10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________

FORM 10-Q

____________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from________to

Commission file number 0-10792

____________________________

HORIZON BANCORP, INC.

(Exact name of registrant as specified in its charter)

____________________________

Indiana	35-1562417
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

515 Franklin Street, Michigan City, Indiana 46360

(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (219) 879-0211

Former name, former address and former fiscal year, if changed since last report: N/A

____________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	HBNC	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ¨ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 43,874,353 shares of Common Stock, no par value, at August 3, 2020.

HORIZON BANCORP, INC.

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	74
Item 4.	Controls and Procedures	74
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	76
Item 1A.	Risk Factors	76
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	78
Item 4.	Mine Safety Disclosures	78
Item 5.	Other Information	78
Item 6.	Exhibits	78
Index to Exhibits		78
Signatures		80

2

PART 1 — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	June 30, 2020		December 31, 2019
	(Unaudited)
Assets
Cash and due from banks	$	170,135	$	98,831
Interest-earning time deposits	9,247		8,455
Investment securities, available for sale	935,140		834,776
Investment securities, held to maturity (fair value of $201,818 and $215,147)	190,935		207,899
Loans held for sale	15,913		4,088
Loans, net of allowance for loan losses of $55,090 and $17,667	3,923,292		3,619,174
Premises and equipment, net	92,232		92,209
Federal Home Loan Bank stock	23,608		22,447
Goodwill	151,238		151,238
Other intangible assets	24,782		26,679
Interest receivable	20,185		18,828
Cash value of life insurance	95,709		95,577
Other assets	86,846		66,628
Total assets	$	5,739,262	$	5,246,829
Liabilities
Deposits
Non-interest bearing	$	981,868	$	709,760
Interest bearing	3,325,731		3,221,242
Total deposits	4,307,599		3,931,002
Borrowings	583,073		549,741
Subordinated debentures	58,824		—
Junior subordinated debentures issued to capital trusts	56,437		56,311
Interest payable	2,353		3,062
Other liabilities	78,770		50,690
Total liabilities	5,087,056		4,590,806
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares	—		—
Common stock, no par value, Authorized 99,000,000 shares
Issued 43,846,947 and 45,000,840 shares, Outstanding 43,821,878 and 44,975,771 shares	—		—
Additional paid-in capital	361,087		379,853
Retained earnings	269,849		269,738
Accumulated other comprehensive income	21,270		6,432
Total stockholders’ equity	652,206		656,023
Total liabilities and stockholders’ equity	$	5,739,262	$	5,246,829

See notes to condensed consolidated financial statements

3

HORIZON BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

(Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Interest Income
Loans receivable	$	43,918	$	47,784	$	88,876	$	87,407
Investment securities - taxable	2,321		3,273		5,219		6,395
Investment securities - tax exempt	4,105		2,793		7,903		5,421
Total interest income	50,344		53,850		101,998		99,223
Interest Expense
Deposits	4,506		8,938		12,222		15,814
Borrowed funds	2,074		2,495		4,312		6,116
Subordinated debentures	58		—		58		—
Junior subordinated debentures issued to capital trusts	710		888		1,485		1,484
Total interest expense	7,348		12,321		18,077		23,414
Net Interest Income	42,996		41,529		83,921		75,809
Credit loss expense	7,057		896		15,657		1,260
Net Interest Income after Credit Loss Expense	35,939		40,633		68,264		74,549
Non-interest Income
Service charges on deposit accounts	1,888		2,480		4,334		4,357
Wire transfer fees	230		167		401		285
Interchange fees	2,327		2,160		4,223		3,521
Fiduciary activities	1,765		2,063		4,293		4,152
Gains on sale of investment securities (includes $248 and $(100) for the three months ended June 30, 2020 and 2019, respectively, and $587 and $(85) for the six months ended June 30, 2020 and 2019, respectively, related to accumulated other comprehensive earnings reclassifications)	248		(100)		587		(85)
Gain on sale of mortgage loans	6,620		2,078		10,093		3,387
Mortgage servicing income net of impairment	(2,760)		570		(2,735)		1,176
Increase in cash value of bank owned life insurance	557		555		1,111		1,068
Death benefit on bank owned life insurance	—		367		233		367
Other income	250		558		648		1,382
Total non-interest income	11,125		10,898		23,188		19,610
Non-interest Expense
Salaries and employee benefits	15,629		16,951		32,220		31,417
Net occupancy expenses	3,190		3,148		6,442		5,920
Data processing	2,432		2,139		4,837		4,105
Professional fees	518		598		1,054		1,091
Outside services and consultants	1,759		1,655		3,674		5,185
Loan expense	2,692		2,048		4,791		3,997
FDIC insurance expense	235		365		385		525
Other losses	193		169		313		273
Other expense	3,784		4,511		7,865		8,809
Total non-interest expense	30,432		31,584		61,581		61,322
Income Before Income Taxes	16,632		19,947		29,871		32,837
Income tax expense (includes $52 and $(21) for the three months ended June 30, 2020 and 2019, respectively, and $123 and $(18) for the six months ended June 30, 2020 and 2019, respectively, related to income tax expense from reclassification items)	1,993		3,305		3,577		5,379
Net Income	$	14,639	$	16,642	$	26,294	$	27,458
Basic Earnings Per Share	$	0.33	$	0.37	$	0.59	$	0.65
Diluted Earnings Per Share	0.33		0.37		0.59		0.65

See notes to condensed consolidated financial statements

4

HORIZON BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollar Amounts in Thousands)

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Net Income	$	14,639	$	16,642	$	26,294	$	27,458
Other Comprehensive Income
Change in fair value of derivative instruments:
Change in fair value of derivative instruments for the period	(135)		(1,901)		(4,100)		(3,007)
Income tax effect	28		399		861		631
Changes from derivative instruments	(107)		(1,502)		(3,239)		(2,376)
Change in securities:
Unrealized appreciation for the period on AFS securities	15,507		6,933		23,499		18,627
Amortization from transfer of securities from available for sale to held to maturity securities	1		(30)		(29)		(68)
Reclassification adjustment for securities gains realized in income	(248)		100		(587)		85
Income tax effect	(3,205)		(1,472)		(4,806)		(3,917)
Unrealized gains on securities	12,055		5,531		18,077		14,727
Other Comprehensive Income, Net of Tax	11,948		4,029		14,838		12,351
Comprehensive Income	$	26,587	$	20,671	$	41,132	$	39,809

See notes to condensed consolidated financial statements

5

HORIZON BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balances, April 1, 2019	$	—	$	—	$	378,963	$	230,327	$	178	$	609,468
Net income	—		—		—		16,642		—		16,642
Other comprehensive income, net of tax	—		—		—		—		4,029		4,029
Amortization of unearned compensation	—		—		210		—		—		210
Exercise of stock options	—		—		38		—		—		38
Stock option expense	—		—		58		—		—		58
Stock issued stock plans	—		—		1,466		—		—		1,466
Cash dividends on common stock ($0.12 per share)	—		—		—		(5,450)		—		(5,450)
Balances, June 30, 2019	$	—	$	—	$	380,735	$	241,519	$	4,207	$	626,461
Balances, April 1, 2020	$	—	$	—	$	361,019	$	260,501	$	9,322	$	630,842
Net income	—		—		—		14,639		—		14,639
Other comprehensive income, net of tax	—		—		—		—		11,948		11,948
Amortization of unearned compensation	—		—		(79)		—		—		(79)
Exercise of stock options	—		—		(98)		—		—		(98)
Stock option expense	—		—		27		—		—		27
Stock issued stock plans	—		—		218		—		—		218
Cash dividends on common stock ($0.12 per share)	—		—		—		(5,291)		—		(5,291)
Balances, June 30, 2020	$	—	$	—	$	361,087	$	269,849	$	21,270	$	652,206

See notes to condensed consolidated financial statements

6

	Six Months Ended
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balances, January 1, 2019	$	—	$	—	$	276,101	$	224,035	$	(8,144)	$	491,992
Net income	—		—		—		27,458		—		27,458
Other comprehensive income, net of tax	—		—		—		—		12,351		12,351
Amortization of unearned compensation	—		—		301		—		—		301
Exercise of stock options	—		—		155		—		—		155
Stock option expense	—		—		115		—		—		115
Stock issued stock plans	—		—		1,341		—		—		514
Stock issued in Salin acquisition	—		—		102,722		—		—		—
Cash dividends on common stock ($0.22 per share)	—		—		—		(9,974)		—		(9,974)
Balances, June 30, 2019	$	—	$	—	$	380,735	$	241,519	$	4,207	$	626,461
Balances, January 1, 2020	$	—	$	—	$	379,853	$	269,738	$	6,432	$	656,023
Net income	—		—		—		26,294		—		26,294
Other comprehensive income, net of tax	—		—		—		—		14,838		14,838
Impact of adoption of ASU No. 2016-13	—		—		—		(15,635)		—		(15,635)
Amortization of unearned compensation	—		—		122		—		—		122
Exercise of stock options	—		—		157		—		—		157
Stock option expense	—		—		77		—		—		77
Stock issued stock plans	—		—		514		—		—		514
Repurchase of outstanding stock	—		—		(19,636)		—		—		(19,636)
Cash dividends on common stock($0.24 per share)	—		—		—		(10,548)		—		(10,548)
Balances, June 30, 2020	$	—	$	—	$	361,087	$	269,849	$	21,270	$	652,206

See notes to condensed consolidated financial statements

7

HORIZON BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollar Amounts in Thousands)

	Six Months Ended June 30
	2020		2019
Operating Activities
Net income	$	26,294	$	27,458
Items not requiring (providing) cash
Provision for credit losses	15,657		1,260
Depreciation and amortization	4,909		4,380
Share based compensation	77		115
Mortgage servicing rights income	(466)		(1,165)
Mortgage servicing rights net impairment	3,201		(11)
Premium amortization on securities, net	4,266		2,589
(Gain) loss on sale of investment securities	(587)		85
Gain on sale of mortgage loans	(10,093)		(3,387)
Proceeds from sales of loans	258,207		92,314
Loans originated for sale	(259,939)		(91,074)
Change in cash value life insurance	(1,111)		(1,068)
Gain on sale of other real estate owned	7		(11)
Net change in:
Interest receivable	(1,357)		(2,288)
Interest payable	(709)		148
Other assets	1,811		97,207
Other liabilities	661		7,780
Net cash provided by operating activities	40,828		134,332
Investing Activities
Purchases of securities available for sale	(207,160)		(176,629)
Proceeds from sales, maturities, calls and principal repayments of securities available for sale	126,826		165,638
Proceeds from maturities of securities held to maturity	16,138		4,551
Net change in interest-earning time deposits	(792)		7,654
Change in FHLB stock	(1,161)		(803)
Net change in loans	(340,505)		(84,406)
Proceeds on the sale of OREO and repossessed assets	444		1,260
Change in premises and equipment, net	(2,913)		(1,538)
Death benefit on bank owned life insurance	233		367
Repurchase of outstanding stock	(19,636)		—
Net cash received in acquisition, Salin	—		128,745
Net cash provided by (used in) investing activities	(428,526)		44,839
Financing Activities
Net change in:
Deposits	376,597		50,049
Borrowings	33,458		(184,548)
Proceeds from issuance of stock	671		1,496
Net proceeds from issuance of subordinated notes	58,824		—
Dividends paid on common stock	(10,548)		(9,974)
Net cash provided by (used in) financing activities	459,002		(142,977)
Net Change in Cash and Cash Equivalents	71,304		36,194
Cash and Cash Equivalents, Beginning of Period	98,831		58,492

8

Cash and Cash Equivalents, End of Period	$	170,135	$	94,686
Additional Supplemental Information
Interest paid	$	18,786	$	22,440
Income taxes paid	—		1,300
Transfer of loans to other real estate and repossessed assets	939		1,213
Transfer of premises to other real estate	—		1,564
Right-of-use assets exchanged for lease obligations	—		3,411

See notes to condensed consolidated financial statements

9

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 1 - Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of Horizon Bancorp, Inc. (“Horizon” or the “Company”) and its wholly-owned subsidiaries, including Horizon Bank (“Horizon Bank” or the “Bank”). Horizon Bank (formerly known as “Horizon Bank, N.A.”) was a national association until its conversion to an Indiana commercial bank effective June 23, 2017. All inter-company balances and transactions have been eliminated. The results of operations for the periods ended June 30, 2020 and June 30, 2019 are not necessarily indicative of the operating results for the full year of 2020 or 2019. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of Horizon’s management, necessary to fairly present the financial position, results of operations and cash flows of Horizon for the periods presented. Those adjustments consist only of normal recurring adjustments.

Certain information and note disclosures normally included in Horizon’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form10-K for 2019 filed with the Securities and Exchange Commission on February 28, 2020. The condensed consolidated balance sheet of Horizon as of December 31, 2019 has been derived from the audited balance sheet as of that date.

On July 16, 2019, the Board of Directors of the Company authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of June 30, 2020, Horizon had repurchased a total of 373,323 shares at an average price per share of $15.86. In addition to the stock repurchase program, Horizon agreed to repurchase 1,000,000 shares at a price per share of $15.19 from an individual shareholder on March 6, 2020.

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted-average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

The following table shows computation of basic and diluted earnings per share.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Basic earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Basic earnings per share	$	0.33	$	0.37	$	0.59	$	0.65
Diluted earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Effect of dilutive securities:
Restricted stock	7,614		—		40,017		—
Stock options	13,931		75,291		26,967		76,924
Weighted average common shares outstanding	43,802,794		45,130,408		44,286,864		42,032,971
Diluted earnings per share	$	0.33	$	0.37	$	0.59	$	0.65

There were 504,085 and 285,588 shares for the three and six months ended June 30, 2020, which were not included in the computation of diluted earnings per share because they were non-dilutive. There were 341,394 and 341,394 shares for the three and six months ended June 30, 2019, which were not included in the computation of diluted earnings per share because they were non-dilutive.

10

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Horizon has share-based employee compensation plans, which are described in the notes to the financial statements included in the December 31, 2019 Annual Report on Form 10-K.

Adoption of New Accounting Standards

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – On January 1, 2020, the Company adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held to maturity securities. It also applies to off–balance sheet (“OBS”) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar agreements). In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance, rather than as a write–down, on available for sale debt securities management does not intend to sell or believe that it is not more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and OBS credit exposures. Results for reporting periods beginning after December 31, 2019, are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to retained earnings of $15.6 million as of January 1, 2020 for the cumulative effect of adopting ASC 326.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”), previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of $2.8 million of allowance for credit losses (“ACL”) on loans.

The following table illustrates the impact of ASC 326.

	January 1, 2020
(dollars in thousands)	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Loans
Commercial	$	25,614	$	11,996	$	13,618
Real estate	4,971		923		4,048
Mortgage warehouse	1,077		1,077		—
Consumer	8,582		3,671		4,911
Allowance for credit losses on loans	$	40,244	$	17,667	$	22,577

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable totaling $12.8 million at June 30, 2020 was excluded from the ACL calculation and was reported in accrued interest receivable on the consolidated balance sheets. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income

11

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

using the effective yield method without anticipating prepayments.

From time to time, the Bank obtains information that may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of this, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Further, it is management’s policy to generally place a loan on a non-accrual status when the payment is delinquent in excess of 90 days or the loan has had the accrual of interest discontinued by management. The officer responsible for the loan and the Chief Commercial Banking Officer and/or the Chief Operations Officer must review all loans placed on non-accrual status. Subsequent payments on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal in accordance with the loan terms. The Company requires a period of satisfactory performance of not less than six months before returning a non-accrual loan to accrual status.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is contractually 90 days past due, and charges down to the net realizable value other secured loans when they are contractually 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

A loan becomes impaired when, based on current information, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is classified as impaired, the degree of impairment must be recognized by estimating future cash flows from the debtor. The present value of these cash flows is computed at a discount rate based on the interest rate contained in the loan agreement. However, if a particular loan has a determinable market value for its collateral, the creditor may use that value. Also, if the loan is secured and considered collateral dependent, the creditor may use the fair value of the collateral. Interest income on loans individually classified as impaired is recognized on a cash basis after all past due and current principal payments have been made.

Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1-4 family residences, residential construction loans, automobile, home equity, second mortgage loans and mortgage warehouse loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When analysis of borrower operating results and financial condition indicate that underlying cash flows of a borrower’s business are not adequate to meet its debt service requirements, the loan is evaluated for impairment. Often this is associated with a delay or shortfall in payments of 30 days or more. Loans are generally moved to non-accrual status when they are 90 days or more past due. These loans are often considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms, including troubled debt restructurings, are measured for impairment. Allowable methods for determining the amount of impairment include the three methods described above.

12

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Purchased Credit Deteriorated Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An ACL on loans is determined using the same methodology as other loans held for investment. The initial ACL on loans determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and ACL on loans becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL on loans are recorded through credit loss expense.

The Company adopted this ASU using the prospective transition approach for PCD loans previously accounted for under ASC 310-30. In accordance with the standard, we did not assess whether PCI loans met the criteria of PCD as of the date of adoption and all loans previously classified as PCI were updated to the PCD classification. Pools utilized for PCI accounting under ASC 310-30 were not considered since the Company did not have PCI pools at the time of adoption. PCD loans were assessed using prior specific loan reviews for the initial PCD loan ACL. At the date of adoption, no securities were determined to be PCD.

Allowance for Credit Losses on Loans

The ACL on loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is confirmed to no longer be collectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, changes in economic conditions, or other relevant factors.

The Company considers the following when estimating credit losses: 1) available information relevant to assessing the collectibility of cash flows including internal information, external information or a combination of both relating to past events, current conditions and reasonable and supportable forecasts; 2) relevant qualitative and quantitative factors relating to the environment in which the Bank operates and factors specific to the borrower; 3) off-balance-sheet credit exposures; and credit support.

ACL on loans is measured on a collective basis and reflects impairment in groups of loans aggregated on the basis of similar risk characteristics which may include any one or a combination of the following: internal credit ratings, risk ratings or classification, financial asset type, collateral type, size, industry of the borrower, historical or expected credit loss patterns, and reasonable and supportable forecast periods. The ACL for a specific portfolio segment is computed by multiplying the loss rate by the amortized cost balance of the segment with adjustments for other qualitative factors as described above. As appropriate, newer credit products or portfolios with limited historical loss may use applicable external data for determining the ACL until experience justifies that sufficient product maturity supports the estimate of expected credit losses.

Pursuant to ASC 326-20-30-9, an entity shall not rely solely on past events to estimate expected credit losses, and should consider adjustments to historical information to reflect the extent to which management expects current conditions and forecasted conditions to differ from the periods utilized for the historical loss rate calculation. Management has incorporated an adjustment of the historical loss rate calculated within the model to reflect current and forecasted condition and has applied this adjustment on a qualitative factor basis to the aggregate pool loss rate.

The qualitative adjustment is based on a combination of external econometric data and internal factors such as portfolio composition, changes in management, changes in loan policy and other factors. The economic forecast is based in part on economic indexes and quantitative matrices with a six to twelve month forecast. The qualitative adjustment is calculated based on current and forecasted conditions and evaluated each quarter by management, and therefore is dynamic in nature. As a result of the forecast being applied as a qualitative factor and adjusted quarterly, no reversion to the historical loss rate is necessary, as

13

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

the historical base loss rate is preserved in the calculation of “all in” loss rate.

Specific reserves reflect impairment on loans identified for evaluation or individually considered non-performing, including troubled debt restructurings and receivables where the Company has determined foreclosure is probable. These loans no longer have similar risk characteristics to collectively evaluated loans due to changes in credit risk, borrower circumstances, recognition of write-offs, or cash collections that have been fully applied to principal on the basis of non-accrual policies. At a minimum, the population of loans subject to individual evaluation include individual loans and leases where it is probable we will be unable to collect all amounts due, according to the original contractual terms. These include commercial impaired loans, jumbo residential mortgages (as defined), and jumbo home equity loans with a balance exceeding $250,000, and other loans as determined by management. ACL for residential and consumer loans are, primarily, determined by meaningful pools of similar loans and are evaluated on a quarterly basis.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The provision for credit losses on loans on individually evaluated loans is recognized on the fair value of collateral adjusted for estimated costs to sell, the basis of the present value of expected future cash flows discounted at the effective interest rate or the observable market price as of the relevant date.

The table below identifies the Company's loan portfolio segments and classes.

Portfolio Segment	Class of Financing Receivable
Commercial	Owner occupied real estate
	Non-owner occupied real estate
	Residential spec homes
	Development & spec land
	Commercial and industrial
Real estate	Residential mortgage
	Residential construction
Mortgage warehouse	Mortgage warehouse
Consumer	Direct installment
	Indirect installment
	Home equity

Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Class of financing receivable is defined as a group of financing receivables determined on the basis of both of the following, 1) risk characteristics of the financing receivable, and 2) an entity's method for monitoring and assessing credit risk. Generally, the Bank does not move loans from a revolving loan to a term loan other than construction loans. Construction loans are reviewed and rewritten prior to being originated as a term loan.

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may incorporate a personal guarantee. However, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

14

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Commercial real estate loans are viewed primarily as cash flow loans and, secondarily, as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy, or fluctuations in interest rates. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow, and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Real Estate and Consumer

With respect to residential loans that are secured by 1–4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon’s mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon’s agreement with the mortgage company. Each mortgage loan funded by Horizon undergoes an underwriting review by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company. In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan. At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement. Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company. When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on the agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note. Horizon also has the option to request that the mortgage company reacquire an individual mortgage. Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company. Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

Determining the Contractual Term

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

15

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Troubled Debt Restructurings (“TDR”)

A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The ACL on loans on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate is used to discount the expected cash flows, not the rate specified within the restructuring.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act provides all banks with the option to elect either or both of the following from March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the termination of the national emergency:

i.to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and/or

ii.to suspend any determination of a loan modified as a result of the effects of the COVID-19 pandemic as being a TDR, including impairment for accounting purposes.

If a bank elects a suspension noted above, the suspension (i) will be effective for the term of the loan modification, but solely with respect to any modification, including a forbearance arrangement, an interest rate modification, a repayment plan, and any other similar arrangement that defers or delays the payment of principal or interest, that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019; and (ii) will not apply to any adverse impact on the credit of a borrower that is not related to the COVID-19 pandemic.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The Company determines the estimated amount of expected credit extensions based on historical usage to calculate the amount of exposure for a loss estimate. After review of the expected credit losses on OBS, the Company determined the amount not being recorded as immaterial at this time.

Allowance for Credit Losses on Available for Sale Securities

For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For debt securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recorded in other comprehensive income.

Changes in the ACL are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Allowance for Credit Losses on Held to Maturity Securities

For held to maturity securities, the Company conducts an assessment of its held to maturity securities at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to

16

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers from Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. If this assessment indicates that a material credit loss exists, the present value of cash flows expected to be collected form the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss. After completing this assessment, management determined any credit losses as of June 30, 2020 were not material to the consolidated financial statements.

FASB ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment - On January 1, 2020, the Company adopted the provision of ASU No. 2017-04, which eliminates Step 2 from the goodwill impairment test. Under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative test.

At each reporting date between annual goodwill impairment tests, Horizon considers potential indicators of impairment. Given the current economic uncertainty and volatility surrounding COVID-19, Horizon assessed whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered comprised the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting unit; performance of the Company's stock and other relevant events. Horizon further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. At the conclusion of the assessment, the Company determined that as of March 31, 2020 it was more likely than not that the fair value exceeded its carrying values. Horizon will continue to monitor developments regarding the COVID-19 pandemic and measures implemented in response to the pandemic, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

FASB ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement – On January 1, 2020, the Company adopted the provision of ASU 2018-13, which modifies the disclosure requirements on fair value measurements. The amendment removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The update also adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, the Company may disclose other quantitative information in lieu of the weighted average if we determine that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the 2019 condensed consolidated financial statements to be comparable to 2020. These reclassifications had no effect on net income.

17

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 2 – Acquisitions

Salin Bancshares, Inc.

On March 26, 2019, Horizon completed the acquisition of Salin Bancshares, Inc. (“Salin”), an Indiana corporation, and Horizon Bank’s acquisition of Salin Bank and Trust Company (“Salin Bank”), an Indiana commercial bank and wholly-owned subsidiary of Salin, through mergers effective March 26, 2019. Under the terms of the Merger Agreement, shareholders of Salin received 23,907.5 shares of Horizon common stock and $87,417.17 in cash for each outstanding share of Salin common stock. Salin shares outstanding at the closing to be exchanged were 275, and the shares of Horizon common stock issued to Salin shareholders totaled 6,563,697. The Salin shareholders received cash in lieu of fractional shares. Based upon the March 25, 2019 closing price of $15.65 per share of Horizon common stock immediately prior to the effectiveness of the merger the transaction has an implied valuation of approximately $126.7 million. The Company incurred approximately $5.6 million in costs related to the acquisition. These expenses are classified in the non-interest expense section of the income statement and are primarily located in the data processing, professional fees, outside services and consultants and other expense line items. As a result of the acquisition, the Company was able to increase its deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale.

Under the acquisition method of accounting, the total purchase price was allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition.

Assets			Liabilities
Cash and due from banks	$	152,745	Deposits
Investment securities, available for sale	54,319		Non-interest bearing	$	188,744
Loans			NOW accounts	207,567
Commercial	352,798		Savings and money market	274,504
Residential mortgage	131,008		Certificates of deposit	70,529
Consumer	85,112		Total deposits	741,344
Total loans	568,918		Borrowings	70,495
Premises and equipment, net	20,425		Subordinated debentures	18,376
FRB and FHLB stock	3,571		Interest payable	826
Goodwill	31,358		Other liabilities	8,759
Core deposit intangible	19,818		Total liabilities assumed	$	839,800
Interest receivable	2,488
Other assets	112,880
Total assets purchased	$	966,522
Common shares issued	$	102,722
Cash paid	24,000
Total purchase price	$	126,722

Of the total purchase price of $126.7 million, $19.8 million has been allocated to core deposit intangible. Additionally, $31.4 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible is being amortized over 10 years on a straight line basis.

The Company acquired various loans in the acquisition that had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. Purchased credit-impaired loans at the acquisition date, were accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which

18

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporated the estimate of current assumptions, such as default rates, severity and prepayment speeds.

The following table details an estimate of the acquired loans that are accounted for in accordance with ASC 310-30 as of March 26, 2019.

Contractually required principal and interest at acquisition	$	22,672
Contractual cash flows not expected to be collected (nonaccretable differences)	6,694
Expected cash flows at acquisition	15,978
Interest component of expected cash flows (accretable discount)	735
Fair value of acquired loans accounted for under ASC310-30	$	15,243

Estimates of certain loans, those for which specific credit-related deterioration has occurred since origination, were recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.

The results of operations of Salin have been included in the Company’s consolidated financial statements since the acquisition date. The following schedule includes pro-forma results for the three and six months ended June 30, 2019 as if the Salin acquisition had occurred as of the beginning of the comparable prior reporting period.

	Three Months Ended			Six Months Ended
		June 30		June 30
		2019		2019
Summary of Operations:
Net Interest Income		$	41,529	$	83,711
Provision for Loan Losses		896		1,560
Net Interest Income after Provision for Loan Losses		40,633		82,151
Non-interest Income		10,898		20,024
Non-interest Expense		31,584		73,736
Income before Income Taxes		19,947		28,439
Income Tax Expense		3,305		5,322
Net Income		16,642		23,117
Net Income Available to Common Shareholders		$	16,642	$	23,117
Basic Earnings per Share		$	0.37	$	0.51
Diluted Earnings per Share		$	0.37	$	0.51

The pro-forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits acquired, premises expense for the banking centers acquired and the related income tax effects.

The pro-forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, nor is it intended to be a projection of future results.

19

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 3 – Securities

The fair value of securities is as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
State and municipal	$	525,488	$	23,503	$	(759)	$	548,232
Federal agency collateralized mortgage obligations	219,431		6,380		(6)		225,805
Federal agency mortgage-backed pools	143,755		5,031		—		148,786
Corporate notes	10,867		1,450		—		12,317
Total available for sale investment securities	$	899,541	$	36,364	$	(765)	$	935,140
Held to maturity
State and municipal	$	175,953	$	10,408	$	—	$	186,361
Federal agency collateralized mortgage obligations	3,006		89		—		3,095
Federal agency mortgage-backed pools	11,976		386		—		12,362
Total held to maturity investment securities	$	190,935	$	10,883	$	—	$	201,818

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
U.S. Treasury and federal agencies	$	1,415	$	—	$	(2)	$	1,413
State and municipal	396,931		11,288		(2,451)		405,768
Federal agency collateralized mortgage obligations	267,272		2,543		(563)		269,252
Federal agency mortgage-backed pools	145,623		1,207		(258)		146,572
Corporate notes	10,848		923		—		11,771
Total available for sale investment securities	$	822,089	$	15,961	$	(3,274)	$	834,776
Held to maturity
State and municipal	$	190,767	$	7,129	$	(54)	$	197,842
Federal agency collateralized mortgage obligations	4,560		13		(5)		4,568
Federal agency mortgage-backed pools	12,572		194		(29)		12,737
Total held to maturity investment securities	$	207,899	$	7,336	$	(88)	$	215,147

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. While these securities are held in the available for sale portfolio and held-to-maturity, Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity.

20

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2020 and December 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Within one year	$	40,750	$	40,838	$	37,386	$	37,321
One to five years	41,840		43,156		41,230		41,293
Five to ten years	116,279		125,049		117,004		122,145
After ten years	337,486		351,506		213,574		218,193
	536,355		560,549		409,194		418,952
Federal agency collateralized mortgage obligations	219,431		225,805		267,272		269,252
Federal agency mortgage-backed pools	143,755		148,786		145,623		146,572
Total available for sale investment securities	$	899,541	$	935,140	$	822,089	$	834,776
Held to maturity
Within one year	$	11,255	$	11,308	$	7,811	$	7,874
One to five years	48,178		49,597		56,037		57,048
Five to ten years	89,212		95,232		94,756		98,480
After ten years	27,308		30,224		32,163		34,440
	175,953		186,361		190,767		197,842
Federal agency collateralized mortgage obligations	3,006		3,095		4,560		4,568
Federal agency mortgage-backed pools	11,976		12,362		12,572		12,737
Total held to maturity investment securities	$	190,935	$	201,818	$	207,899	$	215,147

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	June 30, 2020
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
State and municipal	$	66,448	$	(651)	$	4,885	$	(108)	$	71,333	$	(759)
Federal agency collateralized mortgage obligations	3,438		(6)		—		—		3,438		(6)
Total temporarily impaired securities	$	69,886	$	(657)	$	4,885	$	(108)	$	74,771	$	(765)

21

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	December 31, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
U.S. Treasury and federal agencies	$	1,413	$	(2)	$	—	$	—	$	1,413	$	(2)
State and municipal	129,942		(2,374)		6,279		(131)		136,221		(2,505)
Federal agency collateralized mortgage obligations	68,043		(308)		23,301		(260)		91,344		(568)
Federal agency mortgage-backed pools	24,740		(104)		37,822		(183)		62,562		(287)
Corporate notes	—		—		—		—		—		—
Total temporarily impaired securities	$	224,138	$	(2,788)	$	67,402	$	(574)	$	291,540	$	(3,362)

Information regarding security proceeds, gross gains and gross losses are presented below.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Sales of securities available for sale
Proceeds	$	5,146	$	74,048	$	37,182	$	91,635
Gross gains	248		99		637		158
Gross losses	—		(199)		(50)		(243)

22

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 4 – Loans

The following table presents total loans outstanding by portfolio class, as of June 30, 2020:

	June 30, 2020
Commercial
Owner occupied real estate	$	501,198
Non-owner occupied real estate	1,009,116
Residential spec homes	12,036
Development & spec land	28,987
Commercial and industrial	761,378
Total commercial	2,312,715
Real estate
Residential mortgage	682,695
Residential construction	21,715
Mortgage warehouse	300,386
Total real estate	1,004,796
Consumer
Direct installment	39,515
Indirect installment	360,641
Home equity	260,715
Total consumer	660,871
Total loans	3,978,382
Allowance for loan losses	(55,090)
Net loans	$	3,923,292

As of June 30, 2020, loans originated under the Federal Paycheck Protection Program ("PPP") totaled approximately $308.1 million. Total loans include net deferred loan fees of $7.1 million at June 30, 2020.

23

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents total loans outstanding, as of December 31, 2019:

	December 31, 2019
Commercial
Working capital and equipment	$	938,317
Real estate, including agriculture	978,891
Tax exempt	63,571
Other	65,872
Total	2,046,651
Real estate
1-4 family	762,571
Other	8,146
Total	770,717
Consumer
Auto	362,729
Recreation	16,262
Real estate/home improvement	43,585
Home equity	237,979
Unsecured	7,286
Other	1,339
Total	669,180
Mortgage warehouse	150,293
Total loans	3,636,841
Allowance for loan losses	(17,667)
Loans, net	$	3,619,174

Note 5 – Accounting for Certain Loans Acquired in a Transfer

The Company has acquired loans in acquisitions, whereby the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages prior to January 1, 2020. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

24

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The carrying amounts of those loans included in the balance sheet amounts of loans receivable as of December 31, 2019 are as follows:

	December 31, 2019
	Commercial		Real Estate		Consumer		Outstanding Balance		Allowance for Loan Losses		Carrying Amount
Heartland	$	197	$	99	$	—	$	296	$	—	$	296
Summit	88		473		—		561		—		561
Peoples	229		35		—		264		—		264
Kosciusko	244		131		—		375		—		375
LaPorte	353		793		20		1,166		—		1,166
Lafayette	1,867		—		—		1,867		—		1,867
Wolverine	2,289		—		—		2,289		—		2,289
Salin	4,938		1,912		962		7,812		133		7,679
Total	$	10,205	$	3,443	$	982	$	14,630	$	133	$	14,497

Accretable yield, or income expected to be collected for the six months ended June 30, 2019 is as follows:

	Six Months Ended June 30, 2019
	Beginning balance		Additions		Accretion		Reclassification from nonaccretable difference		Disposals		Ending balance
Heartland	$	174	$	—	$	(16)	$	—	$	—	$	158
Summit	42		—		(5)		—		(11)		26
Kosciusko	300		—		(33)		—		(1)		266
LaPorte	829		—		(59)		—		—		770
Lafayette	609		—		(67)		—		(180)		362
Wolverine	698		—		(212)		—		(120)		366
Salin	—		735		—		—		—		735
Total	$	2,652	$	735	$	(392)	$	—	$	(312)	$	2,683

During the six months ended June 30, 2019, the Company increased the allowance for loan losses on purchased loans by a charge to the income statement of $154,000.

25

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 6 – Allowance for Credit and Loan Losses

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	32,550	$	5,654	$	1,055	$	9,181	$	48,440
Provision for credit losses on loans	6,603		202		135		117		7,057
Charge-offs	(15)		(34)		—		(526)		(575)
Recoveries	9		10		—		149		168
Balance, end of period	$	39,147	$	5,832	$	1,190	$	8,921	$	55,090

	Three Months Ended June 30, 2019
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	11,556	$	1,588	$	1,014	$	3,663	$	17,821
Provision for credit losses on loans	590		185		26		95		896
Charge-offs	(339)		(48)		—		(327)		(714)
Recoveries	74		7		—		221		302
Balance, end of period	$	11,881	$	1,732	$	1,040	$	3,652	$	18,305

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30, 2020
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	11,996	$	923	$	1,077	$	3,671	$	17,667
Impact of adopting ASC 326	10,832		4,048		—		4,911		19,791
Initial PCD Allowance	2,786		—		—		—		2,786
Provision for credit losses on loans	13,519		902		113		1,123		15,657
Charge-offs	(84)		(60)		—		(1,144)		(1,288)
Recoveries	98		19		—		360		477
Balance, end of period	$	39,147	$	5,832	$	1,190	$	8,921	$	55,090

26

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	Six Months Ended June 30, 2019
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	10,495	$	1,676	$	1,006	$	4,643	$	17,820
Provision for credit losses on loans	1,712		70		34		(556)		1,260
Charge-offs	(416)		(48)		—		(911)		(1,375)
Recoveries	90		34		—		476		600
Balance, end of period	$	11,881	$	1,732	$	1,040	$	3,652	$	18,305

The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge-offs, net of recoveries, (“loan losses”) recognized over the life of a pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).

To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date.

The Company's expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company's historical look-back period includes January 2012 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.

Qualitative reserves reflect management's overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit-related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

The Company's CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized National, Regional and Local Leading Economic Indexes, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate, and qualitative adjustments were utilized to reflect the forecast and other relevant factors.

The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns.

The $15.7 million ACL provision included special allocations related to the potential impact on three portfolios, non-owner occupied retail, leisure and hospitality, and unstabilized commercial real estate while continuing allocations for hotels and restaurants, as a result of the COVID-19 measures implemented by the states in which Horizon operates (Indiana and Michigan). Extensive analysis and monitoring of these portfolios has been undertaken and, while no loss has been specifically identified, the risks to certain borrowers are elevated and, therefore, the special allocation was deemed prudent.

27

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents the balance in the allowance for credit loss and the recorded investment in loans, by portfolio segment, and based on impairment analysis as of December 31, 2019:

	December 31, 2019
	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	541	$	—	$	—	$	—	$	541
Collectively evaluated for impairment	11,455		923		1,077		3,671		17,126
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total ending allowance balance	$	11,996	$	923	$	1,077	$	3,671	$	17,667
Loans:
Individually evaluated for impairment	$	7,347	$	—	$	—	$	—	$	7,347
Collectively evaluated for impairment	2,040,299		770,705		150,293		665,952		3,627,249
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total ending loans balance	$	2,047,646	$	770,705	$	150,293	$	665,952	$	3,634,596

28

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 7 – Non-performing Loans

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

	June 30, 2020
	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non-performing TDRs		Performing TDRs		Total Non-performing Loans		Non-accrual with no Allowance for Credit Losses
Commercial
Owner occupied real estate	$	8,547	$	—	$	629	$	167	$	9,343	$	6,158
Non-owner occupied real estate	1,242		—		350		—		1,592		1,086
Residential spec homes	—		—		—		—		—		—
Development & spec land	70		—		—		—		70		70
Commercial and industrial	2,049		—		1,184		—		3,233		2,363
Total commercial	11,908		—		2,163		167		14,238		9,677
Real estate
Residential mortgage	7,354		—		1,054		1,537		9,945		8,408
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	7,354		—		1,054		1,537		9,945		8,408
Consumer
Direct installment	27		40		—		—		67		27
Indirect installment	1,237		83		—		—		1,320		1,237
Home equity	1,925		—		226		335		2,486		2,151
Total consumer	3,189		123		226		335		3,873		3,415
Total	$	22,451	$	123	$	3,443	$	2,039	$	28,056	$	21,500

There was no interest income recognized on non-accrual loans during the three and six months ended June 30, 2020 and 2019 while the loans were in non-accrual status.

29

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	December 31, 2019
	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non-performing TDRs		Performing TDRs		Total Non-performing Loans		Non-accrual with no Allowance for Credit Losses
Commercial
Owner occupied real estate	$	2,424	$	—	$	629	$	139	$	3,192	$	2,563
Non-owner occupied real estate	682		—		374		—		1,056		937
Residential spec homes	—		—		—		—		—		—
Development & spec land	73		—		—		—		73		73
Commercial and industrial	1,603		—		78		1,345		3,026		514
Total commercial	4,782		—		1,081		1,484		7,347		4,087
Real estate
Residential mortgage	7,614		1		708		1,561		9,884		8,322
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	7,614		1		708		1,561		9,884		8,322
Consumer
Direct installment	30		5		—		—		35		30
Indirect installment	1,234		135		—		—		1,369		1,234
Home equity	2,019		5		217		309		2,550		2,236
Total consumer	3,283		145		217		309		3,954		3,500
Total	$	15,679	$	146	$	2,006	$	3,354	$	21,185	$	15,909

Included in the $22.5 million of non-accrual loans and the $3.4 million of non-performing TDRs at June 30, 2020 were $3.3 million and $960,000, respectively, of loans acquired for which accretable yield was recognized.

