GlobeNewswire Inc | Jul 27, 2021 04:35PM EDT

July 27, 2021

MICHIGAN CITY, Ind., July 27, 2021 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) Horizon Bancorp, Inc. (Horizon or the Company) announced its unaudited financial results for the three and six months ending June30, 2021.

Horizon achieved strong earnings in the second quarter, along with increased noninterest income, stable net interest income, lower deposit costs and strong asset quality metrics, Chairman and CEO Craig M. Dwight said. With an improving commercial lending pipeline, and ample liquidity and capital, Horizon is very well positioned for loan growth more in line with historic levels in a recovering economy. We also continue to focus on disciplined management of our highly efficient operations and initiated plans to consolidate 10 locations this summer, reassigning employees to other open positions and investing savings into digital capabilities and opportunities in our growing Indiana and Michigan markets. We also announced the acquisition of 14 Michigan branches to extend our lowcost deposit franchise in a financially and strategically attractive transaction that is on schedule for completion during the third quarter.

Second Quarter 2021 Highlights

-- Net income grew to a record $22.2 million, up 8.6% from the linked quarter and 51.5% from the yearago period. Diluted earnings per share (EPS) of $0.50 includes the $0.01 aftertax impact of expenses associated with Horizons agreement to acquire 14 TCF National Bank branches, approximately $976 million in deposits and approximately $278 million in loans in a financially and strategically attractive extension of Horizons lowcost deposit franchise in Michigan, announced in the quarter. EPS was $0.46 for the first quarter of 2021 and $0.33 for the second quarter of 2020. -- Pretax, preprovision net income grew to a secondquarter record $24.5 million, up 0.9% from the linked quarter and 3.2% from the yearago period. This nonGAAP financial measure is utilized by banks to provide a greater understanding of pretax profitability before giving effect to credit loss expense. (See the NonGAAP Reconciliation of PreTax, PreProvision Income table below.) -- Net interest income was $42.6 million for the quarter, compared to $42.5 million for the first quarter of 2021 and $43.0 million for the second quarter of 2020. Reported net interest margin (NIM) was 3.14% and adjusted NIM was 3.13%, with reported NIM declining by 15 basis points and adjusted NIM decreasing by four basis points from the first quarter of 2021. (See the NonGAAP Reconciliation of Net Interest Margin table for the definition of this nonGAAP calculation of adjusted NIM.) An estimated seven basis points attributed to Federal Paycheck Protection Program (PPP) lending improved the margin, offset by an estimated 21 basis point compression attributed to excess liquidity held during the quarter, for both NIM and adjusted NIM. -- Horizons inmarket consumer and commercial deposit relationships, combined with strategic pricing moves to manage deposit growth and runoff of higherpriced time deposits, contributed to continued improvement in the cost of interest bearing liabilities, which declined to 0.45% in the quarter, compared to 0.50% in the first quarter of 2021 and 0.74% in the second quarter of 2020.

-- Noninterest expense was $33.4 million in the quarter, or 2.18% of average assets on an annualized basis, compared to $32.2 million, or 2.20%, in the first quarter of 2021 and $30.4 million, or 2.18%, in the second quarter of 2020. -- The efficiency ratio for the period was 57.73% compared to 57.03% for the first quarter of 2021 and 56.23% for the second quarter of 2020. The adjusted efficiency ratio was 57.45% compared to 57.97% for the first quarter of 2021 and 56.49% for the second quarter of 2020. (See the Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio table below.) -- Horizon experienced an increased return on average assets (ROAA) of 1.45% and return on average common equity (ROACE) of 12.59% in the quarter, as well as adjusted ROAA of 1.46% and adjusted ROACE of 12.61%, excluding the impact of acquisition expenses and prepayment penalties, net of tax, and death benefits on bank owned life insurance. (See the NonGAAP Reconciliation of Return on Average Assets and the NonGAAP Reconciliation of Return on Average Common Equity tables below.) -- Horizon recorded a provision release of $1.5 million and maintained solid asset quality metrics at period end, including nonperforming loans declining 10.9% during the quarter to $22.3 million, or 0.63% of total loans, substandard loans declining 4.6% to $82.5 million, or 2.3% of total loans, net chargeoffs declining 81.3% to $39,000, or 0.00% of average loans for the period, and COVID19 deferrals declining 42.7% to $52.5 million, or 1.5% of total loans. -- Total noninterest income grew to $15.2 million, up 9.6% from the linked quarter and 36.7% from the yearago period, due to favorable impact of mortgage production, bank owned life insurance, banking fees and fiduciary activities. Following record residential lending in 2020, mortgagerelated noninterest income remained strong in the second three months of 2021, with gain on mortgage loan sales of $5.6 million and net mortgage servicing income of $1.5million. The Horizon Bank (the Bank) originated $173.0 million in mortgage loans during the quarter, with 61% of volume from purchases, as Horizon continued to focus residential lending on prime borrowers in Indiana and Michigan markets. -- Loans, excluding PPP lending, totaled $3.36 billion on June30, 2021, were lower reflecting cash reserves maintained by many current and prospective commercial borrowers and retail households through the quarter. Loans, excluding PPP lending, totaled $3.42 billion on March 31, 2021 and $3.69 billion on June30, 2020. -- Horizons book value per share and tangible book value per share increased to alltime highs of $16.16 and $12.24, respectively. (See the NonGAAP Reconciliation of Tangible Stockholders Equity and Tangible Book Value per Share table below.) -- As part of the Company's annual branch performance review and a thirdparty analysis of the Bank's retail network, Horizon's Board of Directors approved the permanent closure of nine Indiana branch locations and one in Michigan to occur on August 27, 2021. -- Horizon increased cash dividends paid in the quarter by 8.3% to $0.13 per share, as previously announced. As of June 30, 2021, in excess of $129 million in cash was maintained at the holding company, providing considerable future optionality to build shareholder value.

Summary

For the Three Months Ended June 30, March 31, June 30,Net Interest Income and Net Interest 2021 2021 2020MarginNet interest income $ 42,632 $ 42,538 $ 42,996 Net interest margin 3.14 % 3.29 % 3.47 %Adjusted net interest margin 3.13 % 3.17 % 3.35 %

Expected net interest margin compression in the second quarter continued to reflect pressure on total earning assets as we invested significant liquidity in loweryielding assets. This was partially offset by a four basis point increase in average loan yields and a five basis point reduction in our already low average cost of interest bearing liabilities, Mr. Dwight commented.

We continue to believe that Horizon's ample liquidity and capital positions us well to quickly respond to both commercial and consumer credit needs that we expect to accelerate as stimulus dollars are spent down and a recovering economy enhances demand.

