and employee benefits of $369,000, a decrease in FDIC insurance expense of $404,000 and a decrease in other expense of $175,000.

Non–GAAP Reconciliation of Non–Interest Expense
(Dollars in Thousands, Unaudited)
 Twelve Months Ended
 December 31, December 31,    
  2022   2021  Adjusted
Non–interest ExpenseActual Acquisition
&
Non–Recurring
Expenses
 Adjusted Actual Acquisition
&
Non–Recurring
Expenses
 Adjusted Amount
Change
 Percent
Change
Salaries and employee benefits$80,283  $ $80,283  $74,051  $(227) $73,824  $6,459  8.7%
Net occupancy expenses 13,323     13,323   12,541   (13)  12,528   795  6.3%
Data processing 10,567     10,567   9,962   (18)  9,944   623  6.3%
Professional fees 1,843     1,843   2,216   (149)  2,067   (224) (10.8)%
Outside services and consultants 10,850     10,850   8,449   (750)  7,699   3,151  40.9%
Loan expense 5,411     5,411   5,492   (83)  5,409   2  —%
FDIC insurance expense 2,558     2,558   2,377   (6)  2,371   187  7.9%
Other losses 1,046     1,046   2,283   (5)  2,278   (1,232) (54.1)%
Other expense 17,320     17,320   16,023   (2,574)  13,449   3,871  28.8%
Total non–interest expense$143,201  $ $143,201  $133,394  $(3,825) $129,569  $13,632  10.5%
Annualized non–interest expense to average assets 1.90%    1.90%  2.05%    1.99%    


Total adjusted non–interest expense was $13.6 million higher for the year ended December 31, 2022 when compared to the same prior year period. The year–over–increase was due to increases in salaries and employee benefits, outside services and consultants, other expense, net occupancy expenses and data processing, offset by a decrease in other losses.

Annualized non–interest expense as a percent of average assets was 1.84%, 1.91% and 2.01% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively. Annualized non–interest expense, excluding acquisition expenses and non–recurring ESOP settlement expenses, as a percent of average assets was 1.84%, 1.91% and 1.87% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

Annualized non–interest expense as a percent of average assets was 1.90% and 2.05% for the year ended December 31, 2022 and 2021, respectively. Annualized non–interest expense, excluding acquisition expenses and non–recurring ESOP settlement expenses, as a percentage of average assets was 1.90% and 1.99% for the year ended December 31, 2022 and 2021, respectively.

Income tax expense totaled $2.6 million for the fourth quarter of 2022, $2.0 million for the third quarters of 2022 and $4.1 million for the fourth quarter of 2021.

Income tax expense totaled $12.2 million for the year ended December 31, 2022, a decrease of $3.2 million when compared to the year ended December 31, 2021. The decrease in income tax expense was primarily due to an increase income tax credits received during 2022.

Capital

The capital resources of the Company and the Bank exceeded regulatory capital ratios for “well capitalized” banks at December 31, 2022. Stockholders’ equity totaled $677.4 million at December 31, 2022 and the ratio of average stockholders’ equity to average assets was 9.07% for the twelve months ended December 31, 2022.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of December 31, 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$782,705 14.48% $432,525 8.00% $567,688 10.50%  N/A N/A 
Bank 734,578 13.59%  432,413 8.00%  567,542 10.50% $540,516 10.00%
Tier 1 capital (to risk–weighted assets)                
Consolidated 736,150 13.62%  324,393 6.00%  459,557 8.50%  N/A N/A 
Bank 686,069 12.69%  324,310 6.00%  459,439 8.50%  432,413 8.00%
Common equity tier 1 capital (to risk–weighted assets)                
Consolidated 616,231 11.40%  243,295 4.50%  378,459 7.00%  N/A N/A 
Bank 686,069 12.69%  243,232 4.50%  378,361 7.00%  351,336 6.50%
Tier 1 capital (to average assets)                
Consolidated 736,150 10.23%  287,867 4.00%  287,867 4.00%  N/A N/A 
Bank 686,069 9.55%  287,262 4.00%  287,262 4.00%  359,077 5.00%

Tangible book value per common share (“TBVPS”) declined $0.99 during the twelve months ended December 31, 2022 to $11.59, as unrealized net losses on securities available for sale (“AFS”) of $2.71 per common share, reduced accumulated other comprehensive income (“AOCI”) by $118.0 million during the twelve months ended December 31, 2022.