Troubled Debt Restructurings

Loans modified as TDRs generally consist of allowing borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans' contractual terms. TDRs that continue to accrue interest are individually monitored on a monthly basis and evaluated for impairment annually and transferred to non-accrual status when it is probable that any remaining principal and interest payments due on the loan will not be collected in accordance with the contractual terms of the loan. TDRs that subsequently default are individually evaluated for impairment at the time of default.

At June 30, 2020, the type of concessions the Company has made on restructured loans has been temporary rate reductions and/or reductions in monthly payments, and there have been no restructured loans with modified recorded balances. Any modification to a loan that is a concession and is not in the normal course of lending is considered a restructured loan. A restructured loan is returned to accruing status after six consecutive payments but is still reported as TDR unless the loan bears interest at a market rate. As of June 30, 2020, the Company had $5.5 million in TDRs, $2.0 million were performing according to the restructured terms, and one TDR was returned to accrual status during the first six months of 2020. There were $435,000 of specific reserves allocated to TDRs at June 30, 2020 based on the discounted cash flows or, when appropriate, the fair value of the collateral. These TDRs are exclusive of loans modified under the CARES Act during the six months of 2020.

30

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents TDRs by loan portfolio:

	June 30, 2020						December 31, 2019
	Non-accrual		Accruing		Total		Non-accrual		Accruing		Total
Commercial
Owner occupied real estate	$	629	$	167	$	796	$	629	$	139	$	768
Non-owner occupied real estate	350		—		350		374		—		374
Residential spec homes	—		—		—		—		—		—
Development & spec land	—		—		—		—		—		—
Commercial and industrial	1,184		—		1,184		78		1,345		1,423
Total commercial	2,163		167		2,330		1,081		1,484		2,565
Real estate
Residential mortgage	1,054		1,537		2,591		708		1,561		2,269
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	1,054		1,537		2,591		708		1,561		2,269
Consumer
Direct installment	—		—		—		—		—		—
Indirect installment	—		—		—		—		—		—
Home equity	226		335		561		217		309		526
Total consumer	226		335		561		217		309		526
Total	$	3,443	$	2,039	$	5,482	$	2,006	$	3,354	$	5,360

Loans Modified under the CARES Act

The Bank has elected (i) to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and (ii) to suspend any determination of a loan modified as a result of the effects of COVID-19 pandemic as being a TDR, including impairment for accounting purposes. At June 30, 2020, the Bank modified loans totaling $533.9 million which qualify for treatment under the CARES Act.

Collateral Dependent Financial Assets

A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.

31

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The table below presents the value of collateral dependent loans by loan class as of June 30, 2020:

	June 30, 2020
Commercial
Owner occupied real estate	$	3,018
Non-owner occupied real estate	506
Commercial and industrial	870
Total commercial	4,394
Total collateral dependent loans	$	4,394

The following table presents the payment status by class of loan, excluding non-accrual loans of $22.5 million and non-performing TDRs of $3.4 million at June 30, 2020:

	June 30, 2020
	Current			30-59 Days Past Due			60-89 Days Past Due			90 Days or Greater Past Due			Total  Past Due Loans			Total Loans
Commercial
Owner occupied real estate	$	491,811		$	116		$	—		$	—		$	116		$	491,927
Non-owner occupied real estate	1,007,524			—			—			—			—			1,007,524
Residential spec homes	12,036			—			—			—			—			12,036
Development & spec land	28,917			—			—			—			—			28,917
Commercial and industrial	757,964			100			—			—			100			758,064
Total commercial	2,298,252			216			—			—			216			2,298,468
Real estate
Residential mortgage	672,729			1,295			263			—			1,558			674,287
Residential construction	21,715			—			—			—			—			21,715
Mortgage warehouse	300,386			—			—			—			—			300,386
Total real estate	994,830			1,295			263			—			1,558			996,388
Consumer
Direct installment	39,413			30			5			40			75			39,488
Indirect installment	355,305			1,097			259			83			1,439			356,744
Home equity	260,536			434			254			—			688			261,224
Total consumer	655,254			1,561			518			123			2,202			657,456
Total	$	3,948,336		$	3,072		$	781		$	123		$	3,976		$	3,952,312
Percentage of total loans	99.90		%	0.08		%	0.02		%	0.00		%	0.10		%	100.00		%

32

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents the payment status by class of loan, excluding non-accrual loans of $15.7 million and non-performing TDRs of $2.0 million at December 31, 2019:

	December 31, 2019
	Current			30-59 Days Past Due			60-89 Days Past Due			90 Days or Greater Past Due			Total  Past Due Loans			Total
Commercial
Owner occupied real estate	$	515,604		$	920		$	—		$	—		$	920		$	516,524
Non-owner occupied real estate	972,195			80			—			—			80			972,275
Residential spec homes	12,925			—			—			—			—			12,925
Development & spec land	35,881			—			—			—			—			35,881
Commercial and industrial	503,348			819			11			—			830			504,178
Total commercial	2,039,953			1,819			11			—			1,830			2,041,783
Real estate
Residential mortgage	740,712			1,984			—			1			1,985			742,697
Residential construction	19,686			—			—			—			—			19,686
Mortgage warehouse	150,293			—			—			—			—			150,293
Total real estate	910,691			1,984			—			1			1,985			912,676
Consumer
Direct installment	40,864			175			5			5			185			41,049
Indirect installment	344,478			2,407			404			135			2,946			347,424
Home equity	273,050			904			20			5			929			273,979
Total consumer	658,392			3,486			429			145			4,060			662,452
Total	$	3,609,036		$	7,289		$	440		$	146		$	7,875		$	3,616,911
Percentage of total loans	99.78		%	0.20		%	0.01		%	0.01		%	0.22		%	100.00		%

The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

Horizon Bank’s processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re-evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the loan grade.

•For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective markets (ranging from $1,000,000 to $3,500,000) are validated by the Loan Committee, which is chaired by the Chief Commercial Banking Officer (CCBO).

•Commercial loan officers are responsible for reviewing their loan portfolios and reporting any adverse material change to the CCBO or Loan Committee. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the CCBO and the Credit Department of the change in the loan grade. Downgrades are accepted immediately by the CCBO, however, lenders must present their factual information to either the Loan Committee or the CCBO when recommending an upgrade.

•The CCBO, or his designee, meets regularly with loan officers to discuss the status of past-due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade.

•Monthly, senior management meets with the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures, other real estate owned and personal

33

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Credit Losses for loans.

For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non-accrual, or are classified as a TDR are graded “Substandard.” After being 90 to 120 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non-accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass.

Horizon Bank employs a nine-grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below.

Risk Grade 1: Excellent (Pass)

Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents or loans to any publicly held company with a current long-term debt rating of A or better and meeting defined key financial metric ranges.

Risk Grade 2: Good (Pass)

Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities with required margins where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit histories; or loans to publicly held companies with current long-term debt ratings of Baa or better and meeting defined key financial metric ranges.

Risk Grade 3: Satisfactory (Pass)

Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered and meeting defined key financial metric ranges. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:

•At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory;

•At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.

•The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.

•During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.

Risk Grade 4 Satisfactory/Monitored:

Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory rated loans and meet defined key financial metric ranges. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank’s minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization.

34

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Risk Grade 4W Management Watch:

Loans in this category are considered to be of acceptable quality and meet defined key financial metric ranges, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion. Commercial construction loans are graded as 4W Management Watch until the projects are completed and stabilized.

Risk Grade 5: Special Mention

Loans which possess some temporary (normally less than one year) credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,” impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength and must meet defined key financial metric ranges.

Risk Grade 6: Substandard

One or more of the following characteristics may be exhibited in loans classified Substandard:

•Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

•Loans are inadequately protected by the current net worth and paying capacity of the obligor.

•The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

•Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

•Unusual courses of action are needed to maintain a high probability of repayment.

•The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.

•The lender is forced into a subordinated or unsecured position due to flaws in documentation.

•Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.

•The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

•There is a significant deterioration in market conditions to which the borrower is highly vulnerable.

•The borrower meets defined key financial metric ranges.

Risk Grade 7: Doubtful

One or more of the following characteristics may be present in loans classified Doubtful:

•Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

•The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

•The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

•The borrower meets defined key financial metric ranges.

Risk Grade 8: Loss

Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

35

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following tables present loans by credit grades and origination year.

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Commercial
Owner occupied real estate
Pass	$	27,165	$	65,335	$	55,867	$	54,371	$	56,131	$	161,463	$	38,697	$	459,029
Special Mention	173		291		4,983		4,393		2,394		11,132		—		23,366
Substandard	—		1,231		3,915		1,146		497		8,135		3,879		18,803
Doubtful	—		—		—		—		—		—		—		—
Total owner occupied real estate	$	27,338	$	66,857	$	64,765	$	59,910	$	59,022	$	180,730	$	42,576	$	501,198
Non-owner occupied real estate
Pass	$	68,736	$	129,273	$	83,742	$	143,870	$	114,786	$	231,098	$	159,787	$	931,292
Special Mention	2,477		10,727		27,479		9,421		2,959		15,174		1,075		69,312
Substandard	—		—		2,438		631		453		4,990		—		8,512
Doubtful	—		—		—		—		—		—		—		—
Total non-owner occupied real estate	$	71,213	$	140,000	$	113,659	$	153,922	$	118,198	$	251,262	$	160,862	$	1,009,116
Residential spec homes
Pass	$	—	$	—	$	—	$	318	$	679	$	1,905	$	7,889	$	10,791
Special Mention	—		—		—		—		—		—		1,245		1,245
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total residential spec homes	$	—	$	—	$	—	$	318	$	679	$	1,905	$	9,134	$	12,036
Development & spec land
Pass	$	30	$	912	$	2,449	$	4,815	$	804	$	13,356	$	6,488	$	28,854
Special Mention	—		—		—		—		—		133		—		133
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total development & spec land	$	30	$	912	$	2,449	$	4,815	$	804	$	13,489	$	6,488	$	28,987
Commercial & industrial
Pass	$	321,761	$	66,704	$	66,203	$	96,404	$	30,716	$	83,437	$	33,185	$	698,410
Special Mention	8,027		4,012		8,027		6,321		2,363		12,088		1,914		42,752
Substandard	2,651		5,751		3,553		1,699		834		3,656		2,072		20,216
Doubtful	—		—		—		—		—		—		—		—
Total commercial & industrial	$	332,439	$	76,467	$	77,783	$	104,424	$	33,913	$	99,181	$	37,171	$	761,378
Total commercial	$	431,020	$	284,236	$	258,656	$	323,389	$	212,616	$	546,567	$	256,231	$	2,312,715

36

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Real estate
Residential mortgage
Performing	$	59,698	$	68,882	$	119,632	$	115,321	$	85,206	$	223,362	$	649	$	672,750
Non-performing	—		181		147		369		1,310		7,938		—		9,945
Total residential mortgage	$	59,698	$	69,063	$	119,779	$	115,690	$	86,516	$	231,300	$	649	$	682,695
Residential construction
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	21,715	$	21,715
Non-performing	—		—		—		—		—		—		—		—
Total residential construction	$	—	$	—	$	—	$	—	$	—	$	—	$	21,715	$	21,715
Mortgage warehouse
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	300,386	$	300,386
Non-performing	—		—		—		—		—		—		—		—
Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	300,386	$	300,386
Total real estate	$	59,698	$	69,063	$	119,779	$	115,690	$	86,516	$	231,300	$	322,750	$	1,004,796

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Consumer
Direct installment
Performing	$	6,706	$	12,336	$	7,486	$	7,381	$	3,002	$	2,523	$	14	$	39,448
Non-performing	—		4		30		20		6		7		—		67
Total direct installment	$	6,706	$	12,340	$	7,516	$	7,401	$	3,008	$	2,530	$	14	$	39,515
Indirect installment
Performing	$	72,828	$	119,252	$	96,562	$	50,133	$	12,502	$	8,044	$	—	$	359,321
Non-performing	—		166		272		531		141		210		—		1,320
Total indirect installment	$	72,828	$	119,418	$	96,834	$	50,664	$	12,643	$	8,254	$	—	$	360,641
Home equity
Performing	$	28,281	$	50,367	$	43,076	$	33,139	$	26,902	$	71,516	$	4,948	$	258,229
Non-performing	—		9		55		79		52		1,123		1,168		2,486
Total home equity	$	28,281	$	50,376	$	43,131	$	33,218	$	26,954	$	72,639	$	6,116	$	260,715
Total consumer	$	107,815	$	182,134	$	147,481	$	91,283	$	42,605	$	83,423	$	6,130	$	660,871

37

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	December 31, 2019
	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	492,386		$	8,328		$	18,863		$	—		$	519,577
Non-owner occupied real estate	957,990			7,824			7,517			—			973,331
Residential spec homes	12,925			—			—			—			12,925
Development & spec land	35,815			—			139			—			35,954
Commercial and industrial	468,893			18,652			18,314			—			505,859
Total commercial	1,968,009			34,804			44,833			—			2,047,646
Real estate
Residential mortgage	741,136			—			9,883			—			751,019
Residential construction	19,686			—			—			—			19,686
Mortgage warehouse	150,293			—			—			—			150,293
Total real estate	911,115			—			9,883			—			920,998
Consumer
Direct installment	41,044			—			35			—			41,079
Indirect installment	347,289			—			1,369			—			348,658
Home equity	273,665			—			2,550			—			276,215
Total consumer	661,998			—			3,954			—			665,952
Total	$	3,541,122		$	34,804		$	58,670		$	—		$	3,634,596
Percentage of total loans	97.43		%	0.96		%	1.61		%	0.00		%	100.00		%

Commercial loans modified due to the impact of the COVID-19 pandemic were immediately downgraded one level resulting in the increase of Special Mention commercial loans from December 31, 2019 to June 30, 2020.

Note 8 – Loan Servicing

Loans serviced for others are not included in the accompanying condensed consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1.5 billiom and $1.4 billion at June 30, 2020 and December 31, 2019.

The aggregate fair value of capitalized mortgage servicing rights was approximately $12.1 million and $14.4 million at June 30, 2020 and December 31, 2019, compared to the carrying values of $12.4 million and $14.3 million at June 30, 2020 and December 31, 2019, respectively. Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage servicing rights.

38

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	June 30,		December 31,
	2020		2019
Mortgage servicing rights
Balance, beginning of period	$	15,046	$	12,876
Servicing rights capitalized	2,573		3,547
Amortization of servicing rights	(1,310)		(1,377)
Balance, end of period	16,309		15,046
Impairment allowance
Balance, beginning of period	(719)		(527)
Additions	(3,201)		(234)
Reductions	—		42
Balance, end of period	(3,920)		(719)
Mortgage servicing rights, net	$	12,389	$	14,327

The Bank recorded additional impairment of approximately $3.2 million and $192,000 for the six months ended June 30, 2020 and December 31, 2019, respectively.

Note 9 – Goodwill

The following table presents the Company’s carrying amount of goodwill as of June 30, 2020 and December 31, 2019.

	June 30,		December 31,
	2020		2019
Balance, beginning of period	$	151,238	$	119,880
Goodwill acquired during the period	—		31,358
Balance, end of period	$	151,238	$	151,238

In accordance with ASC 350-20, the Company conducts a goodwill impairment test at least annually, or more frequently as events occur or circumstances change that would more-likely-than-not reduce the fair value below its carrying amount. In the second quarter of 2020, the onset of the COVID-19 pandemic prompted the Company to assess qualitative and quantitative factors to determine whether it was more-likely-than-not the fair value of the Company was less than the carrying amount.

The Company assessed relevant events and circumstances, including macroeconomic conditions, industry and market considerations, overall financial performance, changes in the composition or carrying amount of assets and liabilities, the market price of the Company’s common stock and other relevant facts. The Company performed both a market capitalization approach and a discounted cash flow approach to determine the fair value of the Company. As a result, no goodwill impairment charge was recognized during the three and six months ended June 30, 2020.

Note 10 – Repurchase Agreements

The Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remained under the Bank’s control.

39

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table shows repurchase agreements accounted for as secured borrowings:

	June 30, 2020
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to one year		One to three years		Three to five years		Five to ten years		Beyond ten years		Total
Repurchase Agreements and repurchase-to-maturity transactions
Repurchase Agreements	$	109,160	$	—	$	—	$	—	$	—	$	—	$	109,160
Securities pledged for Repurchase Agreements
Federal agency collateralized mortgage obligations	$	46,073	$	—	$	—	$	—	$	—	$	—	$	46,073
Federal agency mortgage-backed pools	65,039		—		—		—		—		—		65,039
Total	$	111,112	$	—	$	—	$	—	$	—	$	—	$	111,112

Note 11 – Subordinated Notes

On June 24, 2020, Horizon issued $60.0 million in aggregate principal amount of 5.625% fixed-to-floating rate subordinated notes (the “Notes”). The Notes were offered in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Notes mature on July 1, 2030 (the “Maturity Date”). From and including the date of original issuance to, but excluding, July 1, 2025 or the date of earlier redemption (the “fixed rate period”), the Notes bear interest at an initial rate of 5.625% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2021. The last interest payment date for the fixed rate period will be July 1, 2025. From and including July 1, 2025 to, but excluding, the Maturity Date or the date of earlier redemption (the “floating rate period”), the Notes bear interest at a floating rate per annum equal to the Benchmark rate (which is expected to be Three-Month Term SOFR), plus 549 basis points, payable quarterly in arrears on January 1, April 1, July1, and October 1 of each year, commencing on October 1, 2025. Notwithstanding the foregoing, in the event that the Benchmark rate is less than zero, the Benchmark rate shall be deemed to be zero.

Horizon may, at its option, beginning with the interest payment date of July 1, 2025 and on any interest payment date thereafter, redeem the Notes, in whole or in part. The Notes will not otherwise be redeemable by Horizon prior to maturity, unless certain events occur. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. Any early redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations, including capital regulations.

The Notes are unsecured subordinated obligations, and rank pari passu, or equally, with all of Horizon's future unsecured subordinated debt and are junior to all existing and future senior debt. The Notes are structurally subordinated to all existing and future liabilities of Horizon's subsidiaries, including the deposit liabilities and claims of other creditors of Horizon Bank, and are effectively subordinated to Horizon's existing and future secured indebtedness. There is no sinking fund for the Notes. The Notes are obligations of Horizon only and are not obligations of, and are not guaranteed by, any of Horizon's subsidiaries.

40

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 12 – Derivative Financial Instruments

Cash Flow Hedges - As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flow due to interest rate fluctuations, the Company entered into interest rate swap agreements for a portion of its floating rate debt. The agreements provide for the Company to receive interest from the counterparty at three months LIBOR and to pay interest to the counterparty at a fixed rate of 4.20% on a notional amount of $12.0 million at June 30, 2020 and a weighted average fixed rate of 4.03% on a notional amount of $15.5 million December 31, 2019. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

The Company assumed additional interest rate swap agreements as the result of the LaPorte acquisition in July 2016. The agreements provide for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a fixed rate of 2.62% on a notional amount of $10.0 million at June 30, 2020 and at a weighted average fixed rate of 2.31% on a notional amount of $30.0 million at December 31, 2019. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

On July 20, 2018, the Company entered into an interest rate swap agreement for an additional portion of its floating rate debt. The agreement provides for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a rate of 2.81% on a notional amount of $50.0 million at June 30, 2020 and December 31, 2019. Under the agreement, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

Management has designated the interest rate swap agreement as a cash flow hedging instrument. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. At June 30, 2020, the Company’s cash flow hedge was effective and is not expected to have a significant impact on the Company’s net income over the next 12 months.

Fair Value Hedges

Fair value hedges are intended to reduce the interest rate risk associated with the underlying hedged item. The Company enters into fixed rate loan agreements as part of its lending policy. To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company has entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings. At June 30, 2020, the Company’s fair value hedges were effective and are not expected to have a significant impact on the Company’s net income over the next 12 months.

The change in fair value of both the hedge instruments and the underlying loan agreements are recorded as gains or losses in interest income. The fair value hedges are considered to be highly effective and any hedge ineffectiveness was deemed not material. The notional amounts of the loan and security agreements being hedged were $425.8 million at June 30, 2020 and $361.0 million at December 31, 2019.

Other Derivative Instruments

The Company enters into non-hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business. At June 30, 2020, the Company’s fair value of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company’s net income.

The change in fair value of both the forward sale commitments and commitments to originate mortgage loans were recorded and the net gains or losses included in the Company’s gain on sale of loans.

41

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

	Asset Derivatives			Liability Derivatives
	June 30, 2020			June 30, 2020
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	42,378	Other liabilities	$	50,917
Total derivatives designated as hedging instruments		42,378			50,917
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets	590		Other liabilities	—
Total derivatives not designated as hedging instruments		590			—
Total derivatives		$	42,968		$	50,917

	Asset Derivatives			Liability Derivatives
	December 31, 2019			December 31, 2019
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	11,422	Other liabilities	$	15,861
Total derivatives designated as hedging instruments		11,422			15,861
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets	264		Other liabilities	38
Total derivatives not designated as hedging instruments		264			38
Total derivatives		$	11,686		$	15,899

The effect of the derivative instruments on the condensed consolidated statements of income for the three-month and six-month periods ending June 30 is as follows:

	Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivatives in cash flow hedging relationship
Interest rate contracts	$	(107)	$	(1,502)	$	(3,239)	$	(2,376)

FASB Accounting Standards Codification (“ASC”) Topic 820-10-20 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820-10-55 establishes a fair value hierarchy that emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

42

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	Location of gain (loss) recognized on derivative	Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative in fair value hedging relationship
Interest rate contracts	Interest income - loans	$	(3,162)	$	(7,529)	$	(29,492)	$	(11,580)
Interest rate contracts	Interest income - loans	3,162		7,529		29,492		11,580
Total		$	—	$	—	$	—	$	—

	Location of gain (loss) recognized on derivative	Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative not designated as hedging relationship
Mortgage contracts	Other income - gain on sale of loans	$	(679)	$	75	$	364	$	332

Note 13 – Disclosures about Fair Value of Assets and Liabilities

The Fair Value Measurements topic of the FASB ASC defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. There are three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended June 30, 2020. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available for sale securities

When quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Treasury and federal agency securities, state and municipal securities, federal agency collateralized mortgage obligations and mortgage-backed pools and corporate notes. Level 2 securities are valued by a third party pricing service commonly used in the banking industry utilizing observable inputs. Observable inputs include dealer quotes, market spreads, cash flow analysis, the U.S. Treasury yield curve, trade execution data, market consensus prepayment spreads and available credit information and the bond’s terms and conditions. The pricing

43

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

provider utilizes evaluated pricing models that vary based on asset class. These models incorporate available market information including quoted prices of securities with similar characteristics and, because many fixed-income securities do not trade on a daily basis, apply available information through processes such as benchmark curves, benchmarking of like securities, sector grouping, and matrix pricing. In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features.

Hedged loans

Certain fixed rate loans have been converted to variable rate loans by entering into interest rate swap agreements. The fair value of those fixed rate loans is based on discounting the estimated cash flows using interest rates determined by the respective interest rate swap agreement. Loans are classified within Level 2 of the valuation hierarchy based on the unobservable inputs used.

Interest rate swap agreements

The fair value of the Company’s interest rate swap agreements is estimated by a third party using inputs that are primarily unobservable including a yield curve, adjusted for liquidity and credit risk, contracted terms and discounted cash flow analysis, and therefore, are classified within Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:

	June 30, 2020
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
State and municipal	$	548,232	$	—	$	548,232	$	—
Federal agency collateralized mortgage obligations	225,805		—		225,805		—
Federal agency mortgage-backed pools	148,786		—		148,786		—
Corporate notes	12,317		—		12,317		—
Total available for sale securities	935,140		—		935,140		—
Interest rate swap agreements asset	39,216		—		39,216		—
Forward sale commitments	590		—		590		—
Interest rate swap agreements liability	(47,620)		—		(47,620)		—

44

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

	December 31, 2019
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
U.S. Treasury and federal agencies	$	1,413	$	—	$	1,413	$	—
State and municipal	405,768		—		405,768		—
Federal agency collateralized mortgage obligations	269,252		—		269,252		—
Federal agency mortgage-backed pools	146,572		—		146,572		—
Corporate notes	11,771		—		11,771		—
Total available for sale securities	834,776		—		834,776		—
Interest rate swap agreements asset	11,422		—		11,422		—
Forward sale commitments	264		—		264		—
Interest rate swap agreements liability	(15,861)		—		(15,861)		—
Commitments to originate loans	(38)		—		(38)		—

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Non-interest Income
Total gains and losses from:
Hedged loans	$	(3,162)	$	(7,529)	$	(29,492)	$	(11,580)
Fair value interest rate swap agreements	3,162		7,529		29,492		11,580
Derivative loan commitments	(679)		75		364		332
	$	(679)	$	75	$	364	$	332

Certain other assets are measured at fair value on a non-recurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2020
Collateral dependent loans	$	12,389	$	—	$	—	$	12,389
Mortgage servicing rights	12,389		—		—		12,389
December 31, 2019
Impaired loans	$	6,806	$	—	$	—	$	6,806
Mortgage servicing rights	14,327		—		—		14,327

Collateral Dependent Loans: Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is

45

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Mortgage Servicing Rights (MSRs): MSRs do not trade in an active market with readily observable prices. Accordingly, the fair value of these assets is classified as Level 3. The Company determines the fair value of MSRs using an income approach model based upon the Company’s month-end interest rate curve and prepayment assumptions. The model utilizes assumptions to estimate future net servicing income cash flows, including estimates of time decay, payoffs and changes in valuation inputs and assumptions. The Company reviews the valuation assumptions against this market data for reasonableness and adjusts the assumptions if deemed appropriate. The carrying amount of the MSRs’ fair value due to impairment decreased by $3.2 million during the first six months of 2020 and increased by $11,000 during the first six months of 2019.

The following table presents qualitative information about unobservable inputs used in recurring and non-recurring Level 3 fair value measurements, other than goodwill.

	June 30, 2020
	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral dependent loans	$	12,389	Collateral based measurement	Discount to reflect current market conditions and ultimate collectibility	0.0%-100.0% (13.0%)
Mortgage servicing rights	12,389		Discounted cash flows	Discount rate, Constant prepayment rate, Probability of default	7.8%-7.8% (7.8%), 12.3%-18.3% (16.8%), 0.4%-8.2%(1.4%)

	December 31, 2019
	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,806	Collateral based measurement	Discount to reflect current market conditions and ultimate collectibility	0.0%-100.0%(7.4%)
Mortgage servicing rights	14,327		Discounted cash flows	Discount rate, Constant prepayment rate, Probability of default	8.7%-9.0% (8.7%), 10.2%-19.8%(12.2%), 0.1%-2.9%(0.7%)

Note 14 – Fair Value of Financial Instruments

The estimated fair value amounts of the Company’s financial instruments were determined using available market information, current pricing information applicable to Horizon and various valuation methodologies. Where market quotations were not available, considerable management judgment was involved in the determination of estimated fair values. Therefore, the estimated fair value of financial instruments shown below may not be representative of the amounts at which they could be exchanged in a current or future transaction. Due to the inherent uncertainties of expected cash flows of financial instruments, the use of alternate valuation assumptions and methods could have a significant effect on the estimated fair value amounts.

The estimated fair values of financial instruments, as shown below, are not intended to reflect the estimated liquidation or market value of Horizon taken as a whole. The disclosed fair value estimates are limited to Horizon’s significant financial instruments at June 30, 2020 and December 31, 2019. These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheet as well as certain off-balance sheet financial instruments. The estimated fair values shown below do not include any valuation of assets and liabilities, which are not financial instruments as defined by the FASB ASC fair value hierarchy.

46

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and Due from Banks — The carrying amounts approximate fair value.

Interest-earning time deposits — The fair values of the Company's interest-earning time deposits are estimated using discounted cash flow analyses based on current rates for similar types of interest-earning time deposits.

Held-to-Maturity Securities — For debt securities held to maturity, fair values are based on quoted market prices or dealer quotes. For those securities where a quoted market price is not available, carrying amount is a reasonable estimate of fair value based upon comparison with similar securities.

Loans Held for Sale — The carrying amounts approximate fair value.

Net Loans — The fair value of net loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

FHLB Stock — Fair value of FHLB stock is based on the price at which it may be resold to the FHLB.

Interest Receivable/Payable — The carrying amounts approximate fair value.

Deposits — The fair value of demand deposits, savings accounts, interest-bearing checking accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturity.

Borrowings — Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings.

Subordinated Notes — The fair value of subordinated notes is based on discounted cash flows based on current borrowing rates for similar types of instruments.

Junior Subordinated Debentures Issued to Capital Trusts — Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.

Commitments to Extend Credit and Standby Letters of Credit — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. Due to the short-term nature of these agreements, carrying amounts approximate fair value.

47

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

	June 30, 2020
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	170,135	$	170,135	$	—	$	—
Interest-earning time deposits	9,247		—		9,462		—
Investment securities, held to maturity	190,935		—		201,818		—
Loans held for sale	15,913		—		—		15,913
Loans (excluding loan level hedges), net	3,923,292		—		—		3,912,434
Stock in FHLB	23,608		—		23,608		—
Interest receivable	20,185		—		20,185		—
Liabilities
Non-interest bearing deposits	$	981,868	$	981,868	$	—	$	—
Interest bearing deposits	—		—		3,328,498		—
Borrowings	—		—		595,893		—
Subordinated notes	58,824		—		58,824		—
Junior subordinated debentures issued to capital trusts	56,437		—		52,603		—
Interest payable	2,353		—		2,353		—

	December 31, 2019
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	98,831	$	98,831	$	—	$	—
Interest-earning time deposits	8,455		—		8,537		—
Investment securities, held to maturity	207,899		—		215,147		—
Loans held for sale	4,088		—		—		4,088
Loans (excluding loan level hedges), net	3,619,174		—		—		3,554,951
Stock in FHLB	22,447		—		22,447		—
Interest receivable	18,828		—		18,828		—
Liabilities
Non-interest bearing deposits	$	709,760	$	709,760	$	—	$	—
Interest bearing deposits	3,221,242		—		3,180,768		—
Borrowings	549,741		—		546,995		—
Junior subordinated debentures issued to capital trusts	56,311		—		51,809		—
Interest payable	3,062		—		3,062		—

48

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 15 – Accumulated Other Comprehensive Income

	June 30, 2020		December 31, 2019
Unrealized gain on securities available for sale	$	35,599	$	12,687
Unamortized loss on securities held to maturity, previously transferred from AFS	(136)		(107)
Unrealized loss on derivative instruments	(8,540)		(4,440)
Tax effect	(5,653)		(1,708)
Total accumulated other comprehensive income	$	21,270	$	6,432

Note 16 – Regulatory Capital

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. These capital requirements implement changes arising from the Dodd-Frank Wall Street Reform and Consumer Protection Act and the U.S. Basel Committee on Banking Supervision’s capital framework (known as “Basel III”). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Company and Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance with the Basel III-based regulations. As allowed under Basel III rules, the Company made the decision to opt-out of including accumulated other comprehensive income in regulatory capital. The minimum regulatory capital requirements are set forth in the table below.

In addition, to be categorized as well capitalized, the Company and Bank must maintain Total risk-based, Tier I risk-based, common equity Tier I risk- based and Tier I leverage ratios as set forth in the table below. As of June 30, 2020 and December 31, 2019, the Company and Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the second quarter of 2020 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies.

In October 2019, the federal banking agencies finalized a new rule that will simplify capital requirements for qualified community banks that opt into the new community bank leverage ratio framework. The new framework was available to use in March 31, 2020 Call Reports or Forms FRY-9C (as applicable) for depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets, among other qualifying criteria. Horizon did not elect the new community bank leverage ratio framework.

As of March 31, 2020, the Company and Bank elected the transition option of the 2019 CECL Rule which allows banking organizations to phase in over a three-year period the day-one adverse effects of CECL on their regulatory capital ratios.

49

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Horizon and the Bank’s actual and required capital ratios as of June 30, 2020 and December 31, 2019 were as follows:

	Actual				Required for Capital1 Adequacy Purposes				Required For Capital1 Adequacy Purposes with Capital Buffer				Well Capitalized  Under Prompt1 Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2020
Total capital1 (to risk-weighted assets)
Consolidated	$	628,750	14.37	%	$	350,035	8.00	%	$	459,421	10.50	%	N/A		N/A
Bank	514,371		11.74	%	350,508		8.00	%	460,042		10.50	%	$	438,135	10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated	585,386		13.38	%	262,505		6.00	%	371,882		8.50	%	N/A		N/A
Bank	459,621		10.49	%	262,891		6.00	%	372,429		8.50	%	350,521		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated	469,069		10.72	%	196,904		4.50	%	306,295		7.00	%	N/A		N/A
Bank	459,621		10.49	%	197,168		4.50	%	306,706		7.00	%	284,799		6.50	%
Tier 1 capital1 (to average assets)
Consolidated	585,386		10.75	%	217,818		4.00	%	217,818		4.00	%	N/A		N/A
Bank	459,621		8.48	%	216,802		4.00	%	216,802		4.00	%	271,003		5.00	%
December 31, 2019
Total capital1 (to risk-weighted assets)
Consolidated	$	548,364	13.95	%	$	314,395	8.00	%	$	412,644	10.500	%	N/A		N/A
Bank	497,227		12.65	%	314,452		8.00	%	412,718		10.500	%	$	393,065	10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated	530,643		13.50	%	235,796		6.00	%	334,044		8.500	%	N/A		N/A
Bank	479,506		12.20	%	235,823		6.00	%	334,082		8.500	%	314,430		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated	473,150		12.04	%	176,846		4.50	%	275,094		7.000	%	N/A		N/A
Bank	479,506		12.20	%	176,867		4.50	%	275,126		7.000	%	255,475		6.50	%
Tier 1 capital1 (to average assets)
Consolidated	530,643		10.50	%	202,111		4.00	%	202,111		4.000	%	N/A		N/A
Bank	479,506		9.49	%	202,110		4.00	%	202,110		4.000	%	252,638		5.00	%
(1) As defined by regulatory agencies

50

HORIZON BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 17 – Future Accounting Matters

FASB ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

The FASB has issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of ASC 740. The guidance also improves consistent application by clarifying and amending existing guidance from ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein and is to be applied on a retrospective, modified retrospective or prospective approach, depending on the specific amendment. Early adoption is permitted. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

Note 18 – General Litigation

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operation and cash flows of the Company.

51

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, 2020 and 2019

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward–Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Horizon Bancorp, Inc. (“Horizon” or the “Company”) and Horizon Bank (the “Bank”). Horizon intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for the purposes of these safe harbor provisions. Statements in this report should be considered in conjunction with the other information available about Horizon, including the information in the other filings we make with the Securities and Exchange Commission. 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,” “expect,” “estimate,” “project,” “intend,” “plan,” “believe,” “could,” “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.

Actual results may differ materially, adversely or positively, from the expectations of the Company that are expressed or implied by any forward-looking statement. Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:

•economic conditions and their impact on Horizon and its customers;

•COVID-19 related impact on Horizon and its customers (See Item 1A. Risk Factors within this Report on Form 10-Q for additional details)

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

•volatility in interest rates and their impact on mortgage loan volumes and the outflow of deposits;

•loss of key Horizon personnel;

•increases in disintermediation, as new technologies allow consumers to complete financial transactions without the assistance of banks;

•loss of fee income, including interchange fees, as new and emerging alternative payment platforms (e.g. Apple Pay or Bitcoin) take a greater market share of the payment systems;

•estimates of fair value of certain of Horizon’s assets and liabilities;

•volatility and disruption in financial markets;

•prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets;

•sources of liquidity;

•potential risk of environmental liability related to lending activities;

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

•legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular, including the effects resulting from the reforms enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act;

•the impact of whole or partial dismantling of provisions of the Dodd-Frank Act under the current federal administration, including the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act;

•the impact of the Basel III capital rules;

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

52

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, 2020 and 2019

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

•rapid technological developments and changes;

•the risks presented by cyber terrorism and data security breaches;

•containing costs and expenses;

•the slowing or failure of economic recovery;

•the ability of the U.S. federal government to manage federal debt limits;

•the potential influence on the U.S. financial markets and economy from material changes outside the U.S. or in overseas relations, including changes in the U.S. trade relations related to imposition of tariffs, Brexit and the phase out in 2021 of the London Interbank Offered Rate (“LIBOR”); and

•the risks of expansion through mergers and acquisitions, including unexpected credit quality problems with acquired loans, difficulty integrating acquired operations and material differences in the actual financial results of such transactions compared with Horizon’s initial expectations, including the full realization of anticipated cost savings.

The foregoing list of important factors is not exclusive, and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document or, in the case of documents incorporated by reference, the dates of those documents. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf. For a detailed discussion of the risks and uncertainties that may cause our actual results or performance to differ materially from the results or performance expressed or implied by forward-looking statements, see “Risk Factors” in Item 1A of Part I of our 2019 Annual Report on Form 10-K, in Item 1A of this Report on Form 10-Q, and in the subsequent reports we file with the SEC.

Overview

Horizon is a registered bank holding company incorporated in Indiana and headquartered in Michigan City, Indiana. Horizon provides a broad range of banking services in northern and central Indiana and southern and central Michigan through its bank subsidiary. Horizon operates as a single segment, which is commercial banking. Horizon’s common stock is traded on the NASDAQ Global Select Market under the symbol HBNC. The Bank was originally chartered as a national banking association in 1873 and has operated continuously since that time and converted to an Indiana state-chartered bank effective on June 23, 2017. The Bank is a full-service commercial bank offering commercial and retail banking services, corporate and individual trust and agency services, and other services incident to banking. Upon approval of a name change by Horizon’s shareholders at the annual meeting on May 3, 2018, Horizon’s full corporate name became “Horizon Bancorp, Inc.”

On March 26, 2019, Horizon completed the acquisition of Salin Bancshares, Inc. (“Salin”), an Indiana corporation and Horizon Bank’s acquisition of Salin Bank and Trust Company (“Salin Bank”), an Indiana commercial bank and wholly-owned subsidiary of Salin, through mergers effective March 26, 2019. Under the terms of the Merger Agreement, shareholders of Salin received 23,907.5 shares of Horizon common stock and $87,417.17 in cash for each outstanding share of Salin common stock. Salin shares outstanding at the closing to be exchanged were 275, and the shares of Horizon common stock issued to Salin shareholders totaled 6,563,697. Based upon the March 25, 2019 closing price of $15.65 per share of Horizon common stock immediately prior to the effectiveness of the merger, the transaction had an implied valuation of approximately $126.7 million.

Second Quarter 2020 Highlights

•Earned net income of $14.6 million, or $0.33 diluted earnings per share, compared to $11.7 million, or $0.26 diluted earnings per share, for the first quarter of 2020 and $16.6 million, or $0.37 diluted earnings per share, for the second quarter of 2019.

•Grew pre–tax, pre–provision net income to $23.7 million for the quarter, compared to $21.8 million for the first quarter of 2020 and $20.8 million for the second quarter of 2019. This non–GAAP financial measure is utilized by banks to provide a greater understanding of pre–tax profitability before giving effect to credit loss expense. (See the “Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income” table below.)

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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, 2020 and 2019

•Reported return on average assets (“ROAA”) of 1.05% and return on average common equity (“ROACE”) of 9.07% in the quarter, as well as adjusted ROAA of 1.03% and adjusted ROACE of 8.95%, excluding the impact of gains on sale of investment securities, net of tax. (See the “Non–GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” tables below.)

•Increased the allowance for credit losses (“ACL”) 13.7% during the quarter and 211.8% year–to–date to $55.1 million at period end, representing 1.38% of total loans, reflecting implementation of the Current Expected Credit Losses (“CECL”) accounting method and prudent increases in the Company’s general reserves. ACL at period end also represented 1.49% of loans excluding Federal Paycheck Protection Program (“PPP”) loans, and 196.4% of non–performing loans excluding those which have been modified under the CARES Act.

