What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-08 · 214 added, 212 removed, 636 unchanged (40% of the section changed)

10 unchanged sentences

Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward–looking statement include but are not limited to:

• COVID–19 related impact on Horizon and its customers, employees and vendors, which may depend on several factors, including the scope and continued duration of the pandemic, its influence on the financial markets, long–term and post–pandemic changes in the banking preferences and behaviors of customers, supply chain risks to the bank and its customers and actions taken by governmental authorities and other third parties in response to the pandemic;

• economic conditions and their impact on Horizon and its customers, including local and global economic recovery from the pandemic and changes in rates of inflation or deflation;

• changes to government regulations, including the CARES Act, on the accounting for modified loans;

• changes in the level and volatility of interest rates, spreads on earning assets and interest bearing liabilities, and interest rate sensitivity;

• economic conditions and their impact on Horizon and its customers, including continuing increases in inflation;

• the monetary, trade and other regulatory policies of the U.S.

1 unchanged sentence

• the increasing use of Bitcoin and other crypto currencies and/or stable coin and the possible impact these alternative currencies may have on deposit disintermediation and income derived from payment systems;

• the effect of low interest rates on net interest rate margin and their impact on mortgage loan volumes and the outflow of deposits;

• loss of key Horizon personnel;

7 unchanged sentences

• changes in the competitive environment in Horizon’s market areas and among other financial service providers;

• continuing risks and uncertainties relating to the COVID–19 pandemic and government responses thereto;

• legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular;

• changes in regulatory supervision and oversight, including monetary policy and capital requirements;

• changes in accounting policies or procedures as may be adopted and required by regulatory agencies;

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

• legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular;

• changes in regulatory supervision and oversight, including monetary policy and capital requirements;

• changes in accounting policies or procedures as may be adopted and required by regulatory agencies;

For the Three and Nine Months ended September 30, 2022 and 2021

• litigation, regulatory enforcement, tax, and legal compliance risk and costs, as applicable generally and specifically to the financial and fiduciary (generally and as an ESOP fiduciary) environment, especially if materially different from the amount we expect to incur or have accrued for, and any disruptions caused by the same;

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Horizon’s common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.

Horizon Bank (formerly known as “Horizon Bank, N.A.”) was founded in 1873 as a national association, and it remained a national association until its conversion to an Indiana commercial bank effective June 23, 2017.

Horizon Bank was founded in 1873 as a national association, and it remained a national association until its conversion to an Indiana commercial bank effective June 23, 2017.

The Bank is a full–service commercial bank offering commercial and retail banking services, corporate and individual trust and agency services, and other services incident to banking.

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And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Over the last 20 years, Horizon has expanded its geographic reach and experienced financial growth through a combination of both organic expansion and mergers and acquisitions.

Horizon's initial operations focused on northwest Indiana, but since then, the Company has developed a presence in new markets in southern and central Michigan and northeastern and central Indiana.

Second Quarter 2022 Highlights

• Net income grew to a record $24.9 million, up 5.5% from the linked quarter and 12.1% from the prior year period.

Diluted earnings per share (“EPS”) of $0.57 was up from $0.54 for the first quarter of 2022 and $0.50 for the second quarter of 2021.

• Pre–tax, pre–provision net income grew to $29.1 million, up 13.1% from the linked quarter and 18.9% from the prior year period.

This non–GAAP financial measure is utilized by banks to provide a greater understanding of pre–tax profitability before giving effect to credit loss expense.

(See the “Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income” table below.) Horizon recorded a provision expense of $240,000 in the quarter compared to a provision release of $1.4 million in the linked quarter, and a provision release of $1.5 million in the prior year period.

• Reported net interest margin (“NIM”) was 3.19% and adjusted NIM was 3.12%, with reported NIM increasing by 20 basis points and adjusted NIM increasing by 19 basis points from the first quarter of 2022.

Third Quarter 2022 Highlights

• Return on average assets (“ROAA”) was 1.29% year–to–date and 1.24% for the third quarter.

• Return on average common equity (“ROACE”) was 13.97% year–to–date and 13.89% for the third quarter.

• Return on average tangible equity was 18.73% year–to–date and 18.71% for the third quarter.

• Total loans, excluding Federal Paycheck Protection Program (“PPP”) loans and sold commercial participation loans, grew by an annualized rate of 14.5% year–to–date and an annualized rate of 7.8% quarter over quarter.

• Commercial loans, excluding PPP loans and sold commercial participation loans, grew by an annualized rate of 13.8% year–to–date and an annualized rate of 7.2% quarter over quarter to a record $2.35 billion.

• Consumer loans grew by an annualized rate of 31.7% year–to–date and an annualized rate of 23.9% quarter over quarter to a record $899.9 million at period end.

• Asset quality remains solid with total loan delinquency at 0.12% of total loans, net charge–offs to average loans of 0.00% and a reversal of credit loss expense during the quarter.

• Net interest income increased by $387,000 to $53.4 million during the third quarter compared to $53.0 million for the previous quarter.

• Reported net interest margin (“NIM”) was 3.13% and adjusted NIM was 3.08%, with reported NIM decreasing by six basis points and adjusted NIM decreasing by four basis points from the second quarter of 2022.

(See the “Non–GAAP Reconciliation of Net Interest Margin” table below for the definition of this non–GAAP calculation of adjusted NIM.)

• Total loans, excluding Federal Paycheck Protection Program (“PPP”) loans and sold commercial participation loans, grew by 6.2%, or 25.1% annualized, during the second quarter to $3.89 billion at period end compared to $3.66 billion on March 31, 2022.

• Commercial loans, excluding PPP loans and sold commercial participation loans, grew by 4.9%, or 19.7% annualized, during the second quarter to a record $2.31 billion from $2.20 billion on March 31, 2022.

• Consumer loans grew by 12.6%, or 50.5% annualized, during the second quarter to a record $848.7 million at period end.

