(NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three and nine months ended September 30, 2024.

Net income for the three months ended September 30, 2024 was $18.2 million, or $0.41 per diluted share, compared to net income of $14.1 million, or $0.32, for the second quarter of 2024 and compared to net income of $16.2 million, or $0.37 per diluted share, for the third quarter of 2023.

Net income for the nine months ended September 30, 2024 was $46.3 million, or $1.05 per diluted share, compared to net income of $53.2 million, or $1.21, for the nine months ended September 30, 2023.

Third Quarter 2024 Highlights

  • Net interest income increased for the fourth consecutive quarter to $46.9 million, compared to $45.3 million in the linked quarter of 2024. Net interest margin, on a fully taxable equivalent ("FTE") basis1, expanded for the fourth consecutive quarter to 2.66%, compared to 2.64% in the linked quarter of 2024.
  • Total loans held for investment ("HFI") were $4.8 billion at September 30, 2024, relatively unchanged from June 30, 2024 balances. However, consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. 
  • Positive deposit growth of 1.7% during the quarter, to $5.7 billion at period end. The quarter was highlighted by stable non-interest bearing deposit balances and growth in core relationship consumer and commercial portfolios. 
  • Credit quality remains strong, with annualized net charge offs of 0.03% of average loans during the third quarter. Non-performing assets to total assets of 0.32% remains well within expected ranges, with no material change in the loss outlook. Provision for loan losses of $1.0 million reflects continued positive credit performance.

“Horizon continues to execute well on its key strategic initiatives of consistently improving our operating performance through a more productive balance sheet, growth in non-interest income and continued disciplined in our operating model. As a result, we are optimistic on the positive momentum of the franchise through year-end 2024 and into 2025. During the quarter, our commercial team was able to deliver another quarter of quality loan growth, even coming off a strong end to the second quarter. The strength of Horizon's core deposit franchise showed solid performance, and our credit metrics remain well managed. These efforts led to a third consecutive quarter of sequential growth in pre-tax pre-provision income," President and Chief Executive Officer Thomas M. Prame said. "Importantly, we continue our efforts to optimize our business model, and are pleased to announce the repositioning of a portion of our securities portfolio and the intended sale of our mortgage warehouse business during the fourth quarter. These shareholder accretive actions are expected to yield sustainable improvement in the profitability of our business that will be evident in the fourth quarter, and positively impact Horizon's financial performance in 2025."

_________________________1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

Accretive Fourth Quarter 2024 Strategic Actions

Horizon announced strategic actions taking place in the fourth quarter of 2024, which are designed to simplify its business, strengthen the balance sheet and improve long-term structural profitability. In October, the Company completed the repositioning of about $325 million of available-for-sale securities. Additionally, the Company has signed a letter of intent to sell its mortgage warehouse business, which is expected to generate a gain-on-sale. Details on these actions, the use of proceeds, and the expected financial impact are available in the Company's third quarter 2024 investor presentation published at investor.horizonbank.com.

 
Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
  Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
  2024   2024   2024   2023   2023
Income statement:                  
Net interest income $ 46,910     $ 45,279     $ 43,288     $ 42,257     $ 42,090  
Credit loss expense   1,044       2,369       805       1,274       263  
Non-interest income   11,511       10,485       9,929       (20,449 )     11,830  
Non-interest expense   39,272       37,522       37,107       39,330       36,168  
Income tax expense   (75 )     1,733       1,314       6,419       1,284  
Net income $ 18,180     $ 14,140     $ 13,991     $ (25,215 )   $ 16,205  
                   
Per share data:                  
Basic earnings per share $ 0.42     $ 0.32     $ 0.32     $ (0.58 )   $ 0.37  
Diluted earnings per share   0.41       0.32       0.32       (0.58 )     0.37  
Cash dividends declared per common share   0.16       0.16       0.16       0.16       0.16  
Book value per common share   17.27       16.62       16.49       16.47       15.89  
Market value - high   16.57       12.74       14.44       14.65       12.68  
Market value - low   11.89       11.29       11.75       9.33       9.90  
Weighted average shares outstanding - Basic   43,712,059       43,712,059       43,663,610       43,649,585       43,646,609  
Weighted average shares outstanding - Diluted   44,112,321       43,987,187       43,874,036       43,649,585       43,796,069  
Common shares outstanding (end of period)   43,712,059       43,712,059       43,726,380       43,652,063       43,648,501  
                   