•Maintained solid asset quality metrics, including non–performing and delinquent loans representing 0.70% and 0.10% of total loans, respectively, at June 30, 2020, while net charge–offs were unchanged at 0.01% of average loans for the period.

•Granted payment deferrals to loans representing 14.3% of the total portfolio at period end, compared to 10.4% as previously reported.

•Secured approval for 2,340 PPP loans during the quarter, providing approximately $308.1 million in funding for local employers in the communities Horizon serves, with $1.1 million in deferred salary expense associated with origination costs that will be amortized to interest income as PPP loans are forgiven or paid off. Accreted PPP loans fees, net of amortized origination costs, of $869,000 were recognized as interest income in the second quarter, with the balance of approximately $9.1 million expected to be accreted to interest income over the life of these loans.

•Reported non–interest expense of $30.4 million, representing 2.18% of average assets on an annualized basis compared to 2.38% for the first quarter of 2020 and 2.51% for the second quarter of 2019.

•Improved the efficiency ratio in the period to 56.23% compared to 58.79% for the first quarter of 2020. (See the “Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” tables below.)

•Originated a record $252.8 million in mortgage loans during the quarter, up 128.1% from the first quarter of 2020 and 127.0% from the second quarter of 2019, and generated record gain on mortgage loan sales of $6.6 million, up 90.6% from the linked quarter and 218.6% from the year–ago period.

•Reported net interest margin of 3.47% and adjusted net interest margin of 3.35%, with each declining by 9 basis points from the first quarter of 2020. (See the “Non–GAAP Reconciliation of Net Interest Margin” table for the definition of this Non–GAAP calculation). An estimated 3 basis points of compression is attributed to PPP lending in the quarter, for both net interest margin and adjusted net interest margin.

•Horizon's book value per share increased from $14.59 at December 31, 2019 to $14.88 at June 30, 2020. Horizon’s tangible book value per share increased from $10.63 at December 31, 2019 to $10.87 at June 30, 2020, which includes the accounting adjustment for CECL as of January 1, 2020. This represents the highest tangible book value per share in the Company’s history. (See the “Non–GAAP Reconciliation of Tangible Stockholders' Equity and Tangible Book Value per Share” tables below.)

•Maintained strong liquidity position including approximately $1.3 billion in cash and investment securities, which is approximately 22.6% of total assets, and approximately $910.7 million in unused availability on lines of credit, at June 30, 2020.

Coronavirus Update/Status

The coronavirus (“COVID-19”) pandemic has placed significant health, economic and other major pressure throughout the communities we serve, in the states of Indiana and Michigan, the United States and the entire world. We have implemented a number of procedures in response to the pandemic to support the safety and well-being of our employees, customers and shareholders that continue through the date of this report:

•Employees

◦Safety and well-being of employees and families is our first priority.

◦Implemented pandemic plan in March after completing test run in February 2020.

◦Installed sneeze guards, customer directional signage, implemented mask requirements, and continuing with sanitizing and social distancing protocols.

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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, 2020 and 2019

◦Steadily reducing percentage of employees working remotely from early second quarter peak.

◦Increased paid time off and sick time benefits.

•Consumers

◦97% of our branch locations are now open for walk-in traffic.

◦Two locations still serving customers by appointment only and through alternative delivery channels and are scheduled to open by July 31, 2020.

◦Installed nine additional Interactive Teller Machines (“ITMs”) staffed by remote video tellers.

◦Opened fourth call center location.

◦Payment relief

▪Approximately $63 million consumer and mortgage loans have been modified as of June 30, 2020.

▪Continued to provide new loans to qualified applicants.

▪Provided mortgage loan education programs.

▪Provided additional financial assistance in the form of fee waivers and a freeze on all debt collection activities.

•Businesses

◦Preferred SBA Lender

▪Active participant in all SBA loan programs (PPP, 7a, Express and 504).

◦Payment Relief Programs

▪Approximately $470 million in commercial loans with payment extensions as of June 30, 2020.

▪Processed and received approval for 2,340 PPP loans, funding approximately $308.1 million.

▪Continued to provide new loans to qualified applicants.

•Communities

◦Increased volunteerism in support of local not-for-profit entities.

◦Contributed over $300,000 to COVID-19 related not-for-profit efforts (local food banks, United Way, housing).

◦Participated in community conference calls related to COVID-19.

◦Partnered with local neighborhood housing partnerships to provide funding for low to moderate income families.

◦Partnered with local Certified Development Corporations to provide capital to small businesses.

◦Supported flood victims in Midland, Michigan.

Financial Summary

	For the Three Months Ended
	June 30,			March 31,			June 30,
Net Interest Income and Net Interest Margin	2020			2020			2019
Net interest income	$	42,996		$	40,925		$	41,529
Net interest margin	3.47		%	3.56		%	3.73		%
Adjusted net interest margin	3.35		%	3.44		%	3.61		%

	For the Three Months Ended
	June 30,		March 31,		June 30,
Asset Yields and Funding Costs	2020		2020		2019
Interest earning assets	4.05	%	4.47	%	4.81	%
Interest bearing liabilities	0.74	%	1.13	%	1.38	%

55

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, 2020 and 2019

	For the Three Months Ended
Non-interest Income and Mortgage Banking Income	June 30,		March 31,		June 30,
	2020		2020		2019
Total non-interest income	$	11,125	$	12,063	$	10,898
Gain on sale of mortgage loans	6,620		3,473		2,078
Mortgage servicing income net of impairment	(2,760)		25		570

	For the Three Months Ended
	June 30,			March 31,			June 30,
Non-interest Expense	2020			2020			2019
Total non-interest expense	$	30,432		$	31,149		$	31,584
Annualized non-interest expense to average assets	2.18		%	2.38		%	2.51		%

	At or for the Three Months Ended
Credit Quality	June 30,		March 31,		June 30,
	2020		2020		2019
Allowance for credit losses to total loans	1.38	%	1.30	%	0.50	%
Non-performing loans to total loans	0.70	%	0.65	%	0.52	%
Percent of net charge–offs to average loans outstanding for the period	0.01	%	0.01	%	0.01	%

				CECL Adoption
	December 31,					January 1,			Net Reserve Build		Net Reserve Build		June 30,
Allowance for Credit Losses	2019			Impact		2020			1Q20		2Q20		2020
Commercial	$	11,996		$	13,618	$	25,614		$	6,936	$	6,597	$	39,147
Retail Mortgage	923			4,048		4,971			683		178		5,832
Warehouse	1,077			—		1,077			(22)		135		1,190
Consumer	3,671			4,911		8,582			599		(260)		8,921
Allowance for Credit Losses (“ACL”)	$	17,667		$	22,577	$	40,244		$	8,196	$	6,650	$	55,090
ACL/Total Loans	0.49		%			1.10		%					1.38		%

Critical Accounting Policies

The notes to the consolidated financial statements included in Item 8 of the Company’s Annual Report on Form 10-K for 2019 contain a summary of the Company’s significant accounting policies. Certain of these policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Management has identified as critical accounting policies the allowance for loan losses, goodwill and intangible assets, mortgage servicing rights, hedge accounting and valuation measurements.

Allowance for Credit Losses

The allowance for credit losses on loans and leases replaces the allowance for loan and leases losses as a critical accounting estimate, as of January 1, 2020 with the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

56

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, 2020 and 2019

Measurement of Credit Losses on Financial Instruments.

The allowance for credit losses represents management’s best estimate of current expected credit losses over the life of the portfolio of loan and leases. Estimating credit losses requires judgment in determining loan specific attributes impacting the borrower’s ability to repay contractual obligations. Other factors such as economic forecasts used to determine a reasonable and supportable forecast, prepayment assumptions, the value of underlying collateral, and changes in size composition and risks within the portfolio are also considered.

The allowance for credit losses is assessed at each balance sheet date and adjustments are recorded in the provision for credit losses. 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 balances considered uncollectible are charged-off against the ACL. Recoveries of amounts previously charged-off are credited to the ACL. PCD assets represent assets that are acquired with evidence of more than insignificant credit quality deterioration since origination at the acquisition date. At acquisition, the allowance for credit losses on PCD assets is booked directly the ACL. Any subsequent changes in the ACL on PCD assets is recorded through the provision for credit losses. Management believes that the ACL is adequate to absorb the expected life of loan credit losses on the portfolio of loans and leases as of the balance sheet date. Actual losses incurred may differ materially from our estimates. Particularly, the impact of COVID-19 on both borrower credit and the greater macroeconomic environment is uncertain and changes in the duration, spread and severity of the virus will affect our loss experience.

Goodwill and Intangible Assets

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. FASB ASC 350-10 establishes standards for the amortization of acquired intangible assets and impairment assessment of goodwill. At June 30, 2020, Horizon had core deposit intangibles of $24.8 million subject to amortization and $151.2 million of goodwill, which is not subject to amortization. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. Horizon’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Horizon to provide quality, cost effective banking services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely affect earnings in future periods. FASB ASC 350-10 requires an annual evaluation of goodwill for impairment.

At each reporting date between annual goodwill impairment tests, Horizon considers potential indicators of impairment. Given the current economic uncertainty and volatility surrounding COVID-19, Horizon assessed whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered comprised the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting unit; performance of the Company's stock and other relevant events. Horizon further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. At the conclusion of the assessment, the Company determined that as of June 30, 2020 it was more likely than not that the fair value exceeded its carrying values. Horizon will continue to monitor developments regarding the COVID-19 pandemic and measures implemented in response to the pandemic, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future.

Mortgage Servicing Rights

Servicing assets are recognized as separate assets when rights are acquired through purchase or through the sale of financial assets on a servicing- retained basis. 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. 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. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. When the book value of an individual stratum

57

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, 2020 and 2019

exceeds its fair value, an impairment reserve is recognized so that each individual stratum is carried at the lower of its amortized book value or fair value. In periods of falling market interest rates, accelerated loan prepayment can adversely affect the fair value of these mortgage-servicing rights relative to their book value. In the event that the fair value of these assets was to increase in the future, Horizon can recognize the increased fair value to the extent of the impairment allowance but cannot recognize an asset in excess of its amortized book value. Future changes in management’s assessment of the impairment of these servicing assets, as a result of changes in observable market data relating to market interest rates, loan prepayment speeds, and other factors, could impact Horizon’s financial condition and results of operations either positively or negatively.

Generally, when market interest rates decline and other factors favorable to prepayments occur, there is a corresponding increase in prepayments as customers refinance existing mortgages under more favorable interest rate terms. 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. 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. For purposes of model valuation, estimates are made for each product type within the mortgage servicing rights portfolio on a monthly basis. In addition, on a quarterly basis Horizon engages a third party to independently test the value of its servicing asset.

Derivative Instruments

As part of the Company’s asset/liability management program, Horizon utilizes, from time-to-time, interest rate floors, caps or swaps to reduce the Company’s sensitivity to interest rate fluctuations. These are derivative instruments, which are recorded as assets or liabilities in the consolidated balance sheets at fair value. Changes in the fair values of derivatives are reported in the consolidated income statements or other comprehensive income (“OCI”) depending on the use of the derivative and whether the instrument qualifies for hedge accounting. The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis.

Horizon’s accounting policies related to derivatives reflect the guidance in FASB ASC 815-10. Derivatives that qualify for the hedge accounting treatment are designated as either: a hedge of the fair value of the recognized asset or liability or of an unrecognized firm commitment (a fair value hedge) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge). For fair value hedges, the cumulative change in fair value of both the hedge instruments and the underlying loans is recorded in non-interest income. For cash flow hedges, changes in the fair values of the derivative instruments are reported in OCI to the extent the hedge is effective. The gains and losses on derivative instruments that are reported in OCI are reflected in the consolidated income statement in the periods in which the results of operations are impacted by the variability of the cash flows of the hedged item. Generally, net interest income is increased or decreased by amounts receivable or payable with respect to the derivatives, which qualify for hedge accounting. At inception of the hedge, Horizon establishes the method it uses for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized currently in the consolidated statements of income. Horizon excludes the time value expiration of the hedge when measuring ineffectiveness.

Valuation Measurements

Valuation methodologies often involve a significant degree of judgment, particularly when there are no observable active markets for the items being valued. Investment securities, residential mortgage loans held for sale and derivatives are carried at fair value, as defined in FASB ASC 820, which requires key judgments affecting how fair value for such assets and liabilities is determined. 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 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

58

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, 2020 and 2019

assumptions could produce significantly different results, which could affect Horizon’s results of operations.

Financial Condition

On June 30, 2020, Horizon’s total assets were $5.7 billion, an increase of approximately $492.4 million compared to December 31, 2019. The increase was primarily in net loans of $304.1 million, investment securities available for sale of $100.4 million, cash and due from banks of $71.3 million and other assets of $20.2 million. These increases were offset by a decrease in investment securities held to maturity of $17.0 million.

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

	June 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
U.S. Treasury and federal agencies	$	—	$	—	$	1,415	$	1,413
State and municipal	525,488		548,232		396,931		405,768
Federal agency collateralized mortgage obligations	219,431		225,805		267,272		269,252
Federal agency mortgage-backed pools	143,755		148,786		145,623		146,572
Corporate notes	10,867		12,317		10,848		11,771
Total available for sale investment securities	$	899,541	$	935,140	$	822,089	$	834,776
Held to maturity
State and municipal	$	175,953	$	186,361	$	190,767	$	197,842
Federal agency collateralized mortgage obligations	3,006		3,095		4,560		4,568
Federal agency mortgage-backed pools	11,976		12,362		12,572		12,737
Total held to maturity investment securities	$	190,935	$	201,818	$	207,899	$	215,147

Investment securities available for sale increased $100.4 million since December 31, 2019 to $935.1 million as of June 30, 2020. This increase was due to additional purchases to increase earning assets.

Gross loans increased $353.4 million since December 31, 2019 to $4.0 billion as of June 30, 2020. Commercial, mortgage warehouse and loans held for sale increased $266.1 million, $150.1 million and $11.8 million, respectively, offset by a decrease in residential mortgage and consumer loans of $66.3 million and $8.3 million, respectively. The majority of the increase in gross loans was due to the origination of approximately $308.1 million in PPP loans which are included in the commercial loan category.

Total deposits increased $376.6 million since December 31, 2019 to $4.3 billion as of June 30, 2020. This increase was primarily due to Federal stimulus payments to consumers and funds from the origination of PPP loans.

Total borrowings increased from $549.7 million as of December 31, 2019 to $583.1 million as of June 30, 2020. At June 30, 2020, the Company had $179.2 million in short-term funds borrowed compared to $267.9 million at December 31, 2019 as long-term funding provided opportunities to extend borrowings at lower rates. The Company also issued $60.0 million in subordinated notes during the second quarter of 2020.

Stockholders’ equity totaled $652.2 million at June 30, 2020 compared to $656.0 million at December 31, 2019. The decrease in stockholders’ equity during the period was due to the repurchase of outstanding stock, the impact of the adoption of ASU 2016-13 and dividends declared, offset by the generation of net income and an increase in accumulated other comprehensive income during the period. Book value per common share at June 30, 2020 increased to $14.88 compared to $14.59 at December 31, 2019.

59

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, 2020 and 2019

Results of Operations

Overview

Consolidated net income for the three-month period ended June 30, 2020 was $14.6 million, or $0.33 diluted earnings per share, compared to $16.6 million, or $0.37 diluted earnings per share for the same period in 2019. The decrease in net income for the three-month period ended June 30, 2020 when compared to the same prior year period reflects an increase in credit loss expense of $6.2 million, offset by an increase in net interest income of $1.5 million and an increase in non-interest income of $227,000, along with decreases in non-interest expense and income tax expense of $1.2 million and $1.3 million, respectively. Excluding merger expenses, gain/loss on sale of investment securities and death benefit on bank owned life insurance (“adjusted net income”), adjusted net income for the second quarter of 2020 was $14.4 million, or $0.32 diluted earnings per share, compared to $17.6 million, or $0.39 diluted earnings per share for the second quarter of 2019.

Consolidated net income for the six-month period ended June 30, 2020 was $26.3 million, or $0.59 diluted earnings per share, compared to $27.5 million, or $0.65 diluted earnings per share for the same period in 2019. The decrease in net income for the six-month period ended June 30, 2020 when compared to the same prior year period reflects an increase in credit loss expense and non-interest expense of $14.4 million and $259,000, respectively. Increases in net interest income and non-interest income of $8.1 million and $3.6 million, respectively, along with a decrease in income tax expense of $1.8 million, partially offset the increase in credit loss expense and non-interest expense. Adjusted net income for the six-month period ended June 30, 2020 was $25.6 million, or $0.57 diluted earnings per share, compared to $31.8 million, or $0.75 diluted earnings per share for the same period in 2019.

Net Interest Income

The largest component of net income is net interest income. Net interest income is the difference between interest income, principally from loans and investment securities, and interest expense, principally on deposits and borrowings. Changes in the net interest income are the result of changes in volume and the net interest spread, which affects the net interest margin. Volume refers to the average dollar levels of interest-earning assets and interest-bearing liabilities. Net interest spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. 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 June 30, 2020 was $43.0 million, an increase of $1.5 million from the $41.5 million earned during the same period in 2019. Yields on the Company’s interest-earning assets decreased by 76 basis points to 4.05% for the three months ended June 30, 2020 from 4.81% for the three months ended June 30, 2019. Interest income decreased $3.5 million from $53.8 million for the three months ended June 30, 2019 to $50.3 million for the same period in 2020. The decrease in interest income was due to a decrease in interest rates during the second quarter of 2020. Interest income from acquisition-related purchase accounting adjustments was $1.6 million for the three months ending June 30, 2020 compared to $1.3 million for the same period of 2019.

Rates paid on interest-bearing liabilities decreased by 64 basis points for the three-month period ended June 30, 2020 compared to the same period in 2019. Interest expense decreased $5.0 million when compared to the three-month period ended June 30, 2019 to $7.3 million for the same period in 2020. This decrease was due to lower rates paid on deposits and borrowings. The cost on average interest-bearing deposits decreased 60 basis points while the cost of average borrowings decreased 116 basis points. Average balances of interest-bearing deposits increased $180.8 million and average balances of borrowings increased $220.0 million for the three-month period ended June 30, 2020 when compared to the same period in 2019.

The net interest margin decreased 26 basis points from 3.73% for the three-month period ended June 30, 2019 to 3.47% for the same period in 2020. The decrease in the margin for the three-month period ended June 30, 2020 compared to the same period in 2019 was due to a decrease in the yield of interest-earning assets, offset by a decrease in the cost of interest-bearing liabilities. Excluding the interest income recognized from the acquisition-related purchase accounting adjustments (“adjusted net interest margin”), the margin would have been 3.35% for the three-month period ending June 30, 2020 compared to 3.61% for the same period in 2019.

60

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, 2020 and 2019

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

	Average Balance Sheets
	(Dollar Amount in Thousands, Unaudited)
		Three Months Ended						Three Months Ended
		June 30, 2020						June 30, 2019
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
	Assets
	Interest earning assets
	Federal funds sold	$	62,832	$	17	0.11	%	$	18,251	$	120	2.64	%
	Interest earning deposits	20,278		61		1.21	%	18,516		83		1.80	%
	Investment securities - taxable	481,552		2,243		1.87	%	480,036		3,070		2.57	%
	Investment securities - non-taxable (1)	647,375		4,105		3.15	%	411,944		2,793		3.44	%
	Loans receivable (2) (3)	3,900,599		43,918		4.54	%	3,637,927		47,784		5.29	%
	Total interest earning assets	5,112,636		50,344		4.05	%	4,566,674		53,850		4.81	%
	Non-interest earning assets
	Cash and due from banks	84,297						67,537
	Allowance for credit losses	(48,611)						(18,036)
	Other assets	472,373						431,190
	Total average assets	$	5,620,695					$	5,047,365
	Liabilities and Stockholders' Equity
	Interest bearing liabilities
	Interest bearing deposits	$	3,299,661	$	4,506	0.55	%	$	3,118,821	$	8,938	1.15	%
	Borrowings	618,274		2,074		1.35	%	398,320		2,495		2.51	%
	Subordinated notes	4,527		58		5.15	%	—		—		—	%
	Junior subordinated debentures issued to capital trusts	52,835		710		5.40	%	53,572		888		6.65	%
	Total interest bearing liabilities	3,975,297		7,348		0.74	%	3,570,713		12,321		1.38	%
	Non-interest bearing liabilities
	Demand deposits	924,890						818,872
	Accrued interest payable and other liabilities	71,018						35,752
	Stockholders' equity	649,490						622,028
	Total average liabilities and stockholders' equity	$	5,620,695					$	5,047,365
	Net interest income/spread			$	42,996	3.31	%			$	41,529	3.43	%
	Net interest income as a percent of average interest earning assets (1)					3.47	%					3.73	%
(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. The average rate is presented on a tax equivalent basis.
(2)	Includes fees on loans. 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. The average rate is presented on a tax equivalent basis.

61

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, 2020 and 2019

The net interest margin was impacted during the second quarter of 2020 due to the PPP loans that were originated. Horizon estimates that the PPP loans compressed the net interest margin by 3 basis points for the quarter. This assumes these PPP loans were not included in average interest earning assets or interest income and were primarily funded by the growth in non-interest bearing deposits. The compression to the net interest margin for the first six months of 2020 using the same assumptions was estimated to be 2 basis points.

Net interest income during the six months ended June 30, 2020 was $83.9 million, an increase of $8.1 million from the $75.8 million earned during the same period in 2019. Yields on the Company’s interest-earning assets decreased by 54 basis points to 4.25% for the six months ended June 30, 2020 from 4.79% for the six months ended June 30, 2019. Interest income increased $2.8 million from $99.2 million for the six months ended June 30, 2019 to $102.0 million for the same period in 2020. Average interest earning assets during the six months ended June 30, 2020 increased $679.7 million to $4.9 billion compared to $4.2 billion during the six months ended June 30, 2019. Interest income from acquisition-related purchase accounting adjustments was $3.0 million for the six months ending June 30, 2020 compared to $2.8 million for the same period of 2019.

Rates paid on interest-bearing liabilities decreased by 48 basis points for the six-month period ended June 30, 2020 compared to the same period in 2019. Interest expense decreased $5.3 million when compared to the six-month period ended June 30, 2019 to $18.1 million for the same period in 2020. This decrease was due to lower rates paid on deposits and borrowings. The cost on average interest-bearing deposits decreased 38 basis points while the cost of average borrowings decreased 102 basis points. Average balances of interest-bearing deposits increased $444.0 million and average balances of borrowings increased $88.4 million for the six-month period ended June 30, 2020 when compared to the same period in 2019.

The net interest margin decreased 17 basis points from 3.68% for the six-month period ended June 30, 2019 to 3.51% for the same period in 2020. The decrease in the margin for the six-month period ended June 30, 2020 compared to the same period in 2019 was due to a decrease in the yield of interest-earning assets, offset by a decrease in the cost of interest-bearing liabilities. Excluding the interest income recognized from the acquisition-related purchase accounting adjustments (“adjusted net interest margin”), the margin would have been 3.39% for the six-month period ending June 30, 2020 compared to 3.55% for the same period in 2019.

62

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, 2020 and 2019

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

	Average Balance Sheets
	(Dollar Amount in Thousands, Unaudited)
		Six Months Ended						Six Months Ended
		June 30, 2020						June 30, 2019
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
	Assets
	Interest earning assets
	Federal funds sold	$	43,903	$	113	0.52	%	$	13,072	$	224	3.46	%
	Interest earning deposits	23,391		163		1.40	%	22,414		191		1.72	%
	Investment securities - taxable	491,360		4,943		2.02	%	464,544		5,980		2.60	%
	Investment securities - non-taxable (1)	618,080		7,903		3.16	%	402,883		5,421		3.43	%
	Loans receivable (2) (3)	3,752,654		88,876		4.78	%	3,346,731		87,407		5.28	%
	Total interest earning assets	4,929,388		101,998		4.25	%	4,249,644		99,223		4.79	%
	Non-interest earning assets
	Cash and due from banks	81,203						56,160
	Allowance for credit losses	(36,588)						(17,939)
	Other assets	459,184						391,558
	Total average assets	$	5,433,187					$	4,679,423
	Liabilities and Stockholders' Equity
	Interest bearing liabilities
	Interest bearing deposits	$	3,262,492	$	12,222	0.75	%	$	2,818,496	$	15,814	1.13	%
	Borrowings	575,702		4,312		1.51	%	487,266		6,116		2.53	%
	Subordinated debentures	2,264		58		5.15	%	—		—		—	%
	Junior subordinated debentures issued to capital trusts	52,801		1,485		5.66	%	45,735		1,484		6.54	%
	Total interest bearing liabilities	3,893,259		18,077		0.93	%	3,351,497		23,414		1.41	%
	Non-interest bearing liabilities
	Demand deposits	820,997						731,556
	Accrued interest payable and other liabilities	63,393						32,508
	Stockholders' equity	655,538						563,862
	Total average liabilities and stockholders' equity	$	5,433,187					$	4,679,423
	Net interest income/spread			$	83,921	3.32	%			$	75,809	3.38	%
	Net interest income as a percent of average interest earning assets (1)					3.51	%					3.68	%
(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. The average rate is presented on a tax equivalent basis.
(2)	Includes fees on loans. 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. The average rate is presented on a tax equivalent basis.

63

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, 2020 and 2019

Credit Loss Expense

Horizon assesses the adequacy of its Allowance for Credit Losses (“ACL”) by regularly reviewing the performance of its loan portfolio. During the three-month period ended June 30, 2020, a provision of $7.1 million was required to reflect the nature of our loan portfolios and general characteristics of certain loan pools compared to $896,000 for the same period of 2019. During the three-month period ended June 30, 2020, commercial loan net charge-offs were $6,000, residential mortgage loan net charge-offs were $24,000 and consumer loan net charge-offs were $377,000.

During the six-month period ended June 30, 2020, a provision of $15.7 million was required to reflect the nature of our loan portfolios and general characteristics of certain loan pools compared to $1.3 million for the same period of 2019. During the six-month period ended June 30, 2020, commercial loan net recoveries were $14,000, residential mortgage loan net charge-offs were $41,000 and consumer loan net charge-offs were $784,000.

The ACL balance at June 30, 2020 was $55.1 million, or 1.38% of total loans. This compares to an ACL balance of $17.7 million at December 31, 2019 or 0.49% of total loans.

The $7.1 million ACL provision included $6.4 million in special allocations related to the potential impact on three portfolios, non-owner occupied retail, leisure and hospitality, and unstabilized commercial real estate while continuing allocations for hotels and restaurants, as a result of the COVID-19 measures implemented by the states in which Horizon operates (Indiana and Michigan). Extensive analysis and monitoring of these portfolios has been undertaken and, while no loss has been specifically identified, the risks to certain borrowers are elevated and, therefore, the special allocation was deemed prudent.

As of June 30, 2020, non-performing loans totaled $28.1 million, which reflects a 12 basis point increase in non-performing loans to total loans, or a $6.9 million increase from $21.2 million in non-performing loans as of December 31, 2019. Non-performing commercial loans increased by $6.9 million, non-performing real estate loans increased by $61,000 and non-performing consumer loans decreased by $81,000 at June 30, 2020 compared to December 31, 2019.

The Bank has elected (i) to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and (ii) to suspend any determination of a loan modified as a result of the effects of COVID-19 pandemic as being a TDR, including impairment for accounting purposes. At June 30, 2020, the Bank modified loans totaling $533.9 million which qualify for treatment under the CARES Act. The following is a summary of loan modifications related to the COVID-19 pandemic by type of loan.

Type of Loan	#	Net Balance	Interest Accrued to Date	% of Total Modifications		% of Portfolio
Commercial	670	$470.8	$1.4	88.2	%	20.1	%
Mortgage (Retained Only)	137	$39.1	0.6	7.3	%	5.3	%
Indirect Auto	819	$17.4	0.1	3.3	%	4.9	%
Consumer Direct	133	$3.6	0.1	0.7	%	5.1	%
Consumer Revolving	48	$3.0	0.0	0.5	%	1.3	%
Total	1,807	$533.9	$2.2	100.0	%	14.3	%
Mortgage (Serviced Only)	268

Other Real Estate Owned (OREO) and repossessed assets totaled $2.6 million at June 30, 2020 compared to $3.7 million at December 31, 2019.

64

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, 2020 and 2019

Non-interest Income

The following is a summary of changes in non-interest income for the three months ending June 30, 2020 and 2019 (table dollar amounts in thousands):

	Three Months Ended
	June 30, 2020		June 30, 2019		Amount Change		Percent Change
Non-interest Income
Service charges on deposit accounts	$	1,888	$	2,480	$	(592)	(23.9)	%
Wire transfer fees	230		167		63		37.7	%
Interchange fees	2,327		2,160		167		7.7	%
Fiduciary activities	1,765		2,063		(298)		-14.4	%
Gain (loss) on sale of investment securities	248		(100)		348		-348.0	%
Gain on sale of mortgage loans	6,620		2,078		4,542		218.6	%
Mortgage servicing net of impairment	(2,760)		570		(3,330)		-584.2	%
Increase in cash surrender value of bank owned life insurance	557		555		2		0.4	%
Death benefit on bank owned life insurance	—		367		(367)		0.0	%
Other income	250		558		(308)		(55.2)	%
Total non-interest income	$	11,125	$	10,898	$	227	2.1	%

Total non-interest income was $227,000 higher during the second quarter of 2020 compared to the same period of 2019. Residential mortgage loan activity during the second quarter of 2020 generated $6.6 million of income from the gain on sale of mortgage loans, up from $2.1 million for the same period in 2019 due to a higher volume of loans sold and an increase in the percentage gain on loans sold. Mortgage servicing rights, net of impairment, decreased $3.3 million during the second quarter of 2020 compared to the same period of 2019 primarily due to an impairment charge of $2.9 million recorded during the second quarter of 2020. Service charges on deposit accounts, death benefit on bank owned life insurance, other income and fiduciary activities decreased $592,000, $367,000, $308,000 and $298,000, respectively, when comparing the second quarter of 2020 to the same period of 2019.

The following is a summary of changes in non-interest income for the six months ending June 30, 2020 and 2019 (table dollar amounts in thousands):

	Six Months Ended
	June 30, 2020		June 30, 2019		Amount Change		Percent Change
Non-interest Income
Service charges on deposit accounts	$	4,334	$	4,357	$	(23)	(0.5)	%
Wire transfer fees	401		285		116		40.7	%
Interchange fees	4,223		3,521		702		19.9	%
Fiduciary activities	4,293		4,152		141		3.4	%
Gain on sale of investment securities	587		(85)		672		-790.6	%
Gain on sale of mortgage loans	10,093		3,387		6,706		198.0	%
Mortgage servicing net of impairment	(2,735)		1,176		(3,911)		-332.6	%
Increase in cash surrender value of bank owned life insurance	1,111		1,068		43		4.0	%
Death benefit on bank owned life insurance	233		367		(134)		(36.5)	%
Other income	648		1,382		(734)		(53.1)	%
Total non-interest income	$	23,188	$	19,610	$	3,578	18.2	%

65

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, 2020 and 2019

Total non-interest income was $3.6 million higher for the six-month period ended June 30, 2020 compared to the same period of 2019. Residential mortgage loan activity during the six-month period ended June 30, 2020 generated $10.1 million of income from the gain on sale of mortgage loans, up from $3.4 million for the same period in 2019 due to a higher volume of loans sold and an increase in the percentage gain on loans sold. Mortgage servicing rights, net of impairment, decreased $3.9 million during the six-month period ended June 30, 2020 compared to the same period of 2019 primarily due to an impairment charge of $2.9 million recorded during the second quarter of 2020.

Non-interest Expense

The following is a summary of changes in non-interest expense for the three months ending June 30, 2020 and 2019 (table dollar amounts in thousands):

	Three Months Ended
	June 30, 2020								June 30, 2019								Adjusted
	Actual			Merger Expenses		Adjusted			Actual			Merger Expenses		Adjusted			Amount Change		Percent Change
Non-interest Expense
Salaries and employee benefits	$	15,629		$	—	$	15,629		$	16,951		$	(482)	$	16,469		$	(840)	(5.1)	%
Net occupancy expenses	3,190			—		3,190			3,148			(75)		3,073			117		3.8	%
Data processing	2,432			—		2,432			2,139			(68)		2,071			361		17.4	%
Professional fees	518			—		518			598			(153)		445			73		16.4	%
Outside services and consultants	1,759			—		1,759			1,655			(176)		1,479			280		18.9	%
Loan expense	2,692			—		2,692			2,048			(2)		2,046			646		31.6	%
FDIC deposit insurance	235			—		235			365			—		365			(130)		-35.6	%
Other losses	193			—		193			169			(69)		100			93		93.0	%
Other expenses	3,784			—		3,784			4,511			(507)		4,004			(220)		(5.5)	%
Total non-interest expense	$	30,432		$	—	$	30,432		$	31,584		$	(1,532)	$	30,052		$	380	1.3	%
Annualized Non-interest Exp. to Avg. Assets	2.18		%			2.18		%	2.51		%			2.39		%

Total non-interest expense was $1.1 million lower for the second quarter of 2020 when compared to the second quarter of 2019. Decreases in salaries and employee benefits and other expense were offset in part by increases in loan expense and data processing. Excluding merger expenses, total non-interest expense increased by $380,000 in the second quarter of 2020 when compared to the first quarter of 2019.

Annualized non-interest expense as a percent of average assets were 2.18% and 2.51% for the three months ended June 30, 2020 and 2019, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.18% and 2.39% for the three months ended June 30, 2020 and 2019, respectively.

66

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, 2020 and 2019

The following is a summary of changes in non-interest expense for the six months ending June 30, 2020 and 2019 (table dollar amounts in thousands):

	Six Months Ended
	June 30, 2020								June 30, 2019								Adjusted
	Actual			Merger Expenses		Adjusted			Actual			Merger Expenses		Adjusted			Amount Change		Percent Change
Non-interest Expense
Salaries and employee benefits	$	32,220		$	—	$	32,220		$	31,417		$	(484)	$	30,933		$	1,287	4.2	%
Net occupancy expenses	6,442			—		6,442			5,920			(75)		5,845			597		10.2	%
Data processing	4,837			—		4,837			4,105			(360)		3,745			1,092		29.2	%
Professional fees	1,054			—		1,054			1,091			(392)		699			355		50.8	%
Outside services and consultants	3,674			—		3,674			5,185			(2,466)		2,719			955		35.1	%
Loan expense	4,791			—		4,791			3,997			(2)		3,995			796		19.9	%
FDIC deposit insurance	385			—		385			525			—		525			(140)		-26.7	%
Other losses	313			—		313			273			(71)		202			111		55.0	%
Other expenses	7,865			—		7,865			8,809			(1,800)		7,009			856		12.2	%
Total non-interest expense	$	61,581		$	—	$	61,581		$	61,322		$	(5,650)	$	55,672		$	5,909	10.6	%
Annualized Non-interest Exp. to Avg. Assets	2.28		%			2.28		%	2.64		%			2.40		%

Total non-interest expense was $259,000 higher for the six-month period ended June 30, 2020 when compared to the same period of 2019. Increases in salaries and employee benefits, loan expense, data processing and net occupancy expenses were offset in part by decreases in outside services and consultants and other expense. Excluding merger expenses, total non-interest expense increased by $5.9 million for the six-month period ended June 30, 2020 when compared to the same period of 2019. This increase was primarily related to the closing of the Salin Bancshares, Inc. merger on March 26, 2019 and the related increase in costs.

Income Taxes

Income tax expense totaled $2.0 million for the second quarter of 2020 a decrease of $1.3 million when compared to the second quarter of 2019. The decrease in income tax expense in the second quarter of 2020 compared to the second quarter of 2019 was primarily due to a decrease in income before taxes of $3.3 million in addition to an increase in tax-exempt municipal interest income.

Income tax expense totaled $3.6 million for the six-month period ended June 30, 2020, a decrease of $1.8 million when compared to the same period of 2019. The decrease in income tax expense was due to a decrease in income before taxes of $3.0 million in addition to an increase in tax-exempt municipal interest income.

Liquidity

The Bank maintains a stable base of core deposits provided by long-standing relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayment, investment security sales and maturities, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the FHLB. At June 30, 2020, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $910.7 million in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $517.1 million at December 31, 2019. The Bank had approximately $453.6 million of

67

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, 2020 and 2019

unpledged investment securities at June 30, 2020 compared to $807.4 million at December 31, 2019.

Capital Resources

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at June 30, 2020. Stockholders’ equity totaled $652.2 million as of June 30, 2020, compared to $656.0 million as of December 31, 2019. For the six months ended June 30, 2020, the ratio of average stockholders’ equity to average assets was 12.07% compared to 12.28% for the twelve months ended December 31, 2019. The decrease in stockholders’ equity during the period was the result of the repurchase of outstanding stock, the impact of the adoption of ASU 2016-13 and dividends declared, offset by net income and the increase in accumulated other comprehensive income.

Horizon declared common stock dividends in the amount of $0.24 per share during the first six months of 2020 and $0.22 per share for the same period of 2019. The dividend payout ratio (dividends as a percent of basic earnings per share) was 40.7% and 33.8% for the first six months of 2020 and 2019, respectively. For additional information regarding dividends, see Horizon’s Annual Report on Form 10-K for 2019.

Use of Non-GAAP Financial Measures

Certain information set forth in this quarterly report on Form 10-Q 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, net interest margin, the allowance for credit losses, tangible stockholders’ equity, tangible book value per share, the return on average assets, the return on average common equity, and pre-tax pre-provision net income. 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 the tax reform bill, 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 without giving effect to the purchase accounting impacts and other adjustments. 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 Report on Form 10-Q for reconciliations of the non-GAAP figures identified herein and their most comparable GAAP measures.