• Non–interest expense was $36.4 million in the quarter, or 1.95% of average assets on an annualized basis, compared to $36.6 million, or 2.03%, in the first quarter of 2022 and $33.4 million, or 2.18%, in the second quarter of 2021.

Non–interest expense was $73.0 million, or 1.99% of average assets on an annualized basis for the six months ended June 30, 2022 compared to $65.6 million, or 2.19% of average assets on an annualized basis for the six months ended June 30, 2021.

• The efficiency ratio for the period was 55.57% compared to 58.74% for the first quarter of 2022 and 57.73% for the second quarter of 2021.

The adjusted efficiency ratio was 56.13% compared to 58.74% for the first quarter of 2022 and 57.45% for the second quarter of 2021.

(See the “Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” table below.)

• As part of the Company’s annual branch performance review of Horizon Bank’s (the “Bank”) retail network, Horizon’s Board of Directors approved the permanent closure of seven branch locations in the second half of 2022.

A one–time charge of approximately $380,000 was recorded during the second quarter to record these branch locations’ fixed assets at fair value.

• Asset quality remains favorable as evidenced by non–performing loans at 0.51% of total loans at period end and net charge–offs to average loans represented 0.01% for the second quarter of 2022.

• The Company was more asset sensitive as of June 30, 2022 compared to the previous quarter end, as deposit BETA’s have lagged rising rates and an increase in adjustable rate assets.

Current estimates for parallel rate shocks to the balance sheet, at a 100 basis point shock and 200 basis point shock, increase net interest income by approximately $7.0 million and $12.8 million, respectively.

• Non–interest income is down $2.2 million for the quarter due to lower residential mortgage loan volume, resulting in lower gain on sale income, and from lower wealth management fees related to year–to–date declines in equity and bond markets.

• Non-interest expense was $38.4 million in the quarter, or 1.99% of average assets on an annualized basis, compared to $36.4 million, or 1.95%, in the second quarter of 2022.

Year–to–date non–interest expense continues to be well managed at $111.3 million, or 1.99% of average assets on an annualized basis which is below our target of 2.00% of average assets.

• The effective tax rate for the third quarter dropped to 7.8% due to the recognition of solar tax credits as projects were put into service during the quarter.

• Net income totaled $23.8 million, down 4.2% from the prior quarter and up 3.3% from the prior year period.

Diluted earnings per share (“EPS”) of $0.55 was down from $0.57 for the second quarter of 2022 and up from $0.52 for the third quarter of 2021.

• Asset sensitivity decreased in the quarter compared to the previous quarter end, as deposit betas increased with rising rates.

Deposit beta is defined as the change in deposit costs as a percentage of the change in the federal funds rate over a particular period.

Current estimates for parallel rate shocks to the balance sheet, at 100 basis points and 200 basis points, decrease net interest income by approximately $3.3 million and $6.7 million, respectively.

HORIZON BANCORP, INC.

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And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

• Since March 31, 2022, deposit betas have significantly lagged our modeled betas at a 3% beta on total deposits over the last three months compared to our model using a beta of 35% for total deposits.

• During the second quarter of 2022, the continued steepening of the yield curve resulted in unrealized losses on available for sale investments of $122.0 million compared to unrealized losses of $73.6 million at March 31, 2022.

The impact to the tangible capital ratio was a decrease of 46 basis points from 6.94% at March 31, 2022 to 6.48% at June 30, 2022, a 6.63% decrease.

• The Bank's capital is still robust with leverage and risk based capital ratios of 9.17% and 14.81%, respectively.

For the Three and Nine Months ended September 30, 2022 and 2021

• In a non–parallel rate model, the result is an estimated increase to net interest income of approximately $1.3 million, or 0.61%, at a 200 basis point move.

• When the entire balance sheet is valued in our models, the economic value of equity increased in the third quarter of 2022, when compared to the prior year quarter.

• Deposit betas increased to 23% on total interest bearing deposits in the third quarter compared to a 3% beta during the previous quarter.

• During the third quarter of 2022, the continued steepening of the yield curve resulted in unrealized losses on available for sale investments of $161.8 million compared to unrealized losses of $122.0 million at June 30, 2022.

The impact to the tangible capital ratio was a decrease of 3.55% from 6.48% at June 30, 2022 to 6.25% at September 30, 2022.

• The Bank’s capital position is still robust with leverage and risk based capital ratios of 9.31% and 14.23%, respectively.

The annualized dividend yield was 3.56% as of September 30, 2022.

Financial Summary

For the Three Months Ended

June 30, March 31, June 30,

September 30, June 30, September 30,

Net Interest Income and Net Interest Margin 2022 2022 2021

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Net interest margin 3.13 % 3.19 % 3.17 %

Adjusted net interest margin 3.12 % 2.93 % 3.13 %

Adjusted net interest margin (See “Use of Non–GAAP Financial Measures”) 3.08 % 3.12 % 3.12 %

For the Three Months Ended

June 30, March 31, June 30,

September 30, June 30, September 30,

Asset Yields and Funding Costs 2022 2022 2021

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Non–interest Income and

Mortgage Banking Income June 30, March 31, June 30,

Mortgage Banking Income September 30, June 30, September 30,

2022 2022 2021

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For the Three Months Ended

June 30, March 31, June 30,

September 30, June 30, September 30,

Non–interest Expense 2022 2022 2021

1 unchanged sentence

Annualized non–interest expense to average assets 1.99 % 1.95 % 2.09 %

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Nine Months ended September 30, 2022 and 2021

At or for the Three Months Ended

Credit Quality June 30, March 31, June 30,

Credit Quality September 30, June 30, September 30,

2022 2022 2021

2 unchanged sentences

Percent of net charge–offs to average loans outstanding for the period 0.00 % 0.01 % 0.00 %

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

Allowance for June 30, Net Reserve December 31,

Credit Losses 2022 2Q22 1Q22 2021

Allowance for September 30, Net Reserve December 31,

Credit Losses 2022 3Q22 2Q22 1Q22 2021

Commercial $ 33,806 $ (996) $ (2,987) $ (2,986) $ 40,775

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Actual losses incurred may differ materially from our estimates.