Key ratios:                  
Return on average assets   0.92 %     0.73 %     0.72 %   (1.27)        %     0.81 %
Return on average stockholders' equity   9.80       7.83       7.76       (14.23 )     8.99  
Total equity to total assets   9.52       9.18       9.18       9.06       8.71  
Total loans to deposit ratio   83.92       85.70       82.78       78.01       76.52  
Allowance for credit losses to HFI loans   1.10       1.08       1.09       1.13       1.14  
Annualized net charge-offs of average total loans(1)   0.03       0.05       0.04       0.07       0.07  
Efficiency ratio   67.22       67.29       69.73       180.35       67.08  
                   
Key metrics (Non-GAAP)(2) :                  
Net FTE interest margin   2.66 %     2.64 %     2.50 %     2.43 %     2.41 %
Return on average tangible common equity   12.65       10.18       10.11       (18.76 )     11.79  
Tangible common equity to tangible assets   7.58       7.22       7.20       7.08       6.72  
Tangible book value per common share $ 13.46     $ 12.80     $ 12.65     $ 12.60     $ 12.00  
                   
                   
(1) Average total loans includes loans held for investment and held for sale.
(2) Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures.
 

Income Statement Highlights

Net Interest Income

Net interest income was $46.9 million in the third quarter of 2024, compared to $45.3 million in the second quarter of 2024, driven by net growth in average interest earning assets of $117.5 million and continued net FTE interest margin expansion during the quarter. Horizon’s net FTE interest margin1 was 2.66% for the third quarter of 2024, compared to 2.64% for the second quarter of 2024, attributable to the favorable mix shift in average interest earning assets toward higher-yielding loans and in the average funding mix toward lower-cost deposit balances. Interest accretion from the fair value of acquired loans did not contribute significantly to the third quarter net interest income, or net FTE interest margin.

Provision for Credit Losses

During the third quarter of 2024, the Company recorded a provision for credit losses of $1.0 million. This compares to a provision for credit losses of $2.4 million during the second quarter of 2024, and $0.3 million during the third quarter of 2023. The decrease in the provision for credit losses during the third quarter of 2024 when compared with the second quarter of 2024 was primarily attributable to less total loan growth in the current quarter relative to the prior quarter.

For the third quarter of 2024, the allowance for credit losses included net charge-offs of $0.4 million, or an annualized 0.03% of average loans outstanding, compared to net charge-offs of $0.6 million, or an annualized 0.05% of average loans outstanding for the second quarter of 2024, and net charge-offs of $0.7 million, or an annualized 0.07% of average loans outstanding, in the third quarter of 2023.

The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.10% at September 30, 2024, compared to 1.08% at June 30, 2024 and 1.14% at September 30, 2023.

Non-Interest Income

For the Quarter Ended September 30,   June 30,   March 31,   December 31,   September 30,
(Dollars in Thousands) 2024   2024   2024   2023   2023
Non-interest Income                  
Service charges on deposit accounts $ 3,320     $ 3,130     $ 3,214     $ 3,092     $ 3,086  
Wire transfer fees   123       113       101       103       120  
Interchange fees   3,511       3,826       3,109       3,224       3,186  
Fiduciary activities   1,394       1,372       1,315       1,352       1,206  
Gains (losses) on sale of investment securities                     (31,572 )      
Gain on sale of mortgage loans   1,622       896       626       951       1,582  
Mortgage servicing income net of impairment   412       450       439       724       631  
Increase in cash value of bank owned life insurance   349       318       298       658       1,055  
Other income   780       380       827       1,019       964  
Total non-interest income $ 11,511     $ 10,485     $ 9,929     $ (20,449 )   $ 11,830  
                                       

Total non-interest income was $11.5 million in the third quarter of 2024, compared to $10.5 million in the second quarter of 2024, due primarily to higher realized gains on sale of mortgage loans and increased other income.

