ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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The LLC |
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☒ |
Accelerated Filer |
☐ | |||
Non-Accelerated Filer |
☐ |
Smaller Reporting Company |
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Emerging Growth Company |
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Document |
Part of Form 10-K into which portion of document is incorporated | |
Portions of the Registrant’s Proxy Statement to be filed for its |
Part III | |
May 7, 2020 annual meeting of shareholders |
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Item 1A |
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Item 1B |
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Item 2 |
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Item 3 |
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Item 4 |
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Special Item: |
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Item 5 |
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Item 6 |
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Item 7 |
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Item 7A |
63 |
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Item 8 |
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Item 9 |
139 |
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Item 9A |
139 |
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Item 9B |
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Item 10 |
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Item 11 |
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Item 12 |
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Item 13 |
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Item 14 |
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Item 15 |
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Item 16 |
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145 |
• | economic conditions and their impact on Horizon and its customers; |
• | changes in the level and volatility of interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; |
• | rising interest rates and their impact on mortgage loan volumes and the outflow of deposits; |
• | loss of key Horizon personnel; |
• | increases in disintermediation, as new technologies allow consumers to complete financial transactions without the assistance of banks; |
• | loss of fee income, including interchange fees, as new and emerging alternative payment platforms (e.g., Apple Pay or Bitcoin) take a greater market share of the payment systems; |
• | estimates of fair value of certain of Horizon’s assets and liabilities; |
• | volatility and disruption in financial markets; |
• | prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets; |
• | sources of liquidity; |
• | potential risk of environmental liability related to lending and acquisition activities; |
• | changes in the competitive environment in Horizon’s market areas and among other financial service providers; |
• | legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular, including the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act; |
• | the impact of whole or partial dismantling of provisions of the Dodd-Frank Act under the current federal administration, including the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act; |
• | the impact of the Basel III capital rules; |
• | changes in regulatory supervision and oversight, including monetary policy and capital requirements; |
• | changes in accounting policies or procedures as may be adopted and required by regulatory agencies; |
• | rapid technological developments and changes; |
• | the risks presented by cyber terrorism and data security breaches; |
• | the rising costs of effective cybersecurity; |
• | containing costs and expenses; |
• | the slowing or failure of economic recovery; |
• | the ability of the U.S. federal government to manage federal debt limits; |
• | the potential influence on the U.S. financial markets and economy from the effects of global warming; |
• | the potential influence on the U.S. financial markets and economy from 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 in 2021 of the London Interbank Offered Rate (“LIBOR”); |
• | the risks of expansion through mergers and acquisitions, including unexpected credit quality problems with acquired loans, difficulty integrating acquired operations and material differences in the actual financial results of such transactions compared with Horizon’s initial expectations, including the full realization of anticipated cost savings; |
INDIANA |
MICHIGAN |
|||||||||||||||||
County |
Number of Institutions |
Horizon Market Share |
County |
Number of Institutions |
Horizon Market Share |
|||||||||||||
Allen |
21 |
0.68 |
% | Berrien |
9 |
9.21 |
% | |||||||||||
Bartholomew |
9 |
7.92 |
% | Cass |
5 |
5.84 |
% | |||||||||||
Carroll |
6 |
27.23 |
% | Ingham |
17 |
2.38 |
% | |||||||||||
Cass |
6 |
19.91 |
% | Kalamazoo |
15 |
1.58 |
% | |||||||||||
DeKalb |
11 |
18.69 |
% | Kent |
26 |
0.45 |
% | |||||||||||
Elkhart |
17 |
0.30 |
% | Midland |
8 |
13.99 |
% | |||||||||||
Fountain |
4 |
10.40 |
% | Ottawa |
16 |
0.32 |
% | |||||||||||
Grant |
7 |
9.11 |
% | Saginaw |
13 |
0.89 |
% | |||||||||||
Hamilton |
27 |
0.29 |
% | St. Joseph |
9 |
5.18 |
% | |||||||||||
Howard |
10 |
3.83 |
% | |||||||||||||||
Johnson |
19 |
11.92 |
% | |||||||||||||||
Kosciusko |
10 |
5.90 |
% | |||||||||||||||
La Porte |
8 |
59.15 |
% | |||||||||||||||
LaGrange |
4 |
4.79 |
% | |||||||||||||||
Lake |
16 |
1.65 |
% | |||||||||||||||
Marion |
23 |
0.79 |
% | |||||||||||||||
Noble |
6 |
7.17 |
% | |||||||||||||||
Porter |
11 |
11.00 |
% | |||||||||||||||
St. Joseph |
15 |
0.23 |
% | |||||||||||||||
Tippecanoe |
16 |
7.57 |
% | |||||||||||||||
Whitley |
8 |
7.28 |
% |
Actual |
Required for Capital 1 Adequacy Purposes |
Required For Capital 1 Adequacy Purposes with Capital Buffer |
Well Capitalized Under Prompt 1 Corrective Action Provisions |
|||||||||||||||||||||||||||||
December 31, 2019 |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
$ | 548,364 |
13.95 |
% | $ | 314,395 |
8.00 |
% | $ | 412,644 |
10.50 |
% | N/A |
N/A |
||||||||||||||||||
Bank |
497,227 |
12.65 |
% | 314,452 |
8.00 |
% | 412,718 |
10.50 |
% | $ | 393,065 |
10.00 |
% | |||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
530,643 |
13.50 |
% | 235,796 |
6.00 |
% | 334,044 |
8.50 |
% | N/A |
N/A |
|||||||||||||||||||||
Bank |
479,506 |
12.20 |
% | 235,823 |
6.00 |
% | 334,082 |
8.50 |
% | 314,430 |
8.00 |
% | ||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
473,150 |
12.04 |
% | 176,846 |
4.50 |
% | 275,094 |
7.00 |
% | N/A |
N/A |
|||||||||||||||||||||
Bank |
479,506 |
12.20 |
% | 176,867 |
4.50 |
% | 275,126 |
7.00 |
% | 255,475 |
6.50 |
% | ||||||||||||||||||||
Tier 1 capital 1 (to average assets) |
||||||||||||||||||||||||||||||||
Consolidated |
530,643 |
10.50 |
% | 202,111 |
4.00 |
% | 202,111 |
4.00 |
% | N/A |
N/A |
|||||||||||||||||||||
Bank |
479,506 |
9.49 |
% | 202,110 |
4.00 |
% | 202,110 |
4.00 |
% | 252,638 |
5.00 |
% |
1 |
As defined by regulatory agencies |
I. |
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL |
II. |
INVESTMENT PORTFOLIO |
A. | The following is a schedule of the amortized cost and fair value of investment securities available for sale and held to maturity. |
December 31, 2019 |
December 31, 2018 |
December 31, 2017 |
||||||||||||||||||||||
(dollars in thousands) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
||||||||||||||||||
Available for sale |
||||||||||||||||||||||||
U.S. Treasury and federal agencies |
$ | 1,415 |
$ | 1,413 |
$ | 16,815 |
$ | 16,608 |
$ | 19,277 |
$ | 19,052 |
||||||||||||
State and municipal |
396,931 |
405,768 |
210,386 |
209,303 |
148,045 |
149,564 |
||||||||||||||||||
Federal agency collateralized mortgage obligations |
267,272 |
269,252 |
187,563 |
185,003 |
132,871 |
130,365 |
||||||||||||||||||
Federal agency mortgage-backed pools |
145,623 |
146,572 |
183,479 |
178,736 |
211,487 |
208,657 |
||||||||||||||||||
Private labeled mortgage-backed pools |
— |
— |
— |
— |
1,650 |
1,642 |
||||||||||||||||||
Corporate notes |
10,848 |
11,771 |
10,666 |
10,698 |
272 |
385 |
||||||||||||||||||
Total available for sale |
822,089 |
834,776 |
608,909 |
600,348 |
513,602 |
509,665 |
||||||||||||||||||
Total held to maturity |
207,899 |
215,147 |
210,112 |
208,273 |
200,448 |
201,085 |
||||||||||||||||||
Total investment securities |
$ | 1,029,988 |
$ | 1,049,923 |
$ | 819,021 |
$ | 808,621 |
$ | 714,050 |
$ | 710,750 |
||||||||||||
B. | The following is a schedule of maturities of each category of available for sale and held-to-maturity debt securities and the related weighted-average yield of such securities as of December 31, 2019: |
One Year or Less |
After One Year Through Five Years |
After Five Years Through Ten Years |
After Ten Years |
|||||||||||||||||||||||||||||
(dollars in thousands) |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
||||||||||||||||||||||||
Available for sale |
||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies (1) |
$ | — |
0.00 |
% | $ | 1,413 |
1.50 |
% | $ | — |
0.00 |
% | $ | — |
0.00 |
% | ||||||||||||||||
State and municipal |
36,006 |
2.04 |
% | 39,661 |
2.44 |
% | 112,412 |
3.68 |
% | 217,689 |
3.39 |
% | ||||||||||||||||||||
Federal agency collateralized mortgage obligations (2) |
— |
0.00 |
% | — |
0.00 |
% | 48,207 |
2.55 |
% | 221,045 |
3.42 |
% | ||||||||||||||||||||
Federal agency mortgage-backed pools (2) |
— |
0.00 |
% | 5,038 |
2.75 |
% | 70,750 |
2.48 |
% | 70,784 |
3.25 |
% | ||||||||||||||||||||
Corporate notes |
— |
0.00 |
% | 1,535 |
3.24 |
% | 9,732 |
2.88 |
% | 503 |
0.00 |
% | ||||||||||||||||||||
Total available for sale |
36,006 |
2.04 |
% | 47,647 |
2.47 |
% | 241,101 |
3.07 |
% | 510,021 |
3.38 |
% | ||||||||||||||||||||
Total held to maturity |
7,874 |
3.52 |
% | 66,048 |
3.52 |
% | 100,110 |
3.83 |
% | 41,115 |
3.33 |
% | ||||||||||||||||||||
Total investment securities |
$ | 43,880 |
2.30 |
% | $ | 113,695 |
3.08 |
% | $ | 341,211 |
3.29 |
% | $ | 551,136 |
3.38 |
% | ||||||||||||||||
(1) |
Fair value is based on contractual maturity or call date where a call option exists |
(2) |
Maturity based upon final maturity date |
III. |
LOAN PORTFOLIO |
A. |
Types of Loans Total loans on the balance sheet are comprised of the following classifications for the years indicated. |
(dollars in thousands) |
December 31 2019 |
December 31 2018 |
December 31 2017 |
December 31 2016 |
December 31 2015 |
|||||||||||||||
Commercial |
$ | 2,046,651 |
$ | 1,721,590 |
$ | 1,669,934 |
$ | 1,069,956 |
$ | 804,995 |
||||||||||
Real estate |
770,717 |
668,141 |
609,739 |
531,874 |
437,144 |
|||||||||||||||
Mortgage warehouse |
150,293 |
74,120 |
94,508 |
135,727 |
144,692 |
|||||||||||||||
Consumer |
669,180 |
549,481 |
460,999 |
398,429 |
362,300 |
|||||||||||||||
Total loans |
3,636,841 |
3,013,332 |
2,835,180 |
2,135,986 |
1,749,131 |
|||||||||||||||
Allowance for loan losses |
(17,667) |
(17,820) |
(16,394) |
(14,837) |
(14,534) |
|||||||||||||||
Loans, net |
$ | 3,619,174 |
$ | 2,995,512 |
$ | 2,818,786 |
$ | 2,121,149 |
$ | 1,734,597 |
||||||||||
B. |
Maturities and Sensitivities of Loans to Changes in Interest Rates The following is a schedule of maturities and sensitivities of loans to changes in interest rates, excluding real estate mortgage, mortgage warehouse and consumer loans, as of December 31, 2019: |
(dollars in thousands) |
One Year or Less |
One Through Five Years |
After Five Years |
Total |
||||||||||||
Maturing or repricing Commercial, financial, agricultural and commercial tax-exempt loans |
$ | 1,303,544 |
$ | 676,459 |
$ | 66,648 |
$ | 2,046,651 |
(dollars in thousands) |
Fixed Rate |
Variable Rate |
||||||
Total commercial, financial, agricultural, and commercial tax-exempt loansdue after one year |
$ | 479,727 |
$ | 263,380 |
December 31 |
December 31 |
December 31 |
December 31 |
December 31 |
||||||||||||||||
(dollars in thousands) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
Non-performing loans |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
More than 90 days past due |
$ | — |
$ | 208 |
$ | — |
$ | 183 |
$ | — |
||||||||||
Non-accrual |
4,782 |
6,094 |
6,902 |
2,249 |
5,030 |
|||||||||||||||
Trouble debt restructuring - accruing |
1,484 |
109 |
1 |
— |
60 |
|||||||||||||||
Trouble debt restructuring - non-accrual |
1,081 |
492 |
451 |
— |
1,915 |
|||||||||||||||
Real estate |
||||||||||||||||||||
More than 90 days past due |
1 |
180 |
— |
— |
1 |
|||||||||||||||
Non-accrual |
7,614 |
2,846 |
3,693 |
2,959 |
4,354 |
|||||||||||||||
Trouble debt restructuring - accruing |
1,561 |
1,558 |
1,672 |
1,254 |
808 |
|||||||||||||||
Trouble debt restructuring - non-accrual |
708 |
423 |
351 |
809 |
1,074 |
|||||||||||||||
Mortgage warehouse |
||||||||||||||||||||
More than 90 days past due |
— |
— |
— |
— |
— |
|||||||||||||||
Non-accrual |
— |
— |
— |
— |
— |
|||||||||||||||
Trouble debt restructuring - accruing |
— |
— |
— |
— |
— |
|||||||||||||||
Trouble debt restructuring - non-accrual |
— |
— |
— |
— |
— |
|||||||||||||||
Consumer |
||||||||||||||||||||
More than 90 days past due |
145 |
180 |
167 |
58 |
27 |
|||||||||||||||
Non-accrual |
3,283 |
2,608 |
2,681 |
2,728 |
2,878 |
|||||||||||||||
Trouble debt restructuring - accruing |
309 |
335 |
285 |
238 |
350 |
|||||||||||||||
Trouble debt restructuring - non-accrual |
217 |
142 |
211 |
205 |
183 |
|||||||||||||||
Total non-performing loans |
21,185 |
15,175 |
16,414 |
10,683 |
16,680 |
|||||||||||||||
Other real estate owned and repossessed collateral |
||||||||||||||||||||
Commercial |
3,698 |
1,967 |
578 |
542 |
161 |
|||||||||||||||
Real estate |
28 |
60 |
200 |
2,648 |
3,046 |
|||||||||||||||
Mortgage warehouse |
— |
— |
— |
— |
— |
|||||||||||||||
Consumer |
— |
48 |
60 |
26 |
— |
|||||||||||||||
Total other real estate owned and repossessed collateral |
3,726 |
2,075 |
838 |
3,216 |
3,207 |
|||||||||||||||
Total non-performing assets |
$ | 24,911 |
$ | 17,250 |
$ | 17,252 |
$ | 13,899 |
$ | 19,887 |
(dollars in thousands) |
||||
Gross interest income that would have been recorded on non-accrual loans outstanding as of December 31, 2019, in the period if the loans had been current, in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period. |
$ | 1,129 |
||
Interest income actually recorded on non-accrual loans outstanding as of December 31, 2019, and included in net income for the period. |
808 |
|||
Interest income not recognized during the period on non-accrual loans outstanding as of December 31, 2019. |
$ | 321 |
||
1. | From time to time, the Bank obtains information which may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of such, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. Further, it is management’s policy to place a commercial loan on a non-accrual status when delinquent in excess of 90 days or management has determined that the borrower’s ability to continue to make payments is in doubt. The officer responsible for the loan, the Executive Vice President and Chief Commercial Banking, Officer and the senior commercial loan workout officer must review all loans placed on non-accrual status. |
2. | Potential Problem Loans: |
3. | Foreign Outstandings: |
4. | Loan Concentrations: |
D. | Other Interest-Bearing Assets |
IV. |
SUMMARY OF LOAN LOSS EXPERIENCE |
A. | The following is an analysis of the activity in the allowance for loan losses account: |
December 31 |
December 31 |
December 31 |
December 31 |
December 31 |
||||||||||||||||
(dollars in thousands) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
Loans outstanding at the end of the period (1) |
$ | 3,636,841 |
$ | 3,013,332 |
$ | 2,835,180 |
$ | 2,135,986 |
$ | 1,749,131 |
||||||||||
Average loans outstanding during the period (1) |
3,500,649 |
2,910,741 |
2,335,126 |
1,948,580 |
1,593,790 |
(1) |
Net of unearned income and deferred loan fees |
December 31 |
December 31 |
December 31 |
December 31 |
December 31 |
||||||||||||||||
(dollars in thousands) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
