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Horizon Bancorp, Inc. Reports Fourth Quarter 2024 Results and Successful Execution of Several Key Strategic Initiatives

1. HBNC reported a net loss of $10.9 million in Q4 2024. 2. Net interest income rose to $53.1 million, fifth consecutive quarterly increase. 3. 22.4% annual growth in commercial loans contributed to higher net interest margin. 4. The company successfully restructured its efficiency initiatives for 2025. 5. Total deposits fell by $126.4 million, primarily in time deposits.

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Why Bullish?

Despite the loss, net interest income growth and loan expansion indicate potential for recovery. Similar scenarios previously led to stock price rebounds as investor confidence grew in sustainable growth strategies.

How important is it?

The article highlights key financial metrics and strategic initiatives that can influence HBNC's future performance and investor sentiment significantly.

Why Long Term?

The strategic changes and growth initiatives are likely to impact performance in the long run, similar to past practices that established stronger operational foundations.

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HBNC
MICHIGAN CITY, Ind., Jan. 22, 2025 (GLOBE NEWSWIRE) -- (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three months and year ended December 31, 2024. “We are very pleased with Horizon’s fourth quarter results, which displayed a significantly more profitable core business model and the successful completion of several major initiatives aimed at continuing this positive trajectory throughout 2025. During the quarter, the team exited lower-yielding securities at a favorable time, and capitalized on the opportunity to redeploy this liquidity into higher yielding loans and to exit higher-cost funding. These actions, combined with an impressive 22.4% annualized growth rate in commercial loans, increased the margin by 31 basis points from the third quarter. Additionally, the team completed its previously communicated fourth quarter initiatives aimed at restructuring its expense base to create greater efficiency in 2025”, President and CEO, Thomas Prame said. “The core franchise continues to have strong momentum, and we are positioned well to create greater returns for our shareholders in 2025.” Net loss for the three months ended December 31, 2024 was $10.9 million, or a loss of $0.25 per diluted share, compared to net income of $18.2 million, or $0.41, for the third quarter of 2024 and compared to a net loss of $25.2 million, or a loss of $0.58 per diluted share, for the fourth quarter of 2023. Net income for the three months ended December 31, 2024 was negatively impacted by the $39.1 million pre-tax loss on the sale of investment securities, and expenses directly related to the previously announced strategic initiatives. Partially offsetting these items was the reversal of the $5.1 million tax valuation allowance, which served to reduce the Company's tax liability in the fourth quarter of 2024. Net income for the three months ended December 31, 2023 was negatively impacted by the $31.6 million pre-tax loss on the sale of investment securities, tax expense of $8.6 million related to the termination of BOLI policies and the establishment of the tax valuation allowance. Net income for the twelve months ended December 31, 2024 was $35.4 million or $0.80 per diluted share, compared to net income of $28.0 million, or $0.64, for the twelve months ended December 31, 2023. Fourth Quarter 2024 Highlights Net interest income increased for the fifth consecutive quarter to $53.1 million for the three months ended December 31, 2024, compared to $46.9 million for the three months ended September 30, 2024. The net interest margin, on a fully taxable equivalent ("FTE") basis1, also expanded for the fifth consecutive quarter, to 2.97% compared with 2.66% for the three months ended September 30, 2024. As previously disclosed, the Company completed the repositioning of $332.2 million of available-for-sale securities during the fourth quarter. While the sale resulted in a pre-tax loss of $39.1 million, the Company redeployed the proceeds received into higher-yielding loans and continued to manage down higher cost funding sources. Total loans were $4.91 billion at December 31, 2024, up $108.6 million from September 30, 2024 balances. Consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. Loans held for sale (“HFS”) increased $65.5 million as a result of the Company’s transfer of its mortgage warehouse loan balances of $64.8 million at December 31, 2024. Total deposits declined by $126.4 million during the quarter, to $5.60 billion at period end, with the majority of the decline in time deposits, which declined by $131.5 million. The Company's non-maturity deposit base continued to display strength, growing for the third consecutive quarter, including another quarter of relatively stable non-interest bearing deposit balances and growth in core relationship consumer and commercial portfolios. Credit quality remained strong, with annualized net charge offs of 0.05% of average loans during the fourth quarter. Non-performing assets to total assets of 0.35% remains well within expected ranges, with no material change from the prior quarter. Provision for loan losses of $1.2 million reflects increased provision for unfunded commitments and net growth in commercial loans held for investment ("HFI"), partially offset by the elimination of the reserve associated with mortgage warehouse and the reduction of reserve related to the planned runoff of indirect auto in the current quarter, when compared with the prior quarter. Continued the process for the sale of the mortgage warehouse division during the quarter. Sold the business for a gain, effective January 17th, which will be recognized in Q1 2025 results. ________________________1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.  Financial Highlights(Dollars in Thousands Except Share and Per Share Data and Ratios) Three Months Ended December 31, September 30, June 30, March 31, December 31,  2024   2024   2024   2024   2023 Income statement:         Net interest income$53,127  $46,910  $45,279  $43,288  $42,257 Credit loss expense 1,171   1,044   2,369   805   1,274 Non-interest (loss) income (28,954)  11,511   10,485   9,929   (20,449)Non-interest expense 44,935   39,272   37,522   37,107   39,330 Income tax (benefit) expense (11,051)  (75)  1,733   1,314   6,419 Net (loss) income$(10,882) $18,180  $14,140  $13,991  $(25,215)          Per share data:         Basic (loss) earnings per share$(0.25) $0.42  $0.32  $0.32  $(0.58)Diluted (loss) earnings per share (0.25)  0.41   0.32   0.32   (0.58)Cash dividends declared per common share 0.16   0.16   0.16   0.16   0.16 Book value per common share 17.46   17.27   16.62   16.49   16.47 Market value - High 18.76   16.57   12.74   14.44   14.65 Market value - Low 14.57   11.89   11.29   11.75   9.33 Weighted average shares outstanding - Basic 43,721,211   43,712,059   43,712,059   43,663,610   43,649,585 Weighted average shares outstanding - Diluted 43,721,211   44,112,321   43,987,187   43,874,036   43,649,585 Common shares outstanding (end of period) 43,722,086   43,712,059   43,712,059   43,726,380   43,652,063           Key ratios:         Return on average assets(0.55)%  0.92%  0.73%  0.72% (1.27)%Return on average stockholders' equity (5.73)  9.80   7.83   7.76   (14.23)Total equity to total assets 9.79   9.52   9.18   9.18   9.06 Total loans to deposit ratio 87.75   83.92   85.70   82.78   78.01 Allowance for credit losses to HFI loans 1.07   1.10   1.08   1.09   1.13 Annualized net charge-offs of average total loans(1) 0.05   0.03   0.05   0.04   0.07 Efficiency ratio 185.89   67.22   67.29   69.73   180.35           Key metrics (Non-GAAP)(2) :         Net FTE interest margin 2.97%  2.66%  2.64%  2.50%  2.42%Return on average tangible common equity (7.35)  12.65   10.18   10.11   (18.76)Tangible common equity to tangible assets 7.83   7.58   7.22   7.20   7.08 Tangible book value per common share$13.68  $13.46  $12.80  $12.65  $12.60           (1) Average total loans includes loans held for investment and held for sale.(2) Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures. Income Statement Highlights Net Interest Income Net interest income was $53.1 million in the fourth quarter of 2024, compared to $46.9 million in the third quarter of 2024, driven by strong expansion of the Company's net FTE interest margin, while average interest earning assets increased by $65.9 million, or 0.9% from the prior quarter. Horizon’s net FTE interest margin1 was 2.97% for the fourth quarter of 2024, compared to 2.66% for the third quarter of 2024, attributable to the favorable mix shift in average interest earning assets toward higher-yielding loans and in the average funding mix toward lower-cost deposit balances, in addition to disciplined pricing strategies on both sides of the balance sheet. The fourth quarter net FTE interest margin did benefit by approximately five basis points related to interest recoveries on specific commercial loans. Provision for Credit Losses During the fourth quarter of 2024, the Company recorded a provision for credit losses of $1.2 million. This compares to a provision for credit losses of $1.0 million during the third quarter of 2024, and $1.3 million during the fourth quarter of 2023. The increase in the provision for credit losses during the fourth quarter of 2024 when compared with the third quarter of 2024 was primarily attributable to increased provision for unfunded commitments and net growth in commercial loans, partially offset by the elimination of the reserve associated with mortgage warehouse balances moved to HFS and the reduction of reserve related to the planned runoff of indirect auto in the current quarter, when compared with the prior quarter. For the fourth quarter of 2024, the allowance for credit losses included net charge-offs of $0.6 million, or an annualized 0.05% of average loans outstanding, compared to net charge-offs of $0.4 million, or an annualized 0.03% of average loans outstanding for the third quarter of 2024, and net charge-offs of $0.8 million, or an annualized 0.07% of average loans outstanding, in the fourth quarter of 2023. The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.07% at December 31, 2024, compared to 1.10% at September 30, 2024 and 1.13% at December 31, 2023. Non-Interest Income For the Quarter EndedDecember 31, September 30, June 30, March 31, December 31,(Dollars in Thousands)2024  2024  2024  2024  2023 Non-interest Income            Service charges on deposit accounts3,276  3,320  3,130  3,214  3,092 Wire transfer fees124  123  113  101  103 Interchange fees3,353  3,511  3,826  3,109  3,224 Fiduciary activities1,313  1,394  1,372  1,315  1,352 Loss on sale of investment securities(39,140) —  —  —  (31,572)Gain on sale of mortgage loans1,071  1,622  896  626  951 Mortgage servicing income net of impairment376  412  450  439  724 Increase in cash value of bank owned life insurance335  349  318  298  658 Other income338  780  380  827  1,019 Total non-interest (loss) income(28,954) 11,511  10,485  9,929  (20,449) Total non-interest loss was $29.0 million in the fourth quarter of 2024, compared to non-interest income of $11.5 million in the third quarter of 2024. As previously disclosed, the Company completed the repositioning of $332.2 million of available-for-sale securities during the quarter resulting in a pre-tax loss on sale of investment securities of $39.1 million. Non-Interest Expense For the Quarter EndedDecember 31, September 30, June 30, March 31, December 31,(Dollars in Thousands)2024  2024  2024  2024  2023 Non-interest Expense              Salaries and employee benefits25,564  21,829  20,583  20,268  21,877 Net occupancy expenses3,431  3,207  3,192  3,546  3,260 Data processing2,841  2,977  2,579  2,464  2,942 Professional fees736  676  714  607  772 Outside services and consultants4,470  3,677  3,058  3,359  2,394 Loan expense1,285  1,034  1,038  719  1,345 FDIC insurance expense1,193  1,204  1,315  1,320  1,200 Core deposit intangible amortization843  844  844  872  903 Other losses371  297  515  16  508 Other expense4,201  3,527  3,684  3,936  4,129 Total non-interest expense44,935  39,272  37,522  37,107  39,330  Total non-interest expense was $44.9 million in the fourth quarter of 2024, compared with $39.3 million in the third quarter of 2024. The increase in non-interest expense during the fourth quarter of 2024 was primarily driven by a $3.7 million increase in salaries and employee benefits expense, which is mainly attributable to the acceleration of stock compensation expense and the expenses related to the termination of a legacy benefits program, in addition to increased incentive compensation accruals and higher medical benefit claims expense. Outside services and consultants expense increased by $793 thousand related to direct expenses for strategic initiatives executed in the fourth quarter and additional expense accruals. Income Taxes Horizon recorded a net tax benefit for the fourth quarter of 2024, which is reflective of the reduction to full-year pre-tax income, attributable to the realized securities loss, and the reversal of the $5.1 million tax valuation allowance. Balance Sheet Highlights Total assets decreased by $126.3 million, or 1.6%, to $7.80 billion as of December 31, 2024, from $7.93 billion as of September 30, 2024. The decrease in total assets is primarily due to proceeds from the sale of investment securities being partially utilized to pay down higher-cost time deposits, as the remaining proceeds from the sale were either reinvested in commercial loans or held in interest-bearing cash accounts. Total investment securities decreased by $328.2 million, or 13.5%, to $2.1 billion as of December 31, 2024, from $2.4 billion as of September 30, 2024. As previously disclosed, the Company sold $332.2 million in book value of available-for-sale securities during the fourth quarter at a loss of $39.1 million. There were no purchases of investment securities during the fourth quarter of 2024. Total loans were $4.91 billion at December 31, 2024, up $108.6 million from September 30, 2024 balances. Consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. Loans held for sale (“HFS”) increased $65.5 million as a result of the Company’s transfer of its mortgage warehouse loan balances of $64.8 million at December 31, 2024. Total deposits decreased by $126.4 million, or 2.2%, to $5.6 billion as of December 31, 2024 when compared to balances as of September 30, 2024. Non-interest bearing deposits were relatively unchanged during the quarter, while savings and money market accounts grew by $25.9 million, or 0.8%. Time deposits declined by $131.5 million, or 10.8%, as the Company elected to use certain proceeds from the sale of investment securities to reduce higher-cost balances. Total borrowings remained essentially unchanged during the quarter, at $1.1 billion as of December 31, 2024, while balances subject to repurchase agreements declined by $32.5 million, to $89.9 million. ________________________1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure. Capital The following table presents the consolidated regulatory capital ratios of the Company for the previous three quarters, and the Company’s preliminary estimate of its consolidated regulatory capital ratios for the quarter ended December 31, 2024: For the Quarter Ended December 31, September 30, June 30, March 31,  2024* 2024 2024 2024**Consolidated Capital Ratios        Total capital (to risk-weighted assets) 13.84% 13.45% 13.41% 13.75%Tier 1 capital (to risk-weighted assets) 11.96% 11.63% 11.59% 11.89%Common equity tier 1 capital (to risk-weighted assets) 10.96% 10.68% 10.63% 10.89%Tier 1 capital (to average assets) 8.87% 9.02% 9.02% 8.91%*Preliminary estimate - may be subject to change  ** Prior period was previously revised (see disclosure in Form 10-Q for the quarterly period ending June 30, 2024)   As of December 31, 2024, the ratio of total stockholders’ equity to total assets is 9.79%. Book value per common share was $17.46, increasing $0.19 during the fourth quarter of 2024. Tangible common equity1 totaled $598.1 million at December 31, 2024, and the ratio of tangible common equity to tangible assets1 was 7.83% at December 31, 2024, up from 7.58% at September 30, 2024. Tangible book value, which excludes intangible assets from total equity, per common share1 was $13.68, increasing $0.22 during the fourth quarter of 2024 behind the growth in retained earnings, excluding the securities loss that was previously in accumulated other comprehensive income, the recovery of the tax valuation allowance and a credit to additional paid-in capital from the closing out of the previously noted legacy benefits program. Credit Quality As of December 31, 2024, total non-accrual loans increased by $2.2 million, or 9%, from September 30, 2024, to 0.53% of total loans HFI. Total non-performing assets increased $1.8 million, or 7%, to $27.4 million, compared to $25.6 million as of September 30, 2024. The ratio of non-performing assets to total assets increased to 0.35% compared to 0.32% as of September 30, 2024. As of December 31, 2024, net charge-offs increased by $243 thousand to $621 thousand, compared to $378 thousand as of September 30, 2024 and remain just 0.05% annualized of average loans. ________________________1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure. Earnings Conference Call As previously announced, Horizon will host a conference call to review its fourth quarter financial results and operating performance. Participants may access the live conference call on January 23, 2025 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833-974-2379 from the United States, 866-450-4696 from Canada or 1-412-317-5772 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call. A telephone replay of the call will be available approximately one hour after the end of the conference through February 1, 2025. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 1–412–317-0088 from other international locations, and entering the access code 9847279. About Horizon Bancorp, Inc. Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.8 billion-asset commercial bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon's retail offerings include prime residential and other secured consumer lending to in-market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in-market business banking and treasury management services, as well as equipment financing solutions for customers regionally and nationally, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana's Michigan City, is available at horizonbank.com and investor.horizonbank.com. Use of Non-GAAP Financial Measures Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures relating to net income, diluted earnings per share, pre-tax, pre-provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them. We believe that this shows the impact of such events as acquisition-related purchase accounting adjustments and swap termination fees, among others we have identified in our reconciliations. Horizon believes these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP information identified herein and its most comparable GAAP measures. Forward Looking Statements This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission (the “SEC”). Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: current financial conditions within the banking industry; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the aggregate effects of elevated inflation levels in recent years; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; macroeconomic conditions and their impact on Horizon and its customers; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict and the Israel and Hamas conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.    Condensed Consolidated Statements of Income (Dollars in Thousands Except Per Share Data, Unaudited) Three Months Ended Year Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31,  2024   2024   2024   2024   2023   2024   2023 Interest Income             Loans receivable$76,747  $75,488  $71,880  $66,954  $65,583  $291,069  $244,544 Investment securities - taxable 6,814   8,133   7,986   7,362   8,157   30,295   34,410 Investment securities - tax-exempt 6,301   6,310   6,377   6,451   6,767   25,439   28,384 Other 3,488   957   738   4,497   3,007   9,680   4,967 Total interest income 93,350   90,888   86,981   85,264   83,514   356,483   312,305 Interest Expense             Deposits 27,818   30,787   28,447   27,990   27,376   115,042   85,857 Borrowed funds 10,656   11,131   11,213   11,930   11,765   44,930   42,478 Subordinated notes 829   830   829   831   870   3,319   3,511 Junior subordinated debentures issued to capital trusts 920   1,230   1,213   1,225   1,246   4,588   4,715 Total interest expense 40,223   43,978   41,702   41,976   41,257   167,879   136,561 Net Interest Income 53,127   46,910   45,279   43,288   42,257   188,604   175,744 Provision for loan losses 1,171   1,044   2,369   805   1,274   5,389   2,459 Net Interest Income after Provision for Loan Losses 51,956   45,866   42,910   42,483   40,983   183,215   173,285 Non-interest Income             Service charges on deposit accounts 3,276   3,320   3,130   3,214   3,092   12,940   12,227 Wire transfer fees 124   123   113   101   103   461   448 Interchange fees 3,353   3,511   3,826   3,109   3,224   13,799   12,861 Fiduciary activities 1,313   1,394   1,372   1,315   1,352   5,394   5,080 Loss on sale of investment securities (39,140)  —   —   —   (31,572)  (39,140)  (32,052)Gain on sale of mortgage loans 1,071   1,622   896   626   951   4,215   4,323 Mortgage servicing income net of impairment 376   412   450   439   724   1,677   2,708 Increase in cash value of bank owned life insurance 335   349   318   298   658   1,300   3,709 Other income 338   780   380   827   1,019   2,325   2,694 Total non-interest (loss) income (28,954)  11,511   10,485   9,929   (20,449)  2,971   11,998 Non-interest Expense             Salaries and employee benefits 25,564   21,829   20,583   20,268   21,877   88,244   80,809 Net occupancy expenses 3,431   3,207   3,192   3,546   3,260   13,376   13,355 Data processing 2,841   2,977   2,579   2,464   2,942   10,861   11,626 Professional fees 736   676   714   607   772   2,733   2,645 Outside services and consultants 4,470   3,677   3,058   3,359   2,394   14,564   9,942 Loan expense 1,285   1,034   1,038   719   1,345   4,076   4,980 FDIC insurance expense 1,193   1,204   1,315   1,320   1,200   5,032   3,880 Core deposit intangible amortization 843   844   844   872   903   3,403   3,612 Other losses 371   297   515   16   508   1,199   1,051 Other expense 4,201   3,527   3,684   3,936   4,129   15,348   14,384 Total non-interest expense 44,935   39,272   37,522   37,107   39,330   158,836   146,284 (Loss) Income Before Income Taxes (21,933)  18,105   15,873   15,305   (18,796)  27,350   38,999 Income tax (benefit) expense (11,051)  (75)  1,733   1,314   6,419   (8,079)  11,018 Net (Loss) Income$(10,882) $18,180  $14,140  $13,991  $(25,215) $35,429  $27,981 Basic (Loss) Earnings Per Share$(0.25) $0.42  $0.32  $0.32  $(0.58) $0.81  $0.64 Diluted (Loss) Earnings Per Share (0.25)  0.41   0.32   0.32   (0.58)  0.80   0.64     Condensed Consolidated Balance Sheet (Dollar in Thousands) December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Assets         Interest earning assets         Federal funds sold$—  $—  $453  $—  $215 Interest earning deposits 201,131   126,019   38,957   170,882   413,528 Interest earning time deposits 735   735   1,715   1,715   2,205 Federal Home Loan Bank stock 53,826   53,826   53,826   53,826   34,509 Investment securities, available for sale 233,677   541,170   527,054   535,319   547,251 Investment securities, held to maturity 1,867,690   1,888,379   1,904,281   1,925,725   1,945,638 Loans held for sale 67,597   2,069   2,440   922   1,418 Gross loans held for investment (HFI) 4,847,040   4,803,996   4,822,840   4,618,175   4,417,630 Total Interest earning assets 7,271,696   7,416,194   7,351,566   7,306,564   7,362,394 Non-interest earning assets         Allowance for credit losses (51,980)  (52,881)  (52,215)  (50,387)  (50,029)Cash 92,300   108,815   106,691   100,206   112,772 Cash value of life insurance 37,450   37,115   36,773   36,455   36,157 Other assets 152,635   119,026   165,656   160,593   177,061 Goodwill 155,211   155,211   155,211   155,211   155,211 Other intangible assets 10,223   11,067   11,910   12,754   13,626 Premises and equipment, net 93,864   93,544   93,695   94,303   94,583 Interest receivable 39,747   39,366   43,240   40,008   38,710 Total non-interest earning assets 529,450   511,263   560,961   549,143   578,091 Total assets$7,801,146  $7,927,457  $7,912,527  $7,855,707  $7,940,484 Liabilities         Savings and money market deposits$3,446,681  $3,420,827  $3,364,726  $3,350,673  $3,369,149 Time deposits 1,089,153   1,220,653   1,178,389   1,136,121   1,179,739 Borrowings 1,142,340   1,142,744   1,229,165   1,219,812   1,217,020 Repurchase agreements 89,912   122,399   128,169   139,309   136,030 Subordinated notes 55,738   55,703   55,668   55,634   55,543 Junior subordinated debentures issued to capital trusts 57,477   57,423   57,369   57,315   57,258 Total interest earning liabilities 5,881,301   6,019,749   6,013,486   5,958,864   6,014,739 Non-interest bearing deposits 1,064,818   1,085,535   1,087,040   1,093,076   1,116,005 Interest payable 11,137   11,400   11,240   7,853   22,249 Other liabilities 80,308   55,951   74,096   74,664   68,680 Total liabilities$7,037,564  $7,172,635  $7,185,862  $7,134,457  $7,221,673 Stockholders’ Equity         Preferred stock$—  $—  $—  $—  $— Common stock —   —   —   —   — Additional paid-in capital 363,761   358,453   357,673   356,599   356,400 Retained earnings 436,122   454,050   442,977   435,927   429,021 Accumulated other comprehensive (loss) (36,301)  (57,681)  (73,985)  (71,276)  (66,609)Total stockholders’ equity$763,582  $754,822  $726,665  $721,250  $718,812 Total liabilities and stockholders’ equity$7,801,146  $7,927,457  $7,912,527  $7,855,707  $7,940,485         Loans and Deposits     (Dollars in Thousands)     December 31, September 30, June 30, March 31, December 31, % Change  2024   2024   2024   2024   2023  Q4'24 vsQ3'24 Q4'24 vsQ4'23Commercial:             Commercial real estate$2,202,858  $2,105,459  $2,117,772  $1,984,723  $1,962,097  5% 12%Commercial & Industrial 875,297   808,600   786,788   765,043   712,863  8% 23%Total commercial 3,078,155   2,914,059   2,904,560   2,749,766   2,674,960  6% 15%Residential Real estate 802,909   801,356   797,956   782,071   681,136  —% 18%Mortgage warehouse —   80,437   68,917   56,548   45,078  (100)% (100)%Consumer 965,976   1,008,144   1,051,407   1,029,790   1,016,456  (4)% (5)%Total loans held for investment 4,847,040   4,803,996   4,822,840   4,618,175   4,417,630  1% 10%Loans held for sale 67,597   2,069   2,440   922   1,418  3167% 4667%Total loans 4,914,637   4,806,065   4,825,280   4,619,097   4,419,048  2% 11%              Deposits:             Interest bearing deposits             Savings and money market deposits$3,446,681  $3,420,827  $3,364,726  $3,350,673  $3,369,149  1% 2%Time deposits$1,089,153  $1,220,653  $1,178,389  $1,136,121  $1,179,739  (11)% (8)%Total Interest bearing deposits 4,535,834   4,641,480   4,543,115   4,486,794   4,548,888  (2)% —%Non-interest bearing deposits             Non-interest bearing deposits$1,064,818  $1,085,535  $1,087,040  $1,093,076  $1,116,005  (2)% (5)%Total deposits$5,600,652  $5,727,015  $5,630,155  $5,579,870  $5,664,893  (2)% (1)%    Average Balance Sheet (Dollars in Thousands, Unaudited) Three Months Ended December 31, 2024September 30, 2024December 31, 2023 AverageBalance(8)Interest(4)(6)AverageRate(4) AverageBalance(8)Interest(4)(6)AverageRate(4) AverageBalance(8)Interest(4)(6)AverageRate(4) AssetsInterest earning assets         Interest earning deposits (incl. Fed Funds Sold)$290,693 $3,4884.77%$73,524 $9575.18% 221,375  3,0075.39%Federal Home Loan Bank stock 53,826  1,51611.20% 53,826  1,60711.88% 34,509  7198.27%Investment securities - taxable (1) 1,079,377  5,2981.95% 1,301,830  6,5261.99% 1,517,572  7,4381.94%Investment securities - non-taxable (1) 1,129,622  7,9762.81% 1,125,295  7,9872.82% 1,172,157  8,5662.90%Total investment securities 2,208,999  13,2742.39% 2,427,125  14,5132.38% 2,689,729  16,0046.04%Loans receivable (2) (3) 4,842,660  77,1426.34% 4,775,788  75,8286.32% 4,327,930  65,8976.04%Total interest earning assets 7,396,178  95,4205.13% 7,330,263  92,9055.04% 7,273,543  85,6274.67%Non-interest earning assets         Cash and due from banks 85,776    108,609    103,255   Allowance for credit losses (52,697)   (52,111)   (49,586)  Other assets 409,332    471,259    553,604   Total average assets$7,838,589   $7,858,020   $7,880,816             Liabilities and Stockholders' EquityInterest bearing liabilities         Interest bearing deposits$3,417,610 $16,1971.89%$3,386,177 $18,1852.14% 3,303,469  15,1161.82%Time deposits 1,160,527  11,6213.98% 1,189,148  12,6024.22% 1,205,799  12,2604.03%Borrowings 1,130,301  10,1383.57% 1,149,952  10,2213.54% 1,206,462  10,8123.56%Repurchase agreements 91,960  5182.24% 123,524  9102.93% 132,524  9532.85%Subordinated notes 55,717  8295.92% 55,681  8305.93% 58,221  8705.93%Junior subordinated debentures issued to capital trusts 57,443  9206.37% 57,389  1,2308.53% 57,222  1,2468.64%Total interest bearing liabilities 5,913,558  40,2232.71% 5,961,871  43,9782.93% 5,963,697  41,2572.74%Non-interest bearing liabilitiesDemand deposits 1,099,574    1,083,214    1,125,164   Accrued interest payable and other liabilities 70,117    74,563    89,162   Stockholders' equity 755,340    738,372    702,793   Total average liabilities and stockholders' equity$7,838,589   $7,858,020   $7,880,816   Net FTE interest income (non-GAAP) (5) $55,197  $48,927  $44,370 Less FTE adjustments (4)  2,070   2,017   2113 Net Interest Income $53,127  $46,910  $42,257 Net FTE interest margin (Non-GAAP) (4)(5)  2.97%  2.66%  2.42%(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities.(2) Includes fees on loans held for sale and held for investment. The inclusion of loan fees does not have a material effect on the average interest rate.(3) Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.(4) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate.(5) Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.(6) Includes dividend income on Federal Home Loan Bank stock        Credit Quality     (Dollars in Thousands Except Ratios)     Quarter Ended     December 31, September 30, June 30, March 31, December 31, % Change  2024   2024   2024   2024   2023  4Q24 vs3Q24 4Q24 vs4Q23Non-accrual loans             Commercial 5,658  $6,830  $4,321  $5,493  $7,362  (17)% (23)%Residential Real estate 11,215   9,529   8,489   8,725   8,058  18% 39%Mortgage warehouse —   —   —   —   —  —% —%Consumer 8,919   7,208   5,453   4,835   4,290  24% 108%Total non-accrual loans$25,792  $23,567  $18,263  $19,053  $19,710  9% 31%90 days and greater delinquent - accruing interest 1,166  $819  $1,039   108   559  42% 109%Total non-performing loans$26,958  $24,386  $19,302  $19,161  $20,269  11% 33%              Other real estate owned             Commercial 407  $1,158  $1,111  $1,124  $1,124  (65)% (64)%Residential Real estate —   —   —   —   182  —% (100)%Mortgage warehouse —   —   —   —   —  —% —%Consumer 17   36   57   50   205  (52)% (92)%Total other real estate owned$424  $1,194  $1,168  $1,174  $1,511  (64)% (72)%              Total non-performing assets$27,382  $25,580  $20,470  $20,335  $21,780  7% 26%              Loan data:             Accruing 30 to 89 days past due loans 23,075   18,087  $19,785  $15,154  $16,595  28% 39%Substandard loans 43,235   