What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-10 · 290 added, 150 removed, 445 unchanged (50% of the section changed)

17 unchanged sentences

• 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;

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

• increases in disintermediation, as new technologies allow consumers to complete financial transactions without the assistance of banks, which may have been accelerated by the COVID–19 pandemic;

11 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

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

33 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

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.

First Quarter 2023 Highlights

• Deposits totaled $5.70 billion at period end, declining $155.8 million during the quarter, primarily due to a $122.2 million reduction in balances by municipal and other public depositors that have otherwise largely maintained their banking relationship with Horizon.

• Consumer and commercial deposits totaled $4.28 billion at period end, declining just $33.6 million during the quarter.

• 75% of total deposits at period end were FDIC insured, collateralized, or third–party insured, and the average tenure of all deposit accounts with Horizon exceeded 10 years.

• The average deposit account balance at period end was less than $25,000 for consumer and commercial depositors and less than $195,000 for all accounts including those of large public depositors.

• Horizon's loan–to–deposit ratio was 74.5% at period end, as total loans increased by an annualized rate of 8.3% year–to–date and a rate of 2.1% quarter over quarter, fueled by growth in commercial, consumer and residential balances.

• Asset quality remained solid with total loan delinquency at 0.33% of total loans and net charge–offs to average loans of 0.01% during the quarter.

• Non–interest expense of $34.5 million in the first quarter declined 3.3% from the linked quarter and 2.1% from the prior year period.

Non–interest expense in the first quarter represented 1.79% of average assets on an annualized basis, improving from 1.84%, in the linked quarter and 1.95% in the prior year period.

• Net income totaled $18.2 million, compared to $21.2 million in the fourth quarter of 2022 and $23.6 million in the prior year period.

Diluted earnings per share (“EPS”) of $0.42 compared to $0.48 for the fourth quarter of 2022 and $0.54 for the first quarter of 2022.

• Deposit betas increased to 51% on total interest bearing deposits in the first quarter compared to a 32% deposit beta during the previous quarter.

• During the first quarter of 2023, unrealized losses on available for sale investments declined to $121.5 million compared to unrealized losses of $140.1 million at December 31, 2022.

As a result, our tangible capital ratio increased from 6.56% at December 31, 2022 to 6.87% at March 31, 2023.

• Horizon's book value per share and tangible book value per share increased to $16.11 and $12.17 compared to $15.55 and $11.59 in the linked quarter and $15.55 and $11.54 in the first quarter of 2022, respectively.

• The Bank’s capital position was still robust with leverage and risk based capital ratios of 8.86% and 13.15%, respectively.

• Horizon's annualized dividend yield was 5.79% as of March 31, 2023.

• On January 17, 2023, Horizon's Board of Directors approved the appointment of Thomas M.

Prame to serve as the Chief Executive Officer of both Horizon and the Bank, effective June 1, 2023.

Dwight will retain the title of Chief Executive Officer until June 1, 2023 and retire as an employee from Horizon and the Bank effective July 3, 2023.

Dwight will continue as the Chairman of the Board of Directors of both Horizon and the Bank.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

Second Quarter 2023 Highlights

• Increased net income to $18.8 million or $0.43 per diluted share, from $18.2 million or $0.42 in the first quarter of 2023.

• Net interest income of $46.2 million increased from $45.2 million in the linked quarter.

Second quarter 2023 net interest income benefited from average total loan and earning asset growth over the linked quarter, as well as a $1.5 million gain on swap termination that contributed approximately $0.02 to diluted earnings per share.

• Non–interest income expanded to $11.0 million from $9.6 million in the linked quarter.

• Continued to manage non–interest expense as a percentage of average assets to less than 1.90% on an annualized basis, totaling $36.3 million, or 1.86%, compared to $34.5 million, or 1.79% in the linked quarter.

• Deposits remained resilient during the quarter, totaling $5.71 billion at period end, compared to $5.70 billion on March 31, 2023.

• Loans grew to $4.27 billion at period end, increasing by 2.2% annualized during the quarter and 5.3% annualized since December 31, 2022.

• Maintained consistent and sound asset quality with 30 to 89 days delinquent loans representing 0.26% of total loans and non–performing loans representing 0.52% of total loans at period end, as well as net charge–offs representing 0.01% of average loans during the quarter.

• Tangible common equity continued to improve to 6.91% of tangible assets on June 30, 2023, an improvement of 4 basis points during the quarter and 35 basis points since December 31, 2022.

• The Bank’s capital position was strong with leverage and risk based capital ratios of 8.90% and 13.64%, respectively.

• Horizon's annualized dividend yield was robust at 6.15% as of June 30, 2023, with cash maintained at the holding company level representing approximately eight quarters of dividend payments and fixed costs.

Financial Summary

For the Three Months Ended

March 31, December 31, March 31,

June 30, March 31, June 30,

Net Interest Income and Net Interest Margin 2023 2023 2022

3 unchanged sentences

For the Three Months Ended

March 31, December 31, March 31,

June 30, March 31, June 30,

Asset Yields and Funding Costs 2023 2023 2022

1 unchanged sentence

Interest bearing liabilities 2.10 % 1.85 % 0.34 %

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, 2023 and 2022

For the Three Months Ended

Non–interest Income and

Mortgage Banking Income March 31, December 31, March 31,

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

2023 2023 2022

3 unchanged sentences

For the Three Months Ended

March 31, December 31, March 31,

June 30, March 31, June 30,

Non–interest Expense 2023 2023 2022

2 unchanged sentences

At or for the Three Months Ended

Credit Quality March 31, December 31, March 31,

Credit Quality June 30, March 31, June 30,

2023 2023 2022

2 unchanged sentences

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

Allowance for March 31, Net Reserve December 31,

Credit Losses 2023 1Q22 2022

Allowance for June 30, Net Reserve December 31,

Credit Losses 2023 2Q23 1Q23 2022

Commercial $ 30,354 $ (802) $ (1,289) $ 32,445

5 unchanged sentences

ACL/Total Loans 1.17 % 1.21 %

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

Critical Accounting Policies

8 unchanged sentences

The allowance is estimated based on loan level characteristics using historical loss rates, a reasonable and supportable economic forecast.

Loan losses are estimated using the fair value of collateral for collateral–dependent loans, or when the borrower is experiencing financial difficulty such that repayment of the loan is expected to be made through the operation or sale of the collateral.

Loan losses are estimated using the fair value of collateral for collateral–dependent loans, or

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, 2023 and 2022

when the borrower is experiencing financial difficulty such that repayment of the loan is expected to be made through the operation or sale of the collateral.

Loan balances considered uncollectible are charged–off against the ACL.

8 unchanged sentences

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

At March 31, 2023, Horizon had core deposit intangibles of $16.3 million subject to amortization and $155.2 million of goodwill, which is not subject to amortization.

At June 30, 2023, Horizon had core deposit intangibles of $15.4 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.

10 unchanged sentences

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 March 31, 2023, 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 June 30, 2023, it was more likely than not that the fair value exceeded its carrying values.

Horizon will continue to monitor developments regarding the current banking environment, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future.

2 unchanged sentences

Capitalized servicing rights are amortized into non–interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

assets are evaluated regularly for impairment based upon the fair value of the rights as compared to amortized cost.

Servicing assets are evaluated regularly for impairment based upon the fair value of the rights as compared to amortized cost.

Impairment is determined by stratifying servicing rights by predominant characteristics, such as interest rates, original loan terms and whether the loans are fixed or adjustable rate mortgages.

6 unchanged sentences

When a mortgage loan is prepaid, the anticipated cash flows associated with servicing that loan are terminated, resulting in a reduction of the fair value of the capitalized mortgage servicing rights.

To the extent that actual borrower prepayments do not react as anticipated by the prepayment model (i.e., the historical data observed in the model does not correspond to actual market activity), it is possible that the prepayment model could fail to accurately predict mortgage prepayments and could result in significant earnings volatility.

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, 2023 and 2022

result in significant earnings volatility.

To estimate prepayment speeds, Horizon utilizes a third-party prepayment model, which is based upon statistically derived data linked to certain key principal indicators involving historical borrower prepayment activity associated with mortgage loans in the secondary market, current market interest rates and other factors, including Horizon’s own historical prepayment experience.

20 unchanged sentences

In addition, the outcomes of valuations have a direct bearing on the carrying amounts of goodwill, mortgage servicing rights, and pension and other post–retirement benefit obligations.

To determine the values of these

To determine the values of these assets and liabilities, as well as the extent, to which related assets may be impaired, management makes assumptions and estimates related to discount rates, asset returns, prepayment speeds and other factors.

The use of different discount rates or other valuation assumptions could produce significantly different results, which could affect Horizon’s results of operations.

Financial Condition

On June 30, 2023, Horizon’s total assets were $8.0 billion, an increase of approximately $90.8 million compared to December 31, 2022.

The increase in total assets was primarily growth in net loans of $108.8 million and an increase in cash and due from banks of $105.5 million.

These increases were offset by decreases in investments available for sale of $91.7 million primarily due to sales during the first six months of 2023 and a decrease in investments held to maturity of $39.3 million.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

assets and liabilities, as well as the extent, to which related assets may be impaired, management makes assumptions and estimates related to discount rates, asset returns, prepayment speeds and other factors.

The use of different discount rates or other valuation assumptions could produce significantly different results, which could affect Horizon’s results of operations.

Financial Condition

On March 31, 2023, Horizon’s total assets were $7.9 billion, an increase of approximately $25.5 million compared to December 31, 2022.

The increase in total assets was primarily growth in net loans of $89.9 million and an increase in cash and due from banks of $11.2 million.

These increases were offset by decreases in investments available for sale of $54.1 million primarily due to sales during the first quarter and a decrease in other assets of $17.1 million.

For the Three and Six Months ended June 30, 2023 and 2022

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Value Amortized

14 unchanged sentences

Total held to maturity investment securities $ 1,983,496 $ 1,668,229 $ 2,022,748 $ 1,681,309

Investment securities available for sale decreased $54.1 million since December 31, 2022 to $943.4 million as of March 31, 2023 primarily due to the sale of certain securities and investment securities held to maturity decreased $7.2 million since December 31, 2022 to $2.0 billion as of March 31, 2023.

This decrease in investments held to maturity was due to cash flows received during the first quarter.

Net loans increased $89.9 million since December 31, 2022 to $4.2 billion as of March 31, 2023.

Commercial loans increased $38.0 million, consumer loans increased $58.3 million and residential mortgage loans increased $9.2 million since December 31, 2022.

These increases were offset by decreases in mortgage warehouse loans of $16.6 million since December 31, 2022.

Other assets decreased $17.1 million since December 31, 2022 to $122.2 million as of March 31, 2023.

This decrease was primarily due to a decrease in deferred tax assets related to the level of unrealized losses on available for sale securities of approximately $4.0 million and a decrease in the unrealized gain of fair value hedges of approximately $9.5 million.

Total deposits decreased $155.8 million since December 31, 2022 to $5.7 billion as of March 31, 2023, primarily due to a $122.2 million reduction in balances by municipal and other public depositors that have largely maintained banking relationships with Horizon and a reduction in consumer and commercial balances of $33.6 million during the quarter.

Investment securities available for sale decreased $91.7 million since December 31, 2022 to $905.8 million as of June 30, 2023 primarily due to the sale of certain securities and investment securities held to maturity decreased $39.3 million since December 31, 2022 to $2.0 billion as of June 30, 2023.

This decrease in investments held to maturity was due to cash flows received during the first six months of 2023.

Net loans increased $108.8 million since December 31, 2022 to $4.3 billion as of June 30, 2023.

Commercial loans increased $38.9 million, consumer loans increased $35.1 million, residential mortgage loans increased $21.5 million and mortgage warehouse loans increased $12.8 million since December 31, 2022.

Total deposits decreased $148.4 million since December 31, 2022 to $5.7 billion as of June 30, 2023, primarily due to a reduction in consumer and commercial balances of $55.6 million and a $54.6 million, respectively, offset by an increase in balances by municipal and other public depositors of approximately $117.6 million during the first six months of 2023.

Total borrowings increased to $1.4 billion as of June 30, 2023 from $1.1 billion as of December 31, 2022, primarily due to the decrease in total deposits.

Stockholders’ equity totaled $709.2 million at June 30, 2023 compared to $677.4 million at December 31, 2022.

The increase in stockholders’ equity during the period was primarily due to a decrease in accumulated other comprehensive loss of $8.3 million as unrealized losses on available for sale securities decreased to $127.3 million and the generation of net income, offset by the amount of dividends paid during the quarter.

Book value per common share at June 30, 2023 increased to $16.25 compared to $16.11 at December 31, 2022.

Results of Operations

Consolidated net income for the three–month period ended June 30, 2023 was $18.8 million, or $0.43 diluted earnings per share, compared to $24.9 million, or $0.57 diluted earnings per share for the same period in 2022.

The decrease in net income for the three–month period ended June 30, 2023 when compared to the same prior year period reflects a decrease in

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

Total borrowings increased to $1.3 billion as of March 31, 2023 from $1.1 billion as of December 31, 2022, primarily due to the decrease in total deposits.

Stockholders’ equity totaled $702.6 million at March 31, 2023 compared to $677.4 million at December 31, 2022.

The increase in stockholders’ equity during the period was primarily due to a decrease in accumulated other comprehensive loss of $14.2 million as unrealized losses on available for sale securities decreased to $121.5 million and the generation of net income, offset by the amount of dividends paid during the quarter.

Book value per common share at March 31, 2023 increased to $16.11 compared to $15.55 at December 31, 2022.

Results of Operations

Consolidated net income for the three–month period ended March 31, 2023 was $18.2 million, or $0.42 diluted earnings per share, compared to $23.6 million, or $0.54 diluted earnings per share for the same period in 2022.

The decrease in net income for the three–month period ended March 31, 2023 when compared to the same prior year period reflects a decrease in net interest income of $1.6 million, an increase in credit loss expense of $1.6 million and a decrease in non–interest income of $4.5 million, offset by a decrease in non–interest expense of $746,000 and a decrease in income tax expense of $1.7 million.

For the Three and Six Months ended June 30, 2023 and 2022

net interest income of $5.9 million, an increase in credit loss expense of $440,000 a decrease in non–interest income of $1.4 million and an increase in non–interest expense of $858,000, offset by a decrease in income tax expense of $2.5 million.

Consolidated net income for the six–month period ended June 30, 2023 was $37.0 million, or $0.85 diluted earnings per share, compared to $48.4 million, or $1.11 diluted earnings per share for the same period in 2022.

The decrease in net income for the six–month period ended June 30, 2023 when compared to the same prior year period reflects a decrease in net interest income of $7.5 million, an increase in credit loss expense of $2.1 million and a decrease in non–interest income of $6.0 million and an increase in non–interest expense of $112,000, offset by a decrease in income tax expense of $4.2 million.

Net Interest Income

5 unchanged sentences

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.

Net interest income during the three months ended March 31, 2023 was $45.2 million, a decrease of $1.6 million from the $46.8 million earned during the same period in 2022.

Yields on the Company’s interest earning assets increased by 104 basis points to 4.17% for the three months ended March 31, 2023 from 3.13% for the three months ended March 31, 2022.

Interest income increased $21.1 million from $50.7 million for the three months ended March 31, 2022 to $71.8 million for the same period in 2023.

The increase in interest income was due to higher yields earned on interest earning assets and an increase in average balances of interest earning assets of $386.5 million during the three months ended March 31, 2023.

Interest income from acquisition–related purchase accounting adjustments was $367,000 for the three months ended March 31, 2023 compared to $916,000 for the same period in 2022.

Rates paid on interest bearing liabilities increased by 155 basis points for the three–month period ended March 31, 2023 compared to the same period in 2022.

Interest expense increased $22.7 million when compared to the three–month period ended March 31, 2022 to $26.6 million for the same period in 2023.

Net interest income during the three months ended June 30, 2023 was $46.2 million, a decrease of $5.9 million from the $52.0 million earned during the same period in 2022.

Yields on the Company’s interest earning assets increased by 100 basis points to 4.39% for the three months ended June 30, 2023 from 3.39% for the three months ended June 30, 2022.

Interest income increased $20.3 million from $56.6 million for the three months ended June 30, 2022 to $76.9 million for the same period in 2023.

The increase in interest income was due to higher yields earned on interest earning assets and an increase in average balances of interest earning assets of $269.0 million during the three months ended June 30, 2023.

Interest income from acquisition–related purchase accounting adjustments was $651,000 for the three months ended June 30, 2023 compared to $1.2 million for the same period in 2022.

Rates paid on interest bearing liabilities increased by 176 basis points for the three–month period ended June 30, 2023 compared to the same period in 2022.

Interest expense increased $26.1 million when compared to the three–month period ended June 30, 2022 to $30.7 million for the same period in 2023.

This increase was due to higher rates paid on interest bearing liabilities.

The cost of average interest bearing deposits increased 156 basis points while the cost of average borrowings increased 216 basis points.

Average balances of interest bearing deposits increased $23.6 million and average balances of borrowings increased $549.5 million for the three-month period ended March 31, 2023 when compared to the same period in 2022.

The net interest margin decreased 23 basis points from 2.90% for the three–month period ended March 31, 2022 to 2.67% for the same period in 2023.

The decrease in the margin for the three–month period ended March 31, 2023 compared to the same period in 2022 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 2.65% for the three-month period ended March 31, 2023 compared to 2.85% for the same period in 2022.

Average balances of interest bearing deposits decreased $95.9 million and average balances of borrowings increased $563.4 million for the three-month period ended June 30, 2023 when compared to the same period in 2022.

The net interest margin decreased 44 basis points from 3.13% for the three–month period ended June 30, 2022 to 2.69% for the same period in 2023.

The decrease in the margin for the three–month period ended June 30, 2023 compared to the same period in 2022 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 and the gain on swap termination recorded in interest expense (“adjusted net interest margin”), the margin would have been 2.57% for the three-month period ended June 30, 2023 compared to 3.06% for the same period in 2022.

(See the “Non–GAAP Reconciliation of Net Interest Margin” table below.)

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

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

2 unchanged sentences

Three Months Ended Three Months Ended

March 31, 2023 March 31, 2022

June 30, 2023 June 30, 2022

Balance Interest Average

42 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

Net interest income during the six months ended June 30, 2023 was $91.4 million, a decrease of $7.5 million from the $98.9 million earned during the same period in 2022.

Yields on the Company’s interest earning assets increased by 101 basis points to 4.28% for the six months ended June 30, 2023 from 3.27% for the six months ended June 30, 2022.

Interest income increased $41.3 million from $107.4 million for the six months ended June 30, 2022 to $148.7 million for the same period in 2023.

The increase in interest income was due to higher yields earned on interest earning assets and an increase in average balances of interest earning assets of $327.4 million during the six months ended June 30, 2023.

Interest income from acquisition–related purchase accounting adjustments was $1.0 million for the six months ended June 30, 2023 compared to $2.1 million for the same period in 2022.

Rates paid on interest bearing liabilities increased by 166 basis points for the six–month period ended June 30, 2023 compared to the same period in 2022.

Interest expense increased $48.8 million when compared to the six–month period ended June 30, 2022 to $57.3 million for the same period in 2023.

This increase was due to higher rates paid on interest bearing liabilities.

The cost of average interest bearing deposits increased 138 basis points while the cost of average borrowings increased 242 basis points.

Average balances of interest bearing deposits decreased $37.4 million and average balances of borrowings increased $556.5 million for the six–month period ended June 30, 2023 when compared to the same period in 2022.

The net interest margin decreased 34 basis points from 3.02% for the six–month period ended June 30, 2022 to 2.68% for the same period in 2023.

The decrease in the margin for the six–month period ended June 30, 2023 compared to the same period in 2022 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 and the gain on swap termination recorded in interest expense (“adjusted net interest margin”), the margin would have been 2.61% for the six–month period ended June 30, 2023 compared to 2.96%for the same period in 2022.

(See the “Non–GAAP Reconciliation of Net Interest Margin” table below.)

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, 2023 and 2022

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

Average Balance Sheets

(Dollar Amount in Thousands, Unaudited)

Six Months Ended Six Months Ended

June 30, 2023 June 30, 2022

Balance Interest Average

Interest earning assets

Federal funds sold $ 19,411 $ 459 4.77 % $ 121,707 $ 108 0.18 %

Interest earning deposits 8,891 169 3.83 % 18,154 50 0.56 %

Investment securities – taxable 1,717,008 17,465 2.05 % 1,709,014 16,064 1.90 %

Investment securities – non–taxable (1)

1,277,328 14,615 2.92 % 1,326,819 14,004 2.69 %

Loans receivable (2) (3)

4,184,347 115,958 5.61 % 3,703,857 77,124 4.22 %

Total interest earning assets 7,206,985 148,666 4.28 % 6,879,551 107,350 3.27 %

Non–interest earning assets

Cash and due from banks 103,247 101,340

Allowance for credit losses (49,907) (53,411)

Other assets 574,707 463,868

Total average assets $ 7,835,032 $ 7,391,348

Liabilities and Stockholders’ Equity

Interest bearing liabilities

Interest bearing deposits $ 4,472,519 $ 33,777 1.52 % $ 4,509,962 $ 3,173 0.14 %

Borrowings 1,115,350 18,303 3.31 % 558,867 2,453 0.89 %

Repurchase agreements 139,683 1,186 1.71 % 140,610 77 0.11 %

Subordinated notes 58,928 1,761 6.03 % 58,782 1,761 6.04 %

Junior subordinated debentures issued to capital trusts 57,079 2,242 7.92 % 56,839 1,011 3.59 %

Total interest bearing liabilities 5,843,559 57,269 1.98 % 5,325,060 8,475 0.32 %

Non–interest bearing liabilities

Demand deposits 1,220,917 1,329,316

Accrued interest payable and other liabilities 67,893 39,968

Stockholders’ equity 702,663 697,004

Total average liabilities and stockholders’ equity $ 7,835,032 $ 7,391,348

Net interest income/spread $ 91,397 2.30 % $ 98,875 2.95 %

Net interest income as a percent of average interest earning assets (1)

2.68 % 3.02 %

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.

The average rate is presented on a tax equivalent basis.

Includes fees on loans.

The inclusion of loan fees does not have a material effect on the average interest rate.

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.

The average rate is presented on a tax equivalent basis.

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, 2023 and 2022

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 March 31, 2023 vs.

Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 vs.

Three Months Ended June 30, 2022 Six Months Ended June 30, 2023 vs.

Six Months Ended June 30, 2022

Change Change

Volume Change

Change Change

Volume Change

Interest Income

15 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 March 31, 2023, credit loss expense totaled $242,000 compared to a credit loss recovery of $1.4 million for the same period in 2022.

During the three–month period ended March 31, 2023, commercial loan net charge–offs were $104,000, residential mortgage loan net recoveries were $6,000 and consumer loan net charge–offs were $281,000.

The ACL balance at March 31, 2023 was $49.5 million, or 1.17% of total loans compared to an ACL balance of $50.5 million at December 31, 2022 or 1.21% of total loans.

The decrease in the ACL to total loans ratio was primarily due to favorable asset quality with non–performing loans at 0.47% of total loans at period end and net charge–offs to average loans represented 0.01% for the first quarter of 2023.

As of March 31, 2023, non–performing loans totaled $19.8 million, reflecting a $2.0 million decrease from $21.8 million in non–performing loans as of December 31, 2022.

Non–performing commercial loans decreased by $807,000, non–performing real estate loans decreased by $1.2 million and non–performing consumer loans decreased by $39,000 at March 31, 2023 compared to December 31, 2022.

Other Real Estate Owned (“OREO”) and repossessed assets totaled $1.8 million at March 31, 2023 compared to $2.1 million at December 31, 2022.

During the three–month period ended June 30, 2023, credit loss expense for loans totaled $741,000 compared to $240,000 for the same period in 2022.

During the three–month period ended June 30, 2023, commercial loan net charge–offs were $101,000, residential mortgage loan net recoveries were $10,000 and consumer loan net charge–offs were $183,000.

During the six–month period ended June 30, 2023, credit loss expense for loans totaled $336,000 compared to a credit loss recovery of $1.1 million for the same period of 2022.

During the six–month period ended June 30, 2023, commercial loan net charge–offs were $205,000, residential mortgage loan net recoveries were $16,000 and consumer loan net charge–offs were $464,000.

The ACL balance at June 30, 2023 was $50.0 million, or 1.17% of total loans compared to an ACL balance of $50.5 million at December 31, 2022 or 1.21% of total loans.

The decrease in the ACL to total loans ratio was primarily due to favorable asset quality with non–performing loans at 0.52% of total loans at period end and net charge–offs to average loans represented 0.01% for the second quarter of 2023.

As of June 30, 2023, non–performing loans totaled $22.1 million, reflecting a $269,000 increase from $21.8 million in non–performing loans as of December 31, 2022.

Non–performing commercial loans decreased by $1.1 million, non–performing real estate loans increased by $45,000 and non–performing consumer loans increased by $1.3 million at June 30, 2023 compared to December 31, 2022.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

Other Real Estate Owned (“OREO”) and repossessed assets totaled $1.7 million at June 30, 2023 compared to $2.1 million at December 31, 2022.

Non–interest Income

The following is a summary of changes in non–interest income for the three months ended March 31, 2023 and 2022 (table dollar amounts in thousands):

The following is a summary of changes in non–interest income for the three months ended June 30, 2023 and 2022 (table dollar amounts in thousands):

Three Months Ended

March 31, Amount Percent

June 30, Amount Percent

2023 2022 Change Change

8 unchanged sentences

Increase in cash surrender value of bank owned life insurance 1,015 519 496 95.6 %

Death benefit on bank owned life insurance — 644 (644) 0.0 %

Other income 349 461 (112) (24.3) %

Total non–interest income $ 10,997 $ 12,434 $ (1,437) (11.6) %

Total non–interest income was $4.5 million lower during the first quarter of 2023 compared to the same period in 2022.

The sale of $64.0 million of available for sale investments generated a $500,000 loss during the first quarter of 2023.

Residential mortgage loan activity during the first quarter of 2023 generated $785,000 of income from the gain on sale of mortgage loans, down from $2.0 million for the same period in 2022 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 $2.8 million during the first quarter of 2023 compared to the same period in 2022 due to an impairment recovery of $2.6 million recorded during the first quarter of 2022.

Other income was $530,000 lower during the first quarter of 2023 compared to the same period in 2022 due to the gains from the sale of other real estate owned during the first quarter of 2022.

Total non–interest income was $1.4 million lower during the second quarter of 2023 compared to the same period in 2022.

The sale of $24.7 million of available for sale investments generated a $20,000 gain during the second quarter of 2023.

Residential mortgage loan activity during the second quarter of 2023 generated $1.0 million of income from the gain on sale of mortgage loans, down from $2.5 million for the same period in 2022 due to a lower volume of loans sold and a decrease in the percentage gain on loans sold.

The cash surrender value of bank owned life insurance increased $496,000 during the second quarter of 2023 compared to the same period in 2022, primarily due to the purchase of $50.0 million in additional life insurance during the third quarter of 2022.

Mortgage servicing income, net of impairment or recovery, increased $321,000 during the second quarter of 2023 compared to the same period in 2022.

Fiduciary activities income was $158,000 lower during the first quarter of 2023 compared to the same period in 2022.

3 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

The following is a summary of changes in non–interest income for the six months ended June 30, 2023 and 2022 (table dollar amounts in thousands):

Six Months Ended

June 30, Amount Percent

2023 2022 Change Change

Non–interest Income

Service charges on deposit accounts $ 6,049 $ 5,628 $ 421 7.5 %

Wire transfer fees 225 329 (104) (31.6) %

Interchange fees 6,451 6,362 89 1.4 %

Fiduciary activities 2,522 2,908 (386) (13.3) %

Gain on sale of investment securities (480) — (480) #DIV/0!

Gain on sale of mortgage loans 1,790 4,528 (2,738) (60.5) %

Mortgage servicing net of impairment 1,353 3,808 (2,455) (64.5) %

Increase in cash surrender value of bank owned life insurance 1,996 1,029 967 94.0 %

Death benefit on bank owned life insurance — 644 (644) (100.0) %

Other income 711 1,353 (642) (47.5) %

Total non–interest income $ 20,617 $ 26,589 $ (5,972) (22.5) %

Total non–interest income was $6.0 million lower during the six months ended June 30, 2023 compared to the same period in 2022.

The sale of $88.2 million of available for sale investments generated a $480,000 net loss during the first six months of 2023.

Residential mortgage loan activity generated $1.8 million of income from the gain on sale of mortgage loans, down from $4.5 million for the same period in 2022 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 $2.5 million during the first six months of 2023 compared to the same period in 2022 due to an impairment recovery of $2.6 million recorded during the first quarter of 2022.

Other income was $642,000 lower during the second quarter of 2023 compared to the same period in 2022 due to the gains from the sale of other real estate owned during the first quarter of 2022.

Fiduciary activities income was $386,000 lower during the first six months of 2023 compared to the same period in 2022.

The cash surrender value of bank owned life insurance increased $967,000 during the six months ended June 30, 2023 compared to the same period in 2022, primarily due to the purchase of $50.0 million in additional life insurance during the third quarter of 2022.

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, 2023 and 2022

Non–interest Expense

The following is a summary of changes in non–interest expense for the three months ended March 31, 2023 and 2022 (table dollar amounts in thousands):

The following is a summary of changes in non–interest expense for the three months ended June 30, 2023 and 2022 (table dollar amounts in thousands):

Three Months Ended

March 31, March 31, QTD QTD

June 30, June 30, QTD QTD

2023 2022 $ Change % Change

13 unchanged sentences

Assets 1.86 % 1.90 %

Total non–interest expense was $746,000 lower during the first quarter of 2023 when compared to the first quarter of 2022 primarily due to a decrease in salaries and employee benefits expense of $1.0 million from lower salary and incentive compensation expense and a decrease in FDIC insurance expense of $185,000, offset by increases of $219,000 in professional fees and $192,000 in outside services and consultants expense.

Annualized non–interest expense as a percent of average assets was 1.79% and 1.95% for the three months ended March 31, 2023 and 2022, respectively.

Income tax expense totaled $1.9 million for the first quarter of 2023, a decrease of $1.7 million when compared to the first quarter of 2022 due to a decrease in income before taxes of $7.0 million.

Total non–interest expense was $858,000 higher during the second quarter of 2023 when compared to the second quarter of 2022 primarily due to increases in data processing of $409,000, professional fees of $350,000 and salaries and employee benefits expense of $205,000, offset by decreases of $228,000 in other losses and $136,000 in loan expense.

Annualized non–interest expense to average assets decreased to 1.86% for the three months ended June 30, 2023 compared to 1.90% for the same period in 2022 as expense reductions from branch acquisitions were realized and investments in technology are being leveraged, resulting in this improvement.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

The following is a summary of changes in non–interest expense for the six months ended June 30, 2023 and 2022 (table dollar amounts in thousands):

Six Months Ended

June 30, June 30, YTD YTD

2023 2022 $ Change % Change

Non–interest Expense

Salaries and employee benefits $ 38,874 $ 39,692 $ (818) (2.1) %

Net occupancy expenses 6,812 6,751 61 0.9 %

Data processing 5,685 5,144 541 10.5 %

Professional fees 1,166 597 569 95.3 %

Outside services and consultants 5,232 5,010 222 4.4 %

Loan expense 2,515 2,738 (223) (8.1) %

FDIC deposit insurance 1,380 1,500 (120) (8.0) %

Core deposit intangible amortization 1,806 1,851 (45) (2.4) %

Other losses 355 530 (175) (33.0) %

Other expenses 6,961 6,861 100 1.5 %

Total non–interest expense $ 70,786 $ 70,674 $ 112 0.2 %

Annualized Non–interest Exp.

Assets 1.82 % 1.99 %

Total non–interest expense was $112,000 higher during the first six months of 2023 when compared to the same period of 2022 primarily due to increases of $569,000 in professional fees and $541,000 in data processing expense, offset by decreases in salaries and employee benefits expense of $818,000 and loan expense of $223,000.

Annualized non–interest expense to average assets decreased to 1.82% during the first six months of 2023 compared to 1.99% for the same period in 2022 as expense reductions from branch consolidations were realized and investments in technology are being leveraged, resulting in this improvement.

Income tax expense totaled $1.5 million for the second quarter of 2023, a decrease of $2.5 million when compared to the second quarter of 2022 due to a decrease in income before taxes of $8.6 million.

Income tax expense totaled $3.3 million for the first six months of 2023, a decrease of $4.2 million when compared to the same period of 2022 due to a decrease in income before taxes of $15.6 million.

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

1 unchanged sentence

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 March 31, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.65 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $438.0 million at December 31, 2022.

The Bank had approximately $666.3 million of unpledged investment securities at March 31, 2023 compared to $2.1 billion at December 31, 2022.

At June 30, 2023, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.71 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $438.0 million at December 31, 2022.

The Bank had approximately $650.7 million of unpledged investment securities at June 30, 2023 compared to $2.1 billion at December 31, 2022.

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, 2023 and 2022

Capital Resources

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2023.

Stockholders’ equity totaled $702.6 million as of March 31, 2023, compared to $677.4 million as of December 31, 2022.

For the three months ended March 31, 2023, the ratio of average stockholders’ equity to average assets was 8.86% compared to 9.07% for the twelve months ended December 31, 2022.

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at June 30, 2023.

Stockholders’ equity totaled $709.2 million as of June 30, 2023, compared to $677.4 million as of December 31, 2022.

For the six months ended June 30, 2023, the ratio of average stockholders’ equity to average assets was 8.97% compared to 9.07% for the twelve months ended December 31, 2022.

The increase in stockholders’ equity during the period was due to an increase in accumulated other comprehensive income of $8.3 million and net income during the period, offset by the amount of dividends paid.

Horizon declared common stock dividends in the amount of $0.16 per share during the first three months of 2023 and $0.15 per share for the same period in 2022.

The dividend payout ratio (dividends as a percent of basic earnings per share) was 38.1% and 27.8% for the first three months of 2023 and 2022, respectively.

Horizon declared common stock dividends in the amount of $0.32 per share during the first six months of 2023 and $0.31 per share for the same period in 2022.

The dividend payout ratio (dividends as a percent of basic earnings per share) was 37.7% and 27.9% for the first six months of 2023 and 2022, respectively.

For additional information regarding dividends, see Horizon’s 2022 Annual Report on Form 10–K.

2 unchanged sentences

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, tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and the return on average tangible equity.

In each case, we have identified special circumstances that we consider to be adjustments and have excluded them, to show the impact of such events as acquisition–related purchase accounting adjustments, among others we have identified in our reconciliations.

In each case, we have identified special circumstances that we consider to be adjustments and have excluded them, to show 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 that 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 other adjustments.

5 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

Non–GAAP Reconciliation of Net Income

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

Net income as reported $ 18,763 $ 18,228 $ 21,165 $ 23,821 $ 24,859 $ 36,991 $ 48,422

Gain on swap termination (1,453) — — — — (1,453) —

Tax effect 305 — — — — 305 —

Net income excluding gain on swap termination 17,615 18,228 21,165 23,821 24,859 35,843 48,422

(Gain)/loss on sale of investment

6 unchanged sentences

Non–GAAP Reconciliation of Diluted Earnings per Share

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

Diluted earnings per share (“EPS”) as reported $ 0.43 $ 0.42 $ 0.48 $ 0.55 $ 0.57 $ 0.85 $ 1.11

Gain on swap termination (0.03) — — — — (0.03) —

Tax effect 0.01 — — — — 0.01 —

Diluted EPS excluding gain on swap termination 0.41 0.42 0.48 0.55 0.57 0.83 1.11

(Gain)/loss on sale of investment securities — 0.01 — — — 0.01 —

4 unchanged sentences

Adjusted Diluted EPS $ 0.41 $ 0.43 $ 0.48 $ 0.55 $ 0.56 $ 0.84 $ 1.10

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, 2023 and 2022

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

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

3 unchanged sentences

Pre–tax, pre–provision net income $ 20,895 $ 20,333 $ 23,745 $ 25,233 $ 29,074 $ 41,228 $ 54,790

Gain on swap termination (1,453) — — — — (1,453) —

(Gain)/loss on sale of investment securities (20) 500 — — — 480 —

1 unchanged sentence

Adjusted pre–tax, pre–provision net income $ 19,422 $ 20,833 $ 23,745 $ 25,233 $ 28,430 $ 40,255 $ 54,146

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

Non–GAAP Reconciliation of Net Interest Margin

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

6 unchanged sentences

(“PAUs”) (651) (367) (431) (906) (1,223) (1,018) (2,139)

Gain on swap termination (1,453) — — — — (1,453) —

Adjusted net interest income $ 44,056 $ 44,870 $ 48,351 $ 50,955 $ 50,821 $ 88,926 $ 96,736

2 unchanged sentences

(Dollars in Thousands Except per Share Data, Unaudited)

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

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

2023 2023 2022 2022 2022

4 unchanged sentences

Book value per common share $ 16.25 $ 16.11 $ 15.55 $ 14.80 $ 15.10

Tangible book value per common

share $ 12.17 $ 11.59 $ 10.82 $ 11.11 $ 11.54

Tangible book value per common share $ 12.34 $ 12.17 $ 11.59 $ 10.82 $ 11.11

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

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

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

6 unchanged sentences

Net interest income as reported 46,160 45,237 48,782 51,861 52,044 91,397 98,875

Gain on swap termination (1,453) — — — — (1,453) —

Net interest income excluding gain on swap termination 44,707 45,237 48,782 51,861 52,044 89,944 98,875

Non–interest income as reported 10,997 9,620 10,674 10,188 12,434 20,617 26,589

7 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

Non–GAAP Reconciliation of Return on Average Assets

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

1 unchanged sentence

Return on average assets ("ROAA") as reported 0.96 % 0.94 % 1.09 % 1.24 % 1.33 % 0.95 % 1.32 %

Gain on swap termination (0.07) — — — — (0.04) —

Tax effect 0.02 — — — — 0.01 —

ROAA excluding gain on swap termination 0.91 0.94 1.09 1.24 1.33 0.92 1.32

(Gain)/loss on sale of investment securities — 0.03 — — — 0.01 —

6 unchanged sentences

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

1 unchanged sentence

Return on average common equity ("ROACE") as reported 10.59 % 10.66 % 12.72 % 13.89 % 14.72 % 10.62 % 14.01 %

Gain on swap termination (0.82) — — — — (0.41) —

Tax effect 0.17 — — — — 0.09 —

ROACE excluding gain on swap termination 9.94 10.66 12.72 13.89 14.72 10.30 14.01

(Gain)/loss on sale of investment securities (0.01) 0.29 — — — 0.14 —

8 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

Non–GAAP Reconciliation of Return on Average Tangible Equity

(Dollars in Thousands, Unaudited)

Three Months Ended

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

Three Months Ended Six Months Ended

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

2023 2023 2022 2022 2022 2023 2022

3 unchanged sentences

Return on average common equity ("ROATE") 13.94 % 14.18 % 17.24 % 18.65 % 19.86 % 14.05 % 18.74 %

Gain on swap termination (1.08) — — — — (0.55) —

Tax effect 0.23 — — — — 0.12 —

ROATE excluding gain on swap termination 13.09 14.18 17.24 18.65 19.86 13.62 18.74

(Gain)/loss on sale of investment securities (0.01) 0.39 — — — 0.18 —

5 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