Particularly, the impact of COVID–19 on both borrower credit and the greater macroeconomic environment is uncertain and changes in the duration, spread and severity of the virus will affect our loss experience.

Goodwill and Intangible Assets

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FASB ASC 350–10 establishes standards for the amortization of acquired intangible assets and impairment assessment of goodwill.

At June 30, 2022, Horizon had core deposit intangibles of $19.1 million subject to amortization and $154.6 million of goodwill, which is not subject to amortization.

At September 30, 2022, Horizon had core deposit intangibles of $18.2 million subject to amortization and $155.2 million of goodwill, which is not subject to amortization.

Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired.

Horizon’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Horizon to provide quality, cost effective banking services in a competitive marketplace.

The goodwill value is supported by revenue that is in part driven by the volume of business transacted.

A decrease in earnings resulting from a decline in the customer base or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely affect earnings in future periods.

FASB ASC 350–10 requires an annual evaluation of goodwill for impairment.

Horizon’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Horizon

HORIZON BANCORP, INC.

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And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

to provide quality, cost effective banking services in a competitive marketplace.

The goodwill value is supported by revenue that is in part driven by the volume of business transacted.

FASB ASC 350–10 requires an annual evaluation of goodwill for impairment.

At each reporting date between annual goodwill impairment tests, Horizon considers potential indicators of impairment.

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Horizon further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and stress testing performed.

At the conclusion of the most recent qualitative assessment, the Company determined that as of June 30, 2022, it was more likely than not that the fair value exceeded its carrying values.

At the conclusion of the most recent qualitative assessment, the Company determined that as of September 30, 2022, it was more likely than not that the fair value exceeded its carrying values.

Horizon will continue to monitor developments regarding the COVID–19 pandemic and measures implemented in response to the pandemic, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future.

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Changes in the fair values of derivatives are reported in the consolidated income statements or other comprehensive income (“OCI”) depending on the use of the derivative and whether the instrument qualifies for hedge accounting.

The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis.

Horizon’s accounting policies related to derivatives reflect the guidance in FASB ASC 815–10.

Derivatives that qualify for the hedge accounting treatment are designated as either:

a hedge of the fair value of the recognized asset or liability or of an unrecognized firm commitment (a fair value hedge) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge).

For fair value hedges, the cumulative

The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the

HORIZON BANCORP, INC.

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And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

change in fair value of both the hedge instruments and the underlying loans is recorded in non–interest income.

For the Three and Nine Months ended September 30, 2022 and 2021

hedged risk, both at inception of the hedge and on an ongoing basis.

Horizon’s accounting policies related to derivatives reflect the guidance in FASB ASC 815–10.

Derivatives that qualify for the hedge accounting treatment are designated as either:

For fair value hedges, the cumulative change in fair value of both the hedge instruments and the underlying loans is recorded in non–interest income.

For cash flow hedges, changes in the fair values of the derivative instruments are reported in OCI to the extent the hedge is effective.

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Financial Condition

On June 30, 2022, Horizon’s total assets were $7.6 billion, an increase of approximately $229.0 million compared to December 31, 2021.

On September 30, 2022, Horizon’s total assets were $7.7 billion, an increase of approximately $306.8 million compared to December 31, 2021.

The increase in total assets was primarily in investments held to maturity of $479.1 million purchased and growth in net loans of $370.5 million.

These increases were offset by decreases in cash and due from banks of $484.7 million used to fund the growth and investments available for sale of $119.8 million due to unrealized losses.

These increases were offset by decreases in cash and due from banks of $483.8 million used to fund the growth and investments available for sale of $175.2 million primarily due to unrealized losses.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Nine Months ended September 30, 2022 and 2021

Investment securities were comprised of the following as of (dollars in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Value Amortized

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Total held to maturity investment securities $ 2,031,536 $ 1,640,589 $ 1,552,443 $ 1,559,991

Investment securities available for sale decreased $175.2 million since December 31, 2021 to $985.7 million as of September 30, 2022 primarily due to unrealized losses and investment securities held to maturity increased $479.1 million since December 31, 2021 to $2.0 billion as of September 30, 2022.

This increase in investments held to maturity was due to additional purchases to increase earning assets.

Net loans increased $370.5 million since December 31, 2021 to $4.0 billion as of September 30, 2022.

Commercial loans, excluding PPP loans and sold commercial participation loans, increased $220.8 million, consumer loans increased $172.6 million and residential mortgage loans increased $40.5 million since December 31, 2021.

These increases were offset by decreases in mortgage warehouse loans of $35.3 million, PPP loans of $25.5 million, loans held for sale of $10.7 million and sold commercial participation loans of $5.5 million since December 31, 2021.

Other assets increased $77.6 million since December 31, 2021 to $158.4 million as of September 30, 2022.

This increase was primarily due to an increase in deferred tax assets related to the level of unrealized losses on available for sale securities of approximately $35.4 million and an increase in the unrealized gain of fair value hedges of approximately $31.1 million.

Total deposits increased $27.8 million since December 31, 2021 to $5.8 billion as of September 30, 2022, from organic growth.

Total borrowings increased to $1.0 billion as of September 30, 2022 from $712.7 million as of December 31, 2021.

At September 30, 2022, the Company had $871.6 million in short–term funds borrowed compared to $180.8 million at December 31, 2021.

Stockholders’ equity totaled $645.0 million at September 30, 2022 compared to $723.2 million at December 31, 2021.

The decrease in stockholders’ equity during the period was primarily due to a decrease in accumulated other comprehensive income of $130.5 million as unrealized losses on available for sale securities totaled $161.8 million and the amount of dividends paid during the quarter, offset by the generation of net income.