For the Three Months Ended June 30, March 31, June 30,Asset Yields and Funding Costs 2021 2021 2020Interest earning assets 3.48 % 3.66 % 4.05 %Interest bearing liabilities 0.45 % 0.50 % 0.74 %

For the Three Months EndedNon?interest Income and June 30, March 31, June 30,Mortgage Banking Income 2021 2021 2020Total non?interest income $ 15,207 $ 13,873 $ 11,125 Gain on sale of mortgage loans 5,612 5,296 6,620 Mortgage servicing income net of 1,503 213 (2,760 ) impairment

For the Three Months Ended June 30, March 31, June 30,Non?interest Expense 2021 2021 2020Total non?interest expense $ 33,388 $ 32,172 $ 30,432 Annualized non?interest expense to 2.18 % 2.20 % 2.18 %average assets

For the Three Months Ended June March June 30, 31, 30,Credit Quality 2021 2021 2020Allowance for credit losses to total loans 1.58 % 1.56 % 1.38 %Non?performing loans to total loans 0.63 % 0.68 % 0.70 %Percent of net charge?offs to average loans 0.00 % 0.01 % 0.01 %outstanding for the period

Allowance for December Net Reserve June 30, 31,Credit Losses 2020 1Q20 2Q20 2021Commercial $ 42,210 $ 770 $ (1,214 ) $ 41,766 Retail Mortgage 4,620 (391 ) (121 ) 4,108 Warehouse 1,267 (104 ) (8 ) 1,155 Consumer 8,930 (116 ) (194 ) 8,620 Allowance for Credit Losses $ 57,027 $ 159 $ (1,537 ) $ 55,649 (?ACL?)ACL / Total Loans 1.47 % 1.58 %Acquired Loan Discount $ 11,494 $ (221 ) $ (815 ) $ 10,458 (?ALD?)

Horizon recorded a provision release reflecting continuing economic improvement and the Bank's strong asset quality, including significant reductions in nonperforming and substandard loans, net chargeoffs and COVID19 deferral levels in the quarter, Mr. Dwight said.

Income Statement Highlights

Net income for the second quarter of 2021 was $22.2 million, or $0.50 diluted earnings per share, compared to $20.4 million, or $0.46, for the linked quarter and $14.6 million, or $0.33, for the prior year period. This represents the highest quarterly net income in the Companys history, even with the $0.01 after tax effect of second quarter 2021 acquisition expenses.

Adjusted net income for the second quarter of 2021 was $22.2 million, or $0.50 diluted earnings per share, compared to $19.7 million, or $0.44, for the linked quarter and $14.4 million, or $0.32, for the prior year period. Adjusted net income, which is not calculated according to generally accepted accounting principles (GAAP), is a measure that Horizon uses to provide a greater understanding of operating profitability.

The increase in net income for the second quarter of 2021 when compared to the first quarter of 2021 reflects an increase in noninterest income of $1.3 million, a decrease of $1.9 million in credit loss expense and an increase in net interest income of $94,000, offset by an increase in noninterest expense of $1.2 million and an increase in income tax expense of $320,000.

Interest income includes the recognition of PPP interest and net loan processing fees totaling $2.7 million in the second quarter of 2021, compared to $3.2 million in the linked quarter. On June30, 2021, the Company had $5.7 million in deferred PPP loan processing fees outstanding and $169.4 million in PPP loans outstanding. PPP deferred fees and loans outstanding at March 31, 2021 were $7.3 million and $252.3 million, respectively. The processing fees are deferred and recognized over the contractual life of the loan, or accelerated at forgiveness.

Second quarter 2021 income from the gain on sale of mortgage loans totaled $5.6 million, up from $5.3 million in the linked quarter and down from $6.6 million in the prior year period.

Noninterest expense of $33.4 million in the second quarter of 2021 reflected an $859,000 increase in salaries and employee benefits expense, an increase of $518,000 in outside services and consultants, an increase of $309,000 in other expenses, an increase of $285,000 in loan expenses and $242,000 in acquisition expenses, offset by a decrease in FDIC deposit insurance expense of $300,000, a decrease in other losses of $277,000 and a decrease in net occupancy expenses of $234,000, from the linked quarter.

The increase in net income for the second quarter of 2021 when compared to the same prior year period reflects an increase in noninterest income of $4.1 million and a decrease in credit loss expense of $8.5 million, offset by an increase in noninterest expense of $3.0 million, an increase in income tax expense of $1.8 million and a decrease in net interest income of $364,000.

Net income for the first six months of 2021 was $42.6 million, or $0.97 diluted earnings per share, compared to $26.3 million, or $0.59 diluted earnings per share, for the first six months of 2020. Adjusted net income for the first six months of 2021 was $41.9 million, or $0.95 diluted earnings per share, compared to $25.6 million, or $0.57 diluted earnings per share, for the first six months of 2020. The increase in net income for the first six months of 2021 when compared to the same prior year period reflects a decrease in credit loss expense of $16.8 million, an increase in noninterest income of $5.9 million and an increase in net interest income of $1.2 million, offset by an increase in noninterest expense of $4.0 million and an increase in income tax expense of $3.6 million.

Non?GAAP Reconciliation of Net Income(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December 31, September June 30, June 30, June 30, 30, 2021 2021 2020 2020 2020 2021 2020Net income $ 22,173 $ 20,422 $ 21,893 $ 20,312 $ 14,639 $ 42,595 $ 26,294 as reportedAcquisition 242 ? ? ? ? 242 ? expensesTax effect (51 ) ? ? ? ? (51 ) ? Net incomeexcluding 22,364 20,422 21,893 20,312 14,639 42,786 26,294 acquisitionexpenses(Gain) /loss onsale of ? (914 ) (2,622 ) (1,088 ) (248 ) (914 ) (587 ) investmentsecuritiesTax effect ? 192 551 228 52 192 123 Net incomeexcluding(gain) /loss on 22,364 19,700 19,822 19,452 14,443 42,064 25,830 sale ofinvestmentsecuritiesDeathbenefit onbank owned (266 ) ? ? (31 ) ? (266 ) (233 ) lifeinsurance(?BOLI?)Net incomeexcludingdeath 22,098 19,700 19,822 19,421 14,443 41,798 25,597 benefit onBOLIPrepaymentpenalties 125 ? 3,804 ? ? 125 ? onborrowingsTax effect (26 ) ? (799 ) ? ? (26 ) ? Net incomeexcludingprepayment 22,197 19,700 22,827 19,421 14,443 41,897 25,597 penaltiesonborrowingsAdjusted $ 22,197 $ 19,700 $ 22,827 $ 19,421 $ 14,443 $ 41,897 $ 25,597 net income

Non?GAAP Reconciliation of Diluted Earnings per Share(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December September June 30, June 30, June 30, 31, 30, 2021 2021 2020 2020 2020 2021 2020Dilutedearningsper share $ 0.50 $ 0.46 $ 0.50 $ 0.46 $ 0.33 $ 0.97 $ 0.59 (?EPS?) asreportedAcquisition 0.01 ? ? ? ? 0.01 ? expensesTax effect ? ? ? ? ? ? ? Diluted EPSexcluding 0.51 0.46 0.50 0.46 0.33 0.98 0.59 acquisitionexpenses(Gain) /loss onsale of ? (0.02 ) (0.06 ) (0.02 ) (0.01 ) (0.02 ) (0.01 ) investmentsecuritiesTax effect ? ? 0.01 0.01 ? ? ? Diluted EPSexcluding(gain) /loss on 0.51 0.44 0.45 0.45 0.32 0.96 0.58 sale ofinvestmentsecuritiesDeathbenefit onbank owned (0.01 ) ? ? ? ? (0.01 ) (0.01 ) lifeinsurance(?BOLI?)Diluted EPSexcludingdeath 0.50 0.44 0.45 0.45 0.32 0.95 0.57 benefit onBOLIPrepaymentpenalties ? ? 0.09 ? ? ? ? onborrowingsTax effect ? ? (0.02 ) ? ? ? ? Diluted EPSexcludingprepayment 0.50 0.44 0.52 0.45 0.32 0.95 0.57 penaltiesonborrowingsAdjusted $ 0.50 $ 0.44 $ 0.52 $ 0.45 $ 0.32 $ 0.95 $ 0.57 diluted EPS