_________________________1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

Non-Interest Expense

For the Quarter Ended September 30,   June 30,   March 31,   December 31,   September 30,
(Dollars in Thousands) 2024   2024   2024   2023   2023
Non-interest Expense                  
Salaries and employee benefits $ 21,829     $ 20,583     $ 20,268     $ 21,877     $ 20,058  
Net occupancy expenses   3,207       3,192       3,546       3,260       3,283  
Data processing   2,977       2,579       2,464       2,942       2,999  
Professional fees   676       714       607       772       707  
Outside services and consultants   3,677       3,058       3,359       2,394       2,316  
Loan expense   1,034       1,038       719       1,345       1,120  
FDIC insurance expense   1,204       1,315       1,320       1,200       1,300  
Core deposit intangible amortization   844       844       872       903       903  
Other losses   297       515       16       508       188  
Other expense   3,527       3,684       3,936       4,129       3,294  
Total non-interest expense $ 39,272     $ 37,522     $ 37,107     $ 39,330     $ 36,168  
                                       

Total non-interest expense was $39.3 million in the third quarter of 2024, compared with $37.5 million in the second quarter of 2024. The increase in non-interest expense during the third quarter of 2024 was primarily driven by a $1.2 million increase in salaries and employee benefits expense, which is partially attributable to a legacy benefits program expense, and a $0.6 million increase in outside services and consultants expense related to strategic initiatives.

Income Taxes

Horizon's effective tax rate was -0.4% for the third quarter of 2024, as compared to 10.9% for the second quarter of 2024. The decrease in the effective tax rate during the third quarter was primarily due to an increase in net realizable tax credits for the current year, which reduced the Company's estimated annual effective tax rate.

Balance Sheet

Total assets increased by $14.9 million, or 0.2%, to $7.93 billion as of September 30, 2024, from $7.91 billion as of June 30, 2024. The increase in total assets is primarily due to increases in federal funds sold of $79.5 million, or 230.6%, to $113.9 million as of September 30, 2024, compared to $34.5 million as of June 30, 2024. The increase in federal funds sold during the period was partially offset by a decrease in other assets of $46.6 million, or 28.1%, to $119.0 million as of September 30, 2024, from $165.7 million as of June 30, 2024.

Total investment securities remained unchanged, at $2.4 billion as of September 30, 2024, compared to June 30, 2024, as the positive market impact to available for sale securities was offset by normal pay-downs and maturities. There were no purchases of investment securities during the third quarter of 2024.

Total loans HFI and loans held for sale were relatively consistent at $4.8 billion as of September 30, 2024 compared to $4.8 billion as of June 30, 2024, as growth in commercial loans of $9.5 million were offset by a decline in consumer loans of $43.3 million.

Total deposit balances increased by $96.9 million, or 1.7%, to $5.7 billion as of September 30, 2024 when compared to balances as of June 30, 2024. Non-interest bearing deposit balances were essentially unchanged during the quarter.

Total borrowings decreased by $86.4 million, or 7.0%, to $1.1 billion as of September 30, 2024, primarily related to the repayment of a portion of Federal Home Loan Bank advances, when compared to balances as of June 30, 2024.

Capital

The following table presents the consolidated regulatory capital ratios of the Company for the previous three quarters:

For the Quarter Ended September 30,   June 30,   March 31, December 31,
  2024*   2024   2024** 2023**
Consolidated Capital Ratios            
Total capital (to risk-weighted assets)   13.52 %     13.41 %     13.75 %   14.04 %
Tier 1 capital (to risk-weighted assets)   11.70 %     11.59 %     11.89 %   12.13 %
Common equity tier 1 capital (to risk-weighted assets)   10.74 %     10.63 %     10.89 %   11.11 %
Tier 1 capital (to average assets)   9.01 %     9.02 %     8.91 %   8.61 %
*Preliminary estimate - may be subject to change  
**Prior periods were previously revised (see disclosure in Form 10-Q for the quarterly period ending June 30, 2024)  
   

As of September 30, 2024, the ratio of total stockholders’ equity to total assets is 9.52%. Book value per common share was $17.27, increasing $0.65 during the third quarter of 2024.

Tangible common equity1 totaled $588.5 million at September 30, 2024, and the ratio of tangible common equity to tangible assets1 was 7.58% at September 30, 2024, up from 7.22% at June 30, 2024. Tangible book value, which excludes intangible assets from total equity, per common share1 was $13.46, increasing $0.66 during the third quarter of 2024.

Credit Quality

As of September 30, 2024, total non-accrual loans increased by $5.3 million, or 29.0%, from June 30, 2024, to 0.49% of total loans HFI. Total non-performing assets increased $5.1 million, or 25.0%, to $25.6 million, compared to $20.5 million as of June 30, 2024. The ratio of non-performing assets to total assets increased to 0.32% compared to 0.26% as of June 30, 2024.