Book value per common share at September 30, 2022 decreased to $14.80 compared to $15.10 at December 31, 2021.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

Investment securities available for sale decreased $119.8 million since December 31, 2021 to $1.0 billion as of June 30, 2022 primarily due to unrealized losses and investment securities held to maturity increased $500.3 million since December 31, 2021 to $2.1 billion as of June 30, 2022.

This increase in investments held to maturity was due to additional purchases to increase earning assets as the result of organic deposit growth.

Net loans increased $295.1 million since December 31, 2021 to $3.9 billion as of June 30, 2022.

Commercial loans, excluding PPP loans and sold commercial participation loans, increased $108.0 million, consumer loans increased $94.8 million, residential mortgage loans increased $15.2 million, mortgage warehouse loans increased $11.4 million and sold commercial participation loans increased $1.0 million since December 31, 2021.

These increases were offset by decreases in PPP loans of $4.4 million and loans held for sale of $838,000 since December 31, 2021.

Other assets increased $47.6 million since December 31, 2021 to $128.4 million as of June 30, 2022.

This increase was primarily due to an increase in deferred tax assets related to the level of unrealized losses on available for sale securities of approximately $27.1 million and an increase in the unrealized gain of fair value hedges of approximately $9.9 million.

Total deposits increased $42.6 million since December 31, 2021 to $5.8 billion as of June 30, 2022, from organic growth.

Total borrowings increased from $712.7 million as of December 31, 2021 to $959.2 million as of June 30, 2022.

At June 30, 2022, the Company had $458.0 million in short-term funds borrowed compared to $180.8 million at December 31, 2021.

Stockholders’ equity totaled $657.9 million at June 30, 2022 compared to $723.2 million at December 31, 2021.

The decrease in stockholders’ equity during the period was primarily due to a decrease in accumulated other comprehensive income of $38.3 million as unrealized losses on available for sale securities totaled $122.0 million and the amount of dividends paid during the quarter, offset by the generation of net income.

Book value per common share at June 30, 2022 decreased to $15.10 compared to $15.55 at December 31, 2021.

For the Three and Nine Months ended September 30, 2022 and 2021

Results of Operations

Consolidated net income for the three–month period ended June 30, 2022 was $24.9 million, or $0.57 diluted earnings per share, compared to $22.2 million, or $0.50 diluted earnings per share for the same period in 2021.

The increase in net income for the three–month period ended June 30, 2022 when compared to the same prior year period reflects an increase in net interest income of $10.4 million, offset by an increase in non–interest expense of $3.0 million, a decrease in non–interest income of $2.8 million, an increase in credit loss expense of $1.7 million and an increase in income tax expense of $205,000.

Consolidated net income for the six–month period ended June 30, 2022 was $48.4 million, or $1.11 diluted earnings per share, compared to $42.6 million, or $0.97 diluted earnings per share for the same period in 2021.

The increase in net income for the six–month period ended June 30, 2022 when compared to the same prior year period reflects an increase in net interest income of $16.0 million and a decrease in credit loss expense of $21,000, offset by an increase in non–interest expense of $7.4 million, a decrease in non–interest income of $2.5 million and an increase in income tax expense of $294,000.

Consolidated net income for the three–month period ended September 30, 2022 was $23.8 million, or $0.55 diluted earnings per share, compared to $23.1 million, or $0.52 diluted earnings per share for the same period in 2021.

The increase in net income for the three–month period ended September 30, 2022 when compared to the same prior year period reflects an increase in net interest income of $6.9 million, a decrease in credit loss expense of $1.7 million and a decrease in income tax expense of $2.0 million, offset by an increase in non–interest expense of $4.0 million and a decrease in non–interest income of $5.9 million.

Consolidated net income for the nine–month period ended September 30, 2022 was $72.2 million, or $1.65 diluted earnings per share, compared to $65.7 million, or $1.49 diluted earnings per share for the same period in 2021.

The increase in net income for the nine–month period ended September 30, 2022 when compared to the same prior year period reflects an increase in net interest income of $22.9 million, a decrease in credit loss expense of $1.7 million and a decrease in income tax expense of $1.7 million, offset by an increase in non–interest expense of $11.4 million and a decrease in non–interest income of $8.3 million.

Net Interest Income

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Net interest margin refers to net interest income divided by average interest earning assets and is influenced by the level and relative mix of interest earning assets and interest bearing liabilities.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

Net interest income during the three months ended June 30, 2022 was $53.0 million, an increase of $10.4 million from the $42.6 million earned during the same period in 2021.

Yields on the Company’s interest earning assets decreased by two basis points to 3.46% for the three months ended June 30, 2022 from 3.48% for the three months ended June 30, 2021.

Interest income increased $10.2 million from $47.4 million for the three months ended June 30, 2021 to $57.6 million for the same period in 2022.

The increase in interest income was due to an increase in average balances of interest earning assets of $1.3 billion during the three months ended June 30, 2022.

Interest income from acquisition–related purchase accounting adjustments was $1.2 million for the three months ending June 30, 2022 compared to $230,000 for the same period of 2021.

Rates paid on interest bearing liabilities decreased by 11 basis points for the three–month period ended June 30, 2022 compared to the same period in 2021.

Interest expense decreased $224,000 when compared to the three–month period ended June 30, 2021 to $4.6 million for the same period in 2022.

This decrease was due to lower rates paid on deposits and borrowings.

The cost of average interest bearing deposits decreased seven basis points while the cost of average borrowings decreased 58 basis points.

Average balances of interest bearing deposits increased $860.2 million and average balances of borrowings increased $278.5 million for the three-month period ended June 30, 2022 when compared to the same period in 2021.

The net interest margin increased five basis points from 3.14% for the three–month period ended June 30, 2021 to 3.19% for the same period in 2022.

The increase in the margin for the three–month period ended June 30, 2022 compared to the same period in 2021 was due to a decrease in the cost of interest bearing liabilities, offset by a decrease in the yield on interest earning assets.