Non?GAAP Reconciliation of Pre?Tax, Pre?Provision Income(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December 31, September June 30, June 30, June 30, 30, 2021 2021 2020 2020 2020 2021 2020Pre?tax $ 25,943 $ 23,872 $ 23,860 $ 24,638 $ 16,632 $ 49,815 $ 29,871 incomeCredit loss (1,492 ) 367 3,042 2,052 7,057 (1,125 ) 15,657 expensePre?tax,pre?provision $ 24,451 $ 24,239 $ 26,902 $ 26,690 $ 23,689 $ 48,690 $ 45,528 income Pre?tax,pre?provision $ 24,451 $ 24,239 $ 26,902 $ 26,690 $ 23,689 $ 48,690 $ 45,528 incomeAcquisition 242 ? ? ? ? 242 ? expenses(Gain) / losson sale of ? (914 ) (2,622 ) (1,088 ) (248 ) (914 ) (587 ) investmentsecuritiesDeath benefit (266 ) ? ? (31 ) ? (266 ) (233 ) on BOLIPrepaymentpenalties on 125 ? 3,804 ? ? 125 ? borrowingsAdjustedpre?tax, $ 24,552 $ 23,325 $ 28,084 $ 25,571 $ 23,441 $ 47,752 $ 44,708 pre?provisionincome

Horizons net interest margin decreased to 3.14% for the second quarter of 2021 compared to 3.29% for the first quarter of 2021. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 18 basis points, offset by a decrease in the cost of interest bearing liabilities of five basis points. Interest income from acquisitionrelated purchase accounting adjustments was $1.3 million lower during the second quarter of 2021 when compared to the first quarter of 2021.

Horizons net interest margin decreased to 3.14% for the second quarter of 2021 compared to 3.47% for the second quarter of 2020. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 57 basis points offset by a decrease in the cost of interest bearing liabilities of 29 basis points.

Horizons net interest margin decreased to 3.21% for the first six months of 2021 compared to 3.51% for the same prior year period. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 68 basis points offset by a decrease in the cost of interest bearing liabilities of 46 basis points.

The net interest margin was impacted during the second and first quarters of 2021 by PPP loans that were originated. Horizon estimates that the PPP loans increased the net interest margin by seven and 10 basis points for the second and first quarters of 2021, respectively. This assumes these PPP loans were not included in average interest earning assets or interest income and were primarily funded by the growth in noninterest bearing deposits.

The net interest margin was also impacted during the second and first quarters of 2021 by excess liquidity carried on the balance sheet through increased deposits. Horizon estimates that the excess liquidity compressed the net interest margin by 21 and 16 basis points for the second and first quarters of 2021, respectively. This assumes that the excess liquidity was not included in average interest earning assets or interest income and was excluded from noninterest bearing deposits.

Non?GAAP Reconciliation of Net Interest Margin(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2021 2021 2020 2020 2020 2021 2020Net interest income as reported $ 42,632 $ 42,538 $ 43,622 $ 43,397 $ 42,996 $ 85,170 $ 83,921 Average interest earning assets 5,659,384 5,439,634 5,365,888 5,251,611 5,112,636 5,550,116 4,929,388 Net interest income as a percentage ofaverage interest earning assets (?Net 3.14 % 3.29 % 3.34 % 3.39 % 3.47 % 3.21 % 3.51 %Interest Margin?) Net interest income as reported $ 42,632 $ 42,538 $ 43,622 $ 43,397 $ 42,996 $ 85,170 $ 83,921 Acquisition?related purchase (230 ) (1,579 ) (2,461 ) (1,488 ) (1,553 ) (1,809 ) (2,987 ) accounting adjustments (?PAUs?)Prepayment penalties on borrowings 125 ? 3,804 ? ? 125 ? Adjusted net interest income $ 42,527 $ 40,959 $ 44,965 $ 41,909 $ 41,443 $ 83,361 $ 80,934 Adjusted net interest margin 3.13 % 3.17 % 3.44 % 3.27 % 3.35 % 3.15 % 3.39 %

Net interest margin, excluding acquisitionrelated purchase accounting adjustments (adjusted net interest margin), was 3.13% for the second quarter of 2021, compared to 3.17% for the linked quarter and 3.35% for the second quarter of 2020. Interest income from acquisitionrelated purchase accounting adjustments was $230,000, $1.6 million and $1.6 million for the three months ended June30, 2021, March31, 2021 and June30, 2020, respectively.

The adjusted net interest margin was 3.15% for the first six months of 2021 compared to 3.39% for the same prior year period. Interest income from acquisitionrelated purchase accounting adjustments was $1.8 million and $3.0 million for the six months ended June 30, 2021 and 2020, respectively.

Lending Activity

Total loans were $3.53 billion, or $3.36 billion excluding PPP loans, on June30, 2021. Total loans were $3.67 billion, or $3.42 billion excluding PPP loans, on March31, 2021. During the three months ended June30, 2021, PPP loans decreased $82.8 million, mortgage warehouse loans decreased $60.9 million, residential mortgage loans decreased $22.5 million and loans held for sale decreased $570,000, offset by an increase in consumer loans of $11.7 million and an increase in commercial loans, excluding PPP loans, of $9.6 million.

Loan Growth by Type, Excluding Acquired Loans(Dollars in Thousands, Unaudited) June 30, March 31, Amount Percent 2021 2021 Change ChangeCommercial,excluding PPP $ 1,935,187 $ 1,925,576 $ 9,611 0.5 %loansPPP loans 169,440 252,282 (82,842 ) (32.8 ) %Residential 559,437 581,929 (22,492 ) (3.9 )mortgage %Consumer 650,144 638,403 11,741 1.8 %Subtotal 3,314,208 3,398,190 (83,982 ) (2.5 ) %Loans held for 7,228 7,798 (570 ) (7.3 )sale %Mortgage 205,311 266,246 (60,935 ) (22.9 )warehouse %Total loans $ 3,526,747 $ 3,672,234 $ (145,487 ) (4.0 ) %

Residential mortgage lending activity for the three months ended June30, 2021 generated $5.6 million in income from the gain on sale of mortgage loans, increasing $316,000 from the first quarter of 2021 and decreasing $1.0 million from the second quarter of 2020. Total origination volume for the second quarter of 2021, including loans placed into the portfolio, totaled $173.0 million, representing an increase of 11.2% from first quarter 2021 levels, and a decrease of 31.6% from the second quarter of 2020. As a percentage of total originations, 39% of the volume was for refinances and 61% was for new purchases during the second quarter of 2021. Total origination volume of loans sold to the secondary market totaled $113.2 million, representing a decrease of 10.2% from the first quarter of 2021 and a decrease of 41.2% from the second quarter of 2020.

Revenue derived from Horizon's residential mortgage and mortgage warehouse lending activities was 12% for the three months ended June 30, 2021, compared to 14% for the linked quarter and 15% for the three months ended June 30, 2020.