As of September 30, 2024, net charge-offs decreased by $0.2 million to $0.4 million, compared to $0.6 million as of June 30, 2024 and remain just 0.03% annualized of average loans.

_________________________1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

Earnings Conference Call

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

Participants may access the live conference call on October 24, 2024 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 1-412-317-5772 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 November 1, 2024. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 1–412–317-0088 from other international locations, and entering the access code 9847279.

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.9 billion-asset commercial 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 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, as well as equipment financing solutions for customers regionally and nationally, 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.

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, pre-tax, pre-provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them. We believe that this shows the impact of such events as acquisition-related purchase accounting adjustments and swap termination fees, 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.

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: current financial conditions within the banking industry; 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; the aggregate effects of elevated inflation levels in recent years; 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; macroeconomic conditions and their impact on Horizon and its customers; 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; 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 the Israel and Hamas 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 website (www.sec.gov). 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.

   
  Condensed Consolidated Statements of Income
  (Dollars in Thousands Except Per Share Data, Unaudited)
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,   September 30,   September 30,
  2024   2024   2024   2023   2023   2024   2023
Interest Income                          
Loans receivable $ 75,488     $ 71,880     $ 66,954     $ 65,583     $ 63,003     $ 214,322     $ 178,961  
Investment securities - taxable   8,133       7,986       7,362       8,157       8,788       23,481       26,253  
Investment securities - tax-exempt   6,310       6,377       6,451       6,767       7,002       19,138       21,617  
Other   957       738       4,497       3,007       1,332       6,192       1,960  
Total interest income   90,888       86,981       85,264       83,514       80,125       263,133       228,791  
Interest Expense                          
Deposits   30,787       28,447       27,990       27,376       24,704       87,224       58,481  
Borrowed funds   11,131       11,213       11,930       11,765       11,224       34,274       30,713  
Subordinated notes   830       829       831       870       880       2,490       2,641  
Junior subordinated debentures issued to capital trusts   1,230       1,213       1,225       1,246       1,227       3,668       3,469  
Total interest expense   43,978       41,702       41,976       41,257       38,035       127,656       95,304  
Net Interest Income   46,910       45,279       43,288       42,257       42,090       135,477       133,487  
Provision for loan losses   1,044       2,369       805       1,274       263       4,218       1,185  
Net Interest Income after Provision for Loan Losses   45,866       42,910       42,483       40,983       41,827       131,259       132,302  
Non-interest Income                          
Service charges on deposit accounts   3,320       3,130       3,214       3,092       3,086       9,664       9,135  
Wire transfer fees   123       113       101       103       120       337       345  
Interchange fees   3,511       3,826       3,109       3,224       3,186       10,446       9,637  
Fiduciary activities   1,394       1,372       1,315       1,352       1,206       4,081       3,728  
Gains (losses) on sale of investment securities                     (31,572 )                 (480 )
Gain on sale of mortgage loans   1,622       896       626       951       1,582       3,144       3,372  
Mortgage servicing income net of impairment   412       450       439       724       631       1,301       1,984  
Increase in cash value of bank owned life insurance   349       318       298       658       1,055       965       3,051  
Other income   780       380       827       1,019       964       1,987       1,675  
Total non-interest income   11,511       10,485       9,929       (20,449 )     11,830       31,925       32,447  
Non-interest Expense                          
Salaries and employee benefits   21,829       20,583       20,268       21,877       20,058       62,680       58,932  
Net occupancy expenses   3,207       3,192       3,546       3,260       3,283       9,945       10,095  
Data processing   2,977       2,579       2,464       2,942       2,999       8,020       8,684  
Professional fees   676       714       607       772       707       1,997       1,873  
Outside services and consultants   3,677       3,058       3,359       2,394       2,316       10,094       7,548  
Loan expense   1,034       1,038       719       1,345       1,120       2,791       3,635  
FDIC insurance expense   1,204       1,315       1,320       1,200       1,300       3,839       2,680  
Core deposit intangible amortization   844       844       872       903       903       2,560       2,709  
Other losses   297       515       16       508       188       828       543  
Other expense   3,527       3,684       3,936       4,129       3,294       11,147       10,255  
Total non-interest expense   39,272       37,522       37,107       39,330       36,168       113,901       106,954  
Income /(Loss) Before Income Taxes   18,105       15,873       15,305       (18,796 )     17,489       49,283       57,795  
Income tax expense   (75 )     1,733       1,314       6,419       1,284       2,972       4,599  
Net Income /(Loss) $ 18,180     $ 14,140     $ 13,991     $ (25,215 )   $ 16,205     $ 46,311     $ 53,196  
Basic Earnings /(Loss) Per Share $ 0.42     $ 0.32     $ 0.32     $ (0.58 )   $ 0.37     $ 1.06     $ 1.22  
Diluted Earnings/(Loss) Per Share   0.41       0.32       0.32       (0.58 )     0.37       1.05       1.21  
                                                       