Excluding the interest income recognized from the acquisition–related purchase accounting adjustments (“adjusted net interest margin”), the margin would have been 3.12% for the three-month period ending June 30, 2022 compared to 3.13% for the same period in 2021.

Net interest income during the three months ended September 30, 2022 was $53.4 million, an increase of $6.9 million from the $46.5 million earned during the same period in 2021.

Yields on the Company’s interest earning assets increased by 22 basis points to 3.68% for the three months ended September 30, 2022 from 3.46% for the three months ended September 30, 2021.

Interest income increased $12.2 million from $50.9 million for the three months ended September 30, 2021 to $63.0 million for the same period in 2022.

The increase in interest income was due to an increase in average balances of interest earning assets of $1.0 billion during the three months ended September 30, 2022.

Interest income from acquisition–related purchase accounting adjustments was $906,000 for the three months ended September 30, 2022 compared to $875,000 for the same period of 2021.

Rates paid on interest bearing liabilities increased by 31 basis points for the three–month period ended September 30, 2022 compared to the same period in 2021.

Interest expense increased $5.3 million when compared to the three–month period ended September 30, 2021 to $9.6 million for the same period in 2022.

This increase was due to higher rates paid on deposits and borrowings.

The cost of average interest bearing deposits increased 17 basis points while the cost of average borrowings increased 96 basis points.

Average balances of interest bearing deposits increased $647.1 million and average balances of borrowings increased $341.3 million for the three-month period ended September 30, 2022 when compared to the same period in 2021.

The net interest margin decreased four basis points from 3.17% for the three–month period ended September 30, 2021 to 3.13% for the same period in 2022.

The decrease in the margin for the three–month period ended September 30, 2022 compared to the same period in 2021 was due to an increase in the cost of interest bearing liabilities, offset by a increase in the yield on interest earning assets.

Excluding the interest income recognized from the acquisition–related purchase accounting adjustments (“adjusted net interest margin”), the margin would have been 3.08% for the three-month period ended September 30, 2022 compared to 3.12% for the same period in 2021.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

The following are the average balance sheets for the three months ending (dollars in thousands):

For the Three and Nine Months ended September 30, 2022 and 2021

The following are the average balance sheets for the three months ended (dollars in thousands):

Average Balance Sheets

1 unchanged sentence

Three Months Ended Three Months Ended

June 30, 2022 June 30, 2021

September 30, 2022 September 30, 2021

Balance Interest Average

42 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

Net interest income during the six months ended June 30, 2022 was $101.2 million, an increase of $16.0 million from the $85.2 million earned during the same period in 2021.

Yields on the Company’s interest earning assets decreased by 23 basis points to 3.34% for the six months ended June 30, 2022 from 3.57% for the six months ended June 30, 2021.

Interest income increased $14.6 million from $95.0 million for the six months ended June 30, 2021 to $109.7 million for the same period in 2022.

The increase in interest income was due to an increase in average balances of interest earning assets of $1.3 billion during the six months ended June 30, 2022.

Interest income from acquisition–related purchase accounting adjustments was $2.1 million for the six months ended June 30, 2022 compared to $1.8 million for the same period of 2021.

Rates paid on interest bearing liabilities decreased by 15 basis points for the six–month period ended June 30, 2022 compared to the same period in 2021.

Interest expense decreased $1.4 million when compared to the six–month period ended June 30, 2021 to $8.5 million for the same period in 2022.

This decrease was due to lower rates paid on deposits and borrowings.

The cost of average interest bearing deposits decreased 11 basis points while the cost of average borrowings decreased 54 basis points.

Average balances of interest bearing deposits increased $907.1 million and average balances of borrowings increased $208.8 million for the six-month period ended June 30, 2022 when compared to the same period in 2021.

The net interest margin decreased 18 basis points from 3.21% for the six–month period ended June 30, 2021 to 3.03% for the same period in 2022.

The decrease in the margin for the six–month period ended June 30, 2022 compared to the same period in 2021 was due to a decrease in the yield on interest earning assets, offset by a decrease in the cost of interest bearing liabilities.

Excluding the interest income recognized from the acquisition–related purchase accounting adjustments (“adjusted net interest margin”), the margin would have been 2.97% for the six-month period ending June 30, 2022 compared to 3.15% for the same period in 2021.

For the Three and Nine Months ended September 30, 2022 and 2021

Net interest income during the nine months ended September 30, 2022 was $154.6 million, an increase of $22.9 million from the $131.7 million earned during the same period in 2021.

Yields on the Company’s interest earning assets decreased by 8 basis points to 3.45% for the nine months ended September 30, 2022 from 3.53% for the nine months ended September 30, 2021.

Interest income increased $26.8 million from $145.9 million for the nine months ended September 30, 2021 to $172.7 million for the same period in 2022.

The increase in interest income was due to an increase in average balances of interest earning assets of $1.2 billion during the nine months ended September 30, 2022.

Interest income from acquisition–related purchase accounting adjustments was $3.0 million for the nine months ended September 30, 2022 compared to $2.7 million for the same period of 2021.

Rates paid on interest bearing liabilities increased by one basis points for the nine–month period ended September 30, 2022 compared to the same period in 2021.

Interest expense increased $3.9 million when compared to the nine–month period ended September 30, 2021 to $18.1 million for the same period in 2022.

This increase was due to higher rates paid on borrowings.

The cost of average borrowings increased 9 basis points.

Average balances of interest bearing deposits increased $819.5 million and average balances of borrowings increased $253.4 million for the nine-month period ended September 30, 2022 when compared to the same period in 2021.

The net interest margin decreased 17 basis points from 3.20% for the nine–month period ended September 30, 2021 to 3.03% for the same period in 2022.

The decrease in the margin for the nine–month period ended September 30, 2022 compared to the same period in 2021 was due to a decrease in the yield on interest earning assets in addition to a slight increase in the cost of interest bearing liabilities.