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, while other sources of liquidity for Horizon include earnings, loan repayments, 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 December 31, 2022, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $438.0 million in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Discount Window. The Bank also had approximately $2.1 billion of unpledged investment securities at December 31, 2022. Total available liquidity was $2.7 billion at December 31, 2022.

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 (the “SEC”). 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: changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; continuing increases in inflation; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; continuing risks and uncertainties relating to the COVID–19 pandemic and government responses thereto; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; material changes outside the U.S. or in overseas relations, including changes in U.S. trade relations related to imposition of tariffs, Brexit, and the phase out of the London Interbank Offered Rate (“LIBOR”); the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward–looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10–K, Quarterly Reports on Form 10–Q, and Current Reports on Form 8–K) filed with the SEC and available at the SEC’s Internet website (www.sec.gov).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)
  
 December 31, September 30, June 30, March 31, December 31,
  2022  2022  2022  2022  2021
Balance sheet:         
Total assets$7,872,518 $7,718,695 $7,640,936 $7,420,328 $7,374,903
Interest earning deposits & federal funds sold 12,233  7,302  5,646  20,827  502,364
Interest earning time deposits 2,812  2,814  3,799  4,046  4,782
Investment securities 3,020,306  3,017,191  3,093,792  3,118,641  2,713,255
Commercial loans 2,467,422  2,403,743  2,363,991  2,259,327  2,213,945
Mortgage warehouse loans 69,529  73,690  116,488  105,118  109,031
Residential mortgage loans 653,292  634,901  608,582  593,372  594,382
Consumer loans 967,755  919,198  866,819  768,854  741,176
Total loans 4,157,998  4,031,532  3,955,880  3,726,671  3,658,534
Earning assets 7,225,833  7,087,368  7,088,737  6,898,208  6,878,968
Non–interest bearing deposit accounts 1,277,768  1,315,155  1,328,213  1,325,570  1,360,338
Interest bearing transaction accounts 3,582,891  3,736,798  3,760,890  3,782,644  3,711,767
Time deposits 997,115  778,885  756,482  743,283  730,886
Total deposits 5,857,774  5,830,838  5,845,585  5,851,497  5,802,991
Borrowings 1,142,949  1,048,091  959,222  728,664  712,739
Subordinated notes 58,896  58,860  58,823  58,786  58,750
Junior subordinated debentures issued to capital trusts 57,027  56,966  56,907  56,850  56,785
Total stockholders’ equity 677,375  644,993  657,865  677,450  723,209


Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
 Three Months Ended
 December 31, September 30, June 30, March 31, December 31,
  2022   2022   2022   2022   2021 
Income statement:         
Net interest income$48,782  $51,861  $52,044  $46,831  $48,477 
Credit loss expense (recovery) (69)  (601)  240   (1,386)  (2,071)
Non–interest income 10,674   10,188   12,434   14,155   12,828 
Non–interest expense 35,711   36,816   35,404   35,270   37,871 
Income tax expense 2,649   2,013   3,975   3,539   4,080 
Net income$21,165  $23,821  $24,859  $23,563  $21,425 
          
Per share data:         
Basic earnings per share$0.49  $0.55  $0.57  $0.54  $0.49 
Diluted earnings per share 0.48   0.55   0.57   0.54   0.49 
Cash dividends declared per common share 0.16   0.16   0.16   0.15   0.15 
Book value per common share 15.55   14.80   15.10   15.55   16.61 
Tangible book value per common share 11.59   10.82   11.11   11.54   12.58 
Market value – high 20.00   20.59   19.21   23.45   21.14 
Market value – low$14.51  $16.74  $16.72  $18.67  $18.01 
Weighted average shares outstanding – Basis 43,574,151   43,573,370   43,572,796   43,554,713   43,534,298 
Weighted average shares outstanding – Diluted 43,667,954   43,703,793   43,684,691   43,734,556   43,733,416 
          