  Condensed Consolidated Balance Sheets
  (Dollars in Thousands)
  September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023
Assets                  
Interest earning assets                  
Federal funds sold $ 113,912     $ 34,453     $ 161,704     $ 401,672     $ 71,576  
Interest earning deposits   12,107       4,957       9,178       12,071       4,718  
Interest earning time deposits   735       1,715       1,715       2,205       2,207  
Federal Home Loan Bank stock   53,826       53,826       53,826       34,509       34,509  
Investment securities, available for sale   541,170       527,054       535,319       547,251       865,168  
Investment securities, held to maturity   1,888,379       1,904,281       1,925,725       1,945,638       1,966,483  
Loans held for sale   2,069       2,440       922       1,418       2,828  
Gross loans held for investment (HFI)   4,803,996       4,822,840       4,618,175       4,417,630       4,359,002  
Total Interest earning assets   7,416,194       7,351,566       7,306,564       7,362,394       7,306,491  
Non-interest earning assets                  
Allowance for credit losses   (52,881 )     (52,215 )     (50,387 )     (50,029 )     (49,699 )
Cash   108,815       106,691       100,206       112,772       98,843  
Cash value of life insurance   37,115       36,773       36,455       36,157       149,212  
Other assets   119,026       165,656       160,593       177,061       152,280  
Goodwill   155,211       155,211       155,211       155,211       155,211  
Other intangible assets   11,067       11,910       12,754       13,626       14,530  
Premises and equipment, net   93,544       93,695       94,303       94,583       94,716  
Interest receivable   39,366       43,240       40,008       38,710       37,850  
Total non-interest earning assets   511,263       560,961       549,143       578,091       652,943  
Total assets $ 7,927,457     $ 7,912,527     $ 7,855,707     $ 7,940,485     $ 7,959,434  
Liabilities                  
Savings and money market deposits $ 3,420,827     $ 3,364,726     $ 3,350,673     $ 3,369,149     $ 3,322,788  
Time deposits   1,220,653       1,178,389       1,136,121       1,179,739       1,250,606  
Borrowings   1,142,744       1,229,165       1,219,812       1,217,020       1,214,016  
Repurchase agreements   122,399       128,169       139,309       136,030       142,494  
Subordinated notes   55,703       55,668       55,634       55,543       59,007  
Junior subordinated debentures issued to capital trusts   57,423       57,369       57,315       57,258       57,201  
Total interest earning liabilities   6,019,749       6,013,486       5,958,864       6,014,739       6,046,112  
Non-interest bearing deposits   1,085,535       1,087,040       1,093,076       1,116,005       1,126,703  
Interest payable   11,400       11,240       7,853       22,249       16,281  
Other liabilities   55,951       74,096       74,664       68,680       76,969  
Total liabilities   7,172,635       7,185,862       7,134,457       7,221,673       7,266,065  
Stockholders’ Equity                  
Preferred stock                            
Common stock                            
Additional paid-in capital   358,453       357,673       356,599       356,400       355,478  
Retained earnings   454,050       442,977       435,927       429,021       461,325  
Accumulated other comprehensive income (loss)   (57,681 )     (73,985 )     (71,276 )     (66,609 )     (123,434 )
Total stockholders’ equity   754,822       726,665       721,250       718,812       693,369  
Total liabilities and stockholders’ equity $ 7,927,457     $ 7,912,527     $ 7,855,707     $ 7,940,485     $ 7,959,434  
                                       