68

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, 2020 and 2019

Non-GAAP Reconciliation of Net Income
(Dollars in Thousands, Unaudited)
	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2020		2020		2019		2019		2019		2020		2019
Net income as reported	$	14,639	$	11,655	$	18,543	$	20,537	$	16,642	$	26,294	$	27,458
Merger expenses	—		—		—		—		1,532		—		5,650
Tax effect	—		—		—		—		(295)		—		(987)
Net income excluding merger expenses	14,639		11,655		18,543		20,537		17,879		26,294		32,121
(Gain)/loss on sale of investment securities	(248)		(339)		(10)		—		100		(587)		85
Tax effect	52		71		2		—		(21)		123		(18)
Net income excluding (gain)/loss on sale of investment securities	14,443		11,387		18,535		20,537		17,958		25,830		32,188
Death benefit on bank owned life insurance (“BOLI”)	—		(233)		—		(213)		(367)		(233)		(367)
Net income excluding death benefit on BOLI	14,443		11,154		18,535		20,324		17,591		25,597		31,821
Adjusted net income	$	14,443	$	11,154	$	18,535	$	20,324	$	17,591	$	25,597	$	31,821

69

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, 2020 and 2019

Non-GAAP Reconciliation of Diluted Earnings per Share
(Unaudited)
	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2020		2020		2019		2019		2019		2020		2019
Diluted earnings per share (“EPS”) as reported	$	0.33	$	0.26	$	0.41	$	0.46	$	0.37	$	0.59	$	0.65
Merger expenses	—		—		—		—		0.03		—		0.13
Tax effect	—		—		—		—		—		—		(0.02)
Diluted EPS excluding merger expenses	0.33		0.26		0.41		0.46		0.40		0.59		0.76
(Gain)/loss on sale of investment securities	(0.01)		(0.01)		—		—		—		(0.01)		—
Tax effect	—		—		—		—		—		—		—
Diluted EPS excluding (gain)/loss on investment securities	0.32		0.25		0.41		0.46		0.40		0.58		0.76
Death benefit on BOLI	—		(0.01)		—		(0.01)		(0.01)		(0.01)		(0.01)
Diluted EPS excluding death benefit on BOLI	0.32		0.24		0.41		0.45		0.39		0.57		0.75
Adjusted Diluted EPS	$	0.32	$	0.24	$	0.41	$	0.45	$	0.39	$	0.57	$	0.75

Non-GAAP Reconciliation of Pre-Tax, Pre-Provision Net Income
(Dollars in Thousands, Unaudited)
	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2020		2020		2019		2019		2019		2020		2019
Pre-tax income	$	16,632	$	13,239	$	22,463	$	24,541	$	19,947	$	29,871	$	32,837
Credit loss expense	7,057		8,600		340		376		896		15,657		1,260
Pre-tax, pre-provision net income	$	23,689	$	21,839	$	22,803	$	24,917	$	20,843	$	45,528	$	34,097
Pre-tax, pre-provision net income	$	23,689	$	21,839	$	22,803	$	24,917	$	20,843	$	45,528	$	34,097
Merger expenses	—		—		—		—		1,532		—		5,650
(Gain)/loss on sale of investment securities	(248)		(339)		(10)		—		100		(587)		85
Death benefit on bank owned life insurance	—		(233)		—		(213)		(367)		(233)		(367)
Adjusted pre-tax, pre-provision net income	$	23,441	$	21,267	$	22,793	$	24,704	$	22,108	$	44,708	$	39,465

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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, 2020 and 2019

Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2020			2020			2019			2019			2019			2020			2019
Net interest income as reported	$	42,996		$	40,925		$	41,519		$	43,463		$	41,529		$	83,921		$	75,809
Average interest earning assets	5,112,636			4,746,202			4,748,217			4,623,985			4,566,674			4,929,388			4,249,644
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”)	3.47		%	3.56		%	3.58		%	3.82		%	3.73		%	3.51		%	3.68		%
Net interest income as reported	$	42,996		$	40,925		$	41,519		$	43,463		$	41,529		$	83,921		$	75,809
Acquisition-related purchase accounting adjustments (“PAUs”)	(1,553)			(1,434)			(1,042)			(1,739)			(1,299)			(2,987)			(2,809)
Adjusted net interest income	$	41,443		$	39,491		$	40,477		$	41,724		$	40,230		$	80,934		$	73,000
Adjusted net interest margin	3.35		%	3.44		%	3.49		%	3.67		%	3.61		%	3.39		%	3.55		%

Non-GAAP Reconciliation of Tangible Stockholders' Equity and Tangible Book Value per Share
(Dollars in Thousands Except per Share Data, Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2020		2020		2019		2019		2019
Total stockholders' equity	$	652,206	$	630,842	$	656,023	$	642,711	$	626,461
Less: Intangible assets	176,020		176,961		177,917		178,896		179,776
Total tangible stockholders' equity	$	476,186	$	453,881	$	478,106	$	463,815	$	446,685
Common shares outstanding	43,821,878		43,763,623		44,975,771		44,969,021		45,061,372
Book value per common share	$	14.88	$	14.41	$	14.59	$	14.29	$	13.90
Tangible book value per common share	$	10.87	$	10.37	$	10.63	$	10.31	$	9.91

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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, 2020 and 2019

Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2020			2020			2019			2019			2019			2020			2019
Non-GAAP Calculation of Efficiency Ratio
Non-interest expense as reported	$	30,432		$	31,149		$	30,650		$	30,060		$	31,584		$	61,581		$	61,322
Net interest income as reported	42,996			40,925			41,519			43,463			41,529			83,921			75,809
Non-interest income as reported	$	11,125		$	12,063		$	11,934		$	11,514		$	10,898		$	23,188		$	19,610
Non-interest expense/(Net interest income + Non-interest income) ("Efficiency Ratio")	56.23		%	58.79		%	57.34		%	54.68		%	60.24		%	57.49		%	64.27		%
Non-GAAP Reconciliation of Adjusted Efficiency Ratio
Non-interest expense as reported	$	30,432		$	31,149		$	30,650		$	30,060		$	31,584		$	61,581		$	61,322
Merger expenses	—			—			—			—			(1,532)			—			(5,650)
Non-interest expense excluding merger expenses	30,432			31,149			30,650			30,060			30,052			61,581			55,672
Net interest income as reported	42,996			40,925			41,519			43,463			41,529			83,921			75,809
Non-interest income as reported	11,125			12,063			11,934			11,514			10,898			23,188			19,610
(Gain)/loss on sale of investment securities	(248)			(339)			(10)			—			100			(587)			85
Death benefit on bank owned life insurance ("BOLI")	—			(233)			—			(213)			(367)			(233)			(367)
Non-interest income excluding (gain)/loss on sale of investment securities and death benefit on BOLI	$	10,877		$	11,491		$	11,924		$	11,301		$	10,631		$	22,368		$	19,328
Adjusted efficiency ratio	56.49		%	59.43		%	57.35		%	54.89		%	57.62		%	57.94		%	58.52		%

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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, 2020 and 2019

Non-GAAP Reconciliation of Return on Average Assets
(Dollars in Thousands, Unaudited)
	Three Months Ended															Six Months Ended
Non-GAAP Reconciliation of Return on Average Assets	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2020			2020			2019			2019			2019			2020			2019
Average assets	$	5,620,695		$	5,257,332		$	5,250,574		$	5,107,259		$	5,047,365		$	5,433,187		$	4,679,423
Return on average assets ("ROAA") as reported	1.05		%	0.89		%	1.40		%	1.60		%	1.32		%	0.97		%	1.18		%
Merger expenses	—			—			—			—			0.12			—			0.24
Tax effect	—			—			—			—			(0.02)			—			(0.04)
ROAA excluding merger expenses	1.05			0.89			1.40			1.60			1.42			0.97			1.38
(Gain)/loss on sale of investment securities	(0.02)			(0.03)			—			—			0.01			(0.02)			—
Tax effect	—			0.01			—			—			—			—			—
ROAA excluding (gain)/loss on sale of investment securities	1.03			0.87			1.40			1.60			1.43			0.95			1.38
Death benefit on bank owned life insurance ("BOLI")	—			(0.02)			—			(0.02)			(0.03)			(0.01)			(0.02)
ROAA excluding death benefit on BOLI	1.03			0.85			1.40			1.58			1.40			0.94			1.36
Adjusted ROAA	1.03		%	0.85		%	1.40		%	1.58		%	1.40		%	0.94		%	1.36		%

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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, 2020 and 2019

Non-GAAP Reconciliation of Return on Average Common Equity
(Dollars in Thousands, Unaudited)
	Three Months Ended															Six Months Ended
Non-GAAP Reconciliation of Return on Average Common Equity	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2020			2020			2019			2019			2019			2020			2019
Average common equity	$	649,490		$	667,588		$	653,071		$	640,770		$	622,028		$	655,538		$	563,862
Return on average common equity ("ROACE") as reported	9.07		%	7.02		%	11.26		%	12.72		%	10.73		%	8.07		%	9.82		%
Merger expenses	—			—			—			—			0.99			—			2.02
Tax effect	—			—			—			—			(0.19)			—			(0.35)
ROACE excluding merger expenses	9.07			7.02			11.26			12.72			11.53			8.07			11.49
(Gain)/loss on sale of investment securities	(0.15)			(0.20)			(0.01)			—			0.06			(0.18)			0.03
Tax effect	0.03			0.04			—			—			(0.01)			0.04			(0.01)
ROACE excluding (gain)/loss on sale of investment securities	8.95			6.86			11.25			12.72			11.58			7.93			11.51
Death benefit on bank owned life insurance ("BOLI")	—			(0.14)			—			(0.13)			(0.24)			(0.07)			(0.13)
ROACE excluding death benefit on BOLI	8.95			6.72			11.25			12.59			11.34			7.86			11.38
Adjusted ROACE	8.95		%	6.72		%	11.25		%	12.59		%	11.34		%	7.86		%	11.38		%

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We refer you to Horizon’s 2019 Annual Report on Form 10-K for analysis of its interest rate sensitivity. Horizon believes there have been no significant changes in its interest rate sensitivity since it was reported in its 2019 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on an evaluation of disclosure controls and procedures as of June 30, 2020, Horizon’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of Horizon’s disclosure controls (as defined in Exchange Act Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on such evaluation, such officers have concluded that, as of the evaluation date, Horizon’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by Horizon in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time specified in Securities and Exchange Commission rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosure.

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HORIZON BANCORP, INC. AND SUBSIDIARIES

Changes in Internal Control Over Financial Reporting

Beginning January 1, 2020, Horizon adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Horizon implemented changes to the policies, process, and controls over the estimation of the allowance for credit losses to support the adoption of ASU 2016-13. Many controls under this new standard mirror controls under the prior GAAP methodology. New controls were established over the review of economic forecasting projections obtained from independent third parties. Except as related to the adoption of ASU 2016-13, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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HORIZON BANCORP, INC. AND SUBSIDIARIES

Part II – Other Information

ITEM 1. LEGAL PROCEEDINGS

Horizon and its subsidiaries are involved in various legal proceedings incidental to the conduct of their business. Management does not expect that the outcome of any such proceedings will have a material adverse effect on our consolidated financial position or results of operations.

ITEM 1A. RISK FACTORS

The disclosures below supplement the risk factors previously disclosed under Item 1A. of the Company's 2019 Annual Report on Form 10-K.

The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic is creating extensive disruptions to the global economy and to the lives of individuals throughout the world. Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. While the scope, duration, and full effects of COVID-19 are rapidly evolving and not fully known, the pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic and market uncertainty, and disrupted trade and supply chains. If these effects continue for a prolonged period or result in sustained economic stress or recession, many of the risk factors identified in our Form 10-K could be exacerbated and such effects could have a material adverse impact on us in a number of ways related to credit, collateral, customer demand, funding operations, interest rate risk, human capital and self-insurance, as described in more detail below.

•Credit Risk - Our risks of timely loan repayment and the value of collateral supporting the loans are affected by the strength of our borrower's business. Concern about the spread of COVID-19 has caused and is likely to continue to cause business shutdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, increased unemployment and commercial property vacancy rates, reduced profitability and ability for property owners to make mortgage payments, and overall economic and financial market instability, all of which may cause our customers to be unable to make scheduled loan payments. If the effects of COVID-19 result in widespread and sustained repayment shortfalls on loans in our portfolio, we could incur significant delinquencies, foreclosures and credit losses, particularly if the available collateral is insufficient to cover our exposure. The future effects of COVID-19 on economic activity could negatively affect the collateral values associated with our existing loans, the ability to liquidate the real estate collateral securing our residential and commercial real estate loans, our ability to maintain loan origination volume and to obtain additional financing, the future demand for or profitability of our lending services, and the financial condition and credit risk of our customers. Further, in the event of delinquencies, regulatory changes and policies designed to protect borrowers may slow or prevent us from making our business decisions or may result in a delay in our taking certain remediation actions, such as foreclosure. In addition, we have unfunded commitments to extend credit to customers. During a challenging economic environment like now, our customers are more dependent on our credit commitments and increased borrowings under these commitments could adversely impact our liquidity. Furthermore, in an effort to support our communities during the pandemic, we are participating in the Paycheck Protection Program (“PPP”) under the CARES Act whereby loans to small businesses are made and those loans are subject to the regulatory requirements that would require forbearance of loan payments for a specified time or that would limit our ability to pursue all available remedies in the event of a loan default. If the borrower under the PPP loan fails to qualify for loan forgiveness, we are at the heightened risk of holding these loans at unfavorable interest rates as compared to the loans to customers that we would have otherwise extended.

•Strategic Risk - Our success may be affected by a variety of external factors that may affect the price or marketability of our products and services, changes in interest rates that may increase our funding costs, reduced demand for our financial products due to economic conditions and the various responses of governmental and nongovernmental authorities. In recent weeks, the COVID-19 pandemic has significantly increased economic uncertainty and has led to disruption and volatility in the global capital markets. Furthermore, many of the governmental actions have been directed toward curtailing household and business activity to contain COVID-19. These actions have been rapidly expanding in scope and intensity. For example, in many of our markets, local governments have acted to temporarily

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HORIZON BANCORP, INC. AND SUBSIDIARIES

Part II – Other Information

close or restrict the operations of most businesses. The future effects of COVID-19 on economic activity could negatively affect the future banking products we provide, including a decline in originating of loans.

•Operational Risk - Current and future restrictions on our workforce's access to our facilities could limit our ability to meet customer servicing expectations and have a material adverse effect on our operations and financial results. We rely on business processes and branch activity that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties. In response to COVID-19, we have modified our business practices with a portion of our employees working remotely from other locations and their homes to have our operations uninterrupted as much as possible. Further, technology in employees' homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices. The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk. These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.

Moreover, we rely on many third parties in our business operations, including the appraiser of the real property collateral, vendors that supply essential services such as loan servicers, providers of financial information, systems and analytical tools and providers of electronic payment and settlement systems, and local and federal government agencies, offices, and courthouses. In light of the developing measures responding to the pandemic, many of these entities may limit the availability and access of their services. For example, loan origination could be delayed due to the limited availability of real estate appraisers for the collateral. Loan closings could be delayed related to reductions in available staff in recording offices or the closing of courthouses in certain counties, which slows the process for title work, mortgage and UCC filings in those counties. If the third-party service providers continue to have limited capacities for a prolonged period or if additional limitations or potential disruptions in these services materialize, it may negatively affect our operations and financial results.

•Interest Rate Risk - Our net interest income, lending activities, deposits and profitability could be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19. In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent, citing concerns about the impact of COVID-19 on markets and stress in the energy sector. A prolonged period of extremely volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies. Higher income volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in current fair market values of our assets. Fluctuations in interest rates will impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest earning assets and interest bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition.

In addition, the United States Government and its related entities are incurring unprecedented debt levels in support of the United States Economy. This level of debt may not be sustainable, may cause inflationary pressures and increases risks to fund the balance sheet if international investors elect to no longer purchase United States Treasuries.

Because there have been no recent global pandemics that resulted in similar global impact, we do not yet know the full extent of COVID-19's effects on our business, operations, or the global economy as a whole. Any future development will be highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the effectiveness of our work from home arrangements, third party providers' ability to support our operation, and any actions taken by governmental authorities and other third parties in response to the pandemic. The uncertain future development of this crisis could materially and adversely affect our business, operations, operating results, financial condition, liquidity or capital levels.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)Unregistered Sales of Equity Securities: Not Applicable

(b)Use of Proceeds: Not Applicable

(c)Repurchase of Our Equity Securities: Not Applicable

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HORIZON BANCORP, INC. AND SUBSIDIARIES

Part II – Other Information

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

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HORIZON BANCORP, INC. AND SUBSIDIARIES

Part II – Other Information

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Index

Exhibit No.	Description	Location
1.1	Underwriting Agreement, dated June 17, 2020	Incorporated by reference to Exhibit 1.1 to Registrant's Form 8-K filed on June 18, 2020
4.1	Indenture for Subordinated Debt, dated June 24, 2020, between Horizon Bancorp, Inc. and Wilmington Trust, National Association	Incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K filed on June 24, 2020
4.2	First Supplemental Indenture, dated June 24, 2020, between Horizon Bancorp, Inc. and Wilmington Trust, National Association	Incorporated by reference to Exhibit 4.2 to Registrant's Form 8-K filed on June 24, 2020
31.1	Certification of Craig M. Dwight	Attached
31.2	Certification of Mark E. Secor	Attached
32	Certification of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Attached
101	Inline Interactive Data Files	Attached
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, has been formatted in Inline XBRL	Within the Inline XBRL document

79

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HORIZON BANCORP, INC.
August 4, 2020	/s/ Craig M. Dwight
Date	Craig M. Dwight
	Chief Executive Officer
August 4, 2020	/s/ Mark E. Secor
Date	Mark E. Secor
	Chief Financial Officer

80

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CRAIG M. DWIGHT

I, Craig M. Dwight, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Horizon Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrants’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 4, 2020	/s/ Craig M. Dwight
Date	Craig M. Dwight
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CRAIG M. DWIGHT

I, Mark E. Secor, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Horizon Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrants’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 4, 2020	/s/ Mark E. Secor
Date	Mark E. Secor
	Chief Financial Officer

EX-32

EXHIBIT 32

HORIZON BANCORP, INC.

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Horizon Bancorp, Inc. (the “Company”) certifies that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 4, 2020	/s/ Craig M. Dwight
Date	Craig M. Dwight
	Chief Executive Officer
August 4, 2020	/s/ Mark E. Secor
Date	Mark E. Secor
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Horizon Bancorp, Inc. and will be retained by Horizon Bancorp, Inc. and furnished to the Securities Exchange Commission or its staff upon request.

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Cover Page - shares	6 Months Ended
	Jun. 30, 2020	Aug. 03, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	0-10792
Entity Registrant Name	HORIZON BANCORP, INC.
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000706129
Current Fiscal Year End Date	--12-31
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1562417
Entity Address, Address Line One	515 Franklin Street
Entity Address, City or Town	Michigan City
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46360
City Area Code	219
Local Phone Number	879-0211
Title of 12(b) Security	Common stock, no par value
Trading Symbol	HBNC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,874,353

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and due from banks	$ 170,135	$ 98,831
Interest-earning time deposits	9,247	8,455
Investment securities, available for sale	935,140	834,776
Investment securities, held to maturity (fair value of $201,818 and $215,147)	190,935	207,899
Loans held for sale	15,913	4,088
Loans, net of allowance for loan losses of $55,090 and $17,667	3,923,292	3,619,174
Premises and equipment, net	92,232	92,209
Federal Home Loan Bank stock	23,608	22,447
Goodwill	151,238	151,238
Other intangible assets	24,782	26,679
Interest receivable	20,185	18,828
Cash value of life insurance	95,709	95,577
Other assets	86,846	66,628
Total assets	5,739,262	5,246,829
Deposits
Non-interest bearing	981,868	709,760
Interest bearing	3,325,731	3,221,242
Total deposits	4,307,599	3,931,002
Borrowings	583,073	549,741
Subordinated debentures	58,824	0
Junior subordinated debentures issued to capital trusts	56,437	56,311
Interest payable	2,353	3,062
Other liabilities	78,770	50,690
Total liabilities	5,087,056	4,590,806
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares	0	0
Common stock	0	0
Additional paid-in capital	361,087	379,853
Retained earnings	269,849	269,738
Accumulated other comprehensive income	21,270	6,432
Total stockholders’ equity	652,206	656,023
Total liabilities and stockholders’ equity	5,739,262	5,246,829
Allowance for credit losses on loans	$ 55,090	$ 17,667

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Investment securities, held to maturity fair value	$ 201,818	$ 215,147
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, shares authorized	99,000,000	99,000,000
Common stock, shares issued	43,846,947	45,000,840
Common stock, shares outstanding (in shares)	43,821,878	44,975,771

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Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest Income
Loans receivable	$ 43,918	$ 47,784	$ 88,876	$ 87,407
Investment securities - taxable	2,321	3,273	5,219	6,395
Investment securities - tax exempt	4,105	2,793	7,903	5,421
Total interest income	50,344	53,850	101,998	99,223
Interest Expense
Deposits	4,506	8,938	12,222	15,814
Borrowed funds	2,074	2,495	4,312	6,116
Subordinated debentures	58	0	58	0
Junior subordinated debentures issued to capital trusts	710	888	1,485	1,484
Total interest expense	7,348	12,321	18,077	23,414
Net Interest Income	42,996	41,529	83,921	75,809
Credit loss expense	7,057	896	15,657	1,260
Net Interest Income after Credit Loss Expense	35,939	40,633	68,264	74,549
Non-interest Income
Service charges on deposit accounts	1,888	2,480	4,334	4,357
Wire transfer fees	230	167	401	285
Interchange fees	2,327	2,160	4,223	3,521
Fiduciary activities	1,765	2,063	4,293	4,152
Debt and Equity Securities, Gain (Loss)	248	(100)	587	(85)
Gain on sale of mortgage loans	6,620	2,078	10,093	3,387
Mortgage servicing income net of impairment	(2,760)	570	(2,735)	1,176
Increase in cash value of bank owned life insurance	557	555	1,111	1,068
Death benefit on bank owned life insurance	0	367	233	367
Other income	250	558	648	1,382
Total non-interest income	11,125	10,898	23,188	19,610
Non-interest Expense
Salaries and employee benefits	15,629	16,951	32,220	31,417
Net occupancy expenses	3,190	3,148	6,442	5,920
Data processing	2,432	2,139	4,837	4,105
Professional fees	518	598	1,054	1,091
Outside services and consultants	1,759	1,655	3,674	5,185
Loan expense	2,692	2,048	4,791	3,997
FDIC insurance expense	235	365	385	525
Other losses	193	169	313	273
Other expense	3,784	4,511	7,865	8,809
Total non-interest expense	30,432	31,584	61,581	61,322
Income Before Income Taxes	16,632	19,947	29,871	32,837
Income Tax Expense (Benefit)	1,993	3,305	3,577	5,379
Net Income	$ 14,639	$ 16,642	$ 26,294	$ 27,458
Basic Earnings Per Share (in USD per share)	$ 0.33	$ 0.37	$ 0.59	$ 0.65
Diluted Earnings Per Share (in USD per share)	$ 0.33	$ 0.37	$ 0.59	$ 0.65
Income tax expense (benefit) from reclassification	$ 52	$ (21)	$ 123	$ (18)

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Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Accumulated other comprehensive earnings reclassifications	$ 248	$ (100)	$ 587	$ (85)
Income tax expense (benefit) from reclassification	$ 52	$ (21)	$ 123	$ (18)

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 14,639	$ 16,642	$ 26,294	$ 27,458
Change in fair value of derivative instruments:
Change in fair value of derivative instruments for the period	(135)	(1,901)	(4,100)	(3,007)
Income tax effect	28	399	861	631
Changes from derivative instruments	(107)	(1,502)	(3,239)	(2,376)
Change in securities:
Unrealized appreciation for the period on AFS securities	15,507	6,933	23,499	18,627
Amortization from transfer of securities from available for sale to held to maturity securities	1	(30)	(29)	(68)
Reclassification adjustment for securities gains realized in income	(248)	100	(587)	85
Income tax effect	(3,205)	(1,472)	(4,806)	(3,917)
Unrealized gains on securities	12,055	5,531	18,077	14,727
Other Comprehensive Income, Net of Tax	11,948	4,029	14,838	12,351
Comprehensive Income	$ 26,587	$ 20,671	$ 41,132	$ 39,809

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Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands	Total	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income
Beginning Balances at Dec. 31, 2018	$ 491,992	$ 276,101	$ 224,035	$ (8,144)
Net income	27,458		27,458
Other comprehensive income (loss), net of tax	12,351			12,351
Amortization of unearned compensation	301	301
Exercise of stock options	155	155
Stock option expense	115	115
Stock issued stock plans	514	1,341
Stock issued in Salin acquisition	0	102,722
Cash dividends on common stock	(9,974)		(9,974)
Ending Balances at Jun. 30, 2019	$ 626,461	380,735	241,519	4,207
Cash dividends on common stock, per share	$ 0.22
Beginning Balances at Mar. 31, 2019	$ 609,468	378,963	230,327	178
Net income	16,642		16,642
Other comprehensive income (loss), net of tax	4,029			4,029
Amortization of unearned compensation	210	210
Exercise of stock options	38	38
Stock option expense	58	58
Stock issued stock plans	1,466	1,466
Cash dividends on common stock	(5,450)		(5,450)
Ending Balances at Jun. 30, 2019	$ 626,461	380,735	241,519	4,207
Cash dividends on common stock, per share	$ 0.12
Impact of adoption of ASU No. 2016-13	$ (15,635)		(15,635)
Beginning Balances at Dec. 31, 2019	656,023	379,853	269,738	6,432
Net income	26,294		26,294
Other comprehensive income (loss), net of tax	14,838			14,838
Amortization of unearned compensation	122	122
Exercise of stock options	157	157
Stock option expense	77	77
Stock issued stock plans	514	514
Repurchase of outstanding stock	(19,636)	(19,636)
Cash dividends on common stock	(10,548)		(10,548)
Ending Balances at Jun. 30, 2020	$ 652,206	361,087	269,849	21,270
Cash dividends on common stock, per share	$ 0.24
Beginning Balances at Mar. 31, 2020	$ 630,842	361,019	260,501	9,322
Net income	14,639		14,639
Other comprehensive income (loss), net of tax	11,948			11,948
Amortization of unearned compensation	(79)	(79)
Exercise of stock options	(98)	(98)
Stock option expense	27	27
Stock issued stock plans	218	218
Cash dividends on common stock	(5,291)		(5,291)
Ending Balances at Jun. 30, 2020	$ 652,206	$ 361,087	$ 269,849	$ 21,270
Cash dividends on common stock, per share	$ 0.12

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Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Stockholders' Equity [Abstract]
Cash dividends on common stock, per share	$ 0.12	$ 0.12	$ 0.24	$ 0.22

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Operating Activities
Net income			$ 26,294	$ 27,458
Items not requiring (providing) cash
Provision for credit losses	$ 7,057	$ 896	15,657	1,260
Depreciation and amortization			4,909	4,380
Share based compensation			77	115
Mortgage servicing rights income			(466)	(1,165)
Mortgage servicing rights net impairment			3,201	(11)	$ 192
Premium amortization on securities, net			4,266	2,589
(Gain) loss on sale of investment securities	(248)	100	(587)	85
Gain on sale of mortgage loans	(6,620)	(2,078)	(10,093)	(3,387)
Proceeds from sales of loans			258,207	92,314
Loans originated for sale			(259,939)	(91,074)
Change in cash value life insurance			(1,111)	(1,068)
Gain on sale of other real estate owned			7	(11)
Net change in:
Interest receivable			(1,357)	(2,288)
Interest payable			(709)	148
Other assets			1,811	97,207
Other liabilities			661	7,780
Net cash provided by operating activities			40,828	134,332
Investing Activities
Purchases of securities available for sale			(207,160)	(176,629)
Proceeds from sales, maturities, calls and principal repayments of securities available for sale			126,826	165,638
Proceeds from maturities of securities held to maturity			16,138	4,551
Net change in interest-earning time deposits			(792)	7,654
Change in FHLB stock			(1,161)	(803)
Net change in loans			(340,505)	(84,406)
Proceeds on the sale of OREO and repossessed assets			444	1,260
Change in premises and equipment, net			(2,913)	(1,538)
Death benefit on bank owned life insurance			233	367
Repurchase of outstanding stock			(19,636)	0
Net cash provided by (used in) investing activities			(428,526)	44,839
Net change in:
Deposits			376,597	50,049
Borrowings			33,458	(184,548)
Proceeds from issuance of stock			671	1,496
Net proceeds from issuance of subordinated notes			58,824	0
Dividends paid on common stock			(10,548)	(9,974)
Net cash provided by (used in) financing activities			459,002	(142,977)
Net Change in Cash and Cash Equivalents			71,304	36,194
Cash and Cash Equivalents, Beginning of Period			98,831	58,492	58,492
Cash and Cash Equivalents, End of Period	$ 170,135	$ 94,686	170,135	94,686	$ 98,831
Additional Supplemental Information
Interest paid			18,786	22,440
Income taxes paid			0	1,300
Transfer of loans to other real estate and repossessed assets			939	1,213
Transfer of premises to other real estate			0	1,564
Right-of-use assets exchanged for lease obligations			0	3,411
Salin
Investing Activities
Net cash received in acquisition, Salin			$ 0	$ 128,745

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Future Accounting Matters

6 Months Ended

Jun. 30, 2020

Accounting Changes and Error Corrections [Abstract]

Future Accounting Matters

Future Accounting Matters

FASB ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

The FASB has issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of ASC 740. The guidance also improves consistent application by clarifying and amending existing guidance from ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein and is to be applied on a retrospective, modified retrospective or prospective approach, depending on the specific amendment. Early adoption is permitted. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

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General Litigation	6 Months Ended
	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
General Litigation	General LitigationThe Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operation and cash flows of the Company.

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Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Accounting Policies

Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of Horizon Bancorp, Inc. (“Horizon” or the “Company”) and its wholly-owned subsidiaries, including Horizon Bank (“Horizon Bank” or the “Bank”). Horizon Bank (formerly known as “Horizon Bank, N.A.”) was a national association until its conversion to an Indiana commercial bank effective June 23, 2017. All inter-company balances and transactions have been eliminated. The results of operations for the periods ended June 30, 2020 and June 30, 2019 are not necessarily indicative of the operating results for the full year of 2020 or 2019. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of Horizon’s management, necessary to fairly present the financial position, results of operations and cash flows of Horizon for the periods presented. Those adjustments consist only of normal recurring adjustments.

Certain information and note disclosures normally included in Horizon’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form10-K for 2019 filed with the Securities and Exchange Commission on February 28, 2020. The condensed consolidated balance sheet of Horizon as of December 31, 2019 has been derived from the audited balance sheet as of that date.

On July 16, 2019, the Board of Directors of the Company authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of June 30, 2020, Horizon had repurchased a total of 373,323 shares at an average price per share of $15.86. In addition to the stock repurchase program, Horizon agreed to repurchase 1,000,000 shares at a price per share of $15.19 from an individual shareholder on March 6, 2020.

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted-average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

The following table shows computation of basic and diluted earnings per share.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Basic earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Basic earnings per share	$	0.33	$	0.37	$	0.59	$	0.65
Diluted earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Effect of dilutive securities:
Restricted stock	7,614		—		40,017		—
Stock options	13,931		75,291		26,967		76,924
Weighted average common shares outstanding	43,802,794		45,130,408		44,286,864		42,032,971
Diluted earnings per share	$	0.33	$	0.37	$	0.59	$	0.65

There were 504,085 and 285,588 shares for the three and six months ended June 30, 2020, which were not included in the computation of diluted earnings per share because they were non-dilutive. There were 341,394 and 341,394 shares for the three and six months ended June 30, 2019, which were not included in the computation of diluted earnings per share because they were non-dilutive.

Horizon has share-based employee compensation plans, which are described in the notes to the financial statements included in the December 31, 2019 Annual Report on Form 10-K.

Adoption of New Accounting Standards

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – On January 1, 2020, the Company adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held to maturity securities. It also applies to off–balance sheet (“OBS”) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar agreements). In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance, rather than as a write–down, on available for sale debt securities management does not intend to sell or believe that it is not more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and OBS credit exposures. Results for reporting periods beginning after December 31, 2019, are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to retained earnings of $15.6 million as of January 1, 2020 for the cumulative effect of adopting ASC 326.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”), previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of $2.8 million of allowance for credit losses (“ACL”) on loans.

The following table illustrates the impact of ASC 326.

	January 1, 2020
(dollars in thousands)	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Loans
Commercial	$	25,614	$	11,996	$	13,618
Real estate	4,971		923		4,048
Mortgage warehouse	1,077		1,077		—
Consumer	8,582		3,671		4,911
Allowance for credit losses on loans	$	40,244	$	17,667	$	22,577

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable totaling $12.8 million at June 30, 2020 was excluded from the ACL calculation and was reported in accrued interest receivable on the consolidated balance sheets. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income

using the effective yield method without anticipating prepayments.

From time to time, the Bank obtains information that may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of this, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Further, it is management’s policy to generally place a loan on a non-accrual status when the payment is delinquent in excess of 90 days or the loan has had the accrual of interest discontinued by management. The officer responsible for the loan and the Chief Commercial Banking Officer and/or the Chief Operations Officer must review all loans placed on non-accrual status. Subsequent payments on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal in accordance with the loan terms. The Company requires a period of satisfactory performance of not less than six months before returning a non-accrual loan to accrual status.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is contractually 90 days past due, and charges down to the net realizable value other secured loans when they are contractually 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

A loan becomes impaired when, based on current information, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is classified as impaired, the degree of impairment must be recognized by estimating future cash flows from the debtor. The present value of these cash flows is computed at a discount rate based on the interest rate contained in the loan agreement. However, if a particular loan has a determinable market value for its collateral, the creditor may use that value. Also, if the loan is secured and considered collateral dependent, the creditor may use the fair value of the collateral. Interest income on loans individually classified as impaired is recognized on a cash basis after all past due and current principal payments have been made.

Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1-4 family residences, residential construction loans, automobile, home equity, second mortgage loans and mortgage warehouse loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When analysis of borrower operating results and financial condition indicate that underlying cash flows of a borrower’s business are not adequate to meet its debt service requirements, the loan is evaluated for impairment. Often this is associated with a delay or shortfall in payments of 30 days or more. Loans are generally moved to non-accrual status when they are 90 days or more past due. These loans are often considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms, including troubled debt restructurings, are measured for impairment. Allowable methods for determining the amount of impairment include the three methods described above.

Purchased Credit Deteriorated Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An ACL on loans is determined using the same methodology as other loans held for investment. The initial ACL on loans determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and ACL on loans becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL on loans are recorded through credit loss expense.

The Company adopted this ASU using the prospective transition approach for PCD loans previously accounted for under ASC 310-30. In accordance with the standard, we did not assess whether PCI loans met the criteria of PCD as of the date of adoption and all loans previously classified as PCI were updated to the PCD classification. Pools utilized for PCI accounting under ASC 310-30 were not considered since the Company did not have PCI pools at the time of adoption. PCD loans were assessed using prior specific loan reviews for the initial PCD loan ACL. At the date of adoption, no securities were determined to be PCD.

Allowance for Credit Losses on Loans

The ACL on loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is confirmed to no longer be collectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, changes in economic conditions, or other relevant factors.

The Company considers the following when estimating credit losses: 1) available information relevant to assessing the collectibility of cash flows including internal information, external information or a combination of both relating to past events, current conditions and reasonable and supportable forecasts; 2) relevant qualitative and quantitative factors relating to the environment in which the Bank operates and factors specific to the borrower; 3) off-balance-sheet credit exposures; and credit support.

ACL on loans is measured on a collective basis and reflects impairment in groups of loans aggregated on the basis of similar risk characteristics which may include any one or a combination of the following: internal credit ratings, risk ratings or classification, financial asset type, collateral type, size, industry of the borrower, historical or expected credit loss patterns, and reasonable and supportable forecast periods. The ACL for a specific portfolio segment is computed by multiplying the loss rate by the amortized cost balance of the segment with adjustments for other qualitative factors as described above. As appropriate, newer credit products or portfolios with limited historical loss may use applicable external data for determining the ACL until experience justifies that sufficient product maturity supports the estimate of expected credit losses.

Pursuant to ASC 326-20-30-9, an entity shall not rely solely on past events to estimate expected credit losses, and should consider adjustments to historical information to reflect the extent to which management expects current conditions and forecasted conditions to differ from the periods utilized for the historical loss rate calculation. Management has incorporated an adjustment of the historical loss rate calculated within the model to reflect current and forecasted condition and has applied this adjustment on a qualitative factor basis to the aggregate pool loss rate.

The qualitative adjustment is based on a combination of external econometric data and internal factors such as portfolio composition, changes in management, changes in loan policy and other factors. The economic forecast is based in part on economic indexes and quantitative matrices with a six to twelve month forecast. The qualitative adjustment is calculated based on current and forecasted conditions and evaluated each quarter by management, and therefore is dynamic in nature. As a result of the forecast being applied as a qualitative factor and adjusted quarterly, no reversion to the historical loss rate is necessary, as

the historical base loss rate is preserved in the calculation of “all in” loss rate.

Specific reserves reflect impairment on loans identified for evaluation or individually considered non-performing, including troubled debt restructurings and receivables where the Company has determined foreclosure is probable. These loans no longer have similar risk characteristics to collectively evaluated loans due to changes in credit risk, borrower circumstances, recognition of write-offs, or cash collections that have been fully applied to principal on the basis of non-accrual policies. At a minimum, the population of loans subject to individual evaluation include individual loans and leases where it is probable we will be unable to collect all amounts due, according to the original contractual terms. These include commercial impaired loans, jumbo residential mortgages (as defined), and jumbo home equity loans with a balance exceeding $250,000, and other loans as determined by management. ACL for residential and consumer loans are, primarily, determined by meaningful pools of similar loans and are evaluated on a quarterly basis.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The provision for credit losses on loans on individually evaluated loans is recognized on the fair value of collateral adjusted for estimated costs to sell, the basis of the present value of expected future cash flows discounted at the effective interest rate or the observable market price as of the relevant date.

The table below identifies the Company's loan portfolio segments and classes.

Portfolio Segment	Class of Financing Receivable
Commercial	Owner occupied real estate
	Non-owner occupied real estate
	Residential spec homes
	Development & spec land
	Commercial and industrial
Real estate	Residential mortgage
	Residential construction
Mortgage warehouse	Mortgage warehouse
Consumer	Direct installment
	Indirect installment
	Home equity

Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Class of financing receivable is defined as a group of financing receivables determined on the basis of both of the following, 1) risk characteristics of the financing receivable, and 2) an entity's method for monitoring and assessing credit risk. Generally, the Bank does not move loans from a revolving loan to a term loan other than construction loans. Construction loans are reviewed and rewritten prior to being originated as a term loan.

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may incorporate a personal guarantee. However, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans and, secondarily, as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy, or fluctuations in interest rates. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow, and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Real Estate and Consumer

With respect to residential loans that are secured by 1–4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon’s mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon’s agreement with the mortgage company. Each mortgage loan funded by Horizon undergoes an underwriting review by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company. In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan. At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement. Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company. When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on the agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note. Horizon also has the option to request that the mortgage company reacquire an individual mortgage. Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company. Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

Determining the Contractual Term

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Troubled Debt Restructurings (“TDR”)

A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The ACL on loans on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate is used to discount the expected cash flows, not the rate specified within the restructuring.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act provides all banks with the option to elect either or both of the following from March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the termination of the national emergency:

i.to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and/or

ii.to suspend any determination of a loan modified as a result of the effects of the COVID-19 pandemic as being a TDR, including impairment for accounting purposes.

If a bank elects a suspension noted above, the suspension (i) will be effective for the term of the loan modification, but solely with respect to any modification, including a forbearance arrangement, an interest rate modification, a repayment plan, and any other similar arrangement that defers or delays the payment of principal or interest, that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019; and (ii) will not apply to any adverse impact on the credit of a borrower that is not related to the COVID-19 pandemic.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The Company determines the estimated amount of expected credit extensions based on historical usage to calculate the amount of exposure for a loss estimate. After review of the expected credit losses on OBS, the Company determined the amount not being recorded as immaterial at this time.

Allowance for Credit Losses on Available for Sale Securities

For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For debt securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recorded in other comprehensive income.

Changes in the ACL are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Allowance for Credit Losses on Held to Maturity Securities

For held to maturity securities, the Company conducts an assessment of its held to maturity securities at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to

perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers from Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. If this assessment indicates that a material credit loss exists, the present value of cash flows expected to be collected form the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss. After completing this assessment, management determined any credit losses as of June 30, 2020 were not material to the consolidated financial statements.

FASB ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment - On January 1, 2020, the Company adopted the provision of ASU No. 2017-04, which eliminates Step 2 from the goodwill impairment test. Under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative test.

At each reporting date between annual goodwill impairment tests, Horizon considers potential indicators of impairment. Given the current economic uncertainty and volatility surrounding COVID-19, Horizon assessed whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered comprised the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting unit; performance of the Company's stock and other relevant events. Horizon further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. At the conclusion of the assessment, the Company determined that as of March 31, 2020 it was more likely than not that the fair value exceeded its carrying values. Horizon will continue to monitor developments regarding the COVID-19 pandemic and measures implemented in response to the pandemic, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

FASB ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement – On January 1, 2020, the Company adopted the provision of ASU 2018-13, which modifies the disclosure requirements on fair value measurements. The amendment removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The update also adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, the Company may disclose other quantitative information in lieu of the weighted average if we determine that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the 2019 condensed consolidated financial statements to be comparable to 2020. These reclassifications had no effect on net income.

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Acquisitions

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Acquisitions

Acquisitions

Salin Bancshares, Inc.