Key ratios:         
Return on average assets 1.09%  1.24%  1.33%  1.31%  1.14%
Return on average common stockholders’ equity 12.72   13.89   14.72   13.34   11.81 
Net interest margin 2.85   3.04   3.13   2.90   2.87 
Allowance for credit losses to total loans 1.21   1.27   1.32   1.41   1.48 
Average equity to average assets 8.55   8.91   9.06   9.79   9.64 
Efficiency ratio 60.06   59.33   54.91   57.83   61.77 
Annualized non–interest expense to average assets 1.84   1.91   1.90   1.95   2.01 
Bank only capital ratios:         
Tier 1 capital to average assets 9.55   8.84   8.85   8.83   8.50 
Tier 1 capital to risk weighted assets 12.69   12.74   12.87   13.23   13.69 
Total capital to risk weighted assets 13.59   13.65   13.83   14.25   14.72 


Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
 Twelve Months Ended
 December 31, December 31,
  2022   2021 
Income statement:   
Net interest income$199,518  $175,805 
Credit loss expense (recovery) (1,816)  (2,084)
Non–interest income 47,451   57,952 
Non–interest expense 143,201   133,394 
Income tax expense 12,176   15,356 
Net income$93,408  $87,091 
    
Per share data:   
Basic earnings per share$2.14  $1.99 
Diluted earnings per share 2.14   1.98 
Cash dividends declared per common share 0.63   0.56 
Book value per common share 15.55   16.61 
Tangible book value per common share 11.59   12.58 
Market value – high 23.45   21.14 
Market value – low$14.51  $15.43 
Weighted average shares outstanding – Basis 43,568,823   43,802,733 
Weighted average shares outstanding – Diluted 43,699,734   43,955,280 
    
Key ratios:   
Return on average assets 1.24%  1.34%
Return on average common stockholders’ equity 13.66   12.23 
Net interest margin 2.98   3.03 
Allowance for credit losses to total loans 1.21   1.48 
Average equity to average assets 9.07   10.93 
Efficiency ratio 57.98   57.07 
Annualized non–interest expense to average assets 1.90   2.05 
Bank only capital ratios:   
Tier 1 capital to average assets 9.55   8.50 
Tier 1 capital to risk weighted assets 12.69   13.69 
Total capital to risk weighted assets 13.59   14.72 


Financial Highlights
(Dollars in Thousands Except Ratios, Unaudited)
  
 December 31, September 30, June 30, March 31, December 31,
  2022   2022   2022   2022   2021 
Loan data:         
Substandard loans$56,194  $57,932  $59,377  $57,928  $56,968 
30 to 89 days delinquent 10,709   6,970   6,739   6,358   8,536 
          
Non–performing loans:         
90 days and greater delinquent – accruing interest 92   193   210   107   145 
Trouble debt restructures – accruing interest 2,570   2,529   2,535   2,372   2,391 
Trouble debt restructures – non–accrual 1,548   1,665   1,345   1,501   1,521 
Non–accrual loans 17,630   14,771   16,116   16,133   14,962 
Total non–performing loans$21,840  $19,158  $20,206  $20,113  $19,019 
Non–performing loans to total loans 0.52%  0.47%  0.51%  0.54%  0.52%


Allocation of the Allowance for Credit Losses
(Dollars in Thousands, Unaudited)
  
 December 31, September 30, June 30, March 31, December 31,
 2022 2022 2022 2022 2021
Commercial$32,445 $33,806 $34,802 $37,789 $40,775
Residential mortgage 5,577  5,137  4,422  4,351  3,856
Mortgage warehouse 1,020  1,024  1,067  1,055  1,059
Consumer 11,422  11,402  12,059  9,313  8,596
Total$50,464 $51,369 $52,350 $52,508 $54,286