Expense Management

Three Months Ended June 30, March 31, 2021 2021 AdjustedNon?interest Actual Acquisition Adjusted Actual Acquisition Adjusted Amount PercentExpense Expenses Expenses Change ChangeSalaries andemployee $ 17,730 $ ? $ 17,730 $ 16,871 $ ? $ 16,871 $ 859 5.1 %benefitsNet occupancy 3,084 ? 3,084 3,318 ? 3,318 (234 ) (7.1 )%expensesData processing 2,388 ? 2,388 2,376 ? 2,376 12 0.5 %Professional 588 (51 ) 537 544 ? 544 (7 ) (1.3 )%feesOutside services 2,220 (187 ) 2,033 1,702 ? 1,702 331 19.4 %and consultantsLoan expense 3,107 ? 3,107 2,822 ? 2,822 285 10.1 %FDIC insurance 500 ? 500 800 ? 800 (300 ) (37.5 )%expenseOther losses 6 ? 6 283 ? 283 (277 ) (97.9 )%Other expense 3,765 (4 ) 3,761 3,456 ? 3,456 305 8.8 %Totalnon?interest $ 33,388 $ (242 ) $ 33,146 $ 32,172 $ ? $ 32,172 $ 974 3.0 %expenseAnnualizednon?interest 2.18 % 2.16 % 2.20 % 2.20 % expense toaverage assets

Total noninterest expense was $1.2 million higher in the second quarter of 2021 when compared to the first quarter of 2021. The increase in expenses was primarily due to an increase in salaries and employee benefits of $859,000, an increase in outside services and consultants of $518,000, an increase in other expenses of $309,000 and an increase in loan expense of $285,000, offset by decreases in FDIC insurance expense of $300,000, other losses of $277,000 and net occupancy of $234,000. The increase in salaries and employee benefits expense was due to a decrease of $581,000 in deferred loan origination costs and an increase of $272,000 in health insurance expense. Excluding acquisition expenses, total noninterest expense increased by $974,000 in the second quarter of 2021 when compared to the first quarter of 2021.

Three Months Ended June 30, June 30, 2021 2020 AdjustedNon?interest Actual Acquisition Adjusted Actual Acquisition Adjusted Amount PercentExpense Expenses Expenses Change ChangeSalaries andemployee $ 17,730 $ ? $ 17,730 $ 15,629 $ ? $ 15,629 $ 2,101 13.4 %benefitsNet occupancy 3,084 ? 3,084 3,190 ? 3,190 (106 ) (3.3 )expenses %Data processing 2,388 ? 2,388 2,432 ? 2,432 (44 ) (1.8 ) %Professional 588 (51 ) 537 518 ? 518 19 3.7 %feesOutside services 2,220 (187 ) 2,033 1,759 ? 1,759 274 15.6 %and consultantsLoan expense 3,107 ? 3,107 2,692 ? 2,692 415 15.4 %FDIC insurance 500 ? 500 235 ? 235 265 112.8 %expenseOther losses 6 ? 6 193 ? 193 (187 ) (96.9 ) %Other expense 3,765 (4 ) 3,761 3,784 ? 3,784 (23 ) (0.6 ) %Totalnon?interest $ 33,388 $ (242 ) $ 33,146 $ 30,432 $ ? $ 30,432 $ 2,714 8.9 %expenseAnnualizednon?interest 2.18 % 2.16 % 2.18 % 2.18 % expense toaverage assets

Total noninterest expense was $3.0 million higher in the second quarter of 2021 when compared to the second quarter of 2020. Increases in salaries and employee benefits, outside services and consultants, loan expense and FDIC insurance expense were offset in part by decreases in other losses and net occupancy expenses. Excluding acquisition expenses, total noninterest expense increased by $2.7 million in the second quarter when compared to the same prior year period.

Six Months Ended June 30, June 30, 2021 2020 AdjustedNon?interest Actual Acquisition Adjusted Actual Acquisition Adjusted Amount PercentExpense Expenses Expenses Change ChangeSalaries andemployee $ 34,601 $ ? $ 34,601 $ 32,220 $ ? $ 32,220 $ 2,381 7.4 %benefitsNet occupancy 6,402 ? 6,402 6,442 ? 6,442 (40 ) (0.6 )%expensesData processing 4,764 ? 4,764 4,837 ? 4,837 (73 ) (1.5 )%Professional 1,132 (51 ) 1,081 1,054 ? 1,054 27 2.6 %feesOutside services 3,922 (187 ) 3,735 3,674 ? 3,674 61 1.7 %and consultantsLoan expense 5,929 ? 5,929 4,791 ? 4,791 1,138 23.8 %FDIC insurance 1,300 ? 1,300 385 ? 385 915 237.7 %expenseOther losses 289 ? 289 313 ? 313 (24 ) (7.7 )%Other expense 7,221 (4 ) 7,217 7,865 ? 7,865 (648 ) (8.2 )%Totalnon?interest $ 65,560 $ (242 ) $ 65,318 $ 61,581 $ ? $ 61,581 $ 3,737 6.1 %expenseAnnualizednon?interest 2.19 % 2.18 % 2.28 % 2.28 % expense toaverage assets

Total noninterest expense was $4.0 million higher for the first six months of 2021 when compared to the same prior year period. Increases in salaries and employee benefits, loan expenses and FDIC insurance expense were offset in part by a decrease in other expense. Excluding acquisition expenses, total noninterest expense increased $3.7 million for the first six months of 2021 when compared to the same prior year period. Annualized noninterest expense as a percent of average assets was 2.18%, 2.20% and 2.18% for the three months ended June30, 2021, March31, 2021 and June30, 2020, respectively. Annualized noninterest expense, excluding acquisition expenses, as a percent of average assets was 2.16%, 2.20% and 2.18% for the three months ended June30, 2021, March31, 2021 and June30, 2020, respectively.

Annualized noninterest expense as a percent of average assets was 2.19% and 2.28% for the six months ended June30, 2021 and 2020, respectively. Annualized noninterest expense, excluding acquisition expenses, as a percentage of average assets was 2.18% and 2.28% for the six months ended June30, 2021 and 2020, respectively.

Income tax expense totaled $3.8 million for the second quarter of 2021, an increase of $320,000 when compared to the first quarter of 2021 and an increase of $1.8 million when compared to the second quarter of 2020. The increase in income tax expense in the second quarter of 2021 compared to both periods was primarily due to increases in income before tax expense.

Income tax expense totaled $7.2 million for the six months ended June30, 2021, an increase of $3.6 million when compared to the six months ended June30, 2020. The increase in income tax expense was primarily due to an increase in income before taxes of $19.9 million.

Capital

The capital resources of the Company and the Bank exceeded regulatory capital ratios for well capitalized banks at June30, 2021. Stockholders equity totaled $710.4 million at June30, 2021 and the ratio of average stockholders equity to average assets was 11.62% for the six months ended June30, 2021.

Capital levels benefited from the Companys previously disclosed public offering of subordinated notes raising $60.0 million in June 2020. Horizons fortress balance sheet at June30, 2021 maintained adequate regulatory capital ratios when stress testing for highly adverse scenarios.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of June30, 2021.

Required for Capital Well Capitalized Actual Required for Capital Adequacy Purposes Under Prompt Adequacy Purposes with Capital Buffer Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio Amount RatioTotal capital(to risk?weightedassets)Consolidated $ 687,957 16.65 % $ 330,550 8.00 % $ 433,847 10.50 % N/A N/ABank 562,810 13.59 % 331,308 8.00 % 434,842 10.50 % $ 414,135 10.00 %Tier 1capital (to risk?weightedassets)Consolidated 634,359 15.35 % 247,958 6.00 % 351,274 8.50 % N/A N/ABank 510,983 12.34 % 248,452 6.00 % 351,974 8.50 % 331,269 8.00 %Common equitytier 1capital (to risk?weightedassets)Consolidated 519,058 12.56 % 185,968 4.50 % 289,284 7.00 % N/A N/ABank 510,983 12.34 % 186,339 4.50 % 289,861 7.00 % 269,156 6.50 %Tier 1capital (to averageassets)Consolidated 634,359 10.76 % 235,821 4.00 % 235,821 4.00 % N/A N/ABank 510,983 8.72 % 234,396 4.00 % 234,396 4.00 % 292,995 5.00 %

Liquidity

The Bank maintains a stable base of core deposits provided by longstanding relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayment, investment security sales and maturities, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the Federal Home Loan Bank of Indianapolis (the FHLB). At June30, 2021, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $890.6 million in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Discount Window. The Bank had approximately $1.187 billion of unpledged investment securities at June30, 2021.