On March 26, 2019, Horizon completed the acquisition of Salin Bancshares, Inc. (“Salin”), an Indiana corporation, and Horizon Bank’s acquisition of Salin Bank and Trust Company (“Salin Bank”), an Indiana commercial bank and wholly-owned subsidiary of Salin, through mergers effective March 26, 2019. Under the terms of the Merger Agreement, shareholders of Salin received 23,907.5 shares of Horizon common stock and $87,417.17 in cash for each outstanding share of Salin common stock. Salin shares outstanding at the closing to be exchanged were 275, and the shares of Horizon common stock issued to Salin shareholders totaled 6,563,697. The Salin shareholders received cash in lieu of fractional shares. Based upon the March 25, 2019 closing price of $15.65 per share of Horizon common stock immediately prior to the effectiveness of the merger the transaction has an implied valuation of approximately $126.7 million. The Company incurred approximately $5.6 million in costs related to the acquisition. These expenses are classified in the non-interest expense section of the income statement and are primarily located in the data processing, professional fees, outside services and consultants and other expense line items. As a result of the acquisition, the Company was able to increase its deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale.

Under the acquisition method of accounting, the total purchase price was allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition.

Assets			Liabilities
Cash and due from banks	$	152,745	Deposits
Investment securities, available for sale	54,319		Non-interest bearing	$	188,744
Loans			NOW accounts	207,567
Commercial	352,798		Savings and money market	274,504
Residential mortgage	131,008		Certificates of deposit	70,529
Consumer	85,112		Total deposits	741,344
Total loans	568,918		Borrowings	70,495
Premises and equipment, net	20,425		Subordinated debentures	18,376
FRB and FHLB stock	3,571		Interest payable	826
Goodwill	31,358		Other liabilities	8,759
Core deposit intangible	19,818		Total liabilities assumed	$	839,800
Interest receivable	2,488
Other assets	112,880
Total assets purchased	$	966,522
Common shares issued	$	102,722
Cash paid	24,000
Total purchase price	$	126,722

Of the total purchase price of $126.7 million, $19.8 million has been allocated to core deposit intangible. Additionally, $31.4 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible is being amortized over 10 years on a straight line basis.

The Company acquired various loans in the acquisition that had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. Purchased credit-impaired loans at the acquisition date, were accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which

includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporated the estimate of current assumptions, such as default rates, severity and prepayment speeds.

The following table details an estimate of the acquired loans that are accounted for in accordance with ASC 310-30 as of March 26, 2019.

Contractually required principal and interest at acquisition	$	22,672
Contractual cash flows not expected to be collected (nonaccretable differences)	6,694
Expected cash flows at acquisition	15,978
Interest component of expected cash flows (accretable discount)	735
Fair value of acquired loans accounted for under ASC310-30	$	15,243

Estimates of certain loans, those for which specific credit-related deterioration has occurred since origination, were recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.

The results of operations of Salin have been included in the Company’s consolidated financial statements since the acquisition date. The following schedule includes pro-forma results for the three and six months ended June 30, 2019 as if the Salin acquisition had occurred as of the beginning of the comparable prior reporting period.

	Three Months Ended			Six Months Ended
		June 30		June 30
		2019		2019
Summary of Operations:
Net Interest Income		$	41,529	$	83,711
Provision for Loan Losses		896		1,560
Net Interest Income after Provision for Loan Losses		40,633		82,151
Non-interest Income		10,898		20,024
Non-interest Expense		31,584		73,736
Income before Income Taxes		19,947		28,439
Income Tax Expense		3,305		5,322
Net Income		16,642		23,117
Net Income Available to Common Shareholders		$	16,642	$	23,117
Basic Earnings per Share		$	0.37	$	0.51
Diluted Earnings per Share		$	0.37	$	0.51

The pro-forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits acquired, premises expense for the banking centers acquired and the related income tax effects.

The pro-forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, nor is it intended to be a projection of future results.

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Securities

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The fair value of securities is as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
State and municipal	$	525,488	$	23,503	$	(759)	$	548,232
Federal agency collateralized mortgage obligations	219,431		6,380		(6)		225,805
Federal agency mortgage-backed pools	143,755		5,031		—		148,786
Corporate notes	10,867		1,450		—		12,317
Total available for sale investment securities	$	899,541	$	36,364	$	(765)	$	935,140
Held to maturity
State and municipal	$	175,953	$	10,408	$	—	$	186,361
Federal agency collateralized mortgage obligations	3,006		89		—		3,095
Federal agency mortgage-backed pools	11,976		386		—		12,362
Total held to maturity investment securities	$	190,935	$	10,883	$	—	$	201,818

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
U.S. Treasury and federal agencies	$	1,415	$	—	$	(2)	$	1,413
State and municipal	396,931		11,288		(2,451)		405,768
Federal agency collateralized mortgage obligations	267,272		2,543		(563)		269,252
Federal agency mortgage-backed pools	145,623		1,207		(258)		146,572
Corporate notes	10,848		923		—		11,771
Total available for sale investment securities	$	822,089	$	15,961	$	(3,274)	$	834,776
Held to maturity
State and municipal	$	190,767	$	7,129	$	(54)	$	197,842
Federal agency collateralized mortgage obligations	4,560		13		(5)		4,568
Federal agency mortgage-backed pools	12,572		194		(29)		12,737
Total held to maturity investment securities	$	207,899	$	7,336	$	(88)	$	215,147

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. While these securities are held in the available for sale portfolio and held-to-maturity, Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity.

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2020 and December 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Within one year	$	40,750	$	40,838	$	37,386	$	37,321
One to five years	41,840		43,156		41,230		41,293
Five to ten years	116,279		125,049		117,004		122,145
After ten years	337,486		351,506		213,574		218,193
	536,355		560,549		409,194		418,952
Federal agency collateralized mortgage obligations	219,431		225,805		267,272		269,252
Federal agency mortgage-backed pools	143,755		148,786		145,623		146,572
Total available for sale investment securities	$	899,541	$	935,140	$	822,089	$	834,776
Held to maturity
Within one year	$	11,255	$	11,308	$	7,811	$	7,874
One to five years	48,178		49,597		56,037		57,048
Five to ten years	89,212		95,232		94,756		98,480
After ten years	27,308		30,224		32,163		34,440
	175,953		186,361		190,767		197,842
Federal agency collateralized mortgage obligations	3,006		3,095		4,560		4,568
Federal agency mortgage-backed pools	11,976		12,362		12,572		12,737
Total held to maturity investment securities	$	190,935	$	201,818	$	207,899	$	215,147

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	June 30, 2020
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
State and municipal	$	66,448	$	(651)	$	4,885	$	(108)	$	71,333	$	(759)
Federal agency collateralized mortgage obligations	3,438		(6)		—		—		3,438		(6)
Total temporarily impaired securities	$	69,886	$	(657)	$	4,885	$	(108)	$	74,771	$	(765)

	December 31, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
U.S. Treasury and federal agencies	$	1,413	$	(2)	$	—	$	—	$	1,413	$	(2)
State and municipal	129,942		(2,374)		6,279		(131)		136,221		(2,505)
Federal agency collateralized mortgage obligations	68,043		(308)		23,301		(260)		91,344		(568)
Federal agency mortgage-backed pools	24,740		(104)		37,822		(183)		62,562		(287)
Corporate notes	—		—		—		—		—		—
Total temporarily impaired securities	$	224,138	$	(2,788)	$	67,402	$	(574)	$	291,540	$	(3,362)

Information regarding security proceeds, gross gains and gross losses are presented below.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Sales of securities available for sale
Proceeds	$	5,146	$	74,048	$	37,182	$	91,635
Gross gains	248		99		637		158
Gross losses	—		(199)		(50)		(243)

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Loans

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Loans

Loans

The following table presents total loans outstanding by portfolio class, as of June 30, 2020:

	June 30, 2020
Commercial
Owner occupied real estate	$	501,198
Non-owner occupied real estate	1,009,116
Residential spec homes	12,036
Development & spec land	28,987
Commercial and industrial	761,378
Total commercial	2,312,715
Real estate
Residential mortgage	682,695
Residential construction	21,715
Mortgage warehouse	300,386
Total real estate	1,004,796
Consumer
Direct installment	39,515
Indirect installment	360,641
Home equity	260,715
Total consumer	660,871
Total loans	3,978,382
Allowance for loan losses	(55,090)
Net loans	$	3,923,292

As of June 30, 2020, loans originated under the Federal Paycheck Protection Program ("PPP") totaled approximately $308.1 million. Total loans include net deferred loan fees of $7.1 million at June 30, 2020.

The following table presents total loans outstanding, as of December 31, 2019:

	December 31, 2019
Commercial
Working capital and equipment	$	938,317
Real estate, including agriculture	978,891
Tax exempt	63,571
Other	65,872
Total	2,046,651
Real estate
1-4 family	762,571
Other	8,146
Total	770,717
Consumer
Auto	362,729
Recreation	16,262
Real estate/home improvement	43,585
Home equity	237,979
Unsecured	7,286
Other	1,339
Total	669,180
Mortgage warehouse	150,293
Total loans	3,636,841
Allowance for loan losses	(17,667)
Loans, net	$	3,619,174

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Accounting for Certain Loans Acquired in a Transfer

6 Months Ended

Jun. 30, 2020

Transfers and Servicing [Abstract]

Accounting for Certain Loans Acquired in a Transfer

Accounting for Certain Loans Acquired in a Transfer

The Company has acquired loans in acquisitions, whereby the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages prior to January 1, 2020. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

The carrying amounts of those loans included in the balance sheet amounts of loans receivable as of December 31, 2019 are as follows:

	December 31, 2019
	Commercial		Real Estate		Consumer		Outstanding Balance		Allowance for Loan Losses		Carrying Amount
Heartland	$	197	$	99	$	—	$	296	$	—	$	296
Summit	88		473		—		561		—		561
Peoples	229		35		—		264		—		264
Kosciusko	244		131		—		375		—		375
LaPorte	353		793		20		1,166		—		1,166
Lafayette	1,867		—		—		1,867		—		1,867
Wolverine	2,289		—		—		2,289		—		2,289
Salin	4,938		1,912		962		7,812		133		7,679
Total	$	10,205	$	3,443	$	982	$	14,630	$	133	$	14,497

Accretable yield, or income expected to be collected for the six months ended June 30, 2019 is as follows:

	Six Months Ended June 30, 2019
	Beginning balance		Additions		Accretion		Reclassification from nonaccretable difference		Disposals		Ending balance
Heartland	$	174	$	—	$	(16)	$	—	$	—	$	158
Summit	42		—		(5)		—		(11)		26
Kosciusko	300		—		(33)		—		(1)		266
LaPorte	829		—		(59)		—		—		770
Lafayette	609		—		(67)		—		(180)		362
Wolverine	698		—		(212)		—		(120)		366
Salin	—		735		—		—		—		735
Total	$	2,652	$	735	$	(392)	$	—	$	(312)	$	2,683

During the six months ended June 30, 2019, the Company increased the allowance for loan losses on purchased loans by a charge to the income statement of $154,000.

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Allowance for Loan Losses

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Allowance for Loan Losses

Allowance for Credit and Loan Losses

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	32,550	$	5,654	$	1,055	$	9,181	$	48,440
Provision for credit losses on loans	6,603		202		135		117		7,057
Charge-offs	(15)		(34)		—		(526)		(575)
Recoveries	9		10		—		149		168
Balance, end of period	$	39,147	$	5,832	$	1,190	$	8,921	$	55,090

	Three Months Ended June 30, 2019
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	11,556	$	1,588	$	1,014	$	3,663	$	17,821
Provision for credit losses on loans	590		185		26		95		896
Charge-offs	(339)		(48)		—		(327)		(714)
Recoveries	74		7		—		221		302
Balance, end of period	$	11,881	$	1,732	$	1,040	$	3,652	$	18,305

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30, 2020
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	11,996	$	923	$	1,077	$	3,671	$	17,667
Impact of adopting ASC 326	10,832		4,048		—		4,911		19,791
Initial PCD Allowance	2,786		—		—		—		2,786
Provision for credit losses on loans	13,519		902		113		1,123		15,657
Charge-offs	(84)		(60)		—		(1,144)		(1,288)
Recoveries	98		19		—		360		477
Balance, end of period	$	39,147	$	5,832	$	1,190	$	8,921	$	55,090

	Six Months Ended June 30, 2019
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	10,495	$	1,676	$	1,006	$	4,643	$	17,820
Provision for credit losses on loans	1,712		70		34		(556)		1,260
Charge-offs	(416)		(48)		—		(911)		(1,375)
Recoveries	90		34		—		476		600
Balance, end of period	$	11,881	$	1,732	$	1,040	$	3,652	$	18,305

The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge-offs, net of recoveries, (“loan losses”) recognized over the life of a pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).

To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date.

The Company's expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company's historical look-back period includes January 2012 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.

Qualitative reserves reflect management's overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit-related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

The Company's CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized National, Regional and Local Leading Economic Indexes, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate, and qualitative adjustments were utilized to reflect the forecast and other relevant factors.

The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns.

The $15.7 million ACL provision included special allocations related to the potential impact on three portfolios, non-owner occupied retail, leisure and hospitality, and unstabilized commercial real estate while continuing allocations for hotels and restaurants, as a result of the COVID-19 measures implemented by the states in which Horizon operates (Indiana and Michigan). Extensive analysis and monitoring of these portfolios has been undertaken and, while no loss has been specifically identified, the risks to certain borrowers are elevated and, therefore, the special allocation was deemed prudent.

The following table presents the balance in the allowance for credit loss and the recorded investment in loans, by portfolio segment, and based on impairment analysis as of December 31, 2019:

	December 31, 2019
	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	541	$	—	$	—	$	—	$	541
Collectively evaluated for impairment	11,455		923		1,077		3,671		17,126
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total ending allowance balance	$	11,996	$	923	$	1,077	$	3,671	$	17,667
Loans:
Individually evaluated for impairment	$	7,347	$	—	$	—	$	—	$	7,347
Collectively evaluated for impairment	2,040,299		770,705		150,293		665,952		3,627,249
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total ending loans balance	$	2,047,646	$	770,705	$	150,293	$	665,952	$	3,634,596

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Non-performing Loans and Impaired Loans

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Non-performing Loans and Impaired Loans

Non-performing Loans

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

	June 30, 2020
	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non-performing TDRs		Performing TDRs		Total Non-performing Loans		Non-accrual with no Allowance for Credit Losses
Commercial
Owner occupied real estate	$	8,547	$	—	$	629	$	167	$	9,343	$	6,158
Non-owner occupied real estate	1,242		—		350		—		1,592		1,086
Residential spec homes	—		—		—		—		—		—
Development & spec land	70		—		—		—		70		70
Commercial and industrial	2,049		—		1,184		—		3,233		2,363
Total commercial	11,908		—		2,163		167		14,238		9,677
Real estate
Residential mortgage	7,354		—		1,054		1,537		9,945		8,408
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	7,354		—		1,054		1,537		9,945		8,408
Consumer
Direct installment	27		40		—		—		67		27
Indirect installment	1,237		83		—		—		1,320		1,237
Home equity	1,925		—		226		335		2,486		2,151
Total consumer	3,189		123		226		335		3,873		3,415
Total	$	22,451	$	123	$	3,443	$	2,039	$	28,056	$	21,500

There was no interest income recognized on non-accrual loans during the three and six months ended June 30, 2020 and 2019 while the loans were in non-accrual status.

	December 31, 2019
	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non-performing TDRs		Performing TDRs		Total Non-performing Loans		Non-accrual with no Allowance for Credit Losses
Commercial
Owner occupied real estate	$	2,424	$	—	$	629	$	139	$	3,192	$	2,563
Non-owner occupied real estate	682		—		374		—		1,056		937
Residential spec homes	—		—		—		—		—		—
Development & spec land	73		—		—		—		73		73
Commercial and industrial	1,603		—		78		1,345		3,026		514
Total commercial	4,782		—		1,081		1,484		7,347		4,087
Real estate
Residential mortgage	7,614		1		708		1,561		9,884		8,322
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	7,614		1		708		1,561		9,884		8,322
Consumer
Direct installment	30		5		—		—		35		30
Indirect installment	1,234		135		—		—		1,369		1,234
Home equity	2,019		5		217		309		2,550		2,236
Total consumer	3,283		145		217		309		3,954		3,500
Total	$	15,679	$	146	$	2,006	$	3,354	$	21,185	$	15,909

Included in the $22.5 million of non-accrual loans and the $3.4 million of non-performing TDRs at June 30, 2020 were $3.3 million and $960,000, respectively, of loans acquired for which accretable yield was recognized.

Troubled Debt Restructurings

Loans modified as TDRs generally consist of allowing borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans' contractual terms. TDRs that continue to accrue interest are individually monitored on a monthly basis and evaluated for impairment annually and transferred to non-accrual status when it is probable that any remaining principal and interest payments due on the loan will not be collected in accordance with the contractual terms of the loan. TDRs that subsequently default are individually evaluated for impairment at the time of default.

At June 30, 2020, the type of concessions the Company has made on restructured loans has been temporary rate reductions and/or reductions in monthly payments, and there have been no restructured loans with modified recorded balances. Any modification to a loan that is a concession and is not in the normal course of lending is considered a restructured loan. A restructured loan is returned to accruing status after six consecutive payments but is still reported as TDR unless the loan bears interest at a market rate. As of June 30, 2020, the Company had $5.5 million in TDRs, $2.0 million were performing according to the restructured terms, and one TDR was returned to accrual status during the first six months of 2020. There were $435,000 of specific reserves allocated to TDRs at June 30, 2020 based on the discounted cash flows or, when appropriate, the fair value of the collateral. These TDRs are exclusive of loans modified under the CARES Act during the six months of 2020.

The following table presents TDRs by loan portfolio:

	June 30, 2020						December 31, 2019
	Non-accrual		Accruing		Total		Non-accrual		Accruing		Total
Commercial
Owner occupied real estate	$	629	$	167	$	796	$	629	$	139	$	768
Non-owner occupied real estate	350		—		350		374		—		374
Residential spec homes	—		—		—		—		—		—
Development & spec land	—		—		—		—		—		—
Commercial and industrial	1,184		—		1,184		78		1,345		1,423
Total commercial	2,163		167		2,330		1,081		1,484		2,565
Real estate
Residential mortgage	1,054		1,537		2,591		708		1,561		2,269
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	1,054		1,537		2,591		708		1,561		2,269
Consumer
Direct installment	—		—		—		—		—		—
Indirect installment	—		—		—		—		—		—
Home equity	226		335		561		217		309		526
Total consumer	226		335		561		217		309		526
Total	$	3,443	$	2,039	$	5,482	$	2,006	$	3,354	$	5,360

Loans Modified under the CARES Act

The Bank has elected (i) to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and (ii) to suspend any determination of a loan modified as a result of the effects of COVID-19 pandemic as being a TDR, including impairment for accounting purposes. At June 30, 2020, the Bank modified loans totaling $533.9 million which qualify for treatment under the CARES Act.

Collateral Dependent Financial Assets

A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.

The table below presents the value of collateral dependent loans by loan class as of June 30, 2020:

	June 30, 2020
Commercial
Owner occupied real estate	$	3,018
Non-owner occupied real estate	506
Commercial and industrial	870
Total commercial	4,394
Total collateral dependent loans	$	4,394

The following table presents the payment status by class of loan, excluding non-accrual loans of $22.5 million and non-performing TDRs of $3.4 million at June 30, 2020:

	June 30, 2020
	Current			30-59 Days Past Due			60-89 Days Past Due			90 Days or Greater Past Due			Total  Past Due Loans			Total Loans
Commercial
Owner occupied real estate	$	491,811		$	116		$	—		$	—		$	116		$	491,927
Non-owner occupied real estate	1,007,524			—			—			—			—			1,007,524
Residential spec homes	12,036			—			—			—			—			12,036
Development & spec land	28,917			—			—			—			—			28,917
Commercial and industrial	757,964			100			—			—			100			758,064
Total commercial	2,298,252			216			—			—			216			2,298,468
Real estate
Residential mortgage	672,729			1,295			263			—			1,558			674,287
Residential construction	21,715			—			—			—			—			21,715
Mortgage warehouse	300,386			—			—			—			—			300,386
Total real estate	994,830			1,295			263			—			1,558			996,388
Consumer
Direct installment	39,413			30			5			40			75			39,488
Indirect installment	355,305			1,097			259			83			1,439			356,744
Home equity	260,536			434			254			—			688			261,224
Total consumer	655,254			1,561			518			123			2,202			657,456
Total	$	3,948,336		$	3,072		$	781		$	123		$	3,976		$	3,952,312
Percentage of total loans	99.90		%	0.08		%	0.02		%	0.00		%	0.10		%	100.00		%

The following table presents the payment status by class of loan, excluding non-accrual loans of $15.7 million and non-performing TDRs of $2.0 million at December 31, 2019:

	December 31, 2019
	Current			30-59 Days Past Due			60-89 Days Past Due			90 Days or Greater Past Due			Total  Past Due Loans			Total
Commercial
Owner occupied real estate	$	515,604		$	920		$	—		$	—		$	920		$	516,524
Non-owner occupied real estate	972,195			80			—			—			80			972,275
Residential spec homes	12,925			—			—			—			—			12,925
Development & spec land	35,881			—			—			—			—			35,881
Commercial and industrial	503,348			819			11			—			830			504,178
Total commercial	2,039,953			1,819			11			—			1,830			2,041,783
Real estate
Residential mortgage	740,712			1,984			—			1			1,985			742,697
Residential construction	19,686			—			—			—			—			19,686
Mortgage warehouse	150,293			—			—			—			—			150,293
Total real estate	910,691			1,984			—			1			1,985			912,676
Consumer
Direct installment	40,864			175			5			5			185			41,049
Indirect installment	344,478			2,407			404			135			2,946			347,424
Home equity	273,050			904			20			5			929			273,979
Total consumer	658,392			3,486			429			145			4,060			662,452
Total	$	3,609,036		$	7,289		$	440		$	146		$	7,875		$	3,616,911
Percentage of total loans	99.78		%	0.20		%	0.01		%	0.01		%	0.22		%	100.00		%

The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

Horizon Bank’s processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re-evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the loan grade.

•For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective markets (ranging from $1,000,000 to $3,500,000) are validated by the Loan Committee, which is chaired by the Chief Commercial Banking Officer (CCBO).

•Commercial loan officers are responsible for reviewing their loan portfolios and reporting any adverse material change to the CCBO or Loan Committee. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the CCBO and the Credit Department of the change in the loan grade. Downgrades are accepted immediately by the CCBO, however, lenders must present their factual information to either the Loan Committee or the CCBO when recommending an upgrade.

•The CCBO, or his designee, meets regularly with loan officers to discuss the status of past-due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade.

•Monthly, senior management meets with the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures, other real estate owned and personal

property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Credit Losses for loans.

For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non-accrual, or are classified as a TDR are graded “Substandard.” After being 90 to 120 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non-accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass.

Horizon Bank employs a nine-grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below.

Risk Grade 1: Excellent (Pass)

Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents or loans to any publicly held company with a current long-term debt rating of A or better and meeting defined key financial metric ranges.

Risk Grade 2: Good (Pass)

Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities with required margins where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit histories; or loans to publicly held companies with current long-term debt ratings of Baa or better and meeting defined key financial metric ranges.

Risk Grade 3: Satisfactory (Pass)

Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered and meeting defined key financial metric ranges. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:

•At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory;

•At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.

•The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.

•During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.

Risk Grade 4 Satisfactory/Monitored:

Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory rated loans and meet defined key financial metric ranges. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank’s minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization.

Risk Grade 4W Management Watch:

Loans in this category are considered to be of acceptable quality and meet defined key financial metric ranges, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion. Commercial construction loans are graded as 4W Management Watch until the projects are completed and stabilized.

Risk Grade 5: Special Mention

Loans which possess some temporary (normally less than one year) credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,” impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength and must meet defined key financial metric ranges.

Risk Grade 6: Substandard

One or more of the following characteristics may be exhibited in loans classified Substandard:

•Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

•Loans are inadequately protected by the current net worth and paying capacity of the obligor.

•The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

•Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

•Unusual courses of action are needed to maintain a high probability of repayment.

•The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.

•The lender is forced into a subordinated or unsecured position due to flaws in documentation.

•Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.

•The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

•There is a significant deterioration in market conditions to which the borrower is highly vulnerable.

•The borrower meets defined key financial metric ranges.

Risk Grade 7: Doubtful

One or more of the following characteristics may be present in loans classified Doubtful:

•Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

•The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

•The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

•The borrower meets defined key financial metric ranges.

Risk Grade 8: Loss

Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following tables present loans by credit grades and origination year.

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Commercial
Owner occupied real estate
Pass	$	27,165	$	65,335	$	55,867	$	54,371	$	56,131	$	161,463	$	38,697	$	459,029
Special Mention	173		291		4,983		4,393		2,394		11,132		—		23,366
Substandard	—		1,231		3,915		1,146		497		8,135		3,879		18,803
Doubtful	—		—		—		—		—		—		—		—
Total owner occupied real estate	$	27,338	$	66,857	$	64,765	$	59,910	$	59,022	$	180,730	$	42,576	$	501,198
Non-owner occupied real estate
Pass	$	68,736	$	129,273	$	83,742	$	143,870	$	114,786	$	231,098	$	159,787	$	931,292
Special Mention	2,477		10,727		27,479		9,421		2,959		15,174		1,075		69,312
Substandard	—		—		2,438		631		453		4,990		—		8,512
Doubtful	—		—		—		—		—		—		—		—
Total non-owner occupied real estate	$	71,213	$	140,000	$	113,659	$	153,922	$	118,198	$	251,262	$	160,862	$	1,009,116
Residential spec homes
Pass	$	—	$	—	$	—	$	318	$	679	$	1,905	$	7,889	$	10,791
Special Mention	—		—		—		—		—		—		1,245		1,245
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total residential spec homes	$	—	$	—	$	—	$	318	$	679	$	1,905	$	9,134	$	12,036
Development & spec land
Pass	$	30	$	912	$	2,449	$	4,815	$	804	$	13,356	$	6,488	$	28,854
Special Mention	—		—		—		—		—		133		—		133
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total development & spec land	$	30	$	912	$	2,449	$	4,815	$	804	$	13,489	$	6,488	$	28,987
Commercial & industrial
Pass	$	321,761	$	66,704	$	66,203	$	96,404	$	30,716	$	83,437	$	33,185	$	698,410
Special Mention	8,027		4,012		8,027		6,321		2,363		12,088		1,914		42,752
Substandard	2,651		5,751		3,553		1,699		834		3,656		2,072		20,216
Doubtful	—		—		—		—		—		—		—		—
Total commercial & industrial	$	332,439	$	76,467	$	77,783	$	104,424	$	33,913	$	99,181	$	37,171	$	761,378
Total commercial	$	431,020	$	284,236	$	258,656	$	323,389	$	212,616	$	546,567	$	256,231	$	2,312,715

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Real estate
Residential mortgage
Performing	$	59,698	$	68,882	$	119,632	$	115,321	$	85,206	$	223,362	$	649	$	672,750
Non-performing	—		181		147		369		1,310		7,938		—		9,945
Total residential mortgage	$	59,698	$	69,063	$	119,779	$	115,690	$	86,516	$	231,300	$	649	$	682,695
Residential construction
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	21,715	$	21,715
Non-performing	—		—		—		—		—		—		—		—
Total residential construction	$	—	$	—	$	—	$	—	$	—	$	—	$	21,715	$	21,715
Mortgage warehouse
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	300,386	$	300,386
Non-performing	—		—		—		—		—		—		—		—
Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	300,386	$	300,386
Total real estate	$	59,698	$	69,063	$	119,779	$	115,690	$	86,516	$	231,300	$	322,750	$	1,004,796

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Consumer
Direct installment
Performing	$	6,706	$	12,336	$	7,486	$	7,381	$	3,002	$	2,523	$	14	$	39,448
Non-performing	—		4		30		20		6		7		—		67
Total direct installment	$	6,706	$	12,340	$	7,516	$	7,401	$	3,008	$	2,530	$	14	$	39,515
Indirect installment
Performing	$	72,828	$	119,252	$	96,562	$	50,133	$	12,502	$	8,044	$	—	$	359,321
Non-performing	—		166		272		531		141		210		—		1,320
Total indirect installment	$	72,828	$	119,418	$	96,834	$	50,664	$	12,643	$	8,254	$	—	$	360,641
Home equity
Performing	$	28,281	$	50,367	$	43,076	$	33,139	$	26,902	$	71,516	$	4,948	$	258,229
Non-performing	—		9		55		79		52		1,123		1,168		2,486
Total home equity	$	28,281	$	50,376	$	43,131	$	33,218	$	26,954	$	72,639	$	6,116	$	260,715
Total consumer	$	107,815	$	182,134	$	147,481	$	91,283	$	42,605	$	83,423	$	6,130	$	660,871

	December 31, 2019
	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	492,386		$	8,328		$	18,863		$	—		$	519,577
Non-owner occupied real estate	957,990			7,824			7,517			—			973,331
Residential spec homes	12,925			—			—			—			12,925
Development & spec land	35,815			—			139			—			35,954
Commercial and industrial	468,893			18,652			18,314			—			505,859
Total commercial	1,968,009			34,804			44,833			—			2,047,646
Real estate
Residential mortgage	741,136			—			9,883			—			751,019
Residential construction	19,686			—			—			—			19,686
Mortgage warehouse	150,293			—			—			—			150,293
Total real estate	911,115			—			9,883			—			920,998
Consumer
Direct installment	41,044			—			35			—			41,079
Indirect installment	347,289			—			1,369			—			348,658
Home equity	273,665			—			2,550			—			276,215
Total consumer	661,998			—			3,954			—			665,952
Total	$	3,541,122		$	34,804		$	58,670		$	—		$	3,634,596
Percentage of total loans	97.43		%	0.96		%	1.61		%	0.00		%	100.00		%

Commercial loans modified due to the impact of the COVID-19 pandemic were immediately downgraded one level resulting in the increase of Special Mention commercial loans from December 31, 2019 to June 30, 2020.

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Loan Servicing

6 Months Ended

Jun. 30, 2020

Payments for (Proceeds from) Mortgage Servicing Rights [Abstract]

Loan Servicing

Loan Servicing

Loans serviced for others are not included in the accompanying condensed consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1.5 billiom and $1.4 billion at June 30, 2020 and December 31, 2019.

The aggregate fair value of capitalized mortgage servicing rights was approximately $12.1 million and $14.4 million at June 30, 2020 and December 31, 2019, compared to the carrying values of $12.4 million and $14.3 million at June 30, 2020 and December 31, 2019, respectively. Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage servicing rights.

	June 30,		December 31,
	2020		2019
Mortgage servicing rights
Balance, beginning of period	$	15,046	$	12,876
Servicing rights capitalized	2,573		3,547
Amortization of servicing rights	(1,310)		(1,377)
Balance, end of period	16,309		15,046
Impairment allowance
Balance, beginning of period	(719)		(527)
Additions	(3,201)		(234)
Reductions	—		42
Balance, end of period	(3,920)		(719)
Mortgage servicing rights, net	$	12,389	$	14,327

The Bank recorded additional impairment of approximately $3.2 million and $192,000 for the six months ended June 30, 2020 and December 31, 2019, respectively.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The following table presents the Company’s carrying amount of goodwill as of June 30, 2020 and December 31, 2019.

	June 30,		December 31,
	2020		2019
Balance, beginning of period	$	151,238	$	119,880
Goodwill acquired during the period	—		31,358
Balance, end of period	$	151,238	$	151,238

In accordance with ASC 350-20, the Company conducts a goodwill impairment test at least annually, or more frequently as events occur or circumstances change that would more-likely-than-not reduce the fair value below its carrying amount. In the second quarter of 2020, the onset of the COVID-19 pandemic prompted the Company to assess qualitative and quantitative factors to determine whether it was more-likely-than-not the fair value of the Company was less than the carrying amount.

The Company assessed relevant events and circumstances, including macroeconomic conditions, industry and market considerations, overall financial performance, changes in the composition or carrying amount of assets and liabilities, the market price of the Company’s common stock and other relevant facts. The Company performed both a market capitalization approach and a discounted cash flow approach to determine the fair value of the Company. As a result, no goodwill impairment charge was recognized during the three and six months ended June 30, 2020.

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Repurchase Agreements

6 Months Ended

Jun. 30, 2020

Text Block [Abstract]

Repurchase Agreements

Repurchase AgreementsThe Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remained under the Bank’s control.

The following table shows repurchase agreements accounted for as secured borrowings:

	June 30, 2020
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to one year		One to three years		Three to five years		Five to ten years		Beyond ten years		Total
Repurchase Agreements and repurchase-to-maturity transactions
Repurchase Agreements	$	109,160	$	—	$	—	$	—	$	—	$	—	$	109,160
Securities pledged for Repurchase Agreements
Federal agency collateralized mortgage obligations	$	46,073	$	—	$	—	$	—	$	—	$	—	$	46,073
Federal agency mortgage-backed pools	65,039		—		—		—		—		—		65,039
Total	$	111,112	$	—	$	—	$	—	$	—	$	—	$	111,112

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Subordinated Notes

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Subordinated Borrowings Disclosure

Subordinated Notes

On June 24, 2020, Horizon issued $60.0 million in aggregate principal amount of 5.625% fixed-to-floating rate subordinated notes (the “Notes”). The Notes were offered in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Notes mature on July 1, 2030 (the “Maturity Date”). From and including the date of original issuance to, but excluding, July 1, 2025 or the date of earlier redemption (the “fixed rate period”), the Notes bear interest at an initial rate of 5.625% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2021. The last interest payment date for the fixed rate period will be July 1, 2025. From and including July 1, 2025 to, but excluding, the Maturity Date or the date of earlier redemption (the “floating rate period”), the Notes bear interest at a floating rate per annum equal to the Benchmark rate (which is expected to be Three-Month Term SOFR), plus 549 basis points, payable quarterly in arrears on January 1, April 1, July1, and October 1 of each year, commencing on October 1, 2025. Notwithstanding the foregoing, in the event that the Benchmark rate is less than zero, the Benchmark rate shall be deemed to be zero.

Horizon may, at its option, beginning with the interest payment date of July 1, 2025 and on any interest payment date thereafter, redeem the Notes, in whole or in part. The Notes will not otherwise be redeemable by Horizon prior to maturity, unless certain events occur. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. Any early redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations, including capital regulations.

The Notes are unsecured subordinated obligations, and rank pari passu, or equally, with all of Horizon's future unsecured subordinated debt and are junior to all existing and future senior debt. The Notes are structurally subordinated to all existing and future liabilities of Horizon's subsidiaries, including the deposit liabilities and claims of other creditors of Horizon Bank, and are effectively subordinated to Horizon's existing and future secured indebtedness. There is no sinking fund for the Notes. The Notes are obligations of Horizon only and are not obligations of, and are not guaranteed by, any of Horizon's subsidiaries.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Cash Flow Hedges - As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flow due to interest rate fluctuations, the Company entered into interest rate swap agreements for a portion of its floating rate debt. The agreements provide for the Company to receive interest from the counterparty at three months LIBOR and to pay interest to the counterparty at a fixed rate of 4.20% on a notional amount of $12.0 million at June 30, 2020 and a weighted average fixed rate of 4.03% on a notional amount of $15.5 million December 31, 2019. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

The Company assumed additional interest rate swap agreements as the result of the LaPorte acquisition in July 2016. The agreements provide for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a fixed rate of 2.62% on a notional amount of $10.0 million at June 30, 2020 and at a weighted average fixed rate of 2.31% on a notional amount of $30.0 million at December 31, 2019. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

On July 20, 2018, the Company entered into an interest rate swap agreement for an additional portion of its floating rate debt. The agreement provides for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a rate of 2.81% on a notional amount of $50.0 million at June 30, 2020 and December 31, 2019. Under the agreement, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

Management has designated the interest rate swap agreement as a cash flow hedging instrument. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. At June 30, 2020, the Company’s cash flow hedge was effective and is not expected to have a significant impact on the Company’s net income over the next 12 months.

Fair Value Hedges

Fair value hedges are intended to reduce the interest rate risk associated with the underlying hedged item. The Company enters into fixed rate loan agreements as part of its lending policy. To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company has entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings. At June 30, 2020, the Company’s fair value hedges were effective and are not expected to have a significant impact on the Company’s net income over the next 12 months.

The change in fair value of both the hedge instruments and the underlying loan agreements are recorded as gains or losses in interest income. The fair value hedges are considered to be highly effective and any hedge ineffectiveness was deemed not material. The notional amounts of the loan and security agreements being hedged were $425.8 million at June 30, 2020 and $361.0 million at December 31, 2019.

Other Derivative Instruments

The Company enters into non-hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business. At June 30, 2020, the Company’s fair value of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company’s net income.

The change in fair value of both the forward sale commitments and commitments to originate mortgage loans were recorded and the net gains or losses included in the Company’s gain on sale of loans.

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

	Asset Derivatives			Liability Derivatives
	June 30, 2020			June 30, 2020
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	42,378	Other liabilities	$	50,917
Total derivatives designated as hedging instruments		42,378			50,917
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets	590		Other liabilities	—
Total derivatives not designated as hedging instruments		590			—
Total derivatives		$	42,968		$	50,917

	Asset Derivatives			Liability Derivatives
	December 31, 2019			December 31, 2019
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	11,422	Other liabilities	$	15,861
Total derivatives designated as hedging instruments		11,422			15,861
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets	264		Other liabilities	38
Total derivatives not designated as hedging instruments		264			38
Total derivatives		$	11,686		$	15,899

The effect of the derivative instruments on the condensed consolidated statements of income for the three-month and six-month periods ending June 30 is as follows:

	Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivatives in cash flow hedging relationship
Interest rate contracts	$	(107)	$	(1,502)	$	(3,239)	$	(2,376)

FASB Accounting Standards Codification (“ASC”) Topic 820-10-20 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820-10-55 establishes a fair value hierarchy that emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

	Location of gain (loss) recognized on derivative	Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative in fair value hedging relationship
Interest rate contracts	Interest income - loans	$	(3,162)	$	(7,529)	$	(29,492)	$	(11,580)
Interest rate contracts	Interest income - loans	3,162		7,529		29,492		11,580
Total		$	—	$	—	$	—	$	—

	Location of gain (loss) recognized on derivative	Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative not designated as hedging relationship
Mortgage contracts	Other income - gain on sale of loans	$	(679)	$	75	$	364	$	332

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Disclosures about Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2020

Text Block [Abstract]

Disclosures about Fair Value of Assets and Liabilities

Disclosures about Fair Value of Assets and Liabilities

The Fair Value Measurements topic of the FASB ASC defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. There are three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended June 30, 2020. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available for sale securities

When quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Treasury and federal agency securities, state and municipal securities, federal agency collateralized mortgage obligations and mortgage-backed pools and corporate notes. Level 2 securities are valued by a third party pricing service commonly used in the banking industry utilizing observable inputs. Observable inputs include dealer quotes, market spreads, cash flow analysis, the U.S. Treasury yield curve, trade execution data, market consensus prepayment spreads and available credit information and the bond’s terms and conditions. The pricing

provider utilizes evaluated pricing models that vary based on asset class. These models incorporate available market information including quoted prices of securities with similar characteristics and, because many fixed-income securities do not trade on a daily basis, apply available information through processes such as benchmark curves, benchmarking of like securities, sector grouping, and matrix pricing. In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features.

Hedged loans

Certain fixed rate loans have been converted to variable rate loans by entering into interest rate swap agreements. The fair value of those fixed rate loans is based on discounting the estimated cash flows using interest rates determined by the respective interest rate swap agreement. Loans are classified within Level 2 of the valuation hierarchy based on the unobservable inputs used.

Interest rate swap agreements

The fair value of the Company’s interest rate swap agreements is estimated by a third party using inputs that are primarily unobservable including a yield curve, adjusted for liquidity and credit risk, contracted terms and discounted cash flow analysis, and therefore, are classified within Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:

	June 30, 2020
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
State and municipal	$	548,232	$	—	$	548,232	$	—
Federal agency collateralized mortgage obligations	225,805		—		225,805		—
Federal agency mortgage-backed pools	148,786		—		148,786		—
Corporate notes	12,317		—		12,317		—
Total available for sale securities	935,140		—		935,140		—
Interest rate swap agreements asset	39,216		—		39,216		—
Forward sale commitments	590		—		590		—
Interest rate swap agreements liability	(47,620)		—		(47,620)		—

	December 31, 2019
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
U.S. Treasury and federal agencies	$	1,413	$	—	$	1,413	$	—
State and municipal	405,768		—		405,768		—
Federal agency collateralized mortgage obligations	269,252		—		269,252		—
Federal agency mortgage-backed pools	146,572		—		146,572		—
Corporate notes	11,771		—		11,771		—
Total available for sale securities	834,776		—		834,776		—
Interest rate swap agreements asset	11,422		—		11,422		—
Forward sale commitments	264		—		264		—
Interest rate swap agreements liability	(15,861)		—		(15,861)		—
Commitments to originate loans	(38)		—		(38)		—

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Non-interest Income
Total gains and losses from:
Hedged loans	$	(3,162)	$	(7,529)	$	(29,492)	$	(11,580)
Fair value interest rate swap agreements	3,162		7,529		29,492		11,580
Derivative loan commitments	(679)		75		364		332
	$	(679)	$	75	$	364	$	332

Certain other assets are measured at fair value on a non-recurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2020
Collateral dependent loans	$	12,389	$	—	$	—	$	12,389
Mortgage servicing rights	12,389		—		—		12,389
December 31, 2019
Impaired loans	$	6,806	$	—	$	—	$	6,806
Mortgage servicing rights	14,327		—		—		14,327

Collateral Dependent Loans: Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is

utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Mortgage Servicing Rights (MSRs): MSRs do not trade in an active market with readily observable prices. Accordingly, the fair value of these assets is classified as Level 3. The Company determines the fair value of MSRs using an income approach model based upon the Company’s month-end interest rate curve and prepayment assumptions. The model utilizes assumptions to estimate future net servicing income cash flows, including estimates of time decay, payoffs and changes in valuation inputs and assumptions. The Company reviews the valuation assumptions against this market data for reasonableness and adjusts the assumptions if deemed appropriate. The carrying amount of the MSRs’ fair value due to impairment decreased by $3.2 million during the first six months of 2020 and increased by $11,000 during the first six months of 2019.

The following table presents qualitative information about unobservable inputs used in recurring and non-recurring Level 3 fair value measurements, other than goodwill.

	June 30, 2020
	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral dependent loans	$	12,389	Collateral based measurement	Discount to reflect current market conditions and ultimate collectibility	0.0%-100.0% (13.0%)
Mortgage servicing rights	12,389		Discounted cash flows	Discount rate, Constant prepayment rate, Probability of default	7.8%-7.8% (7.8%), 12.3%-18.3% (16.8%), 0.4%-8.2%(1.4%)

	December 31, 2019
	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,806	Collateral based measurement	Discount to reflect current market conditions and ultimate collectibility	0.0%-100.0%(7.4%)
Mortgage servicing rights	14,327		Discounted cash flows	Discount rate, Constant prepayment rate, Probability of default	8.7%-9.0% (8.7%), 10.2%-19.8%(12.2%), 0.1%-2.9%(0.7%)

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The estimated fair value amounts of the Company’s financial instruments were determined using available market information, current pricing information applicable to Horizon and various valuation methodologies. Where market quotations were not available, considerable management judgment was involved in the determination of estimated fair values. Therefore, the estimated fair value of financial instruments shown below may not be representative of the amounts at which they could be exchanged in a current or future transaction. Due to the inherent uncertainties of expected cash flows of financial instruments, the use of alternate valuation assumptions and methods could have a significant effect on the estimated fair value amounts.

The estimated fair values of financial instruments, as shown below, are not intended to reflect the estimated liquidation or market value of Horizon taken as a whole. The disclosed fair value estimates are limited to Horizon’s significant financial instruments at June 30, 2020 and December 31, 2019. These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheet as well as certain off-balance sheet financial instruments. The estimated fair values shown below do not include any valuation of assets and liabilities, which are not financial instruments as defined by the FASB ASC fair value hierarchy.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and Due from Banks — The carrying amounts approximate fair value.

Interest-earning time deposits — The fair values of the Company's interest-earning time deposits are estimated using discounted cash flow analyses based on current rates for similar types of interest-earning time deposits.

Held-to-Maturity Securities — For debt securities held to maturity, fair values are based on quoted market prices or dealer quotes. For those securities where a quoted market price is not available, carrying amount is a reasonable estimate of fair value based upon comparison with similar securities.

Loans Held for Sale — The carrying amounts approximate fair value.

Net Loans — The fair value of net loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

FHLB Stock — Fair value of FHLB stock is based on the price at which it may be resold to the FHLB.

Interest Receivable/Payable — The carrying amounts approximate fair value.

Deposits — The fair value of demand deposits, savings accounts, interest-bearing checking accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturity.

Borrowings — Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings.

Subordinated Notes — The fair value of subordinated notes is based on discounted cash flows based on current borrowing rates for similar types of instruments.

Junior Subordinated Debentures Issued to Capital Trusts — Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.

Commitments to Extend Credit and Standby Letters of Credit — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. Due to the short-term nature of these agreements, carrying amounts approximate fair value.

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

	June 30, 2020
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	170,135	$	170,135	$	—	$	—
Interest-earning time deposits	9,247		—		9,462		—
Investment securities, held to maturity	190,935		—		201,818		—
Loans held for sale	15,913		—		—		15,913
Loans (excluding loan level hedges), net	3,923,292		—		—		3,912,434
Stock in FHLB	23,608		—		23,608		—
Interest receivable	20,185		—		20,185		—
Liabilities
Non-interest bearing deposits	$	981,868	$	981,868	$	—	$	—
Interest bearing deposits	—		—		3,328,498		—
Borrowings	—		—		595,893		—
Subordinated notes	58,824		—		58,824		—
Junior subordinated debentures issued to capital trusts	56,437		—		52,603		—
Interest payable	2,353		—		2,353		—

	December 31, 2019
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	98,831	$	98,831	$	—	$	—
Interest-earning time deposits	8,455		—		8,537		—
Investment securities, held to maturity	207,899		—		215,147		—
Loans held for sale	4,088		—		—		4,088
Loans (excluding loan level hedges), net	3,619,174		—		—		3,554,951
Stock in FHLB	22,447		—		22,447		—
Interest receivable	18,828		—		18,828		—
Liabilities
Non-interest bearing deposits	$	709,760	$	709,760	$	—	$	—
Interest bearing deposits	3,221,242		—		3,180,768		—
Borrowings	549,741		—		546,995		—
Junior subordinated debentures issued to capital trusts	56,311		—		51,809		—
Interest payable	3,062		—		3,062		—

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

	June 30, 2020		December 31, 2019
Unrealized gain on securities available for sale	$	35,599	$	12,687
Unamortized loss on securities held to maturity, previously transferred from AFS	(136)		(107)
Unrealized loss on derivative instruments	(8,540)		(4,440)
Tax effect	(5,653)		(1,708)
Total accumulated other comprehensive income	$	21,270	$	6,432

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Regulatory Capital

6 Months Ended

Jun. 30, 2020

Banking and Thrift [Abstract]

Regulatory Capital

Regulatory Capital

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. These capital requirements implement changes arising from the Dodd-Frank Wall Street Reform and Consumer Protection Act and the U.S. Basel Committee on Banking Supervision’s capital framework (known as “Basel III”). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Company and Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance with the Basel III-based regulations. As allowed under Basel III rules, the Company made the decision to opt-out of including accumulated other comprehensive income in regulatory capital. The minimum regulatory capital requirements are set forth in the table below.

In addition, to be categorized as well capitalized, the Company and Bank must maintain Total risk-based, Tier I risk-based, common equity Tier I risk- based and Tier I leverage ratios as set forth in the table below. As of June 30, 2020 and December 31, 2019, the Company and Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the second quarter of 2020 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies.

In October 2019, the federal banking agencies finalized a new rule that will simplify capital requirements for qualified community banks that opt into the new community bank leverage ratio framework. The new framework was available to use in March 31, 2020 Call Reports or Forms FRY-9C (as applicable) for depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets, among other qualifying criteria. Horizon did not elect the new community bank leverage ratio framework.

As of March 31, 2020, the Company and Bank elected the transition option of the 2019 CECL Rule which allows banking organizations to phase in over a three-year period the day-one adverse effects of CECL on their regulatory capital ratios.

Horizon and the Bank’s actual and required capital ratios as of June 30, 2020 and December 31, 2019 were as follows:

	Actual				Required for Capital1 Adequacy Purposes				Required For Capital1 Adequacy Purposes with Capital Buffer				Well Capitalized  Under Prompt1 Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2020
Total capital1 (to risk-weighted assets)
Consolidated	$	628,750	14.37	%	$	350,035	8.00	%	$	459,421	10.50	%	N/A		N/A
Bank	514,371		11.74	%	350,508		8.00	%	460,042		10.50	%	$	438,135	10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated	585,386		13.38	%	262,505		6.00	%	371,882		8.50	%	N/A		N/A
Bank	459,621		10.49	%	262,891		6.00	%	372,429		8.50	%	350,521		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated	469,069		10.72	%	196,904		4.50	%	306,295		7.00	%	N/A		N/A
Bank	459,621		10.49	%	197,168		4.50	%	306,706		7.00	%	284,799		6.50	%
Tier 1 capital1 (to average assets)
Consolidated	585,386		10.75	%	217,818		4.00	%	217,818		4.00	%	N/A		N/A
Bank	459,621		8.48	%	216,802		4.00	%	216,802		4.00	%	271,003		5.00	%
December 31, 2019
Total capital1 (to risk-weighted assets)
Consolidated	$	548,364	13.95	%	$	314,395	8.00	%	$	412,644	10.500	%	N/A		N/A
Bank	497,227		12.65	%	314,452		8.00	%	412,718		10.500	%	$	393,065	10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated	530,643		13.50	%	235,796		6.00	%	334,044		8.500	%	N/A		N/A
Bank	479,506		12.20	%	235,823		6.00	%	334,082		8.500	%	314,430		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated	473,150		12.04	%	176,846		4.50	%	275,094		7.000	%	N/A		N/A
Bank	479,506		12.20	%	176,867		4.50	%	275,126		7.000	%	255,475		6.50	%
Tier 1 capital1 (to average assets)
Consolidated	530,643		10.50	%	202,111		4.00	%	202,111		4.000	%	N/A		N/A
Bank	479,506		9.49	%	202,110		4.00	%	202,110		4.000	%	252,638		5.00	%
(1) As defined by regulatory agencies

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Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Earnings per Common Share

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted-average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

The following table shows computation of basic and diluted earnings per share.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Basic earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Basic earnings per share	$	0.33	$	0.37	$	0.59	$	0.65
Diluted earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Effect of dilutive securities:
Restricted stock	7,614		—		40,017		—
Stock options	13,931		75,291		26,967		76,924
Weighted average common shares outstanding	43,802,794		45,130,408		44,286,864		42,032,971
Diluted earnings per share	$	0.33	$	0.37	$	0.59	$	0.65

There were 504,085 and 285,588 shares for the three and six months ended June 30, 2020, which were not included in the computation of diluted earnings per share because they were non-dilutive. There were 341,394 and 341,394 shares for the three and six months ended June 30, 2019, which were not included in the computation of diluted earnings per share because they were non-dilutive.

Horizon has share-based employee compensation plans, which are described in the notes to the financial statements included in the December 31, 2019 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Adoption of New Accounting Standards

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – On January 1, 2020, the Company adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held to maturity securities. It also applies to off–balance sheet (“OBS”) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar agreements). In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance, rather than as a write–down, on available for sale debt securities management does not intend to sell or believe that it is not more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and OBS credit exposures. Results for reporting periods beginning after December 31, 2019, are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to retained earnings of $15.6 million as of January 1, 2020 for the cumulative effect of adopting ASC 326.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”), previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of $2.8 million of allowance for credit losses (“ACL”) on loans.

The following table illustrates the impact of ASC 326.

	January 1, 2020
(dollars in thousands)	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Loans
Commercial	$	25,614	$	11,996	$	13,618
Real estate	4,971		923		4,048
Mortgage warehouse	1,077		1,077		—
Consumer	8,582		3,671		4,911
Allowance for credit losses on loans	$	40,244	$	17,667	$	22,577

FASB ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment - On January 1, 2020, the Company adopted the provision of ASU No. 2017-04, which eliminates Step 2 from the goodwill impairment test. Under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative test.

At each reporting date between annual goodwill impairment tests, Horizon considers potential indicators of impairment. Given the current economic uncertainty and volatility surrounding COVID-19, Horizon assessed whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered comprised the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting unit; performance of the Company's stock and other relevant events. Horizon further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. At the conclusion of the assessment, the Company determined that as of March 31, 2020 it was more likely than not that the fair value exceeded its carrying values. Horizon will continue to monitor developments regarding the COVID-19 pandemic and measures implemented in response to the pandemic, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

FASB ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement – On January 1, 2020, the Company adopted the provision of ASU 2018-13, which modifies the disclosure requirements on fair value measurements. The amendment removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The update also adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, the Company may disclose other quantitative information in lieu of the weighted average if we determine that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

Loans

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable totaling $12.8 million at June 30, 2020 was excluded from the ACL calculation and was reported in accrued interest receivable on the consolidated balance sheets. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income

using the effective yield method without anticipating prepayments.

From time to time, the Bank obtains information that may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of this, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Further, it is management’s policy to generally place a loan on a non-accrual status when the payment is delinquent in excess of 90 days or the loan has had the accrual of interest discontinued by management. The officer responsible for the loan and the Chief Commercial Banking Officer and/or the Chief Operations Officer must review all loans placed on non-accrual status. Subsequent payments on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal in accordance with the loan terms. The Company requires a period of satisfactory performance of not less than six months before returning a non-accrual loan to accrual status.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is contractually 90 days past due, and charges down to the net realizable value other secured loans when they are contractually 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

A loan becomes impaired when, based on current information, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is classified as impaired, the degree of impairment must be recognized by estimating future cash flows from the debtor. The present value of these cash flows is computed at a discount rate based on the interest rate contained in the loan agreement. However, if a particular loan has a determinable market value for its collateral, the creditor may use that value. Also, if the loan is secured and considered collateral dependent, the creditor may use the fair value of the collateral. Interest income on loans individually classified as impaired is recognized on a cash basis after all past due and current principal payments have been made.

Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1-4 family residences, residential construction loans, automobile, home equity, second mortgage loans and mortgage warehouse loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When analysis of borrower operating results and financial condition indicate that underlying cash flows of a borrower’s business are not adequate to meet its debt service requirements, the loan is evaluated for impairment. Often this is associated with a delay or shortfall in payments of 30 days or more. Loans are generally moved to non-accrual status when they are 90 days or more past due. These loans are often considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms, including troubled debt restructurings, are measured for impairment. Allowable methods for determining the amount of impairment include the three methods described above.

Purchased Credit Deteriorated Loans

Purchased Credit Deteriorated Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An ACL on loans is determined using the same methodology as other loans held for investment. The initial ACL on loans determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and ACL on loans becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL on loans are recorded through credit loss expense.

The Company adopted this ASU using the prospective transition approach for PCD loans previously accounted for under ASC 310-30. In accordance with the standard, we did not assess whether PCI loans met the criteria of PCD as of the date of adoption and all loans previously classified as PCI were updated to the PCD classification. Pools utilized for PCI accounting under ASC 310-30 were not considered since the Company did not have PCI pools at the time of adoption. PCD loans were assessed using prior specific loan reviews for the initial PCD loan ACL. At the date of adoption, no securities were determined to be PCD.

Allowance for Loan Losses

Allowance for Credit Losses on Loans

The ACL on loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is confirmed to no longer be collectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, changes in economic conditions, or other relevant factors.

The Company considers the following when estimating credit losses: 1) available information relevant to assessing the collectibility of cash flows including internal information, external information or a combination of both relating to past events, current conditions and reasonable and supportable forecasts; 2) relevant qualitative and quantitative factors relating to the environment in which the Bank operates and factors specific to the borrower; 3) off-balance-sheet credit exposures; and credit support.

ACL on loans is measured on a collective basis and reflects impairment in groups of loans aggregated on the basis of similar risk characteristics which may include any one or a combination of the following: internal credit ratings, risk ratings or classification, financial asset type, collateral type, size, industry of the borrower, historical or expected credit loss patterns, and reasonable and supportable forecast periods. The ACL for a specific portfolio segment is computed by multiplying the loss rate by the amortized cost balance of the segment with adjustments for other qualitative factors as described above. As appropriate, newer credit products or portfolios with limited historical loss may use applicable external data for determining the ACL until experience justifies that sufficient product maturity supports the estimate of expected credit losses.

Pursuant to ASC 326-20-30-9, an entity shall not rely solely on past events to estimate expected credit losses, and should consider adjustments to historical information to reflect the extent to which management expects current conditions and forecasted conditions to differ from the periods utilized for the historical loss rate calculation. Management has incorporated an adjustment of the historical loss rate calculated within the model to reflect current and forecasted condition and has applied this adjustment on a qualitative factor basis to the aggregate pool loss rate.

The qualitative adjustment is based on a combination of external econometric data and internal factors such as portfolio composition, changes in management, changes in loan policy and other factors. The economic forecast is based in part on economic indexes and quantitative matrices with a six to twelve month forecast. The qualitative adjustment is calculated based on current and forecasted conditions and evaluated each quarter by management, and therefore is dynamic in nature. As a result of the forecast being applied as a qualitative factor and adjusted quarterly, no reversion to the historical loss rate is necessary, as

the historical base loss rate is preserved in the calculation of “all in” loss rate.

Specific reserves reflect impairment on loans identified for evaluation or individually considered non-performing, including troubled debt restructurings and receivables where the Company has determined foreclosure is probable. These loans no longer have similar risk characteristics to collectively evaluated loans due to changes in credit risk, borrower circumstances, recognition of write-offs, or cash collections that have been fully applied to principal on the basis of non-accrual policies. At a minimum, the population of loans subject to individual evaluation include individual loans and leases where it is probable we will be unable to collect all amounts due, according to the original contractual terms. These include commercial impaired loans, jumbo residential mortgages (as defined), and jumbo home equity loans with a balance exceeding $250,000, and other loans as determined by management. ACL for residential and consumer loans are, primarily, determined by meaningful pools of similar loans and are evaluated on a quarterly basis.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The provision for credit losses on loans on individually evaluated loans is recognized on the fair value of collateral adjusted for estimated costs to sell, the basis of the present value of expected future cash flows discounted at the effective interest rate or the observable market price as of the relevant date.

Mortgage Portfolio

he table below identifies the Company's loan portfolio segments and classes.

Portfolio Segment	Class of Financing Receivable
Commercial	Owner occupied real estate
	Non-owner occupied real estate
	Residential spec homes
	Development & spec land
	Commercial and industrial
Real estate	Residential mortgage
	Residential construction
Mortgage warehouse	Mortgage warehouse
Consumer	Direct installment
	Indirect installment
	Home equity

Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Class of financing receivable is defined as a group of financing receivables determined on the basis of both of the following, 1) risk characteristics of the financing receivable, and 2) an entity's method for monitoring and assessing credit risk. Generally, the Bank does not move loans from a revolving loan to a term loan other than construction loans. Construction loans are reviewed and rewritten prior to being originated as a term loan.

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may incorporate a personal guarantee. However, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans and, secondarily, as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy, or fluctuations in interest rates. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow, and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Real Estate and Consumer

With respect to residential loans that are secured by 1–4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon’s mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon’s agreement with the mortgage company. Each mortgage loan funded by Horizon undergoes an underwriting review by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company. In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan. At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement. Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company. When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on the agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note. Horizon also has the option to request that the mortgage company reacquire an individual mortgage. Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company. Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

Reclassifications

Reclassifications

Certain reclassifications have been made to the 2019 condensed consolidated financial statements to be comparable to 2020. These reclassifications had no effect on net income.

Determining the Contractual Term

Determining the Contractual Term

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Troubled Debt Restructurings

Troubled Debt Restructurings (“TDR”)

A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The ACL on loans on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate is used to discount the expected cash flows, not the rate specified within the restructuring.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act provides all banks with the option to elect either or both of the following from March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the termination of the national emergency:

i.to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and/or

ii.to suspend any determination of a loan modified as a result of the effects of the COVID-19 pandemic as being a TDR, including impairment for accounting purposes.

If a bank elects a suspension noted above, the suspension (i) will be effective for the term of the loan modification, but solely with respect to any modification, including a forbearance arrangement, an interest rate modification, a repayment plan, and any other similar arrangement that defers or delays the payment of principal or interest, that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019; and (ii) will not apply to any adverse impact on the credit of a borrower that is not related to the COVID-19 pandemic.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The Company determines the estimated amount of expected credit extensions based on historical usage to calculate the amount of exposure for a loss estimate. After review of the expected credit losses on OBS, the Company determined the amount not being recorded as immaterial at this time.

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Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Computation of Basic and Diluted Earnings Per Share

The following table shows computation of basic and diluted earnings per share.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Basic earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Basic earnings per share	$	0.33	$	0.37	$	0.59	$	0.65
Diluted earnings per share
Net income	$	14,639	$	16,642	$	26,294	$	27,458
Weighted average common shares outstanding	43,781,249		45,055,117		44,219,880		41,956,047
Effect of dilutive securities:
Restricted stock	7,614		—		40,017		—
Stock options	13,931		75,291		26,967		76,924
Weighted average common shares outstanding	43,802,794		45,130,408		44,286,864		42,032,971
Diluted earnings per share	$	0.33	$	0.37	$	0.59	$	0.65

Schedule of Impact of ASC 326

The following table illustrates the impact of ASC 326.

	January 1, 2020
(dollars in thousands)	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Loans
Commercial	$	25,614	$	11,996	$	13,618
Real estate	4,971		923		4,048
Mortgage warehouse	1,077		1,077		—
Consumer	8,582		3,671		4,911
Allowance for credit losses on loans	$	40,244	$	17,667	$	22,577

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Schedule of Purchase Price of Assets Acquired and Liabilities Assumed

Assets			Liabilities
Cash and due from banks	$	152,745	Deposits
Investment securities, available for sale	54,319		Non-interest bearing	$	188,744
Loans			NOW accounts	207,567
Commercial	352,798		Savings and money market	274,504
Residential mortgage	131,008		Certificates of deposit	70,529
Consumer	85,112		Total deposits	741,344
Total loans	568,918		Borrowings	70,495
Premises and equipment, net	20,425		Subordinated debentures	18,376
FRB and FHLB stock	3,571		Interest payable	826
Goodwill	31,358		Other liabilities	8,759
Core deposit intangible	19,818		Total liabilities assumed	$	839,800
Interest receivable	2,488
Other assets	112,880
Total assets purchased	$	966,522
Common shares issued	$	102,722
Cash paid	24,000
Total purchase price	$	126,722

Schedule of Acquired Loans Accounted for in Accordance with ASC 310-30

The following table details an estimate of the acquired loans that are accounted for in accordance with ASC 310-30 as of March 26, 2019.

Contractually required principal and interest at acquisition	$	22,672
Contractual cash flows not expected to be collected (nonaccretable differences)	6,694
Expected cash flows at acquisition	15,978
Interest component of expected cash flows (accretable discount)	735
Fair value of acquired loans accounted for under ASC310-30	$	15,243

Pro Forma Result of Comparable Prior Reporting Period

The following schedule includes pro-forma results for the three and six months ended June 30, 2019 as if the Salin acquisition had occurred as of the beginning of the comparable prior reporting period.

	Three Months Ended			Six Months Ended
		June 30		June 30
		2019		2019
Summary of Operations:
Net Interest Income		$	41,529	$	83,711
Provision for Loan Losses		896		1,560
Net Interest Income after Provision for Loan Losses		40,633		82,151
Non-interest Income		10,898		20,024
Non-interest Expense		31,584		73,736
Income before Income Taxes		19,947		28,439
Income Tax Expense		3,305		5,322
Net Income		16,642		23,117
Net Income Available to Common Shareholders		$	16,642	$	23,117
Basic Earnings per Share		$	0.37	$	0.51
Diluted Earnings per Share		$	0.37	$	0.51

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Securities (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Fair Value of Securities

The fair value of securities is as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
State and municipal	$	525,488	$	23,503	$	(759)	$	548,232
Federal agency collateralized mortgage obligations	219,431		6,380		(6)		225,805
Federal agency mortgage-backed pools	143,755		5,031		—		148,786
Corporate notes	10,867		1,450		—		12,317
Total available for sale investment securities	$	899,541	$	36,364	$	(765)	$	935,140
Held to maturity
State and municipal	$	175,953	$	10,408	$	—	$	186,361
Federal agency collateralized mortgage obligations	3,006		89		—		3,095
Federal agency mortgage-backed pools	11,976		386		—		12,362
Total held to maturity investment securities	$	190,935	$	10,883	$	—	$	201,818

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
U.S. Treasury and federal agencies	$	1,415	$	—	$	(2)	$	1,413
State and municipal	396,931		11,288		(2,451)		405,768
Federal agency collateralized mortgage obligations	267,272		2,543		(563)		269,252
Federal agency mortgage-backed pools	145,623		1,207		(258)		146,572
Corporate notes	10,848		923		—		11,771
Total available for sale investment securities	$	822,089	$	15,961	$	(3,274)	$	834,776
Held to maturity
State and municipal	$	190,767	$	7,129	$	(54)	$	197,842
Federal agency collateralized mortgage obligations	4,560		13		(5)		4,568
Federal agency mortgage-backed pools	12,572		194		(29)		12,737
Total held to maturity investment securities	$	207,899	$	7,336	$	(88)	$	215,147

Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2020 and December 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Within one year	$	40,750	$	40,838	$	37,386	$	37,321
One to five years	41,840		43,156		41,230		41,293
Five to ten years	116,279		125,049		117,004		122,145
After ten years	337,486		351,506		213,574		218,193
	536,355		560,549		409,194		418,952
Federal agency collateralized mortgage obligations	219,431		225,805		267,272		269,252
Federal agency mortgage-backed pools	143,755		148,786		145,623		146,572
Total available for sale investment securities	$	899,541	$	935,140	$	822,089	$	834,776
Held to maturity
Within one year	$	11,255	$	11,308	$	7,811	$	7,874
One to five years	48,178		49,597		56,037		57,048
Five to ten years	89,212		95,232		94,756		98,480
After ten years	27,308		30,224		32,163		34,440
	175,953		186,361		190,767		197,842
Federal agency collateralized mortgage obligations	3,006		3,095		4,560		4,568
Federal agency mortgage-backed pools	11,976		12,362		12,572		12,737
Total held to maturity investment securities	$	190,935	$	201,818	$	207,899	$	215,147

Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	June 30, 2020
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
State and municipal	$	66,448	$	(651)	$	4,885	$	(108)	$	71,333	$	(759)
Federal agency collateralized mortgage obligations	3,438		(6)		—		—		3,438		(6)
Total temporarily impaired securities	$	69,886	$	(657)	$	4,885	$	(108)	$	74,771	$	(765)

	December 31, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
U.S. Treasury and federal agencies	$	1,413	$	(2)	$	—	$	—	$	1,413	$	(2)
State and municipal	129,942		(2,374)		6,279		(131)		136,221		(2,505)
Federal agency collateralized mortgage obligations	68,043		(308)		23,301		(260)		91,344		(568)
Federal agency mortgage-backed pools	24,740		(104)		37,822		(183)		62,562		(287)
Corporate notes	—		—		—		—		—		—
Total temporarily impaired securities	$	224,138	$	(2,788)	$	67,402	$	(574)	$	291,540	$	(3,362)

Sales of Securities Available for Sale

Information regarding security proceeds, gross gains and gross losses are presented below.

	Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019
Sales of securities available for sale
Proceeds	$	5,146	$	74,048	$	37,182	$	91,635
Gross gains	248		99		637		158
Gross losses	—		(199)		(50)		(243)

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Loans (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Loans Outstanding by Portfolio Class

The following table presents total loans outstanding by portfolio class, as of June 30, 2020:

	June 30, 2020
Commercial
Owner occupied real estate	$	501,198
Non-owner occupied real estate	1,009,116
Residential spec homes	12,036
Development & spec land	28,987
Commercial and industrial	761,378
Total commercial	2,312,715
Real estate
Residential mortgage	682,695
Residential construction	21,715
Mortgage warehouse	300,386
Total real estate	1,004,796
Consumer
Direct installment	39,515
Indirect installment	360,641
Home equity	260,715
Total consumer	660,871
Total loans	3,978,382
Allowance for loan losses	(55,090)
Net loans	$	3,923,292

Amounts of Loans

The following table presents total loans outstanding, as of December 31, 2019:

	December 31, 2019
Commercial
Working capital and equipment	$	938,317
Real estate, including agriculture	978,891
Tax exempt	63,571
Other	65,872
Total	2,046,651
Real estate
1-4 family	762,571
Other	8,146
Total	770,717
Consumer
Auto	362,729
Recreation	16,262
Real estate/home improvement	43,585
Home equity	237,979
Unsecured	7,286
Other	1,339
Total	669,180
Mortgage warehouse	150,293
Total loans	3,636,841
Allowance for loan losses	(17,667)
Loans, net	$	3,619,174

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Accounting for Certain Loans Acquired in a Transfer (Tables)

6 Months Ended

Jun. 30, 2020

Transfers and Servicing [Abstract]

Carrying Amounts of Loans

The carrying amounts of those loans included in the balance sheet amounts of loans receivable as of December 31, 2019 are as follows:

	December 31, 2019
	Commercial		Real Estate		Consumer		Outstanding Balance		Allowance for Loan Losses		Carrying Amount
Heartland	$	197	$	99	$	—	$	296	$	—	$	296
Summit	88		473		—		561		—		561
Peoples	229		35		—		264		—		264
Kosciusko	244		131		—		375		—		375
LaPorte	353		793		20		1,166		—		1,166
Lafayette	1,867		—		—		1,867		—		1,867
Wolverine	2,289		—		—		2,289		—		2,289
Salin	4,938		1,912		962		7,812		133		7,679
Total	$	10,205	$	3,443	$	982	$	14,630	$	133	$	14,497

Accretable Yield or Income Expected to be Collected

Accretable yield, or income expected to be collected for the six months ended June 30, 2019 is as follows:

	Six Months Ended June 30, 2019
	Beginning balance		Additions		Accretion		Reclassification from nonaccretable difference		Disposals		Ending balance
Heartland	$	174	$	—	$	(16)	$	—	$	—	$	158
Summit	42		—		(5)		—		(11)		26
Kosciusko	300		—		(33)		—		(1)		266
LaPorte	829		—		(59)		—		—		770
Lafayette	609		—		(67)		—		(180)		362
Wolverine	698		—		(212)		—		(120)		366
Salin	—		735		—		—		—		735
Total	$	2,652	$	735	$	(392)	$	—	$	(312)	$	2,683

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Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Allowance for Loan Losses

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	32,550	$	5,654	$	1,055	$	9,181	$	48,440
Provision for credit losses on loans	6,603		202		135		117		7,057
Charge-offs	(15)		(34)		—		(526)		(575)
Recoveries	9		10		—		149		168
Balance, end of period	$	39,147	$	5,832	$	1,190	$	8,921	$	55,090

	Three Months Ended June 30, 2019
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	11,556	$	1,588	$	1,014	$	3,663	$	17,821
Provision for credit losses on loans	590		185		26		95		896
Charge-offs	(339)		(48)		—		(327)		(714)
Recoveries	74		7		—		221		302
Balance, end of period	$	11,881	$	1,732	$	1,040	$	3,652	$	18,305

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30, 2020
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	11,996	$	923	$	1,077	$	3,671	$	17,667
Impact of adopting ASC 326	10,832		4,048		—		4,911		19,791
Initial PCD Allowance	2,786		—		—		—		2,786
Provision for credit losses on loans	13,519		902		113		1,123		15,657
Charge-offs	(84)		(60)		—		(1,144)		(1,288)
Recoveries	98		19		—		360		477
Balance, end of period	$	39,147	$	5,832	$	1,190	$	8,921	$	55,090

	Six Months Ended June 30, 2019
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	10,495	$	1,676	$	1,006	$	4,643	$	17,820
Provision for credit losses on loans	1,712		70		34		(556)		1,260
Charge-offs	(416)		(48)		—		(911)		(1,375)
Recoveries	90		34		—		476		600
Balance, end of period	$	11,881	$	1,732	$	1,040	$	3,652	$	18,305

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment

The following table presents the balance in the allowance for credit loss and the recorded investment in loans, by portfolio segment, and based on impairment analysis as of December 31, 2019:

	December 31, 2019
	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	541	$	—	$	—	$	—	$	541
Collectively evaluated for impairment	11,455		923		1,077		3,671		17,126
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total ending allowance balance	$	11,996	$	923	$	1,077	$	3,671	$	17,667
Loans:
Individually evaluated for impairment	$	7,347	$	—	$	—	$	—	$	7,347
Collectively evaluated for impairment	2,040,299		770,705		150,293		665,952		3,627,249
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total ending loans balance	$	2,047,646	$	770,705	$	150,293	$	665,952	$	3,634,596

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Non-performing Loans and Impaired Loans (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Non-accrual, Loans Past Due Over 90 Days Still on Accrual, and Troubled Debt Restructured ("TDRs") by Class of Loans

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

	June 30, 2020
	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non-performing TDRs		Performing TDRs		Total Non-performing Loans		Non-accrual with no Allowance for Credit Losses
Commercial
Owner occupied real estate	$	8,547	$	—	$	629	$	167	$	9,343	$	6,158
Non-owner occupied real estate	1,242		—		350		—		1,592		1,086
Residential spec homes	—		—		—		—		—		—
Development & spec land	70		—		—		—		70		70
Commercial and industrial	2,049		—		1,184		—		3,233		2,363
Total commercial	11,908		—		2,163		167		14,238		9,677
Real estate
Residential mortgage	7,354		—		1,054		1,537		9,945		8,408
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	7,354		—		1,054		1,537		9,945		8,408
Consumer
Direct installment	27		40		—		—		67		27
Indirect installment	1,237		83		—		—		1,320		1,237
Home equity	1,925		—		226		335		2,486		2,151
Total consumer	3,189		123		226		335		3,873		3,415
Total	$	22,451	$	123	$	3,443	$	2,039	$	28,056	$	21,500

There was no interest income recognized on non-accrual loans during the three and six months ended June 30, 2020 and 2019 while the loans were in non-accrual status.

	December 31, 2019
	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non-performing TDRs		Performing TDRs		Total Non-performing Loans		Non-accrual with no Allowance for Credit Losses
Commercial
Owner occupied real estate	$	2,424	$	—	$	629	$	139	$	3,192	$	2,563
Non-owner occupied real estate	682		—		374		—		1,056		937
Residential spec homes	—		—		—		—		—		—
Development & spec land	73		—		—		—		73		73
Commercial and industrial	1,603		—		78		1,345		3,026		514
Total commercial	4,782		—		1,081		1,484		7,347		4,087
Real estate
Residential mortgage	7,614		1		708		1,561		9,884		8,322
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	7,614		1		708		1,561		9,884		8,322
Consumer
Direct installment	30		5		—		—		35		30
Indirect installment	1,234		135		—		—		1,369		1,234
Home equity	2,019		5		217		309		2,550		2,236
Total consumer	3,283		145		217		309		3,954		3,500
Total	$	15,679	$	146	$	2,006	$	3,354	$	21,185	$	15,909

Schedule of TDRs by Loan Portfolio

The following table presents TDRs by loan portfolio:

	June 30, 2020						December 31, 2019
	Non-accrual		Accruing		Total		Non-accrual		Accruing		Total
Commercial
Owner occupied real estate	$	629	$	167	$	796	$	629	$	139	$	768
Non-owner occupied real estate	350		—		350		374		—		374
Residential spec homes	—		—		—		—		—		—
Development & spec land	—		—		—		—		—		—
Commercial and industrial	1,184		—		1,184		78		1,345		1,423
Total commercial	2,163		167		2,330		1,081		1,484		2,565
Real estate
Residential mortgage	1,054		1,537		2,591		708		1,561		2,269
Residential construction	—		—		—		—		—		—
Mortgage warehouse	—		—		—		—		—		—
Total real estate	1,054		1,537		2,591		708		1,561		2,269
Consumer
Direct installment	—		—		—		—		—		—
Indirect installment	—		—		—		—		—		—
Home equity	226		335		561		217		309		526
Total consumer	226		335		561		217		309		526
Total	$	3,443	$	2,039	$	5,482	$	2,006	$	3,354	$	5,360

Loans Modified under the CARES Act

The Bank has elected (i) to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR; and (ii) to suspend any determination of a loan modified as a result of the effects of COVID-19 pandemic as being a TDR, including impairment for accounting purposes. At June 30, 2020, the Bank modified loans totaling $533.9 million which qualify for treatment under the CARES Act.

Schedule of Collateral Dependent Loans by Loan Class

The table below presents the value of collateral dependent loans by loan class as of June 30, 2020:

	June 30, 2020
Commercial
Owner occupied real estate	$	3,018
Non-owner occupied real estate	506
Commercial and industrial	870
Total commercial	4,394
Total collateral dependent loans	$	4,394

Payment Status by Class of Loan

The following table presents the payment status by class of loan, excluding non-accrual loans of $22.5 million and non-performing TDRs of $3.4 million at June 30, 2020:

	June 30, 2020
	Current			30-59 Days Past Due			60-89 Days Past Due			90 Days or Greater Past Due			Total  Past Due Loans			Total Loans
Commercial
Owner occupied real estate	$	491,811		$	116		$	—		$	—		$	116		$	491,927
Non-owner occupied real estate	1,007,524			—			—			—			—			1,007,524
Residential spec homes	12,036			—			—			—			—			12,036
Development & spec land	28,917			—			—			—			—			28,917
Commercial and industrial	757,964			100			—			—			100			758,064
Total commercial	2,298,252			216			—			—			216			2,298,468
Real estate
Residential mortgage	672,729			1,295			263			—			1,558			674,287
Residential construction	21,715			—			—			—			—			21,715
Mortgage warehouse	300,386			—			—			—			—			300,386
Total real estate	994,830			1,295			263			—			1,558			996,388
Consumer
Direct installment	39,413			30			5			40			75			39,488
Indirect installment	355,305			1,097			259			83			1,439			356,744
Home equity	260,536			434			254			—			688			261,224
Total consumer	655,254			1,561			518			123			2,202			657,456
Total	$	3,948,336		$	3,072		$	781		$	123		$	3,976		$	3,952,312
Percentage of total loans	99.90		%	0.08		%	0.02		%	0.00		%	0.10		%	100.00		%

The following table presents the payment status by class of loan, excluding non-accrual loans of $15.7 million and non-performing TDRs of $2.0 million at December 31, 2019:

	December 31, 2019
	Current			30-59 Days Past Due			60-89 Days Past Due			90 Days or Greater Past Due			Total  Past Due Loans			Total
Commercial
Owner occupied real estate	$	515,604		$	920		$	—		$	—		$	920		$	516,524
Non-owner occupied real estate	972,195			80			—			—			80			972,275
Residential spec homes	12,925			—			—			—			—			12,925
Development & spec land	35,881			—			—			—			—			35,881
Commercial and industrial	503,348			819			11			—			830			504,178
Total commercial	2,039,953			1,819			11			—			1,830			2,041,783
Real estate
Residential mortgage	740,712			1,984			—			1			1,985			742,697
Residential construction	19,686			—			—			—			—			19,686
Mortgage warehouse	150,293			—			—			—			—			150,293
Total real estate	910,691			1,984			—			1			1,985			912,676
Consumer
Direct installment	40,864			175			5			5			185			41,049
Indirect installment	344,478			2,407			404			135			2,946			347,424
Home equity	273,050			904			20			5			929			273,979
Total consumer	658,392			3,486			429			145			4,060			662,452
Total	$	3,609,036		$	7,289		$	440		$	146		$	7,875		$	3,616,911
Percentage of total loans	99.78		%	0.20		%	0.01		%	0.01		%	0.22		%	100.00		%

Loans by Credit Grades

The following tables present loans by credit grades and origination year.

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Commercial
Owner occupied real estate
Pass	$	27,165	$	65,335	$	55,867	$	54,371	$	56,131	$	161,463	$	38,697	$	459,029
Special Mention	173		291		4,983		4,393		2,394		11,132		—		23,366
Substandard	—		1,231		3,915		1,146		497		8,135		3,879		18,803
Doubtful	—		—		—		—		—		—		—		—
Total owner occupied real estate	$	27,338	$	66,857	$	64,765	$	59,910	$	59,022	$	180,730	$	42,576	$	501,198
Non-owner occupied real estate
Pass	$	68,736	$	129,273	$	83,742	$	143,870	$	114,786	$	231,098	$	159,787	$	931,292
Special Mention	2,477		10,727		27,479		9,421		2,959		15,174		1,075		69,312
Substandard	—		—		2,438		631		453		4,990		—		8,512
Doubtful	—		—		—		—		—		—		—		—
Total non-owner occupied real estate	$	71,213	$	140,000	$	113,659	$	153,922	$	118,198	$	251,262	$	160,862	$	1,009,116
Residential spec homes
Pass	$	—	$	—	$	—	$	318	$	679	$	1,905	$	7,889	$	10,791
Special Mention	—		—		—		—		—		—		1,245		1,245
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total residential spec homes	$	—	$	—	$	—	$	318	$	679	$	1,905	$	9,134	$	12,036
Development & spec land
Pass	$	30	$	912	$	2,449	$	4,815	$	804	$	13,356	$	6,488	$	28,854
Special Mention	—		—		—		—		—		133		—		133
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total development & spec land	$	30	$	912	$	2,449	$	4,815	$	804	$	13,489	$	6,488	$	28,987
Commercial & industrial
Pass	$	321,761	$	66,704	$	66,203	$	96,404	$	30,716	$	83,437	$	33,185	$	698,410
Special Mention	8,027		4,012		8,027		6,321		2,363		12,088		1,914		42,752
Substandard	2,651		5,751		3,553		1,699		834		3,656		2,072		20,216
Doubtful	—		—		—		—		—		—		—		—
Total commercial & industrial	$	332,439	$	76,467	$	77,783	$	104,424	$	33,913	$	99,181	$	37,171	$	761,378
Total commercial	$	431,020	$	284,236	$	258,656	$	323,389	$	212,616	$	546,567	$	256,231	$	2,312,715

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Real estate
Residential mortgage
Performing	$	59,698	$	68,882	$	119,632	$	115,321	$	85,206	$	223,362	$	649	$	672,750
Non-performing	—		181		147		369		1,310		7,938		—		9,945
Total residential mortgage	$	59,698	$	69,063	$	119,779	$	115,690	$	86,516	$	231,300	$	649	$	682,695
Residential construction
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	21,715	$	21,715
Non-performing	—		—		—		—		—		—		—		—
Total residential construction	$	—	$	—	$	—	$	—	$	—	$	—	$	21,715	$	21,715
Mortgage warehouse
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	300,386	$	300,386
Non-performing	—		—		—		—		—		—		—		—
Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	300,386	$	300,386
Total real estate	$	59,698	$	69,063	$	119,779	$	115,690	$	86,516	$	231,300	$	322,750	$	1,004,796

June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Consumer
Direct installment
Performing	$	6,706	$	12,336	$	7,486	$	7,381	$	3,002	$	2,523	$	14	$	39,448
Non-performing	—		4		30		20		6		7		—		67
Total direct installment	$	6,706	$	12,340	$	7,516	$	7,401	$	3,008	$	2,530	$	14	$	39,515
Indirect installment
Performing	$	72,828	$	119,252	$	96,562	$	50,133	$	12,502	$	8,044	$	—	$	359,321
Non-performing	—		166		272		531		141		210		—		1,320
Total indirect installment	$	72,828	$	119,418	$	96,834	$	50,664	$	12,643	$	8,254	$	—	$	360,641
Home equity
Performing	$	28,281	$	50,367	$	43,076	$	33,139	$	26,902	$	71,516	$	4,948	$	258,229
Non-performing	—		9		55		79		52		1,123		1,168		2,486
Total home equity	$	28,281	$	50,376	$	43,131	$	33,218	$	26,954	$	72,639	$	6,116	$	260,715
Total consumer	$	107,815	$	182,134	$	147,481	$	91,283	$	42,605	$	83,423	$	6,130	$	660,871

	December 31, 2019
	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	492,386		$	8,328		$	18,863		$	—		$	519,577
Non-owner occupied real estate	957,990			7,824			7,517			—			973,331
Residential spec homes	12,925			—			—			—			12,925
Development & spec land	35,815			—			139			—			35,954
Commercial and industrial	468,893			18,652			18,314			—			505,859
Total commercial	1,968,009			34,804			44,833			—			2,047,646
Real estate
Residential mortgage	741,136			—			9,883			—			751,019
Residential construction	19,686			—			—			—			19,686
Mortgage warehouse	150,293			—			—			—			150,293
Total real estate	911,115			—			9,883			—			920,998
Consumer
Direct installment	41,044			—			35			—			41,079
Indirect installment	347,289			—			1,369			—			348,658
Home equity	273,665			—			2,550			—			276,215
Total consumer	661,998			—			3,954			—			665,952
Total	$	3,541,122		$	34,804		$	58,670		$	—		$	3,634,596
Percentage of total loans	97.43		%	0.96		%	1.61		%	0.00		%	100.00		%

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Loan Servicing (Tables)

6 Months Ended

Jun. 30, 2020

Payments for (Proceeds from) Mortgage Servicing Rights [Abstract]

Originated Mortgage Servicing Rights

	June 30,		December 31,
	2020		2019
Mortgage servicing rights
Balance, beginning of period	$	15,046	$	12,876
Servicing rights capitalized	2,573		3,547
Amortization of servicing rights	(1,310)		(1,377)
Balance, end of period	16,309		15,046
Impairment allowance
Balance, beginning of period	(719)		(527)
Additions	(3,201)		(234)
Reductions	—		42
Balance, end of period	(3,920)		(719)
Mortgage servicing rights, net	$	12,389	$	14,327

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

The following table presents the Company’s carrying amount of goodwill as of June 30, 2020 and December 31, 2019.

	June 30,		December 31,
	2020		2019
Balance, beginning of period	$	151,238	$	119,880
Goodwill acquired during the period	—		31,358
Balance, end of period	$	151,238	$	151,238

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Repurchase Agreements (Tables)

6 Months Ended

Jun. 30, 2020

Text Block [Abstract]

Summary of Repurchase Agreements Accounted as Secured Borrowings

The following table shows repurchase agreements accounted for as secured borrowings:

	June 30, 2020
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to one year		One to three years		Three to five years		Five to ten years		Beyond ten years		Total
Repurchase Agreements and repurchase-to-maturity transactions
Repurchase Agreements	$	109,160	$	—	$	—	$	—	$	—	$	—	$	109,160
Securities pledged for Repurchase Agreements
Federal agency collateralized mortgage obligations	$	46,073	$	—	$	—	$	—	$	—	$	—	$	46,073
Federal agency mortgage-backed pools	65,039		—		—		—		—		—		65,039
Total	$	111,112	$	—	$	—	$	—	$	—	$	—	$	111,112

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Financial Instruments

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

	Asset Derivatives			Liability Derivatives
	June 30, 2020			June 30, 2020
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	42,378	Other liabilities	$	50,917
Total derivatives designated as hedging instruments		42,378			50,917
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets	590		Other liabilities	—
Total derivatives not designated as hedging instruments		590			—
Total derivatives		$	42,968		$	50,917

	Asset Derivatives			Liability Derivatives
	December 31, 2019			December 31, 2019
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	11,422	Other liabilities	$	15,861
Total derivatives designated as hedging instruments		11,422			15,861
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets	264		Other liabilities	38
Total derivatives not designated as hedging instruments		264			38
Total derivatives		$	11,686		$	15,899

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)

The effect of the derivative instruments on the condensed consolidated statements of income for the three-month and six-month periods ending June 30 is as follows:

	Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivatives in cash flow hedging relationship
Interest rate contracts	$	(107)	$	(1,502)	$	(3,239)	$	(2,376)

Effect of Derivative Instruments on Consolidated Statement of Income Derivative in Fair Value Hedging Relationship

	Location of gain (loss) recognized on derivative	Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative in fair value hedging relationship
Interest rate contracts	Interest income - loans	$	(3,162)	$	(7,529)	$	(29,492)	$	(11,580)
Interest rate contracts	Interest income - loans	3,162		7,529		29,492		11,580
Total		$	—	$	—	$	—	$	—

	Location of gain (loss) recognized on derivative	Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative not designated as hedging relationship
Mortgage contracts	Other income - gain on sale of loans	$	(679)	$	75	$	364	$	332

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Disclosures about Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Text Block [Abstract]

Fair Value Measurements of Assets and Liabilities Recognized on a Recurring Basis

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:

	June 30, 2020
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
State and municipal	$	548,232	$	—	$	548,232	$	—
Federal agency collateralized mortgage obligations	225,805		—		225,805		—
Federal agency mortgage-backed pools	148,786		—		148,786		—
Corporate notes	12,317		—		12,317		—
Total available for sale securities	935,140		—		935,140		—
Interest rate swap agreements asset	39,216		—		39,216		—
Forward sale commitments	590		—		590		—
Interest rate swap agreements liability	(47,620)		—		(47,620)		—

	December 31, 2019
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
U.S. Treasury and federal agencies	$	1,413	$	—	$	1,413	$	—
State and municipal	405,768		—		405,768		—
Federal agency collateralized mortgage obligations	269,252		—		269,252		—
Federal agency mortgage-backed pools	146,572		—		146,572		—
Corporate notes	11,771		—		11,771		—
Total available for sale securities	834,776		—		834,776		—
Interest rate swap agreements asset	11,422		—		11,422		—
Forward sale commitments	264		—		264		—
Interest rate swap agreements liability	(15,861)		—		(15,861)		—
Commitments to originate loans	(38)		—		(38)		—

Realized Gains and Losses Included in Net Income for Periods in Consolidated Statements of Income

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Non-interest Income
Total gains and losses from:
Hedged loans	$	(3,162)	$	(7,529)	$	(29,492)	$	(11,580)
Fair value interest rate swap agreements	3,162		7,529		29,492		11,580
Derivative loan commitments	(679)		75		364		332
	$	(679)	$	75	$	364	$	332

Other Assets Measured at Fair Value on Nonrecurring Basis

Certain other assets are measured at fair value on a non-recurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2020
Collateral dependent loans	$	12,389	$	—	$	—	$	12,389
Mortgage servicing rights	12,389		—		—		12,389
December 31, 2019
Impaired loans	$	6,806	$	—	$	—	$	6,806
Mortgage servicing rights	14,327		—		—		14,327

Qualitative Information About Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements, Other than Goodwill

The following table presents qualitative information about unobservable inputs used in recurring and non-recurring Level 3 fair value measurements, other than goodwill.

	June 30, 2020
	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral dependent loans	$	12,389	Collateral based measurement	Discount to reflect current market conditions and ultimate collectibility	0.0%-100.0% (13.0%)
Mortgage servicing rights	12,389		Discounted cash flows	Discount rate, Constant prepayment rate, Probability of default	7.8%-7.8% (7.8%), 12.3%-18.3% (16.8%), 0.4%-8.2%(1.4%)

	December 31, 2019
	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,806	Collateral based measurement	Discount to reflect current market conditions and ultimate collectibility	0.0%-100.0%(7.4%)
Mortgage servicing rights	14,327		Discounted cash flows	Discount rate, Constant prepayment rate, Probability of default	8.7%-9.0% (8.7%), 10.2%-19.8%(12.2%), 0.1%-2.9%(0.7%)

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Summary of Estimated Fair Values of Financial Instruments

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

	June 30, 2020
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	170,135	$	170,135	$	—	$	—
Interest-earning time deposits	9,247		—		9,462		—
Investment securities, held to maturity	190,935		—		201,818		—
Loans held for sale	15,913		—		—		15,913
Loans (excluding loan level hedges), net	3,923,292		—		—		3,912,434
Stock in FHLB	23,608		—		23,608		—
Interest receivable	20,185		—		20,185		—
Liabilities
Non-interest bearing deposits	$	981,868	$	981,868	$	—	$	—
Interest bearing deposits	—		—		3,328,498		—
Borrowings	—		—		595,893		—
Subordinated notes	58,824		—		58,824		—
Junior subordinated debentures issued to capital trusts	56,437		—		52,603		—
Interest payable	2,353		—		2,353		—

	December 31, 2019
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	98,831	$	98,831	$	—	$	—
Interest-earning time deposits	8,455		—		8,537		—
Investment securities, held to maturity	207,899		—		215,147		—
Loans held for sale	4,088		—		—		4,088
Loans (excluding loan level hedges), net	3,619,174		—		—		3,554,951
Stock in FHLB	22,447		—		22,447		—
Interest receivable	18,828		—		18,828		—
Liabilities
Non-interest bearing deposits	$	709,760	$	709,760	$	—	$	—
Interest bearing deposits	3,221,242		—		3,180,768		—
Borrowings	549,741		—		546,995		—
Junior subordinated debentures issued to capital trusts	56,311		—		51,809		—
Interest payable	3,062		—		3,062		—

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Components of Accumulated Other Comprehensive Loss

	June 30, 2020		December 31, 2019
Unrealized gain on securities available for sale	$	35,599	$	12,687
Unamortized loss on securities held to maturity, previously transferred from AFS	(136)		(107)
Unrealized loss on derivative instruments	(8,540)		(4,440)
Tax effect	(5,653)		(1,708)
Total accumulated other comprehensive income	$	21,270	$	6,432

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Regulatory Capital (Tables)

6 Months Ended

Jun. 30, 2020

Banking and Thrift [Abstract]

Summary of Regulatory Capital Requirement

Horizon and the Bank’s actual and required capital ratios as of June 30, 2020 and December 31, 2019 were as follows:

	Actual				Required for Capital1 Adequacy Purposes				Required For Capital1 Adequacy Purposes with Capital Buffer				Well Capitalized  Under Prompt1 Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2020
Total capital1 (to risk-weighted assets)
Consolidated	$	628,750	14.37	%	$	350,035	8.00	%	$	459,421	10.50	%	N/A		N/A
Bank	514,371		11.74	%	350,508		8.00	%	460,042		10.50	%	$	438,135	10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated	585,386		13.38	%	262,505		6.00	%	371,882		8.50	%	N/A		N/A
Bank	459,621		10.49	%	262,891		6.00	%	372,429		8.50	%	350,521		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated	469,069		10.72	%	196,904		4.50	%	306,295		7.00	%	N/A		N/A
Bank	459,621		10.49	%	197,168		4.50	%	306,706		7.00	%	284,799		6.50	%
Tier 1 capital1 (to average assets)
Consolidated	585,386		10.75	%	217,818		4.00	%	217,818		4.00	%	N/A		N/A
Bank	459,621		8.48	%	216,802		4.00	%	216,802		4.00	%	271,003		5.00	%
December 31, 2019
Total capital1 (to risk-weighted assets)
Consolidated	$	548,364	13.95	%	$	314,395	8.00	%	$	412,644	10.500	%	N/A		N/A
Bank	497,227		12.65	%	314,452		8.00	%	412,718		10.500	%	$	393,065	10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated	530,643		13.50	%	235,796		6.00	%	334,044		8.500	%	N/A		N/A
Bank	479,506		12.20	%	235,823		6.00	%	334,082		8.500	%	314,430		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated	473,150		12.04	%	176,846		4.50	%	275,094		7.000	%	N/A		N/A
Bank	479,506		12.20	%	176,867		4.50	%	275,126		7.000	%	255,475		6.50	%
Tier 1 capital1 (to average assets)
Consolidated	530,643		10.50	%	202,111		4.00	%	202,111		4.000	%	N/A		N/A
Bank	479,506		9.49	%	202,110		4.00	%	202,110		4.000	%	252,638		5.00	%
(1) As defined by regulatory agencies

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Accounting Policies - Additional Information (Details) - USD ($)			3 Months Ended		6 Months Ended
	Mar. 06, 2020	Jan. 01, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Jul. 16, 2019
Schedule Of Accounting Policies [Line Items]
Number of shares authorized to be repurchased								2,250,000
Number of shares repurchased	1,000,000				373,323
Average price per share repurchased	$ 15.19				$ 15.86
Shares, non-dilutive (in shares)			504,085	341,394	285,588	341,394
Impact of adoption of ASU No. 2016-13							$ (15,635,000)
Initial PCD Allowance		$ 2,800,000			$ 2,786,000
Accrued interest receivable			$ 12,800,000		$ 12,800,000
Loan delinquency period					90 days
Minimum period required for satisfactory performance to return loan from non-accrual to accrual status					6 months
Period of loan sold by mortgage company					30 days
Minimum period seldom held					90 days
Mortgage loan deferred due cost					$ 0
Mortgage warehousing maximum pay off period					30 days
Reclassifications effect on net income						$ 0
Retained Earnings
Schedule Of Accounting Policies [Line Items]
Impact of adoption of ASU No. 2016-13							$ (15,635,000)
Minimum
Schedule Of Accounting Policies [Line Items]
Loan delinquency period					90 days
Delay or shortfall in payments of loan					30 days
Maximum
Schedule Of Accounting Policies [Line Items]
Allowance for loan losses charge down family first and junior lien mortgages past due period					180 days
Allowance for loan losses charge down unsecured open end loans past due period					90 days
Allowance for loan losses charge down other secured loans past due period					90 days
Accounting Standards Update 2016-13 | Retained Earnings
Schedule Of Accounting Policies [Line Items]
Impact of adoption of ASU No. 2016-13		$ (15,600,000)

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Accounting Policies - Summary of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Basic earnings per share
Net income	$ 14,639	$ 16,642	$ 26,294	$ 27,458
Weighted average common shares outstanding (in shares)	43,781,249	45,055,117	44,219,880	41,956,047
Basic Earnings Per Share (in USD per share)	$ 0.33	$ 0.37	$ 0.59	$ 0.65
Diluted earnings per share
Net income	$ 14,639	$ 16,642	$ 26,294	$ 27,458
Effect of dilutive securities:
Weighted average common shares outstanding (in shares)	43,802,794	45,130,408	44,286,864	42,032,971
Diluted Earnings Per Share (in USD per share)	$ 0.33	$ 0.37	$ 0.59	$ 0.65
Restricted Stock
Effect of dilutive securities:
Effect of dilutive securities	7,614	0	40,017	0
Stock Options
Effect of dilutive securities:
Effect of dilutive securities	13,931	75,291	26,967	76,924

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Accounting Policies - Impact of ASC 326 (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans	$ 55,090	$ 48,440	$ 22,577	$ 17,667	$ 18,305	$ 17,821	$ 17,820
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			13,618
Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			4,048
Mortgage warehouse
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans	$ 1,190	$ 1,055	0	1,077	$ 1,040	$ 1,014	$ 1,006
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			4,911
As Reported Under ASC 326
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			40,244
As Reported Under ASC 326 | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			25,614
As Reported Under ASC 326 | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			4,971
As Reported Under ASC 326 | Mortgage warehouse
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			1,077
As Reported Under ASC 326 | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			8,582
Impact of adopting ASC 326
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			17,667	19,791
Impact of adopting ASC 326 | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			11,996
Impact of adopting ASC 326 | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			923
Impact of adopting ASC 326 | Mortgage warehouse
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			1,077	$ 0
Impact of adopting ASC 326 | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses on loans			$ 3,671

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Acquisitions Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	6 Months Ended
	Mar. 26, 2019	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Common stock, shares outstanding (in shares)		43,821,878	44,975,771
Acquisition of goodwill		$ 151,238	$ 151,238	$ 119,880
Salin
Business Acquisition [Line Items]
Exchange ratio per share	23907.50%
Cash paid for shares	$ 87,417.17
Common stock, shares outstanding (in shares)	275,000
Common stock issued (in shares)	6,563,697
Market closing price per share (in USD per share)	$ 15.65
Estimated transaction value	$ 126,700
Costs related to the acquisition	5,600
Total purchase price	126,722
Net intangible assets acquired	19,818
Acquisition of goodwill	$ 31,358
Core deposit intangible amortization period		10 years

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Acquisitions Schedule of Final Purchase Price of Assets Acquired and Liabilities Assumed for Salin (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Mar. 26, 2019	Dec. 31, 2018
Loans
Goodwill	$ 151,238	$ 151,238		$ 119,880
Salin
Assets
Cash and due from banks			$ 152,745
Investment securities, available for sale			54,319
Loans
Total loans			568,918
Premises and equipment, net			20,425
FRB and FHLB stock			3,571
Goodwill			31,358
Core deposit intangible			19,818
Interest receivable			2,488
Other assets			112,880
Total assets purchased			966,522
Common shares issued			102,722
Cash paid			24,000
Total purchase price			126,722
Deposits
Non-interest bearing			188,744
NOW accounts			207,567
Savings and money market			274,504
Certificates of deposit			70,529
Total deposits			741,344
Borrowings			70,495
Subordinated debentures			18,376
Interest payable			826
Other liabilities			8,759
Total liabilities assumed			839,800
Salin | Residential mortgage
Loans
Total loans			131,008
Salin | Commercial
Loans
Total loans			352,798
Salin | Consumer
Loans
Total loans			$ 85,112

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Acquisitions - Schedule of Acquired Loans Accounted for in Accordance with ASC 310-30 (Details) - Salin $ in Thousands	Mar. 26, 2019 USD ($)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required principal and interest at acquisition	$ 22,672
Contractual cash flows not expected to be collected (nonaccretable differences)	6,694
Expected cash flows at acquisition	15,978
Interest component of expected cash flows (accretable discount)	735
Fair value of acquired loans accounted for under ASC310-30	$ 15,243

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Acquisitions - Pro Forma Result of Comparable Prior Reporting Period (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Business Acquisition, Pro Forma Information [Abstract]
Net Interest Income	$ 41,529	$ 83,711
Provision for Loan Losses	896	1,560
Net Interest Income after Provision for Loan Losses	40,633	82,151
Non-interest Income	10,898	20,024
Non-interest Expense	31,584	73,736
Income before Income Taxes	19,947	28,439
Income Tax Expense	3,305	5,322
Net Income	16,642	23,117
Net Income Available to Common Shareholders	$ 16,642	$ 23,117
Basic Earnings Per Share (in USD per share)	$ 0.37	$ 0.51
Diluted Earnings Per Share (in USD per share)	$ 0.37	$ 0.51

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Securities - Fair Value of Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Available for sale
Amortized Cost	$ 899,541	$ 822,089
Gross Unrealized Gains	36,364	15,961
Gross Unrealized Losses	(765)	(3,274)
Fair Value	935,140	834,776
Held to maturity
Amortized Cost	190,935	207,899
Gross Unrealized Gains	10,883	7,336
Gross Unrealized Losses	0	(88)
Fair Value	201,818	215,147
U.S. Treasury and federal agencies
Available for sale
Amortized Cost		1,415
Gross Unrealized Gains		0
Gross Unrealized Losses		(2)
Fair Value		1,413
State and municipal
Available for sale
Amortized Cost	525,488	396,931
Gross Unrealized Gains	23,503	11,288
Gross Unrealized Losses	(759)	(2,451)
Fair Value	548,232	405,768
Held to maturity
Amortized Cost	175,953	190,767
Gross Unrealized Gains	10,408	7,129
Gross Unrealized Losses	0	(54)
Fair Value	186,361	197,842
Federal agency collateralized mortgage obligations
Available for sale
Amortized Cost	219,431	267,272
Gross Unrealized Gains	6,380	2,543
Gross Unrealized Losses	(6)	(563)
Fair Value	225,805	269,252
Held to maturity
Amortized Cost	3,006	4,560
Gross Unrealized Gains	89	13
Gross Unrealized Losses	0	(5)
Fair Value	3,095	4,568
Federal agency mortgage-backed pools
Available for sale
Amortized Cost	143,755	145,623
Gross Unrealized Gains	5,031	1,207
Gross Unrealized Losses	0	(258)
Fair Value	148,786	146,572
Held to maturity
Amortized Cost	11,976	12,572
Gross Unrealized Gains	386	194
Gross Unrealized Losses	0	(29)
Fair Value	12,362	12,737
Corporate notes
Available for sale
Amortized Cost	10,867	10,848
Gross Unrealized Gains	1,450	923
Gross Unrealized Losses	0	0
Fair Value	$ 12,317	$ 11,771

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Securities - Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Amortized cost within one year	$ 40,750	$ 37,386
Amortized cost one to five years	41,840	41,230
Amortized cost for five to ten years	116,279	117,004
Amortized cost for after ten years	337,486	213,574
Available for sale	536,355	409,194
Amortized Cost	899,541	822,089
Within one year, amortized cost	11,255	7,811
One to five years, amortized cost	48,178	56,037
Five to ten years, amortized cost	89,212	94,756
After ten years, amortized cost	27,308	32,163
Total amortized cost	175,953	190,767
Investment securities, held to maturity	190,935	207,899
Fair value within one year	40,838	37,321
Fair value for one to five years	43,156	41,293
Fair value for five to ten years	125,049	122,145
Fair value for after ten years	351,506	218,193
Total fair value	560,549	418,952
Within one year, fair value	11,308	7,874
One to five years, fair value	49,597	57,048
five to ten years, fair value	95,232	98,480
After ten years, fair value	30,224	34,440
Total fair value	186,361	197,842
Fair Value	201,818	215,147
Fair Value	935,140	834,776
Federal agency collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Available for sale	219,431	267,272
Amortized Cost	219,431	267,272
Investment securities, held to maturity	3,006	4,560
Fair Value	3,095	4,568
Fair Value	225,805	269,252
Federal agency mortgage-backed pools
Schedule of Available-for-sale Securities [Line Items]
Available for sale	143,755	145,623
Amortized Cost	143,755	145,623
Investment securities, held to maturity	11,976	12,572
Fair Value	12,362	12,737
Fair Value	$ 148,786	$ 146,572

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Securities - Gross Unrealized Losses and Fair Value of Company's Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	$ 69,886	$ 224,138
Unrealized losses less than 12 months	(657)	(2,788)
Fair value more than 12 months	4,885	67,402
Unrealized losses more than 12 months	(108)	(574)
Total fair value	74,771	291,540
Total unrealized losses	765	3,362
U.S. Treasury and federal agencies
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months		1,413
Unrealized losses less than 12 months		(2)
Fair value more than 12 months		0
Unrealized losses more than 12 months		0
Total fair value		1,413
Total unrealized losses		2
State and municipal
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	66,448	129,942
Unrealized losses less than 12 months	(651)	(2,374)
Fair value more than 12 months	4,885	6,279
Unrealized losses more than 12 months	(108)	(131)
Total fair value	71,333	136,221
Total unrealized losses	759	2,505
Federal agency collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	3,438	68,043
Unrealized losses less than 12 months	(6)	(308)
Fair value more than 12 months	0	23,301
Unrealized losses more than 12 months	0	(260)
Total fair value	3,438	91,344
Total unrealized losses	$ 6	568
Federal agency mortgage-backed pools
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months		24,740
Unrealized losses less than 12 months		(104)
Fair value more than 12 months		37,822
Unrealized losses more than 12 months		(183)
Total fair value		62,562
Total unrealized losses		287
Corporate notes
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months		0
Unrealized losses less than 12 months		0
Fair value more than 12 months		0
Unrealized losses more than 12 months		0
Total fair value		0
Total unrealized losses		$ 0

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Securities - Sales of Securities Available for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Investments, Debt and Equity Securities [Abstract]
Proceeds	$ 5,146	$ 74,048	$ 37,182	$ 91,635
Gross gains	248	99	637	158
Gross losses	$ 0	$ (199)	$ (50)	$ (243)

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Loans - Loans Outstanding by Portfolio Class (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	$ 3,978,382	$ 3,634,596
Allowance for loan losses	(55,090)	(17,667)
Net loans	3,923,292
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	2,312,715	2,047,646
Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	1,004,796	920,998
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	660,871	665,952
Owner occupied real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	501,198	519,577
Non-owner occupied real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	1,009,116	973,331
Residential spec homes | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	12,036
Development & spec land | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	28,987	35,954
Commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	761,378	505,859
Residential mortgage | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	682,695	751,019
Residential construction | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	21,715	19,686
Mortgage warehouse | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	300,386	150,293
Direct installment | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	39,515	41,079
Indirect installment | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	360,641	348,658
Home equity | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	$ 260,715	$ 276,215

XML

Loans - Amounts of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	$ 3,978,382	$ 3,634,596
Total loans		3,636,841
Allowance for loan losses	(55,090)	(17,667)
Loans, net	3,923,292	3,619,174
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		2,046,651
Loan Balance	2,312,715	2,047,646
Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total		770,717
Loan Balance	1,004,796	920,998
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		669,180
Loan Balance	660,871	665,952
Working capital and equipment | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		938,317
Real estate, including agriculture | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		978,891
Tax exempt | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		63,571
Other | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		65,872
1-4 family | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total		762,571
Other | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total		8,146
Auto | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		362,729
Recreation | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		16,262
Real estate/home improvement | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		43,585
Home equity | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		237,979
Loan Balance	$ 260,715	276,215
Unsecured | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		7,286
Other | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial/Consumer, Total		1,339
Mortgage warehouse
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance		$ 150,293

XML

Loans - Additional Information (Details) $ in Millions	Jun. 30, 2020 USD ($)
Receivables [Abstract]
Paycheck protection program	$ 308.1
Deferred loan costs	$ (7.1)

XML

Accounting for Certain Loans Acquired in a Transfer - Amounts of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		$ 3,636,841
Allowance for Loan Losses	$ 55,090	17,667
Carrying Amount	$ 3,923,292
Loans Purchased With Evidence of Credit Deterioration
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		14,630
Allowance for Loan Losses		133
Carrying Amount		14,497
Loans Purchased With Evidence of Credit Deterioration | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		10,205
Loans Purchased With Evidence of Credit Deterioration | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		3,443
Loans Purchased With Evidence of Credit Deterioration | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		982
Loans Purchased With Evidence of Credit Deterioration | Heartland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		296
Allowance for Loan Losses		0
Carrying Amount		296
Loans Purchased With Evidence of Credit Deterioration | Heartland | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		197
Loans Purchased With Evidence of Credit Deterioration | Heartland | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		99
Loans Purchased With Evidence of Credit Deterioration | Heartland | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Summit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		561
Allowance for Loan Losses		0
Carrying Amount		561
Loans Purchased With Evidence of Credit Deterioration | Summit | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		88
Loans Purchased With Evidence of Credit Deterioration | Summit | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		473
Loans Purchased With Evidence of Credit Deterioration | Summit | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Peoples
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		264
Allowance for Loan Losses		0
Carrying Amount		264
Loans Purchased With Evidence of Credit Deterioration | Peoples | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		229
Loans Purchased With Evidence of Credit Deterioration | Peoples | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		35
Loans Purchased With Evidence of Credit Deterioration | Peoples | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Kosciusko
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		375
Allowance for Loan Losses		0
Carrying Amount		375
Loans Purchased With Evidence of Credit Deterioration | Kosciusko | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		244
Loans Purchased With Evidence of Credit Deterioration | Kosciusko | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		131
Loans Purchased With Evidence of Credit Deterioration | Kosciusko | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | LaPorte
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		1,166
Allowance for Loan Losses		0
Carrying Amount		1,166
Loans Purchased With Evidence of Credit Deterioration | LaPorte | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		353
Loans Purchased With Evidence of Credit Deterioration | LaPorte | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		793
Loans Purchased With Evidence of Credit Deterioration | LaPorte | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		20
Loans Purchased With Evidence of Credit Deterioration | Lafayette
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		1,867
Allowance for Loan Losses		0
Carrying Amount		1,867
Loans Purchased With Evidence of Credit Deterioration | Lafayette | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		1,867
Loans Purchased With Evidence of Credit Deterioration | Lafayette | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Lafayette | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Wolverine
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		2,289
Allowance for Loan Losses		0
Carrying Amount		2,289
Loans Purchased With Evidence of Credit Deterioration | Wolverine | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		2,289
Loans Purchased With Evidence of Credit Deterioration | Wolverine | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Wolverine | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		0
Loans Purchased With Evidence of Credit Deterioration | Salin
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		7,812
Allowance for Loan Losses		133
Carrying Amount		7,679
Loans Purchased With Evidence of Credit Deterioration | Salin | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		4,938
Loans Purchased With Evidence of Credit Deterioration | Salin | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		1,912
Loans Purchased With Evidence of Credit Deterioration | Salin | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance		$ 962

XML

Accounting for Certain Loans Acquired in a Transfer - Accretable Yield or Income Expected to be Collected (Details) - Loans Purchased With Evidence of Credit Deterioration $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	$ 2,652
Additions	735
Accretion	(392)
Reclassification from nonaccretable difference	0
Disposals	(312)
Ending balance	2,683
Heartland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	174
Additions	0
Accretion	(16)
Reclassification from nonaccretable difference	0
Disposals	0
Ending balance	158
Summit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	42
Additions	0
Accretion	(5)
Reclassification from nonaccretable difference	0
Disposals	(11)
Ending balance	26
Kosciusko
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	300
Additions	0
Accretion	(33)
Reclassification from nonaccretable difference	0
Disposals	(1)
Ending balance	266
LaPorte
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	829
Additions	0
Accretion	(59)
Reclassification from nonaccretable difference	0
Disposals	0
Ending balance	770
Lafayette
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	609
Additions	0
Accretion	(67)
Reclassification from nonaccretable difference	0
Disposals	(180)
Ending balance	362
Wolverine
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	698
Additions	0
Accretion	(212)
Reclassification from nonaccretable difference	0
Disposals	(120)
Ending balance	366
Salin
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	0
Additions	735
Accretion	0
Reclassification from nonaccretable difference	0
Disposals	0
Ending balance	$ 735

XML

Accounting for Certain Loans Acquired in a Transfer - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Business Acquisition [Line Items]
Provision for credit losses	$ 7,057	$ 896	$ 15,657	$ 1,260
Loans Purchased With Evidence of Credit Deterioration
Business Acquisition [Line Items]
Provision for credit losses				$ 154

XML

Allowance for Loan Losses - Allowance for Loan Losses (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	$ 17,667	$ 48,440	$ 17,821	$ 17,667	$ 17,820
Initial PCD Allowance	2,800			2,786
Provision for credit losses on loans		7,057	896	15,657	1,260
Charge-offs		(575)	(714)	(1,288)	(1,375)
Recoveries		168	302	477	600
Balance, end of period	22,577	55,090	18,305	55,090	18,305
Impact of adopting ASC 326
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	19,791			19,791
Balance, end of period	17,667
Mortgage warehouse
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	1,077	1,055	1,014	1,077	1,006
Initial PCD Allowance				0
Provision for credit losses on loans		135	26	113	34
Charge-offs		0	0	0	0
Recoveries		0	0	0	0
Balance, end of period	0	1,190	1,040	1,190	1,040
Mortgage warehouse | Impact of adopting ASC 326
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	0			0
Balance, end of period	1,077
Commercial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	11,996	32,550	11,556	11,996	10,495
Initial PCD Allowance				2,786
Provision for credit losses on loans		6,603	590	13,519	1,712
Charge-offs		(15)	(339)	(84)	(416)
Recoveries		9	74	98	90
Balance, end of period		39,147	11,881	39,147	11,881
Commercial | Impact of adopting ASC 326
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	10,832			10,832
Real estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	923	5,654	1,588	923	1,676
Initial PCD Allowance				0
Provision for credit losses on loans		202	185	902	70
Charge-offs		(34)	(48)	(60)	(48)
Recoveries		10	7	19	34
Balance, end of period		5,832	1,732	5,832	1,732
Real estate | Impact of adopting ASC 326
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	4,048			4,048
Consumer
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	3,671	9,181	3,663	3,671	4,643
Initial PCD Allowance				0
Provision for credit losses on loans		117	95	1,123	(556)
Charge-offs		(526)	(327)	(1,144)	(911)
Recoveries		149	221	360	476
Balance, end of period		$ 8,921	$ 3,652	8,921	$ 3,652
Consumer | Impact of adopting ASC 326
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	$ 4,911			$ 4,911

XML

Allowance for Loan Losses - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Ending allowance balance attributable to loans:
Allowance for credit losses on loans	$ 55,090	$ 48,440	$ 22,577	$ 17,667	$ 18,305	$ 17,821	$ 17,820
Total ending allowance balance	55,090			17,667
Loans
Loans
Individually evaluated for impairment	15,700			7,347
Collectively evaluated for impairment				3,627,249
Loans acquired with deteriorated credit quality				0
Total ending loans balance				3,634,596
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment				541
Collectively evaluated for impairment				17,126
Allowance for credit losses on loans				0
Total ending allowance balance				17,667
Mortgage warehouse | Loans
Loans
Individually evaluated for impairment				0
Collectively evaluated for impairment				150,293
Loans acquired with deteriorated credit quality				0
Total ending loans balance				150,293
Mortgage warehouse | Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment				0
Collectively evaluated for impairment				1,077
Allowance for credit losses on loans				0
Total ending allowance balance				1,077
Commercial
Ending allowance balance attributable to loans:
Allowance for credit losses on loans	39,147	32,550		11,996	11,881	11,556	10,495
Commercial | Loans
Loans
Individually evaluated for impairment				7,347
Collectively evaluated for impairment				2,040,299
Loans acquired with deteriorated credit quality				0
Total ending loans balance				2,047,646
Commercial | Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment				541
Collectively evaluated for impairment				11,455
Allowance for credit losses on loans				0
Total ending allowance balance				11,996
Real estate
Ending allowance balance attributable to loans:
Allowance for credit losses on loans	5,832	5,654		923	1,732	1,588	1,676
Real estate | Loans
Loans
Individually evaluated for impairment				0
Collectively evaluated for impairment				770,705
Loans acquired with deteriorated credit quality				0
Total ending loans balance				770,705
Real estate | Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment				0
Collectively evaluated for impairment				923
Allowance for credit losses on loans				0
Total ending allowance balance				923
Consumer
Ending allowance balance attributable to loans:
Allowance for credit losses on loans	$ 8,921	$ 9,181		3,671	$ 3,652	$ 3,663	$ 4,643
Consumer | Loans
Loans
Individually evaluated for impairment				0
Collectively evaluated for impairment				665,952
Loans acquired with deteriorated credit quality				0
Total ending loans balance				665,952
Consumer | Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment				0
Collectively evaluated for impairment				3,671
Allowance for credit losses on loans				0
Total ending allowance balance				$ 3,671