  Loans and Deposits        
  (Dollars in Thousands, Unaudited)        
  September 30,   June 30,   March 31,   December 31,   September 30,   % Change
  2024   2024   2024   2023   2023   Q3'24 vs Q2'24   Q3'24 vs Q3'23
Commercial:                          
Commercial real estate $ 2,105,459     $ 2,117,772     $ 1,984,723     $ 1,962,097     $ 1,916,056       (1 )%     10 %
Commercial & Industrial   808,600       786,788       765,043       712,863       673,188       3 %     20 %
Total commercial   2,914,059       2,904,560       2,749,766       2,674,960       2,589,244       %     13 %
Residential Real estate   801,356       797,956       782,071       681,136       675,399       %     19 %
Mortgage warehouse   80,437       68,917       56,548       45,078       65,923       17 %     22 %
Consumer   1,008,144       1,051,407       1,029,790       1,016,456       1,028,436       (4 )%     (2 )%
Total loans held for investment   4,803,996       4,822,840       4,618,175       4,417,630       4,359,002       %     10 %
Loans held for sale   2,069       2,440       922       1,418       2,828       (15 )%     (27 )%
Total loans $ 4,806,065     $ 4,825,280     $ 4,619,097     $ 4,419,048     $ 4,361,830       %     10 %
                           
Deposits:                          
Interest bearing deposits                          
Savings and money market deposits $ 3,420,827     $ 3,364,726     $ 3,350,673     $ 3,369,149     $ 3,322,788       2 %     3 %
Time deposits   1,220,653       1,178,389       1,136,121       1,179,739       1,250,606       4 %     (2 )%
Total Interest bearing deposits   4,641,480       4,543,115       4,486,794       4,548,888       4,573,394       2 %     1 %
Non-interest bearing deposits                          
Non-interest bearing deposits   1,085,535       1,087,040       1,093,076       1,116,005       1,126,703       %     (4 )%
Total deposits $ 5,727,015     $ 5,630,155     $ 5,579,870     $ 5,664,893     $ 5,700,097       2 %     %
                                                       
  Average Balance Sheet
  (Dollars in Thousands, Unaudited)
  Three Months Ended
  September 30, 2024   June 30, 2024   September 30, 2023
  Average Balance Interest(4) Average Rate(4)   Average Balance Interest(4) Average Rate(4)   Average Balance Interest(4) Average Rate(4)
Assets
Interest earning assets                      
Federal funds sold $ 64,743   $ 860     5.28 %   $ 47,805   $ 645     5.43 %   $ 92,305   $ 1,247     5.36 %
Interest earning deposits   8,781     97     4.39 %     7,662     93     4.88 %     8,018     85     4.21 %
Federal Home Loan Bank stock   53,826     1,607     11.88 %     53,827     1,521     11.36 %     34,509     618     7.10 %
Investment securities - taxable (1)   1,301,830     6,526     1.99 %     1,309,305     6,465     1.99 %     1,650,081     8,170     1.96 %
Investment securities - non-taxable (1)   1,125,295     7,987     2.82 %     1,132,065     8,072     2.87 %     1,220,998     8,863     2.88 %
Total investment securities   2,427,125     14,513     2.38 %     2,441,370     14,537     2.39 %     2,871,079     17,033     2.35 %
Loans receivable (2) (3)   4,775,788     75,828     6.32 %     4,662,124     72,208     6.23 %     4,280,700     63,254     5.89 %
Total interest earning assets $ 7,330,263   $ 92,905     5.04 %   $ 7,212,788   $ 89,004     4.96 %   $ 7,286,611   $ 82,237     4.59 %
Non-interest earning assets                      
Cash and due from banks $ 108,609         $ 108,319         $ 100,331      
Allowance for credit losses   (52,111 )         (50,334 )         (49,705 )    
Other assets   471,259           508,555           587,514      
Total average assets $ 7,858,020         $ 7,779,328         $ 7,924,751      
                       
Liabilities and Stockholders' Equity
Interest bearing liabilities                      
Interest bearing deposits $ 3,386,177   $ 18,185     2.14 %   $ 3,334,490   $ 16,814     2.03 %   $ 3,267,594   $ 12,661     1.54 %
Time deposits   1,189,148     12,602     4.22 %     1,134,590     11,633     4.12 %     1,271,104     12,043     3.76 %
Borrowings   1,149,952     10,221     3.54 %     1,184,172     10,278     3.49 %     1,180,452     10,399     3.50 %
Repurchase agreements   123,524     910     2.93 %     125,144     935     3.00 %     136,784     825     2.39 %
Subordinated notes   55,681     830     5.93 %     55,647     829     5.99 %     58,983     880     5.92 %
Junior subordinated debentures issued to capital trusts   57,389     1,230     8.53 %     57,335     1,213     8.51 %     57,166     1,227     8.52 %
Total interest bearing liabilities $ 5,961,871   $ 43,978     2.93 %   $ 5,891,378   $ 41,702     2.85 %   $ 5,972,083   $ 38,035     2.53 %
Non-interest bearing liabilities
Demand deposits $ 1,083,214         $ 1,080,676         $ 1,159,241      
Accrued interest payable and other liabilities   74,563           80,942           77,942      
Stockholders' equity   738,372           726,332           715,485      
Total average liabilities and stockholders' equity $ 7,858,020         $ 7,779,328         $ 7,924,751      
Net FTE interest income (non-GAAP) (5)   $ 48,927         $ 47,302         $ 44,202    
Less FTE adjustments (4)     2,017           2,023           2,112    
Net Interest Income   $ 46,910         $ 45,279         $ 42,090    
Net FTE interest margin (Non-GAAP) (4)(5)       2.66 %         2.64 %         2.41 %
 
(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.
(2) Includes fees on loans held for sale and held for investment. 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.
(4) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate
(5) Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
 
  Credit Quality        
  (Dollars in Thousands Except Ratios, Unaudited)        
  Quarter Ended        
  September 30,   June 30,   March 31,   December 31,   September 30,   % Change
  2024   2024   2024   2023   2023   3Q24 vs 2Q24   3Q24 vs 3Q23
Non-accrual loans                          
Commercial $ 6,830     $ 4,321     $ 5,493     $ 7,362     $ 6,919       58 %     (1 )%
Residential Real estate   9,529       8,489       8,725       8,058       7,644       12 %     25 %
Mortgage warehouse                                 %     %
Consumer   7,208       5,453       4,835       4,290       4,493       32 %     60 %
Total non-accrual loans   23,567       18,263       19,053       19,710       19,056       29 %     24 %
90 days and greater delinquent - accruing interest   819       1,039       108       559       392       (21 )%     109 %
Total non-performing loans   24,386       19,302       19,161       20,269       19,448       26 %     25 %
                           
Other real estate owned                          
Commercial $ 1,158     $ 1,111     $ 1,124     $ 1,124     $ 1,287       4 %     (10 )%
Residential Real estate                     182       32       %     (100 )%
Mortgage warehouse                                 %     %
Consumer   36       57       50       205       72       (37 )%     (50 )%
Total other real estate owned $ 1,194     $ 1,168     $ 1,174     $ 1,511     $ 1,391       2 %     (14 )%
                           
Total non-performing assets $ 25,580     $ 20,470     $ 20,335     $ 21,780     $ 20,839       25 %     23 %
                           
Loan data:                          
Accruing 30 to 89 days past due loans $ 18,087     $ 19,785     $ 15,154     $ 16,595     $ 13,089       (9 )%     38 %
Substandard loans   59,775       51,221       47,469       49,526       47,563       17 %     26 %
Net charge-offs (recoveries)                          
Commercial   (55 )     57       (57 )     233       142       (196 )%     (139 )%
Residential Real estate   (9 )     (4 )     (5 )     21       (39 )     (125 )%     77 %
Mortgage warehouse                                 %     %
Consumer   439       534       488       531       619       (18 )%     (29 )%
Total net charge-offs   375       587       426       785       722       (36 )%     (48 )%
                           
Allowance for credit losses                          
Commercial   32,854       31,941       30,514       29,736       29,472       3 %     11 %
Residential Real estate   2,675       2,588       2,655       2,503       2,794       3 %     (4 )%
Mortgage warehouse   862       736       659       481       714       17 %     21 %
Consumer   16,490       16,950       16,559       17,309       16,719       (3 )%     (1 )%
Total allowance for credit losses $ 52,881     $ 52,215     $ 50,387     $ 50,029     $ 49,699       1 %     6 %
                           
Credit quality ratios                          
Non-accrual loans to HFI loans   0.49 %     0.38 %     0.41 %     0.45 %     0.44 %        
Non-performing assets to total assets   0.32 %     0.26 %     0.26 %     0.27 %     0.26 %        
Annualized net charge-offs of average total loans   0.03 %     0.05 %     0.04 %     0.07 %     0.07 %        
Allowance for credit losses to HFI loans   1.10 %     1.08 %     1.09 %     1.13 %     1.14 %        
                                               
Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin
(Dollars in Thousands, Unaudited)
    Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,
    2024   2024   2024   2023   2023
Interest income (GAAP) (A) $ 90,888     $ 86,981     $ 85,264     $ 83,514     $ 80,125  
Taxable-equivalent adjustment:                    
Investment securities - tax exempt (1)     1,677       1,695       1,715       1,799       1,861  
Loan receivable (2)     340       328       353       314       251  
Interest income (non-GAAP) (B)   92,905       89,004       87,332       85,627       82,237  
Interest expense (GAAP) (C)   43,978       41,702       41,976       41,257       38,035  
Net interest income (GAAP) (D) =(A) - (C)   46,910       45,279       43,288       42,257       42,090  
Net FTE interest income (non-GAAP) (E) = (B) - (C)   48,927       47,302       45,356       44,370       44,202  
Average interest earning assets (F)   7,330,263       7,212,788       7,293,559       7,239,034       7,286,611  
Net FTE interest margin (non-GAAP) (G) = (E*) / (F)   2.66 %     2.64 %     2.50 %     2.43 %     2.41 %
                     
(1) The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity
(2) The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment
*Annualized
 
Non–GAAP Reconciliation of Return on Average Tangible Common Equity
(Dollars in Thousands, Unaudited)
    Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,
    2024   2024   2024   2023   2023
                     
Net income (loss) (GAAP) (A) $ 18,180     $ 14,140     $ 13,991     $ (25,215 )   $ 16,205  
                     
Average stockholders' equity (B)   738,372       726,332       725,083       702,793       715,485  
Average intangible assets (C)   166,819       167,659       168,519       169,401       170,301  
Average tangible equity (Non-GAAP) (D) = (B) - (C) $ 571,553     $ 558,673     $ 556,564     $ 533,392     $ 545,184  
Return on average tangible common equity ("ROACE") (non-GAAP) (E) = (A*) / (D)   12.65 %     10.18 %     10.11 %   (18.76 )%     11.79 %
*Annualized                    
                     
Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets
(Dollars in Thousands, Unaudited)
    Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,
    2024   2024   2024   2023   2023
Total stockholders' equity (GAAP) (A) $ 754,822     $ 726,665     $ 721,250     $ 718,812     $ 693,369  
Intangible assets (end of period) (B)   166,278       167,121       167,965       168,837       169,741  
Total tangible common equity (non-GAAP) (C) = (A) - (B) $ 588,544     $ 559,544     $ 553,285     $ 549,975     $ 523,628  
                     
Total assets (GAAP) (D)   7,927,457       7,912,527       7,855,707       7,940,485       7,959,434  
Intangible assets (end of period) (B)   166,278       167,121       167,965       168,837       169,741  
Total tangible assets (non-GAAP) (E) = (D) - (B) $ 7,761,179     $ 7,745,406     $ 7,687,742     $ 7,771,648     $ 7,789,693  
                     
Tangible common equity to tangible assets (Non-GAAP) (G) = (C) / (E)   7.58 %     7.22 %     7.20 %     7.08 %     6.72 %
                                         
Non–GAAP Reconciliation of Tangible Book Value Per Share
(Dollars in Thousands, Unaudited)
    Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,
    2024   2024   2024   2023   2023
Total stockholders' equity (GAAP) (A) $ 754,822     $ 726,665     $ 721,250     $ 718,812     $ 693,369  
Intangible assets (end of period) (B)   166,278       167,121       167,965       168,837       169,741  
Total tangible common equity (non-GAAP) (C) = (A) - (B) $ 588,544     $ 559,544     $ 553,285     $ 549,975     $ 523,628  
Common shares outstanding (D)   43,712,059       43,712,059       43,726,380       43,652,063       43,648,501  
                     
Tangible book value per common share (non-GAAP) (E) = (C) / (D) $ 13.46     $ 12.80     $ 12.65     $ 12.60     $ 12.00  
                                         
Contact: John R. Stewart, CFA
  EVP, Chief Financial Officer
Phone: (219) 814–5833
Fax: (219) 874–9280
Date: October 23, 2024
   
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