Balance at beginning of the period |
$ | 17,820 |
$ | 16,394 |
$ | 14,837 |
$ | 14,534 |
$ | 16,501 |
||||||||||
Loans charged-off: |
||||||||||||||||||||
Commercial |
863 |
473 |
629 |
758 |
3,437 |
|||||||||||||||
Real estate |
93 |
76 |
89 |
213 |
288 |
|||||||||||||||
Consumer |
2,312 |
2,003 |
1,535 |
1,689 |
2,374 |
|||||||||||||||
Total loans charged-off |
3,268 |
2,552 |
2,253 |
2,660 |
6,099 |
|||||||||||||||
Recoveries of loans previously charged-off: |
||||||||||||||||||||
Commercial |
199 |
176 |
298 |
210 |
192 |
|||||||||||||||
Real estate |
46 |
27 |
44 |
97 |
69 |
|||||||||||||||
Consumer |
894 |
869 |
998 |
814 |
709 |
|||||||||||||||
Total loan recoveries |
1,139 |
1,072 |
1,340 |
1,121 |
970 |
|||||||||||||||
Net loans charged-off |
2,129 |
1,480 |
913 |
1,539 |
5,129 |
|||||||||||||||
Provision charged to operating expense |
1,976 |
2,906 |
2,470 |
1,842 |
3,162 |
|||||||||||||||
Balance at end of the period |
$ | 17,667 |
$ | 17,820 |
$ | 16,394 |
$ | 14,837 |
$ | 14,534 |
||||||||||
Percent of net charge-offs to average loans outstanding for the period |
0.06 |
% | 0.05 |
% | 0.04 |
% | 0.07 |
% | 0.26 |
% |
B. | The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and the percentage of loans in each category to total loans. |
December 31, 2019 |
December 31, 2018 |
December 31, 2017 |
||||||||||||||||||||||
(dollars in thousands) |
Allowance Amount |
% of Loans to Total Loans |
Allowance Amount |
% of Loans to Total Loans |
Allowance Amount |
% of Loans to Total Loans |
||||||||||||||||||
Commercial, financial and agricultural |
$ | 11,996 |
68 |
% | $ | 10,495 |
59 |
% | $ | 9,093 |
56 |
% | ||||||||||||
Real estate |
923 |
5 |
% | 1,676 |
9 |
% | 2,188 |
13 |
% | |||||||||||||||
Mortgage warehousing |
1,077 |
6 |
% | 1,006 |
6 |
% | 1,030 |
6 |
% | |||||||||||||||
Consumer |
3,671 |
21 |
% | 4,643 |
26 |
% | 4,083 |
25 |
% | |||||||||||||||
Unallocated |
— |
— |
— |
— |
— |
— |
||||||||||||||||||
Total |
$ | 17,667 |
100 |
% | $ | 17,820 |
100 |
% | $ | 16,394 |
100 |
% | ||||||||||||
December 31, 2016 |
December 31, 2015 |
|||||||||||||||
(dollars in thousands) |
Allowance Amount |
% of Loans to Total Loans |
Allowance Amount |
% of Loans to Total Loans |
||||||||||||
Commercial, financial and agricultural |
$ | 6,579 |
45 |
% | $ | 7,195 |
49 |
% | ||||||||
Real estate |
2,090 |
14 |
% | 2,476 |
17 |
% | ||||||||||
Mortgage warehousing |
1,254 |
8 |
% | 1,007 |
7 |
% | ||||||||||
Consumer |
4,914 |
33 |
% | 3,856 |
27 |
% | ||||||||||
Unallocated |
— |
— |
— |
— |
||||||||||||
Total |
$ | 14,837 |
100 |
% | $ | 14,534 |
100 |
% | ||||||||
V. |
DEPOSITS |
VI. |
RETURN ON EQUITY AND ASSETS |
VII |
SHORT TERM BORROWINGS |
December 31 |
December 31 |
|||||||
(dollars in thousands) |
2019 |
2018 |
||||||
Outstanding at year-end |
$ | 90,941 |
$ | 52,116 |
||||
Approximate weighted-average interest rate at year-end |
0.70 |
% | 0.64 |
% | ||||
Highest amount outstanding as of any month-end during the year |
$ | 97,301 |
$ | 61,383 |
||||
Approximate average outstanding during the year |
81,264 |
51,385 |
||||||
Approximate weighted-average interest during the year |
0.84 |
% | 0.43 |
% |
• | Credit risk |
• | Market risk |
• | Liquidity risk |
• | Operational risk |
• | Economic risk |
• | Compliance risk |
• | Regulatory risk |
• | Fiduciary risk: |
• | increases in loan delinquencies and foreclosures; |
• | declines in the value of real estate and other collateral securing loans; |
• | an increase in loans charged off; |
• | an increase in the Company’s expense to fund loan loss reserves; |
• | an increase in collection costs; |
• | a decline in the demand for our products and services; and |
• | an increase in non-accrual loans and other real estate owned. |
• | potential exposure to unknown or contingent liabilities of the target company; |
• | exposure to potential asset quality issues of the target company; |
• | potential disruption to our business; |
• | potential diversion of our management’s time and attention away from day-to-day operations; |
• | the possible loss of key employees, business and customers of the target company; |
• | difficulty in estimating the value of the target company; and |
• | potential problems in integrating the target company’s data processing and ancillary systems, customers and employees with ours. |
• | variations in our operating results or the quality of our assets; |
• | operating results that vary from the expectations of management, securities analysts and investors; |
• | increases in loan losses, non-performing loans and other real estate owned; |
• | changes in the U.S. corporate tax rates; |
• | changes in expectations as to our future financial performance; |
• | announcements of new products, strategic developments, new technology, acquisitions and other material events by us or our competitors; |
• | ability to fund Horizon’s assets through core deposits and/or wholesale funding; |
• | the operating and securities price performance of other companies that investors believe are comparable to us; |
• | our inclusion on the Russell 3000 or other indices; |
• | actual or anticipated sales of our equity or equity-related securities; |
• | our past and future dividend practice; |
• | our creditworthiness; |
• | interest rates; |
• | the credit, mortgage and housing markets, and the markets for securities relating to mortgages or housing; |
• | developments with respect to financial institutions generally; and |
• | economic, financial, geopolitical, regulatory, congressional or judicial events that affect us or the financial markets. |
Craig M. Dwight |
63 |
Chairman of Horizon since July 2014; Chairman and Chief Executive Officer of the Bank since January 2003; Chief Executive Officer of Horizon and the Bank since July 2001; President of the Bank from 1998 to January 2003. | ||||
James D. Neff |
60 |
President of Horizon and the Bank since January 2018; Executive Vice President – Consumer and Mortgage Banking of the Bank from 2016 to January 2018; Executive Vice President – Mortgage Banking of the Bank from January 2004 to 2016; Senior Vice President of the Bank from October 1999 to January 2004; Corporate Secretary of Horizon from 2007 to 2017. | ||||
Mark E. Secor |
53 |
Executive Vice President of Horizon since January 2014 ; | ||||
Kathie A. DeRuiter |
58 |
Executive Vice President of Horizon and Senior Bank Operations Officer since January 2014; Senior Vice President, Senior Bank Operations Officer from January 2003 to January 2014; Vice President, Senior Bank Operations Officer from January 2000 to January 2003. | ||||
Dennis J. Kuhn |
60 |
Executive Vice President and Chief Commercial Banking Officer since October 2017; Regional Market President for Michigan and Northeast Indiana from February 2014 to October 2017; Chair of the Regional Loan Committee; Market President for Kalamazoo, Michigan from May 2010 to October 2017. | ||||
Todd A. Etzler |
53 |
Senior Vice President and General Counsel since July 2018; Vice President and General Counsel since March 2017; Corporate Secretary since January 2018. General Counsel of Family Express Corporation from July 2011 to March 2017. |
Index |
December 31 2014 |
December 31 2015 |
December 31 2016 |
December 31 2017 |
December 31 2018 |
December 31 2019 |
||||||||||||||||||
Horizon Bancorp, Inc. |
100.00 |
108.88 |
167.30 |
169.07 |
146.83 |
181.60 |
||||||||||||||||||
Russell 2000 Index |
100.00 |
95.59 |
115.95 |
132.94 |
118.30 |
148.49 |
||||||||||||||||||
SNL Bank $1B-$5B Index |
100.00 |
111.94 |
161.04 |
171.69 |
150.42 |
182.85 |
||||||||||||||||||
SNL Micro Cap Bank Index |
100.00 |
111.20 |
136.72 |
167.25 |
158.70 |
177.22 |
Index |
December 31 2014 |
December 31 2015 |
December 31 2016 |
December 31 2017 |
December 31 2018 |
December 31 2019 |
||||||||||||||||||
Horizon Bancorp, Inc. |
100.00 |
106.96 |
160.67 |
159.53 |
135.83 |
163.54 |
||||||||||||||||||
Indiana Banks (1) |
100.00 |
111.81 |
156.16 |
186.91 |
190.71 |
201.38 |
||||||||||||||||||
Michigan Banks (1) |
100.00 |
110.52 |
130.62 |
140.61 |
157.23 |
179.68 |
(1) |
excludes merger targets |
Years Ended December 31 |
||||||||||||||||||||
2019 |
2018 |
2017 |
2016 |
2015 |
||||||||||||||||
Earnings |
||||||||||||||||||||
Net interest income |
$ | 160,791 |
$ | 134,569 |
$ | 112,100 |
$ | 85,992 |
$ | 74,734 |
||||||||||
Provision for loan losses |
1,976 |
2,906 |
2,470 |
1,842 |
3,162 |
|||||||||||||||
Non-interest income |
43,058 |
34,413 |
33,136 |
35,455 |
30,402 |
|||||||||||||||
Non-interest expense |
122,032 |
102,516 |
94,813 |
86,892 |
74,193 |
|||||||||||||||
Income tax expense |
13,303 |
10,443 |
14,836 |
8,801 |
7,232 |
|||||||||||||||
Net income |
66,538 |
53,117 |
33,117 |
23,912 |
20,549 |
|||||||||||||||
Preferred stock dividend |
— |
— |
— |
(42 |
) | (125 |
) | |||||||||||||
Net income available to common shareholders |
$ | 66,538 |
$ | 53,117 |
$ | 33,117 |
$ | 23,870 |
$ | 20,424 |
||||||||||
Cash dividends declared |
$ | 20,835 |
$ | 15,418 |
$ | 11,720 |
$ | 8,382 |
$ | 6,216 |
||||||||||
Per Share Data |
||||||||||||||||||||
Basic earnings per share (1) |
$ | 1.53 |
$ | 1.39 |
$ | 0.96 |
$ | 0.79 |
$ | 0.87 |
||||||||||
Diluted earnings per share (1) |
1.53 |
1.38 |
0.95 |
0.79 |
0.84 |
|||||||||||||||
Cash dividends declared per common share (1) |
0.46 |
0.40 |
0.33 |
0.27 |
0.26 |
|||||||||||||||
Book value per common share (1) |
14.59 |
12.82 |
11.93 |
10.25 |
9.47 |
|||||||||||||||
Weighted-average shares outstanding: |
||||||||||||||||||||
Basic (1) |
43,493,316 |
38,347,059 |
34,553,736 |
29,981,592 |
23,648,166 |
|||||||||||||||
Diluted (1) |
43,597,595 |
38,495,231 |
34,760,439 |
30,123,615 |
24,295,968 |
|||||||||||||||
Period End Totals |
||||||||||||||||||||
Loans, net of deferred loan fees and unearned income |
$ | 3,636,841 |
$ | 3,013,332 |
$ | 2,831,995 |
$ | 2,135,986 |
$ | 1,749,131 |
||||||||||
Allowance for loan losses |
17,667 |
17,820 |
16,394 |
14,837 |
14,534 |
|||||||||||||||
Total assets |
5,246,829 |
4,246,688 |
3,964,303 |
3,141,156 |
2,652,401 |
|||||||||||||||
Total deposits |
3,931,002 |
3,139,376 |
2,881,003 |
2,471,210 |
1,880,153 |
|||||||||||||||
Total borrowings |
606,052 |
588,221 |
601,810 |
304,945 |
482,144 |
|||||||||||||||
Ratios |
||||||||||||||||||||
Loan to deposit |
92.62 |
% | 96.02 |
% | 98.30 |
% | 86.43 |
% | 93.03 |
% | ||||||||||
Loan to total funding |
80.25 |
% | 80.87 |
% | 81.31 |
% | 76.94 |
% | 74.04 |
% | ||||||||||
Return on average assets |
1.35 |
% | 1.31 |
% | 0.97 |
% | 0.81 |
% | 0.87 |
% | ||||||||||
Average stockholders’ equity to average total assets |
12.28 |
% | 11.65 |
% | 11.15 |
% | 10.22 |
% | 9.30 |
% | ||||||||||
Return on average stockholders’ equity |
10.98 |
% | 11.22 |
% | 8.74 |
% | 7.92 |
% | 9.87 |
% | ||||||||||
Dividend payout ratio (dividends divided by basic earnings per share) |
31.31 |
% | 29.03 |
% | 34.78 |
% | 34.33 |
% | 29.85 |
% | ||||||||||
Price to book value ratio |
130.27 |
% | 123.09 |
% | 155.28 |
% | 182.13 |
% | 131.26 |
% | ||||||||||
Price to earnings ratio |
12.42x |
11.35x |
19.45x |
23.56x |
14.78x |
(1) | Adjusted for 3:2 stock splits on June 15, 2018 and November 14, 2016. |
• | Net income for the year ended December 31, 2019 was $66.5 million, or $1.53 diluted earnings per share, compared to $53.1 million, or $1.38 diluted earnings per share, for the year ended December 31, 2018. This represents the highest annual net income and diluted earnings per share in the Company’s history. |
• | Core net income for the year 2019 increased 31.6% to $70.7 million, or $1.63 diluted earnings per share, compared to $53.7 million, or $1.40 diluted earnings per share, for the year 2018. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table under the heading “Use of Non-GAAP Financial Measures” below for the definition of core net income.) |
• | Return on average assets was 1.35% for the year ended December 31, 2019 compared to 1.31% for the year ended December 31, 2018. |
• | Core return on average assets for the year ended December 31, 2019 was 1.43% compared to 1.33% for the year ended December 31, 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table under the heading “Use of Non-GAAP Financial Measures” below for the definition of core return on average assets.) |
• | Consumer loans increased at a rate of 21.8%, or $119.7 million, during the year ended December 31, 2019. Excluding acquired loans, consumer loans increased at a rate of 6.3%, or $34.6 million during the year ended December 31, 2019. |
• | Net interest income increased $26.2 million, or 19.5%, to $160.8 million for the year ended December 31, 2019 compared to $134.6 million for the year ended December 31, 2018. |
• | Net interest margin was 3.69% for the year ended December 31, 2019 compared to 3.71% for the year ended December 31, 2018. |
• | Horizon’s tangible book value per share increased to $10.63 at December 31, 2019, compared to $9.43 at December 31, 2018. |
• | On March 26, 2019, Horizon announced the completion of the previously announced acquisition of Salin Bancshares, Inc. (“Salin”) and its wholly-owned subsidiary, Salin Bank and Trust Company (“Salin Bank”), headquartered in Indianapolis, Indiana. |
• | On June 18, 2019, Horizon’s Board of Directors approved an increase in the Company’s quarterly cash dividend from $0.10 to $0.12 per share. |
• | On July 16, 2019, Horizon’s Board of Directors authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of December 31, 2019, Horizon had repurchased a total of 99,407 shares at an average price per share of $16.04. |
Level 1 |
Quoted prices in active markets for identical assets or liabilities. | |||
Level 2 |
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||
Level 3 |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
December 31 2019 |
December 31 2018 |
Dollar Change |
Percent Change |
|||||||||||||
Commercial |
||||||||||||||||
Working capital and equipment |
$ |
938,317 |
$ | 804,083 |
$ | 134,234 |
16.7 |
% | ||||||||
Real estate, including agriculture |
978,891 |
834,037 |
144,854 |
17.4 |
% | |||||||||||
Tax exempt |
63,571 |
48,975 |
14,596 |
29.8 |
% | |||||||||||
Other |
65,872 |
34,495 |
31,377 |
91.0 |
% | |||||||||||
Total |
2,046,651 |
1,721,590 |
325,061 |
18.9 |
% | |||||||||||
Real estate |
||||||||||||||||
1-4 family |
762,571 |
659,754 |
102,817 |
15.6 |
% | |||||||||||
Other |
8,146 |
8,387 |
(241 |
) | -2.9 |
% | ||||||||||
Total |
770,717 |
668,141 |
102,576 |
15.4 |
% | |||||||||||
Consumer |
||||||||||||||||
Auto |
362,729 |
327,413 |
35,316 |
10.8 |
% | |||||||||||
Recreation |
16,262 |
13,975 |
2,287 |
16.4 |
% | |||||||||||
Real estate/home improvement |
43,585 |
39,587 |
3,998 |
10.1 |
% | |||||||||||
Home equity |
237,979 |
163,209 |
74,770 |
45.8 |
% | |||||||||||
Unsecured |
7,286 |
4,043 |
3,243 |
80.2 |
% | |||||||||||
Other |
1,339 |
1,254 |
85 |
6.8 |
% | |||||||||||
Total |
669,180 |
549,481 |
119,699 |
21.8 |
% | |||||||||||
Mortgage warehouse |
150,293 |
74,120 |
76,173 |
102.8 |
% | |||||||||||
Total loans |
3,636,841 |
3,013,332 |
623,509 |
20.7 |
% | |||||||||||
Allowance for loan losses |
(17,667 |
) |
(17,820 |
) | 153 |
-0.9 |
% | |||||||||
Loans, net |
$ |
3,619,174 |
$ | 2,995,512 |
$ | 623,662 |
20.8 |
% | ||||||||
December 31 2019 |
December 31 2018 |
December 31 2017 |
||||||||||
Commercial |
$ | 1,980,948 |
$ | 1,676,013 |
$ | 1,227,698 |
||||||
Real estate |
778,844 |
641,161 |
567,581 |
|||||||||
Mortgage warehouse |
107,259 |
82,240 |
89,212 |
|||||||||
Consumer |
633,598 |
511,327 |
450,635 |
|||||||||
Total average loans |
$ | 3,500,649 |
$ | 2,910,741 |
$ | 2,335,126 |
||||||
December 31, 2019 |
December 31, 2018 |
|||||||||||||||||||||||
Number |
Amount |
Percent of Portfolio |
Number |
Amount |
Percent of Portfolio |
|||||||||||||||||||
SBA guaranteed |
325 |
$ | 65,661 |
3.2 |
% | 322 |
$ | 68,849 |
4.0 |
% | ||||||||||||||
Municipal government |
73 |
63,572 |
3.1 |
% | 2 |
11,600 |
0.7 |
% | ||||||||||||||||
Lines of credit |
1,328 |
407,558 |
19.9 |
% | 1,239 |
306,935 |
17.8 |
% | ||||||||||||||||
Real estate and equipment |
4,456 |
1,509,860 |
73.8 |
% | 4,022 |
1,334,206 |
77.5 |
% | ||||||||||||||||