Net Charge–offs (Recoveries)
(Dollars in Thousands Except Ratios, Unaudited)
  
 December 31, September 30, June 30, March 31, December 31,
  2022   2022   2022   2022   2021 
Commercial$(94) $51  $(75) $38  $926 
Residential mortgage (8)  (75)  40   (10)  126 
Mortgage warehouse              
Consumer 387   162   319   108   360 
Total$285  $138  $284  $136  $1,412 
Percent of net charge–offs (recoveries) to average loans outstanding for the period 0.01%  0.00%  0.01%  0.00%  0.04%


Total Non–performing Loans
(Dollars in Thousands Except Ratios, Unaudited)
  
 December 31, September 30, June 30, March 31, December 31,
  2022   2022   2022   2022   2021 
Commercial$9,330  $7,199  $8,008  $7,844  $7,509 
Residential mortgage 8,123   8,047   8,469   8,584   8,005 
Mortgage warehouse              
Consumer 4,387   3,912   3,729   3,685   3,505 
Total$21,840  $19,158  $20,206  $20,113  $19,019 
Non–performing loans to total loans 0.52%  0.47%  0.51%  0.54%  0.52%


Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
  
 December 31, September 30, June 30, March 31, December 31,
 2022 2022 2022 2022 2021
Commercial$1,881 $3,206 $1,414 $2,245 $2,861
Residential mortgage 107  22    170  695
Mortgage warehouse         
Consumer 152  14  58  5  5
Total$2,140 $3,242 $1,472 $2,420 $3,561


Average Balance Sheets
(Dollars in Thousands, Unaudited)
 Three Months Ended Three Months Ended
 December 31, 2022 December 31, 2021
 Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Assets           
Interest earning assets           
Federal funds sold$4,023  $34 3.35% $654,225  $251 0.15%
Interest earning deposits 8,233   48 2.31%  22,537   32 0.56%
Investment securities – taxable 1,655,728   8,703 2.09%  1,405,689   6,208 1.75%
Investment securities – non–taxable (1) 1,385,340   7,543 2.73%  1,224,911   6,456 2.65%
Loans receivable (2) (3) 4,038,656   50,859 5.02%  3,644,688   39,672 4.34%
Total interest earning assets 7,091,980   67,187 3.88%  6,952,050   52,619 3.11%
Non–interest earning assets           
Cash and due from banks 96,835       102,273     
Allowance for credit losses (51,323)      (56,540)    
Other assets 580,874       463,560     
Total average assets$7,718,366      $7,461,343     
            
Liabilities and Stockholders’ Equity           
Interest bearing liabilities           
Interest bearing deposits$4,555,887  $10,520 0.92% $4,543,989  $1,663 0.15%
Borrowings 850,236   5,729 2.67%  525,638   1,025 0.77%
Repurchase agreements 141,676   311 0.87%  137,868   36 0.10%
Subordinated notes 58,874   881 5.94%  58,728   881 5.95%
Junior subordinated debentures issued to capital trusts 56,988   964 6.71%  56,745   537 3.75%
Total interest bearing liabilities 5,663,661   18,405 1.29%  5,322,968   4,142 0.31%
Non–interest bearing liabilities           
Demand deposits 1,321,139       1,366,621     
Accrued interest payable and other liabilities 73,378       52,111     
Stockholders’ equity 660,188       719,643     
Total average liabilities and stockholders’ equity$7,718,366      $7,461,343     
            
Net interest income / spread  $48,782 2.59%   $48,477 2.80%
Net interest income as a percent of average interest earning assets (1)    2.85%     2.87%
            
(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 computation 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.


