HBNC Horizon Bancorp Inc

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

Net income for the three months ended June 30, 2024 was $14.1 million, or $0.32 per diluted share, compared to net income of $14.0 million, or $0.32, for the first quarter of 2024 and compared to net income of $18.8 million, or $0.43 per diluted share, for the second quarter of 2023.

Net income for the six months ended June 30, 2024 was $28.1 million, or $0.64 per diluted share, compared to net income of $37.0 million, or $0.85, for the six months ended June 30, 2023.

Second Quarter 2024 Highlights

• Net interest income increased for the third consecutive quarter to $45.3 million, compared to $43.3 million in the linked quarter of 2024. Net interest margin, on a fully taxable equivalent ("FTE") basis1, expanded for the third consecutive quarter to 2.64%, compared to 2.50% in the linked quarter of 2024.

• Total loans held for investment ("HFI") were $4.8 billion at period end, increasing by 4.4% during the quarter, led by organic commercial loan growth of $154.8 million, or 5.6% in the quarter.

• Credit quality continues to perform well, with non-accrual loans declining $0.8 million, to $18.3 million at June 30, 2024 from March 31, 2024. Annualized net charge-offs remain low, at 0.05% of average loans during the second quarter. Provision for loan losses of $2.4 million primarily reflected continued loan growth in the quarter.

• Deposits totaled $5.6 billion at period end, increasing by 0.9% during the quarter. Non-interest bearing deposit balances at June 30, 2024 were relatively consistent with balances at March 31, 2024.

“We are proud of the Company's performance during the second quarter, which was highlighted by sequential growth in revenue and pre-tax pre-provision income resulting from the strategic shift of Horizon’s balance sheet toward a more profitable earning asset mix, and diligent expense management. Importantly, the previously discussed balance sheet efforts drove improving loan yields, which coupled with the relative stability of our funding costs, yielded 14 basis points of net interest margin expansion in the quarter,” President and Chief Executive Officer Thomas M. Prame said. “In-market businesses and consumers remain at the center of Horizon’s strong credit performance and low-cost deposit franchise, and our Indiana and Michigan markets continue to provide excellent opportunities for organic growth. We are pleased with our performance during the first half of 2024, and remain committed to enhancing our financial performance throughout 2024."

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

Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Income statement:
Net interest income	$	45,279			$	43,288			$	42,257			$	42,090			$	46,160
Credit loss expense		2,369				805				1,274				263				680
Non-interest income		10,485				9,929				(20,449	)			11,830				10,997
Non-interest expense		37,522				37,107				39,330				36,168				36,262
Income tax expense		1,733				1,314				6,419				1,284				1,452
Net income	$	14,140			$	13,991			$	(25,215	)		$	16,205			$	18,763
Per share data:
Basic earnings per share	$	0.32			$	0.32			$	(0.58	)		$	0.37			$	0.43
Diluted earnings per share		0.32				0.32				(0.58	)			0.37				0.43
Cash dividends declared per common share		0.16				0.16				0.16				0.16				0.16
Book value per common share		16.62				16.49				16.47				15.89				16.25
Market value - high		12.74				14.44				14.65				12.68				11.10
Market value - low		11.29				11.75				9.33				9.90				7.75
Weighted average shares outstanding - Basic		43,712,059				43,663,610				43,649,585				43,646,609				43,639,987
Weighted average shares outstanding - Diluted		43,987,187				43,874,036				43,649,585				43,796,069				43,742,588
Common shares outstanding (end of period)		43,712,059				43,726,380				43,652,063				43,648,501				43,645,216
Key ratios:
Return on average assets		0.73	%			0.72	%		(1.27		)%			0.81	%			0.96	%
Return on average stockholders' equity		7.83				7.76				(14.23	)			8.99				10.59
Total equity to total assets		9.18				9.18				9.06				8.71				8.91
Total loans to deposit ratio		85.70				82.78				78.01				76.52				74.85
Annualized non-interest expense to average assets		1.94				1.90				1.98				1.81				1.86
Allowance for credit losses to HFI loans		1.08				1.09				1.13				1.14				1.17
Annualized net charge-offs of average total loans(1)		0.05				0.04				0.07				0.07				0.04
Efficiency ratio		67.29				69.73				180.35				67.08				63.44
Key metrics (Non-GAAP)(2):
Net FTE interest margin		2.64	%			2.50	%			2.43	%			2.41	%			2.69	%
Return on average tangible common equity		10.18				10.11				(18.76	)			11.79				13.94
Tangible common equity to tangible assets		7.22				7.20				7.08				6.72				6.91
Tangible book value per common share	$	12.80			$	12.65			$	12.60			$	12.00			$	12.34
(1)Average total loans includes loans held for investment and held for sale.
(2)Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures.

Income Statement Highlights

Net Interest Income

Net interest income was $45.3 million in the second quarter of 2024, compared to $43.3 million in the first quarter of 2024, driven by net FTE interest margin expansion during the quarter. Horizon’s net FTE interest margin1 was 2.64% for the second quarter of 2024, compared to 2.50% for the first quarter of 2024, attributable to the favorable mix shift in average interest earning assets toward higher-yielding loans against relatively stable costs of interest bearing liabilities. Interest accretion from the fair value of acquired loans did not contribute significantly to the second quarter net interest income, or net FTE interest margin.

Provision for Credit Losses

During the second quarter of 2024, the Company recorded a provision for credit losses of $2.4 million. This compares to a provision for credit losses of $0.8 million during the first quarter of 2024, and $0.7 million during the second quarter of 2023. The increase in the provision for credit losses during the second quarter of 2024 when compared with the first quarter of 2024 was primarily attributable to loan growth.

For the second quarter of 2024, the allowance for credit losses included net charge-offs of $0.6 million, or an annualized 0.05% of average loans outstanding, compared to net charge-offs of $0.4 million, or an annualized 0.04% of average loans outstanding for the first quarter of 2024, and net charge-offs of $0.3 million, or an annualized 0.04% of average loans outstanding, in the second quarter of 2023.

The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.08% at June 30, 2024, compared to 1.09% at March 31, 2024 and 1.17% at June 30, 2023.

Non-Interest Income

For the Quarter Ended	June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in Thousands)	2024				2024				2023				2023				2023
Non-interest Income
Service charges on deposit accounts	$	3,130			$	3,214			$	3,092			$	3,086			$	3,021
Wire transfer fees		113				101				103				120				116
Interchange fees		3,826				3,109				3,224				3,186				3,584
Fiduciary activities		1,372				1,315				1,352				1,206				1,247
Gains (losses) on sale of investment securities		—				—				(31,572	)			—				20
Gain on sale of mortgage loans		896				626				951				1,582				1,005
Mortgage servicing income net of impairment		450				439				724				631				640
Increase in cash value of bank owned life insurance		318				298				658				1,055				1,015
Other income		380				827				1,019				964				349
Total non-interest income	$	10,485			$	9,929			$	(20,449	)		$	11,830			$	10,997

Total non-interest income was $10.5 million in the second quarter of 2024, compared to $9.9 million in the first quarter of 2024, due primarily to increased interchange fees and higher realized gain on sale of mortgage loans.

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

Non-Interest Expense

For the Quarter Ended	June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in Thousands)	2024				2024				2023				2023				2023
Non-interest Expense
Salaries and employee benefits	$	20,583			$	20,268			$	21,877			$	20,058			$	20,162
Net occupancy expenses		3,192				3,546				3,260				3,283				3,249
Data processing		2,579				2,464				2,942				2,999				3,016
Professional fees		714				607				772				707				633
Outside services and consultants		3,058				3,359				2,394				2,316				2,515
Loan expense		1,038				719				1,345				1,120				1,397
FDIC insurance expense		1,315				1,320				1,200				1,300				840
Core deposit intangible amortization		844				872				903				903				903
Other losses		515				16				508				188				134
Other expense		3,684				3,936				4,129				3,294				3,413
Total non-interest expense	$	37,522			$	37,107			$	39,330			$	36,168			$	36,262

Income Taxes

Horizon's effective tax rate was 10.9% for the second quarter of 2024, as compared to 8.6% for the first quarter of 2024. The sequential increase in the effective tax rate brings the year-to-date effective tax rate to 9.8%, consistent with the Company's current estimated annual effective tax rate.

Balance Sheet

Total assets increased by $56.8 million, or 0.7%, to $7.91 billion as of June 30, 2024, from $7.86 billion as of March 31, 2024. The increase in total assets is primarily due to increases in gross loans HFI of $204.7 million, or 4.4%, to $4.8 billion as of June 30, 2024, compared to $4.6 billion as of March 31, 2024. Loan growth during the period was partially offset by a decrease in fed funds sold of $127.3 million, or 78.7%, to $34.5 million as of June 30, 2024, from $161.7 million as of March 31, 2024.

Total investment securities decreased $29.7 million, or 1.2%, to $2.4 billion as of June 30, 2024, from $2.5 billion as of March 31, 2024, primarily as a result of normal pay-downs and maturities. There were no purchases of investment securities during the second quarter of 2024.

Total loans HFI and loans held for sale increased to $4.8 billion as of June 30, 2024 compared to $4.6 billion as of March 31, 2024, led by organic commercial loan growth of $154.8 million.

Total deposit balances increased by $50.3 million, or 0.9%, to $5.6 billion on June 30, 2024 when compared to balances as of March 31, 2024.

All other interest bearing liabilities at June 30, 2024, primarily comprised of Federal Home Loan Bank of Indianapolis advances, remained relatively stable when compared to balances as of March 31, 2024.

Capital

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

For the Quarter Ended		June 30,			March 31,			December 31,
		2024*			2024**			2023**
Consolidated Capital Ratios
Total capital (to risk-weighted assets)		13.36	%		13.75	%		14.04	%
Tier 1 capital (to risk-weighted assets)		11.56	%		11.89	%		12.13	%
Common equity tier 1 capital (to risk-weighted assets)		10.60	%		10.89	%		11.11	%
Tier 1 capital (to average assets)		8.98	%		8.91	%		8.61	%
*Preliminary estimate - may be subject to change
**Prior periods have been revised (see disclosure below)

During the second quarter of 2024 management corrected a prior computation of the Company’s total capital (to risk-weighted assets), Tier 1 capital (to risk-weighted assets), and Tier 1 capital (to average assets) ratios for purposes of the Company’s consolidated financial statements for holding companies filed with the Federal Reserve (the “Regulatory Filings”), which involved an incorrect classification of the Company’s subordinated notes as Tier 1 capital. The Company evaluated the effects of the incorrect classification to its previously filed Regulatory Filings and previously issued financial statements and determined the errors were not material to either of the prior periods noted above. The Company has amended its Regulatory Filings for the periods ended March 31, 2024 and December 31, 2023 to reclassify the subordinated notes balance from Tier 1 capital into Tier 2 capital. The correction of the classification had no effect on the Company’s consolidated balance sheets, statements of income, stockholders’ equity, or the amounts or disclosure of the regulatory capital ratios of the Bank as included in its call reports. The Company continues to exceed regulatory proxy ratios to be considered “well capitalized”, plus the capital conservation buffer, at June 30, 2024. The Company will reflect the reclassification of the subordinated notes described above in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

As of June 30, 2024, the ratio of total stockholders’ equity to total assets is 9.18%. Book value per common share was $16.62, increasing $0.13 during the second quarter of 2024.

Tangible common equity1 totaled $559.5 million at June 30, 2024, and the ratio of tangible common equity to tangible assets1 was 7.22% at June 30, 2024. Tangible book value, which excludes intangible assets from total equity, per common share1 was $12.80, increasing $0.15 during the second quarter of 2024.

Credit Quality

As of June 30, 2024, total non-accrual loans decreased by $0.8 million, or 4.1%, from March 31, 2024, to 0.38% of total loans HFI. Total non-performing assets increased $0.2 million, or 0.8%, to $20.5 million, compared to $20.3 million as of March 31, 2024. The ratio of non-performing assets to total assets was unchanged compared to the first quarter of 2024.

As of June 30, 2024, net charge-offs increased by $0.2 million to $0.6 million, compared to $0.4 million as of March 31, 2024, but remain low at 0.05% annualized of average loan balances.

Earnings Conference Call

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

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

Participants may access the live conference call on July 25, 2024 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833-974-2379 from the United States, 866-450-4696 from Canada or 1-412-317-5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.

A telephone replay of the call will be available approximately one hour after the end of the conference through August 2, 2024. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 1–412–317-0088 from other international locations, and entering the access code 6800817.

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.9 billion-asset commercial bank holding company for Horizon Bank, which serve customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon's retail offerings include prime residential and other secured consumer lending to in-market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in-market business banking and treasury management services, as well as equipment financing solutions for customers regionally and nationally, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana's Michigan City, is available at horizonbank.com and investor.horizonbank.com.

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures relating to net income, diluted earnings per share, pre-tax, pre-provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them. We believe that this shows the impact of such events as acquisition-related purchase accounting adjustments and swap termination fees, among others we have identified in our reconciliations. Horizon believes these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP information identified herein and its most comparable GAAP measures.

Forward Looking Statements

This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission (the “SEC”). Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the ability of Horizon to remediate its material weaknesses in its internal control over financial reporting; continuing increases in inflation; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; economic conditions and their impact on Horizon and its customers, including local and global economic recovery from the pandemic; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict and the Israel and Hamas conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

	Condensed Consolidated Statements of Income
	(Dollars in Thousands Except Per Share Data, Unaudited)
	Three Months Ended																Six Months Ended
	June 30,			March 31,			December 31,				September 30,			June 30,			June 30,			June 30,
	2024			2024			2023				2023			2023			2024			2023
Interest Income
Loans receivable	$	71,880		$	66,954		$	65,583			$	63,003		$	60,594		$	138,834		$	115,958
Investment securities - taxable		7,986			7,362			8,157				8,788			8,740			15,348			17,465
Investment securities - tax-exempt		6,377			6,451			6,767				7,002			7,059			12,828			14,615
Other		738			4,497			3,007				1,332			475			5,235			628
Total interest income		86,981			85,264			83,514				80,125			76,868			172,245			148,666
Interest Expense
Deposits		28,447			27,990			27,376				24,704			18,958			56,437			33,777
Borrowed funds		11,213			11,930			11,765				11,224			9,718			23,143			19,489
Subordinated notes		829			831			870				880			881			1,660			1,761
Junior subordinated debentures issued to capital trusts		1,213			1,225			1,246				1,227			1,151			2,438			2,241
Total interest expense		41,702			41,976			41,257				38,035			30,708			83,678			57,268
Net Interest Income		45,279			43,288			42,257				42,090			46,160			88,567			91,397
Provision for loan losses		2,369			805			1,274				263			680			3,174			922
Net Interest Income after Provision for Loan Losses		42,910			42,483			40,983				41,827			45,480			85,393			90,475
Non-interest Income
Service charges on deposit accounts		3,130			3,214			3,092				3,086			3,021			6,344			6,049
Wire transfer fees		113			101			103				120			116			214			225
Interchange fees		3,826			3,109			3,224				3,186			3,584			6,935			6,451
Fiduciary activities		1,372			1,315			1,352				1,206			1,247			2,687			2,522
Gains (losses) on sale of investment securities		—			—			(31,572	)			—			20			—			(480	)
Gain on sale of mortgage loans		896			626			951				1,582			1,005			1,522			1,790
Mortgage servicing income net of impairment		450			439			724				631			640			889			1,353
Increase in cash value of bank owned life insurance		318			298			658				1,055			1,015			616			1,996
Other income		380			827			1,019				964			349			1,207			711
Total non-interest income		10,485			9,929			(20,449	)			11,830			10,997			20,414			20,617
Non-interest Expense
Salaries and employee benefits		20,583			20,268			21,877				20,058			20,162			40,851			38,874
Net occupancy expenses		3,192			3,546			3,260				3,283			3,249			6,738			6,812
Data processing		2,579			2,464			2,942				2,999			3,016			5,043			5,685
Professional fees		714			607			772				707			633			1,321			1,166
Outside services and consultants		3,058			3,359			2,394				2,316			2,515			6,417			5,232
Loan expense		1,038			719			1,345				1,120			1,397			1,757			2,515
FDIC insurance expense		1,315			1,320			1,200				1,300			840			2,635			1,380
Core deposit intangible amortization		844			872			903				903			903			1,716			1,806
Other losses		515			16			508				188			134			531			355
Other expense		3,684			3,936			4,129				3,294			3,413			7,620			6,961
Total non-interest expense		37,522			37,107			39,330				36,168			36,262			74,629			70,786
Income /(Loss) Before Income Taxes		15,873			15,305			(18,796	)			17,489			20,215			31,178			40,306
Income tax expense		1,733			1,314			6,419				1,284			1,452			3,047			3,315
Net Income /(Loss)	$	14,140		$	13,991		$	(25,215	)		$	16,205		$	18,763		$	28,131		$	36,991
Basic Earnings /(Loss) Per Share	$	0.32		$	0.32		$	(0.58	)		$	0.37		$	0.43		$	0.64		$	0.85
Diluted Earnings/(Loss) Per Share		0.32			0.32			(0.58	)			0.37			0.43			0.64			0.85

	Condensed Consolidated Balance Sheets
	(Dollars in Thousands)
	June 30,2024				March 31,2024				December 31,2023				September 30,2023				June 30,2023
Assets
Interest earning assets
Federal funds sold		34,453				161,704				401,672				71,576				115,794
Interest earning deposits		6,672				10,893				14,276				6,925				6,295
Federal Home Loan Bank stock		53,826				53,826				34,509				34,509				34,509
Investment securities, available for sale		527,054				535,319				547,251				865,168				905,813
Investment securities, held to maturity		1,904,281				1,925,725				1,945,638				1,966,483				1,983,496
Loans held for sale		2,440				922				1,418				2,828				6,933
Gross loans held for investment (HFI)		4,822,840				4,618,175				4,417,630				4,359,002				4,266,260
Total Interest earning assets		7,351,566				7,306,564				7,362,394				7,306,491				7,319,100
Non-interest earning assets
Allowance for credit losses		(52,215	)			(50,387	)			(50,029	)			(49,699	)			(49,976	)
Cash and due from banks		106,691				100,206				112,772				98,843				109,349
Cash value of life insurance		36,773				36,455				36,157				149,212				148,171
Other assets		165,656				160,593				177,061				152,280				133,476
Goodwill		155,211				155,211				155,211				155,211				155,211
Other intangible assets		11,910				12,754				13,626				14,530				15,433
Premises and equipment, net		93,695				94,303				94,583				94,716				95,053
Interest receivable		43,240				40,008				38,710				37,850				37,536
Total non-interest earning assets		560,961				549,143				578,091				652,943				644,253
Total assets		7,912,527				7,855,707				7,940,485				7,959,434				7,963,353
Liabilities
Savings and money market deposits		3,364,726				3,350,673				3,369,149				3,322,788				3,289,474
Time deposits		1,178,389				1,136,121				1,179,739				1,250,606				1,249,803
Borrowings		1,229,165				1,219,812				1,217,020				1,214,016				1,186,407
Repurchase agreements		128,169				139,309				136,030				142,494				165,632
Subordinated notes		55,668				55,634				55,543				59,007				58,970
Junior subordinated debentures issued to capital trusts		57,369				57,315				57,258				57,201				57,143
Total interest earning liabilities		6,013,486				5,958,864				6,014,739				6,046,112				6,007,429
Non-interest bearing deposits		1,087,040				1,093,076				1,116,005				1,126,703				1,170,055
Interest payable		11,240				7,853				22,249				16,281				12,739
Other liabilities		74,096				74,664				68,680				76,969				63,887
Total liabilities		7,185,862				7,134,457				7,221,673				7,266,065				7,254,110
Stockholders’ Equity
Preferred stock		—				—				—				—				—
Common stock		—				—				—				—				—
Additional paid-in capital		357,673				356,599				356,400				355,478				354,953
Retained earnings		442,977				435,927				429,021				461,325				452,209
Accumulated other comprehensive income (loss)		(73,985	)			(71,276	)			(66,609	)			(123,434	)			(97,919	)
Total stockholders’ equity		726,665				721,250				718,812				693,369				709,243
Total liabilities and stockholders’ equity	$	7,912,527			$	7,855,707			$	7,940,485			$	7,959,434			$	7,963,353

	Loans and Deposits
	(Dollars in Thousands, Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,		% Change
	2024		2024		2023		2023		2023		Q2'24 vs Q1'24		Q2'24 vs Q2'23
Commercial:
Commercial real estate	2,117,772		1,984,723		1,962,097		1,916,056		1,859,285		7	%	14	%
Commercial & Industrial	786,788		765,043		712,863		673,188		646,994		3	%	22	%
Total commercial	2,904,560		2,749,766		2,674,960		2,589,244		2,506,279		6	%	16	%
Residential Real estate	797,956		782,071		681,136		675,399		674,751		2	%	18	%
Mortgage warehouse	68,917		56,548		45,078		65,923		82,345		22	%	(16	)%
Consumer	1,051,407		1,029,790		1,016,456		1,028,436		1,002,885		2	%	5	%
Total loans held for investment	4,822,840		4,618,175		4,417,630		4,359,002		4,266,260		4	%	13	%
Loans held for sale	2,440		922		1,418		2,828		6,933		165	%	(65	)%
Total loans	4,825,280		4,619,097		4,419,048		4,361,830		4,273,193		4	%	13	%
Deposits:
Interest bearing deposits
Savings and money market deposits	3,364,726		3,350,673		3,369,149		3,322,788		3,289,474		—	%	2	%
Time deposits	1,178,389		1,136,121		1,179,739		1,250,606		1,249,803		4	%	(6	)%
Total Interest bearing deposits	4,543,115		4,486,794		4,548,888		4,573,394		4,539,277		1	%	—	%
Non-interest bearing deposits
Non-interest bearing deposits	1,087,040		1,093,076		1,116,005		1,126,703		1,170,055		(1	)%	(7	)%
Total deposits	5,630,155		5,579,870		5,664,893		5,700,097		5,709,332		1	%	(1	)%

	Average Balance Sheet
	(Dollars in Thousands, Unaudited)
	Three Months Ended
	June 30, 2024									March 31, 2024									June 30, 2023
	AverageBalance			Interest(4)			AverageRate(4)			AverageBalance			Interest(4)			AverageRate(4)			AverageBalance			Interest(4)			AverageRate(4)
Assets
Interest earning assets
Federal funds sold	$	47,805		$	645		5.43	%		$	322,058		$	4,387		5.48	%		$	30,926		$	376		4.88	%
Interest earning deposits		7,662			93		4.88	%			9,025			110		4.90	%			9,002			99		4.41	%
Federal Home Loan Bank stock		53,827			1,521		11.36	%			37,949			784		8.31	%			33,322			508		6.11	%
Investment securities - taxable(1)		1,309,305			6,465		1.99	%			1,326,246			6,578		1.99	%			1,673,439			8,232		1.97	%
Investment securities - non-taxable(1)		1,132,065			8,072		2.87	%			1,149,957			8,166		2.86	%			1,240,931			8,935		2.89	%
Total investment securities		2,441,370			14,537		2.39	%			2,476,203			14,744		2.39	%			2,914,370			17,167		2.36	%
Loans receivable(2) (3)		4,662,124			72,208		6.23	%			4,448,324			67,307		6.09	%			4,225,020			60,843		5.78	%
Total interest earning assets		7,212,788			89,004		4.96	%			7,293,559			87,332		4.82	%			7,212,640			78,993		4.39	%
Non-interest earning assets
Cash and due from banks		108,319									105,795									102,935
Allowance for credit losses		(50,334	)								(49,960	)								(49,481	)
Other assets		508,555									486,652									573,932
Total average assets	$	7,779,328								$	7,836,046								$	7,840,026
Liabilities and Stockholders' Equity
Interest bearing liabilities
Interest bearing deposits	$	3,334,490		$	17,405		2.10	%		$	3,323,227		$	15,889		1.92	%		$	3,329,899		$	10,388		1.25	%
Time deposits		1,134,590			11,042		3.91	%			1,176,921			12,101		4.14	%			1,115,175			8,570		3.08	%
Borrowings		1,184,172			10,187		3.46	%			1,200,728			10,904		3.65	%			1,176,702			9,035		3.08	%
Repurchase agreements		125,144			1,026		3.30	%			138,052			1,026		2.99	%			140,606			683		1.95	%
Subordinated notes		55,647			829		5.99	%			55,558			831		6.02	%			58,946			881		5.99	%
Junior subordinated debentures issued to capital trusts		57,335			1,213		8.51	%			57,279			1,225		8.60	%			57,110			1,151		8.08	%
Total interest bearing liabilities		5,891,378			41,702		2.85	%			5,951,765			41,976		2.84	%			5,878,438			30,708		2.10	%
Non-interest bearing liabilities
Demand deposits		1,080,676									1,077,183									1,186,520
Accrued interest payable and other liabilities		80,942									82,015									64,115
Stockholders' equity		726,332									725,083									710,953
Total average liabilities and stockholders' equity	$	7,779,328								$	7,836,046								$	7,840,026
Net FTE interest income (non-GAAP)(5)				$	47,302								$	45,356								$	48,285
Less FTE adjustments(4)					(2,023	)								(2,068	)								(2,125	)
Net Interest Income				$	45,279								$	43,288								$	46,160
Net FTE interest margin (Non-GAAP)(4)(5)							2.64	%								2.50	%								2.69	%
(1)Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities.
(2)Includes fees on loans held for sale and held for investment. The inclusion of loan fees does not have a material effect on the average interest rate.
(3)Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.
(4)Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate
(5)Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

	Credit Quality
	(Dollars in Thousands Except Ratios, Unaudited)
	Quarter Ended
	June 30,				March 31,				December 31,				September 30,				June 30,				% Change
	2024				2024				2023				2023				2023				2Q24 vs 1Q24		2Q24 vs 2Q23
Non-accrual loans
Commercial	$	4,321			$	5,493			$	7,362			$	6,919			$	8,275			(21	)%	(48	)%
Residential Real estate		8,489				8,725				8,058				7,644				7,927			(3	)%	7	%
Mortgage warehouse		—				—				—				—				—			—	%	—	%
Consumer		5,453				4,835				4,290				4,493				4,594			13	%	19	%
Total non-accrual loans	$	18,263			$	19,053			$	19,710			$	19,056			$	20,796			(4	)%	(7	)%
90 days and greater delinquent - accruing interest	$	1,058			$	108			$	559			$	392			$	1,313			880	%	(19	)%
Total non-performing loans	$	19,321			$	19,161			$	20,269			$	19,448			$	22,109			1	%	(5	)%
Other real estate owned
Commercial	$	1,111			$	1,124			$	1,124			$	1,287			$	1,567			(1	)%	(29	)%
Residential Real estate		—				—				182				32				107			—	%	(100	)%
Mortgage warehouse		—				—				—				—				—			—	%	—	%
Consumer		57				50				205				72				7			14	%	714	%
Total other real estate owned	$	1,168			$	1,174			$	1,511			$	1,391			$	1,681			(1	)%	(31	)%
Total non-performing assets	$	20,489			$	20,335			$	21,780			$	20,839			$	23,790			1	%	(14	)%
Loan data:
Accruing 30 to 89 days past due loans		19,785				15,154				16,595				13,089				10,913			31	%	81	%
Substandard loans	$	51,221			$	47,469			$	49,526			$	47,563			$	41,484			8	%	23	%
Net charge-offs (recoveries)
Commercial		54				(57	)			233				142				101			195	%	(47	)%
Residential Real estate		(5	)			(5	)			21				(39	)			(10	)		—	%	50	%
Mortgage warehouse		—				—				—				—				—			—	%	—	%
Consumer		535				488				531				619				183			10	%	192	%
Total net charge-offs	$	584			$	426			$	785			$	722			$	274			37	%	113	%
Allowance for credit losses
Commercial		31,941				30,514				29,736				29,472				30,354			5	%	5	%
Residential Real estate		2,588				2,655				2,503				2,794				3,648			(3	)%	(29	)%
Mortgage warehouse		736				659				481				714				893			12	%	(18	)%
Consumer		16,950				16,559				17,309				16,719				15,081			2	%	12	%
Total allowance for credit losses	$	52,215			$	50,387			$	50,029			$	49,699			$	49,976			4	%	4	%
Credit quality ratios
Non-accrual loans to HFI loans		0.38	%			0.41	%			0.45	%			0.44	%			0.49	%
Non-performing assets to total assets		0.26	%			0.26	%			0.27	%			0.26	%			0.30	%
Annualized net charge-offs of average total loans		0.05	%			0.04	%			0.07	%			0.07	%			0.04	%
Allowance for credit losses to HFI loans		1.08	%			1.09	%			1.13	%			1.14	%			1.17	%

Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin
(Dollars in Thousands, Unaudited)
		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Interest income (GAAP)	(A)	$	86,981			$	85,264			$	83,514			$	80,125			$	76,868
Taxable-equivalent adjustment:
Investment securities - tax exempt(1)		$	1,695			$	1,715			$	1,799			$	1,861			$	1,876
Loan receivable(2)		$	328			$	353			$	314			$	251			$	249
Interest income (non-GAAP)	(B)	$	89,004			$	87,332			$	85,627			$	82,237			$	78,993
Interest expense (GAAP)	(C)	$	41,702			$	41,976			$	41,257			$	38,035			$	30,708
Net interest income (GAAP)	(D) = (A) - (C)	$	45,279			$	43,288			$	42,257			$	42,090			$	46,160
Net FTE interest income (non-GAAP)	(E) = (B) - (C)	$	47,302			$	45,356			$	44,370			$	44,202			$	48,285
Average interest earning assets	(F)		7,212,788				7,293,559				7,239,034				7,286,611				7,212,640
Net FTE interest margin (non-GAAP)	(G) = (E*) / (F)		2.64	%			2.50	%			2.43	%			2.41	%			2.69	%
(1)The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity
(2)The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment
*Annualized

Non–GAAP Reconciliation of Return on Average Tangible Common Equity
(Dollars in Thousands, Unaudited)
		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Net income (loss) (GAAP)	(A)	$	14,140			$	13,991			$	(25,215	)		$	16,205			$	18,763
Average stockholders' equity	(B)	$	726,332			$	725,083			$	702,793			$	715,485			$	710,953
Average intangible assets	(C)		167,659				168,519				169,401				170,301				171,177
Average tangible equity (Non-GAAP)	(D) = (B) - (C)	$	558,673			$	556,564			$	533,392			$	545,184			$	539,776
Return on average tangible common equity ("ROACE") (non-GAAP)	(E) = (A*) / (D)		10.18	%			10.11	%		(18.76)%					11.79	%			13.94	%
*Annualized

Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets
(Dollars in Thousands, Unaudited)
		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Total stockholders' equity (GAAP)	(A)	$	726,665			$	721,250			$	718,812			$	693,369			$	709,243
Intangible assets (end of period)	(B)		167,121				167,965				168,837				169,741				170,644
Total tangible common equity (non-GAAP)	(C) = (A) - (B)	$	559,544			$	553,285			$	549,975			$	523,628			$	538,599
Total assets (GAAP)	(D)		7,912,527				7,855,707				7,940,485				7,959,434				7,963,353
Intangible assets (end of period)	(B)		167,121				167,965				168,837				169,741				170,644
Total tangible assets (non-GAAP)	(E) = (D) - (B)	$	7,745,406			$	7,687,742			$	7,771,648			$	7,789,693			$	7,792,709
Tangible common equity to tangible assets (Non-GAAP)	(G) = (C) / (E)		7.22	%			7.20	%			7.08	%			6.72	%			6.91	%

Non–GAAP Reconciliation of Tangible Book Value Per Share
(Dollars in Thousands, Unaudited)
		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Total stockholders' equity (GAAP)	(A)	$	726,665			$	721,250			$	718,812			$	693,369			$	709,243
Intangible assets (end of period)	(B)		167,121				167,965				168,837				169,741				170,644
Total tangible common equity (non-GAAP)	(C) = (A) - (B)	$	559,544			$	553,285			$	549,975			$	523,628			$	538,599
Common shares outstanding	(D)		43,712,059				43,726,380				43,652,063				43,648,501				43,645,216
Tangible book value per common share (non-GAAP)	(E) = (C) / (D)	$	12.80			$	12.65			$	12.60			$	12.00			$	12.34

Contact:	John R. Stewart, CFA
	Chief Financial Officer
Phone:	(219) 814-5833
Fax:	(219) 874–9280
Date:	July 24, 2024