Total |
6,182 |
$ | 2,046,651 |
100.0 |
% | 5,585 |
$ | 1,721,590 |
100.0 |
% | ||||||||||||||
December 31, 2019 |
December 31, 2018 |
|||||||||||||||||||||||
Amount |
Percent of Portfolio |
Yield |
Amount |
Percent of Portfolio |
Yield |
|||||||||||||||||||
Fixed rate |
||||||||||||||||||||||||
Monthly payment |
$ | 160,742 |
20.9 |
% | 4.33 |
% | $ | 116,102 |
17.4 |
% | 4.38 |
% | ||||||||||||
Biweekly payment |
— |
0.0 |
% | 0.00 |
% | 3 |
0.0 |
% | 7.13 |
% | ||||||||||||||
Adjustable rate |
||||||||||||||||||||||||
Monthly payment |
609,975 |
79.1 |
% | 3.96 |
% | 552,036 |
82.6 |
% | 3.90 |
% | ||||||||||||||
Biweekly payment |
— |
0.0 |
% | 0.00 |
% | — |
0.0 |
% | 0.00 |
% | ||||||||||||||
Subtotal |
770,717 |
100.0 |
% | 4.06 |
% | 668,141 |
100.0 |
% | 3.99 |
% | ||||||||||||||
Loans held for sale |
4,088 |
1,038 |
||||||||||||||||||||||
Total real estate loans |
$ | 774,805 |
$ | 669,179 |
||||||||||||||||||||
December 31 2019 |
December 31 2018 |
December 31 2017 |
||||||||||
Mortgage servicing rights |
||||||||||||
Balances, January 1 |
$ | 12,876 |
$ | 12,189 |
$ | 11,681 |
||||||
Servicing rights capitalized |
3,547 |
1,883 |
2,109 |
|||||||||
Amortization of servicing rights |
(1,377 |
) | (1,196 |
) | (1,601 |
) | ||||||
Balances, December 31 |
15,046 |
12,876 |
12,189 |
|||||||||
Impairment allowance |
||||||||||||
Balances, January 1 |
(527 |
) | (587 |
) | (507 |
) | ||||||
Additions |
(234 |
) | (78 |
) | (85 |
) | ||||||
Reductions |
42 |
138 |
5 |
|||||||||
Balances, December 31 |
(719 |
) | (527 |
) | (587 |
) | ||||||
Mortgage servicing rights, net |
$ | 14,327 |
$ | 12,349 |
$ | 11,602 |
||||||
December 31 2019 |
December 31 2018 |
December 31 2017 |
||||||||||
Non-performing loans |
$ | 21,185 |
$ | 15,175 |
$ | 16,414 |
December 31 2019 |
December 31 2018 |
December 31 2017 |
||||||||||
Other real estate owned |
$ | 3,726 |
$ | 2,027 |
$ | 778 |
December 31 2019 |
December 31 2018 |
|||||||
Assets |
||||||||
Allowance for loan losses |
$ | 4,120 |
$ | 3,831 |
||||
Net operating loss and tax credits (from acquisitions) |
54 |
1,038 |
||||||
Director and employee benefits |
1,890 |
2,392 |
||||||
Unrealized loss on AFS securities and fair value hedge |
— |
2,165 |
||||||
Accrued pension |
775 |
801 |
||||||
Fair value adjustment on acquisitions |
— |
— |
||||||
Other |
2,145 |
670 |
||||||
Total assets |
8,984 |
10,897 |
||||||
Liabilities |
||||||||
Depreciation |
(4,456 |
) | (1,850 |
) | ||||
State tax |
(10 |
) | (137 |
) | ||||
Federal Home Loan Bank stock dividends |
(368 |
) | (330 |
) | ||||
Difference in basis of intangible assets |
(3,427 |
) | (2,919 |
) | ||||
Fair value adjustment on acquisitions |
(2,488 |
) | (62 |
) | ||||
Unrealized gain on AFS securities and fair value hedge |
(1,710 |
) | — |
|||||
Other |
(63 |
) | (119 |
) | ||||
Total liabilities |
(12,522 |
) | (5,417 |
) | ||||
Valuation allowance |
— |
(1,038 |
) | |||||
Net deferred tax asset/(liability) |
$ | (3,538 |
) | $ | 4,442 |
|||
Average Balance Outstanding for the Years Ended December 31 |
Average Rate Paid for the Years Ended December 31 |
|||||||||||||||||||||||
2019 |
2018 |
2017 |
2019 |
2018 |
2017 |
|||||||||||||||||||
Non-interest bearing demand deposits |
$ | 757,389 |
$ | 624,576 |
$ | 533,852 |
||||||||||||||||||
Interest bearing demand deposits |
1,024,099 |
827,255 |
831,292 |
0.68 |
% | 0.30 |
% | 0.14 |
% | |||||||||||||||
Savings deposits |
552,101 |
416,404 |
388,953 |
0.32 |
% | 0.08 |
% | 0.07 |
% | |||||||||||||||
Money market |
483,187 |
403,475 |
310,310 |
1.09 |
% | 0.72 |
% | 0.35 |
% | |||||||||||||||
Time deposits |
948,550 |
771,853 |
515,341 |
2.07 |
% | 1.55 |
% | 1.04 |
% | |||||||||||||||
Total deposits |
$ | 3,765,326 |
$ | 3,043,563 |
$ | 2,579,748 |
||||||||||||||||||
Due in three months or less |
$ | 186,089 |
||
Due after three months through six months |
85,555 |
|||
Due after six months through one year |
115,967 |
|||
Due after one year |
73,824 |
|||
$ | 461,435 |
|||
Total |
Within One Year |
One to Three Years |
Three to Five Years |
After Five Years |
||||||||||||||||
Certificates of deposit |
$ | 975,612 |
$ | 747,022 |
$ | 204,313 |
$ | 22,995 |
$ | 1,282 |
||||||||||
Borrowings (1) |
549,741 |
276,970 |
67,324 |
80,299 |
125,148 |
|||||||||||||||
Subordinated debentures (2) |
56,311 |
— |
— |
— |
56,311 |
(1) |
Includes debt obligations to the Federal Home Loan Bank and term repurchase agreements with maturities beyond one year borrowed by Horizon’s banking subsidiary. See Note 13 in Horizon’s Consolidated Financial Statements at Item 8. |
(2) |
Includes Trust Preferred Capital Securities issued by Horizon Statutory Trusts II and III and those assumed in the acquisitions of Alliance Bank in 2005, American Trust in 2009, Heartland in 2012, LaPorte/City Savings in 2016 and Salin in 2019. |
Expiration by Period |
||||||||
Within One Year |
Greater Than One Year |
|||||||
Letters of credit |
$ | 7,053 |
$ | 10,199 |
||||
Unfunded loan commitments |
310,025 |
648,665 |
Twelve Months Ended December 31, 2019 |
Twelve Months Ended December 31, 2018 |
Twelve Months Ended December 31, 2017 |
||||||||||||||||||||||||||||||||||
Average Balance |
Interest |
Average Rate |
Average Balance |
Interest |
Average Rate |
Average Balance |
Interest |
Average Rate |
||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||
Interest-earning assets |
||||||||||||||||||||||||||||||||||||
Federal funds sold |
$ | 21,301 |
$ | 511 |
2.40 |
% | $ | 4,696 |
$ | 115 |
2.45 |
% | $ | 5,450 |
$ | 80 |
1.47 |
% | ||||||||||||||||||
Interest-earning deposits |
19,601 |
342 |
1.74 |
% | 24,491 |
393 |
1.60 |
% | 23,865 |
301 |
1.26 |
% | ||||||||||||||||||||||||
Investment securities - taxable |
474,833 |
11,753 |
2.48 |
% | 431,970 |
10,113 |
2.34 |
% | 417,993 |
8,705 |
2.08 |
% | ||||||||||||||||||||||||
Investment securities - non-taxable (1) |
454,066 |
12,095 |
3.34 |
% | 326,040 |
8,069 |
3.13 |
% | 292,030 |
7,068 |
3.39 |
% | ||||||||||||||||||||||||
Loans receivable (2)(3)(4) |
3,500,649 |
183,631 |
5.27 |
% | 2,910,741 |
147,478 |
5.08 |
% | 2,335,126 |
112,329 |
4.83 |
% | ||||||||||||||||||||||||
Total interest-earning assets (1) |
4,470,450 |
208,332 |
4.75 |
% | 3,697,938 |
166,168 |
4.56 |
% | 3,074,464 |
128,483 |
4.29 |
% | ||||||||||||||||||||||||
Non-interest-earning assets |
||||||||||||||||||||||||||||||||||||
Cash and due from banks |
62,920 |
44,645 |
42,578 |
|||||||||||||||||||||||||||||||||
Allowance for loan losses |
(18,019 |
) | (16,964 |
) | (15,226 |
) | ||||||||||||||||||||||||||||||
Other assets |
417,707 |
337,016 |
295,057 |
|||||||||||||||||||||||||||||||||
Total average assets |
$ | 4,933,058 |
$ | 4,062,635 |
$ | 3,396,873 |
||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
$ | 3,007,937 |
$ | 33,690 |
1.12 |
% | $ | 2,418,987 |
$ | 18,225 |
0.75 |
% | $ | 2,045,896 |
$ | 7,901 |
0.39 |
% | ||||||||||||||||||
Borrowings |
468,159 |
10,672 |
2.28 |
% | 492,830 |
11,009 |
2.23 |
% | 381,488 |
6,178 |
1.62 |
% | ||||||||||||||||||||||||
Subordinated debentures |
50,134 |
3,179 |
6.34 |
% | 36,547 |
2,365 |
6.47 |
% | 36,362 |
2,304 |
6.34 |
% | ||||||||||||||||||||||||
Total interest-bearing liabilities |
3,526,230 |
47,541 |
1.35 |
% | 2,948,364 |
31,599 |
1.07 |
% | 2,463,746 |
16,383 |
0.66 |
% | ||||||||||||||||||||||||
Non-interest-bearing liabilities |
||||||||||||||||||||||||||||||||||||
Demand deposits |
757,389 |
624,576 |
533,852 |
|||||||||||||||||||||||||||||||||
Accrued interest payable and other liabilities |
43,720 |
16,275 |
20,566 |
|||||||||||||||||||||||||||||||||
Stockholders’ equity |
605,719 |
473,420 |
378,709 |
|||||||||||||||||||||||||||||||||
Total average liabilities and stockholders’ equity |
$ | 4,933,058 |
$ | 4,062,635 |
$ | 3,396,873 |
||||||||||||||||||||||||||||||
Net interest income/spread |
$ | 160,791 |
3.40 |
% | $ | 134,569 |
3.49 |
% | $ | 112,100 |
3.63 |
% | ||||||||||||||||||||||||
Net interest income as a percent of average interest-earning assets (1) |
3.69 |
% | 3.71 |
% | 3.75 |
% |
(1) |
Horizon has no foreign office and, accordingly, no assets or liabilities to foreign operations. Horizon’s subsidiary bank had no funds invested in Eurodollar Certificates of Deposit at December 31, 2019. |
(2) |
Yields are presented on a tax-equivalent basis. |
(3) |
Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. |
(4) |
Loan fees and late fees included in interest on loans aggregated $9.8 million, $7.7 million and $7.1 million in 2019, 2018 and 2017, respectively. |
2019 - 2018 |
2018 - 2017 |
|||||||||||||||||||||||
Total Change |
Change Due To Volume |
Change Due To Rate |
Total Change |
Change Due To Volume |
Change Due To Rate |
|||||||||||||||||||
Interest Income |
||||||||||||||||||||||||
Federal funds sold |
$ | 396 |
$ | 398 |
$ | (2 |
) | $ | 35 |
$ | (12 |
) | $ | 47 |
||||||||||
Interest-earning deposits |
(51 |
) | (83 |
) | 32 |
92 |
8 |
84 |
||||||||||||||||
Investment securities - taxable |
1,640 |
1,040 |
600 |
1,408 |
298 |
1,110 |
||||||||||||||||||
Investment securities - non-taxable |
4,026 |
4,239 |
(213 |
) | 1,001 |
1,100 |
(99 |
) | ||||||||||||||||
Loans receivable |
36,153 |
30,914 |
5,239 |
35,149 |
28,991 |
6,158 |
||||||||||||||||||
Total interest income |
42,164 |
36,508 |
5,656 |
37,685 |
30,385 |
7,300 |
||||||||||||||||||
Interest Expense |
||||||||||||||||||||||||
Interest-bearing deposits |
15,465 |
5,137 |
10,328 |
10,324 |
1,677 |
8,647 |
||||||||||||||||||
Borrowings |
(337 |
) | (559 |
) | 222 |
4,831 |
2,101 |
2,730 |
||||||||||||||||
Subordinated debentures |
814 |
862 |
(48 |
) | 61 |
12 |
49 |
|||||||||||||||||
Total interest expense |
15,942 |
5,440 |
10,502 |
15,216 |
3,790 |
11,426 |
||||||||||||||||||
Net interest income |
$ | 26,222 |
$ | 31,068 |
$ | (4,846 |
) | $ | 22,469 |
$ | 26,595 |
$ | (4,126 |
) | ||||||||||
Twelve Months Ended |
2018 - 2019 |
Twelve Months Ended |
2017 - 2018 |
|||||||||||||||||||||||||||||
Non-interest Income |
December 31 2019 |
December 31 2018 |
Amount Change |
Percent Change |
December 31 2018 |
December 31 2017 |
Amount Change |
Percent Change |
||||||||||||||||||||||||
Service charges on deposit accounts |
$ | 9,959 |
$ | 7,762 |
$ | 2,197 |
28.3 |
% | $ | 7,762 |
$ | 6,383 |
$ | 1,379 |
21.6 |
% | ||||||||||||||||
Wire transfer fees |
653 |
612 |
41 |
6.7 |
% | 612 |
658 |
(46 |
) | -7.0 |
% | |||||||||||||||||||||
Interchange fees |
7,655 |
5,715 |
1,940 |
33.9 |
% | 5,715 |
5,104 |
611 |
12.0 |
% | ||||||||||||||||||||||
Fiduciary activities |
8,580 |
7,827 |
753 |
9.6 |
% | 7,827 |
7,894 |
(67 |
) | -0.8 |
% | |||||||||||||||||||||
Gain (loss) on sale of investment securities |
(75 |
) | (443 |
) | 368 |
-83.1 |
% | (443 |
) | 38 |
(481 |
) | -1265.8 |
% | ||||||||||||||||||
Gain on sale of mortgage loans |
9,208 |
6,613 |
2,595 |
39.2 |
% | 6,613 |
7,906 |
(1,293 |
) | -16.4 |
% | |||||||||||||||||||||
Mortgage servicing net of impairment |
1,914 |
2,120 |
(206 |
) | -9.7 |
% | 2,120 |
1,583 |
537 |
33.9 |
% | |||||||||||||||||||||
Increase in cash surrender value of bank owned life insurance |
2,190 |
1,912 |
278 |
14.5 |
% | 1,912 |
1,797 |
115 |
6.4 |
% | ||||||||||||||||||||||
Death benefit on officer life insurance |
580 |
154 |
426 |
276.6 |
% | 154 |
— |
154 |
100.0 |
% | ||||||||||||||||||||||
Other income |
2,394 |
2,141 |
253 |
11.8 |
% | 2,141 |
1,773 |
368 |
20.8 |
% | ||||||||||||||||||||||
Total non-interest income |
$ | 43,058 |
$ | 34,413 |
$ | 8,645 |
25.1 |
% | $ | 34,413 |
$ | 33,136 |
$ | 1,277 |
3.9 |
% | ||||||||||||||||
Twelve Months Ended |
2018 - 2019 |
Twelve Months Ended |
2017 - 2018 |
|||||||||||||||||||||||||||||
Non-interest Expense |
December 31 2019 |
December 31 2018 |
Amount Change |
Percent Change |
December 31 2018 |
December 31 2017 |
Amount Change |
Percent Change |
||||||||||||||||||||||||
Salaries |
$ | 46,319 |
$ | 40,857 |
$ | 5,462 |
13.4 |
% | $ | 40,857 |
$ | 36,503 |
$ | 4,354 |
11.9 |
% | ||||||||||||||||
Commission and bonuses |
6,861 |
5,547 |
1,314 |
23.7 |
% | 5,547 |
6,225 |
(678 |
) | -10.9 |
% | |||||||||||||||||||||
Employee benefits |
12,026 |
10,219 |
1,807 |
17.7 |
% | 10,219 |
8,647 |
1,572 |
18.2 |
% | ||||||||||||||||||||||
Net occupancy expenses |
12,157 |
10,482 |
1,675 |
16.0 |
% | 10,482 |
9,535 |
947 |
9.9 |
% | ||||||||||||||||||||||
Data processing |
8,480 |
6,816 |
1,664 |
24.4 |
% | 6,816 |
5,914 |
902 |
15.3 |
% | ||||||||||||||||||||||
Professional fees |
1,946 |
1,926 |
20 |
1.0 |
% | 1,926 |
2,490 |
(564 |
) | -22.7 |
% | |||||||||||||||||||||
Outside services and consultants |
8,152 |
5,271 |
2,881 |
54.7 |
% | 5,271 |
7,018 |
(1,747 |
) | -24.9 |
% | |||||||||||||||||||||
Loan expense |
8,633 |
6,341 |
2,292 |
36.1 |
% | 6,341 |
4,970 |
1,371 |
27.6 |
% | ||||||||||||||||||||||
FDIC deposit insurance |
252 |
1,444 |
(1,192 |
) | -82.5 |
% | 1,444 |
1,046 |
398 |
38.0 |
% | |||||||||||||||||||||
Other losses |
740 |
665 |
75 |
11.3 |
% | 665 |
368 |
297 |
80.7 |
% | ||||||||||||||||||||||
Other expenses |
16,466 |
12,948 |
3,518 |
27.2 |
% | 12,948 |
12,097 |
851 |
7.0 |
% | ||||||||||||||||||||||
Total non-interest expense |
$ | 122,032 |
$ | 102,516 |
$ | 19,516 |
19.0 |
% | $ | 102,516 |
$ | 94,813 |
$ | 7,703 |
8.1 |
% | ||||||||||||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Non-GAAP Reconciliation of Net Interest Margin |
||||||||||||
Net interest income as reported |
$ | 160,791 |
$ | 134,569 |
$ | 112,100 |
||||||
Average interest-earning assets |
4,470,450 |
3,697,938 |
3,074,464 |
|||||||||
Net interest income as a percentage of average interest-earning assets (“Net Interest Margin”) |
3.69 |
% | 3.71 |
% | 3.75 |
% | ||||||
Acquisition-related purchase accounting adjustments (“PAUs”) |
(5,590 |
) | (6,089 |
) | (3,484 |
) | ||||||
Core net interest income |
155,201 |
128,480 |
108,616 |
|||||||||
Core net interest margin |
3.57 |
% | 3.54 |
% | 3.64 |
% | ||||||
December 31 2019 |
September 30 2019 |
June 30 2019 |
March 31 2019 |
December 31 2018 |
||||||||||||||||
Total stockholders’ equity |
$ | 656,023 |
$ | 642,711 |
$ | 626,461 |
$ | 609,468 |
$ | 491,992 |
||||||||||
Less: Intangible assets |
177,917 |
178,896 |
179,776 |
176,864 |
130,270 |
|||||||||||||||
Total tangible stockholders’ equity |
$ | 478,106 |
$ | 463,815 |
$ | 446,685 |
$ | 432,604 |
$ | 361,722 |
||||||||||
Common shares outstanding |
44,975,771 |
44,969,021 |
45,061,372 |
45,052,747 |
38,375,407 |
|||||||||||||||
Tangible book value per common share |
$ | 10.63 |
$ | 10.31 |
$ | 9.91 |
$ | 9.60 |
$ | 9.43 |
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Non-GAAP Reconciliation of Net Income |
||||||||||||
Net income as reported |
$ | 66,538 |
$ | 53,117 |
$ | 33,117 |
||||||
Merger expenses |
5,650 |
487 |
3,656 |
|||||||||
Tax effect |
(987 |
) | (102 |
) | (1,003 |
) | ||||||
Net income excluding merger expenses |
71,201 |
53,502 |
35,770 |
|||||||||
(Gain)/loss on sale of investment securities |
75 |
443 |
(38 |
) | ||||||||
Tax effect |
(16 |
) | (93 |
) | 13 |
|||||||
Net income excluding loss on sale of investment securities |
71,260 |
53,852 |
35,745 |
|||||||||
Death benefit on bank owned life insurance (“BOLI”) |
(580 |
) | (154 |
) | — |
|||||||
Net income excluding death benefit on BOLI |
70,680 |
53,698 |
35,745 |
|||||||||
Core Net Income |
$ | 70,680 |
$ | 53,698 |
$ | 37,719 |
||||||
Non-GAAP Reconciliation of Diluted Earnings per Share |
||||||||||||
Diluted earnings per share (“EPS”) as reported |
$ | 1.53 |
$ | 1.38 |
$ | 0.95 |
||||||
Merger expenses |
0.13 |
0.01 |
0.11 |
|||||||||
Tax effect |
(0.02 |
) | — |
(0.03 |
) | |||||||
Diluted EPS excluding merger expenses |
1.64 |
1.39 |
1.03 |
|||||||||
(Gain)/loss on sale of investment securities |
— |
0.01 |
— |
|||||||||
Tax effect |
— |
— |
— |
|||||||||
Diluted EPS excluding loss on sale of investment securities |
1.64 |
1.40 |
1.03 |
|||||||||
Death benefit on BOLI |
(0.01 |
) | — |
— |
||||||||
Diluted EPS excluding death benefit on BOLI |
1.63 |
1.40 |
1.03 |
|||||||||
Core Diluted EPS |
$ | 1.63 |
$ | 1.40 |
$ | 1.09 |
||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Non-GAAP Reconciliation of Return on Average Assets |
||||||||||||
Average assets |