Branch Network and Customer Experience

Horizon continues to implement its disciplined approach to enhancing the efficiency of its branch network on an ongoing basis, while leveraging technology to enhance the customer experience. Following management's annual review of branch performance for potential closure and a thirdparty consulting firms review of the Bank's physical branch network and strategy, Horizons Board of Directors approved the permanent closure on August 27, 2021 of nine branch locations in Indiana and one office in Michigan. At the same time, the Bank continues to invest in its Midwest footprint. On May 25, 2021, Horizon announced it agreed to acquire 14 TCF National Bank branches with approximately $976 million in deposits and $278 million in associated loans in a financially and strategically attractive extension of the Bank's lowcost deposit franchise in Michigan. Horizon expects to close the transaction during the third quarter of 2021.

Use of NonGAAP 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 nonGAAP financial measures relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for credit losses, tangible stockholders equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average equity and pretax, preprovision income. In each case, we have identified special circumstances that we consider to be nonrecurring and have excluded them. We believe that this shows the impact of such events as acquisitionrelated purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes these nonGAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and onetime costs of acquisitions and nonrecurring 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 nonGAAP information identified herein and its most comparable GAAP measures.

Non?GAAP Reconciliation of Tangible Stockholders? Equity and Tangible BookValue per Share(Dollars in Thousands, Unaudited) June 30, March 31, December 31, September June 30, 30, 2021 2021 2020 2020 2020Totalstockholders? $ 710,374 $ 689,379 $ 692,216 $ 670,293 $ 652,206 equityLess:Intangible 172,398 173,296 174,193 175,107 176,020 assetsTotaltangible $ 537,976 $ 516,083 $ 518,023 $ 495,186 $ 476,186 stockholders?equityCommon shares 43,950,720 43,949,189 43,880,562 43,874,353 43,821,878 outstandingBook valueper common $ 16.16 $ 15.69 $ 15.78 $ 15.28 $ 14.88 shareTangible bookvalue per $ 12.24 $ 11.74 $ 11.81 $ 11.29 $ 10.87 common share

Non?GAAP Calculation and Reconciliation of Efficiency Ratio and AdjustedEfficiency Ratio(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December 31, September June 30, June 30, June 30, 30, 2021 2021 2020 2020 2020 2021 2020Non?interestexpense as $ 33,388 $ 32,172 $ 36,453 $ 33,407 $ 30,432 $ 65,560 $ 61,581 reportedNet interestincome as 42,632 42,538 43,622 43,397 42,996 85,170 83,921 reportedNon?interestincome as $ 15,207 $ 13,873 $ 19,733 $ 16,700 $ 11,125 $ 29,080 $ 23,188 reportedNon?interestexpense /(Netinterestincome + 57.73 % 57.03 % 57.54 % 55.59 % 56.23 % 57.38 % 57.49 %Non?interestincome)(?EfficiencyRatio?) Non?interestexpense as $ 33,388 $ 32,172 $ 36,453 $ 33,407 $ 30,432 $ 65,560 $ 61,581 reportedAcquisition (242 ) ? ? ? ? (242 ) ? expensesNon?interestexpenseexcluding 33,146 32,172 36,453 33,407 30,432 65,318 61,581 acquisitionexpensesNet interestincome as 42,632 42,538 43,622 43,397 42,996 85,170 83,921 reportedPrepaymentpenalties on 125 ? 3,804 ? ? 125 ? borrowingsNet interestincomeexcluding 42,757 42,538 47,426 43,397 42,996 85,295 83,921 prepaymentpenalties onborrowingsNon?interestincome as 15,207 13,873 19,733 16,700 11,125 29,080 23,188 reported(Gain) /loss on saleof ? (914 ) (2,622 ) (1,088 ) (248 ) (914 ) (587 ) investmentsecuritiesDeathbenefit on (266 ) ? ? (31 ) ? (266 ) (233 ) BOLINon?interestincomeexcluding(gain) /loss on saleof $ 14,941 $ 12,959 $ 17,111 $ 15,581 $ 10,877 $ 27,900 $ 22,368 investmentsecuritiesand deathbenefit onBOLIAdjustedefficiency 57.45 % 57.97 % 56.48 % 56.64 % 56.49 % 57.70 % 57.94 %ratio

Non?GAAP Reconciliation of Return on Average Assets(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2021 2021 2020 2020 2020 2021 2020Average $ 6,142,507 $ 5,936,149 $ 5,864,086 $ 5,768,691 $ 5,620,695 $ 6,039,897 $ 5,433,187 assetsReturn onaverageassets 1.45 % 1.40 % 1.49 % 1.40 % 1.05 % 1.42 % 0.97 %(?ROAA?) asreportedAcquisition 0.02 ? ? ? ? 0.01 ? expensesTax effect ? ? ? ? ? ? ? ROAAexcluding 1.47 1.40 1.49 1.40 1.05 1.43 0.97 acquisitionexpenses(Gain) /loss onsale of ? (0.06 ) (0.18 ) (0.08 ) (0.02 ) (0.03 ) (0.02 ) investmentsecuritiesTax effect ? 0.01 0.04 0.02 ? 0.01 ? ROAAexcluding(gain) /loss on 1.47 1.35 1.35 1.34 1.03 1.41 0.95 sale ofinvestmentsecuritiesDeathbenefit on (0.02 ) ? ? ? ? (0.01 ) (0.01 ) BOLIROAAexcludingdeath 1.45 1.35 1.35 1.34 1.03 1.40 0.94 benefit onBOLIPrepaymentpenalties 0.01 ? 0.26 ? ? ? ? onborrowingsTax effect ? ? (0.05 ) ? ? ? ? ROAAexcludingprepayment 1.46 1.35 1.56 1.34 1.03 1.40 0.94 penaltiesonborrowingsAdjusted 1.46 % 1.35 % 1.56 % 1.34 % 1.03 % 1.40 % 0.94 %ROAA

Non?GAAP Reconciliation of Return on Average Common Equity(Dollars in Thousands, Unaudited) Three Months Ended Six Months Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2021 2021 2020 2020 2020 2021 2020Averagecommon $ 706,652 $ 697,401 $ 680,857 $ 668,797 $ 649,490 $ 702,052 $ 655,538 equityReturn onaveragecommon 12.59 % 11.88 % 12.79 % 12.08 % 9.07 % 12.23 % 8.07 %equity(?ROACE?)as reportedAcquisition 0.14 ? ? ? ? 0.07 ? expensesTax effect (0.03 ) ? ? ? ? (0.01 ) ? ROACEexcluding 12.70 11.88 12.79 12.08 9.07 12.29 8.07 acquisitionexpenses(Gain) /loss onsale of ? (0.53 ) (1.53 ) (0.65 ) (0.15 ) (0.26 ) (0.18 ) investmentsecuritiesTax effect ? 0.11 0.32 0.14 0.03 0.06 0.04 ROACEexcluding(gain) /loss on 12.70 11.46 11.58 11.57 8.95 12.09 7.93 sale ofinvestmentsecuritiesDeathbenefit on (0.15 ) ? ? (0.02 ) ? (0.08 ) (0.07 ) BOLIROACEexcludingdeath 12.55 11.46 11.58 11.55 8.95 12.01 7.86 benefit onBOLIPrepaymentpenalties 0.07 ? 2.22 ? ? 0.04 ? onborrowingsTax effect (0.01 ) ? (0.47 ) ? ? (0.01 ) ? ROACEexcludingprepayment 12.61 % 11.46 % 13.33 % 11.55 % 8.95 % 12.04 % 7.86 %penaltiesonborrowingsAdjusted 12.61 % 11.46 % 13.33 % 11.55 % 8.95 % 12.04 % 7.86 %ROACE

Conference Call

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

Participants may access the live conference call on July28, 2021 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 8773176789 from the United States, 8664504696 from Canada or 4123176789 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 August4, 2021. The replay may be accessed by dialing 8773447529 from the United States, 8556699658 from Canada or 4123170088 from other international locations, and entering the access code 10157826.

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $6.1 billionasset bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon's retail offerings include prime residential, indirect auto, and other secured consumer lending to inmarket customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of inmarket business banking and treasury management services, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana's Michigan City, is available at horizonbank.com and investor.horizonbank.com.

Forward Looking Statements

This press release may contain forwardlooking 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 forwardlooking 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. Forwardlooking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forwardlooking statements are based on managements 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 forwardlooking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizons reports filed with the Securities and Exchange Commission, including those described in Horizons Annual Report on Form 10K and its quarterly reports on Form 10Q. Further, statements about the effects of the COVID19 pandemic on our business, operations, financial performance, and prospects may constitute forwardlooking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forwardlooking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties, and us. Undue reliance should not be placed on the forwardlooking 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 forwardlooking statement to reflect the events or circumstances after the date on which the forwardlooking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Financial Highlights(Dollars in Thousands, Unaudited) June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020Balance sheet:Total assets $ 6,109,227 $ 6,055,528 $ 5,886,614 $ 5,790,143 $ 5,739,262 Interestearningdeposits & 209,304 444,239 158,979 15,707 82,328 federal fundssoldInterestearning time 6,994 7,983 8,965 9,213 9,247 depositsInvestment 1,844,470 1,423,825 1,302,701 1,195,613 1,126,075 securitiesCommercial 2,104,627 2,177,858 2,192,271 2,321,608 2,312,715 loansMortgagewarehouse 205,311 266,246 395,626 374,653 300,386 loansResidentialmortgage 559,437 581,929 624,286 675,220 704,410 loansConsumer 650,144 638,403 655,200 658,884 660,871 loansEarning 5,610,538 5,571,304 5,374,589 5,286,974 5,235,553 assetsNon?interestbearing 1,102,950 1,133,412 1,053,242 1,016,646 981,868 depositaccountsInterestbearing 3,105,328 2,947,438 2,802,673 2,600,691 2,510,854 transactionaccountsTime deposits 573,348 640,966 675,218 718,952 814,877 Borrowings 439,094 481,488 475,000 587,473 583,073 Subordinated 58,676 58,640 58,603 58,566 58,824 notesJuniorsubordinateddebentures 56,662 56,604 56,548 56,491 56,437 issued tocapitaltrustsTotalstockholders? 710,374 689,379 692,216 670,293 652,206 equity

Financial Highlights(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) Three Months Ended June 30, March 31, December 31, September June 30, 30, 2021 2021 2020 2020 2020Income statement:Net interest $ 42,632 $ 42,538 $ 43,622 $ 43,397 $ 42,996 incomeCredit lossexpense (1,492 ) 367 3,042 2,052 7,057 (recovery)Non?interest 15,207 13,873 19,733 16,700 11,125 incomeNon?interest 33,388 32,172 36,453 33,407 30,432 expenseIncome tax 3,770 3,450 1,967 4,326 1,993 expenseNet income $ 22,173 $ 20,422 $ 21,893 $ 20,312 $ 14,639 Per share data:Basicearnings per $ 0.50 $ 0.46 $ 0.50 $ 0.46 $ 0.33 shareDilutedearnings per 0.50 0.46 0.50 0.46 0.33 shareCashdividends 0.13 0.12 0.12 0.12 0.12 declared percommon shareBook valueper common 16.16 15.69 15.78 15.28 14.88 shareTangible bookvalue per 12.24 11.74 11.81 11.29 10.87 common shareMarket value 19.13 19.94 15.86 11.48 12.44 ? highMarket value $ 16.98 $ 15.43 $ 10.16 $ 9.05 $ 8.40 ? lowWeightedaverageshares 43,950,501 43,919,549 43,862,435 43,862,435 43,781,249 outstanding ?BasisWeightedaverageshares 44,111,103 44,072,581 43,903,881 43,903,881 43,802,794 outstanding ?Diluted Key ratios: Return onaverage 1.45 % 1.40 % 1.49 % 1.40 % 1.05 %assetsReturn onaveragecommon 12.59 11.88 12.79 12.08 9.07 stockholders?equityNet interest 3.14 3.29 3.34 3.39 3.47 marginAllowance forcredit losses 1.58 1.56 1.47 1.39 1.38 to totalloansAverageequity to 11.50 11.75 11.61 11.59 11.56 averageassetsEfficiency 57.73 57.03 57.54 55.59 56.23 ratioAnnualizednon?interestexpense to 2.18 2.20 2.47 2.30 2.18 averageassetsBank onlycapital ratios:Tier 1capital to 8.72 8.81 8.71 8.57 8.48 averageassetsTier 1capital to 12.34 12.71 11.29 10.67 10.49 risk weightedassetsTotal capitalto risk 13.59 13.86 12.21 11.56 11.74 weightedassets

Financial Highlights(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited) Six Months Ended June 30, June 30, 2021 2020Income statement: Net interest income $ 85,170 $ 83,921 Credit loss expense (recovery) (1,125 ) 15,657 Non?interest income 29,080 23,188 Non?interest expense 65,560 61,581 Income tax expense 7,220 3,577 Net income $ 42,595 $ 26,294 Per share data: Basic earnings per share $ 0.97 $ 0.59 Diluted earnings per share 0.97 0.59 Cash dividends declared per common share 0.25 0.24 Book value per common share 16.16 14.88 Tangible book value per common share 12.24 10.87 Market value ? high 19.94 18.79 Market value ? low $ 15.43 $ 7.97 Weighted average shares outstanding ? Basis 43,935,111 44,219,880 Weighted average shares outstanding ? Diluted 44,092,577 44,286,864 Key ratios: Return on average assets 1.42 % 0.97 %Return on average common stockholders? equity 12.23 8.07 Net interest margin 3.21 3.51 Allowance for credit losses to total loans 1.58 1.38 Average equity to average assets 11.62 12.07 Efficiency ratio 57.38 57.49 Annualized non?interest expense to average assets 2.19 2.28 Bank only capital ratios: Tier 1 capital to average assets 8.72 8.48 Tier 1 capital to risk weighted assets 12.34 10.49 Total capital to risk weighted assets 13.59 11.74

Financial Highlights(Dollars in Thousands Except Ratios, Unaudited) June 30, March 31, December September June 30, 31, 30, 2021 2021 2020 2020 2020Loan data: Substandard $ 82,488 $ 86,472 $ 98,874 $ 88,286 $ 61,385 loans30 to 89 days 3,336 5,099 6,938 5,513 3,853 delinquent Non?performing loans:90 days andgreaterdelinquent ? ? 267 262 331 123 accruinginterestTrouble debtrestructures ? 1,853 1,828 1,793 1,825 2,039 accruinginterestTrouble debtrestructures ? 2,294 2,271 2,610 2,704 3,443 non?accrualNon?accrual 18,175 20,700 22,142 24,454 22,451 loansTotalnon?performing $ 22,322 $ 25,066 $ 26,807 $ 29,314 $ 28,056 loansNon?performingloans to total 0.63 % 0.68 % 0.69 % 0.72 % 0.70 %loans

Allocation of the Allowance for Credit Losses(Dollars in Thousands, Unaudited) June 30, March 31, December September June 30, 31, 30, 2021 2021 2020 2020 2020Commercial $ 41,766 $ 42,980 $ 42,210 $ 39,795 $ 39,147 Residential 4,108 4,229 4,620 5,464 5,832 mortgageMortgage 1,155 1,163 1,267 1,250 1,190 warehouseConsumer 8,620 8,814 8,930 9,810 8,921 Total $ 55,649 $ 57,186 $ 57,027 $ 56,319 $ 55,090

Net Charge?offs (Recoveries)(Dollars in Thousands Except Ratios, Unaudited) June 30, March 31, December September June 31, 30, 30, 2021 2021 2020 2020 2020Commercial $ 40 $ 158 $ 23 $ 488 $ 6 Residential mortgage (23 ) (65 ) (10 ) 136 24 Mortgage warehouse ? ? ? ? ? Consumer 22 115 216 199 377 Total $ 39 $ 208 $ 229 $ 823 $ 407 Percent of netcharge?offs (recoveries)to average loans 0.00 % 0.01 % 0.01 % 0.02 % 0.01 %outstanding for theperiod

Total Non?performing Loans(Dollars in Thousands Except Ratios, Unaudited) June 30, March 31, December September June 30, 31, 30, 2021 2021 2020 2020 2020Commercial $ 10,345 $ 12,802 $ 14,348 $ 16,169 $ 14,238 Residential 7,841 7,916 7,994 9,209 9,945 mortgageMortgage ? ? ? ? ? warehouseConsumer 4,136 4,348 4,465 3,936 3,873 Total $ 22,322 $ 25,066 $ 26,807 $ 29,314 $ 28,056 Non?performingloans to total 0.63 % 0.68 % 0.69 % 0.72 % 0.70 %loans

Other Real Estate Owned and Repossessed Assets(Dollars in Thousands, Unaudited) June 30, March 31, December September June 30, 31, 30, 2021 2021 2020 2020 2020Commercial $ 1,400 $ 1,696 $ 1,908 $ 2,191 $ 2,374 Residential 37 37 ? 70 249 mortgageMortgage warehouse ? ? ? ? ? Consumer 46 ? ? 80 20 Total $ 1,483 $ 1,733 $ 1,908 $ 2,341 $ 2,643

Average Balance Sheets(Dollars in Thousands, Unaudited) Three Months Ended Three Months Ended June 30, 2021 June 30, 2020 Average Interest Average Average Interest Average Balance Rate Balance RateAssets Interestearning assetsFederal funds $ 359,184 $ 98 0.11 % $ 62,832 $ 17 0.11 %soldInterestearning 29,584 44 0.60 % 20,278 61 1.21 %depositsInvestmentsecurities ? 645,139 2,386 1.48 % 481,552 2,243 1.87 %taxableInvestmentsecurities ? 1,054,703 5,656 2.72 % 647,375 4,105 3.15 %non?taxable ^(1)Loansreceivable ^ 3,570,774 39,236 4.43 % 3,900,599 43,918 4.54 %(2) (3)Totalinterest 5,659,384 47,420 3.48 % 5,112,636 50,344 4.05 %earningassetsNon?interestearning assetsCash and due 84,469 84,297 from banksAllowance for (57,196 ) (48,611 ) credit lossesOther assets 455,850 472,373 Total average $ 6,142,507 $ 5,620,695 assets Liabilitiesand Stockholders?EquityInterestbearing liabilitiesInterestbearing $ 3,680,796 $ 2,053 0.22 % $ 3,299,661 $ 4,506 0.55 %depositsBorrowings 453,856 1,296 1.15 % 618,274 2,074 1.35 %Subordinated 58,653 881 6.02 % 4,527 58 5.15 %notesJuniorsubordinateddebentures 56,627 558 3.95 % 52,835 710 5.40 %issued tocapitaltrustsTotalinterest 4,249,932 4,788 0.45 % 3,975,297 7,348 0.74 %bearingliabilitiesNon?interestbearing liabilitiesDemand 1,139,068 924,890 depositsAccruedinterestpayable and 46,855 71,018 otherliabilitiesStockholders? 706,652 649,490 equityTotal averageliabilitiesand $ 6,142,507 $ 5,620,695 stockholders?equity Net interestincome / $ 42,632 3.03 % $ 42,996 3.31 %spreadNet interestincome as apercent ofaverage 3.14 % 3.47 %interestearningassets ^(1) ^(1) Securities balances represent daily average balances for the fair value ofsecurities. The average rate is calculated based on the daily average balancefor the amortized cost of securities. The average rate is presented on a taxequivalent basis.^(2) Includes fees on loans. The inclusion of loan fees does not have amaterial effect on the average interest rate.^(3) Non?accruing loans for the purpose of the computation above are includedin the daily average loan amounts outstanding. Loan totals are shown net ofunearned income and deferred loan fees. The average rate is presented on a taxequivalent basis.

Average Balance Sheets(Dollars in Thousands, Unaudited) Six Months Ended Six Months Ended June 30, 2021 June 30, 2020 Average Interest Average Average Interest Average Balance Rate Balance RateAssets Interestearning assetsFederal funds $ 313,467 $ 164 0.11 % $ 43,903 $ 113 0.52 %soldInterestearning 27,567 90 0.66 % 23,391 163 1.40 %depositsInvestmentsecurities ? 528,250 3,822 1.46 % 491,360 4,943 2.02 %taxableInvestmentsecurities ? 1,005,855 10,879 2.76 % 618,080 7,903 3.16 %non?taxable ^(1)Loansreceivable ^ 3,674,977 80,054 4.41 % 3,752,654 88,876 4.78 %(2) (3)Totalinterest 5,550,116 95,009 3.57 % 4,929,388 101,998 4.25 %earningassetsNon?interestearning assetsCash and due 84,866 81,203 from banksAllowance for (57,486 ) (36,588 ) credit lossesOther assets 462,401 459,184 Total average $ 6,039,897 $ 5,433,187 assets Liabilitiesand Stockholders?EquityInterestbearing liabilitiesInterestbearing $ 3,602,882 $ 4,396 0.25 % $ 3,262,492 $ 12,222 0.75 %depositsBorrowings 465,502 2,565 1.11 % 575,702 4,312 1.51 %Subordinated 58,635 1,761 6.06 % 2,264 58 5.15 %notesJuniorsubordinateddebentures 56,599 1,117 3.98 % 52,801 1,485 5.66 %issued tocapitaltrustsTotalinterest 4,183,618 9,839 0.47 % 3,893,259 18,077 0.93 %bearingliabilitiesNon?interestbearing liabilitiesDemand 1,101,377 820,997 depositsAccruedinterestpayable and 52,850 63,393 otherliabilitiesStockholders? 702,052 655,538 equityTotal averageliabilitiesand $ 6,039,897 $ 5,433,187 stockholders?equity Net interestincome / $ 85,170 3.10 % $ 83,921 3.32 %spreadNet interestincome as apercent ofaverage 3.21 % 3.51 %interestearningassets ^(1) ^(1) Securities balances represent daily average balances for the fair value ofsecurities. The average rate is calculated based on the daily average balancefor the amortized cost of securities. The average rate is presented on a taxequivalent basis.^(2) Includes fees on loans. The inclusion of loan fees does not have amaterial effect on the average interest rate.^(3) Non?accruing loans for the purpose of the computation above are includedin the daily average loan amounts outstanding. Loan totals are shown net ofunearned income and deferred loan fees. The average rate is presented on a taxequivalent basis.