Excluding the interest income recognized from the acquisition–related purchase accounting adjustments (“adjusted net interest margin”), the margin would have been 2.97% for the nine-month period ended September 30, 2022 compared to 3.14% for the same period in 2021.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

The following are the average balance sheets for the six months ending (dollars in thousands):

For the Three and Nine Months ended September 30, 2022 and 2021

The following are the average balance sheets for the nine months ended (dollars in thousands):

Average Balance Sheets

(Dollar Amount in Thousands, Unaudited)

Six Months Ended Six Months Ended

June 30, 2022 June 30, 2021

Nine Months Ended Nine Months Ended

September 30, 2022 September 30, 2021

Balance Interest Average

42 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Rate/Volume Analysis

The following table illustrates the impact of changes in the volume of interest earning assets and interest bearing liabilities and interest rates on net interest income for the periods indicated.

Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 vs.

Six Months Ended June 30, 2021

Three Months Ended September 30, 2022 vs.

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 vs.

Nine Months Ended September 30, 2021

Change Change

19 unchanged sentences

Horizon assesses the adequacy of its Allowance for Credit Losses (“ACL”) by regularly reviewing the performance of its loan portfolio.

During the three–month period ended June 30, 2022, credit loss expense totaled $240,000 compared to a credit loss recovery of $1.5 million for the same period of 2021.

During the three–month period ended June 30, 2022, commercial loan net recoveries were $75,000, residential mortgage loan net charge–offs were $40,000 and consumer loan net charge–offs were $319,000.

During the six–month period ended June 30, 2022, credit loss expense totaled a recovery of $1.1 million compared to a credit loss recovery of $1.1 million for the same period of 2021.

During the six–month period ended June 30, 2022, commercial loan net charge–offs were $37,000, residential mortgage loan net charge–offs were $30,000 and consumer loan net charge–offs were $427,000.

The ACL balance at June 30, 2022 was $52.4 million, or 1.33% of total loans compared to an ACL balance of $54.3 million at December 31, 2021 or 1.51% of total loans.

The decrease in the ACL to total loans ratio was primarily due to favorable asset quality with non–performing loans at 0.51% of total loans at period end and net charge–offs to average loans represented 0.01% for the second quarter of 2022.

As of June 30, 2022, non–performing loans totaled $20.2 million, reflecting a $1.2 million increase from $19.0 million in non–performing loans as of December 31, 2021.

Non–performing commercial loans increased by $499,000, non–performing real estate loans increased by $464,000 and non–performing consumer loans increased by $224,000 at June 30, 2022 compared to December 31, 2021.

During the three–month period ended September 30, 2022, credit loss recovery totaled $601,000 compared to a credit loss expense of $1.1 million for the same period of 2021.

During the three–month period ended September 30, 2022, commercial loan net charge–offs were $51,000, residential mortgage loan net recoveries were $75,000 and consumer loan net charge–offs were $162,000.

During the nine–month period ended September 30, 2022, credit loss expense totaled a recovery of $1.7 million compared to a credit loss recovery of $13,000 for the same period of 2021.

During the nine–month period ended September 30, 2022, commercial loan net charge–offs were $14,000, residential mortgage loan net recoveries were $45,000 and consumer loan net charge–offs were $589,000.

The ACL balance at September 30, 2022 was $51.4 million, or 1.28% of total loans compared to an ACL balance of $54.3 million at December 31, 2021 or 1.51% of total loans.

The decrease in the ACL to total loans ratio was primarily due to favorable asset quality with non–performing loans at 0.48% of total loans at period end and net charge–offs to average loans represented 0.00% for the third quarter of 2022.

As of September 30, 2022, non–performing loans totaled $19.2 million, reflecting a $139,000 increase from $19.0 million in non–performing loans as of December 31, 2021.

Non–performing commercial loans decreased by $310,000, non–performing real estate loans increased by $42,000 and non–performing consumer loans increased by $407,000 at September 30, 2022 compared to December 31, 2021.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

Other Real Estate Owned (“OREO”) and repossessed assets totaled $1.5 million at June 30, 2022 compared to $2.4 million at December 31, 2021.

The decrease was primarily due to the sale of nine properties during the first six months of 2022.

For the Three and Nine Months ended September 30, 2022 and 2021

Other Real Estate Owned (“OREO”) and repossessed assets totaled $3.2 million at September 30, 2022 compared to $1.5 million at December 31, 2021.

The increase was primarily due to several former branch locations totaling $1.5 million being moved to OREO during the third quarter after being closed.

Non–interest Income

The following is a summary of changes in non–interest income for the three months ending June 30, 2022 and 2021 (table dollar amounts in thousands):

The following is a summary of changes in non–interest income for the three months ended September 30, 2022 and 2021 (table dollar amounts in thousands):

Three Months Ended

June 30, Amount Percent

September 30, Amount Percent

2022 2021 Change Change

4 unchanged sentences

Fiduciary activities 1,203 2,124 (921) (43.4) %

Gain on sale of investment securities — — — 100.0 %

Gain on sale of mortgage loans 1,441 4,088 (2,647) (64.8) %

4 unchanged sentences

Total non–interest income $ 10,188 $ 16,044 $ (5,856) (36.5) %

Total non–interest income was $2.8 million lower during the second quarter of 2022 compared to the same period of 2021.

Residential mortgage loan activity during the second quarter of 2022 generated $2.5 million of income from the gain on sale of mortgage loans, down from $5.6 million for the same period in 2021 due to a lower volume of loans sold and a decrease in the percentage gain on loans sold.

Mortgage servicing income, net of impairment or recovery, decreased $1.2 million during the second quarter of 2022 compared to the same period of 2021 due to an impairment recovery of $1.6 million recorded during the second quarter of 2021 as mortgage pre–payment speeds slowed.

Service charges on deposit accounts and interchange fees increased $676,000 and $690,000, respectively, when comparing the second quarter of 2022 to the same period of 2021 primarily due to the deposits acquired with the branch acquisition completed during the third quarter of 2021.