$ | 4,933,058 |
$ | 4,062,635 |
$ | 3,396,873 |
||||||
Return on average assets (“ROAA”) as reported |
1.35 |
% | 1.31 |
% | 0.97 |
% | ||||||
Merger expenses |
0.11 |
% | 0.01 |
% | 0.11 |
% | ||||||
Tax effect |
-0.02 |
% | 0.00 |
% | -0.03 |
% | ||||||
ROAA excluding merger expenses |
1.44 |
% | 1.32 |
% | 1.05 |
% | ||||||
(Gain)/loss on sale of investment securities |
0.00 |
% | 0.01 |
% | 0.00 |
% | ||||||
Tax effect |
0.00 |
% | 0.00 |
% | 0.00 |
% | ||||||
ROAA excluding loss on sale of investment securities |
1.44 |
% | 1.33 |
% | 1.05 |
% | ||||||
Death benefit on bank owned life insurance (“BOLI”) |
-0.01 |
% | 0.00 |
% | 0.00 |
% | ||||||
ROAA excluding death benefit on BOLI |
1.43 |
% | 1.33 |
% | 1.05 |
% | ||||||
Core ROAA |
1.43 |
% | 1.33 |
% | 1.10 |
% | ||||||
Non-GAAP Reconciliation of Return on Average Common Equity |
||||||||||||
Average Common Equity |
$ | 605,719 |
$ | 473,420 |
$ | 378,709 |
||||||
Return on average common equity (“ROACE”) as reported |
10.98 |
% | 11.22 |
% | 8.74 |
% | ||||||
Merger expenses |
0.93 |
% | 0.10 |
% | 0.97 |
% | ||||||
Tax effect |
-0.16 |
% | -0.02 |
% | -0.26 |
% | ||||||
ROACE excluding merger expenses |
11.75 |
% | 11.30 |
% | 9.45 |
% | ||||||
(Gain)/loss on sale of investment securities |
0.01 |
% | 0.09 |
% | -0.01 |
% | ||||||
Tax effect |
0.00 |
% | -0.02 |
% | 0.00 |
% | ||||||
ROACE excluding loss on sale of investment securities |
11.76 |
% | 11.37 |
% | 9.44 |
% | ||||||
Death benefit on bank owned life insurance (“BOLI”) |
-0.10 |
% | -0.03 |
% | 0.00 |
% | ||||||
ROACE excluding death benefit on BOLI |
11.66 |
% | 11.34 |
% | 9.44 |
% | ||||||
Core ROACE |
11.66 |
% | 11.34 |
% | 9.96 |
% | ||||||
Loan Balance |
Allowance for Loan Losses (ALLL) |
Acquired Loan Discount |
ALLL + Acquired Loan Discount |
Loans, net |
ALLL/ Loan Balance |
Acquired Loan Discount/ Loan Balance |
ALLL+ Acquired Loan Discount/ Loan Balance |
|||||||||||||||||||||||||
Horizon Legacy |
$ | 2,881,650 |
$ | 17,534 |
N/A |
$ | 17,534 |
$ | 2,864,116 |
0.61 |
% | 0.00 |
% | 0.61 |
% | |||||||||||||||||
Heartland |
4,863 |
— |
549 |
549 |
4,314 |
0.00 |
% | 11.29 |
% | 11.29 |
% | |||||||||||||||||||||
Summit |
14,309 |
— |
835 |
835 |
13,474 |
0.00 |
% | 5.84 |
% | 5.84 |
% | |||||||||||||||||||||
Peoples |
66,983 |
— |
1,550 |
1,550 |
65,433 |
0.00 |
% | 2.31 |
% | 2.31 |
% | |||||||||||||||||||||
Kosciusko |
28,249 |
— |
417 |
417 |
27,832 |
0.00 |
% | 1.48 |
% | 1.48 |
% | |||||||||||||||||||||
LaPorte |
62,580 |
— |
2,229 |
2,229 |
60,351 |
0.00 |
% | 3.56 |
% | 3.56 |
% | |||||||||||||||||||||
CNB |
3,210 |
— |
78 |
78 |
3,132 |
0.00 |
% | 2.43 |
% | 2.43 |
% | |||||||||||||||||||||
Lafayette |
57,003 |
— |
496 |
496 |
56,507 |
0.00 |
% | 0.87 |
% | 0.87 |
% | |||||||||||||||||||||
Wolverine |
120,654 |
— |
699 |
699 |
119,955 |
0.00 |
% | 0.58 |
% | 0.58 |
% | |||||||||||||||||||||
Salin |
401,428 |
133 |
13,375 |
13,508 |
387,920 |
0.03 |
% | 3.33 |
% | 3.36 |
% | |||||||||||||||||||||
Total |
$ | 3,640,929 |
$ | 17,667 |
$ | 20,228 |
$ | 37,895 |
$ | 3,603,034 |
0.49 |
% | 0.56 |
% | 1.04 |
% | ||||||||||||||||
• | Horizon had outstanding borrowings of over $392.0 million with the FHLB and total borrowing capacity with the FHLB of $701.6 million. Generally, the loan terms from the FHLB are better than the terms Horizon can receive from other sources, making it less expensive to borrow money from the FHLB. Financial difficulties at the FHLB could reduce or eliminate Horizon’s additional borrowing capacity with the FHLB or the FHLB could change collateral requirements, which could lower the Company’s borrowing availability. |
• | If residential mortgage loan rates remain low, Horizon’s mortgage warehouse loans could create an additional need for funding. |
• | Horizon had a total of $112.0 million of unused Federal Fund lines from various money center banks. These are uncommitted lines and could be withdrawn at any time by the correspondent banks. |
• | Horizon had a total of $95.6 million of available collateral at the FRB secured by municipal securities. These securities may mature, call, or be sold, which would reduce the available collateral. |
• | Horizon had approximately $807.4 million of unpledged investment securities at December 31, 2019. |
• | A downgrade in Horizon’s ability to obtain credit due to factors such as deterioration in asset quality, a large charge to earnings, a decline in profitability or other financial measures, or a significant merger or acquisition could impact the availability of funding sources. |
• | An act of terrorism or war, natural disasters, political events, or the default or bankruptcy of a major corporation, mutual fund, hedge fund or a government agency could affect the cost and availability of funding sources. |
• | Market speculation or rumors about Horizon or the banking industry in general may adversely affect the cost and availability of normal funding sources. |
Total |
Within One Year |
After one but within three years |
After three but within five years |
After five years |
||||||||||||||||
Remaining contractual maturities of time deposits |
$ | 975,612 |
$ | 747,022 |
$ | 204,313 |
$ | 22,995 |
$ | 1,282 |
||||||||||
Borrowings |
549,741 |
276,970 |
67,324 |
80,299 |
125,148 |
|||||||||||||||
Subordinated debentures |
56,311 |
— |
— |
— |
56,311 |
|||||||||||||||
Loan commitments |
958,690 |
310,025 |
648,665 |
— |
— |
|||||||||||||||
Letters of credit |
17,252 |
7,053 |
10,199 |
— |
— |
|||||||||||||||
Total |
$ | 2,557,606 |
$ | 1,340,728 |
$ | 930,844 |
$ | 103,189 |
$ | 182,845 |
||||||||||
3 Months or Less |
> 3 Months & </= 6 Months |
> 6 Months & </= 1 Year |
Greater Than 1 Year |
Total |
||||||||||||||||
Loans |
$ | 1,429,780 |
$ | 213,752 |
$ | 350,923 |
$ | 1,646,474 |
$ | 3,640,929 |
||||||||||
Federal funds sold |
5,646 |
— |
— |
— |
5,646 |
|||||||||||||||
Interest-earning balances with banks |
17,343 |
— |
— |
— |
17,343 |
|||||||||||||||
Investment securities and FHLB stock |
49,549 |
36,893 |
84,662 |
894,018 |
1,065,122 |
|||||||||||||||
Other assets |
— |
— |
— |
517,789 |
517,789 |
|||||||||||||||
Total assets |
$ | 1,502,318 |
$ | 250,645 |
$ | 435,585 |
$ | 3,058,281 |
$ | 5,246,829 |
||||||||||
Noninterest-bearing deposits |
$ | 16,786 |
$ | 16,786 |
$ | 33,572 |
$ | 642,616 |
$ | 709,760 |
||||||||||
Interest-bearing deposits |
376,119 |
292,509 |
399,566 |
2,153,048 |
3,221,242 |
|||||||||||||||
Borrowed funds |
117,874 |
98,950 |
6,086 |
383,142 |
606,052 |
|||||||||||||||
Other liabilities |
— |
— |
— |
53,752 |
53,752 |
|||||||||||||||
Stockholders’ equity |
— |
— |
— |
656,023 |
656,023 |
|||||||||||||||
Total liabilities and stockholders’ equity |
$ | 510,779 |
$ | 408,245 |
$ | 439,224 |
$ | 3,888,581 |
$ | 5,246,829 |
||||||||||
GAP |
$ | 991,539 |
$ | (157,600 |
) | $ | (3,639 |
) | $ | (830,300 |
) | |||||||||
Cumulative GAP |
$ | 991,539 |
$ | 833,939 |
$ | 830,300 |
2025 |
Fair Value December 31 |
|||||||||||||||||||||||||||||||
2020 |
2021 |
2022 |
2023 |
2024 |
& Beyond |
Total |
2019 |
|||||||||||||||||||||||||
Rate-sensitive assets |
||||||||||||||||||||||||||||||||
Fixed interest rate loans |
$ | 689,022 |
$ | 367,287 |
$ | 215,722 |
$ | 131,021 |
$ | 69,181 |
$ | 109,563 |
$ | 1,581,796 |
$ | 1,420,685 |
||||||||||||||||
Average interest rate |
4.89 |
% | 4.83 |
% | 4.96 |
% | 5.01 |
% | 4.97 |
% | 4.78 |
% | 4.89 |
% | ||||||||||||||||||
Variable interest rate loans |
1,319,167 |
148,803 |
133,360 |
107,601 |
99,296 |
250,906 |
2,059,133 |
2,138,354 |
||||||||||||||||||||||||
Average interest rate |
4.70 |
% | 4.36 |
% | 4.46 |
% | 4.52 |
% | 4.27 |
% | 3.87 |
% | 4.53 |
% | ||||||||||||||||||
Total loans |
2,008,189 |
516,090 |
349,082 |
238,622 |
168,477 |
360,469 |
3,640,929 |
3,559,039 |
||||||||||||||||||||||||
Average interest rate |
4.76 |
% | 4.69 |
% | 4.77 |
% | 4.79 |
% | 4.56 |
% | 4.15 |
% | 4.68 |
% | ||||||||||||||||||
Securities, including FHLB stock |
177,407 |
106,642 |
83,685 |
69,485 |
62,792 |
565,111 |
1,065,122 |
1,071,425 |
||||||||||||||||||||||||
Average interest rate |
2.47 |
% | 3.17 |
% | 3.18 |
% | 3.08 |
% | 3.16 |
% | 3.54 |
% | 3.24 |
% | ||||||||||||||||||
Other interest-earning assets |
22,989 |
— |
— |
— |
— |
— |
22,989 |
22,989 |
||||||||||||||||||||||||
Average interest rate |
5.61 |
% | 0.00 |
% | 0.00 |
% | 0.00 |
% | 0.00 |
% | 0.00 |
% | 5.61 |
% | ||||||||||||||||||
Total earning assets |
$ | 2,208,585 |
$ | 622,732 |
$ | 432,767 |
$ | 308,107 |
$ | 231,269 |
$ | 925,580 |
$ | 4,729,040 |
$ | 4,653,453 |
||||||||||||||||
Average interest rate |
4.59 |
% | 4.43 |
% | 4.46 |
% | 4.40 |
% | 4.18 |
% | 3.77 |
% | 4.36 |
% | ||||||||||||||||||
Rate-sensitive liabilities |
||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
$ | 67,145 |
$ | 60,792 |
$ | 55,041 |
$ | 49,834 |
$ | 45,120 |
$ | 431,828 |
$ | 709,760 |
$ | 709,760 |
||||||||||||||||
NOW accounts |
77,857 |
67,689 |
58,849 |
51,163 |
44,481 |
296,109 |
596,148 |
574,709 |
||||||||||||||||||||||||
Average interest rate |
0.15 |
% | 0.15 |
% | 0.15 |
% | 0.15 |
% | 0.15 |
% | 0.15 |
% | 0.15 |
% | ||||||||||||||||||
Savings and money market accounts |
243,331 |
206,992 |
176,134 |
149,924 |
127,656 |
745,445 |
1,649,482 |
1,627,824 |
||||||||||||||||||||||||
Average interest rate |
0.82 |
% | 0.81 |
% | 0.80 |
% | 0.80 |
% | 0.79 |
% | 0.74 |
% | 0.78 |
% | ||||||||||||||||||
Certificates of deposit |
747,006 |
122,957 |
48,181 |
33,175 |
22,995 |
1,298 |
975,612 |
978,235 |
||||||||||||||||||||||||
Average interest rate |
2.05 |
% | 2.15 |
% | 1.90 |
% | 2.28 |
% | 1.93 |
% | 0.76 |
% | 2.06 |
% | ||||||||||||||||||
Total deposits |
1,135,339 |
458,430 |
338,205 |
284,096 |
240,252 |
1,474,680 |
3,931,002 |
3,890,528 |
||||||||||||||||||||||||
Average interest rate |
1.53 |
% | 0.96 |
% | 0.71 |
% | 0.71 |
% | 0.63 |
% | 0.40 |
% | 0.86 |
% | ||||||||||||||||||
Fixed interest rate borrowings |
174,015 |
26,692 |
127,933 |
80 |
80,047 |
50,033 |
458,800 |
460,631 |
||||||||||||||||||||||||
Average interest rate |
1.04 |
% | 2.21 |
% | 1.80 |
% | 3.32 |
% | 1.66 |
% | 2.69 |
% | 1.60 |
% | ||||||||||||||||||
Variable interest rate borrowings |
147,252 |
— |
— |
— |
— |
— |
147,252 |
138,172 |
||||||||||||||||||||||||
Average interest rate |
2.35 |
% | 0.00 |
% | 0.00 |
% | 0.00 |
% | 0.00 |
% | 0.00 |
% | 2.35 |
% | ||||||||||||||||||
Total funds |
$ | 1,456,606 |
$ | 485,122 |
$ | 466,138 |
$ | 284,176 |
$ | 320,299 |
$ | 1,524,713 |
$ | 4,537,054 |
$ | 4,489,331 |
||||||||||||||||
Average interest rate |
1.56 |
% | 1.03 |
% | 1.01 |
% | 0.71 |
% | 0.89 |
% | 0.48 |
% | 0.98 |
% |
Page |
||||
Consolidated Financial Statements |
||||
65 |
||||
66 |
||||
67 |
||||
68 |
||||
69 |
||||
70 |
||||
133 |
||||
138 |
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Assets |
||||||||
Cash and due from banks |
$ |
$ | ||||||
Interest-earning time deposits |
||||||||
Investment securities, available for sale |
||||||||
Investment securities, held to maturity (fair value of $ |
||||||||
Loans held for sale |
||||||||
Loans, net of allowance for loan losses of $ |
||||||||
Premises and equipment, net |
||||||||
Federal Home Loan Bank stock |
||||||||
Goodwill |
||||||||
Other intangible assets |
||||||||
Interest receivable |
||||||||
Cash value of life insurance |
||||||||
Other assets |
||||||||
Total assets |
$ | |||||||
Liabilities |
||||||||
Deposits |
||||||||
Non-interest bearing |
$ |
$ | ||||||
Interest bearing |
||||||||
Total deposits |
||||||||
Borrowings |
||||||||
Subordinated debentures |
||||||||
Interest payable |
||||||||
Other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingent liabilities |
||||||||
Stockholders’ Equity |
||||||||
Preferred stock, Authorized, |
||||||||
Common stock, |
||||||||
Issued |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive income (loss) |
( |
) | ||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | |||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Interest Income |
||||||||||||
Loans receivable |
$ |
|
$ | |
$ | |
||||||
Investment securities |
||||||||||||
Taxable |
|
|
|
|||||||||
Tax exempt |
|
|
|
|||||||||
Total interest income |
|
|
|
|||||||||
Interest Expense |
||||||||||||
Deposits |
|
|
|
|||||||||
Borrowed funds |
|
|
|
|||||||||
Subordinated debentures |
|
|
|
|||||||||
Total interest expense |
|
|
|
|||||||||
Net Interest Income |
|
|
|
|||||||||
Provision for loan losses |
|
|
|
|||||||||
Net Interest Income after Provision for Loan Losses |
|
|
|
|||||||||
Non-interest Income |
||||||||||||
Service charges on deposit accounts |
|
|
|
|||||||||
Wire transfer fees |
|
|
|
|||||||||
Interchange fees |
|
|
|
|||||||||
Fiduciary activities |
|
|
|
|||||||||
Gains (losses) on sale of investment securities (includes $( |
( |
) |
( |
) | |
|||||||
Gain on sale of mortgage loans |
|
|
|
|||||||||
Mortgage servicing income net of impairment |
|
|
|
|||||||||
Increase in cash value of bank owned life insurance |
|
|
|
|||||||||
Death benefit on bank owned life insurance |
|
|
— |
|||||||||
Other income |
|
|
|
|||||||||
Total non-interest income |
|
|
|
|||||||||
Non-interest Expense |
||||||||||||
Salaries and employee benefits |
|
|
|
|||||||||
Net occupancy expenses |
|
|
|
|||||||||
Data processing |
|
|
|
|||||||||
Professional fees |
|
|
|
|||||||||
Outside services and consultants |
|
|
|
|||||||||
Loan expense |
|
|
|
|||||||||
FDIC insurance expense |
|
|
|
|||||||||
Other losses |
|
|
|
|||||||||
Other expense |
|
|
|
|||||||||
Total non-interest expense |
|
|
|
|||||||||
Income Before Income Taxes |
|
|
|
|||||||||
Income tax expense (includes $( |
|
|
|
|||||||||
Net Income Available to Common Shareholders |
$ |
|
$ | |
$ | |
||||||
Basic Earnings Per Share |
$ |
|
$ | |
$ | |
||||||
Diluted Earnings Per Share |
|
|
|
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Net Income |
$ |
|
$ | |
$ | |
||||||
Other Comprehensive Income (Loss) |
||||||||||||
Change in fair value of derivative instruments: |
||||||||||||
Change in fair value of derivative instruments for the period |
( |
) |
( |
) | |
|||||||
Income tax effect |
|
|
( |
) | ||||||||
Changes from derivative instruments |
( |
) |
( |
) | |
|||||||
Change in securities: |
||||||||||||
Unrealized appreciation (depreciation) for the period on AFS securities |
|
( |
) | |
||||||||
Amortization from transfer of securities from available for sale to held to maturity securities |
( |
) |
( |
) | ( |
) | ||||||
Reclassification adjustment for securities (gains) losses realized in income |
|
|
( |
) | ||||||||
Income tax effect |
( |
) |
|
( |
) | |||||||
Unrealized gains (losses) on securities |
|
( |
) | |
||||||||
Other Comprehensive Income (Loss), Net of Tax |
|
( |
) | |
||||||||
Comprehensive Income |
$ |
|
$ | |
$ | |
||||||
Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
|||||||||||||||||||
Balances, January 1, 2017 |
$ |
— |
$ |
— |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||||||||||
Net income |
— |
— |
— |
|
— |
|
||||||||||||||||||
Other comprehensive loss, net of tax |
— |
— |
— |
— |
|
|
||||||||||||||||||
Amortization of unearned compensation |
— |
— |
|
— |
— |
|
||||||||||||||||||
Exercise of stock options |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock option expense |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock issued in Lafayette acquisition |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock issued in Wolverine acquisition |
— |
— |
|
— |
— |
|
||||||||||||||||||
Cash dividends on common stock ($ |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balances, December 31, 2017 |
$ |
— |
$ |
— |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||||||||||
Net income |
— |
— |
— |
|
— |
|
||||||||||||||||||
Other comprehensive loss, net of tax |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||
Amortization of unearned compensation |
— |
— |
|
— |
— |
|
||||||||||||||||||
Exercise of stock options |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock option expense |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock issued stock plans |
— |
— |
|
— |
— |
|
||||||||||||||||||
Reclassification of tax adjustment on accumulated other comprehensive loss |
— |
— |
— |
|
( |
) | — |
|||||||||||||||||
Cash dividends on common stock ($ |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balances, December 31, 2018 |
$ |
— |
$ |
— |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||||||||||
Net income |
— |
— |
— |
|
— |
|
||||||||||||||||||
Other comprehensive income, net of tax |
— |
— |
— |
— |
|
|
||||||||||||||||||
Amortization of unearned compensation |
— |
— |
|
— |
— |
|
||||||||||||||||||
Exercise of stock options |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock option expense |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock issued stock plans |
— |
— |
|
— |
— |
|
||||||||||||||||||
Stock issued in Salin acquisition |
— |
— |
|
— |
— |
|
||||||||||||||||||
Repurchase of outstanding stock |
— |
— |
( |
) | — |
— |
( |
) | ||||||||||||||||
Cash dividends on common stock ($ |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balances, December 31, 2019 |
$ |
— |
$ |
— |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Operating Activities |
||||||||||||
Net income |
$ |
|
$ | |
$ | |
||||||
Items not requiring (providing) cash |
||||||||||||
Provision for loan losses |
|
|
|
|||||||||
Depreciation and amortization |
|
|
|
|||||||||
Share based compensation |
|
|
|
|||||||||
Mortgage servicing rights, net impairment |
|
( |
) | |
||||||||
Premium amortization on securities, net |
|
|
|
|||||||||
Loss (gain) on sale of investment securities |
|
|
( |
) | ||||||||
Gain on sale of mortgage loans |
( |
) |
( |
) | ( |
) | ||||||
Proceeds from sales of loans |
|
|
|
|||||||||
Loans originated for sale |
( |
) |
( |
) | ( |
) | ||||||
Change in cash value life insurance |
( |
) |
( |
) | ( |
) | ||||||
Death benefit on bank owned life insurance |
|
|
— |
|||||||||
Loss (gain) on other real estate owned |
( |
) |
( |
) | ( |
) | ||||||
Net change in: |
||||||||||||
Interest receivable |
( |
) |
( |
) | ( |
) | ||||||
Interest payable |
|
|
|
|||||||||
Other assets |
|
|
|
|||||||||
Other liabilities |
( |
) |
|
( |
) | |||||||
Net cash provided by operating activities |
|
|
|
|||||||||
Investing Activities |
||||||||||||
Purchases of securities available for sale |
( |
) |
( |
) | ( |
) | ||||||
Proceeds from sales, maturities, calls and principal repayments of securities available for sale |
|
|
|
|||||||||
Purchases of securities held to maturity |
— |
( |
) | ( |
) | |||||||
Proceeds from maturities of securities held to maturity |
|
|
|
|||||||||
Net change in interest-earning time deposits |
|
|
|
|||||||||
Change in Federal Reserve and FHLB stock |
( |
) |
|
|
||||||||
Net change in loans |
( |
) |
( |
) | ( |
) | ||||||
Proceeds on the sale of OREO and repossessed assets |
|
|
|
|||||||||
Change in premises and equipment, net |
( |
) |
( |
) | ( |
) | ||||||
Purchases of bank owned life insurance |
— |
( |
) | — |
||||||||
Net cash received in acquisition of branch |
— |
— |
|
|||||||||
Net cash received in acquisition, Lafayette |
— |
— |
|
|||||||||
Gain on remeasurement of equity interest in Lafayette |
— |
— |
( |
) | ||||||||
Net cash received in acquisition, Wolverine |
— |
— |
|
|||||||||
Net cash received in acquisition, Salin |
|
— |
— |
|||||||||
Repurchase of outstanding stock |
( |
) |
— |
— |
||||||||
Net cash provided by (used in) investing activities |
( |
) |
( |
) | ( |
) | ||||||
Financing Activities |
||||||||||||
Net change in: |
||||||||||||
Deposits |
|
|
( |
) | ||||||||
Borrowings |
( |
) |
( |
) | |
|||||||
Proceeds from issuance of stock |
|
|
|
|||||||||
Dividends paid on common stock |
( |
) |
( |
) | ( |
) | ||||||
Net cash provided by (used in) financing activities |
( |
) |
|
|
||||||||
Net Change in Cash and Cash Equivalents |
|
( |
) | |
||||||||
Cash and Cash Equivalents, Beginning of Period |
|
|
|
|||||||||
Cash and Cash Equivalents, End of Period |
$ |
|
$ | |
$ | |
||||||
Additional Supplemental Information |
||||||||||||
Interest paid |
$ |
|
$ | |
$ | |
||||||
Income taxes paid |
|
|
|
|||||||||
Transfer of loans to other real estate and repossessed assets |
|
|
|
|||||||||
Transfer of premises to other real estate |
|
— |
— |
|||||||||
Right-of-use assets exchanged for lease obligations |
|
— |
— |
|||||||||
Sale of securities available for sale not yet settled |
|
|
|
|
|
|
— | |
|
|
— | |
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Basic earnings per share |
||||||||||||
Net income |
$ |
|
$ | |
$ | |
||||||
Weighted average common shares outstanding (1) |
|
|
|
|||||||||
Basic earnings per share |
$ |
|
$ | |
$ | |
||||||
Diluted earnings per share |
||||||||||||
Net income available to common shareholders |
$ |
|
$ | |
$ | |
||||||
Weighted average common shares outstanding (1) |
|
|
|
|||||||||
Effect of dilutive securities: |
||||||||||||
Restricted stock |
|
|
|
|||||||||
Stock options |
|
|
|
|||||||||
Weighted average common shares outstanding |
|
|
|
|||||||||
$ |
|
$ | |
$ | |
|||||||
(1) |
Adjusted for 3:2 stock split on June 15, 2018 |
• |
Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; |
• |
Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; |
• |
Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; |
• |
Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; |
• |
Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and |
• |
Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. |
• | Service charges and fees on deposit accounts – these include general service fees charged for deposit account maintenance and activity and transaction-based fees charged for certain services, such as debit card, wire transfer and overdraft activities. Revenue is recognized when the performance obligation is completed, which is generally after a transaction is completed or monthly for account maintenance services. |
• | Fiduciary activities – this includes periodic fees due from trust and wealth management customers for managing the customers’ financial assets. Fees are charged based on a standard agreement and are recognized as they are earned. |
Assets |
Liabilities |
|||||||||
Cash and due from banks |
$ | |
Deposits |
|||||||
Investment securities, available for sale |
|
Non-interest bearing |
$ | |
||||||
NOW accounts |
|
|||||||||
Loans |
Savings and money market |
|
||||||||
Commercial |
|
Certificates of deposit |
|
|||||||
Residential mortgage |
|
Total deposits |
|
|||||||
Consumer |
|
|||||||||
Total loans |
|
|||||||||
Borrowings |
|
|||||||||
Premises and equipment, net |
|
Subordinated debentures |
|
|||||||
FRB and FHLB stock |
|
Interest payable |
|
|||||||
Goodwill |
|
Other liabilities |
|
|||||||
Core deposit intangible |
|
|||||||||
Interest receivable |
|
|||||||||
Other assets |
|
|||||||||
Total liabilities assumed |
$ | |
||||||||
Total assets purchased |
$ | |
||||||||
Common shares issued |
$ | |
||||||||
Cash paid |
|
|||||||||
Total purchase price |
$ | |
||||||||
Contractually required principal and interest at acquisition |
$ | |
||
Contractual cash flows not expected to be collected (nonaccretable differences) |
|
|||
Expected cash flows at acquisition |
|
|||
Interest component of expected cash flows (accretable discount) |
|
|||
Fair value of acquired loans accounted for under ASC 310-30 |
$ | |
||
Assets |
Liabilities |
|||||||||
Cash and due from banks |
$ | |
Deposits |
|||||||
Non-interest bearing |
$ | |
||||||||
Loans |
NOW accounts |
|
||||||||
Commercial |
|
Savings and money market |
|
|||||||
Residential mortgage |
|
Certificates of deposit |
|
|||||||
Consumer |
|
Total deposits |
|
|||||||
Total loans |
|
|||||||||
Premises and equipment, net |
|
Borrowings |
|
|||||||
FRB and FHLB stock |
|
Interest payable |
|
|||||||
Goodwill |
|
Other liabilities |
|
|||||||
Core deposit intangible |
|
|||||||||
Interest receivable |
|
|||||||||
Other assets |
|
|||||||||
Total assets purchased |
$ | |
Total liabilities assumed |
$ | |
|||||
Common shares issued |
$ | |
||||||||
Cash paid |
|
|||||||||
Total purchase price |
$ | |
||||||||
Contractually required principal and interest at acquisition |
$ | |
||
Contractual cash flows not expected to be collected (nonaccretable differences) |
|
|||
Expected cash flows at acquisition |
|
|||
Interest component of expected cash flows (accretable discount) |
|
|||
Fair value of acquired loans accounted for under ASC 310-30 |
$ | |
||
Assets |
|
|
Liabilities |
|||||||||
Cash and due from banks |
$ | |
|
|
Deposits |
|||||||
Investment securities, available for sale |
|
|
|
Non-interest bearing |
$ | |
||||||
|
|
NOW accounts |
|
|||||||||
Loans |
|
|
Savings and money market |
|
||||||||
Commercial |
|
|
|
Certificates of deposit |
|
|||||||
|
|
|||||||||||
Residential mortgage |
|
|
|
Total deposits |
|
|||||||
Consumer |
|
|
|
|||||||||
|
|
|||||||||||
Total loans |
|
|
|
|||||||||
Premises and equipment, net |
|
|
|
Interest payable |
|
|||||||
FHLB stock |
|
|
|
Other liabilities |
|
|||||||
Goodwill |
|
|
|
|||||||||
Core deposit intangible |
|
|
|
|||||||||
Interest receivable |
|
|
|
|||||||||
Other assets |
|
|
|
|||||||||
|
|
|||||||||||
Total assets purchased |
$ | |
|
|
Total liabilities assumed |
$ | |
|||||
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
| ||
Common shares issued |
$ | |
(1) |
|
|
|||||||
Cash paid |
|
|
|
|||||||||
|
|
|||||||||||
Total purchase price |
$ | |
|
|
||||||||
|
|
(1) |
This includes $ |
Contractually required principal and interest at acquisition |
$ | |
||
Contractual cash flows not expected to be collected (nonaccretable differences) |
|
|||
Expected cash flows at acquisition |
|
|||
Interest component of expected cash flows (accretable discount) |
|
|||
Fair value of acquired loans accounted for under ASC 310-30 |
$ | |
||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Summary of Operations: |
||||||||||||
Net Interest Income |
$ | |
$ | |
$ | |
||||||
Provision for Loan Losses |
|
|
|
|||||||||
Net Interest Income after Provision for Loan Losses |
|
|
|
|||||||||
Non-interest Income |
|
|
|
|||||||||
Non-interest Expense |
|
|
|
|||||||||
Income before Income Taxes |
|
|
|
|||||||||
Income Tax Expense |
|
|
|
|||||||||
Net Income |
$ | |
$ | |
$ | |
||||||
Basic Earnings per Share |
$ | |
$ | |
$ | |
||||||
Diluted Earnings per Share |
$ | |
$ | |
$ | |
December 31, 2019 |
||||||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Available for sale |
||||||||||||||||
U.S. Treasury and federal agencies |
$ | $ | — |
$ | ( |
) | $ | |||||||||
State and municipal |
( |
) | ||||||||||||||
Federal agency collateralized mortgage obligations |
( |
) | ||||||||||||||
Federal agency mortgage-backed pools |
( |
) | ||||||||||||||
Corporate notes |
— |
|||||||||||||||
Total available for sale investment securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Held to maturity |
||||||||||||||||
State and municipal |
$ | $ | $ | ( |
) | $ | ||||||||||
Federal agency collateralized mortgage obligations |
( |
) | ||||||||||||||
Federal agency mortgage-backed pools |
( |
) | ||||||||||||||
Total held to maturity investment securities |
$ | $ | $ | ( |
) | $ | ||||||||||
December 31, 2018 |
||||||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Available for sale |
||||||||||||||||
U.S. Treasury and federal agencies |
$ | $ | $ | ( |
) | $ | ||||||||||
State and municipal |
( |
) | ||||||||||||||
Federal agency collateralized mortgage obligations |
( |
) | ||||||||||||||
Federal agency mortgage-backed pools |
( |
) | ||||||||||||||
Corporate notes |
( |
) | ||||||||||||||
Total available for sale investment securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Held to maturity |
||||||||||||||||
State and municipal |
$ | $ | $ | ( |
) | $ | ||||||||||
Federal agency collateralized mortgage obligations |
( |
) | ||||||||||||||
Federal agency mortgage-backed pools |
( |
) | ||||||||||||||
Total held to maturity investment securities |
$ | $ | $ | ( |
) | $ | ||||||||||
December 31, 2019 |
December 31, 2018 |
|||||||||||||||
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
|||||||||||||
Available for sale |
||||||||||||||||
Within one year |
$ | |
$ | |
$ | |
$ | |
||||||||
One to five years |
|
|
|
|
||||||||||||
Five to ten years |
|
|
|
|
||||||||||||
After ten years |
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Federal agency collateralized mortgage obligations |
|
|
|
|
||||||||||||
Federal agency mortgage-backed pools |
|
|
|
|
||||||||||||
Total available for sale investment securities |
$ | |
$ | |
$ | |
$ | |
||||||||
Held to maturity |
||||||||||||||||
Within one year |
$ | |
$ | |
$ | |
$ | |
||||||||
One to five years |
|
|
|
|
||||||||||||
Five to ten years |
|
|
|
|
||||||||||||
After ten years |
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Federal agency collateralized mortgage obligations |
|
|
|
|
||||||||||||
Federal agency mortgage-backed pools |
|
|
|
|
||||||||||||
Total held to maturity investment securities |
$ | |
$ | |
$ | |
$ | |
||||||||
December 31, 2019 |
||||||||||||||||||||||||
Less than 12 Months |
12 Months or More |
Total |
||||||||||||||||||||||
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
|||||||||||||||||||
Investment Securities |
||||||||||||||||||||||||
U.S. Treasury and federal agencies |
$ | |
$ | ( |
) | $ | — |
$ | — |
$ | |
$ | ( |
) | ||||||||||
State and municipal |
|
( |
) | |
( |
) | |
( |
) | |||||||||||||||
Federal agency collateralized mortgage obligations |
|
( |
) | |
( |
) | |
( |
) | |||||||||||||||
Federal agency mortgage-backed pools |
|
( |
) | |
( |
) | |
( |
) | |||||||||||||||
Total temporarily impaired securities |
$ | |
$ | ( |
) | $ | |
$ | ( |
) | $ | |
$ | ( |
) | |||||||||
December 31, 2018 |
||||||||||||||||||||||||
Less than 12 Months |
12 Months or More |
Total |
||||||||||||||||||||||
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
|||||||||||||||||||
Investment Securities |
||||||||||||||||||||||||
U.S. Treasury and federal agencies |
$ | — |
$ | — |
$ | |
$ | ( |
) | $ | |
$ | ( |
) | ||||||||||
State and municipal |
|
( |
) | |
( |
) | |
( |
) | |||||||||||||||
Federal agency collateralized mortgage obligations |
|
( |
) | |
( |
) | |
( |
) | |||||||||||||||
Federal agency mortgage-backed pools |
|
( |
) | |
( |
) | |
( |
) | |||||||||||||||
Corporate notes |
|
( |
) | — |
— |
|
( |
) | ||||||||||||||||
Total temporarily impaired securities |
$ | |
$ | ( |
) | $ | |
$ | ( |
) | $ | |
$ | ( |
) | |||||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Sales of securities available for sale |
||||||||||||
Proceeds |
$ | |
$ | |
$ | |
||||||
Gross gains |
|
|
|
|||||||||
Gross losses |
( |
) | ( |
) | ( |
) |
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Commercial |
||||||||
Working capital and equipment |
$ |
|
$ | |
||||
Real estate, including agriculture |
|
|
||||||
Tax exempt |
|
|
||||||
Other |
|
|
||||||
Total |
|
|
||||||
Real estate |
||||||||
1-4 family |
|
|
||||||
Other |
|
|
||||||
Total |
|
|
||||||
Consumer |
||||||||
Auto |
|
|
||||||
Recreation |
|
|
||||||
Real estate/home improvement |
|
|
||||||
Home equity |
|
|
||||||
Unsecured |
|
|
||||||
Other |
|
|
||||||
Total |
|
|
||||||
Mortgage warehouse |
|
|
||||||
Total loans |
|
|
||||||
Allowance for loan losses |
( |
) |
( |
) | ||||
Loans, net |
$ |
|
$ | |
||||
December 31, 2019 |
||||||||||||||||
Loan Balance |
Interest Due |
Deferred Costs/ (Fees) |
Recorded Investment |
|||||||||||||
Owner occupied real estate |
$ | $ | $ | ( |
) | $ | ||||||||||
Non-owner occupied real estate |
( |
) | ||||||||||||||
Residential spec homes |
( |
) | ||||||||||||||
Development & spec land |
( |
) | ||||||||||||||
Commercial and industrial |
( |
) | ||||||||||||||
Total commercial |
( |
) | ||||||||||||||
Residential mortgage |
||||||||||||||||
Residential construction |
— |
|||||||||||||||
Mortgage warehouse |
— |
|||||||||||||||
Total real estate |
||||||||||||||||
Direct installment |
||||||||||||||||
Indirect installment |
— |
|||||||||||||||
Home equity |
||||||||||||||||
Total consumer |
||||||||||||||||
Total loans |
||||||||||||||||
Allowance for loan losses |
( |
) | — |
— |
( |
) | ||||||||||
Net loans |
$ | $ | $ | $ | ||||||||||||
December 31, 2018 |
||||||||||||||||
Loan Balance |
Interest Due |
Deferred Costs/ (Fees) |
Recorded Investment |
|||||||||||||
Owner occupied real estate |
$ | $ | $ | ( |
) | $ | ||||||||||
Non-owner occupied real estate |
( |
) | ||||||||||||||
Residential spec homes |
— |
|||||||||||||||
Development & spec land |
( |
) | ||||||||||||||
Commercial and industrial |
( |
) | ||||||||||||||
Total commercial |
( |
) | ||||||||||||||
Residential mortgage |
||||||||||||||||
Residential construction |
— |
|||||||||||||||
Mortgage warehouse |
— |
|||||||||||||||
Total real estate |
||||||||||||||||
Direct installment |
||||||||||||||||
Indirect installment |
— |
|||||||||||||||
Home equity |
||||||||||||||||
Total consumer |
||||||||||||||||
Total loans |
||||||||||||||||
Allowance for loan losses |
( |
) | — |
— |
( |
) | ||||||||||
Net loans |
$ | $ | $ | $ | ||||||||||||
December 31, 2019 |
||||||||||||||||||||||||
Commercial |
Real Estate |
Consumer |
Outstanding Balance |
Allowance for Loan Losses |
Carrying Amount |
|||||||||||||||||||
Heartland |
$ | $ | $ | — |
$ | $ | — |
$ | ||||||||||||||||
Summit |
— |
— |
||||||||||||||||||||||
Peoples |
— |
— |
||||||||||||||||||||||
Kosciusko |
— |
— |
||||||||||||||||||||||
LaPorte |
— |
|||||||||||||||||||||||
Lafayette |
— |
— |
— |
|||||||||||||||||||||
Wolverine |
— |
— |
— |
|||||||||||||||||||||
Salin |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
December 31, 2018 |
||||||||||||||||||||||||
Commercial |
Real Estate |
Consumer |
Outstanding Balance |
Allowance for Loan Losses |
Carrying Amount |
|||||||||||||||||||
Heartland |
$ | $ | $ | — |
$ | $ | — |
$ | ||||||||||||||||
Summit |
— |
— |
||||||||||||||||||||||
Peoples |
— |
— |
||||||||||||||||||||||
Kosciusko |
— |
— |
||||||||||||||||||||||
LaPorte |
||||||||||||||||||||||||
Lafayette |
— |
— |
— |
|||||||||||||||||||||
Wolverine |
— |
— |
— |
|||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Twelve Months Ended December 31, 2019 |
||||||||||||||||||||||||
Beginning balance |
Additions |
Accretion |
Reclassification from nonaccretable difference |
Disposals |
Ending balance |
|||||||||||||||||||
Heartland |
$ | |
$ | — |
$ | ( |
) | $ | — |
$ | — |
$ | |
|||||||||||
Summit |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Kosciusko |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
LaPorte |
|
— |
( |
) | — |
|
|
|||||||||||||||||
Lafayette |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Wolverine |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Salin |
— |
|
( |
) | — |
( |
) | |
||||||||||||||||
Total |
$ | |
$ | |
$ | ( |
) | $ | — |
$ | ( |
) | $ | |
||||||||||
Twelve Months Ended December 31, 2018 |
||||||||||||||||||||||||
Beginning balance |
Additions |
Accretion |
Reclassification from nonaccretable difference |
Disposals |
Ending balance |
|||||||||||||||||||
Heartland |
$ | |
$ | — |
$ | ( |
) | $ | — |
$ | ( |
) | $ | |
||||||||||
Summit |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Kosciusko |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
LaPorte |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Lafayette |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Wolverine |
|
— |
( |
) | — |
( |
) | |
||||||||||||||||
Total |
$ | |
$ | — |
$ | ( |
) | $ | — |
$ | ( |
) | $ | |
||||||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Balance at beginning of the period |
$ |
|
$ | |
$ | |
||||||
Loans charged-off: |
||||||||||||
Commercial |
||||||||||||
Owner occupied real estate |
|
|
|
|||||||||
Non-owner occupied real estate |
|
— |
|
|||||||||
Residential spec homes |
|
— |
— |
|||||||||
Development & spec land |
— |
— |
|
|||||||||
Commercial and industrial |
|
|
|
|||||||||
Total commercial |
|
|
|
|||||||||
Real estate |
||||||||||||
Residential mortgage |
|
|
|
|||||||||
Residential construction |
— |
— |
— |
|||||||||
Mortgage warehouse |
— |
— |
— |
|||||||||
Total real estate |
|
|
|
|||||||||
Consumer |
||||||||||||
Direct installment |
|
|
|
|||||||||
Indirect installment |
|
|
|
|||||||||
Home equity |
|
|
|
|||||||||
Total consumer |
|
|
|
|||||||||
Total loans charged-off |
|
|
|
|||||||||
Recoveries of loans previously charged-off: |
||||||||||||
Commercial |
||||||||||||
Owner occupied real estate |
— |
|
|
|||||||||
Non-owner occupied real estate |
|
|
|
|||||||||
Residential spec homes |
|
|
|
|||||||||
Development & spec land |
— |
— |
— |
|||||||||
Commercial and industrial |
|
|
|
|||||||||
Total commercial |
|
|
|
|||||||||
Real estate |
||||||||||||
Residential mortgage |
|
|
|
|||||||||
Residential construction |
— |
— |
— |
|||||||||
Mortgage warehouse |
— |
— |
— |
|||||||||
Total real estate |
|
|
|
|||||||||
Consumer |
||||||||||||
Direct installment |
|
|
|
|||||||||
Indirect installment |
|
|
|
|||||||||
Home equity |
|
|
— |
|||||||||
Total consumer |
|
|
|
|||||||||
Total loan recoveries |
|
|
|
|||||||||
Net loans charged-off |
|
|
|
|||||||||
Provision charged to operating expense |
||||||||||||
Commercial |
|
|
|
|||||||||
Real estate |
( |
) | ( |
) | ( |
) | ||||||
Consumer |
|
|
|
|||||||||
Total provision charged to operating expense |
|
|
|
|||||||||
Balance at the end of the period |
$ | |
$ | |
$ | |
||||||
December 31, 2019 |
||||||||||||||||||||
Commercial |
Real Estate |
Mortgage Warehousing |
Consumer |
Total |
||||||||||||||||
Allowance For Loan Losses |
||||||||||||||||||||
Ending allowance balance attributable to loans: |
||||||||||||||||||||
Individually evaluated for impairment |
$ | |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||
Collectively evaluated for impairment |
|
|
|
|
|
|||||||||||||||
Loans acquired with deteriorated credit quality |
— |
— |
— |
— |
— |
|||||||||||||||
Total ending allowance balance |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
Loans: |
||||||||||||||||||||
Individually evaluated for impairment |
$ | |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||
Collectively evaluated for impairment |
|
|
|
|
|
|||||||||||||||
Loans acquired with deteriorated credit quality |
— |
— |
— |
— |
— |
|||||||||||||||
Total ending loans balance |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
December 31, 2018 |
||||||||||||||||||||
Commercial |
Real Estate |
Mortgage Warehousing |
Consumer |
Total |
||||||||||||||||
Allowance For Loan Losses |
||||||||||||||||||||
Ending allowance balance attributable to loans: |
||||||||||||||||||||
Individually evaluated for impairment |
$ | |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||
Collectively evaluated for impairment |
|
|
|
|
|
|||||||||||||||
Loans acquired with deteriorated credit quality |
— |
— |
— |
— |
— |
|||||||||||||||
Total ending allowance balance |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
Loans: |
||||||||||||||||||||
Individually evaluated for impairment |
$ | |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||
Collectively evaluated for impairment |
|
|
|
|
|
|||||||||||||||
Loans acquired with deteriorated credit quality |
— |
— |
— |
— |
— |
|||||||||||||||
Total ending loans balance |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
December 31, 2019 |
||||||||||||||||||||
Non-accrual |
Loans Past Due Over 90 Days Still Accruing |
Non-peforming TDRs |
Performing TDRs |
Total Non-performing Loans |
||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | |
$ | — |
$ | |
$ | |
$ | |
||||||||||
Non-owner occupied real estate |
|
— |
|
— |
|
|||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
|
— |
— |
— |
|
|||||||||||||||
Commercial and industrial |
|
— |
|
|
|
|||||||||||||||
Total commercial |
|
— |
|
|
|
|||||||||||||||
Real estate |
||||||||||||||||||||
Residential mortgage |
|
|
|
|
|
|||||||||||||||
Residential construction |
— |
— |
— |
— |
— |
|||||||||||||||
Mortgage warehouse |
— |
— |
— |
— |
— |
|||||||||||||||
Total real estate |
|
|
|
|
|
|||||||||||||||
Consumer |
||||||||||||||||||||
Direct installment |
|
|
— |
— |
|
|||||||||||||||
Indirect installment |
|
|
— |
— |
|
|||||||||||||||
Home equity |
|
|
|
|
|
|||||||||||||||
Total consumer |
|
|
|
|
|
|||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
December 31, 2018 |
||||||||||||||||||||
Non-accrual |
Loans Past Due Over 90 Days Still Accruing |
Non-peforming TDRs |
Performing TDRs |
Total Non-performing Loans |
||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | |
$ | |
$ | — |
$ | |
$ | |
||||||||||
Non-owner occupied real estate |
|
— |
|
— |
|
|||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
|
— |
— |
— |
|
|||||||||||||||
Commercial and industrial |
|
— |
— |
— |
|
|||||||||||||||
Total commercial |
|
|
|
|
|
|||||||||||||||
Real estate |
||||||||||||||||||||
Residential mortgage |
|
|
|
|
|
|||||||||||||||
Residential construction |
— |
— |
— |
— |
— |
|||||||||||||||
Mortgage warehouse |
— |
— |
— |
— |
— |
|||||||||||||||
Total real estate |
|
|
|
|
|
|||||||||||||||
Consumer |
||||||||||||||||||||
Direct installment |
|
— |
— |
— |
|
|||||||||||||||
Indirect installment |
|
|
— |
— |
|
|||||||||||||||
Home equity |
|
|
|
|
|
|||||||||||||||
Total consumer |
|
|
|
|
|
|||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
December 31, 2019 |
||||||||||||||||||||
Twelve Months Ended |
||||||||||||||||||||
Unpaid Principal Balance |
Recorded Investment |
Allowance for Loan Loss Allocated |
Average Balance in Impaired Loans |
Cash/Accrual Interest Income Recognized |
||||||||||||||||
With no recorded allowance |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | |
$ | |
$ | — |
$ | |
$ | |
||||||||||
Non-owner occupied real estate |
|
|
— |
|
|
|||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
|
|
— |
|
— |
|||||||||||||||
Commercial and industrial |
|
|
— |
|
|
|||||||||||||||
Total commercial |
|
|
— |
|
|
|||||||||||||||
With an allowance recorded |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
— |
— |
— |
— |
— |
|||||||||||||||
Non-owner occupied real estate |
|
|
|
|
— |
|||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
— |
— |
— |
— |
— |
|||||||||||||||
Commercial and industrial |
|
|
|
|
|
|||||||||||||||
Total commercial |
|
|
|
|
|
|||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
December 31, 2018 |
||||||||||||||||||||
Twelve Months Ended |
||||||||||||||||||||
Unpaid Principal Balance |
Recorded Investment |
Allowance for Loan Loss Allocated |
Average Balance in Impaired Loans |
Cash/Accrual Interest Income Recognized |
||||||||||||||||
With no recorded allowance |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | |
$ | |
$ | — |
$ | |
$ | |
||||||||||
Non-owner occupied real estate |
|
|
— |
|
|
|||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
|
|
— |
|
— |
|||||||||||||||
Commercial and industrial |
|
|
— |
|
|
|||||||||||||||
Total commercial |
|
|
— |
|
|
|||||||||||||||
With an allowance recorded |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
|
|
|
|
— |
|||||||||||||||
Non-owner occupied real estate |
|
|
|
|
|
|||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
— |
— |
— |
— |
— |
|||||||||||||||
Commercial and industrial |
|
|
|
|
|
|||||||||||||||
Total commercial |
|
|
|
|
|
|||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
December 31, 2017 |
||||||||||||||||||||
Twelve Months Ended |
||||||||||||||||||||
Unpaid Principal Balance |
Recorded Investment |
Allowance for Loan Loss Allocated |
Average Balance in Impaired Loans |
Cash/Accrual Interest Income Recognized |
||||||||||||||||
With no recorded allowance |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | $ | $ | — |
$ | $ | ||||||||||||||
Non-owner occupied real estate |
— |
|||||||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
— |
|||||||||||||||||||
Commercial and industrial |
— |
|||||||||||||||||||
Total commercial |
— |
|||||||||||||||||||
With an allowance recorded |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
||||||||||||||||||||
Non-owner occupied real estate |
||||||||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||
Development & spec land |
— |
— |
— |
— |
— |
|||||||||||||||
Commercial and industrial |
— |
— |
— |
— |
— |
|||||||||||||||
Total commercial |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
December 31, 2019 |
||||||||||||||||||||||||||||
Current |
30-59 DaysPast Due |
60-89 DaysPast Due |
90 Days or Greater Past Due |
Non-accrual & Non-peforming TDRs |
Total Past Due & Non-accrual Loans |
Total |
||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||
Owner occupied real estate |
$ | $ | $ | — |
$ | — |
$ | $ | $ | |||||||||||||||||||
Non-owner occupied realestate |
— |
— |
||||||||||||||||||||||||||
Residential spec homes |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Development & spec land |
— |
— |
— |
|||||||||||||||||||||||||
Commercial and industrial |
— |
|||||||||||||||||||||||||||
Total commercial |
— |
|||||||||||||||||||||||||||
Real estate |
||||||||||||||||||||||||||||
Residential mortgage |
— |
|||||||||||||||||||||||||||
Residential construction |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Mortgage warehouse |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Total real estate |
— |
|||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Direct installment |
||||||||||||||||||||||||||||
Indirect installment |
||||||||||||||||||||||||||||
Home equity |
||||||||||||||||||||||||||||
Total consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Percentage of total loans |
% | % | % | % | % | % | % |
December 31, 2018 |
||||||||||||||||||||||||||||
Current |
30-59 DaysPast Due |
60-89 DaysPast Due |
90 Days or Greater Past Due |
Non-accrual & Non-peforming TDRs |
Total Past Due & Non-accrual Loans |
Total |
||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||
Owner occupied real estate |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Non-owner occupied real estate |
— |
|||||||||||||||||||||||||||
Residential spec homes |
— |
— |
— |
|||||||||||||||||||||||||
Development & spec land |
— |
— |
— |
|||||||||||||||||||||||||
Commercial and industrial |
— |
|||||||||||||||||||||||||||
Total commercial |
||||||||||||||||||||||||||||
Real estate |
||||||||||||||||||||||||||||
Residential mortgage |
||||||||||||||||||||||||||||
Residential construction |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Mortgage warehouse |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Total real estate |
||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Direct installment |
— |
|||||||||||||||||||||||||||
Indirect installment |
||||||||||||||||||||||||||||
Home equity |
||||||||||||||||||||||||||||
Total consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Percentage of total loans |
% | % | % | % | % | % | % |
• |
For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective regions (ranging from $ |
• |
Commercial loan officers are responsible for reviewing their loan portfolios and reporting any adverse material change to the EVP/CCBO or Loan Committee. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the EVP/CCBO and the Credit Department of the change in the loan grade. Downgrades are accepted immediately by the EVP/CCBO, however, lenders must present their factual information to either the Loan Committee or the EVP/CCBO when recommending an upgrade. |
• |
The EVP/CCBO, or a designee, meets periodically with loan officers to discuss the status of past-due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade. |
• |
Monthly, senior management meets as members of the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures, other real estate owned and personal property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Loan and Lease Losses. |
• |
At inception, the loan was properly underwritten, did not |
• |
At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss. |
• |
The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance. |
• |
During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted. |
• |
Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss. |
• |
Loans are inadequately protected by the current net worth and paying capacity of the obligor. |
• |
The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees. |
• |
Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected. |
• |
Unusual courses of action are needed to maintain a high probability of repayment. |
• |