Average Balance Sheets
(Dollars in Thousands, Unaudited)
 Twelve Months Ended Twelve Months Ended
 December 31, 2022 December 31, 2021
 Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Assets           
Interest earning assets           
Federal funds sold$62,211  $165 0.27% $398,528  $535 0.13%
Interest earning deposits 13,596   141 1.04%  25,993   160 0.62%
Investment securities – taxable 1,700,418   33,202 1.95%  884,244   14,437 1.63%
Investment securities – non–taxable (1) 1,356,045   29,025 2.71%  1,086,942   23,246 2.71%
Loans receivable (2) (3) 3,845,137   173,500 4.53%  3,639,454   155,732 4.30%
Total interest earning assets 6,977,407   236,033 3.50%  6,035,161   194,110 3.33%
Non–interest earning assets           
Cash and due from banks 99,885       89,993     
Allowance for credit losses (52,606)      (56,798)    
Other assets 509,229       445,895     
Total average assets$7,533,915      $6,514,251     
            
Liabilities and Stockholders’ Equity           
Interest bearing liabilities           
Interest bearing deposits$4,513,668  $17,809 0.39% $3,897,750  $7,867 0.20%
Borrowings 696,584   11,938 1.71%  425,214   4,546 1.07%
Repurchase agreements 141,048   527 0.37%  123,675   155 0.13%
Subordinated notes 58,819   3,522 5.99%  58,672   3,522 6.00%
Junior subordinated debentures issued to capital trusts 56,899   2,719 4.78%  56,657   2,215 3.91%
Total interest bearing liabilities 5,467,018   36,515 0.67%  4,561,968   18,305 0.40%
Non–interest bearing liabilities           
Demand deposits 1,332,937       1,188,275     
Accrued interest payable and other liabilities 50,330       51,886     
Stockholders’ equity 683,630       712,122     
Total average liabilities and stockholders’ equity$7,533,915      $6,514,251     
            
Net interest income / spread  $199,518 2.83%   $175,805 2.93%
Net interest income as a percent of average interest earning assets (1)    2.98%     3.03%
            
(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 computation 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.


Condensed Consolidated Balance Sheets
(Dollars in Thousands)
    
 December 31,
2022
 December 31,
2021
 (Unaudited)  
Assets   
Cash and due from banks$123,505  $593,508
Interest earning time deposits 2,812   4,782
Investment securities, available for sale 997,558   1,160,812
Investment securities, held to maturity (fair value $1,681,309 and $1,559,991) 2,022,748   1,552,443
Loans held for sale 5,807   12,579
Loans, net of allowance for credit losses of $50,464 and $54,286 4,107,534   3,604,248
Premises and equipment, net 92,677   93,441
Federal Home Loan Bank stock 26,677   24,440
Goodwill 155,211   154,572
Other intangible assets 17,239   20,941
Interest receivable 35,294   26,137
Cash value of life insurance 146,175   97,150
Other assets 139,281   66,836
Total assets$7,872,518  $7,411,889
    
Liabilities   
Deposits   
Non–interest bearing$1,277,768  $1,360,338
Interest bearing 4,580,006   4,442,653
Total deposits 5,857,774   5,802,991
Borrowings 1,142,949   712,739
Subordinated notes 58,896   58,750
Junior subordinated debentures issued to capital trusts 57,027   56,785
Interest payable 5,380   2,235
Other liabilities 73,117   55,180
Total liabilities 7,195,143   6,688,680
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
Issued and Outstanding 43,937,889 and 43,811,421 shares
    
Additional paid–in capital 354,188   352,122
Retained earnings 429,385   363,742
Accumulated other comprehensive income (106,198)  7,345
Total stockholders’ equity 677,375   723,209
Total liabilities and stockholders’ equity$7,872,518  $7,411,889


Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
 Three Months Ended
 December 31, September 30, June 30, March 31, December 31,
  2022   2022  2022  2022   2021 
Interest income         
Loans receivable$50,859  $45,517  $40,585 $36,539  $39,672 
Investment securities – taxable 8,785   8,501   8,716  7,506   6,491 
Investment securities – non–taxable 7,543   7,478   7,307  6,697   6,456 
Total interest income 67,187   61,496   56,608  50,742   52,619 
Interest expense         
Deposits 10,520   4,116   1,677  1,496   1,663 
Borrowed funds 6,040   3,895   1,450  1,080   1,061 
Subordinated notes 881   880   881  880   881 
Junior subordinated debentures issued to capital trusts 964   744   556  455   537 
Total interest expense 18,405   9,635   4,564  3,911   4,142 
Net interest income 48,782   51,861   52,044  46,831   48,477 
Credit loss expense (recovery) (69)  (601)  240  (1,386)  (2,071)
Net interest income after credit loss expense (recovery) 48,851   52,462   51,804  48,217   50,548 
Non–interest Income         
Service charges on deposit accounts 2,947   3,023   2,833  2,795   2,510 
Wire transfer fees 118   148   170  159   205 
Interchange fees 2,951   3,089   3,582  2,780   3,082 
Fiduciary activities 1,270   1,203   1,405  1,503   1,591 
Gain on sale of mortgage loans 1,196   1,441   2,501  2,027   4,167 
Mortgage servicing income net of impairment 637   355   319  3,489   300 
Increase in cash value of bank owned life insurance 751   814   519  510   547 
Death benefit on bank owned life insurance       644      
Other income 804   115   461  892   426 
Total non–interest income 10,674   10,188   12,434  14,155   12,828 
Non–interest expense         
Salaries and employee benefits 19,978   20,613   19,957  19,735   20,549 
Net occupancy expenses 3,279   3,293   3,190  3,561   3,204 
Data processing 2,884   2,539   2,607  2,537   2,672 
Professional fees 694   552   283  314   562 
Outside services and consultants 2,985   2,855   2,485  2,525   2,197 
Loan expense 1,281   1,392   1,533  1,205   1,304 
FDIC insurance expense 388   670   775  725   798 
Other losses 118   398   362  168   1,925 
Other expenses 4,104   4,504   4,212  4,500   4,660 
Total non–interest expense 35,711   36,816   35,404  35,270   37,871 
Income before income taxes 23,814   25,834   28,834  27,102   25,505 
Income tax expense 2,649   2,013   3,975  3,539   4,080 
Net income$21,165  $23,821  $24,859 $23,563  $21,425 
Basic earnings per share$0.49  $0.55  $0.57 $0.54  $0.49 
Diluted earnings per share 0.48   0.55   0.57  0.54   0.49 


Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
 Twelve Months Ended
 December 31, December 31,
  2022   2021 
Interest income   
Loans receivable$173,500  $155,732 
Investment securities – taxable 33,508   15,132 
Investment securities – non–taxable 29,025   23,246 
Total interest income 236,033   194,110 
Interest expense   
Deposits 17,809   7,867 
Borrowed funds 12,465   4,701 
Subordinated notes 3,522   3,522 
Junior subordinated debentures issued to capital trusts 2,719   2,215 
Total interest expense 36,515   18,305 
Net interest income 199,518   175,805 
Credit loss expense (recovery) (1,816)  (2,084)
Net interest income after credit loss expense (recovery) 201,334   177,889 
Non–interest Income   
Service charges on deposit accounts 11,598   9,192 
Wire transfer fees 595   892 
Interchange fees 12,402   10,901 
Fiduciary activities 5,381   7,419 
Gains / (losses) on sale of investment securities    914 
Gain on sale of mortgage loans 7,165   19,163 
Mortgage servicing income net of impairment 4,800   2,352 
Increase in cash value of bank owned life insurance 2,594   2,094 
Death benefit on bank owned life insurance 644   783 
Other income 2,272   4,242 
Total non–interest income 47,451   57,952 
Non–interest expense   
Salaries and employee benefits 80,283   74,051 
Net occupancy expenses 13,323   12,541 
Data processing 10,567   9,962 
Professional fees 1,843   2,216 
Outside services and consultants 10,850   8,449 
Loan expense 5,411   5,492 
FDIC insurance expense 2,558   2,377 
Other losses 1,046   2,283 
Other expenses 17,320   16,023 
Total non–interest expense 143,201   133,394 
Income before income taxes 105,584   102,447 
Income tax expense 12,176   15,356 
Net income$93,408  $87,091 
Basic earnings per share$2.14  $1.99 
Diluted earnings per share 2.14