XML

Non-performing Loans and Impaired Loans - Non-accrual, Loans Past Due Over 90 Days Still on Accrual, and Troubled Debt Restructured ("TDRs") by Class of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Non-accrual	$ 22,451	$ 15,679
Loans Past Due Over 90 Days Still Accruing	123	146
TDR loans	3,443	2,006
Performing TDRs	2,039	3,354
Total Non-performing Loans	28,056	21,185
Non-accrual with no Allowance for Credit Losses	21,500	15,909
Commercial
Financing Receivable, Past Due [Line Items]
Non-accrual	11,908	4,782
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	2,163	1,081
Performing TDRs	167	1,484
Total Non-performing Loans	14,238	7,347
Non-accrual with no Allowance for Credit Losses	9,677	4,087
Commercial | Owner occupied real estate
Financing Receivable, Past Due [Line Items]
Non-accrual	8,547	2,424
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	629	629
Performing TDRs	167	139
Total Non-performing Loans	9,343	3,192
Non-accrual with no Allowance for Credit Losses	6,158	2,563
Commercial | Non-owner occupied real estate
Financing Receivable, Past Due [Line Items]
Non-accrual	1,242	682
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	350	374
Performing TDRs	0	0
Total Non-performing Loans	1,592	1,056
Non-accrual with no Allowance for Credit Losses	1,086	937
Commercial | Residential spec homes
Financing Receivable, Past Due [Line Items]
Non-accrual	0	0
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	0	0
Performing TDRs	0	0
Total Non-performing Loans	0	0
Non-accrual with no Allowance for Credit Losses	0	0
Commercial | Development & spec land
Financing Receivable, Past Due [Line Items]
Non-accrual	70	73
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	0	0
Performing TDRs	0	0
Total Non-performing Loans	70	73
Non-accrual with no Allowance for Credit Losses	70	73
Commercial | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Non-accrual	2,049	1,603
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	1,184	78
Performing TDRs	0	1,345
Total Non-performing Loans	3,233	3,026
Non-accrual with no Allowance for Credit Losses	2,363	514
Real estate
Financing Receivable, Past Due [Line Items]
Non-accrual	7,354	7,614
Loans Past Due Over 90 Days Still Accruing	0	1
TDR loans	1,054	708
Performing TDRs	1,537	1,561
Total Non-performing Loans	9,945	9,884
Non-accrual with no Allowance for Credit Losses	8,408	8,322
Real estate | Residential mortgage
Financing Receivable, Past Due [Line Items]
Non-accrual	7,354	7,614
Loans Past Due Over 90 Days Still Accruing	0	1
TDR loans	1,054	708
Performing TDRs	1,537	1,561
Total Non-performing Loans	9,945	9,884
Non-accrual with no Allowance for Credit Losses	8,408	8,322
Real estate | Residential construction
Financing Receivable, Past Due [Line Items]
Non-accrual	0	0
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	0	0
Performing TDRs	0	0
Total Non-performing Loans	0	0
Non-accrual with no Allowance for Credit Losses	0	0
Real estate | Mortgage warehouse
Financing Receivable, Past Due [Line Items]
Non-accrual	0	0
Loans Past Due Over 90 Days Still Accruing	0	0
TDR loans	0	0
Performing TDRs	0	0
Total Non-performing Loans	0	0
Non-accrual with no Allowance for Credit Losses	0	0
Consumer
Financing Receivable, Past Due [Line Items]
Non-accrual	3,189	3,283
Loans Past Due Over 90 Days Still Accruing	123	145
TDR loans	226	217
Performing TDRs	335	309
Total Non-performing Loans	3,873	3,954
Non-accrual with no Allowance for Credit Losses	3,415	3,500
Consumer | Direct installment
Financing Receivable, Past Due [Line Items]
Non-accrual	27	30
Loans Past Due Over 90 Days Still Accruing	40	5
TDR loans	0	0
Performing TDRs	0	0
Total Non-performing Loans	67	35
Non-accrual with no Allowance for Credit Losses	27	30
Consumer | Indirect installment
Financing Receivable, Past Due [Line Items]
Non-accrual	1,237	1,234
Loans Past Due Over 90 Days Still Accruing	83	135
TDR loans	0	0
Performing TDRs	0	0
Total Non-performing Loans	1,320	1,369
Non-accrual with no Allowance for Credit Losses	1,237	1,234
Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Non-accrual	1,925	2,019
Loans Past Due Over 90 Days Still Accruing	0	5
TDR loans	226	217
Performing TDRs	335	309
Total Non-performing Loans	2,486	2,550
Non-accrual with no Allowance for Credit Losses	$ 2,151	$ 2,236

XML

Non-performing Loans and Impaired Loans - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020 USD ($) consecutivePayment	Dec. 31, 2019 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Non-accrual loans	$ 22,451,000	$ 15,679,000
Non-performing TDRs	$ 3,400,000
Restructured loan returned to accruing status number of Consecutive Payments of loan | consecutivePayment	6
Restructured loan reported in TDRs	$ 5,482,000	5,360,000
Specific reserves allocated to troubled debt restructuring	435,000
TDR loans	3,443,000	2,006,000
Commercial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Non-accrual loans	11,908,000	4,782,000
Restructured loan reported in TDRs	2,330,000	2,565,000
TDR loans	2,163,000	1,081,000
Commercial | Owner occupied real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Non-accrual loans	8,547,000	2,424,000
Restructured loan reported in TDRs	796,000	768,000
Non-accrual loans	22,500,000	15,700,000
TDR loans	629,000	$ 629,000
CARES Act
Financing Receivable, Troubled Debt Restructuring [Line Items]
Restructured loan reported in TDRs	533,900,000
Performing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Restructured loan reported in TDRs	$ 2,000,000.0
Number TDRs returned to accrual status | consecutivePayment	1
Loans Purchased With Evidence of Credit Deterioration
Financing Receivable, Troubled Debt Restructuring [Line Items]
Non-accrual loans	$ 3,300,000
Non-performing TDRs	960,000
Minimum
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loans with an aggregate credit exposure	$ 1,000,000
Loans classified as TDR after a period	90 days
Minimum | Good Pass
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of consecutive years of profit Unaudited Financial Information for Good Pass Rating	5 years
Number of years of Satisfactory Relationship with bank for Good Pass Rating	5 years
Minimum | Satisfactory Pass
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of consecutive years of profit for Good Pass Rating	3 years
Maximum
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loans with an aggregate credit exposure	$ 3,500,000
Loans classified as TDR after a period	120 days
Minimum number of years of Satisfactory Repayment required for Satisfactory Pass Rating	2 years

XML

Non-performing Loans and Impaired Loans - Schedule of TDRs by Loan Portfolio (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	$ 3,443	$ 2,006
Performing TDRs	2,039	3,354
Total	5,482	5,360
Commercial
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	2,163	1,081
Performing TDRs	167	1,484
Total	2,330	2,565
Commercial | Owner occupied real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	629	629
Performing TDRs	167	139
Total	796	768
Commercial | Non-owner occupied real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	350	374
Performing TDRs	0	0
Total	350	374
Commercial | Residential spec homes
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	0	0
Performing TDRs	0	0
Total	0	0
Commercial | Development & spec land
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	0	0
Performing TDRs	0	0
Total	0	0
Commercial | Commercial and industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	1,184	78
Performing TDRs	0	1,345
Total	1,184	1,423
Real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	1,054	708
Performing TDRs	1,537	1,561
Total	2,591	2,269
Real estate | Residential mortgage
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	1,054	708
Performing TDRs	1,537	1,561
Total	2,591	2,269
Real estate | Residential construction
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	0	0
Performing TDRs	0	0
Total	0	0
Real estate | Mortgage warehouse
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	0	0
Performing TDRs	0	0
Total	0	0
Consumer
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	226	217
Performing TDRs	335	309
Total	561	526
Consumer | Direct installment
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	0	0
Performing TDRs	0	0
Total	0	0
Consumer | Indirect installment
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	0	0
Performing TDRs	0	0
Total	0	0
Consumer | Home equity
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDR loans	226	217
Performing TDRs	335	309
Total	$ 561	$ 526

XML

Non-performing Loans and Impaired Loans - Collateral Pledged Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	$ 3,978,382	$ 3,634,596
Real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	1,004,796	920,998
Real estate | Residential mortgage
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	682,695	751,019
Commercial
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	2,312,715	2,047,646
Commercial | Owner occupied real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	501,198	519,577
Commercial | Non-owner occupied real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	1,009,116	973,331
Commercial | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	761,378	$ 505,859
Collateral Pledged [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	4,394
Collateral Pledged [Member] | Commercial
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	4,394
Collateral Pledged [Member] | Commercial | Owner occupied real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	3,018
Collateral Pledged [Member] | Commercial | Non-owner occupied real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	506
Collateral Pledged [Member] | Commercial | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Total collateral dependent loans	$ 870

XML

Non-performing Loans and Impaired Loans - Payment Status by Class of Loan (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Current	$ 3,948,336	$ 3,609,036
Total Past Due	3,976	7,875
Total	$ 3,952,312	$ 3,616,911
Current,Percentage of total loans	99.90%	99.78%
Total Past Due, Percentage of Total Loans	0.10%	0.22%
Percentage of total loans	100.00%	100.00%
Carrying Amount	$ 3,923,292
Commercial
Financing Receivable, Past Due [Line Items]
Current	2,298,252	$ 2,039,953
Total Past Due	216	1,830
Total	2,298,468	2,041,783
Commercial | Owner occupied real estate
Financing Receivable, Past Due [Line Items]
Current	491,811	515,604
Total Past Due	116	920
Total	491,927	516,524
Commercial | Non-owner occupied real estate
Financing Receivable, Past Due [Line Items]
Current	1,007,524	972,195
Total Past Due	0	80
Total	1,007,524	972,275
Commercial | Residential spec homes
Financing Receivable, Past Due [Line Items]
Current	12,036	12,925
Total Past Due	0	0
Total	12,036	12,925
Commercial | Development & spec land
Financing Receivable, Past Due [Line Items]
Current	28,917	35,881
Total Past Due	0	0
Total	28,917	35,881
Commercial | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Current	757,964	503,348
Total Past Due	100	830
Total	758,064	504,178
Real estate
Financing Receivable, Past Due [Line Items]
Current	994,830	910,691
Total Past Due	1,558	1,985
Total	996,388	912,676
Real estate | Residential mortgage
Financing Receivable, Past Due [Line Items]
Current	672,729	740,712
Total Past Due	1,558	1,985
Total	674,287	742,697
Real estate | Residential construction
Financing Receivable, Past Due [Line Items]
Current	21,715	19,686
Total Past Due	0	0
Total	21,715	19,686
Real estate | Mortgage warehouse
Financing Receivable, Past Due [Line Items]
Current	300,386	150,293
Total Past Due	0	0
Total	300,386	150,293
Consumer
Financing Receivable, Past Due [Line Items]
Current	655,254	658,392
Total Past Due	2,202	4,060
Total	657,456	662,452
Consumer | Direct installment
Financing Receivable, Past Due [Line Items]
Current	39,413	40,864
Total Past Due	75	185
Total	39,488	41,049
Consumer | Indirect installment
Financing Receivable, Past Due [Line Items]
Current	355,305	344,478
Total Past Due	1,439	2,946
Total	356,744	347,424
Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Current	260,536	273,050
Total Past Due	688	929
Total	261,224	273,979
30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 3,072	$ 7,289
Total Past Due, Percentage of Total Loans	0.08%	0.20%
30-59 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 216	$ 1,819
30-59 Days Past Due | Commercial | Owner occupied real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	116	920
30-59 Days Past Due | Commercial | Non-owner occupied real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	80
30-59 Days Past Due | Commercial | Residential spec homes
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
30-59 Days Past Due | Commercial | Development & spec land
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
30-59 Days Past Due | Commercial | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	100	819
30-59 Days Past Due | Real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,295	1,984
30-59 Days Past Due | Real estate | Residential mortgage
Financing Receivable, Past Due [Line Items]
Total Past Due	1,295	1,984
30-59 Days Past Due | Real estate | Residential construction
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
30-59 Days Past Due | Real estate | Mortgage warehouse
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
30-59 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	1,561	3,486
30-59 Days Past Due | Consumer | Direct installment
Financing Receivable, Past Due [Line Items]
Total Past Due	30	175
30-59 Days Past Due | Consumer | Indirect installment
Financing Receivable, Past Due [Line Items]
Total Past Due	1,097	2,407
30-59 Days Past Due | Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	434	904
60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 781	$ 440
Total Past Due, Percentage of Total Loans	0.02%	0.01%
60-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 0	$ 11
60-89 Days Past Due | Commercial | Owner occupied real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
60-89 Days Past Due | Commercial | Non-owner occupied real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
60-89 Days Past Due | Commercial | Residential spec homes
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
60-89 Days Past Due | Commercial | Development & spec land
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
60-89 Days Past Due | Commercial | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	0	11
60-89 Days Past Due | Real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	263	0
60-89 Days Past Due | Real estate | Residential mortgage
Financing Receivable, Past Due [Line Items]
Total Past Due	263	0
60-89 Days Past Due | Real estate | Residential construction
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
60-89 Days Past Due | Real estate | Mortgage warehouse
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
60-89 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	518	429
60-89 Days Past Due | Consumer | Direct installment
Financing Receivable, Past Due [Line Items]
Total Past Due	5	5
60-89 Days Past Due | Consumer | Indirect installment
Financing Receivable, Past Due [Line Items]
Total Past Due	259	404
60-89 Days Past Due | Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	254	20
90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 123	$ 146
Total Past Due, Percentage of Total Loans	0.00%	0.01%
90 Days or Greater Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 0	$ 0
90 Days or Greater Past Due | Commercial | Owner occupied real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Commercial | Non-owner occupied real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Commercial | Residential spec homes
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Commercial | Development & spec land
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Commercial | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	1
90 Days or Greater Past Due | Real estate | Residential mortgage
Financing Receivable, Past Due [Line Items]
Total Past Due	0	1
90 Days or Greater Past Due | Real estate | Residential construction
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Real estate | Mortgage warehouse
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
90 Days or Greater Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	123	145
90 Days or Greater Past Due | Consumer | Direct installment
Financing Receivable, Past Due [Line Items]
Total Past Due	40	5
90 Days or Greater Past Due | Consumer | Indirect installment
Financing Receivable, Past Due [Line Items]
Total Past Due	83	135
90 Days or Greater Past Due | Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 0	$ 5

XML

Non-performing Loans and Impaired Loans - Loans by Credit Grades (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	$ 3,978,382	$ 3,634,596
Percentage of total loans		100.00%
Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	431,020
2019	284,236
2018	258,656
2017	323,389
2016	212,616
Prior	546,567
Revolving Loans	256,231
Total Loans	2,312,715	$ 2,047,646
Commercial | Owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	27,338
2019	66,857
2018	64,765
2017	59,910
2016	59,022
Prior	180,730
Revolving Loans	42,576
Total Loans	501,198	519,577
Commercial | Non-owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	71,213
2019	140,000
2018	113,659
2017	153,922
2016	118,198
Prior	251,262
Revolving Loans	160,862
Total Loans	1,009,116	973,331
Commercial | Residential spec homes
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	318
2016	679
Prior	1,905
Revolving Loans	9,134
Total Loans	12,036	12,925
Commercial | Development & spec land
Financing Receivable, Credit Quality Indicator [Line Items]
2020	30
2019	912
2018	2,449
2017	4,815
2016	804
Prior	13,489
Revolving Loans	6,488
Total Loans	28,987	35,954
Commercial | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	332,439
2019	76,467
2018	77,783
2017	104,424
2016	33,913
Prior	99,181
Revolving Loans	37,171
Total Loans	761,378	505,859
Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	59,698
2019	69,063
2018	119,779
2017	115,690
2016	86,516
Prior	231,300
Revolving Loans	322,750
Total Loans	1,004,796	920,998
Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2020	59,698
2019	69,063
2018	119,779
2017	115,690
2016	86,516
Prior	231,300
Revolving Loans	649
Total Loans	682,695	751,019
Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	21,715
Total Loans	21,715	19,686
Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	300,386
Total Loans	300,386	150,293
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2020	107,815
2019	182,134
2018	147,481
2017	91,283
2016	42,605
Prior	83,423
Revolving Loans	6,130
Total Loans	660,871	665,952
Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	6,706
2019	12,340
2018	7,516
2017	7,401
2016	3,008
Prior	2,530
Revolving Loans	14
Total Loans	39,515	41,079
Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	72,828
2019	119,418
2018	96,834
2017	50,664
2016	12,643
Prior	8,254
Revolving Loans	0
Total Loans	360,641	348,658
Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
2020	28,281
2019	50,376
2018	43,131
2017	33,218
2016	26,954
Prior	72,639
Revolving Loans	6,116
Total Loans	260,715	276,215
Performing | Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2020	59,698
2019	68,882
2018	119,632
2017	115,321
2016	85,206
Prior	223,362
Revolving Loans	649
Total Loans	672,750
Performing | Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	21,715
Total Loans	21,715
Performing | Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	300,386
Total Loans	300,386
Performing | Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	6,706
2019	12,336
2018	7,486
2017	7,381
2016	3,002
Prior	2,523
Revolving Loans	14
Total Loans	39,448
Performing | Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	72,828
2019	119,252
2018	96,562
2017	50,133
2016	12,502
Prior	8,044
Revolving Loans	0
Total Loans	359,321
Performing | Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
2020	28,281
2019	50,367
2018	43,076
2017	33,139
2016	26,902
Prior	71,516
Revolving Loans	4,948
Total Loans	258,229
Non-performing | Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	181
2018	147
2017	369
2016	1,310
Prior	7,938
Revolving Loans	0
Total Loans	9,945
Non-performing | Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0
Non-performing | Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0
Non-performing | Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	4
2018	30
2017	20
2016	6
Prior	7
Revolving Loans	0
Total Loans	67
Non-performing | Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	166
2018	272
2017	531
2016	141
Prior	210
Revolving Loans	0
Total Loans	1,320
Non-performing | Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	9
2018	55
2017	79
2016	52
Prior	1,123
Revolving Loans	1,168
Total Loans	2,486
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 3,541,122
Percentage of total loans		97.43%
Pass | Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 1,968,009
Pass | Commercial | Owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	27,165
2019	65,335
2018	55,867
2017	54,371
2016	56,131
Prior	161,463
Revolving Loans	38,697
Total Loans	459,029	492,386
Pass | Commercial | Non-owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	68,736
2019	129,273
2018	83,742
2017	143,870
2016	114,786
Prior	231,098
Revolving Loans	159,787
Total Loans	931,292	957,990
Pass | Commercial | Residential spec homes
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	318
2016	679
Prior	1,905
Revolving Loans	7,889
Total Loans	10,791	12,925
Pass | Commercial | Development & spec land
Financing Receivable, Credit Quality Indicator [Line Items]
2020	30
2019	912
2018	2,449
2017	4,815
2016	804
Prior	13,356
Revolving Loans	6,488
Total Loans	28,854	35,815
Pass | Commercial | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	321,761
2019	66,704
2018	66,203
2017	96,404
2016	30,716
Prior	83,437
Revolving Loans	33,185
Total Loans	698,410	468,893
Pass | Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		911,115
Pass | Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		741,136
Pass | Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		19,686
Pass | Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		150,293
Pass | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		661,998
Pass | Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		41,044
Pass | Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		347,289
Pass | Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		273,665
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 34,804
Percentage of total loans		0.96%
Special Mention | Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 34,804
Special Mention | Commercial | Owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	173
2019	291
2018	4,983
2017	4,393
2016	2,394
Prior	11,132
Revolving Loans	0
Total Loans	23,366	8,328
Special Mention | Commercial | Non-owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	2,477
2019	10,727
2018	27,479
2017	9,421
2016	2,959
Prior	15,174
Revolving Loans	1,075
Total Loans	69,312	7,824
Special Mention | Commercial | Residential spec homes
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	1,245
Total Loans	1,245	0
Special Mention | Commercial | Development & spec land
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	133
Revolving Loans	0
Total Loans	133	0
Special Mention | Commercial | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	8,027
2019	4,012
2018	8,027
2017	6,321
2016	2,363
Prior	12,088
Revolving Loans	1,914
Total Loans	42,752	18,652
Special Mention | Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Special Mention | Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 58,670
Percentage of total loans		1.61%
Substandard | Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 44,833
Substandard | Commercial | Owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1,231
2018	3,915
2017	1,146
2016	497
Prior	8,135
Revolving Loans	3,879
Total Loans	18,803	18,863
Substandard | Commercial | Non-owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	2,438
2017	631
2016	453
Prior	4,990
Revolving Loans	0
Total Loans	8,512	7,517
Substandard | Commercial | Residential spec homes
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0	0
Substandard | Commercial | Development & spec land
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0	139
Substandard | Commercial | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	2,651
2019	5,751
2018	3,553
2017	1,699
2016	834
Prior	3,656
Revolving Loans	2,072
Total Loans	20,216	18,314
Substandard | Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		9,883
Substandard | Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		9,883
Substandard | Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Substandard | Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Substandard | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		3,954
Substandard | Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		35
Substandard | Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		1,369
Substandard | Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		2,550
Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 0
Percentage of total loans		0.00%
Doubtful | Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 0
Doubtful | Commercial | Owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0	0
Doubtful | Commercial | Non-owner occupied real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0	0
Doubtful | Commercial | Residential spec homes
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0	0
Doubtful | Commercial | Development & spec land
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	0	0
Doubtful | Commercial | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Total Loans	$ 0	0
Doubtful | Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Real estate | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Real estate | Residential construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Real estate | Mortgage warehouse
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Consumer | Direct installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Consumer | Indirect installment
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		0
Doubtful | Consumer | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		$ 0

XML

Loan Servicing - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Payments for (Proceeds from) Mortgage Servicing Rights [Abstract]
Unpaid principal balances of loans serviced for others totaled	$ 1,500,000		$ 1,400,000
Aggregate fair value of capitalized mortgage servicing rights	12,100		14,400
Mortgage servicing rights, net	12,389		14,327
Mortgage Servicing Rights Impairment	$ 3,201	$ (11)	$ 192

XML

Loan Servicing - Originated Mortgage Servicing Rights (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Payments for (Proceeds from) Mortgage Servicing Rights [Abstract]
Balance, beginning of period	$ 15,046	$ 12,876
Servicing rights capitalized	2,573	3,547
Amortization of servicing rights	(1,310)	(1,377)
Balance, end of period	16,309	15,046
Balance, beginning of period	(719)	(527)
Additions	(3,201)	(234)
Reductions	0	42
Balance, end of period	(3,920)	(719)
Mortgage servicing rights, net	$ 12,389	$ 14,327

XML

Goodwill - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Goodwill [Roll Forward]
Balance, beginning of period	$ 151,238	$ 119,880
Goodwill acquired during the period	0	31,358
Balance, end of period	$ 151,238	$ 151,238

XML

Goodwill - Additional Information (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairment loss	$ 0	$ 0

XML

Repurchase Agreements - Summary of Repurchase Agreements Accounted as Secured Borrowings (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	$ 109,160
Securities pledged for Repurchase Agreements	111,112
Overnight and Continuous
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	109,160
Securities pledged for Repurchase Agreements	111,112
Up to one year
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	0
Securities pledged for Repurchase Agreements	0
One to three years
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	0
Securities pledged for Repurchase Agreements	0
Three to five years
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	0
Securities pledged for Repurchase Agreements	0
Five to ten years
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	0
Securities pledged for Repurchase Agreements	0
Beyond ten years
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	0
Securities pledged for Repurchase Agreements	0
Federal agency collateralized mortgage obligations
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	46,073
Federal agency collateralized mortgage obligations | Overnight and Continuous
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	46,073
Federal agency collateralized mortgage obligations | Up to one year
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency collateralized mortgage obligations | One to three years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency collateralized mortgage obligations | Three to five years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency collateralized mortgage obligations | Five to ten years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency collateralized mortgage obligations | Beyond ten years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency mortgage-backed pools
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	65,039
Federal agency mortgage-backed pools | Overnight and Continuous
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	65,039
Federal agency mortgage-backed pools | Up to one year
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency mortgage-backed pools | One to three years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency mortgage-backed pools | Three to five years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency mortgage-backed pools | Five to ten years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	0
Federal agency mortgage-backed pools | Beyond ten years
Assets Sold under Agreements to Repurchase [Line Items]
Securities pledged for Repurchase Agreements	$ 0

XML

Subordinated Notes (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 24, 2020
Debt Disclosure [Abstract]
Debt instrument, face amount		$ 60,000,000.0
Interest rate		5.625%
Basis spread on variable rate	5.49%
Redemption price, percentage	100.00%

XML

Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Derivative [Line Items]
LIBOR period	3 months
Weighted average fixed rate	4.20%	4.03%
Recorded period of effectiveness of cash flow hedges on net income	12 months
Recorded period of effectiveness of fair value hedges on net income	12 months
Recorded period of effectiveness of fair value of derivatives on net income	12 months
Interest rate swap agreements liability
Derivative [Line Items]
LIBOR period	1 month
Weighted average fixed rate	2.81%
LaPorte
Derivative [Line Items]
LIBOR period	1 month
Weighted average fixed rate	2.62%	2.31%
Cash Flow Hedging
Derivative [Line Items]
Notional amount of interest	$ 12.0	$ 15.5
Cash Flow Hedging | Interest rate swap agreements liability
Derivative [Line Items]
Notional amount of interest	50.0	50.0
Cash Flow Hedging | LaPorte
Derivative [Line Items]
Notional amount of interest	10.0	30.0
Fair Value Hedging
Derivative [Line Items]
Notional amount of interest	$ 425.8	$ 361.0

XML

Derivative Financial Instruments - Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Total Asset Derivatives	$ 42,968	$ 11,686
Total Liability Derivatives	50,917	15,899
Derivatives designated as hedging instruments
Derivatives, Fair Value [Line Items]
Total Asset Derivatives	42,378	11,422
Total Liability Derivatives	50,917	15,861
Derivatives designated as hedging instruments | Interest rate contracts | Other assets
Derivatives, Fair Value [Line Items]
Total Asset Derivatives	42,378	11,422
Derivatives designated as hedging instruments | Interest rate contracts | Other liabilities
Derivatives, Fair Value [Line Items]
Total Liability Derivatives	50,917	15,861
Derivatives not designated as hedging instruments
Derivatives, Fair Value [Line Items]
Total Asset Derivatives	590	264
Total Liability Derivatives	0	38
Derivatives not designated as hedging instruments | Mortgage loan contracts | Other assets
Derivatives, Fair Value [Line Items]
Total Asset Derivatives	590	264
Derivatives not designated as hedging instruments | Mortgage loan contracts | Other liabilities
Derivatives, Fair Value [Line Items]
Total Liability Derivatives	$ 0	$ 38

XML

Derivative Financial Instruments - Effect of Derivative Instruments on Condensed Consolidated Statements of Income Derivative in Cash Flow Hedging Relationship (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Comprehensive Income on Derivative (Effective Portion)	$ (135)	$ (1,901)	$ (4,100)	$ (3,007)
Cash Flow Hedging | Interest rate contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Comprehensive Income on Derivative (Effective Portion)	$ (107)	$ (1,502)	$ (3,239)	$ (2,376)

XML

Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statements of Income Derivative in Fair Value Hedging Relationship (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest income - loans | Fair Value Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	$ 0	$ 0	$ 0	$ 0
Interest income - loans | Fair Value Hedging | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	(3,162)	(7,529)	(29,492)	(11,580)
Interest income - loans | Fair Value Hedging | Interest Rate Contracts Two
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	3,162	7,529	29,492	11,580
Derivatives not designated as hedging instruments | Other income - gain on sale of loans | Mortgage loan contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	$ (679)	$ 75	$ 364	$ 332

XML

Disclosures about Fair Value of Assets and Liabilities - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Fair Value Disclosures [Abstract]
Reduced in carrying amount of mortgage servicing rights	$ (3,200)	$ 11

XML

Disclosures about Fair Value of Assets and Liabilities - Fair Value Measurements of Assets and Liabilities Recognized on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 935,140	$ 834,776
U.S. Treasury and federal agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		1,413
State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	548,232	405,768
Federal agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	225,805	269,252
Federal agency mortgage-backed pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	148,786	146,572
Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	12,317	11,771
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	935,140	834,776
Recurring Basis | U.S. Treasury and federal agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		1,413
Recurring Basis | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	548,232	405,768
Recurring Basis | Federal agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	225,805	269,252
Recurring Basis | Federal agency mortgage-backed pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	148,786	146,572
Recurring Basis | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	12,317	11,771
Recurring Basis | Interest rate swap agreements asset
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	39,216	11,422
Recurring Basis | Forward sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	590	264
Recurring Basis | Interest rate swap agreements liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	(47,620)	(15,861)
Recurring Basis | Commitments to originate loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value		(38)
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury and federal agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Federal agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Federal agency mortgage-backed pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate swap agreements asset
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Forward sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate swap agreements liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	0	0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commitments to originate loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value		0
Recurring Basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	935,140	834,776
Recurring Basis | Significant Other Observable Inputs (Level 2) | U.S. Treasury and federal agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		1,413
Recurring Basis | Significant Other Observable Inputs (Level 2) | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	548,232	405,768
Recurring Basis | Significant Other Observable Inputs (Level 2) | Federal agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	225,805	269,252
Recurring Basis | Significant Other Observable Inputs (Level 2) | Federal agency mortgage-backed pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	148,786	146,572
Recurring Basis | Significant Other Observable Inputs (Level 2) | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	12,317	11,771
Recurring Basis | Significant Other Observable Inputs (Level 2) | Interest rate swap agreements asset
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	39,216	11,422
Recurring Basis | Significant Other Observable Inputs (Level 2) | Forward sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	590	264
Recurring Basis | Significant Other Observable Inputs (Level 2) | Interest rate swap agreements liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	(47,620)	(15,861)
Recurring Basis | Significant Other Observable Inputs (Level 2) | Commitments to originate loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value		(38)
Recurring Basis | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | U.S. Treasury and federal agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		0
Recurring Basis | Significant Unobservable Inputs (Level 3) | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Federal agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Federal agency mortgage-backed pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Interest rate swap agreements asset
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Forward sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Interest rate swap agreements liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	$ 0	0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Commitments to originate loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value		$ 0

XML

Disclosures about Fair Value of Assets and Liabilities - Realized Gains and Losses included in Net Income for Periods in Consolidated Statements of Income (Details) - Non-interest Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	$ (679)	$ 75	$ 364	$ 332
Hedged loans
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	(3,162)	(7,529)	(29,492)	(11,580)
Interest rate swap agreements liability
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	3,162	7,529	29,492	11,580
Derivative loan commitments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	$ (679)	$ 75	$ 364	$ 332

XML

Disclosures about Fair Value of Assets and Liabilities - Other Assets Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Significant Unobservable Inputs (Level 3) | Collateral dependent loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	$ 12,389
Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value		$ 6,806
Significant Unobservable Inputs (Level 3) | Mortgage servicing rights
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	12,389	14,327
Fair Value, Nonrecurring | Collateral dependent loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	12,389
Fair Value, Nonrecurring | Impaired loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value		6,806
Fair Value, Nonrecurring | Mortgage servicing rights
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	12,389	14,327
Fair Value, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Collateral dependent loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	0
Fair Value, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value		0
Fair Value, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage servicing rights
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	0	0
Fair Value, Nonrecurring | Significant Other Observable Inputs (Level 2) | Collateral dependent loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	0
Fair Value, Nonrecurring | Significant Other Observable Inputs (Level 2) | Impaired loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value		0
Fair Value, Nonrecurring | Significant Other Observable Inputs (Level 2) | Mortgage servicing rights
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	0	0
Fair Value, Nonrecurring | Significant Unobservable Inputs (Level 3) | Collateral dependent loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	12,389
Fair Value, Nonrecurring | Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value		6,806
Fair Value, Nonrecurring | Significant Unobservable Inputs (Level 3) | Mortgage servicing rights
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair Value	$ 12,389	$ 14,327

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Disclosures about Fair Value of Assets and Liabilities - Qualitative Information about Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements, Other than Goodwill (Details) - Significant Unobservable Inputs (Level 3) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($) consecutivePayment	Dec. 31, 2019 USD ($) consecutivePayment
Collateral dependent loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value | $	$ 12,389
Valuation Technique	Collateral based measurement
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectibility
Impaired loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value | $		$ 6,806
Valuation Technique		Collateral based measurement
Unobservable Inputs		Discount to reflect current market conditions and ultimate collectibility
Mortgage servicing rights
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value | $	$ 12,389	$ 14,327
Valuation Technique	Discounted cash flows	Discounted cash flows
Unobservable Inputs	Discount rate,Constant prepayment rate,Probability of default	Discount rate,Constant prepayment rate,Probability of default
Minimum | Collateral dependent loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	0.00%
Minimum | Impaired loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability		0.00%
Minimum | Mortgage servicing rights | Measurement Input, Discount Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.078	0.087
Minimum | Mortgage servicing rights | Measurement Input, Constant Prepayment Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.123	0.102
Minimum | Mortgage servicing rights | Measurement Input, Default Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.004	0.001
Maximum | Collateral dependent loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	100.00%
Maximum | Impaired loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability		100.00%
Maximum | Mortgage servicing rights | Measurement Input, Discount Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.078	0.090
Maximum | Mortgage servicing rights | Measurement Input, Constant Prepayment Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.183	0.198
Maximum | Mortgage servicing rights | Measurement Input, Default Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.082	0.029
Weighted Average | Collateral dependent loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	13.00%
Weighted Average | Impaired loans
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability		7.40%
Weighted Average | Mortgage servicing rights | Measurement Input, Discount Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.078	0.087
Weighted Average | Mortgage servicing rights | Measurement Input, Constant Prepayment Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.168	0.122
Weighted Average | Mortgage servicing rights | Measurement Input, Default Rate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Unobservable inputs	0.014	0.007

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Fair Value of Financial Instruments - Summary of Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and due from banks	$ 170,135	$ 98,831
Interest-bearing Deposits in Banks and Other Financial Institutions	9,247	8,455
Investment securities, held to maturity	190,935	207,899
Loans held for sale	15,913	4,088
Stock in FHLB	23,608	22,447
Interest receivable	20,185	18,828
Liabilities
Non-interest bearing deposits	981,868	709,760
Interest bearing deposits	3,325,731	3,221,242
Borrowings	583,073	549,741
Interest payable	2,353	3,062
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets
Cash and due from banks	170,135	98,831
Interest-bearing Deposits in Banks and Other Financial Institutions	0	0
Investment securities, held to maturity	0	0
Loans held for sale	0	0
Loans (excluding loan level hedges), net	0	0
Stock in FHLB	0	0
Interest receivable	0	0
Liabilities
Non-interest bearing deposits	981,868	709,760
Interest bearing deposits	0	0
Borrowings	0	0
Subordinated notes	0
Junior subordinated debentures issued to capital trusts	0	0
Interest payable	0	0
Significant Other Observable Inputs (Level 2)
Assets
Cash and due from banks	0	0
Interest-bearing Deposits in Banks and Other Financial Institutions	9,462	8,537
Investment securities, held to maturity	201,818	215,147
Loans held for sale	0	0
Loans (excluding loan level hedges), net	0	0
Stock in FHLB	23,608	22,447
Interest receivable	20,185	18,828
Liabilities
Non-interest bearing deposits	0	0
Interest bearing deposits	3,328,498	3,180,768
Borrowings	595,893	546,995
Subordinated notes	58,824
Junior subordinated debentures issued to capital trusts	52,603	51,809
Interest payable	2,353	3,062
Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	0	0
Interest-bearing Deposits in Banks and Other Financial Institutions	0	0
Investment securities, held to maturity	0	0
Loans held for sale	15,913	4,088
Loans (excluding loan level hedges), net	3,912,434	3,554,951
Stock in FHLB	0	0
Interest receivable	0	0
Liabilities
Non-interest bearing deposits	0	0
Interest bearing deposits	0	0
Borrowings	0	0
Subordinated notes	0
Junior subordinated debentures issued to capital trusts	0	0
Interest payable	0	0
Carrying Amount
Assets
Cash and due from banks	170,135	98,831
Interest-bearing Deposits in Banks and Other Financial Institutions	9,247	8,455
Investment securities, held to maturity	190,935	207,899
Loans held for sale	15,913	4,088
Loans (excluding loan level hedges), net	3,923,292	3,619,174
Stock in FHLB	23,608	22,447
Interest receivable	20,185	18,828
Liabilities
Non-interest bearing deposits	981,868	709,760
Interest bearing deposits	0	3,221,242
Borrowings	0	549,741
Subordinated notes	58,824
Junior subordinated debentures issued to capital trusts	56,437	56,311
Interest payable	$ 2,353	$ 3,062

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Accumulated Other Comprehensive Income - Components of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Tax effect	$ (5,653)	$ (1,708)
Total accumulated other comprehensive income	21,270	6,432
Unrealized gain on securities available for sale
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), before tax	35,599	12,687
Unamortized loss on securities held to maturity, previously transferred from AFS
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), before tax	(136)	(107)
Unrealized loss on derivative instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), before tax	$ (8,540)	$ (4,440)

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Regulatory Capital - Summary of Regulatory Capital Requirement (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk-weighted assets), Actual, Amount	$ 628,750	$ 548,364
Total capital (to risk-weighted assets), Actual, Ratio	14.37%	13.95%
Total capital (to risk-weighted assets), For capital adequacy purposes, Amount	$ 350,035	$ 314,395
Total capital (to risk-weighted assets), For capital adequacy purposes, Ratio	8.00%	8.00%
Total capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 459,421	$ 412,644
Total capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Ratio	10.50%	10.50%
Tier 1 capital (to average assets), Actual, Amount	$ 585,386	$ 530,643
Tier 1 capital (to average assets), Actual, Ratio	13.38%	13.50%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 262,505	$ 235,796
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	6.00%	6.00%
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 371,882	$ 334,044
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Ratio	8.50%	8.50%
Common equity tier 1 capital, Actual Amount	$ 469,069	$ 473,150
Common equity tier 1 capital, Actual Ratio	10.72%	12.04%
Common equity tier 1 capital,For capital adequacy purposes, Amount	$ 196,904	$ 176,846
Common equity tier 1 capital, For capital adequacy purpose, Ratio	4.50%	4.50%
Common equity tier 1 capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 306,295	$ 275,094
Common equity tier 1 capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Ratio	7.00%	7.00%
Tier 1 capital (to average assets), Actual, Amount	$ 585,386	$ 530,643
Tier 1 capital (to average assets), Actual, Ratio	10.75%	10.50%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 217,818	$ 202,111
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	4.00%	4.00%
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 217,818	$ 202,111
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Ratio	4.00%	4.00%
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk-weighted assets), Actual, Amount	$ 514,371	$ 497,227
Total capital (to risk-weighted assets), Actual, Ratio	11.74%	12.65%
Total capital (to risk-weighted assets), For capital adequacy purposes, Amount	$ 350,508	$ 314,452
Total capital (to risk-weighted assets), For capital adequacy purposes, Ratio	8.00%	8.00%
Total capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 460,042	$ 412,718
Total capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Ratio	10.50%	10.50%
Total capital (to risk-weighted assets), For well capitalized purpose, Amount	$ 438,135	$ 393,065
Total capital (to risk-weighted assets), For well capitalized purpose, Ratio	10.00%	10.00%
Tier 1 capital (to average assets), Actual, Amount	$ 459,621	$ 479,506
Tier 1 capital (to average assets), Actual, Ratio	10.49%	12.20%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 262,891	$ 235,823
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	6.00%	6.00%
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 372,429	$ 334,082
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Ratio	8.50%	8.50%
Tier 1 capital (to average assets), For well capitalized purpose, Amount	$ 350,521	$ 314,430
Tier 1 capital (to average assets), For well capitalized purposes, Ratio	8.00%	8.00%
Common equity tier 1 capital, Actual Amount	$ 459,621	$ 479,506
Common equity tier 1 capital, Actual Ratio	10.49%	12.20%
Common equity tier 1 capital,For capital adequacy purposes, Amount	$ 197,168	$ 176,867
Common equity tier 1 capital, For capital adequacy purpose, Ratio	4.50%	4.50%
Common equity tier 1 capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 306,706	$ 275,126
Common equity tier 1 capital (to risk-weighted assets), Required for capital1 adequacy purposes with capital buffer, Ratio	7.00%	7.00%
Common equity tier 1 capital, For well capitalized purpose, Amount	$ 284,799	$ 255,475
Common equity tier 1 capital, For well capitalized purposes, Ratio	6.50%	6.50%
Tier 1 capital (to average assets), Actual, Amount	$ 459,621	$ 479,506
Tier 1 capital (to average assets), Actual, Ratio	8.48%	9.49%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 216,802	$ 202,110
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	4.00%	4.00%
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Amount	$ 216,802	$ 202,110
Tier 1 capital (to average assets), Required for capital1 adequacy purposes with capital buffer, Ratio	4.00%	4.00%
Tier 1 capital (to average assets), For well capitalized purpose, Amount	$ 271,003	$ 252,638
Tier 1 capital (to average assets), For well capitalized purposes, Ratio	5.00%	5.00%