59,775   51,221   47,469   49,526  (28)% (13)%Net charge-offs (recoveries)             Commercial (37)  (52)  57   (57)  233  (29)% (116)%Residential Real estate (10)  (9)  (4)  (5)  21  11% (148)%Mortgage warehouse —   —   —   —   —  —% —%Consumer 668   439   534   488   531  52% 26%Total net charge-offs$621  $378  $587  $426  $785  64% (21)%              Allowance for credit losses             Commercial 31,029   32,854   31,941   30,514   29,736  (6)% 4%Residential Real estate 3,115   2,675   2,588   2,655   2,503  16% 24%Mortgage warehouse —   862   736   659   481  (100)% (100)%Consumer 17,837   16,490   16,950   16,559   17,309  8% 3%Total allowance for credit losses$51,981  $52,881  $52,215  $50,387  $50,029  (2)% 4%              Credit quality ratios             Non-accrual loans to HFI loans 0.53%  0.49%  0.38%  0.41%  0.45%    Non-performing assets to total assets 0.35%  0.32%  0.26%  0.26%  0.27%    Annualized net charge-offs of average total loans 0.05%  0.03%  0.05%  0.04%  0.07%    Allowance for credit losses to HFI loans 1.07%  1.10%  1.08%  1.09%  1.13%      Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin(Dollars in Thousands, Unaudited)  Three Months Ended  December 31, September 30, June 30, March 31, December 31,   2024   2024   2024   2024   2023 Interest income (GAAP)(A)$93,350  $90,888  $86,981  $85,264  $83,514 Taxable-equivalent adjustment:          Investment securities - tax exempt (1)  1,675  $1,677  $1,695  $1,715  $1,799 Loan receivable (2)  395  $340  $328  $353  $314 Interest income (non-GAAP)(B) 95,420  $92,905  $89,004  $87,332  $85,627 Interest expense (GAAP)(C) 40,223  $43,978  $41,702  $41,976  $41,257 Net interest income (GAAP)(D) =(A) - (C) 53,127  $46,910  $45,279  $43,288  $42,257 Net FTE interest income (non-GAAP)(E) = (B) - (C) 55,197  $48,927  $47,302  $45,356  $44,370 Average interest earning assets(F) 7,396,178   7,330,263   7,212,788   7,293,559   7,239,034 Net FTE interest margin (non-GAAP)(G) = (E*) / (F) 2.97%  2.66%  2.64%  2.50%  2.43%           (1) The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity(2) The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment*Annualized Non–GAAP Reconciliation of Return on Average Tangible Common Equity(Dollars in Thousands, Unaudited)  Three Months Ended  December 31, September 30, June 30, March 31, December 31,   2024   2024   2024   2024   2023            Net income (loss) (GAAP)(A)$(10,882) $18,180  $14,140  $13,991  $(25,215)           Average stockholders' equity(B)$755,340  $738,372  $726,332  $725,083  $702,793 Average intangible assets(C) 165,973   166,819   167,659   168,519   169,401 Average tangible equity (Non-GAAP)(D) = (B) - (C)$589,367  $571,553  $558,673  $556,564  $533,392 Return on average tangible common equity ("ROACE") (non-GAAP)(E) = (A*) / (D)(7.35)%  12.65%  10.18%  10.11% (18.76)%*Annualized           Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets(Dollars in Thousands, Unaudited)  Three Months Ended  December 31, September 30, June 30, March 31, December 31,   2024   2024   2024   2024   2023 Total stockholders' equity (GAAP)(A)$763,582  $754,822  $726,665  $721,250  $718,812 Intangible assets (end of period)(B) 165,434   166,278   167,121   167,965   168,837 Total tangible common equity (non-GAAP)(C) = (A) - (B)$598,148  $588,544  $559,544  $553,285  $549,975            Total assets (GAAP)(D) 7,801,146   7,927,457   7,912,527   7,855,707   7,940,485 Intangible assets (end of period)(B) 165,434   166,278   167,121   167,965   168,837 Total tangible assets (non-GAAP)(E) = (D) - (B)$7,635,712  $7,761,179  $7,745,406  $7,687,742  $7,771,648            Tangible common equity to tangible assets (Non-GAAP)(G) = (C) / (E) 7.83%  7.58%  7.22%  7.20%  7.08% Non–GAAP Reconciliation of Tangible Book Value Per Share(Dollars in Thousands, Unaudited)  Three Months Ended  December 31, September 30, June 30, March 31, December 31,   2024   2024   2024   2024   2023 Total stockholders' equity (GAAP)(A)$763,582  $754,822  $726,665  $721,250  $718,812 Intangible assets (end of period)(B) 165,434   166,278   167,121   167,965   168,837 Total tangible common equity (non-GAAP)(C) = (A) - (B)$598,148  $588,544  $559,544  $553,285  $549,975 Common shares outstanding(D) 43,722,086   43,712,059   43,712,059   43,726,380   43,652,063            Tangible book value per common share (non-GAAP)(E) = (C) / (D)$13.68  $13.46  $12.80  $12.65  $12.60  Contact:John R. Stewart, CFA EVP, Chief Financial OfficerPhone:(219) 814–5833Fax:(219) 874–9280Date:January 22, 2025

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