Condensed Consolidated Balance Sheets(Dollars in Thousands) June 30, December 31, 2021 2020 (Unaudited) Assets Cash and due from banks $ 304,171 $ 249,711 Interest earning time deposits 6,994 8,965 Investment securities, available for sale 1,691,186 1,134,025 Investment securities, held to maturity (fair 153,284 168,676 value $162,651 and $179,990)Loans held for sale 7,228 13,538 Loans, net of allowance for credit losses of 3,463,870 3,810,356 $55,649 and $57,027Premises and equipment, net 88,604 92,416 Federal Home Loan Bank stock 23,023 23,023 Goodwill 151,238 151,238 Other intangible assets 21,160 22,955 Interest receivable 21,702 21,396 Cash value of life insurance 97,071 96,751 Other assets 79,696 93,564 Total assets $ 6,109,227 $ 5,886,614 Liabilities Deposits Non?interest bearing $ 1,102,950 $ 1,053,242 Interest bearing 3,678,676 3,477,891 Total deposits 4,781,626 4,531,133 Borrowings 439,094 475,000 Subordinated notes 58,676 58,603 Junior subordinated debentures issued to capital 56,662 56,548 trustsInterest payable 2,430 2,712 Other liabilities 60,365 70,402 Total liabilities 5,398,853 5,194,398 Commitments and contingent liabilities Stockholders? equity Preferred stock, Authorized, 1,000,000 shares, ? ? Issued 0 sharesCommon stock, no par value, Authorized 99,000,000shares Issued 44,039,562 and 43,905,631 shares, ? ? Outstanding 43,950,720 and 43,880,562 sharesAdditional paid?in capital 359,227 362,945 Retained earnings 332,509 301,419 Accumulated other comprehensive income 18,638 27,852 Total stockholders? equity 710,374 692,216 Total liabilities and stockholders? equity $ 6,109,227 $ 5,886,614

Condensed Consolidated Statements of Income(Dollars in Thousands Except Per Share Data, Unaudited) Three Months Ended June 30, March 31, December September June 30, 31, 30, 2021 2021 2020 2020 2020Interest incomeLoans $ 39,236 $ 40,818 $ 46,745 $ 44,051 $ 43,918 receivableInvestmentsecurities ? 2,528 1,548 1,570 1,704 2,321 taxableInvestmentsecurities ? 5,656 5,223 4,919 4,391 4,105 non?taxableTotalinterest 47,420 47,589 53,234 50,146 50,344 incomeInterest expenseDeposits 2,053 2,343 2,718 3,616 4,506 Borrowed 1,296 1,269 5,456 1,662 2,074 fundsSubordinated 881 880 871 895 58 notesJuniorsubordinateddebentures 558 559 567 576 710 issued tocapitaltrustsTotalinterest 4,788 5,051 9,612 6,749 7,348 expenseNet interest 42,632 42,538 43,622 43,397 42,996 incomeCredit lossexpense (1,492 ) 367 3,042 2,052 7,057 (recovery)Net interestincome aftercredit loss 44,124 42,171 40,580 41,345 35,939 expense(recovery)Non?interest IncomeServicecharges on 2,157 2,234 2,360 2,154 1,888 depositaccountsWiretransfer 222 255 301 298 230 feesInterchange 2,892 2,340 2,645 2,438 2,327 feesFiduciary 1,961 1,743 2,747 2,105 1,765 activitiesGains /(losses) onsale of ? 914 2,622 1,088 248 investmentsecuritiesGain on saleof mortgage 5,612 5,296 7,815 8,813 6,620 loansMortgageservicingincome net 1,503 213 327 (1,308 ) (2,760 ) ofimpairmentIncrease incash valueof bank 502 511 566 566 557 owned lifeinsuranceDeathbenefit onbank owned 266 ? ? 31 ? lifeinsuranceOther income 92 367 350 515 250 Totalnon?interest 15,207 13,873 19,733 16,700 11,125 incomeNon?interest expenseSalaries andemployee 17,730 16,871 20,030 18,832 15,629 benefitsNetoccupancy 3,084 3,318 3,262 3,107 3,190 expensesData 2,388 2,376 2,126 2,237 2,432 processingProfessional 588 544 691 688 518 feesOutsideservices and 2,220 1,702 2,083 1,561 1,759 consultantsLoan expense 3,107 2,822 2,961 2,876 2,692 FDICinsurance 500 800 900 570 235 expenseOther losses 6 283 735 114 193 Other 3,765 3,456 3,665 3,422 3,784 expensesTotalnon?interest 33,388 32,172 36,453 33,407 30,432 expenseIncomebefore 25,943 23,872 23,860 24,638 16,632 income taxesIncome tax 3,770 3,450 1,967 4,326 1,993 expenseNet income $ 22,173 $ 20,422 $ 21,893 $ 20,312 $ 14,639 Basicearnings per $ 0.50 $ 0.46 $ 0.50 $ 0.46 $ 0.33 shareDilutedearnings per 0.50 0.46 0.50 0.46 0.33 share

Condensed Consolidated Statements of Income(Dollars in Thousands Except Per Share Data, Unaudited) Six Months Ended June 30, June 30, 2021 2020Interest income Loans receivable $ 80,054 $ 88,876 Investment securities ? taxable 4,076 5,219 Investment securities ? non?taxable 10,879 7,903 Total interest income 95,009 101,998 Interest expense Deposits 4,396 12,222 Borrowed funds 2,565 4,312 Subordinated notes 1,761 58 Junior subordinated debentures issued to capital 1,117 1,485 trustsTotal interest expense 9,839 18,077 Net interest income 85,170 83,921 Credit loss expense (recovery) (1,125 ) 15,657 Net interest income after credit loss expense 86,295 68,264 (recovery)Non?interest Income Service charges on deposit accounts 4,391 4,334 Wire transfer fees 477 401 Interchange fees 5,232 4,223 Fiduciary activities 3,704 4,293 Gains / (losses) on sale of investment securities 914 587 Gain on sale of mortgage loans 10,908 10,093 Mortgage servicing income net of impairment 1,716 (2,735 ) Increase in cash value of bank owned life insurance 1,013 1,111 Death benefit on bank owned life insurance 266 233 Other income 459 648 Total non?interest income 29,080 23,188 Non?interest expense Salaries and employee benefits 34,601 32,220 Net occupancy expenses 6,402 6,442 Data processing 4,764 4,837 Professional fees 1,132 1,054 Outside services and consultants 3,922 3,674 Loan expense 5,929 4,791 FDIC insurance expense 1,300 385 Other losses 289 313 Other expenses 7,221 7,865 Total non?interest expense 65,560 61,581 Income before income taxes 49,815 29,871 Income tax expense 7,220 3,577 Net income $ 42,595 $ 26,294 Basic earnings per share $ 0.97 $ 0.59 Diluted earnings per share 0.97 0.59

Contract: Mark E. Secor Chief Financial OfficerPhone: (219) 873-2611Fax: (219) 874-9280