The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments. |
• |
The lender is forced into a subordinated or unsecured position due to flaws in documentation. |
• |
Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms. |
• |
The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan. |
• |
There is a significant deterioration in market conditions to which the borrower is highly vulnerable. |
• |
Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable. |
• |
The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment. |
• |
The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known. |
December 31, 2019 |
||||||||||||||||||||
Pass |
Special Mention |
Substandard |
Doubtful |
Total |
||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Non-owner occupied real estate |
— |
|||||||||||||||||||
Residential spec homes |
— |
— |
— |
|||||||||||||||||
Development & spec land |
— |
|||||||||||||||||||
Commercial and industrial |
— |
|||||||||||||||||||
Total commercial |
— |
|||||||||||||||||||
Real estate |
||||||||||||||||||||
Residential mortgage |
— |
— |
||||||||||||||||||
Residential construction |
— |
— |
— |
|||||||||||||||||
Mortgage warehouse |
— |
— |
— |
|||||||||||||||||
Total real estate |
— |
— |
||||||||||||||||||
Consumer |
||||||||||||||||||||
Direct installment |
— |
— |
||||||||||||||||||
Indirect installment |
— |
— |
||||||||||||||||||
Home equity |
— |
— |
||||||||||||||||||
Total consumer |
— |
— |
||||||||||||||||||
Total |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Percentage of total loans |
% | % | % | % | % |
December 31, 2018 |
||||||||||||||||||||
Pass |
Special Mention |
Substandard |
Doubtful |
Total |
||||||||||||||||
Commercial |
||||||||||||||||||||
Owner occupied real estate |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Non-owner occupied real estate |
— |
|||||||||||||||||||
Residential spec homes |
— |
— |
— |
|||||||||||||||||
Development & spec land |
— |
|||||||||||||||||||
Commercial and industrial |
— |
|||||||||||||||||||
Total commercial |
— |
|||||||||||||||||||
Real estate |
||||||||||||||||||||
Residential mortgage |
— |
— |
||||||||||||||||||
Residential construction |
— |
— |
||||||||||||||||||
Mortgage warehouse |
— |
— |
— |
|||||||||||||||||
Total real estate |
— |
— |
||||||||||||||||||
Consumer |
||||||||||||||||||||
Direct installment |
— |
— |
||||||||||||||||||
Indirect installment |
— |
— |
||||||||||||||||||
Home equity |
— |
— |
||||||||||||||||||
Total consumer |
— |
— |
||||||||||||||||||
Total |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Percentage of total loans |
% | % | % | % | % |
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Land |
$ | $ | ||||||
Buildings and improvements |
||||||||
Furniture and equipment |
||||||||
Total cost |
||||||||
Accumulated depreciation |
( |
) | ( |
) | ||||
Net premises and equipment |
$ | $ | ||||||
December 31 |
December 31 |
December 31 |
||||||||||
2019 |
2018 |
2017 |
||||||||||
Mortgage servicing rights |
||||||||||||
Balances, January 1 |
$ | $ | $ | |||||||||
Servicing rights capitalized |
||||||||||||
Amortization of servicing rights |
( |
) | ( |
) | ( |
) | ||||||
Balances, December 31 |
||||||||||||
Impairment allowance |
||||||||||||
Balances, January 1 |
( |
) | ( |
) | ( |
) | ||||||
Additions |
( |
) | ( |
) | ( |
) | ||||||
Reductions |
||||||||||||
Balances, December 31 |
( |
) | ( |
) | ( |
) | ||||||
Mortgage servicing rights, net |
$ | $ | $ | |||||||||
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Balance, January 1 |
$ | |
$ | |
||||
Goodwill acquired |
|
— |
||||||
Balance, December 31 |
$ | |
$ | |
||||
December 31, 2019 |
December 31, 2018 |
|||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Gross Carrying Amount |
Accumulated Amortization |
|||||||||||||
Amortizable intangible assets | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangible |
$ | |
$ | ( |
) | $ | |
$ | ( |
) |
2020 |
$ | |
||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
Thereafter |
|
|||
$ | |
|||
• |
The practical expedient package that forgoes: |
• |
Reassessment of any expired or existing contracts for a lease |
• |
Reassessment of lease classification for expired or existing leases |
• |
Reassessment of initial direct costs for existing leases |
• |
The hindsight practical expedient to determine lease term and impairment of ROU assets |
• |
Other practical expedients regarding combination of lease and non-lease components and the exclusion of short-term leases |
• |
The Company did not elect to follow the practical expedients for land easements and the portfolio approach |
Year |
Amount |
|||
2020 |
$ | |
||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 and thereafter |
|
|||
Total lease payments |
$ | |
||
Less: Interest |
( |
) | ||
Present value of lease liabilities |
$ | |
||
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Noninterest-bearing demand deposits |
$ | |
$ | |
||||
Interest-bearing demand deposits |
|
|
||||||
Money market (variable rate) |
|
|
||||||
Savings deposits |
|
|
||||||
Certificates of deposit of $250,000 or more |
|
|
||||||
Other certificates and time deposits |
|
|
||||||
Total deposits |
$ | |
$ | |
||||
Retail |
Brokered |
Total |
||||||||||
2020 |
$ | |
$ | |
$ | |
||||||
2021 |
|
|
|
|||||||||
2022 |
|
|
|
|||||||||
2023 |
|
|
|
|||||||||
2024 |
|
— |
|
|||||||||
Thereafter |
|
— |
|
|||||||||
$ | |
$ | |
$ | |
|||||||
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Federal Home Loan Bank advances, variable and fixed rates ranging from |
$ | |
$ | |
||||
Securities sold under agreements to repurchase |
|
|
||||||
Federal funds purchased |
|
|
||||||
Total borrowings |
$ | |
$ | |
||||
2020 |
$ | |
||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
Thereafter |
|
|||
$ | |
|||
December 31, 2019 |
||||||||||||||||||||||||||||
Remaining Contractual Maturity of the Agreements |
||||||||||||||||||||||||||||
Overnight and Continuous |
Up to one year |
One to three years |
Three to five years |
Five to ten years |
Beyond ten years |
Total |
||||||||||||||||||||||
Repurchase Agreements and repurchase-to-maturity transactions |
||||||||||||||||||||||||||||
Repurchase Agreements |
$ | |
$ | — |
$ | — |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||||||
Securities pledged for Repurchase Agreements |
||||||||||||||||||||||||||||
Federal agency collateralized mortgage obligations |
$ | |
$ | — |
$ | — |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||||||
Federal agency mortgage-backed pools |
|
— |
— |
— |
— |
— |
|
|||||||||||||||||||||
Total |
$ | |
$ | — |
$ | — |
$ | — |
$ | — |
$ | — |
$ | |
||||||||||||||
• | Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. |
• | If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. |
• | If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. |
December 31 |
December 31 |
December 31 |
||||||||||
2019 |
2018 |
2017 |
||||||||||
Income tax expense |
||||||||||||
Currently payable |
||||||||||||
Federal |
$ | |
$ | |
$ | |
||||||
State |
|
|
|
|
|
— |
|
|
|
— |
| |
Deferred |
||||||||||||
Federal |
|
|
|
|||||||||
State |
|
|
|
|
|
— |
|
|
|
— |
| |
Revaluation of deferred tax assets |
— |
— |
|
|||||||||
Total income tax expense |
$ | |
$ | |
$ | |
||||||
Reconciliation of federal statutory to actual tax expense |
||||||||||||
Federal statutory income tax at 9 and 2 018 |
$ | |
$ | |
$ | |
||||||
Tax exempt interest |
( |
) |
( |
) | ( |
) | ||||||
Tax exempt income |
( |
) |
( |
) | ( |
) | ||||||
Stock compensation |
( |
) |
( |
) | ( |
) | ||||||
Revaluation of deferred tax assets |
— |
— |
|
|||||||||
Other tax exempt income |
( |
) |
( |
) | ( |
) | ||||||
State tax |
|
|
|
|
|
— |
|
|
|
— |
| |
Nondeductible and other |
|
|
( |
) | ||||||||
Actual tax expense |
$ | |
$ | |
$ | |
||||||
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Assets |
||||||||
Allowance for loan losses |
$ | |
$ | |
||||
Net operating loss and tax credits (from acquisitions) |
|
|
||||||
Director and employee benefits |
|
|
||||||
Unrealized loss on AFS securities and fair value hedge |
— |
|
||||||
Accrued pension |
|
|
||||||
Fair value adjustment on acquisitions |
— |
|
||||||
Other |
|
|
||||||
Total assets |
|
|
||||||
Liabilities |
||||||||
Depreciation |
( |
) |
( |
) | ||||
State tax |
( |
) |
( |
) | ||||
Federal Home Loan Bank stock dividends |
( |
) |
( |
) | ||||
Difference in basis of intangible assets |
( |
) |
( |
) | ||||
Fair value adjustment on acquisitions |
( |
) |
( |
) | ||||
Unrealized gain on AFS securities and fair value hedge |
|
|
( |
) |
|
|
— |
|
Other |
( |
) |
( |
) | ||||
Total liabilities |
( |
) |
( |
) | ||||
Valuation allowance |
— |
( |
) | |||||
Net deferred tax asset/(liability) |
$ | ( |
) |
$ | |
|||
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Unrealized gain (loss) on securities available for sale |
$ | |
$ | ( |
) | |||
Unamortized gain (loss) on securities held to maturity, previously transferred from AFS |
( |
) | |
|||||
Unrealized loss on derivative instruments |
( |
) | ( |
) | ||||
Tax effect |
( |
) | |
|||||
Total accumulated other comprehensive income (loss) |
$ | |
$ | ( |
) | |||
Actual |
Required for Capital 1 Adequacy Purposes |
Required For Capital 1 Adequacy Purposes with Capital Buffer |
Well Capitalized Under Prompt 1 Corrective Action Provisions |
|||||||||||||||||||||||||||||
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
|||||||||||||||||||||||||
December 31, 2019 |
||||||||||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
$ | % | $ | % | $ | % | N/A |
N/A |
||||||||||||||||||||||||
Bank |
% | % | % | $ | % | |||||||||||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
% | % | % | N/A |
N/A |
|||||||||||||||||||||||||||
Bank |
% | % | % | % | ||||||||||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
% | % | % | N/A |
N/A |
|||||||||||||||||||||||||||
Bank |
% | % | % | % | ||||||||||||||||||||||||||||
Tier 1 capital 1 (to average assets) |
||||||||||||||||||||||||||||||||
Consolidated |
% | % | % | N/A |
N/A |
|||||||||||||||||||||||||||
Bank |
% | % | % | % | ||||||||||||||||||||||||||||
December 31, 2018 |
||||||||||||||||||||||||||||||||
Total capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
$ | % | $ | % | $ | % | N/A |
N/A |
||||||||||||||||||||||||
Bank |
% | % | % | $ | % | |||||||||||||||||||||||||||
Tier 1 capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
% | % | % | N/A |
N/A |
|||||||||||||||||||||||||||
Bank |
% | % | % | % | ||||||||||||||||||||||||||||
Common equity tier 1 capital 1 (to risk-weighted assets) |
||||||||||||||||||||||||||||||||
Consolidated |
% | % | % | N/A |
N/A |
|||||||||||||||||||||||||||
Bank |
% | % | % | % | ||||||||||||||||||||||||||||
Tier 1 capital 1 (to average assets) |
||||||||||||||||||||||||||||||||
Consolidated |
% | % | % | N/A |
N/A |
|||||||||||||||||||||||||||
Bank |
% | % | % | % |
Shares |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term |
Aggregate Intrinsic Value |
|||||||||||||
Outstanding, beginning of year |
$ | |||||||||||||||
Granted |
— |
— |
||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited |
— |
— |
||||||||||||||
Outstanding, end of year |
$ | |||||||||||||||
Exercisable, end of year |
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Dividend yields |
% | % | % | |||||||||
Volatility factors of expected market price of common stock |
% | % | % | |||||||||
Risk-free interest rates |
% | % | % | |||||||||
Expected life of options |
Shares |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term |
Aggregate Intrinsic Value |
|||||||||||||
Outstanding, beginning of year |
$ | |||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited |
( |
) | ||||||||||||||
Outstanding, end of year |
$ | |||||||||||||||
Exercisable, end of year |
Shares |
Weighted Average Grant Date Fair Value |
|||||||
Non-vested, beginning of year |
$ | |||||||
Vested |
( |
) | ||||||
Granted |
||||||||
Forfeited |
( |
) | ||||||
Non-vested, end of year |
||||||||
Asset Derivatives |
Liability Derivatives |
|||||||||||||||
December 31, 2019 |
December 31, 2019 |
|||||||||||||||
Balance Sheet Location |
Fair Value |
Balance Sheet Location |
Fair Value |
|||||||||||||
Derivatives designated as hedging instruments |
||||||||||||||||
Interest rate contracts |
Other a ssets |
$ |
Other liabilities |
$ |
||||||||||||
Total derivatives desginated as hedging instruments |
||||||||||||||||
Derivatives not designated as hedging instruments |
||||||||||||||||
Mortgage loan contracts |
Other assets |
Other liabilities |
||||||||||||||
Total derivatives not designated as hedging instruments |
||||||||||||||||
Total derivatives |
$ | $ | ||||||||||||||
Asset Derivatives |
Liability Derivatives |
|||||||||||||||
December 31, 2018 |
December 31, 2018 |
|||||||||||||||
Balance Sheet Location |
Fair Value |
Balance Sheet Location |
Fair Value |
|||||||||||||
Derivatives designated as hedging instruments |
||||||||||||||||
Interest rate contracts |
Other a ssets |
$ |
Other liabilities |
$ |
||||||||||||
Total derivatives desginated as hedging instruments |
||||||||||||||||
Derivatives not designated as hedging instruments |
||||||||||||||||
Mortgage loan contracts |
Other assets |
Other liabilities |
— |
|||||||||||||
Total derivatives not designated as hedging instruments |
— |
|||||||||||||||
Total derivatives |
$ |
$ |
Amount of (Gain) Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion) |
||||||||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Derivatives in cash flow hedging relationship |
||||||||||||
Interest rate contracts |
$ | ( |
) | $ | ( |
) | $ |
Location of gain (loss) recognized on |
Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 |
|||||||||||||
derivative |
2019 |
2018 |
2017 |
|||||||||||
Derivative in fair value hedging relationship |
||||||||||||||
Interest rate contracts |
Interest income - loans |
$ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Interest rate contracts |
Interest |
|||||||||||||
Total |
$ | — |
$ | — |
$ | — |
||||||||
Location of gain (loss) recognized on |
Amount of Gain (Loss) Recognized on Derivative Years Ended December 31 |
|||||||||||||
derivative |
2019 |
2018 |
2017 |
|||||||||||
Derivative not designated as hedging relationship |
||||||||||||||
Mortgage contracts |
Other income - gain on sale of loans |
$ | $ | ( |
) | $ | ( |
) |
Level 1 |
Quoted prices in active markets for identical assets or liabilities | |
Level 2 |
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities | |
Level 3 |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
December 31, 2019 |
||||||||||||||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Available for sale securities |
||||||||||||||||
U.S. Treasury and federal agencies |
$ | |
$ | — |
$ | |
$ | — |
||||||||
State and municipal |
|
— |
|
— |
||||||||||||
Federal agency collateralized mortgage obligations |
|
— |
|
— |
||||||||||||
Federal agency mortgage-backed pools |
|
— |
|
— |
||||||||||||
Corporate notes |
|
— |
|
— |
||||||||||||
Total available for sale securities |
|
— |
|
— |
||||||||||||
Interest rate swap agreements asset |
|
— |
|
— |
||||||||||||
Forward sale commitments |
|
— |
|
— |
||||||||||||
Interest rate swap agreements liability |
( |
) | — |
( |
) | — |
||||||||||
Commitments to originate loans |
( |
) | — |
( |
) | — |
December 31, 2018 |
||||||||||||||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Available for sale securities |
||||||||||||||||
U.S. Treasury and federal agencies |
$ | |
$ | — |
$ | |
$ | — |
||||||||
State and municipal |
|
— |
|
— |
||||||||||||
Federal agency collateralized mortgage obligations |
|
— |
|
— |
||||||||||||
Federal agency mortgage-backed pools |
|
— |
|
— |
||||||||||||
Corporate notes |
|
— |
|
— |
||||||||||||
Total available for sale securities |
|
— |
|
— |
||||||||||||
Interest rate swap agreements asset |
|
— |
|
— |
||||||||||||
Forward sale commitments |
|
— |
|
— |
||||||||||||
Interest rate swap agreements liability |
( |
) | — |
( |
) | — |
||||||||||
Commitments to originate loans |
— |
— |
— |
— |
Years Ended December 31 |
||||||||||||
Non-interest Income |
2019 |
2018 |
2017 |
|||||||||
Total gains and losses from: |
||||||||||||
Hedged loans |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Fair value interest rate swap agreements |
|
|
|
|||||||||
Derivative loan commitments |
|
( |
) | ( |
) | |||||||
$ | |
$ | ( |
) | $ | ( |
) | |||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
December 31, 2019 |
||||||||||||||||
Impaired loans |
$ | |
$ | — |
$ | — |
$ | |
||||||||
Mortgage servicing rights |
|
— |
— |
|
||||||||||||
December 31, 2018 |
||||||||||||||||
Impaired loans |
$ | |
$ | — |
$ | — |
$ | |
||||||||
Mortgage servicing rights |
|
— |
— |
|
December 31, 2019 |
||||||||||||
Fair |
Valuation |
Unobservable |
Range |
|||||||||
Value |
Technique |
Inputs |
(Weighted Average) |
|||||||||
Impaired loans |
$ | conditions and ultimate collectability |
||||||||||
Mortgage servicing rights |
Constant prepayment rate, Probability of default |
( %), |
December 31, 2018 |
||||||||||||
Fair |
Valuation |
Unobservable |
Range |
|||||||||
Value |
Technique |
Inputs |
(Weighted Average) |
|||||||||
Impaired loans |
$ | conditions and ultimate collectability |
||||||||||
Mortgage servicing rights |
Constant prepayment rate, Probability of default |
( |
December 31, 2019 |
||||||||||||||||
Carrying Amount |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Assets |
||||||||||||||||
Cash and due from banks |
$ | $ | $ | — |
$ | — |
||||||||||
Interest-earning time deposits |
— |
— |
||||||||||||||
Investment securities, held to maturity |
— |
— |
||||||||||||||
Loans held for sale |
— |
— |
||||||||||||||
Loans (excluding loan level hedges), net |
— |
— |
||||||||||||||
Stock in FHLB |
— |
— |
||||||||||||||
Interest receivable |
— |
— |
||||||||||||||
Liabilities |
||||||||||||||||
Non-interest bearing deposits |
$ | $ | $ | — |
$ | — |
||||||||||
Interest bearing deposits |
— |
— |
||||||||||||||
Borrowings |
— |
— |
||||||||||||||
Subordinated debentures |
— |
— |
||||||||||||||
Interest payable |
— |
— |
December 31, 2018 |
||||||||||||||||
Carrying Amount |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Assets |
||||||||||||||||
Cash and due from banks |
$ | |
$ | |
$ | — |
$ | — |
||||||||
Interest-earning time deposits |
|
— |
|
— |
||||||||||||
Investment securities, held to maturity |
|
— |
|
— |
||||||||||||
Loans held for sale |
|
— |
— |
|
||||||||||||
Loans (excluding loan level hedges), net |
|
— |
— |
|
||||||||||||
Stock in FHLB |
|
— |
|
— |
||||||||||||
Interest receivable |
|
— |
|
— |
||||||||||||
Liabilities |
||||||||||||||||
Non-interest bearing deposits |
$ | |
$ | |
$ | — |
$ | — |
||||||||
Interest bearing deposits |
|
— |
|
— |
||||||||||||
Borrowings |
|
— |
|
— |
||||||||||||
Subordinated debentures |
|
— |
|
— |
||||||||||||
Interest payable |
|
|
|
|
|
— | |
|
|
|
|
|
— |
|
December 31 |
December 31 |
|||||||
2019 |
2018 |
|||||||
Assets |
||||||||
Total cash and cash equivalents |
$ | |
$ | |
||||
Investment in subsidiaries |
|
|
||||||
Other assets |
|
|
||||||
Total assets |
$ | |
$ | |
||||
Liabilities |
||||||||
Subordinated debentures |
$ |
|
$ |
|
||||
Other liabilities |
|
|
||||||
Stockholders’ Equity |
|
|
||||||
Total liabilities and stockholders’ equity |
$ | |
$ | |
||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Operating Income (Expense) |
||||||||||||
Dividend income from subsidiaries |
$ | |
$ | |
$ | |
||||||
Other income |
— |
— |
|
|||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Employee benefit expense |
( |
) | ( |
) | ( |
) | ||||||
Other expense |
( |
) | ( |
) | ( |
) | ||||||
Income Before Undistributed Income of Subsidiaries |
|
|
|
|||||||||
Undistributed Income of Subsidiaries |
|
|
|
|||||||||
Income Before Tax |
|
|
|
|||||||||
Income Tax Benefit |
|
|
|
|||||||||
Net Income Available to Common Shareholders |
$ | |
$ | |
$ | |
||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Net Income |
$ | |
$ | |
$ | |
||||||
Other Comprehensive Income (Loss) |
||||||||||||
Change in fair value of derivative instruments, net of taxes |
( |
) | ( |
) | |
|||||||
Unrealized appreciation for the period on held to maturity securities, net of taxes |
( |
) | ( |
) | ( |
) | ||||||
Unrealized appreciation (depreciation) on available for sale securities, net of taxes |
|
( |
) | |
||||||||
Less: reclassification adjustment for realized (gains) losses included in net income, net of taxes |
|
|
( |
) | ||||||||
|
( |
) | |
|||||||||
Comprehensive Income |
$ | |
$ | |
$ | |
||||||
Years Ended December 31 |
||||||||||||
2019 |
2018 |
2017 |
||||||||||
Operating Activities |
||||||||||||
Net income |
$ | |
$ | |
$ | |
||||||
Items not requiring (providing) cash |
||||||||||||
Equity in undistributed net income of subsidiaries |
( |
) | ( |
) | ( |
) | ||||||
Change in: |
||||||||||||
Share based compensation |
|
|
|
|||||||||
Amortization of unearned compensation |
|
|
|
|||||||||
Other assets |
( |
) | |
|
||||||||
Other liabilities |
|
|
( |
) | ||||||||
Net cash provided by operating activities |
|
|
|
|||||||||
Investing Activities |
||||||||||||
Repurchase of outstanding stock |
( |
) | — |
— |
||||||||
Acquisition of Lafayette |
— |
— |
( |
) | ||||||||
Acquisition of Wolverine |
— |
— |
( |
) | ||||||||
Acquisition of Salin |
|
— |
— |
|||||||||
Net cash used in investing activities |
|
— |
( |
) | ||||||||
Financing Activities |
||||||||||||
Net change in borrowings |
|
( |
) | ( |
) | |||||||
Dividends paid on common shares |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from issuance of stock |
|
|
|
|||||||||
Net cash used in financing activities |
( |
) | ( |
) | ( |
) | ||||||
Net Change in Cash and Cash Equivalents |
|
|
( |
) | ||||||||
Cash and Cash Equivalents at Beginning of Year |
|
|
|
|||||||||
Cash and Cash Equivalents at End of Year |
$ | |
$ | |
$ | |
||||||
Three Months Ended |
||||||||||||||||
March 31 |
June 30 |
September 30 |
December 31 |
|||||||||||||
2019 |
2019 |
2019 |
2019 |
|||||||||||||
Interest income |
$ | |
$ | |
$ | |
$ | |
||||||||
Interest expense |
|
|
|
|
||||||||||||
Net interest income |
|
|
|
|
||||||||||||
Provision for loan losses |
|
|
|
|
||||||||||||
Gain (loss) on sale of securities |
|
( |
) | — |
|
|||||||||||
Net income |
$ | |
$ | |
$ | |
$ | |
||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | |
$ | |
$ | |
$ | |
||||||||
Diluted |
|
|
|
|
||||||||||||
Average shares outstanding: |
||||||||||||||||
Basic |
|
|
|
|
||||||||||||
Diluted |
|
|
|
|
Three Months Ended |
||||||||||||||||
March 31 |
June 30 |
September 30 |
December 31 |
|||||||||||||
2018 |
2018 |
2018 |
2018 |
|||||||||||||
Interest income |
$ | |
$ | |
$ | |
$ | |
||||||||
Interest expense |
|
|
|
|
||||||||||||
Net interest income |
|
|
|
|
||||||||||||
Provision for loan losses |
|
|
|
|
||||||||||||
Gain (loss) on sale of securities |
|
— |
( |
) | ( |
) | ||||||||||
Net income |
$ | |
$ | |
$ | |
$ | |
||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | |
$ | |
$ | |
$ | |
||||||||
Diluted |
|
|
|
|
||||||||||||
Average shares outstanding: |
||||||||||||||||
Basic |
|
|
|
|
||||||||||||
Diluted |
|
|
|
|
• | Testing the effectiveness of controls over the Company’s inputs and processes utilized in calculating the ALLL including classifications of loans by loan segment, historical loss data, the calculation of a loss rate, the establishment of qualitative adjustments, grading and risk classification of loans and establishment of specific reserves on impaired loans including purchased loans that have experienced further credit deterioration and management’s review controls over the ALLL balance as a whole including attending internal Company credit quality discussions and analysis; |
• | Testing the design and operating effectiveness of controls, including those related to technology, over the allowance for credit losses including data completeness and accuracy, classifications of loans by loan segment, verification of historical net loss data and calculated net loss rates, the establishment of qualitative adjustments, credit ratings and risk classification of loans and establishment of specific reserves on impaired loans and management’s review and disclosure controls over the allowance for credit losses; |
• | Testing of completeness and accuracy of the information utilized in the allowance for credit losses; |
• | Evaluating the qualitative adjustment to the historical loss rates, including assessing the basis for the adjustments and the reasonableness of the significant assumptions; |
• | Computing an independent calculation of acceptable range and comparing it to the Company’s estimate; |
• | Testing the internal loan review functions and evaluating the accuracy of loan grades by utilizing internal specialists to assist us; |
• | Evaluating the appropriateness of loan grades and assessing the reasonableness of specific reserves on impaired loans; |
• | Evaluating the overall reasonableness of qualitative factors and appropriateness of their direction and magnitude and the Company’s support for the direction and magnitude compared to previous years. |
• | Obtaining and reviewing executed Plan and Agreement of Merger documents to gain an understanding of the underlying terms of the consummated acquisition; |
• | Obtaining and reviewing management’s reconciliation procedures of significant accounts and testing of completion procedures performed and asset/liability identification considerations made; |
• | Testing management’s computation of purchase price and determination of goodwill recognized focusing on the completeness and accuracy of the balance sheet acquired and related fair value purchase price allocations made to identified assets acquired and liabilities assumed; |
• | Obtaining and reviewing significant outside vendor valuation estimates and challenging management’s review of the appropriateness of the valuations assessed/allocated to assets acquired and liabilities assumed; including but not limited to, testing all critical inputs, including assumptions applied and valuation models utilized by the outside vendors; |
• | Utilization of our Forensics & Valuation Services group to assist with testing and challenging the related fair value purchase price allocations made to identified assets acquired and liabilities assumed; |
• | Reviewing and evaluating the adequacy of the disclosures made in the footnotes of the Company’s SEC filings. |
Plan Category |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) |
|||||||||
Equity compensation plans approved by security holders |
329,452 |
$ | 12.70 |
657,612 |
||||||||
Equity compensation plans not approved by security holders |
— |
$ | — |
— |
||||||||
329,452 |
$ | 12.70 |
657,612 |
|||||||||
1. | Financial Statements |
|
The following financial statements are filed as part of this document under Item 8: | |
Consolidated Balance Sheets at December 31, 2019 and 2018 | ||
Consolidated Statements of Income, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Comprehensive Income, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Stockholders’ Equity, years ended December 31, 2019, 2018 and 2017 | ||
Consolidated Statements of Cash Flows, years ended December 31, 2019, 2018 and 2017 | ||
Notes to Consolidated Financial Statements | ||
Reports of Independent Registered Public Accounting Firm |
2. | Financial Statement Schedules |
3. | Exhibits |
Exhibit Number |
Description |
Incorporated by Reference/Attached | ||||
3.1 |
Incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K filed on May 16, 2018 | |||||
3.2 |
Incorporated by reference to Exhibit 3.2 to Registrant’s Form 8-K filed on January 22, 2020 | |||||
4.1 |
Attached | |||||
4.2 |
Incorporated by reference to Exhibit 4.1 to Registrant’s Form 10-K for the year ended December 31, 2009 | |||||
4.3 |
Incorporated by reference to Exhibit 4.2 to Registrant’s Form 10-K for the year ended December 31, 2009 | |||||
4.4 |
Incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed on December 21, 2006 | |||||
4.5 |
Incorporated by reference to Exhibit 4.2 to Registrant’s Form 8-K filed on December 21, 2006 | |||||
10.1* |
Incorporated by reference to Appendix A to Registrant’s definitive Proxy Statement for its 2010 Annual Meeting of Shareholders | |||||
10.2* |
Incorporated by reference to Exhibit 10.7 to Registrant’s Form 10-K for the year ended December 31, 2009 | |||||
10.3* |
Incorporated by reference to Exhibit 10.8 to Registrant’s Form 10-K for the year ended December 31, 2009 | |||||
10.4* |
Incorporated by reference to Appendix A to Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders | |||||
10.5* |
Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on June 18, 2013 |
Exhibit Number |
Description |
Incorporated by Reference/Attached | ||||
10.6* |
Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on June 18, 2013 | |||||
10.7* |
Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on March 27, 2017 | |||||
10.8* |
Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on March 27, 2017 | |||||
10.9* |
Incorporated by reference to Exhibit 10.9 to Registrant’s Form 10-K filed on February 28, 2018 | |||||
10.10* |
Incorporated by reference to Exhibit 10.10 to Registrant’s Form 10-K filed on February 28, 2018 | |||||
10.11* |
Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222329) | |||||
10.12* |
Incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222329) | |||||
10.13* |
Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222330) | |||||
10.14* |
Incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-8 filed on December 28, 2017 (Registration No. 333-222330) | |||||
10.15* |
Attached | |||||
10.16* |
Incorporated by reference to Exhibit 10.7 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.17* |
Incorporated by reference to Exhibit 10.8 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.18* |
Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.19* |
Incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.20* |
Incorporated by reference to Exhibit 10.3 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.21* |
Incorporated by reference to Exhibit 10.4 to Registrant’s Form 8-K filed on January 7, 2020 |
Exhibit Number |
Description |
Incorporated by Reference/Attached | ||||
10.22* |
Incorporated by reference to Exhibit 10.5 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
10.23* |
Incorporated by reference to Exhibit 10.6 to Registrant’s Form 8-K filed on January 7, 2020 | |||||
14 |
Incorporated by reference to Exhibit 14 to Registrant’s Form 8-K filed on December 21, 2017 | |||||
21 |
Attached | |||||
23 |
Attached | |||||
31.1 |
Attached | |||||
31.2 |
Attached | |||||
32.1 |
Attached | |||||
32.2 |
Attached | |||||
101 |
Inline Interactive Data Files |
Attached | ||||
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Embedded Within the Inline XBRL Document |
* | Indicates exhibits that describe or evidence management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K. |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized | ||||||
Horizon Bancorp, Inc. Registrant | ||||||
Date: February 28, 2020 |
By: |
/s/ Craig M. Dwight | ||||
Craig M. Dwight Chairman and Chief Executive Officer (Principal Executive Officer) | ||||||
Date: February 28, 2020 |
By : |
/s/ Mark E. Secor | ||||
Mark E. Secor Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. | ||||
Date |
Signature and Title | |||
February 28, 2020 |
/s/ Craig M. Dwight Craig M. Dwight, Chairman of the Board Chief Executive Officer and Director | |||
February 28, 2020 |
/s/ Susan D. Aaron Susan D. Aaron, Director | |||
February 28, 2020 |
/s/ Eric P. Blackhurst Eric P. Blackhurst, Director | |||
February 28, 2020 |
/s/ Lawrence E. Burnell Lawrence E. Burnell, Director | |||
February 28, 2020 |
/s/ James B. Dworkin James B. Dworkin, Director | |||
February 28, 2020 |
/s/ Julie Scheck Freigang Julie Scheck Freigang, Director | |||
February 28, 2020 |
/s/ Daniel F. Hopp Daniel F. Hopp, Director | |||
February 28, 2020 |
/s/ Michele M. Magnuson Michele M. Magnuson, Director |
Date |
Signature and Title | |||
February 28, 2020 |
/s/ Peter L. Pairitz Peter L. Pairitz, Director | |||
February 28, 2020 |
/s/ Steven W. Reed Steven W. Reed, Director | |||
February 28, 2020 |
/s/ Spero W. Valavanis Spero W. Valavanis, Director |