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 nine months ended September 30, 2024.

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

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

Third Quarter 2024 Highlights

• Net interest income increased for the fourth consecutive quarter to $46.9 million, compared to $45.3 million in the linked quarter of 2024. Net interest margin, on a fully taxable equivalent ("FTE") basis1, expanded for the fourth consecutive quarter to 2.66%, compared to 2.64% in the linked quarter of 2024.

• Total loans held for investment ("HFI") were $4.8 billion at September 30, 2024, relatively unchanged from June 30, 2024 balances. However, consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. 

• Positive deposit growth of 1.7% during the quarter, to $5.7 billion at period end. The quarter was highlighted by stable non-interest bearing deposit balances and growth in core relationship consumer and commercial portfolios. 

• Credit quality remains strong, with annualized net charge offs of 0.03% of average loans during the third quarter. Non-performing assets to total assets of 0.32% remains well within expected ranges, with no material change in the loss outlook. Provision for loan losses of $1.0 million reflects continued positive credit performance.

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

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

Accretive Fourth Quarter 2024 Strategic Actions

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

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

Income Statement Highlights

Net Interest Income

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

Provision for Credit Losses

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

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

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

Non-Interest Income

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

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

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

Non-Interest Expense

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

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

Income Taxes

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

Balance Sheet

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

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

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

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

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

Capital

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

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

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

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

Credit Quality

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

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

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

Earnings Conference Call

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

Participants may access the live conference call on October 24, 2024 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833-974-2379 from the United States, 866-450-4696 from Canada or 1-412-317-5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.

A telephone replay of the call will be available approximately one hour after the end of the conference through November 1, 2024. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 1–412–317-0088 from other international locations, and entering the access code 9847279.

About Horizon Bancorp, Inc.

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

Use of Non-GAAP Financial Measures

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

Forward Looking Statements

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

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

	Condensed Consolidated Statements of Income
	(Dollars in Thousands Except Per Share Data, Unaudited)
	Three Months Ended																				Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
	2024				2024				2024				2023				2023				2024				2023
Interest Income
Loans receivable	$	75,488			$	71,880			$	66,954			$	65,583			$	63,003			$	214,322			$	178,961
Investment securities - taxable		8,133				7,986				7,362				8,157				8,788				23,481				26,253
Investment securities - tax-exempt		6,310				6,377				6,451				6,767				7,002				19,138				21,617
Other		957				738				4,497				3,007				1,332				6,192				1,960
Total interest income		90,888				86,981				85,264				83,514				80,125				263,133				228,791
Interest Expense
Deposits		30,787				28,447				27,990				27,376				24,704				87,224				58,481
Borrowed funds		11,131				11,213				11,930				11,765				11,224				34,274				30,713
Subordinated notes		830				829				831				870				880				2,490				2,641
Junior subordinated debentures issued to capital trusts		1,230				1,213				1,225				1,246				1,227				3,668				3,469
Total interest expense		43,978				41,702				41,976				41,257				38,035				127,656				95,304
Net Interest Income		46,910				45,279				43,288				42,257				42,090				135,477				133,487
Provision for loan losses		1,044				2,369				805				1,274				263				4,218				1,185
Net Interest Income after Provision for Loan Losses		45,866				42,910				42,483				40,983				41,827				131,259				132,302
Non-interest Income
Service charges on deposit accounts		3,320				3,130				3,214				3,092				3,086				9,664				9,135
Wire transfer fees		123				113				101				103				120				337				345
Interchange fees		3,511				3,826				3,109				3,224				3,186				10,446				9,637
Fiduciary activities		1,394				1,372				1,315				1,352				1,206				4,081				3,728
Gains (losses) on sale of investment securities		—				—				—				(31,572	)			—				—				(480	)
Gain on sale of mortgage loans		1,622				896				626				951				1,582				3,144				3,372
Mortgage servicing income net of impairment		412				450				439				724				631				1,301				1,984
Increase in cash value of bank owned life insurance		349				318				298				658				1,055				965				3,051
Other income		780				380				827				1,019				964				1,987				1,675
Total non-interest income		11,511				10,485				9,929				(20,449	)			11,830				31,925				32,447
Non-interest Expense
Salaries and employee benefits		21,829				20,583				20,268				21,877				20,058				62,680				58,932
Net occupancy expenses		3,207				3,192				3,546				3,260				3,283				9,945				10,095
Data processing		2,977				2,579				2,464				2,942				2,999				8,020				8,684
Professional fees		676				714				607				772				707				1,997				1,873
Outside services and consultants		3,677				3,058				3,359				2,394				2,316				10,094				7,548
Loan expense		1,034				1,038				719				1,345				1,120				2,791				3,635
FDIC insurance expense		1,204				1,315				1,320				1,200				1,300				3,839				2,680
Core deposit intangible amortization		844				844				872				903				903				2,560				2,709
Other losses		297				515				16				508				188				828				543
Other expense		3,527				3,684				3,936				4,129				3,294				11,147				10,255
Total non-interest expense		39,272				37,522				37,107				39,330				36,168				113,901				106,954
Income /(Loss) Before Income Taxes		18,105				15,873				15,305				(18,796	)			17,489				49,283				57,795
Income tax expense		(75	)			1,733				1,314				6,419				1,284				2,972				4,599
Net Income /(Loss)	$	18,180			$	14,140			$	13,991			$	(25,215	)		$	16,205			$	46,311			$	53,196
Basic Earnings /(Loss) Per Share	$	0.42			$	0.32			$	0.32			$	(0.58	)		$	0.37			$	1.06			$	1.22
Diluted Earnings/(Loss) Per Share		0.41				0.32				0.32				(0.58	)			0.37				1.05				1.21

	Condensed Consolidated Balance Sheets
	(Dollars in Thousands)
	September 30, 2024				June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023
Assets
Interest earning assets
Federal funds sold	$	113,912			$	34,453			$	161,704			$	401,672			$	71,576
Interest earning deposits		12,107				4,957				9,178				12,071				4,718
Interest earning time deposits		735				1,715				1,715				2,205				2,207
Federal Home Loan Bank stock		53,826				53,826				53,826				34,509				34,509
Investment securities, available for sale		541,170				527,054				535,319				547,251				865,168
Investment securities, held to maturity		1,888,379				1,904,281				1,925,725				1,945,638				1,966,483
Loans held for sale		2,069				2,440				922				1,418				2,828
Gross loans held for investment (HFI)		4,803,996				4,822,840				4,618,175				4,417,630				4,359,002
Total Interest earning assets		7,416,194				7,351,566				7,306,564				7,362,394				7,306,491
Non-interest earning assets
Allowance for credit losses		(52,881	)			(52,215	)			(50,387	)			(50,029	)			(49,699	)
Cash		108,815				106,691				100,206				112,772				98,843
Cash value of life insurance		37,115				36,773				36,455				36,157				149,212
Other assets		119,026				165,656				160,593				177,061				152,280
Goodwill		155,211				155,211				155,211				155,211				155,211
Other intangible assets		11,067				11,910				12,754				13,626				14,530
Premises and equipment, net		93,544				93,695				94,303				94,583				94,716
Interest receivable		39,366				43,240				40,008				38,710				37,850
Total non-interest earning assets		511,263				560,961				549,143				578,091				652,943
Total assets	$	7,927,457			$	7,912,527			$	7,855,707			$	7,940,485			$	7,959,434
Liabilities
Savings and money market deposits	$	3,420,827			$	3,364,726			$	3,350,673			$	3,369,149			$	3,322,788
Time deposits		1,220,653				1,178,389				1,136,121				1,179,739				1,250,606
Borrowings		1,142,744				1,229,165				1,219,812				1,217,020				1,214,016
Repurchase agreements		122,399				128,169				139,309				136,030				142,494
Subordinated notes		55,703				55,668				55,634				55,543				59,007
Junior subordinated debentures issued to capital trusts		57,423				57,369				57,315				57,258				57,201
Total interest earning liabilities		6,019,749				6,013,486				5,958,864				6,014,739				6,046,112
Non-interest bearing deposits		1,085,535				1,087,040				1,093,076				1,116,005				1,126,703
Interest payable		11,400				11,240				7,853				22,249				16,281
Other liabilities		55,951				74,096				74,664				68,680				76,969
Total liabilities		7,172,635				7,185,862				7,134,457				7,221,673				7,266,065
Stockholders’ Equity
Preferred stock		—				—				—				—				—
Common stock		—				—				—				—				—
Additional paid-in capital		358,453				357,673				356,599				356,400				355,478
Retained earnings		454,050				442,977				435,927				429,021				461,325
Accumulated other comprehensive income (loss)		(57,681	)			(73,985	)			(71,276	)			(66,609	)			(123,434	)
Total stockholders’ equity		754,822				726,665				721,250				718,812				693,369
Total liabilities and stockholders’ equity	$	7,927,457			$	7,912,527			$	7,855,707			$	7,940,485			$	7,959,434

	Loans and Deposits
	(Dollars in Thousands, Unaudited)
	September 30,				June 30,				March 31,				December 31,				September 30,				% Change
	2024				2024				2024				2023				2023				Q3'24 vs Q2'24				Q3'24 vs Q3'23
Commercial:
Commercial real estate	$	2,105,459			$	2,117,772			$	1,984,723			$	1,962,097			$	1,916,056				(1	)%			10	%
Commercial & Industrial		808,600				786,788				765,043				712,863				673,188				3	%			20	%
Total commercial		2,914,059				2,904,560				2,749,766				2,674,960				2,589,244				—	%			13	%
Residential Real estate		801,356				797,956				782,071				681,136				675,399				—	%			19	%
Mortgage warehouse		80,437				68,917				56,548				45,078				65,923				17	%			22	%
Consumer		1,008,144				1,051,407				1,029,790				1,016,456				1,028,436				(4	)%			(2	)%
Total loans held for investment		4,803,996				4,822,840				4,618,175				4,417,630				4,359,002				—	%			10	%
Loans held for sale		2,069				2,440				922				1,418				2,828				(15	)%			(27	)%
Total loans	$	4,806,065			$	4,825,280			$	4,619,097			$	4,419,048			$	4,361,830				—	%			10	%
Deposits:
Interest bearing deposits
Savings and money market deposits	$	3,420,827			$	3,364,726			$	3,350,673			$	3,369,149			$	3,322,788				2	%			3	%
Time deposits		1,220,653				1,178,389				1,136,121				1,179,739				1,250,606				4	%			(2	)%
Total Interest bearing deposits		4,641,480				4,543,115				4,486,794				4,548,888				4,573,394				2	%			1	%
Non-interest bearing deposits
Non-interest bearing deposits		1,085,535				1,087,040				1,093,076				1,116,005				1,126,703				—	%			(4	)%
Total deposits	$	5,727,015			$	5,630,155			$	5,579,870			$	5,664,893			$	5,700,097				2	%			—	%

	Average Balance Sheet
	(Dollars in Thousands, Unaudited)
	Three Months Ended
	September 30, 2024										June 30, 2024										September 30, 2023
	Average Balance			Interest(4)			Average Rate(4)				Average Balance			Interest(4)			Average Rate(4)				Average Balance			Interest(4)			Average Rate(4)
Assets
Interest earning assets
Federal funds sold	$	64,743		$	860			5.28	%		$	47,805		$	645			5.43	%		$	92,305		$	1,247			5.36	%
Interest earning deposits		8,781			97			4.39	%			7,662			93			4.88	%			8,018			85			4.21	%
Federal Home Loan Bank stock		53,826			1,607			11.88	%			53,827			1,521			11.36	%			34,509			618			7.10	%
Investment securities - taxable (1)		1,301,830			6,526			1.99	%			1,309,305			6,465			1.99	%			1,650,081			8,170			1.96	%
Investment securities - non-taxable (1)		1,125,295			7,987			2.82	%			1,132,065			8,072			2.87	%			1,220,998			8,863			2.88	%
Total investment securities		2,427,125			14,513			2.38	%			2,441,370			14,537			2.39	%			2,871,079			17,033			2.35	%
Loans receivable (2) (3)		4,775,788			75,828			6.32	%			4,662,124			72,208			6.23	%			4,280,700			63,254			5.89	%
Total interest earning assets	$	7,330,263		$	92,905			5.04	%		$	7,212,788		$	89,004			4.96	%		$	7,286,611		$	82,237			4.59	%
Non-interest earning assets
Cash and due from banks	$	108,609									$	108,319									$	100,331
Allowance for credit losses		(52,111	)									(50,334	)									(49,705	)
Other assets		471,259										508,555										587,514
Total average assets	$	7,858,020									$	7,779,328									$	7,924,751
Liabilities and Stockholders' Equity
Interest bearing liabilities
Interest bearing deposits	$	3,386,177		$	18,185			2.14	%		$	3,334,490		$	16,814			2.03	%		$	3,267,594		$	12,661			1.54	%
Time deposits		1,189,148			12,602			4.22	%			1,134,590			11,633			4.12	%			1,271,104			12,043			3.76	%
Borrowings		1,149,952			10,221			3.54	%			1,184,172			10,278			3.49	%			1,180,452			10,399			3.50	%
Repurchase agreements		123,524			910			2.93	%			125,144			935			3.00	%			136,784			825			2.39	%
Subordinated notes		55,681			830			5.93	%			55,647			829			5.99	%			58,983			880			5.92	%
Junior subordinated debentures issued to capital trusts		57,389			1,230			8.53	%			57,335			1,213			8.51	%			57,166			1,227			8.52	%
Total interest bearing liabilities	$	5,961,871		$	43,978			2.93	%		$	5,891,378		$	41,702			2.85	%		$	5,972,083		$	38,035			2.53	%
Non-interest bearing liabilities
Demand deposits	$	1,083,214									$	1,080,676									$	1,159,241
Accrued interest payable and other liabilities		74,563										80,942										77,942
Stockholders' equity		738,372										726,332										715,485
Total average liabilities and stockholders' equity	$	7,858,020									$	7,779,328									$	7,924,751
Net FTE interest income (non-GAAP) (5)				$	48,927									$	47,302									$	44,202
Less FTE adjustments (4)					2,017										2,023										2,112
Net Interest Income				$	46,910									$	45,279									$	42,090
Net FTE interest margin (Non-GAAP) (4)(5)								2.66	%									2.64	%									2.41	%
(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities.
(2) Includes fees on loans held for sale and held for investment. The inclusion of loan fees does not have a material effect on the average interest rate.
(3) Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.
(4) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate
(5) Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

	Credit Quality
	(Dollars in Thousands Except Ratios, Unaudited)
	Quarter Ended
	September 30,				June 30,				March 31,				December 31,				September 30,				% Change
	2024				2024				2024				2023				2023				3Q24 vs 2Q24				3Q24 vs 3Q23
Non-accrual loans
Commercial	$	6,830			$	4,321			$	5,493			$	7,362			$	6,919				58	%			(1	)%
Residential Real estate		9,529				8,489				8,725				8,058				7,644				12	%			25	%
Mortgage warehouse		—				—				—				—				—				—	%			—	%
Consumer		7,208				5,453				4,835				4,290				4,493				32	%			60	%
Total non-accrual loans		23,567				18,263				19,053				19,710				19,056				29	%			24	%
90 days and greater delinquent - accruing interest		819				1,039				108				559				392				(21	)%			109	%
Total non-performing loans		24,386				19,302				19,161				20,269				19,448				26	%			25	%
Other real estate owned
Commercial	$	1,158			$	1,111			$	1,124			$	1,124			$	1,287				4	%			(10	)%
Residential Real estate		—				—				—				182				32				—	%			(100	)%
Mortgage warehouse		—				—				—				—				—				—	%			—	%
Consumer		36				57				50				205				72				(37	)%			(50	)%
Total other real estate owned	$	1,194			$	1,168			$	1,174			$	1,511			$	1,391				2	%			(14	)%
Total non-performing assets	$	25,580			$	20,470			$	20,335			$	21,780			$	20,839				25	%			23	%
Loan data:
Accruing 30 to 89 days past due loans	$	18,087			$	19,785			$	15,154			$	16,595			$	13,089				(9	)%			38	%
Substandard loans		59,775				51,221				47,469				49,526				47,563				17	%			26	%
Net charge-offs (recoveries)
Commercial		(55	)			57				(57	)			233				142				(196	)%			(139	)%
Residential Real estate		(9	)			(4	)			(5	)			21				(39	)			(125	)%			77	%
Mortgage warehouse		—				—				—				—				—				—	%			—	%
Consumer		439				534				488				531				619				(18	)%			(29	)%
Total net charge-offs		375				587				426				785				722				(36	)%			(48	)%
Allowance for credit losses
Commercial		32,854				31,941				30,514				29,736				29,472				3	%			11	%
Residential Real estate		2,675				2,588				2,655				2,503				2,794				3	%			(4	)%
Mortgage warehouse		862				736				659				481				714				17	%			21	%
Consumer		16,490				16,950				16,559				17,309				16,719				(3	)%			(1	)%
Total allowance for credit losses	$	52,881			$	52,215			$	50,387			$	50,029			$	49,699				1	%			6	%
Credit quality ratios
Non-accrual loans to HFI loans		0.49	%			0.38	%			0.41	%			0.45	%			0.44	%
Non-performing assets to total assets		0.32	%			0.26	%			0.26	%			0.27	%			0.26	%
Annualized net charge-offs of average total loans		0.03	%			0.05	%			0.04	%			0.07	%			0.07	%
Allowance for credit losses to HFI loans		1.10	%			1.08	%			1.09	%			1.13	%			1.14	%

Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin
(Dollars in Thousands, Unaudited)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
Interest income (GAAP)	(A)	$	90,888			$	86,981			$	85,264			$	83,514			$	80,125
Taxable-equivalent adjustment:
Investment securities - tax exempt (1)			1,677				1,695				1,715				1,799				1,861
Loan receivable (2)			340				328				353				314				251
Interest income (non-GAAP)	(B)		92,905				89,004				87,332				85,627				82,237
Interest expense (GAAP)	(C)		43,978				41,702				41,976				41,257				38,035
Net interest income (GAAP)	(D) =(A) - (C)		46,910				45,279				43,288				42,257				42,090
Net FTE interest income (non-GAAP)	(E) = (B) - (C)		48,927				47,302				45,356				44,370				44,202
Average interest earning assets	(F)		7,330,263				7,212,788				7,293,559				7,239,034				7,286,611
Net FTE interest margin (non-GAAP)	(G) = (E*) / (F)		2.66	%			2.64	%			2.50	%			2.43	%			2.41	%
(1) The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity
(2) The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment
*Annualized

Non–GAAP Reconciliation of Return on Average Tangible Common Equity
(Dollars in Thousands, Unaudited)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
Net income (loss) (GAAP)	(A)	$	18,180			$	14,140			$	13,991			$	(25,215	)		$	16,205
Average stockholders' equity	(B)		738,372				726,332				725,083				702,793				715,485
Average intangible assets	(C)		166,819				167,659				168,519				169,401				170,301
Average tangible equity (Non-GAAP)	(D) = (B) - (C)	$	571,553			$	558,673			$	556,564			$	533,392			$	545,184
Return on average tangible common equity ("ROACE") (non-GAAP)	(E) = (A*) / (D)		12.65	%			10.18	%			10.11	%		(18.76		)%			11.79	%
*Annualized

Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets
(Dollars in Thousands, Unaudited)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
Total stockholders' equity (GAAP)	(A)	$	754,822			$	726,665			$	721,250			$	718,812			$	693,369
Intangible assets (end of period)	(B)		166,278				167,121				167,965				168,837				169,741
Total tangible common equity (non-GAAP)	(C) = (A) - (B)	$	588,544			$	559,544			$	553,285			$	549,975			$	523,628
Total assets (GAAP)	(D)		7,927,457				7,912,527				7,855,707				7,940,485				7,959,434
Intangible assets (end of period)	(B)		166,278				167,121				167,965				168,837				169,741
Total tangible assets (non-GAAP)	(E) = (D) - (B)	$	7,761,179			$	7,745,406			$	7,687,742			$	7,771,648			$	7,789,693
Tangible common equity to tangible assets (Non-GAAP)	(G) = (C) / (E)		7.58	%			7.22	%			7.20	%			7.08	%			6.72	%

Non–GAAP Reconciliation of Tangible Book Value Per Share
(Dollars in Thousands, Unaudited)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
Total stockholders' equity (GAAP)	(A)	$	754,822			$	726,665			$	721,250			$	718,812			$	693,369
Intangible assets (end of period)	(B)		166,278				167,121				167,965				168,837				169,741
Total tangible common equity (non-GAAP)	(C) = (A) - (B)	$	588,544			$	559,544			$	553,285			$	549,975			$	523,628
Common shares outstanding	(D)		43,712,059				43,712,059				43,726,380				43,652,063				43,648,501
Tangible book value per common share (non-GAAP)	(E) = (C) / (D)	$	13.46			$	12.80			$	12.65			$	12.60			$	12.00

Contact:	John R. Stewart, CFA
	EVP, Chief Financial Officer
Phone:	(219) 814–5833
Fax:	(219) 874–9280
Date:	October 23, 2024