Six Months Ended

June 30, Amount Percent

Total non–interest income was $5.9 million lower during the third quarter of 2022 compared to the same period of 2021.

Residential mortgage loan activity during the third quarter of 2022 generated $1.4 million of income from the gain on sale of mortgage loans, down from $4.1 million for the same period in 2021 due to a lower volume of loans sold and a decrease in the percentage gain on loans sold.

Other income was $3.2 million lower during the third quarter of 2022 compared to the same period of 2021.

This decrease was primarily due to the gain on sale of ESOP trustee accounts totaling $2.3 million and the recovery of $876,000 from an acquired charged–off loan recorded during the third quarter of 2021.

Fiduciary activities income was $921,000 lower during the third quarter of 2022 compared to the same period of 2021 primarily due to rapidly rising interest rates during the most recent quarter.

Service charges on deposit accounts and interchange fees increased $732,000 and $502,000, respectively, when comparing the third quarter of 2022 to the same period of 2021 primarily due to the deposits acquired with the branch acquisition completed during the third quarter of 2021.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Nine Months ended September 30, 2022 and 2021

Nine Months Ended

September 30, Amount Percent

2022 2021 Change Change

11 unchanged sentences

Total non–interest income $ 36,777 $ 45,124 $ (8,347) (18.5) %

Total non–interest income was $8.3 million lower for the nine–month period ended September 30, 2022 compared to the same period of 2021.

Residential mortgage loan activity for the nine–month period ended September 30, 2022 generated $6.0 million of income from the gain on sale of mortgage loans, down from $15.0 million for the same period in 2021 due to a lower volume of loans sold and a decrease in the percentage gain on loans sold.

Other income was $2.3 million lower during the nine–month period ended September 30, 2022 compared to the same period of 2021.

This decrease was primarily due to the gain on sale of ESOP trustee accounts totaling $2.3 million recorded during 2021.

Fiduciary activities income was $1.7 million lower during the nine–month period ended September 30, 2022 compared to the same period of 2021 primarily due to rapidly rising interest rates during the current year.

Mortgage servicing income, net of impairment or recovery, increased $2.1 million for the nine–month period ended September 30, 2022 compared to the same period of 2021 due to an impairment recovery of $2.6 million recorded for the nine–month period ended September 30, 2022 as mortgage pre–payment speeds slowed.

Service charges on deposit accounts and interchange fees increased $2.0 million and $1.6 million, respectively, when comparing the nine–month period ended September 30, 2022 to the same period of 2021 primarily due to the deposits acquired with the branch acquisition completed during the third quarter of 2021.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

Total non–interest income was $2.5 million lower for the six–month period ended June 30, 2022 compared to the same period of 2021.

Residential mortgage loan activity for the six–month period ended June 30, 2022 generated $4.5 million of income from the gain on sale of mortgage loans, down from $10.9 million for the same period in 2021 due to a lower volume of loans sold and a decrease in the percentage gain on loans sold.

Mortgage servicing income, net of impairment or recovery, increased $2.1 million for the six–month period ended June 30, 2022 compared to the same period of 2021 due to an impairment recovery of $2.6 million recorded for the six–month period ended June 30, 2022 as mortgage pre–payment speeds slowed.

Service charges on deposit accounts and interchange fees increased $1.2 million and $1.1 million, respectively, when comparing the six–month period ended June 30, 2022 to the same period of 2021 primarily due to the deposits acquired with the branch acquisition completed during the third quarter of 2021.

For the Three and Nine Months ended September 30, 2022 and 2021

Non–interest Expense

The following is a summary of changes in non–interest expense for the three months ending June 30, 2022 and 2021 (table dollar amounts in thousands):

The following is a summary of changes in non–interest expense for the three months ended September 30, 2022 and 2021 (table dollar amounts in thousands):

Three Months Ended

June 30, June 30,

September 30, September 30,

2022 2021 Adjusted

16 unchanged sentences

Assets 1.99 % 1.99 % 2.09 % 2.05 %

Total non–interest expense was $3.0 million higher for the second quarter of 2022 when compared to the second quarter of 2021.

The increases in expenses was primarily due to an increase in salaries and employee benefits of $2.2 million, an increase in other expense of $447,000, an increase in other losses of $356,000, an increase in FDIC deposit insurance of $275,000 and an increase in outside services and consultants of $265,000 primarily due to the 14 branches acquired in September 2021, wage increases, higher health care costs and continued investments in technology.

These increases were partially offset by decreases of $610,000 in loan expense and $305,000 in professional fees.

Annualized non–interest expense as a percent of average assets was 1.95% and 2.18% for the three months ended June 30, 2022 and 2021, respectively.

Annualized non–interest expense, excluding acquisition expenses, as a percentage of average assets was 1.95% and 2.16% for the three months ended June 30, 2022 and 2021, respectively.

Total non–interest expense was $4.0 million higher for the third quarter of 2022 when compared to the third quarter of 2021.

The increases in expenses was primarily due to an increase in salaries and employee benefits of $1.7 million and an increase in outside services and consultants expense of $525,000, as well as increases in net occupancy expenses due to additional employees hired and branch locations acquired as a result of the 2021 branch acquisition, FDIC insurance expense, other expense due to the amortization of the intangible assets from the solar tax credits and other losses.

Annualized non–interest expense as a percent of average assets was 1.99% and 2.09% for the three months ended September 30, 2022 and 2021, respectively.

Annualized non–interest expense, excluding acquisition expenses, as a percentage of average assets was 1.99% and 2.05% for the three months ended September 30, 2022 and 2021, respectively.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

The following is a summary of changes in non–interest expense for the six months ending June 30, 2022 and 2021 (table dollar amounts in thousands):

Six Months Ended

June 30, June 30,

For the Three and Nine Months ended September 30, 2022 and 2021

The following is a summary of changes in non–interest expense for the nine months ended September 30, 2022 and 2021 (table dollar amounts in thousands):

Nine Months Ended

September 30, September 30,

2022 2021 Adjusted

16 unchanged sentences

Assets 1.99 % 1.99 % 2.16 % 2.13 %

Total non–interest expense was $7.4 million higher for the six–month period ended June 30, 2022 when compared to the same period of 2021.

The increase in expenses was primarily due to an increase in salaries and employee benefits of $5.1 million, an increase in other expense of $1.5 million and an increase in outside services and consultants of $1.1 million primarily due to the 14 branches acquired in September 2021, wage increases and higher health care costs.

These increases were partially offset by decreases of $887,000 in loan expense and $535,000 in professional fees.

Annualized non–interest expense as a percent of average assets was 1.99% and 2.19% for the six months ended June 30, 2022 and 2021, respectively.

Annualized non–interest expense, excluding acquisition expenses, as a percentage of average assets was 1.99% and 2.18% for the six months ended June 30, 2022 and 2021, respectively.

Income tax expense totaled $4.0 million for the second quarter of 2022, an increase of $205,000 when compared to the second quarter of 2021.

Income tax expense totaled $7.5 million for the six months ended June 30, 2022, an increase of $294,000 when compared to the same period in 2021.

The Bank maintains a stable base of core deposits provided by long–standing 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 FHLB.

At June 30, 2022, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $917.6 million in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $672.7 million at December 31, 2021.

The Bank had approximately $2.2 billion of unpledged investment securities at June 30, 2022 compared to $2.0 billion at December 31, 2021.

Total non–interest expense was $11.4 million higher in the first nine months of 2022 when compared to the first nine months of 2021.

The increase was primarily due to higher salaries and employee benefits of $6.8 million due to additional employees hired as a result of the 2021 branch acquisition, higher other expense of $1.9 million, higher outside services and consultants expense of $1.6 million, and was partially offset by a decrease of $606,000 in loan expense and a decrease of $505,000 in professional fees.

Annualized non–interest expense as a percent of average assets was 1.99% and 2.16% for the nine months ended September 30, 2022 and 2021, respectively.

Annualized non–interest expense, excluding acquisition expenses, as a percentage of average assets was 1.99% and 2.13% for the nine months ended September 30, 2022 and 2021, respectively.

Income tax expense totaled $2.0 million for the third quarter of 2022, a decrease of $2.0 million when compared to the second quarter of 2022 and a decrease of $2.0 million when compared to the third quarter of 2021 due to the recognition of solar tax credits as projects were put into service during the quarter, which reduced the effective tax rate to 7.8%.

Income tax expense totaled $9.5 million for the nine months ended September 30, 2022, a decrease of $1.7 million when compared to the nine months ended September 30, 2021.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

The Bank maintains a stable base of core deposits provided by long–standing relationships with individuals and local businesses.

These deposits are the principal source of liquidity for Horizon.

At September 30, 2022, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $917.6 million in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $672.7 million at December 31, 2021.

The Bank had approximately $2.2 billion of unpledged investment securities at September 30, 2022 compared to $2.0 billion at December 31, 2021.

Capital Resources

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at June 30, 2022.

Stockholders’ equity totaled $657.9 million as of June 30, 2022, compared to $723.2 million as of December 31, 2021.

For the six months ended June 30, 2022, the ratio of average stockholders’ equity to average assets was 9.06% compared to 10.93% for the twelve months ended December 31, 2021.

The decrease in stockholders’ equity during the period was due to an decrease in accumulated other comprehensive income of $38.3 million and the amount of dividends paid, offset by net income recorded during the period.

Horizon declared common stock dividends in the amount of $0.31 per share during the first six months of 2022 and $0.26 per share for the same period of 2021.

The dividend payout ratio (dividends as a percent of basic earnings per share) was 27.9% and 25.8% for the first six months of 2022 and 2021, respectively.

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at September 30, 2022.

Stockholders’ equity totaled $645.0 million as of September 30, 2022, compared to $723.2 million as of December 31, 2021.

For the nine months ended September 30, 2022, the ratio of average stockholders’ equity to average assets was 8.91% compared to 10.93% for the twelve months ended December 31, 2021.

The decrease in stockholders’ equity during the period was due to a decrease in accumulated other comprehensive income of $30.1 million and the amount of dividends paid, offset by net income recorded during the period.

Horizon declared common stock dividends in the amount of $0.47 per share during the first nine months of 2022 and $0.41 per share for the same period of 2021.

The dividend payout ratio (dividends as a percent of basic earnings per share) was 28.3% and 27.3% for the first nine months of 2022 and 2021, respectively.

For additional information regarding dividends, see Horizon’s Annual Report on Form 10-K for 2021.

10 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Non–GAAP Reconciliation of Net Income

(Dollars in Thousands, Unaudited)

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

26 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Non–GAAP Reconciliation of Diluted Earnings per Share

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

25 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income

(Dollars in Thousands, Unaudited)

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

12 unchanged sentences

(Dollars in Thousands, Unaudited)

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

13 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share

(Dollars in Thousands Except per Share Data, Unaudited)

June 30, March 31, December 31, September 30, June 30,

September 30, June 30, March 31, December 31, September 30,

2022 2022 2022 2021 2021

10 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio

(Dollars in Thousands, Unaudited)

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

21 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

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,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

26 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

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,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

26 unchanged sentences

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

For the Three and Nine Months ended September 30, 2022 and 2021

Non–GAAP Reconciliation of Return on Average Tangible 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,

Three Months Ended Nine Months Ended

September 30, June 30, March 31, December 31, September 30, September 30, September 30,

2022 2022 2022 2021 2021 2022 2021

24 unchanged sentences

Adjusted ROATE 18.71 % 19.35 % 17.70 % 17.42 % 16.58 % 18.56 % 16.20 %

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Six Months ended June 30, 2022 and 2021

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis