<SEC-DOCUMENT>0000908834-19-000024.txt : 20190315
<SEC-HEADER>0000908834-19-000024.hdr.sgml : 20190315
<ACCEPTANCE-DATETIME>20190315131912
ACCESSION NUMBER:		0000908834-19-000024
CONFORMED SUBMISSION TYPE:	ARS
PUBLIC DOCUMENT COUNT:		11
CONFORMED PERIOD OF REPORT:	20181231
FILED AS OF DATE:		20190315
DATE AS OF CHANGE:		20190315
EFFECTIVENESS DATE:		20190315

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HORIZON BANCORP INC /IN/
		CENTRAL INDEX KEY:			0000706129
		STANDARD INDUSTRIAL CLASSIFICATION:	STATE COMMERCIAL BANKS [6022]
		IRS NUMBER:				351562417
		STATE OF INCORPORATION:			IN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		ARS
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-10792
		FILM NUMBER:		19684331

	BUSINESS ADDRESS:	
		STREET 1:		515 FRANKLIN STREET
		CITY:			MICHIGAN CITY
		STATE:			IN
		ZIP:			46360
		BUSINESS PHONE:		2198790211

	MAIL ADDRESS:	
		STREET 1:		515 FRANKLIN STREET
		CITY:			MICHIGAN CITY
		STATE:			IN
		ZIP:			46360

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HORIZON BANCORP /IN/
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CITIZENS MICHIANA FINANCIAL CORP
		DATE OF NAME CHANGE:	19861021
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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: right; LINE-HEIGHT: 14.8pt">&#160;MESSAGE TO THE SHAREHOLDERS&#160;&#160;|&#160; 2018</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Dear Shareholder,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">In 2018, Horizon Bancorp, Inc. (&#8220;Horizon&#8221;) reported record net income of $53.1 million. This represents a 60.4% increase over the prior year&#8217;s net income of $33.1 million. Horizon&#8217;s Core Net Income for the year-end December 31, 2018, increased to $48.9 million, a 38.0% increase over prior year&#8217;s Core Net Income<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller">1</sup> </font>of $35.5 million. The increase in Horizon&#8217;s 2018 earnings is reflective of Horizon&#8217;s successful execution of its ongoing strategy to build mass and scale through both organic and acquisitive growth.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">During 2018, the equity markets exhibited considerable volatility, which has caused some consternation with investors, specifically in the banking sector. The volatility in bank stocks was driven generally by passive investors, who move large volumes of stock based on their investment models, often overselling their positions. This overselling often creates an opportunity for value investors. At Horizon, we believe that our company represents both a value and a growth play for investors. The value play is based on our current trading multiple discount to peers, while the growth play has been demonstrated by our historical ability to expand the organization. This combination of value and growth makes Horizon an attractive long term investment.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt">2018 A Year of Process Improvement</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">This is the first year since 2013 that Horizon did not close or integrate an acquisition. As a company we completed, closed and integrated nine acquisitions between the years 2014 and 2017. Therefore during 2018 it was important for our Company to take a breather in order to revisit internal processes, up-grade systems and allow for full realization of the cost saves from prior acquisitions. I am pleased to report that Horizon was successful on all fronts which is a testament to the quality of our team and their ability to achieve solid growth, while also improving efficiency.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">On October 29, 2018 Horizon announced a pending merger with Salin Bancshares, Inc. and its wholly owned subsidiary, Salin Bank and Trust Company (&#8220;Salin Bank&#8221;). Salin Bank is a well-managed, family owned bank headquartered in Indianapolis, Indiana, with 20 branches located throughout central Indiana. Salin&#8217;s leadership team successfully grew this franchise to approximately $900 million in total assets, has maintained good asset quality and were early adopters of new banking technology in order to improve their customer experience. Horizon will be retaining several key leaders from Salin Bank who will add depth and experience to our current central Indiana team.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">As part of our merger plan, Horizon intends to close five of Salin Bank&#8217;s branches, which are primarily in markets where we have branch overlap. Our pledge is to retain all of Salin Bank&#8217;s branch employees and, therefore, the Salin customers will continue to recognize a friendly face when they walk into the newly branded Horizon offices. This formula has worked well with past mergers and has resulted in high customer retention rates.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">We anticipate the closing of this transaction in the 1st or 2nd quarter of 2019, with the data processing conversion to take place in the 2nd quarter.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #4d4d4d; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 10.25pt"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller">1</sup>See the Non-GAAP Reconciliation of Net Income and Diluted Earnings Per Share beginning on page 59 of Horizon&#8217;s Annual Report on Form 10-K for a reconciliation of Core Net Income to its most directly comparable GAAP measure, Net Income, for the periods presented.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt">Building for the Future</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">As a publicly traded company, Horizon&#8217;s obligation and responsibility to its shareholders is to continue to look for growth opportunities, to improve upon the customer experience, and to build an efficient operation. Horizon believes that the best opportunities for future growth are in the States of Indiana, and Michigan. Both states are fiscally responsible, have pockets of strong economic growth and community banks with good core deposits. Horizon will continue to capitalize on these opportunities through organic and acquisitive growth initiatives.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">In June 2018, Horizon opened a new full service office in Noblesville, Indiana. Noblesville is the county seat for Hamilton County, Indiana, which is one of the fastest growing counties in the Midwest. This new office complements Horizon&#8217;s existing locations in central Indiana.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">In July 2018, Horizon opened a loan production office in Holland, Michigan. Which complements our growth efforts in West Michigan. This office was established by hiring a seasoned team of experienced and local Holland bankers. Holland is a dynamic growth market with an excellent manufacturing base and is currently experiencing disruption in the banking space, which will improve Horizon&#8217;s growth opportunities.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">In 2018, Horizon launched a digital small business lending application process known as &#8220;InstaCap&#8221;. This program has improved the turnaround time and accelerated the speed to fund loans for our small business loan customers. In 2019, Horizon will continue to invest in technology as we implement additional customer facing software programs to decrease customer friction points and improve their experience with the bank. The 2019 initiatives include stream-lined deposit opening software, and an efficient consumer loan application and underwriting system.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon is a company on the move and will continue to look for opportunities in the markets we serve and for process improvement to build shareholder value.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt">Focused Growth Outlook</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon&#8217;s three-year strategic plan calls for continued acquisitive growth, which we anticipate will account for approximately fifty percent of our total growth during this time period. Horizon&#8217;s acquisition strategy is to partner with like-minded community banks that have similar values and are located in the states of Indiana and Michigan. Both states have favorable economic environments for business and are well known to Horizon&#8217;s senior leadership team.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon believes bank consolidation will continue as a result of the escalating costs of doing business, increased regulatory burden, shrinking net interest margins, the need for succession management, and the required investment in technology to remain competitive. Horizon&#8217;s acquisition experience, reputation for executing smooth integrations, capacity of our internal systems, and ability to retain local people has positioned us well to capitalize on this strategy.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon&#8217;s three-year organic growth strategy is focused on the markets where we believe we can gain market share or capitalize on demographic growth. These markets include major urban areas located in Indiana and Michigan. Most of these markets project population growth faster than Horizon&#8217;s legacy branch locations, have strong local economies, and are dominated by very large banks headquartered outside of these states. We believe organic growth will be achieved by retaining and attracting top talent, rewarding our employees for our mutual success, taking market share from large banks and focusing on our customers&#8217; experience.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Another key component in Horizon&#8217;s strategic plan is to consistently focus on our four primary and diverse revenue streams which include: business and agricultural banking, retail banking, mortgage lending, and wealth and investment management. These four revenue streams provide the bank and shareholders with greater stability to weather varying economic cycles and a diversification of Horizon&#8217;s capital at risk, the combination of which provides for stable and consistent returns over time.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt">General Banking Sector Outlook</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">The economic outlook has several uncertainties tied to the increasing probability for a recession to occur by 2020 including: the tightening of interest spreads as measured by the difference between the two year and ten year U.S. Treasury yields, the ongoing political environment in Washington D.C., and the general slowdown in the world economy.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">In addition to the economic challenges, the banking sector will continue to see increased competition for low-cost deposits to fund growth in earning assets, and for top talent. We must also manage concentration risks well within our respective loan and investment portfolios. Horizon&#8217;s 2019 plan is to seek merger partners with excess deposits and to allocate more resources to support core deposit growth. Horizon is also reviewing its underwriting standards for all loan portfolios in anticipation of a possible recession by 2020. And lastly, Horizon will continue to deploy a top talent retention program that has a goal of retaining 100% of our top performers.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt">Milestones Achieved Across the Company</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon achieved the following milestones in 2018:</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Record earnings of $53.1 million</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Record efficiency ratio at 60.67%</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Return on average assets of 1.31%</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Return on average equity of 11.22%</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Good asset quality as measured by low 2018 net charge-offs at 0.05%</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">An increase in the quarterly dividend of 15%.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">As the result of a 3 for 2 stock split effective June 15, 2018, Horizon increased its total shares outstanding from approximately 25.5 million to 38.4 million shares as of December 31, 2017 and 2018 respectively. This stock split was for the purpose of increasing liquidity in our shares and to continue to make our shares affordable to retail investors.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Improved shareholder liquidity by 47.2% by increasing the average shares traded per day to 95,226 which is an increase over prior year&#8217;s average shares traded per day of 64,714.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">As of December 31, 2018, Horizon&#8217;s tangible book value per share was $9.43 is the highest level since the Company became publically traded.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Maintaining enrollment in the Russell 2000 and 3000 indices and increasing shares of Horizon&#8217;s common stock purchased in related index funds.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">We continue to improve upon operational leverage by increasing mass and scale. In support of this strategy, we announced the merger with Salin Bank on October 29, 2018.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">To improve efficiency and to better allocate our resources, Horizon recently announced the closing of 3 branches.&#160; The branches are on scheduled to close early in the second quarter of 2019.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">During 2018, Horizon&#8217;s price per common share decreased by 14.8%. This decline is in line with the overall drop in bank stocks during the year as evidenced by the KBW NASDAQ Bank index falling 19.6%, the SNL Midwest U.S. Bank falling 16.7%, and S&amp;P 500 Banks falling 18.4%.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon&#8217;s commitment to people first, a cautious and focused approach to expansion, and maintaining a diverse number of revenue streams, gives us confidence in our ability to weather future economic fluctuations and to continue stable growth while continuing to deliver shareholder value.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">On a Personal Note: </font>In May 2019, long time director Larry Middleton will retire from our Board of Directors. Larry has provided Horizon with 26 years of exemplary service and has been a passionate customer advocate. We wish Larry the best in his retirement years and thank him for his years of loyal and dedicated service.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 6pt; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">On behalf of the entire Horizon Bancorp family, thank you for your continued support and investment in Horizon.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">134,569</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">$</div>
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</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">74,734</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">62,983</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Provision for loan losses</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">2,906</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,470</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">1,842</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">3,162</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">3,058</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Other income</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">34,413</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">33,136</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">35,455</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">30,402</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">26,277</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Other expenses</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">102,516</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">94,813</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">86,892</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">74,193</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">61,946</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; PADDING-BOTTOM: 2px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Income tax expense</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; PADDING-BOTTOM: 2px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">10,443</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">14,836</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">8,801</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">7,232</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">6,155</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Net income</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">53,117</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">33,117</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">23,912</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">20,549</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">18,101</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="HEIGHT: 16px">
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; PADDING-BOTTOM: 2px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Preferred stock dividend</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; PADDING-BOTTOM: 2px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">&#8212;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">&#8212;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">(42</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">)</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">(125</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">)</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">(133</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 2px solid; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">)</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; PADDING-BOTTOM: 4px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Net income available to common shareholders</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; PADDING-BOTTOM: 4px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">53,117</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">33,117</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">23,870</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">20,424</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">17,968</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; PADDING-BOTTOM: 4px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Cash dividend declared</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; PADDING-BOTTOM: 4px; BORDER-BOTTOM-COLOR: ; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">15,418</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">11,720</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">8,382</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">6,216</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">4,744</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BORDER-BOTTOM: #000000 4px double; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Per Share Data</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Basic earnings per share&#185;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">1.39</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.96</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.79</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.87</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.88</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Diluted earnings per share&#185;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">1.38</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.95</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.79</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.84</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.85</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Cash dividends declared per common share&#185;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">0.40</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.33</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.27</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.26</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.23</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Book value per common share&#185;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">12.82</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">11.93</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">10.25</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">9.47</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">8.77</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Weighted-average shares outstanding</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 9pt; LINE-HEIGHT: 12.55pt">Basic&#185;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">38,347,059</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">34,553,736</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">29,981,592</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">23,648,166</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">19,393,492</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 9pt; LINE-HEIGHT: 12.55pt">Diluted&#185;</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">38,495,231</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">34,760,439</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">30,123,615</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">24,295,968</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">20,252,167</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Period End Totals</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Loans, net of deferred loan fees and unearned income</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">3,013,332</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,831,995</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,135,986</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">$</div>
</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">1,749,131</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">$</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">1,378,554</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Allowance for loan losses</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">17,820</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">16,394</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">14,837</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">14,534</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">16,501</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Total assets</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">4,246,688</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">3,964,303</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">3,141,156</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,652,401</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,076,922</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Total deposits</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">3,139,376</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,881,003</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">2,471,210</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">1,880,153</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">1,482,319</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Total borrowings</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">588,221</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">601,810</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">304,945</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">482,144</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">383,840</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Ratios</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Loan to deposit</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">96.02</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">98.30</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">86.43</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">93.03</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">93.00</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Loan to total funding</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">80.87</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">81.31</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">76.94</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">74.04</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">73.87</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Return on average assets</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">1.31</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.97</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.81</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.87</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">0.93</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Average stockholders&#8217; equity to average total assets</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">11.65</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">11.15</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">10.22</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">9.30</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">9.33</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Return on average stockholders&#8217; equity</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">11.22</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">8.74</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">7.92</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">9.87</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">10.60</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Dividend payout ratio (<font style="FONT-STYLE: italic">dividends divided by net income</font>)</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">29.03</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">34.78</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">34.33</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">29.85</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">25.72</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Price to book value ratio</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">123.09</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">155.28</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">182.13</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">131.26</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">132.39</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff" valign="bottom" nowrap="nowrap">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">%</div>
</td>
</tr>

<tr>
<td style="WIDTH: 50%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Price to earnings ratio</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; LINE-HEIGHT: 12.55pt">11.35</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">19.45</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">23.56</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">14.78</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom">&#160;</td>
<td style="WIDTH: 7%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff" valign="bottom">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; LINE-HEIGHT: 12.55pt">13.75</div>
</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>
</div>

<div style="LINE-HEIGHT: 12.55pt"><br style="LINE-HEIGHT: 12.55pt">
</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller">1</sup>Adjusted for 3:2 stock split on June 15, 2018 and November 14, 2016.</div>
</div>
</div>

<div id="DSPFPageBreakArea" style="MARGIN-BOTTOM: 10pt; MARGIN-TOP: 10pt; CLEAR: both">
<div id="DSPFPageNumberArea" style="TEXT-ALIGN: right"><font id="DSPFPageNumber" style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: normal; FONT-STYLE: normal">5</font></div>

<div id="DSPFPageBreak" style="PAGE-BREAK-AFTER: always">
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<div>&#160;</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 15.75pt">
<div style="LINE-HEIGHT: 13.7pt">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1px solid; LINE-HEIGHT: 1pt">&#160;</p>

<p style="MARGIN-BOTTOM: 2pt; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1px solid; LINE-HEIGHT: 3pt">&#160;</p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 4pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">UNITED STATES </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">SECURITIES AND EXCHANGE COMMISSION </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Washington, D.C. 20549 </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="TEXT-ALIGN: center">
<p style="MARGIN-BOTTOM: 2pt; WIDTH: 21%; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; LINE-HEIGHT: 6pt"></p>
</div>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">FORM <font style="WHITE-SPACE: nowrap">10-K</font> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="TEXT-ALIGN: center">
<p style="MARGIN-BOTTOM: 2pt; WIDTH: 21%; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; LINE-HEIGHT: 6pt"></p>
</div>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold">(Mark One) </p>

<table id="z26528da37e6e41818a8dd698f8dc2f3e" style="FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">&#9746;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">For the fiscal year ended December&#160;31, 2018 </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Commission file number <font style="WHITE-SPACE: nowrap">0-10792</font> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="TEXT-ALIGN: center">
<p style="MARGIN-BOTTOM: 2pt; WIDTH: 21%; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; LINE-HEIGHT: 6pt"></p>
</div>

<p style="FONT-SIZE: 24pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">(Exact name of registrant as specified in its charter) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="TEXT-ALIGN: center">
<p style="MARGIN-BOTTOM: 2pt; WIDTH: 21%; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; LINE-HEIGHT: 6pt"></p>
</div>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z55a984fc080c4a9294fdefb1269d6789" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 50%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 48%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center"><b>Indiana</b></td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center"><b style="WHITE-SPACE: nowrap">35-1562417</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">(State or other jurisdiction of</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">incorporation or organization)</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">(I.R.S. Employer</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Identification No.)</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center"><b>515 Franklin Street, Michigan City</b></td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center"><b>46360</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center"><b>(Address of principal executive officers)</b></td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center"><b>(Zip Code)</b></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Registrant&#8217;s telephone number, including area code: <font style="WHITE-SPACE: nowrap">219-879-0211</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Securities registered pursuant to Section&#160;12(b) of the Act: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z13a03e8da3494046b76e74d2ef34e9c7" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 50%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 48%"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom" nowrap="nowrap" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; FONT-WEIGHT: bold; TEXT-ALIGN: center; DISPLAY: table-cell">Title of each class</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; FONT-WEIGHT: bold; TEXT-ALIGN: center; DISPLAY: table-cell">Name of each exchange on which registered</p>
</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center"><b>Common Stock, no par value</b></td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center"><b>The NASDAQ Stock Market, LLC</b></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Securities registered pursuant to Section&#160;12(g) of the Act: None </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="TEXT-ALIGN: center">
<p style="MARGIN-BOTTOM: 2pt; WIDTH: 21%; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; LINE-HEIGHT: 6pt"></p>
</div>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act &#160;&#160;&#160;&#160;Yes&#160;&#160;&#9744;&#160;&#160;&#160;&#160;No&#160;&#160;&#9746; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark if the registrant is not required to file reports pursuant to Section&#160;13 or Section&#160;15(d) of the Exchange Act&#160;&#160;&#160;&#160; Yes&#160;&#160;&#9744;&#160;&#160;&#160;&#160;No&#160;&#160;&#9746; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark whether the registrant (1)&#160;has filed all reports required to be filed by Section&#160;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)&#160;has been subject to such filing requirements for the past 90 days.&#160;&#160;&#160;&#160;Yes&#160;&#160;&#9746;&#160;&#160;&#160;&#160;No&#160;&#160;&#9744; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation <font style="WHITE-SPACE: nowrap">S-T</font> (&#167;232.405 of this chapter) during the preceding12 months (or for such shorter period that the registrant was required to submit such files).&#160;&#160;&#160;&#160;Yes&#160;&#160;&#9746;&#160;&#160;&#160;&#160;No&#160;&#160;&#9744; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation <font style="WHITE-SPACE: nowrap">S-K</font> (&#167;229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant&#8217;s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form <font style="WHITE-SPACE: nowrap">10-K</font> or any amendment to the Form <font style="WHITE-SPACE: nowrap">10-K.&#160;&#160;&#9746;</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a <font style="WHITE-SPACE: nowrap">non-accelerated</font> filer, smaller reporting company, or an emerging growth company. See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221; &#8220;smaller reporting company,&#8221; and &#8220;emerging growth company&#8221; in Rule <font style="WHITE-SPACE: nowrap">12b-2</font> of the Exchange Act. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z0d98a4be5cbf454fb4b05f34d258a4c4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 21%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 54%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 21%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 1%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">Large&#160;Accelerated&#160;Filer</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#9746;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Accelerated&#160;Filer</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#9744;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"><font style="WHITE-SPACE: nowrap">Non-Accelerated</font> Filer</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#9744;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Smaller&#160;Reporting&#160;Company</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#9744;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">Emerging&#160;Growth&#160;Company</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#9744;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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&#160;13(a) of the Exchange Act.&#160;&#160;&#9744; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule <font style="WHITE-SPACE: nowrap">12b-2</font> of the Exchange Act).&#160;&#160;&#160;&#160;Yes&#160;&#160;&#9744;&#160;&#160;&#160;&#160;No&#160;&#160;&#9746; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The aggregate market value of the registrant&#8217;s common stock held by <font style="WHITE-SPACE: nowrap">non-affiliates</font> of the registrant, based on the average sale price of such stock as of June&#160;29, 2018, the last business day of the registrant&#8217;s most recently completed second fiscal quarter, was approximately $763.7&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-ALIGN: center">As of February&#160;27, 2019, the registrant had 38,375,407 shares of common stock outstanding. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Documents Incorporated by Reference </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zfb8140e3f46e419d99e016e88f44a425" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 50%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 48%"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center"><b>Part of Form <font style="WHITE-SPACE: nowrap">10-K</font> into which</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center"><b>Document</b></td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center"><b>portion of document is incorporated</b></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center">Portions of the Registrant&#8217;s Proxy Statement to be filed for its</td>
<td valign="bottom">&#160;</td>
<td valign="top" align="center">Part III</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" align="center">May&#160;2, 2019 annual meeting of shareholders</td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1px solid; LINE-HEIGHT: 1pt">&#160;</p>

<p style="MARGIN-BOTTOM: 2pt; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1px solid; LINE-HEIGHT: 3pt">&#160;</p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">2018 Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="toc" name="toc"></a>Table of Contents </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z465b5132f5934ef693159bb91e10b845" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 9%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 87%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Page</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" colspan="3">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_1"><b>FORWARD-LOOKING STATEMENTS</b> </a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" colspan="3">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_2">PART I</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;1</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_3">Business</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;1A</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_4">Risk Factors</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;1B</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_5">Unresolved Staff Comments</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;2</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_6">Properties</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;3</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_7">Legal Proceedings</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;4</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_8">Mine Safety Disclosures</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Special&#160;Item:</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_9">Executive Officers of Registrant</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" colspan="3">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_10">PART II </a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;5</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_11">Market for Registrant&#8217;s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;6</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_12">Selected Financial Data</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">39</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;7</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_13">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;7A</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_14">Quantitative and Qualitative Disclosures about Market Risk</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">63</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;8</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_15">Financial Statements and Supplementary Data</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">64</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;9</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_16">Changes in and Disagreement with Accountants on Accounting and Financial Disclosure </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;9A</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_17">Controls and Procedures</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;9B</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_18">Other Information</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" colspan="3">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_19">PART&#160;III </a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;10</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_20">Directors, Executive Officers and Corporate Governance</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">139</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;11</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_21">Executive Compensation</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">139</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;12</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_22">Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">140</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;13</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_23">Certain Relationships and Related Transactions, and Director Independence</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">140</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;14</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_24">Principal Accounting Fees and Services</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">140</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" colspan="3">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_25">PART IV </a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Item&#160;15</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><a href="#tx695048_26">Exhibits and Financial Statement Schedules </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">140</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top" colspan="3">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_27">SIGNATURES </a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">144</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">2 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">2018 Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold"><a id="tx695048_1" name="tx695048_1"></a>FORWARD-LOOKING STATEMENTS </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"><b>A cautionary note about forward-looking statements:</b> In addition to historical information, information included and incorporated by reference in this Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K</font> contains certain &#8220;forward-looking statements&#8221; within the meaning of the federal securities laws. Horizon Bancorp, Inc. (&#8220;Horizon&#8221;) intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of invoking those safe-harbor provisions. Forward-looking statements can include statements about estimated cost savings, plans and objectives for future operations and expectations about Horizon&#8217;s financial and business performance as well as economic and market conditions. They often can be identified by the use of words such as &#8220;expect,&#8221; &#8220;may,&#8221; &#8220;likely,&#8221; &#8220;could,&#8221; &#8220;should,&#8221; &#8220;will,&#8221; &#8220;intend,&#8221; &#8220;project,&#8221; &#8220;estimate,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;seek,&#8221; &#8220;plan,&#8221; &#8220;goals,&#8221; &#8220;strategy,&#8221; &#8220;future&#8221; and variations of such words and similar expressions. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon may include forward-looking statements in filings it makes with the Securities and Exchange Commission (&#8220;SEC&#8221;), such as this Form <font style="WHITE-SPACE: nowrap">10-K,</font> in other written materials, and in oral statements made by senior management to analysts, investors, representatives of the media and others. Horizon intends that these forward-looking statements speak only as of the date they are made, and Horizon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the forward-looking statement is made or to reflect the occurrence of unanticipated events. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Although management believes that the expectations reflected in forward-looking statements are reasonable, actual results may differ materially, whether adversely or positively, from the expectations of Horizon that are expressed or implied by any forward-looking statement. Risks, uncertainties, and factors that could cause Horizon&#8217;s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to the following: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z77215862e81b47cfa17c9771ac12d454" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">economic conditions and their impact on Horizon and its customers; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6e152d41dcab483c8ba1faa0f59f44a3" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">changes in the level and volatility of interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z52ac26e07a444ed887b3d4f2e716ba8a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">rising interest rates and their impact on mortgage loan volumes and the outflow of deposits; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze7a88f505d564f72939ded954d12d66e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">loss of key Horizon personnel; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zaeead434a63f4f98a0ace0a27b4fdaeb" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">increases in disintermediation, as new technologies allow consumers to complete financial transactions without the assistance of banks; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zdcc0426eeb8a4d76a9eca439bd33e637" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za2f5329ece7d4d0bb1913c22756c6f0b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">estimates of fair value of certain of Horizon&#8217;s assets and liabilities; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zcef9f19d9da54727a0a643de98eaa4fb" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">volatility and disruption in financial markets; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9e5d43e8e8724dee90d4f1325139a439" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zcc0fbfc93f104cf29b66d0627ab58094" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">sources of liquidity; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z5e983945ef834c2388acafc03b44d4d9" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">potential risk of environmental liability related to lending and acquisition activities; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z1eaf207c73f74935b114675fa188b032" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">changes in the competitive environment in Horizon&#8217;s market areas and among other financial service providers; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8af173f81afe4d9dad6b4b745da5e4dd" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular, including the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the &#8220;Dodd-Frank Act&#8221;) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd856c1388e8d42a3a7e4d20615e27f06" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4bfa552c3ba34a00a15b7942e5930e47" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the impact of the Basel III capital rules; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z0117e53607c044e5818a86e2a8a94e04" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
<td style="WIDTH: 5%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">changes in regulatory supervision and oversight, including monetary policy and capital requirements; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zaf212bad92e04e83b01e609aaeeaf0a1" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%">&#160;</td>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">changes in accounting policies or procedures as may be adopted and required by regulatory agencies; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the risks presented by cyber terrorism and data security breaches; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">containing costs and expenses; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the slowing or failure of economic recovery; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the ability of the U.S. federal government to manage federal debt limits; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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 U.S. trade relations related to imposition of tariffs, Brexit, and the phase out in 2021 of the London Interbank Offered Rate (&#8220;LIBOR&#8221;); and </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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&#8217;s initial expectations, including the full realization of anticipated cost savings. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">You are cautioned that actual results may differ materially from those contained in the forward-looking statements. The &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; in Item 7 of this Form <font style="WHITE-SPACE: nowrap">10-K</font> lists some of the factors that could cause Horizon&#8217;s actual results to vary materially from those expressed in or implied by any forward-looking statements. We direct your attention to this discussion. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Other risks and uncertainties that could affect Horizon&#8217;s future performance are set forth below in Item 1A, &#8220;Risk Factors.&#8221; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><a id="tx695048_2" name="tx695048_2"></a>PART I </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold"><a id="tx695048_3" name="tx695048_3"></a><u>ITEM</u><u>&#160;</u><u>1. BUSINESS</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The disclosures in this Item 1 are qualified by the disclosures below in Item 1A, &#8220;Risk Factors,&#8221; and Item 7, &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations,&#8221; and in other cautionary statements set forth elsewhere in this Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K.</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">General </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon Bancorp, Inc. (&#8220;Horizon&#8221; or the &#8220;Company&#8221;) is a registered bank holding company incorporated in Indiana and headquartered in Michigan City, Indiana. Horizon provides a broad range of banking services in the Northern and Central regions of Indiana and the Southern, Central and Great Lakes Bay regions of Michigan through its bank subsidiary, Horizon Bank (&#8220;Horizon Bank&#8221; or the &#8220;Bank&#8221;) and other affiliated entities and Horizon Risk Management, Inc. Horizon operates as a single segment, which is commercial banking. Horizon&#8217;s common stock is traded on the NASDAQ Global Select Market under the symbol HBNC. Horizon Bank (formerly known as &#8220;Horizon Bank, N.A.&#8221;) was a national association until its conversion to an Indiana commercial bank effective June&#160;23, 2017. Prior to that date, Horizon was chartered as a national banking association founded in 1873. 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. Horizon Risk Management, Inc. is a captive insurance company incorporated in Nevada and was formed as a wholly owned subsidiary of Horizon. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On October&#160;29, 2018, Horizon entered into an Agreement and Plan of Merger (the &#8220;Merger Agreement&#8221;) providing for Horizon&#8217;s acquisition of Salin Bancshares, Inc. (&#8220;Salin&#8221;). Pursuant to the Merger Agreement, Salin will merge with and into Horizon, with Horizon surviving the merger (the &#8220;Merger&#8221;), and Salin Bank and Trust Company, a wholly-owned subsidiary of Salin, will merge with and into Horizon Bank, with Horizon Bank as the surviving bank. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The boards of directors of each of Horizon and Salin have approved the merger and the Merger Agreement. Subject to the approval of the Merger by Salin shareholders, regulatory approvals and other closing conditions, the parties anticipate completing the Merger during the first quarter of 2019. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">In connection with the Merger, shareholders of Salin will receive fixed consideration of 23,907.5 shares of Horizon common stock and $84,417.17 in cash for each share of Salin common stock. Based on the closing price of Horizon&#8217;s common stock on October&#160;26, 2018 of $16.95 per share, the transaction value for the shares of common stock is approximately $135.3&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Merger Agreement also provides for certain termination rights for both Horizon and Salin, and further provides that upon termination of the Merger Agreement under certain circumstances, Salin will be obligated to pay Horizon a termination fee. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As of December&#160;31, 2018, Salin had total assets of approximately $929.4&#160;million, total deposits of approximately $749.5&#160;million and total loans of approximately $593.7&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On October&#160;17, 2017, Horizon completed the acquisition of Wolverine Bancorp, Inc., a Maryland corporation (&#8220;Wolverine&#8221;) and Horizon Bank&#8217;s acquisition of Wolverine Bank, a federally-chartered savings bank and wholly-owned subsidiary of Wolverine, through mergers effective October&#160;17, 2017. Under the terms of the Merger Agreement, shareholders of Wolverine received 1.5228 shares of Horizon common stock and $14.00 in cash for each outstanding share of Wolverine common stock. Wolverine shares outstanding at the closing to be exchanged were 2,129,331, and the shares of Horizon common stock issued to Wolverine shareholders totaled 3,241,045. Based upon the October&#160;16, 2017 closing price of $19.37 per share of Horizon common stock immediately prior to the effectiveness of the merger, less the consideration used to pay off Wolverine Bancorp&#8217;s ESOP loan receivable, the transaction has an implied valuation of approximately $93.8&#160;million. 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On September&#160;1, 2017, Horizon completed the acquisition of Lafayette Community Bancorp, an Indiana corporation (&#8220;Lafayette&#8221;) and the Bank&#8217;s acquisition of Lafayette Community Bank, a state-chartered bank and wholly-owned subsidiary of Lafayette, through mergers effective September&#160;1, 2017. Under the terms of the Merger Agreement, shareholders of Lafayette received 0.8817 shares of Horizon common stock and $1.73 in cash for each outstanding share of Lafayette common stock. Lafayette shareholders owning fewer than 100 shares of common stock received $17.25 in cash for each common share. Lafayette shares outstanding at the closing to be exchanged were 1,856,679, and the shares of Horizon common stock issued to Lafayette shareholders totaled 1,636,888. Based upon the August&#160;31, 2017 closing price of $17.45 per share of Horizon common stock immediately prior to the effectiveness of the merger, the transaction has an implied valuation of approximately $34.5&#160;million. 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 and to increase revenue in this vibrant growth market. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On February&#160;3, 2017, Horizon completed the purchase and assumption of certain assets and liabilities of a single branch of First Farmers Bank&#160;&amp; Trust Company, in Bargersville, Indiana. Net cash of $11.0&#160;million was received in the transaction, representing the deposit balances assumed at closing, net of amounts paid for loans acquired in the transaction of $3.4&#160;million and a 3.0% premium on deposits. Customer deposit balances were recorded at $14.8&#160;million and a core deposit intangible of $452,000 was recorded in the transaction which will be amortized over ten years on a straight line basis. There was no goodwill generated in the transaction. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On November&#160;7, 2016, Horizon completed the acquisition of CNB Bancorp, an Indiana corporation headquartered in Attica, Indiana (&#8220;CNB&#8221;) and the Bank&#8217;s acquisition of The Central National Bank and Trust Company (&#8220;Central National Bank&#160;&amp; Trust&#8221;), through mergers effective November&#160;7, 2016. Under terms of the acquisition, shareholders of CNB received merger consideration in the form of cash. The total value of the consideration for the acquisition was $5.3&#160;million. 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On July&#160;18, 2016, Horizon completed the acquisition of LaPorte Bancorp, Inc., a Maryland corporation (&#8220;LaPorte Bancorp&#8221;) and the Bank&#8217;s acquisition of The LaPorte Savings Bank, a state-chartered savings bank and wholly owned subsidiary of LaPorte Bancorp, through mergers effective July&#160;18, 2016. Under the terms of the merger agreement, shareholders of LaPorte Bancorp had the option to receive $17.50 per share in cash or 1.4153 shares of Horizon common stock for each share of LaPorte Bancorp&#8217;s common stock, subject to allocation provisions to assure that in aggregate, </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">LaPorte Bancorp shareholders received total consideration that consisted of 65% stock and 35% cash. As a result of LaPorte Bancorp stockholder stock and cash elections and the related proration provisions of the merger agreement, Horizon issued 5,132,232 shares of its common stock in the merger. Based upon the July&#160;18, 2016 closing price of $12.24 per share of Horizon common stock, less the consideration used to pay off LaPorte Bancorp&#8217;s ESOP loan receivable, the transaction had an implied valuation of approximately $98.6&#160;million. 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On June&#160;1, 2016, Horizon completed the acquisition of Kosciusko Financial, Inc., an Indiana corporation (&#8220;Kosciusko&#8221;) and the Bank&#8217;s acquisition of Farmers State Bank, a state-chartered bank and wholly owned subsidiary of Kosciusko, through mergers effective June&#160;1, 2016. Under the terms of the merger agreement, shareholders of Kosciusko had the option to receive $81.75 per share in cash or 6.7775 shares of Horizon common stock for each share of Kosciusko&#8217;s common stock, subject to allocation provisions to assure that in aggregate, Kosciusko shareholders received total consideration that consisted of 65% stock and 35% cash. Kosciusko shareholders owning fewer than 100 shares of common stock received $81.75 in cash for each common share. As a result of Kosciusko stockholder stock and cash elections and the related proration provisions of the merger agreement, Horizon issued 1,310,145 shares of its common stock in the merger. Based upon the June&#160;1, 2016 closing price of $11.04 per share of Horizon common stock, the transaction had an implied valuation of approximately $23.0&#160;million. 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On July&#160;1, 2015, Horizon completed the acquisition of Peoples Bancorp, an Indiana corporation (&#8220;Peoples&#8221;) and the Bank&#8217;s acquisition of Peoples Federal Savings Bank of DeKalb County (&#8220;Peoples FSB&#8221;), through mergers effective July&#160;1, 2015. Under the terms of the acquisition, the exchange ratio was 2.1375 shares of Horizon common stock and $9.75 in cash for each outstanding share of Peoples common stock. Peoples shareholders owning fewer than 100 shares of common stock received $33.14 in cash for each common share. Peoples shares outstanding at the closing were 2,311,858, and the shares of Horizon common stock issued to Peoples shareholders totaled 4,932,454. Horizon&#8217;s stock price was $11.25 per share at the close of business on July&#160;1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1&#160;million. As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On April&#160;3, 2014 Horizon completed its acquisition of SCB Bancorp, Inc. (&#8220;Summit&#8221;) and the Bank&#8217;s acquisition of Summit Community Bank, through mergers effective as of that date. Under the final terms of the acquisition, the exchange ratio was 1.1034 shares of Horizon&#8217;s common stock and $5.15 in cash for each share of Summit common stock outstanding. Summit shares outstanding at the closing were 1,164,442, and the shares of Horizon common stock issued to Summit shareholders totaled 1,284,345. Horizon&#8217;s stock price was $9.88 per share at the close of business on April&#160;3, 2014. Based upon these numbers, the total value of the consideration for the acquisition was $18.9&#160;million (not including the retirement of Summit debt). As a result of the acquisition, the Company experienced, and expects to continue to experience, increases in its deposit base, reductions in transaction costs and reduced costs through economies of scale. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Bank maintains 63 full service offices and 3 loan and deposit production offices. At December&#160;31, 2018, the Bank had total assets of $4.25&#160;billion and total deposits of $3.14&#160;billion. The Bank has wholly-owned direct and indirect subsidiaries: Horizon Investments, Inc. (&#8220;Horizon Investments&#8221;), Horizon Properties, Inc. (&#8220;Horizon Properties&#8221;), Horizon Insurance Services, Inc. (&#8220;Horizon Insurance&#8221;), Horizon Grantor Trust, The Loan Store, Inc. and Wolverine Commercial Holdings, LLC. Horizon Investments manages the investment portfolio of the Bank. Horizon Properties manages the real estate investment trust. Horizon Insurance is used by the Company&#8217;s Wealth Management to sell certain life insurance products through a third party. Horizon Grantor Trust holds title to certain company owned life insurance policies<b>.</b> The Loan Store, Inc. does not presently engage in any business activities. Wolverine Commercial Holdings, LLC currently holds one piece of property but does not otherwise engage in significant business activities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon formed Horizon Bancorp Capital Trust II in 2004 (&#8220;Trust II&#8221;) and Horizon Bancorp Capital Trust III in 2006 (&#8220;Trust III&#8221;) for the purpose of participating in pooled trust preferred securities offerings. The Company assumed additional debentures as the result of the acquisition of Alliance Financial Corporation in 2005, which formed Alliance Financial Statutory Trust I (&#8220;Alliance Trust&#8221;). The Company also assumed additional debentures as the result of the </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">acquisition of American Trust&#160;&amp; Savings Bank (&#8220;American&#8221;) in 2010, which formed Am Tru Statutory Trust I (&#8220;Am Tru Trust&#8221;). The Company also assumed additional debentures as the result of the Heartland transaction, which formed Heartland (IN) Statutory Trust II (&#8220;Heartland Trust&#8221;). In 2016, the Company also assumed additional debentures as the result of the LaPorte Bancorp transaction. LaPorte Bancorp acquired City Savings Financial Corporation in 2007. City Savings Financial Corporation issued the debentures and formed City Savings Statutory Trust I (&#8220;City Savings&#8221;) in 2003. See Note 15 of the Consolidated Financial Statements included at Item 8 for further discussion regarding these previously consolidated entities that are now reported separately. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The business of Horizon is not seasonal to any material degree. No material part of Horizon&#8217;s business is dependent upon a single or small group of customers, the loss of any one or more of which would have a materially adverse effect on the business of Horizon. In 2018, revenues from loans accounted for 73.5% of the total consolidated revenue, and revenues from investment securities accounted for 9.1% of total consolidated revenue. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Available Information </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Company&#8217;s Internet address is www.horizonbank.com. The Company makes available, free of charge through the &#8220;About Us - Investor Relations &#8211; Documents - SEC Filings&#8221; section of its Internet website, copies of the Company&#8217;s Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K,</font> Quarterly Reports on Form <font style="WHITE-SPACE: nowrap">10-Q,</font> Current Reports on Form <font style="WHITE-SPACE: nowrap">8-K</font> and any amendments to those reports filed or furnished pursuant to Section&#160;13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after those reports are filed with or furnished to the SEC. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Employees </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Company and its subsidiaries employed approximately 716 full and part-time employees as of December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Competition </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon faces a high degree of competition in all of its primary markets.&#160;The Bank&#8217;s primary market consists of areas throughout the northern, northwestern, northeastern and central regions of the state of Indiana along with the southern, central and Great Lakes Bay regions of the state of Michigan. The Bank&#8217;s primary market is further defined by the Indiana counties of La Porte, Lake, Porter, St. Joseph, Elkhart, Kosciusko, LaGrange, DeKalb, Noble, Whitley, Allen, Fountain, Tippecanoe, Hamilton, Marion and Johnson, as well as the Michigan counties of Berrien, Cass, St. Joseph, Kalamazoo, Ingham, Midland, Saginaw, Oakland and Ottawa. The Bank competes with other commercial banks, savings and loan associations, consumer finance companies, credit unions and other <font style="WHITE-SPACE: nowrap">non-bank</font> and digital financial service providers.&#160;To a more moderate extent, the Bank competes with Chicago money center banks, mortgage banking companies, insurance companies, brokerage houses, other institutions engaged in money market financial services and certain government agencies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon was the largest of the eight bank and thrift institutions in La Porte County with a 54.99% market share, as of June&#160;30, 2018. In July 2016, Horizon completed its acquisition of The LaPorte Savings Bank adding its market share and a net of four branches located in La Porte County. In Porter County, Horizon was the fifth largest of 12 institutions with a market share of 10.93%. As of June&#160;30, 2018, Horizon held 1.70% of the market share in Lake County. Horizon entered Kosciusko County in June 2016 through its acquisition of Farmers State Bank. As of June&#160;30, 2018, Horizon held a market share of 7.63% and was ranked fourth out of 10 institutions in Kosciusko County. Horizon entered the Indiana counties of Allen, DeKalb, LaGrange, Noble and Whitley in 2015 through its acquisition of Peoples FSB. As of June&#160;30, 2018, Horizon was the second largest of the 11 bank and thrift institutions in DeKalb County with a market share of 21.96%, followed by market shares of 7.97% in Whitley County; 7.63% in Noble County; 5.33% in LaGrange County; and less than 1% in Allen County. Horizon&#8217;s market share in the counties of St. Joseph and Elkhart were less than 1% at June&#160;30, 2018. At June&#160;30, 2018, Horizon held a 10.49% market share in Fountain County, which it entered in late 2016 through the acquisition of Central National Bank and Trust. On September&#160;1, 2017, Horizon acquired Lafayette Community Bank and entered Tippecanoe County. At June&#160;30, 2018, Horizon ranked fifth out of 15 institutions in Tippecanoe County with a 11.06% market share. In 2012, Horizon entered Johnson County through its acquisition of Heartland Bank and ranked second of the 19 institutions with a market share of 12.24%, as of June&#160;30, 2018. Horizon&#8217;s market share of deposits was less than 1% each in Hamilton and Marion Counties. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Horizon was the fourth largest of the 10 bank and thrift institutions in Berrien County with an 8.88% market share, as of June&#160;30, 2018. The branches acquired from Peoples FSB in Michigan are located in Cass, St. Joseph and Kalamazoo Counties where Horizon held market share of 6.18%, 4.62% and 1.36%, respectively, as of June&#160;30, 2018. Horizon entered Ingham County through its acquisition of Summit Community Bank in 2014 and held 2.26% market share as of June&#160;30, 2018. On October&#160;17, 2017, Horizon acquired Wolverine Bank and entered Midland and Saginaw counties. At June&#160;30, 2018, Horizon was the second largest of seven institutions in Midland County with a 6.32% market share. Horizon held less than 1% market share in Saginaw County and Kent County, Michigan at June&#160;30, 2018. (Source: FDIC Summary of Deposits Market Share Reports, available at www.fdic.gov.) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Regulation and Supervision </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold; FONT-STYLE: italic">General </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">As a bank holding company and a financial holding company, the Company is subject to extensive regulation, supervision and examination by the Board of Governors of the Federal Reserve System (the &#8220;Federal Reserve Board&#8221; or &#8220;Federal Reserve&#8221;) as its primary federal regulator under the Bank Holding Company Act of 1956, as amended (&#8220;BHC Act&#8221;). The Company is required to file annual reports with the Federal Reserve and provide other information that the Federal Reserve may require. The Federal Reserve may also make examinations and inspections of the Company. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Bank, as an Indiana-chartered bank, is subject to extensive regulation, supervision and examination by the Indiana Department of Financial Institutions (&#8220;DFI&#8221;) as its primary state regulator. Also, as to certain matters, the Bank is under the supervision of, and subject to examination by, the Federal Deposit Insurance Corporation (&#8220;FDIC&#8221;) because the FDIC provides deposit insurance to the Bank and is the Bank&#8217;s primary federal regulator. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The supervision, regulation and examination of Horizon and the Bank by the bank regulatory agencies are intended primarily for the protection of depositors rather than for the benefit of Horizon&#8217;s shareholders. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. Horizon&#8217;s common stock is listed on the NASDAQ Global Select Market under the trading symbol &#8220;HBNC,&#8221; and Horizon is subject to the NASDAQ rules applicable to listed companies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Included below is a brief summary of significant aspects of the laws, regulations and policies applicable to Horizon and the Bank. This summary is qualified in its entirety by reference to the full text of the statutes, regulations and policies that are referenced and is not intended to be an exhaustive description of the statutes, regulations and policies applicable to the business of Horizon and the Bank. Also, such statutes, regulations and policies are continually under review by Congress and state legislatures and by federal and state regulatory agencies. A change in statutes, regulations or regulatory policies applicable to Horizon and the Bank could have a material effect on Horizon&#8217;s business, financial condition and results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The Bank Holding Company Act </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The BHC Act generally limits the business in which a bank holding company and its subsidiaries may engage to banking or managing or controlling banks and those activities that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto. Those closely related activities currently can include such activities as consumer finance, mortgage banking and securities brokerage. Certain well-managed and well-capitalized bank holding companies may elect to be treated as a &#8220;financial holding company&#8221; and, as a result, will be permitted to engage in a broader range of activities that are financial in nature and in activities that are determined to be incidental or complementary to activities that are financial in nature. Horizon has both qualified as, and elected to be, a financial holding company. Activities that are considered financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">To commence any new activity permitted by the BHC Act or to acquire a company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least &#8220;satisfactory&#8221; in its most recent examination under the Community Reinvestment Act. The Federal Reserve Board has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal Reserve Board has reasonable grounds to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Federal Reserve Board policy has historically required bank holding companies to act as a source of financial and managerial strength for their subsidiary banks. The Dodd-Frank Act, which was signed into law on July&#160;21, 2010, codified this policy. Under this requirement, Horizon is required to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances in which Horizon might not otherwise do so. For this purpose, &#8220;source of financial strength&#8221; means Horizon&#8217;s ability to provide financial assistance to the Bank in the event of the Bank&#8217;s financial distress. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The BHC Act, the Bank Merger Act (which is the popular name for Section&#160;18(c) of the Federal Deposit Insurance Act) and other federal and state statutes regulate acquisitions of banks and bank holding companies. The BHC Act requires the prior approval of the Federal Reserve before a bank holding company may acquire more than a 5% voting interest or substantially all the assets of any bank or bank holding company. Banks must also seek prior approval from their primary state and federal regulators for any such acquisitions. In reviewing applications seeking approval for mergers and other acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant&#8217;s performance record under the Community Reinvestment Act and the effectiveness of the subject organizations in combating money laundering activities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (&#8220;FDICIA&#8221;), a bank holding company is required to guarantee the compliance of any insured depository institution subsidiary that may become &#8220;undercapitalized&#8221; (as defined in FDICIA), with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal bank regulatory agency. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Bank holding companies, such as Horizon, and their insured depository institutions, such as the Bank, are subject to various regulatory capital requirements administered by the federal and state regulators. The guidelines establish a systematic analytical framework that makes regulatory capital requirements more sensitive to differences in risk profiles among banking organizations. Risk-based capital ratios are determined by allocating assets and specified <font style="WHITE-SPACE: nowrap">off-balance</font> sheet commitments to four risk weighted categories, with higher levels of capital being required for the categories perceived as representing greater risk. For an additional discussion of the Company&#8217;s regulatory capital ratios and regulatory requirements as of December&#160;31, 2018, please refer to the subsection titled <i>&#8220;Capital Regulation&#8221;</i> in this &#8220;Regulation and Supervision&#8221; section. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Branching and Acquisitions </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Indiana law, the BHC Act and the Bank Merger Act restrict certain types of expansion by the Company and the Bank. The Company and the Bank may be required to apply for prior approval from (or give prior notice and an opportunity for review to) the Federal Reserve, the DFI and the FDIC, and or other regulatory agencies as a condition to the acquisition or establishment of new offices, or the acquisition by merger, purchase or otherwise of the stock, business or assets of other banks or companies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Under current law, Indiana chartered banks may establish branches throughout the state and in other states, subject to certain limitations. Indiana law also authorizes an Indiana bank to establish one or more branches in states other than Indiana through interstate merger transactions and to establish one or more interstate branches through de novo branching or the acquisition of a branch. The Dodd-Frank Act permits the establishment of de novo branches in states where such branches could be opened by a state bank chartered by that state. The consent of the state in which the new branch will be opened is no longer required. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Deposit Insurance and Assessments </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Bank&#8217;s deposits are insured to applicable limits by the Deposit Insurance Fund (&#8220;DIF&#8221;) of the FDIC. Generally, deposits are insured up to the statutory limit of $250,000. Banks are subject to deposit insurance premiums and assessments to maintain the DIF. The FDIC has authority to raise or lower assessment rates on insured banks in order to achieve statutorily required reserve ratios in the DIF and to impose special additional assessments. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Dodd-Frank Act resulted in significant changes to the FDIC&#8217;s deposit insurance system. Under the Dodd-Frank Act, the FDIC is authorized to set the reserve ratio for the DIF at no less than 1.35%, and must achieve the 1.35% designated reserve ratio by September&#160;30, 2020. The FDIC must offset the effect of the increase in the minimum designated reserve ratio from 1.15% to 1.35% on insured depository institutions of less than $10&#160;billion and may declare dividends to depository institutions when the reserve ratio at the end of a calendar quarter is at least 1.5%, although the FDIC has the authority to suspend or limit such permitted dividend declarations. The FDIC has set the long term goal for the designated reserve ratio of the deposit insurance fund at 2% of estimated insured deposits. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Also as a consequence of the Dodd-Frank Act, the assessment base for deposit insurance premiums was changed in 2011 from adjusted domestic deposits to average consolidated total assets minus average tangible equity. Tangible equity for this purpose means Tier 1 capital. The initial base assessment rates ranged from <font style="WHITE-SPACE: nowrap">5-35</font> basis points. For small Risk Category I banks, such as Horizon Bank, the rates ranged from <font style="WHITE-SPACE: nowrap">5-9</font> basis points. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Adjustments are made to the initial assessment rates based on long-term unsecured debt, depository institution debt, and brokered deposits. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Effective as of June&#160;30, 2016, the reserve ratio reached 1.15% and a new assessment rate schedule became effective July&#160;1, 2016, with rates ranging from 3 to 30 basis points instead of 5 to 35 basis points. Assessment rates for all established smaller banks will be determined using financial measures and supervisory ratings derived from a statistical model estimating the probability of failure over three years. The new pricing system eliminates risk categories, but establishes minimum and maximum assessment rates for established small banks based on a bank&#8217;s CAMELS composite ratings (<i>i.e.</i>, capital adequacy, asset quality, management, earnings, liquidity and sensitivity). </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon&#8217;s FDIC deposit insurance expense decreased $513,000 during 2017 compared to 2016 as a result of the new assessment rate schedule effective July&#160;1, 2016. Horizon&#8217;s FDIC deposit insurance expense increased $398,000 during 2018 compared to 2017 primarily due to an increase in average consolidated total assets. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The FDIC may terminate the deposit insurance of any insured depository institution if the FDIC determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe and unsound condition to continue operations or has violated any applicable law, regulation, order or any condition imposed in writing by, or written agreement with, the FDIC. The FDIC may also suspend deposit insurance temporarily during the hearing process for a permanent termination of insurance if the institution has no tangible capital. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">FDIC-insured institutions are also subject to the requirement to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation (&#8220;FICO&#8221;), an agency of the Federal government established to recapitalize the insolvent Federal Savings and Loan Insurance Corporation, an early predecessor of the DIF. The FICO bonds were scheduled to be repaid between 2017 and 2019, and the last bond is now scheduled to be repaid in September 2019. For 2018, the Bank paid 0.46 basis points for each $100 of insured deposits for the first quarter, 0.44 basis points for the second quarter, and 0.32 basis points for the third and fourth quarters. The assessment rate was further reduced to 0.14 basis points for the first quarter of 2019. The Federal Housing Finance Agency, which is the agency authorized by Congress to prescribe regulations relating to FICO, recently adopted a final rule effective January&#160;7, 2019, that projects that the last FICO assessment on institutions like Horizon Bank will be collected on the March&#160;29, 2019, FDIC Quarterly Certified Statement Invoice. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Transactions with Affiliates and Insiders </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon and the Bank are subject to the Federal Reserve Act, which restricts financial transactions between banks, affiliated companies and their executive officers, including limits on credit transactions between these parties. The statute prescribes terms and conditions in order for bank affiliate transactions to be deemed to be consistent with safe and sound banking practices, and it also restricts the types of collateral security permitted in connection with a bank&#8217;s extension of credit to an affiliate. In general, extensions of credit (i)&#160;must be made on substantially the same terms, including interest rates and collateral, and subject to credit underwriting procedures that are at least as stringent as those prevailing at the time for comparable transactions with <font style="WHITE-SPACE: nowrap">non-affiliates,</font> and (ii)&#160;must not involve more than the normal risk of repayment or present other unfavorable features. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Capital Regulation </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The federal bank regulatory authorities have adopted risk-based capital guidelines for banks and bank holding companies that are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and account for <font style="WHITE-SPACE: nowrap">off-balance</font> sheet items. Generally, to satisfy the capital requirements, the Company must maintain capital sufficient to meet both risk-based asset ratio tests and a leverage ratio test on a consolidated basis. Risk-based capital ratios are determined by allocating assets and specified <font style="WHITE-SPACE: nowrap">off-balance</font> sheet commitments into various risk-weighted categories, with higher weighting assigned to categories perceived as representing greater risk. A risk-based ratio represents the applicable measure of capital divided by total risk-weighted assets. The leverage ratio is a measure of the Company&#8217;s core capital divided by total assets adjusted as specified in the guidelines. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The capital guidelines divide a bank holding company&#8217;s or bank&#8217;s capital into two tiers. The first tier (&#8220;Tier I&#8221;) includes common equity, certain <font style="WHITE-SPACE: nowrap">non-cumulative</font> perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, less goodwill and certain other intangible assets (except mortgage servicing rights and purchased credit card relationships, subject to certain limitations). Supplementary capital (&#8220;Tier II&#8221;) includes, among other items, cumulative perpetual and long-term limited-life preferred stock, mandatory convertible securities, certain hybrid capital instruments, term subordinated debt and the allowance for loan and lease losses, subject to certain limitations, less required deductions. The regulations also require the maintenance of a leverage ratio designed to supplement the risk-based capital guidelines. This ratio is computed by dividing Tier I capital, net of all intangibles, by the quarterly average of total assets. Pursuant to the regulations, banks must maintain capital levels commensurate with the level of risk, including the volume and severity of problem loans to which they are exposed. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Effective January&#160;1, 2015 (subject to certain <font style="WHITE-SPACE: nowrap">phase-in</font> provisions through January&#160;1, 2019), the Company became subject to new federal banking rules implementing changes arising from Dodd-Frank and the U.S. Basel Committee on Banking Supervision, providing a capital framework for all U.S. banks and bank holding companies (&#8220;Basel III&#8221;). Basel III increased the minimum requirements for both the quantity and quality of capital held by Horizon and the Bank. The rules include a new common equity Tier 1 capital ratio of 4.5%, a minimum Tier 1 capital ratio of 6.0% (increased from 4.0%), a total capital ratio of 8.0% (unchanged from prior rules) and a minimum leverage ratio of 4.0%. The final rules also require a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets, which is in addition to the other minimum risk-based capital standards in the rule. Institutions that do not maintain the required capital conservation buffer will become subject to progressively more stringent limitations on the percentage of earnings that can be paid out in dividends or used for stock repurchases and on the payment of certain bonuses to senior executive management. The capital conservation buffer requirement was phased in over three years beginning in 2016 at 0.625% of risk-weighted assets and increased each year until fully implemented at 2.5% on January&#160;1, 2019. The capital conservation buffer requirement effectively raises the minimum required common equity Tier 1 capital ratio to 7.0%, the Tier 1 capital ratio to 8.5% and the total capital ratio to 10.5% on a fully <font style="WHITE-SPACE: nowrap">phased-in</font> basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Basel III also introduced other changes, including an increase in the capital required for certain categories of assets, including higher-risk construction real estate loans and certain exposures related to securitizations. Banking organizations with less than $15&#160;billion in assets as of December&#160;31, 2010, such as Horizon, are permitted to retain <font style="WHITE-SPACE: nowrap">non-qualifying</font> Tier 1 capital trust preferred securities issued prior to May&#160;19, 2010, subject generally to a limit of 25% of Tier 1 capital. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">11 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the &#8220;Regulatory Relief Act&#8221;) was enacted, which could change the regulatory capital requirements applicable to Horizon. The Regulatory Relief Act was enacted to modify or remove certain financial reform rules and regulations, including some implemented under the Dodd-Frank Act. Of particular significance for financial institutions and their holding companies with total consolidated assets of less than $10&#160;billion, the Regulatory Relief Act directs the federal banking regulators to establish a single &#8220;Community Bank Leverage Ratio&#8221; of between 8% to 10% to replace the leverage and risk-based regulatory capital ratios. Any qualifying depository institution or its holding company that exceeds the &#8220;Community Bank Leverage Ratio&#8221; will be considered to have met generally applicable leverage and risk-based regulatory capital ratios, and any qualifying depository institution that exceeds the new ratio will be considered to be &#8220;well-capitalized&#8221; under the prompt correction action rules. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon&#8217;s management believes that, as of December&#160;31, 2018, Horizon and the Bank met all capital adequacy requirements under the Basel III capital rules currently in effect. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following is a summary of Horizon&#8217;s and the Bank&#8217;s regulatory capital and capital requirements at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z30749a18009c470e956b931b9a4923c3" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 49%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
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<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Actual</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Required&#160;for&#160;Capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup></b><br>
<b>Adequacy Purposes</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Required&#160;For&#160;Capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup></b><br>
<b>Adequacy Purposes</b><br>
<b>with Capital Buffer</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Well&#160;Capitalized&#160;Under<br>
Prompt<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup></b><br>
<b>Corrective Action<br>
 Provisions</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u>December&#160;31, 2018</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1 </sup>(to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;427,616</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;255,419</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;315,283</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">396,755</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.43</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">255,419</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">315,283</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;319,274</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">409,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.83</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,565</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251,429</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,565</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251,429</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">255,420</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common equity tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">371,297</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.63</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143,673</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">203,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.375</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143,674</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">203,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.375</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">207,528</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to average assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">409,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.12</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,033</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,033</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.000</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.34</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,327</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,327</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.000</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">202,908</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc43b5e27d52f4c2fb7ee209754acc656" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">As defined by regulatory agencies </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Dodd-Frank Act also requires the Federal Reserve to set minimum capital levels for bank holding companies that are as stringent as those required for insured depository subsidiaries, except that bank holding companies with less than $1&#160;billion in assets are exempt from these capital requirements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Dividends </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon is a legal entity separate and distinct from the Bank. The primary source of Horizon&#8217;s cash flow, including cash flow to pay dividends on its common stock, is the payment of dividends to Horizon by the Bank. Under Indiana law, the Bank may pay dividends of so much of its undivided profits (generally, earnings less losses, bad debts, taxes and other operating expenses) as is considered appropriate by the Bank&#8217;s Board of Directors. However, the Bank must obtain the approval of the DFI for the payment of a dividend if the total of all dividends declared by the Bank during the current year, including the proposed dividend, would exceed the sum of retained net income for the year to date plus its retained net income for the previous two years. For this purpose, &#8220;retained net income&#8221; means net income as calculated for call report purposes, less all dividends declared for the applicable period. The Bank is generally exempt from this DFI <font style="WHITE-SPACE: nowrap">pre-approval</font> process for dividends if (i)&#160;the Bank has been assigned a composite uniform financial institutions rating of 1 or 2 as a result of the most recent federal or state examination; (ii)&#160;the proposed dividend will not result in a Tier 1 leverage ratio below 7.5%; and (iii)&#160;the Bank is not subject to any corrective action, supervisory order, supervisory agreement or board approved operating agreement. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The FDIC has the authority to prohibit the Bank from paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice in light of the financial condition of the Bank. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">12 </p>
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<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">In addition, under Federal Reserve supervisory policy, a bank holding company generally should not maintain its existing rate of cash dividends on common shares unless (i)&#160;the organization&#8217;s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and (ii)&#160;the prospective rate of earnings retention appears consistent with the organization&#8217;s capital needs, assets, quality and overall financial condition. The Federal Reserve issued a letter dated February&#160;24, 2009, to bank holding companies informing them that it expects bank holding companies to consult with it in advance of declaring dividends that could raise safety and soundness concerns (<i>i.e.</i>, such as when the dividend is not supported by earnings or involves a material increase in the dividend rate) and in advance of repurchasing shares of common stock or preferred stock. Although the effect of this letter was revised in December 2015 to become inapplicable to certain large U.S. bank holding companies (generally, those with at least $50&#160;billion in average total consolidated assets), the guidance remains effective for bank holding companies like Horizon. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Prompt Corrective Regulatory Action </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Under FDICIA, federal banking regulatory authorities are required to take regulatory enforcement actions known as &#8220;prompt corrective action&#8221; with respect to depository institutions that do not meet minimum capital requirements. The extent of the regulators&#8217; powers depends on whether the institution in question is categorized as &#8220;well capitalized,&#8221; &#8220;adequately capitalized,&#8221; &#8220;undercapitalized,&#8221; &#8220;significantly undercapitalized,&#8221; or &#8220;critically undercapitalized,&#8221; as defined by regulation. Depending upon the capital category to which an institution is assigned, the regulators&#8217; corrective powers include: (i)&#160;requiring the submission of a capital restoration plan; (ii)&#160;placing limits on asset growth and restrictions on activities; (iii)&#160;requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; (iv)&#160;restricting transactions with affiliates; (v)&#160;restricting the interest rate the institution may pay on deposits; (vi)&#160;ordering a new election of directors of the institution; (vii)&#160;requiring that senior executive officers or directors be dismissed; (viii)&#160;prohibiting the institution from accepting deposits from correspondent banks; (ix)&#160;requiring the institution to divest certain subsidiaries; (x)&#160;prohibiting the payment of principal or interest on subordinated debt; and (xi)&#160;ultimately, for critically undercapitalized institutions, appointing a receiver for the institution. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">New prompt corrective action requirements that became effective January&#160;1, 2015, increased the capital level requirements necessary to qualify as &#8220;well capitalized.&#8221; At December&#160;31, 2018, the Bank was categorized as &#8220;well capitalized,&#8221; meaning that the Bank&#8217;s total risk-based capital ratio exceeded 10%, the Bank&#8217;s Tier 1 risk-based capital ratio exceeded 8%, the Bank&#8217;s common equity Tier 1 risk-based capital ratio exceeded 6.5%, the Bank&#8217;s leverage ratio exceeded 5%, and the Bank was not subject to a regulatory order, agreement or directive to meet and maintain a specific capital level for any capital measure. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Banking regulators may change these capital requirements from time to time, depending on the economic outlook generally and the outlook for the banking industry. For instance, when established, the new Community Bank Leverage Ratio prescribed by the Regulatory Relief Act will set the standard for a &#8220;well-capitalized&#8221; institution for purposes of &#8220;prompt corrective action.&#8221; The Company is unable to predict whether and when any such further capital requirements would be imposed and, if so, to what levels and on what schedule. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Anti-Money Laundering &#8211; The USA Patriot Act and the Bank Secrecy Act </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon is subject to the provisions of the USA PATRIOT Act of 2001, which contains anti-money laundering and financial transparency laws and requires financial institutions to implement additional policies and procedures to address money laundering, suspicious activities and currency transaction reporting, and currency crimes. The regulations promulgated under the USA PATRIOT Act of 2001 require financial institutions such as the Bank to adopt controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of their customers. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Bank Secrecy Act of 1970, which was amended to incorporate certain provisions of the USA PATRIOT Act of 2001, also focuses on combating money laundering and terrorist financing and requires financial institutions to develop policies, procedures and practices to prevent, detect and deter these activities, including customer identification programs and procedures for filing suspicious activity reports. Banks had until May 2018 at the latest to update their policies with respect to new customer due diligence regulations adopted by the U.S. Department of the Treasury under the Bank Secrecy Act. During 2018, Horizon Bank implemented the Fifth Pillar of the Bank Secrecy Act (&#8220;BSA&#8221;) which focuses on identifying beneficial ownership. The BSA officer and BSA analysts incorporated these enhanced due diligence requirements into the Bank&#8217;s policies, procedures and training programs in 2018. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">13 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Failure to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations relating thereto, could have serious legal and reputational consequences for Horizon and the Bank. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Federal Securities Law and NASDAQ </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The shares of common stock of Horizon have been registered with the SEC under the Securities Exchange Act (the &#8220;1934 Act&#8221;). Horizon is subject to the information, proxy solicitation, insider trading restrictions and other requirements of the 1934 Act and the rules of the SEC promulgated thereunder. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Shares of common stock held by persons who are affiliates of Horizon may not be resold without registration unless sold in accordance with the resale restrictions of Rule 144 under the Securities Act of 1933. If Horizon meets the current public information requirements under Rule 144, each affiliate of Horizon who complies with the other conditions of Rule 144 (including those that require the affiliate&#8217;s sale to be aggregated with those of certain other persons) would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of (i) 1% of the outstanding shares of Horizon or (ii)&#160;the average weekly volume of trading in such shares during the preceding four calendar weeks. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Under the Dodd-Frank Act, Horizon is required to provide its shareholders an opportunity to vote on the executive compensation payable to its named executive officers and on golden parachute payments in connection with mergers and acquisitions. These votes are <font style="WHITE-SPACE: nowrap">non-binding</font> and advisory. At least once every six years, Horizon must also permit shareholders to determine, on an advisory basis, whether such votes on executive compensation (called &#8220;say on pay&#8221; votes) should be held every one, two, or three years. In both 2012 and 2018, Horizon&#8217;s shareholders voted in favor of presenting the executive compensation &#8220;say on pay&#8221; question every year. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Shares of common stock of Horizon are listed on The NASDAQ Global Select Market under the trading symbol &#8220;HBNC,&#8221; and Horizon is subject to the rules of NASDAQ for listed companies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Sarbanes-Oxley Act of 2002 </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon is subject to the Sarbanes-Oxley Act of 2002 (the &#8220;Sarbanes-Oxley Act&#8221;), which revised the laws affecting corporate governance, accounting obligations and corporate reporting. The Sarbanes-Oxley Act applies to all companies with equity or debt securities registered under the 1934 Act. In particular, the Sarbanes-Oxley Act established: (i)&#160;new requirements for audit committees, including independence, expertise and responsibilities; (ii)&#160;additional responsibilities regarding financial statements for the Chief Executive Officer and Chief Financial Officer of the reporting company; (iii)&#160;new standards for auditors and regulation of audits; (iv)&#160;increased disclosure and reporting obligations for the reporting company and its directors and executive officers; and (v)&#160;new and increased civil and criminal penalties for violation of the securities laws. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Pursuant to the final rules adopted by the SEC to implement Section&#160;404 of the Sarbanes-Oxley Act, Horizon is required to include in each Form <font style="WHITE-SPACE: nowrap">10-K</font> it files a report of management on Horizon&#8217;s internal control over financial reporting. The internal control report must include a statement of management&#8217;s responsibility for establishing and maintaining adequate control over financial reporting of Horizon, identify the framework used by management to evaluate the effectiveness of Horizon&#8217;s internal control over financial reporting and provide management&#8217;s assessment of the effectiveness of Horizon&#8217;s internal control over financial reporting. This Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K</font> also includes an attestation report issued by Horizon&#8217;s registered public accounting firm on Horizon&#8217;s internal control over financial reporting. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">14 </p>
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<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Financial System Reform &#8211; The Dodd-Frank Act, the CFPB and the 2018 Regulatory Relief Act </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Dodd-Frank Act, which was signed into law in 2010, significantly changed the regulation of financial institutions and the financial services industry. The Dodd-Frank Act includes provisions affecting large and small financial institutions alike, including several provisions that have profoundly affected how community banks, thrifts, and small bank and thrift holding companies are regulated. Among other things, these provisions eliminated the Office of Thrift Supervision and transferred its functions to the other federal banking agencies, relaxed rules regarding interstate branching, allowed financial institutions to pay interest on business checking accounts, changed the scope of federal deposit insurance coverage and imposed new capital requirements on bank and thrift holding companies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Dodd-Frank Act created the Consumer Financial Protection Bureau (&#8220;CFPB&#8221;) as an independent bureau within the Federal Reserve System with broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes. In July 2011, many of the consumer financial protection functions formerly assigned to the federal banking and other designated agencies were transferred to the CFBP. The CFBP has a large budget and staff, and has the authority to implement regulations under federal consumer protection laws and enforce those laws against financial institutions. The CFPB has examination and primary enforcement authority over depository institutions with $10&#160;billion or more in assets. Smaller institutions are subject to rules promulgated by the CFPB but continue to be examined and supervised by the federal banking regulators for consumer compliance purposes. The CFPB also has authority to prevent unfair, deceptive or abusive practices in connection with offering consumer financial products. Additionally, the CFPB is authorized to collect fines and provide consumer restitution in the event of violations, engage in consumer financial education, track consumer complaints, request data, and promote the availability of financial services to underserved consumers and communities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The CFPB has indicated that mortgage lending is an area of supervisory focus and that it will concentrate its examination and rulemaking efforts on the variety of mortgage-related topics required under the Dodd-Frank Act, including minimum standards for the origination of residential mortgages. The CFPB has published several final regulations impacting the mortgage industry, including rules related to <font style="WHITE-SPACE: nowrap">ability-to-repay,</font> mortgage servicing, escrow accounts, and mortgage loan originator compensation. The <font style="WHITE-SPACE: nowrap">ability-to-repay</font> rule makes lenders liable if they fail to assess a borrower&#8217;s ability to repay under a prescribed test, but also creates a safe harbor for so called &#8220;qualified mortgages.&#8221; Failure to comply with the <font style="WHITE-SPACE: nowrap">ability-to-repay</font> rule may result in possible CFPB enforcement action and special statutory damages plus actual, class action, and attorneys&#8217; fees damages, all of which a borrower may claim in defense of a foreclosure action at any time. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The CFPB also amended Regulation C to implement amendments to the Home Mortgage Disclosure Act made by the Dodd-Frank Act. The amendment added a significant number of new information collecting and reporting requirements for financial institutions, most of which became effective as of January&#160;1, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Dodd-Frank Act contains numerous other provisions affecting financial institutions of all types, many of which may have an impact on the operating environment of Horizon in substantial and unpredictable ways. Horizon has incurred higher operating costs in complying with the Dodd-Frank Act, and expects these higher costs to continue for the foreseeable future. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In May 2018, the Regulatory Relief Act was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act. While the Regulatory Relief Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10&#160;billion and for large banks with assets of more than $50&#160;billion. Many of these changes could result in meaningful regulatory relief for community banks such as Horizon Bank. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Regulatory Relief Act, among other matters, expands the definition of qualified mortgages which may be held by a financial institution and simplifies the regulatory capital rules for financial institutions and their holding companies with total consolidated assets of less than $10&#160;billion by instructing the federal banking regulators to establish a single &#8220;Community Bank Leverage Ratio&#8221; of between 8% and 10% to replace the leverage and risk-based regulatory capital ratios. The federal banking agencies may consider a financial institution&#8217;s risk profile when evaluating whether it qualifies as a community bank for purposes of the new ration. In addition, the Regulatory Relief Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule (proprietary trading prohibitions), mortgage disclosures and risk weights for certain high-risk commercial real estate loans. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">It is difficult at this time to predict when or how any new standards under the Regulatory Relief Act will ultimately be applied to us or what specific impact the <font style="WHITE-SPACE: nowrap">yet-to-be-written</font> implementing rules and regulations will have on community banks. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon&#8217;s management will continue to review the status of the rules and regulations adopted pursuant to the Dodd-Frank Act and the Regulatory Relief Act, and to assess their probable impact on the business, financial condition and results of operations of Horizon. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Federal Home Loan Bank (&#8220;FHLB&#8221;) System </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Bank is a member of the FHLB of Indianapolis, which is one of twelve regional FHLBs. Each FHLB serves as a reserve or central bank for its members within its assigned region. The FHLB is funded primarily from funds deposited by banks and savings associations and proceeds derived from the sale of consolidated obligations of the FHLB system. It makes loans to members (<i>i.e.</i>, advances) in accordance with policies and procedures established by the Board of Directors of the FHLB. All FHLB advances must be fully secured by sufficient collateral as determined by the FHLB. The Federal Housing Finance Board (&#8220;FHFB&#8221;), an independent agency, controls the FHLB System, including the FHLB of Indianapolis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral to 30% of a member&#8217;s capital and limiting total advances to a member. Interest rates charged for advances vary depending upon maturity, the cost of funds to the FHLB of Indianapolis and the purpose of the borrowing. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The FHLBs are required to provide funds for the resolution of troubled savings associations and to contribute to affordable housing programs through direct loans or interest subsidies on advances targeted for community investment and low and moderate income housing projects. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As a member of the FHLB, the Bank is required to purchase and maintain stock in the FHLB of Indianapolis in an amount equal to at least 1% of its aggregate unpaid residential mortgage loans, home purchase contracts, or similar obligations at the beginning of each year. At December&#160;31, 2018, the Bank&#8217;s investment in stock of the FHLB of Indianapolis was $18.1&#160;million. For the year ended December&#160;31, 2018, dividends paid by the FHLB of Indianapolis to the Bank on the FHLB stock totaled approximately $875,000, for an annualized rate paid in dividends of 4.9%. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Limitations on Rates Paid for Deposits; Restrictions on Brokered Deposits </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">FDIC regulations restrict the interest rates that less than well-capitalized insured depository institutions may pay on deposits and also restrict the ability of such institutions to accept brokered deposits. These regulations permit a &#8220;well capitalized&#8221; depository institution to accept, renew or roll over brokered deposits without restriction, and an &#8220;adequately capitalized&#8221; depository institution to accept, renew or roll over brokered deposits with a waiver from the FDIC (subject to certain restrictions on payments of rates). The regulations prohibit an &#8220;undercapitalized&#8221; depository institution from accepting, renewing or rolling over brokered deposits. These regulations contemplate that the definitions of &#8220;well capitalized,&#8221; &#8220;adequately capitalized&#8221; and &#8220;undercapitalized&#8221; will be the same as the definitions adopted by the agencies to implement the prompt corrective action provisions of FDICIA. The Bank is a well-capitalized institution, and management does not believe that these regulations have a materially adverse effect on the Bank&#8217;s current operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Community Reinvestment Act </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Under the Community Reinvestment Act (&#8220;CRA&#8221;), the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution&#8217;s discretion to develop the types of products and services that it believes are best suited to its particular </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">community, consistent with the CRA. The CRA requires the FDIC in connection with its examination of the Bank, to assess its record of meeting the credit needs of its community and to take that record into account in its evaluation of certain applications by the Bank. For example, the regulations specify that a bank&#8217;s CRA performance will be considered in its expansion proposals (e.g., branching and acquisitions of other financial institutions) and may be the basis for approving, denying or conditioning the approval of an application. As of the date of its most recent regulatory examination, the Bank was rated &#8220;satisfactory&#8221; with respect to its CRA compliance. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Gramm-Leach-Bliley Act, Financial Privacy </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Gramm-Leach-Bliley Act adopted in 1999 (&#8220;Gramm-Leach&#8221;) was intended to modernize the banking industry by removing barriers to affiliation among banks, insurance companies, the securities industry and other financial service providers. Gramm-Leach was responsible for establishing a distinct type of bank holding company, known as a financial holding company, which is allowed to engage in an expanded range of financial services, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. As previously discussed, Horizon has qualified as, and elected to become, a financial holding company under the Gramm-Leach amendments to the BHC Act. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Under Gramm-Leach, federal banking regulators adopted rules limiting the ability of banks and other financial institutions to disclose <font style="WHITE-SPACE: nowrap">non-public</font> information about consumers to <font style="WHITE-SPACE: nowrap">non-affiliated</font> third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to <font style="WHITE-SPACE: nowrap">non-affiliated</font> third parties. The privacy provisions of Gramm-Leach affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As a financial institution, the Bank handles a significant amount of sensitive data, including personal information. The Company does not disclose any <font style="WHITE-SPACE: nowrap">non-public</font> information about any current or former customers to anyone except as permitted by law and subject to contractual confidentiality provisions which restrict the release and use of such information. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We are also subject to guidance from the Federal Financial Institutions Examination Council (&#8220;FFIEC&#8221;), an interagency body for five federal banking regulators, with respect to such matters as data privacy, disaster recovery and cybersecurity. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon continues to monitor existing and new privacy and data security laws for their impact on Horizon&#8217;s business operations, including the applicability of laws such as the European Union&#8217;s comprehensive 2018 General Data Privacy Regulation to Horizon and its customers. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Interchange Fees for Debit Cards </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Under the Dodd-Frank Act, interchange fees for bank card transactions must be reasonable and proportional to the issuer&#8217;s incremental cost incurred with respect to the transaction plus certain fraud related costs. Interchange fees are transaction fees between banks for each bank card transaction, designed to reimburse the card-issuing bank for the costs of handling and credit risk inherent in a bank credit or debit card transaction. Although institutions with total assets of less than $10&#160;billion, like the Bank, are exempt from this requirement, competitive pressures are likely to require smaller depository institutions to reduce fees with respect to these bank card transactions. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Other Regulation </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">In addition to the matters discussed above, the Bank is subject to additional regulation of its activities, including a variety of consumer protection regulations affecting its lending, deposit and debt collection activities and regulations affecting secondary mortgage market activities. Both federal and state law extensively regulate various aspects of the banking business, such as reserve requirements, <font style="WHITE-SPACE: nowrap">truth-in-lending</font> and <font style="WHITE-SPACE: nowrap">truth-in-savings</font> disclosures, equal credit opportunity, fair credit reporting, trading in securities and other aspects of banking operations. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Effect of Governmental Monetary Policies </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Bank&#8217;s earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve&#8217;s monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession. The monetary policies of the Federal Reserve have major effects upon the levels of bank loans, investments and deposits through its open market operations in United States government securities and through its regulation of the discount rate on borrowings of member banks and the reserve requirements against member bank deposits. It is not possible to predict the nature or impact of future changes in monetary and fiscal policies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Legislative Initiatives </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Additional legislative and administrative actions affecting the banking industry may be considered by the United States Congress, state legislatures and various regulatory agencies, including those referred to above such as the 2018 Regulatory Relief Act. Horizon cannot predict with certainty whether such legislative or administrative action will be enacted or the extent to which the banking industry in general or Horizon and its affiliates in particular will be affected. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u>BANK HOLDING COMPANY STATISTICAL DISCLOSURES </u></p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS&#8217; EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Information required by this section of Securities Act Industry Guide 3 is presented in &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; as set forth in Item 7 below, herein incorporated by reference. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">INVESTMENT PORTFOLIO </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">A. The following is a schedule of the amortized cost and fair value of investment securities available for sale and held to maturity. </p>

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<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2018</b></td>
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<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2017</b></td>
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<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2016</b></td>
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<td valign="bottom">(dollars in thousands)</td>
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<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
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<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale</p>
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<td valign="bottom">&#160;&#160;</td>
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<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,815</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,608</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19,277</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,051</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,989</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">210,386</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">209,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">148,045</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">149,564</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">117,327</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">116,592</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">187,563</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">132,871</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">139,040</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">137,195</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">183,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">211,487</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180,183</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176,726</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Private labeled mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,650</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,666</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">272</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">385</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,238</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,329</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">608,909</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">600,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">513,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">509,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">445,839</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">439,831</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">210,112</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,273</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">200,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">201,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">193,194</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,086</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;819,021</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;808,621</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;714,050</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;710,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;639,033</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;633,917</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">18 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc97ce35ee1824996bb543b58ad21f850" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">B.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The following is a schedule of maturities of each category of available for sale and <font style="WHITE-SPACE: nowrap">held-to-maturity</font> debt securities and the related weighted-average yield of such securities as of December&#160;31, 2018: </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8e3ac24925a34628b399b610378fa9b1" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 53%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>One Year</b><br>
<b>or Less</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>After One Year</b><br>
<b>Through&#160;Five&#160;Years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>After Five Years</b><br>
<b>Through&#160;Ten&#160;Years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>After Ten Years</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Yield</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Yield</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Yield</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Yield</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,607</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.17</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,001</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,099</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.89</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">91,740</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.09</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">67,016</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,031</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.52</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">56,511</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.61</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">127,461</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.42</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,115</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.52</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">93,174</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.53</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">81,433</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.96</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Private labeled mortgage-backed pools<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.53</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.17</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">333</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,462</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.67</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">256,791</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.15</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">276,243</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">70</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">58,405</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">103,326</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,472</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.80</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;20,532</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;105,257</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.18</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;360,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.40</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;322,715</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.45</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z3ff50a404809490d9d6abcf25c1d2322" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Fair value is based on contractual maturity or call date where a call option exists </p>
</td>
</tr>
</table>

<table id="z02b5957de2db40d190b591124d925707" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Maturity based upon final maturity date </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">The weighted-average interest rates are based on coupon rates for securities purchased at par value and on effective interest rates considering amortization or accretion if the securities were purchased at a premium or discount. Yields are not presented on a <font style="WHITE-SPACE: nowrap">tax-equivalent</font> basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">Excluding those holdings of the investment portfolio in Treasury securities and other agencies and corporations of the U.S. Government, there were no investments in securities of any one issuer that exceeded 10% of the consolidated stockholders&#8217; equity of Horizon at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z39af8ac952e440028eb1aa56ff78689b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><b>III.</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">LOAN PORTFOLIO </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb0caff5915b443528078343513c254f6" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">A.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Types of Loans</b>&#8212;Total loans on the balance sheet are comprised of the following classifications for the years indicated. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z0003b1c6e012407a96d4318a0bd0f4fb" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 55%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December 31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December 31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December 31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December 31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December 31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,721,590</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,669,934</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,069,956</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">804,995</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">674,314</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">668,141</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">609,739</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">531,874</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">437,144</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">254,625</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135,727</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">144,692</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">129,156</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">549,481</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">460,999</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">398,429</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">362,300</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">320,459</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,013,332</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,835,180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,135,986</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,749,131</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,378,554</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(17,820</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,394</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(14,837</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(14,534</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,501</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,995,512</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,818,786</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,121,149</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,734,597</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,362,053</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd87261986a9e4756bacb79c0924f02ce" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">B.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Maturities and Sensitivities of Loans to Changes in Interest Rates</b>&#8212;The following is a schedule of maturities and sensitivities of loans to changes in interest rates, excluding real estate mortgage, mortgage warehouse and consumer loans, as of December&#160;31, 2018: </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb408cfd5652c48c6aaada1157024e708" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 59%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>One Year</b><br>
<b>or Less</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>One&#160;Through</b><br>
<b>Five Years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>After&#160;Five</b><br>
<b>Years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Maturing or repricing Commercial, financial, agricultural and commercial <font style="WHITE-SPACE: nowrap">tax-exempt</font> loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,044,106</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;621,879</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;55,605</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,721,590</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">19 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 4%">The following is a schedule of fixed-rate and variable-rate commercial, financial, agricultural and commercial <font style="WHITE-SPACE: nowrap">tax-exempt</font> loans due after one year. (Variable-rate loans are those loans with floating or adjustable interest rates.) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z5891b5bcb30f4191b4558dccd38d454f" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 76%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fixed</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Variable</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total commercial, financial, agricultural, and commercial <font style="WHITE-SPACE: nowrap">tax-exempt</font> loans due after one year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;464,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;213,438</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z037d7c985245475ea77c433ff0e65a29" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">C.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Risk Elements</b> </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%"><b><font style="WHITE-SPACE: nowrap">Non-accrual,</font> Past Due and Restructured Loans</b>&#8212;The following schedule summarizes <font style="WHITE-SPACE: nowrap">non-accrual,</font> past due and restructured loans. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4da82e2b21d44309bbb2d492318fc3f5" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 55%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-performing</font> loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">More than 90 days past due</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">183</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; WHITE-SPACE: nowrap; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Non-accrual</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,094</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,902</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,249</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,024</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - accruing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">109</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">610</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - <font style="WHITE-SPACE: nowrap">non-accrual</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">451</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,915</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,221</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">More than 90 days past due</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; WHITE-SPACE: nowrap; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Non-accrual</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,846</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,693</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,959</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,354</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,297</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - accruing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,558</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,672</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,254</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">808</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,526</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - <font style="WHITE-SPACE: nowrap">non-accrual</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">423</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">351</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">809</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,074</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,031</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">More than 90 days past due</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; WHITE-SPACE: nowrap; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Non-accrual</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - accruing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - <font style="WHITE-SPACE: nowrap">non-accrual</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">More than 90 days past due</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">58</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">75</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; WHITE-SPACE: nowrap; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Non-accrual</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,608</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,681</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,728</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,878</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,991</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - accruing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">335</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">285</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">238</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">350</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,236</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Trouble debt restructuring - <font style="WHITE-SPACE: nowrap">non-accrual</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">142</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">211</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">205</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">183</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">391</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total <font style="WHITE-SPACE: nowrap">non-performing</font> loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,414</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,683</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,680</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">22,442</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other real estate owned and repossessed collateral</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,967</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">578</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">542</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">161</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">411</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">200</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,648</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">636</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">48</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total other real estate owned and repossessed collateral</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,075</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">838</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,216</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,207</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,201</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total <font style="WHITE-SPACE: nowrap">non-performing</font> assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;17,250</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;17,252</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;13,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;19,887</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;23,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z40751aa116ca4203b3bba4467c9fb831" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 91%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gross interest income that would have been recorded on <font style="WHITE-SPACE: nowrap">non-accrual</font> loans outstanding as of December&#160;31, 2018, in the period if the loans had been current, in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period.</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;835</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest income actually recorded on <font style="WHITE-SPACE: nowrap">non-accrual</font> loans outstanding as of December&#160;31, 2018, and included in net income for the period.</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">341</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest income not recognized during the period on <font style="WHITE-SPACE: nowrap">non-accrual</font> loans outstanding as of December&#160;31, 2018.</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">494</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">20 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Discussion of <font style="WHITE-SPACE: nowrap">Non-Accrual</font> Policy </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z13d4e08203ff472bb448656bd6ad3c23" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">1.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">From time to time, the Bank obtains information which may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of such, it is management&#8217;s policy to convert the loan from an &#8220;earning asset&#8221; to a <font style="WHITE-SPACE: nowrap">non-accruing</font> loan. Further, it is management&#8217;s policy to place a commercial loan on a <font style="WHITE-SPACE: nowrap">non-accrual</font> status when delinquent in excess of 90 days or it has had the accrual of interest discontinued by management. The officer responsible for the loan, the Chief Credit Officer and the senior commercial loan workout officer must review all loans placed on <font style="WHITE-SPACE: nowrap">non-accrual</font> status. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9ef4914fddbe4c058131913cbb5f4888" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">2.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Potential Problem Loans: </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 8%">Impaired and <font style="WHITE-SPACE: nowrap">non-accrual</font> loans for which the discounted cash flows or collateral value exceeded the carrying value of the loan totaled $15.2&#160;million and $16.4&#160;million at December&#160;31, 2018 and 2017. The allowance for impaired and <font style="WHITE-SPACE: nowrap">non-accrual</font> loans included in the Bank&#8217;s allowance for loan losses totaled $1.0&#160;million and $184,000 at those respective dates. The average balance of impaired loans during 2018 and 2017 was $7.4&#160;million and $3.8&#160;million. </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z0b80da8076a44c74a49c14184a7dcb62" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">3.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Foreign Outstandings: </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 8%">None. </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z61efaeb88d1e4ecea84e936cfbc7e4c4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">4.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Loan Concentrations: </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 8%">As of December&#160;31, 2018, there are no significant concentrations of loans exceeding 10% of total loans. See Item III A above for a listing of the types of loans by concentration. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z143939363cfa4b60ad29479c0970e732" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">D.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">Other Interest-Bearing Assets </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">There are no other interest-bearing assets as of December&#160;31, 2018, which would be required to be disclosed under Item III C.1 or 2 if such assets were loans. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z741d737552ac45eda51d61d605aea477" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><b>IV.</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">SUMMARY OF LOAN LOSS EXPERIENCE </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4cacc8d0c36a49dc9036bb015215b88c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">A.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The following is an analysis of the activity in the allowance for loan losses account: </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb85969b1f81d48da98f53bd9274e39fa" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 55%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans outstanding at the end of the period<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,013,332</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,835,180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,135,986</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,749,131</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,378,554</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Average loans outstanding during the period<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,910,741</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,335,126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,948,580</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,593,790</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,247,510</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z376b3edb84a345679628d24cc35c2fdc" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Net of unearned income and deferred loan fees </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z94652a80d2e448bebf5ef4acef310463" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 55%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balance at beginning of the period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,501</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;15,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans <font style="WHITE-SPACE: nowrap">charged-off:</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">629</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">758</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,437</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,802</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">76</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">213</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">288</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">328</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,689</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,374</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,999</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans <font style="WHITE-SPACE: nowrap">charged-off</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,552</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,253</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,660</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,099</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Recoveries of loans previously <font style="WHITE-SPACE: nowrap">charged-off:</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">298</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">773</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">44</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">69</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">21</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">869</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">998</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">814</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">709</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">786</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loan recoveries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,072</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,340</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,121</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,580</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net loans <font style="WHITE-SPACE: nowrap">charged-off</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,480</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">913</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,539</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,549</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Provision charged to operating expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,842</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,162</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,058</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balance at end of the period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,501</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Percent of net charge-offs to average loans outstanding for the period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.16</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">21 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6c85b0f51bba46f89be7c807e59cb2c0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">B.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and the percentage of loans in each category to total loans. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zddfd01ba28fa414c8affad9fab5c0d12" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 49%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>%&#160;of&#160;Loans&#160;to</b><br>
<b>Total Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>%&#160;of&#160;Loans&#160;to</b><br>
<b>Total Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>%&#160;of&#160;Loans&#160;to</b><br>
<b>Total Loans</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial, financial and agricultural</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;10,495</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,093</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">56</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,579</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">45</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,188</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,090</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehousing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,254</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,083</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,914</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unallocated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z366a45ae8d6c48158ed55953609e1574" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 60%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2014</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>%&#160;of&#160;Loans&#160;to</b><br>
<b>Total Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>%&#160;of&#160;Loans&#160;to</b><br>
<b>Total Loans</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial, financial and agricultural</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,195</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,910</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">48</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,476</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehousing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,007</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,132</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,856</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,951</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unallocated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,501</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In 1999, Horizon began a mortgage warehousing program. This program is described in &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; in Item 7 below and in the Notes to the Consolidated Financial Statements in Item 8 below, which are incorporated herein by reference. The greatest risk related to these loans is transaction and fraud risk. During 2018, Horizon processed approximately $2.359&#160;billion in mortgage warehouse loans. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z45afbfe3bd884fe4bd64b1c5a3b2c2a9" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><b>V.</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">DEPOSITS </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Information required by this section is found in &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; in Item 7 below and in the Consolidated Financial Statements and related Notes in Item 8 below, which are incorporated herein by reference. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><b>VI.</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">RETURN ON EQUITY AND ASSETS </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Information required by this section is found in &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 below and in the Consolidated Financial Statements and related Notes in Item 8 below, which are incorporated herein by reference. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><b>VII.</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left">SHORT TERM BORROWINGS </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following is a schedule of statistical information relative to securities sold under agreements to repurchase which are secured by Treasury and U.S. Government agency securities and mature within one year. There were no other categories of short-term borrowings for which the average balance outstanding during the period was 30% or more of stockholders&#8217; equity at the end of the period. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze6b3e3b00b344f1b95129e83eeb89cce" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 8%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 8%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">(dollars in thousands)</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Outstanding at <font style="WHITE-SPACE: nowrap">year-end</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;52,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;61,097</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Approximate weighted-average interest rate at <font style="WHITE-SPACE: nowrap">year-end</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.64</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Highest amount outstanding as of any <font style="WHITE-SPACE: nowrap">month-end</font> during the year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">61,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,081</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Approximate average outstanding during the year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">51,385</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">55,206</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Approximate weighted-average interest during the year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.43</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.21</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">22 </p>
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<p style="PAGE-BREAK-BEFORE: always"></p>

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<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u><b><a id="tx695048_4" name="tx695048_4"></a>ITEM&#160;1A. RISK FACTORS</b> </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">An investment in Horizon&#8217;s securities is subject to risks inherent to our business. The material risks and uncertainties that management believes currently affect Horizon are described below. Before making an investment decision, you should carefully consider these risks as well as information we include or incorporate by reference in this report and other filings we make with the SEC. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may affect our business operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, our results could differ materially from the forward-looking statements. All forward-looking statements in this report are current only as of the date on which the statements were made. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risks Related to Our Business </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">As a financial institution, we are subject to a number of risks relating to our daily business. Although we undertake a variety of efforts to manage and control those risks, many of the risks are outside of our control. Among the risks we face are the following: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Credit risk</b>: the risk that loan customers or other parties will be unable to perform their contractual obligations; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Market risk</b>: the risk that changes in market rates and prices will adversely affect our financial condition or results of operation; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Liquidity risk</b>: the risk that Horizon or the Bank will have insufficient cash or access to cash to meet its operating needs; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Operational risk</b>: the risk of loss resulting from fraud, inadequate or failed internal processes, cyber-security breaches, people and systems, or external events; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Economic risk</b>: the risk that the economy in our markets could decline resulting in increased unemployment, decreased real estate values and increased loan charge-offs; and </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><b>Compliance risk</b>: the risk of additional action by our regulators or additional regulation that could hinder our ability to do business profitably. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The current economic environment poses challenges that could adversely affect our financial condition and results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">For many years, we operated in a challenging and uncertain economic environment due to the volatility and disruption caused by the major recession that began in 2008. The housing market was significantly impacted, several major banks collapsed, and the U.S. economy continued to shrink through the third quarter of 2009, representing the longest downturn since the Great Depression. Now, a decade later, the U.S. economy has been recovering slowly and unevenly. The labor market has seen significant recovery and employment levels are returning to <font style="WHITE-SPACE: nowrap">pre-2008</font> recession levels, but many challenges face the economy going forward, such as elevated pension and medical costs, government budget deficits, and looming escalation of trade conflicts with China and others. In addition, economic growth going forward from 2018 into 2019 has been impacted by the partial government shutdown from December&#160;22, 2018 to January&#160;25, 2019, causing business disruptions from understaffed federal agencies, and loss of income and employment for federal contractors, as well as temporary loss of income for over 800,000 federal employees. In addition, even though the Federal Reserve has indicated that after four interest rate hikes in 2018, it will slow down on raising rates, both the current higher interest rates and the fading impact of the 2017 tax cuts could affect the strength of the economy for 2019. Global and national economic changes will ultimately have local economic impact, and can impact us directly and indirectly. Financial institutions, such as the Bank, retain direct exposure to the residential and commercial real estate markets, and local declines in real estate values, home sales volumes, and loss of confidence in the U.S. economy or loss of employment by borrowers, could have an adverse effect on our financial condition and results of operations. In general, any loss confidence in the U.S. or local economy could cause financial stress on borrowers and their customers, driving losses beyond that which is provided in our allowance for loan losses and potentially resulting in the following additional consequences: increases in loan delinquencies, problem assets and foreclosures; declining demand for our products and services; decreased deposits, which would negatively impact our liquidity position; and declining asset and collateral values associated with our existing loans, reducing a customer&#8217;s borrowing power and our security for the loans. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">23 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">We face intense competition in all phases of our business from other banks, financial institutions and <font style="WHITE-SPACE: nowrap">non-banks.</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The banking and financial services business in most of our markets is highly competitive. Our competitors include large regional banks, local community banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market mutual funds, credit unions and other <font style="WHITE-SPACE: nowrap">non-bank</font> financial and digital service providers, many of which have greater financial, marketing and technological resources than us. Many of these competitors are not subject to the same regulatory restrictions that we are and may be able to compete more effectively as a result. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Also, technology and other changes have lowered barriers to entry and made it possible for customers to complete financial transactions using <font style="WHITE-SPACE: nowrap">non-banks</font> that historically have involved banks at one or both ends of the transaction. <font style="WHITE-SPACE: nowrap">Non-banks</font> now offer products and services traditionally provided by banks. The wide acceptance of Internet-based commerce has resulted in a number of alternative payment processing systems and lending platforms in which banks play only minor roles. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. Use of emerging alternative payment platforms, such as Apple Pay or Bitcoin or other cryptocurrencies, can alter consumer credit card behavior and consequently impact our interchange fee income. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The process of eliminating banks as intermediaries, known as &#8220;disintermediation,&#8221; could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The effects of disintermediation can also impact the lending business because of the fast growing body of financial technology companies that use software to deliver mortgage lending and other financial services. A related risk is the migration of bank personnel away from the traditional bank environments into financial technology companies and other <font style="WHITE-SPACE: nowrap">non-banks.</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Increased competition in our market may result in a decrease in the amounts of our loans and deposits, reduced spreads between loan rates and deposit rates or loan terms that are more favorable to the borrower. Any of these results could have a material adverse effect on our ability to maintain our earnings record, grow our loan portfolios and obtain <font style="WHITE-SPACE: nowrap">low-cost</font> funds. If increased competition causes us to significantly discount the interest rates we offer on loans or increase the amount we pay on deposits, our net interest income could be adversely impacted. If increased competition causes us to relax<b> </b>our underwriting standards, we could be exposed to higher losses from lending activities. Additionally, many of our competitors are larger in total assets and capitalization, have greater access to capital markets and offer a broader range of financial services than we can offer. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Annually, the number of banks and the number of bank branches continues to decrease, which decreases the opportunities to expand through acquisitions. Horizon is also experiencing an increase in competition to acquire other banks, due to the overall strength of financial institutions and their high capital levels. In addition, credit unions are now actively pursuing small bank acquisitions within our markets. Increased competition for bank acquisitions may slow Horizon&#8217;s ability to grow earning assets at comparable historical growth rates. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our commercial and consumer loans expose us to increased credit risks. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We have a large percentage of commercial and consumer loans. Commercial loans generally have greater credit risk than residential mortgage loans because repayment of these loans often depends on the successful business operations of the borrowers. These loans also typically have much larger loan balances than residential mortgage loans. Consumer loans generally involve greater risk than residential mortgage loans because they are unsecured or secured by assets that depreciate in value. Although we undertake a variety of underwriting, monitoring and reserving protections with respect to these types of loans, there can be no guarantee that we will not suffer unexpected losses. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">24 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our holdings of construction, land and home equity loans may pose more credit risk than other types of mortgage loans. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Construction loans, loans secured by commercial real estate and home equity loans generally entail more risk than other types of mortgage loans. When real estate values decrease, the developers to whom we lend are likely to experience a decline in sales of new homes from their projects. Land and construction loans are more likely to become <font style="WHITE-SPACE: nowrap">non-performing</font> as developers are unable to build and sell homes in volumes large enough for orderly repayment of loans and as other owners of such real estate (including homeowners) are unable to keep up with their payments. We strive to establish what we believe are adequate reserves on our financial statements to cover the credit risk of these loan portfolios. However, there can be no assurance that losses will not exceed our reserves, and ultimately result in a material level of charge-offs, which could adversely impact our results of operations, liquidity and capital. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The allowance for loan losses may prove inadequate or be negatively affected by credit risk exposures. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Our business depends on the creditworthiness of our customers. We periodically review the allowance for loan and lease losses for adequacy considering economic conditions and trends, collateral values, and credit quality indicators, including past <font style="WHITE-SPACE: nowrap">charge-off</font> experience and levels of past due loans and <font style="WHITE-SPACE: nowrap">non-performing</font> assets. There is no certainty that the allowance for loan losses will be adequate over time to cover credit losses in the portfolio because of unanticipated adverse changes in the economy, market conditions or events adversely affecting specific customers, industries or markets. If the credit quality of the customer base materially decreases, if the risk profile of a market, industry or group of customers changes materially, or if the allowance for loan losses is not adequate, our business, financial condition, liquidity, capital, and results of operations could be materially adversely affected. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Changes in market interest rates could adversely affect our financial condition and results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Our financial condition and results of operations are significantly affected by changes in market interest rates. We can neither predict with certainty nor control changes in interest rates. These changes can occur at any time and are affected by many factors, including international, national, regional and local economic conditions, competitive pressures and monetary policies of the Federal Reserve. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our results of operations depend substantially on our net interest income, which is the difference between the interest income that we earn on our interest-earning assets and the interest expense that we pay on our interest-bearing liabilities. Our profitability depends on our ability to manage our assets and liabilities during periods of changing market interest rates. If rates increase rapidly as a result of an improving economy, we may have to increase the rates paid on our deposits and borrowed funds more quickly than loans and investments <font style="WHITE-SPACE: nowrap">re-price,</font> resulting in a negative impact on interest spreads and net interest income. The impact of rising rates could be compounded if deposit customers flow funds away from us into direct investments, such as U.S. Government bonds, corporate securities and other investment vehicles, including mutual funds, which, because of the absence of federal insurance premiums and reserve requirements, generally pay higher rates of return than those offered by financial institutions such as ours. These consequences and consumer reactions may be more likely to occur during a future rise in interest rates as a result of, and in reaction to, the historically low interest rates that persisted for an extended period of time from 2008 until the rates started to rise again slowly in late 2015. In other words, historical consumer behavior may not be a reliable predictor of future consumer behavior in a period of rising interest rates (such as 2018, with four interest rate increases), resulting in a larger outflow of deposits or a higher level of loan prepayments than we would expect. In either case, our deposit costs may increase and our loan interest income may decline, either or both of which may have an adverse effect on our financial results. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Changes in interest rates also could affect loan volume. For instance, an increase in interest rates could cause a decrease in the demand for mortgage loans (and other loans), which could result in a significant decline in our revenue stream. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Conversely, should market interest rates fall below current levels, our net interest margin could also be negatively affected, as competitive pressures could keep us from further reducing rates on our deposits, and prepayments and curtailments on assets may continue. Such movements may cause a decrease in our interest rate spread and net interest margin, and therefore, decrease our profitability. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">25 </p>
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<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">We also are subject to reinvestment risk associated with changes in interest rates. Changes in interest rates may affect the average life of loans and mortgage-related securities. Increases in interest rates may decrease loan demand and/or may make it more difficult for borrowers to repay adjustable rate loans. Decreases in interest rates often result in increased prepayments of loans and mortgage-related securities, as borrowers refinance their loans to reduce borrowing costs. Under these circumstances, we are subject to reinvestment risk to the extent that we are unable to reinvest the cash received from such prepayments in loans or other investments that have interest rates that are comparable to the interest rates on existing loans and securities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">An economic slowdown in our primary market areas could affect our business. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Our primary market area for deposits and loans consists of Northern and Central Indiana and the Southern, Central and Great Lakes Bay regions of Michigan. An economic slowdown could hurt our business and the possible consequences of such a downturn could include the following: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z91f3c7294c4b4a6fb9977168154d2c3a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">increases in loan delinquencies and foreclosures; </p>
</td>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z2a11773c7d8a40b5b70a330916c91d6f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">declines in the value of real estate and other collateral securing loans; </p>
</td>
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<table id="z7a1e8214f0384ae68ce8a9aa46dd92ce" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">an increase in loans charged off; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z105bea6baf064df78139c420f5ae711c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">an increase in the Company&#8217;s expense to fund loan loss reserves; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z393e52ddd13d427787122ef7d4198834" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">an increase in collection costs; </p>
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<table id="z2a710ebce41c45449f58e4b85e2d8a8f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">a decline in the demand for our products and services, and; </p>
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<table id="z15b0a48cefc44d1ebfccd8de290f9068" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">an increase in <font style="WHITE-SPACE: nowrap">non-accrual</font> loans and other real estate owned. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The loss of key members of our senior management team and our lending teams could affect our ability to operate effectively. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We depend heavily on the services of our existing senior management team, particularly our CEO Craig M. Dwight, to carry out our business and investment strategies. As we continue to grow and expand our business and our locations, products and services, we will increasingly need to rely on Mr.&#160;Dwight&#8217;s experience, judgment and expertise as well as that of the other members of our senior management team. We also depend heavily on our experienced and effective lending teams and their respective special market insights, including, for example, our agricultural lending specialists. In addition to the importance of retaining our lending team, we will also need to continue to attract and retain qualified banking personnel at all levels. Competition for such personnel is intense in our geographic market areas. If we are unable to attract and retain an effective lending team and other talented people, our business could suffer. The loss of the services of any senior management personnel, particularly Mr.&#160;Dwight, or the inability to recruit and retain qualified lending and other personnel in the future, could have a material adverse effect on our consolidated results of operations, financial condition and prospects. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Potential acquisitions may disrupt our business and dilute stockholder value. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We periodically evaluate merger and acquisition opportunities and conduct due diligence activities related to possible transactions with other financial institutions and financial services companies. We generally seek merger or acquisition partners that are culturally similar and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services. Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z19bad0f2e90746ab96848bd469552e86" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">potential exposure to unknown or contingent liabilities of the target company; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z27907b7e6a7847f397ce526fd9c14ce7" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">exposure to potential asset quality issues of the target company; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze3545b3a2c644a7c89379b120b25567a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">potential disruption to our business; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z3573b8dc3b0d4a9b8bd427290e3cd1b1" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">potential diversion of our management&#8217;s time and attention away from <font style="WHITE-SPACE: nowrap">day-to-day</font> operations; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc8ca5960b7444afab4b3f0d71a87755c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the possible loss of key employees, business and customers of the target company; </p>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">difficulty in estimating the value of the target company, and; </p>
</td>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd3ef70963ce04d4b956d56da37fbb0db" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">potential problems in integrating the target company&#8217;s systems, customers and employees with ours. </p>
</td>
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</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">26 </p>
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<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving the payment of cash or the issuance of our debt or equity securities may occur at any time. Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction. To the extent we were to issue additional common shares in any such transaction, our current shareholders would be diluted and such an issuance may have the effect of decreasing our stock price, perhaps significantly. Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on our financial condition and results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In addition, merger and acquisition costs incurred by Horizon may temporarily increase operating expenses. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">We may need to raise additional capital in the future, and such capital may not be available when needed or at all. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We may need to raise additional capital in the future to fund acquisitions and to provide us with sufficient capital resources and liquidity to meet our commitments, regulatory capital requirements and business needs, particularly if our asset quality or earnings were to deteriorate significantly. Although we are currently, and have historically been, &#8220;well capitalized&#8221; for regulatory purposes, in the past we have been required to maintain increased levels of capital in connection with certain acquisitions. Additionally, we periodically explore acquisition opportunities with other financial institutions, some of which are in distressed financial condition. Any future acquisition, particularly the acquisition of a significantly troubled institution or an institution of comparable size to us, may require us to raise additional capital in order to obtain regulatory approval and/or to remain well capitalized. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We cannot guarantee that such capital will be available on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, our depositors or counterparties participating in the capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Moreover, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our business, financial condition and results of operations and may restrict our ability to grow. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The preparation of our financial statements requires the use of estimates that may vary from actual results. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates that affect the financial statements. One of our most critical estimates is the level of the allowance for loan losses. Due to the inherent nature of these estimates, we cannot provide absolute assurance that we will not have to increase the allowance for loan losses and/or sustain loan losses that are significantly higher than the provided allowance. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our mortgage warehouse and indirect lending operations are subject to a higher fraud risk than our other lending operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We buy loans originated by mortgage bankers and automobile dealers. Because we must rely on the mortgage bankers and automobile dealers in making and documenting these loans, there is an increased risk of fraud to us on the part of the third-party originators and the underlying borrowers. In order to guard against this increased risk, we perform investigations on the mortgage companies with whom we do business, and we review the loan files and loan documents we purchase to attempt to detect any irregularities or legal noncompliance. However, there is no guarantee that our procedures will detect all cases of fraud or legal noncompliance. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">27 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our mortgage lending profitability could be significantly reduced if we are not able to resell mortgages at a reasonable gain on sale or experience other problems with the secondary market process or we are unable to retain our mortgage loan sales force due to regulatory changes. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Currently, we sell a substantial portion of the mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to aggregate a high volume of loans and to sell them in the secondary market at a gain. Thus, we are dependent upon the existence of an active secondary market and our ability to profitably sell loans into that market. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our ability to sell mortgage loans readily is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and Ginnie Mae (the &#8220;Agencies&#8221;) and other institutional and <font style="WHITE-SPACE: nowrap">non-institutional</font> investors. These entities account for a substantial portion of the secondary market in residential mortgage loans. Some of the largest participants in the secondary market, including the Agencies, are government-sponsored enterprises whose activities are governed by federal law. Any future changes in laws that significantly affect the activity of such government-sponsored enterprises could, in turn, adversely affect our operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. Although to date, the conservatorship has not had a significant or adverse effect on our operations, and during 2010 and 2012 the Federal Housing Finance Agency indicated that the Treasury Department is committed to fund Fannie Mae and Freddie Mac to levels needed in order to sufficiently meet their funding needs, it is currently unclear whether further changes would significantly and adversely affect our operations. Members of the present federal administration have expressed an intent to seek an end to the conservatorship and to privatize the Agencies, and it is unclear how that might impact us. In addition, our ability to sell mortgage loans readily is dependent upon our ability to remain eligible for the programs offered by the Agencies and other institutional and <font style="WHITE-SPACE: nowrap">non-institutional</font> investors. Our ability to remain eligible may also depend on having an acceptable peer-relative delinquency ratio for the Federal Housing Administration (&#8220;FHA&#8221;) and maintaining a delinquency rate with respect to Ginnie Mae pools that are below Ginnie Mae guidelines. In the case of Ginnie Mae pools, we have repurchased delinquent loans from them in the past to maintain compliance with the minimum required delinquency ratios. Although these loans are typically insured as to principal by the FHA, such repurchases increase our capital and liquidity needs, and there can be no assurance that we will have sufficient capital or liquidity to continue to purchase such loans out of the Ginnie Mae pools if required to do so. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Any significant impairment of our eligibility with any of the Agencies could materially and adversely affect our operations. Further, the criteria for loans to be accepted under such programs may be changed from <font style="WHITE-SPACE: nowrap">time-to-time</font> by the sponsoring entity which could result in a lower volume of corresponding loan originations. The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our mortgage lending profitability could be significantly reduced as changes in interest rates could affect mortgage origination volume and pricing for selling mortgages on the secondary market. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Currently, we sell a substantial portion of the mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to originate and sell mortgages to the secondary market at a gain. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">A higher interest rate environment can negatively affect the volume of loan originations and refinanced loans reducing the dollar amount of loans available to be sold to the secondary market. Higher interest rates can also negatively affect the premium received on loans sold to the secondary market as competitive pressures to originate loans can reduce pricing. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">We are exposed to intangible asset risk in that our goodwill may become impaired. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">As of December&#160;31, 2018, we had $130.3&#160;million of goodwill and other intangible assets. A significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate, or slower growth rates could result in impairment of goodwill. If we were to conclude that a future write-down of our goodwill is necessary, then we would record the appropriate charge, which could be materially adverse to our operating results and financial position. For further discussion, see Notes 1 and 11, &#8220;Nature of Operations and Summary of Significant Accounting Policies&#8221; and &#8220;Goodwill and Intangible Assets,&#8221; to the Consolidated Financial Statements included in Item 8 of our Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2018. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">We are subject to extensive regulation and changes in laws and regulatory policies could adversely affect our business. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Our operations are subject to extensive regulation by federal agencies. See &#8220;Regulation and Supervision&#8221; in the description of our Business in Item 1 of Part I of this report for detailed information on the laws and regulations to which we are subject. Changes in applicable laws, regulations or regulator policies can materially affect our business. The likelihood of any major changes in the future and their effects are impossible to determine. As an example, the Bank could experience higher credit losses because of federal or state legislation or by regulatory or bankruptcy court action that reduces the amount the Bank&#8217;s borrowers are otherwise contractually required to pay under existing loan contracts. Also, the Bank could experience higher credit losses because of federal or state legislation or regulatory action that limits its ability to foreclose on property or other collateral or makes foreclosure less economically feasible. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We face other risks from recent actions of the U.S. Treasury and the Internal Revenue Service. In November 2016, these agencies issued a Notice making captive insurance company activities &#8220;transactions of interest&#8221; due to the potential for tax avoidance or evasion. We have a captive insurance company and it is not certain at this point how the Notice may impact us on our operation of the captive insurance company as a risk management tool. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Legislation enacted in recent years, together with additional actions announced by the U.S. Treasury and other regulatory agencies, continue to develop. It is not clear at this time what impact legislation and liquidity and funding initiatives of the U.S. Treasury and other bank regulatory agencies, and additional programs that may be initiated in the future, will have on the financial markets and the financial services industry. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The full impact of the Tax Cuts and Jobs Act on us and our customers is unknown at present, creating uncertainty and risk related to our customers&#8217; future demand for credit and our future results. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On December&#160;22, 2017, President Trump signed the Tax Cuts and Jobs Act (the &#8220;Tax Reform Act&#8221;), which introduced broad and complex tax reforms. Among other changes, the Tax Reform Act reduced the corporate tax rate for 2018 and limited the utilization of net operating losses to offset taxable income. As a result, during the fourth quarter of 2017, Horizon recognized an increase in income tax expense because of a $2.4&#160;million adjustment of Horizon&#8217;s net deferred tax assets to the new corporate rate. Many aspects of the Tax Reform Act were clarified during 2018 by the U.S. Treasury and the Internal Revenue Service. As additional clarification and implementation guidance is issued on the Tax Reform Act, we may need to make further adjustments, which could have an impact on our earnings. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Increased economic activity expected to result from the decrease in tax rates on businesses generally could spur additional economic activity that would encourage additional borrowing. At the same time, some customers may elect to use their additional cash flow from lower taxes to fund their existing levels of activity, decreasing borrowing needs. The limitations on the federal income tax deductibility of business interest expense (subject to new proposed regulations announced in November 2018) may affect a significant number of our customers, effectively increasing the cost of borrowings and making equity or hybrid funding relatively more attractive. This could have a long-term negative impact on business customer borrowing. We experienced an increase in our <font style="WHITE-SPACE: nowrap">after-tax</font> net income available to stockholders in 2018, and anticipate an increase in future years as a result of the decrease in our effective tax rate. Some or all of this benefit could be lost to the extent that the banks and financial services companies we compete with elect to lower interest rates and fees and we are forced to respond in order to remain competitive. There is no assurance that presently anticipated benefits of the Tax Reform Act for the Company will be realized. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In addition, the Tax Reform Act could have an impact on how we compensate our executives due to amendments affecting the deductibility of certain executive compensation, and it could also prompt tax changes at the state level that could impact us. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">In short, the Tax Reform Act may have wide-ranging, unexpected and material effects on our business practices, financial condition and results of operations, and we are not able to predict all of these effects at this time. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In the long-term, U.S. corporate tax rates may increase and therefore would have an adverse impact on earnings. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our inability to continue to process large volumes of transactions accurately could adversely impact our business and financial results. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We process large volumes of transactions on a daily basis and are exposed to numerous types of operational risk. Operational risk resulting from inadequate or failed internal processes, people and systems includes the risk of fraud by persons inside or outside Horizon, the execution of unauthorized transactions by employees, errors relating to transaction processing and systems, and breaches of the internal control system and compliance requirements. This risk of loss also includes the potential legal actions that could arise as a result of the operational deficiency or as a result of noncompliance with applicable regulatory standards. Accordingly, if systems of internal control should fail to work as expected, if systems are used in an unauthorized manner, or if employees subvert the system of internal controls, significant losses could result. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We establish and maintain systems of internal operational controls that are designed to provide us with timely and accurate information about our level of operational risk. While not foolproof, these systems have been designed to manage operational risk at appropriate, cost-effective levels. Procedures also exist that are designed to ensure that policies relating to conduct, ethics and business practices are followed. If these systems fail, significant losses could result. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">While we continually monitor and improve the system of internal controls, data processing systems and corporate-wide processes and procedures, there can be no assurance that future losses will not occur. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Our information systems may experience cyber-attacks or an interruption or breach in security. Our cybersecurity systems could be inadequate or fail. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We rely heavily on internal and outsourced technologies, communications, and information systems to conduct our business. Additionally, in the normal course of business, we collect, process and retain sensitive and confidential information regarding our customers. As our reliance on technology has increased, so have the potential risks of a technology-related operation interruption (such as disruptions in our customer relationship management, general ledger, deposit, loan, or other systems) or the occurrence of cyber-attacks (such as unauthorized access to our systems, computer viruses or other malicious code). These risks have increased for all financial institutions as new technologies, including the use of the Internet and telecommunications technologies (including mobile devices), have become commonly used to conduct financial and other business transactions, during a time of increased technological sophistication of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions, particularly denial of service attacks, that are designed to disrupt key business services, such as customer-facing web sites. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources, both domestic and foreign. However, we have analyzed and will continue to analyze security related to device-specific considerations, user access topics, transaction-processing and network integrity. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We also face risks related to cyber-attacks and other security breaches in connection with credit card and debit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including merchant acquiring banks, payment processors, payment card networks and our processors. Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them. Further cyber-attacks or other breaches in the future, whether affecting us or others, could intensify consumer concern and regulatory focus and result in reduced use of payment cards and increased costs, all of which could have a material adverse effect on our business. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">To the extent we are involved in any future cyber-attacks or other breaches, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance we maintain. We could also suffer significant damage to our reputation. Although we are insured against many of these risks, including privacy breach response costs, notification expenses, breach support and credit monitoring expenses, cyber extortion and cyber terrorism, there can be no assurances that such insurance will be sufficient to cover all costs arising from a data or information technology breach and our exposure may exceed our coverage. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">We continually encounter technological changes. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements, and we may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">We rely on other companies to provide key components of our business infrastructure. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Third-party vendors provide key components of our business infrastructure, including Internet connections, mobile and internet banking, statement processing, loan document preparation, network access and transaction and other processing services.&#160;Although we have selected these third-party vendors carefully, we do not control their actions.&#160;Any problems caused by these third parties, including as a result of inadequate or interrupted service or breach of customer information, could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business.&#160;In addition, any breach in customer information could affect our reputation and cause a loss of business. Replacing these third-party vendors also could result in significant delay and expense. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Damage to our reputation could damage our business. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Our business depends upon earning and maintaining the trust and confidence of our customers, investors and employees. Damage to our reputation could cause significant harm to our business and prospects. Harm to our reputation can arise from numerous sources, including, among others, employee misconduct, compliance failures, litigation or regulatory outcomes or governmental investigations. In addition, a failure to deliver appropriate standards of service and quality, or a failure or perceived failure to treat customers and clients fairly, can result in customer dissatisfaction, litigation, privacy breach and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs and harm to our reputation. Adverse publicity about Horizon, whether or not true, may result in harm to our existing business, customer relationships and prospects. Should any events or factors that can undermine our reputation occur, there is no assurance that the additional costs and expenses that we may need to incur to address the issues giving rise to the reputational harm would not adversely affect our earnings and results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The soundness of other financial institutions could adversely affect us. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Many of these transactions expose us to credit risk in the event of default by our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Loss of income due to payment systems leaving the banking industry. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">As technology continues to improve there is an increasing erosion of banks processing payments to Fintech companies, such as Amazon, Walmart and Paypal, to name a few. As banks lose transaction processing volume we may experience a decline in deposits and related fee income. In addition, an increase in the usage of crypto currencies will diminish the need for banks and their related payment systems. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u>Risks Related to our Common Stock </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold; FONT-STYLE: italic">The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell our common stock at times or at prices you find attractive. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Although our common stock is listed on the NASDAQ Global Select Market, our stock price constantly changes, and we expect our stock price to continue to fluctuate in the future. Our stock price is impacted by a variety of factors, some of which are beyond our control. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">These factors include: </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">variations in our operating results or the quality of our assets; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">operating results that vary from the expectations of management, securities analysts and investors; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">increases in loan losses, <font style="WHITE-SPACE: nowrap">non-performing</font> loans and other real estate owned; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za5d1661217db41ee89b7f846b4b92c4e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">changes in the U.S. corporate tax rates; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z1c97137344d64ff7950ad626b324249a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">changes in expectations as to our future financial performance; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z984cc548e6994ea9a5f116e19a20e630" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">announcements of new products, strategic developments, new technology, acquisitions and other material events by us or our competitors; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z991df930d00f4401a83c74d40a942f37" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">ability to fund Horizon&#8217;s assets through core deposits and/or wholesale funding; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zec47e2e998c44e3cbc37d1b98e13082d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the operating and securities price performance of other companies that investors believe are comparable to us; </p>
</td>
</tr>
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<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zce3d2c2f728842ff878d1584756c8f8d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">our inclusion on the Russell 3000 or other indices; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z821891e71a6142afa285f6ee2e9415ed" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">actual or anticipated sales of our equity or equity-related securities; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4517f036fc714c29a3c665fde9dd9f2f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">our past and future dividend practice; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze0c195a8b90b4682888adcaf173a96ef" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">our creditworthiness; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9f69089d6dd74929863ecda2dd2d356f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">interest rates; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zde3eaab777d44b3ba606e6815efe6fc5" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">the credit, mortgage and housing markets, and the markets for securities relating to mortgages or housing; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z92ad8593d8684f44bdd26fd70c4e6316" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">developments with respect to financial institutions generally; and </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z94eba3bd6ebb42b389a5501ebbcd0d00" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left"><b>&#8226;</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">economic, financial, geopolitical, regulatory, congressional or judicial events that affect us or the financial markets. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In addition the stock market in general has experienced price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies and particularly those in the financial services and banking sector, including for reasons unrelated to their operating performance. These broad market fluctuations may adversely affect our stock price, notwithstanding our operating results. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Because our stock is moderately traded, it may be more difficult for you to sell your shares or buy additional shares when you desire to do so and the price may be volatile. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Although our common stock has been listed on the NASDAQ stock market since December 2001, our common stock is moderately traded. The prices of moderately traded stocks, such as ours, can be more volatile than stocks traded in a large, active public market and can be more easily impacted by sales or purchases of large blocks of stock. Moderately traded stocks are also less liquid, and because of the low volume of trades, you may be unable to sell your shares when you desire to do so. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">32 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Provisions in our articles of incorporation, our <font style="WHITE-SPACE: nowrap">by-laws,</font> and Indiana law may delay or prevent an acquisition of us by a third party. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Our articles of incorporation and <font style="WHITE-SPACE: nowrap">by-laws</font> and Indiana law contain provisions that have certain anti-takeover effects. While the purpose of these provisions is to strengthen the negotiating position of the board of directors in the event of a hostile takeover attempt, the overall effects of these provisions may be to render more difficult or discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a larger block of our shares, and the removal of incumbent directors and key management. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our articles of incorporation provide for a staggered board, which means that only <font style="WHITE-SPACE: nowrap">one-third</font> of our board can be replaced by shareholders at any annual meeting. Our articles also provide that our directors may only be removed without cause by shareholders owning 70% or more of our outstanding common stock. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our articles also preempt Indiana law with respect to business combinations with a person who acquires 10% or more of our common stock and provide that such transactions are subject to independent and super-majority shareholder approval requirements unless certain pricing and board <font style="WHITE-SPACE: nowrap">pre-approval</font> requirements are satisfied. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our <font style="WHITE-SPACE: nowrap">by-laws</font> do not permit cumulative voting of shareholders in the election of directors, allowing the holders of a majority of our outstanding shares to control the election of all our directors, and our directors are elected by plurality (not majority) voting. Our <font style="WHITE-SPACE: nowrap">by-laws</font> also establish detailed procedures that shareholders must follow if they desire to nominate directors for election or otherwise present issues for consideration at a shareholders&#8217; meeting. We also have a maximum age for new directors and a mandatory retirement age for directors. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">These and other provisions of our governing documents and Indiana law are intended to provide the board of directors with the negotiating leverage to achieve a more favorable outcome for our shareholders in the event of an offer for the Company. However, there is no assurance that these same anti-takeover provisions could not have the effect of delaying, deferring or preventing a transaction or a change in control that might be in the best interest of our shareholders. </p>

<p style="FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z490f9aabe276471b95df4c97fb26134e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><b><a id="tx695048_5" name="tx695048_5"></a><u>ITEM</u><u>&#160;</u><u>1B.&#160;UNRESOLVED</u></b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: left"><u>STAFF COMMENTS</u> </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Not applicable. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">33 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold"><u><a id="tx695048_6" name="tx695048_6"></a>ITEM&#160;2. PROPERTIES </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The main office and full service branch of Horizon and the Bank is located at 515 Franklin Street, Michigan City, Indiana. The building located across the street from the main office of Horizon and the Bank, at 502 Franklin Street, houses the credit administration, operations, facilities and purchasing, and information technology departments of the Bank. In addition to these principal facilities, the Bank has 62 sales offices located at: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z84782ec3241f41f785e32cfaf1ae2c0c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 11%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 30%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 28%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 28%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">113 West First Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Wanatah</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">3631 Franklin Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan City</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1500 West Lincolnway</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">La Porte</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">423 South Roosevelt Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Chesterton</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">4208 North Calumet Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Valparaiso</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">2650 Willowcreek Road</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Portage</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">8590 Broadway</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Merrillville</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1909 East Bristol Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Elkhart</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">902 East Lincolnway</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Valparaiso</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">10429 Calumet Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Munster</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">17400 State Road 23</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">South Bend</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">455 Morthland Drive</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Valparaiso</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">302 North Alabama Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indianapolis</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1216 West Carmel Drive</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Carmel</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1321 119<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">th</sup> Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Whiting</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1349 Calumet Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Hammond</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1300 North Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Crown Point</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">420 North Morton Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Franklin</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">151 Marlin Drive</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Greenwood</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">507 Three Notch Lane</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Bargersville</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">942 South US 31</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Greenwood</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">105 North Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Avilla</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">116 West Mitchell Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Kendallville</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">212 West 7<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">th</sup> Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Auburn</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1212 South Randolph Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Garrett</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">114 South Detroit Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Lagrange</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top"><font style="WHITE-SPACE: nowrap">123-129</font> South Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Columbia City</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">303 Defiance Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Howe</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">625 South Wayne Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Waterloo</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">210 West Lake Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Topeka</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">22730 Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Woodburn</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">102 East Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Mentone</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">433 Anchorage Road</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Warsaw</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">2102 East Center Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Warsaw</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">200 Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Leesburg</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">411 South Huntington Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Syracuse</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">710 Indiana Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">La Porte</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">6959 West Johnson Road</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">La Porte</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">301 Boyd Boulevard</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">La Porte</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1 Parkman Drive</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Westville</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">2 South Perry Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Attica</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">307 East Jackson Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Attica</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">301 South Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Lafayette</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1980 Northwestern Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">West Lafayette</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">3602 Cougill Lane</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Lafayette</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">2134 Greenbush Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Lafayette</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">34 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z0bad42f8501b4b40914ef5b89d4a5ca8" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 11%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 30%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 28%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 28%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">44 S 8<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">th</sup> Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Noblesville</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">811 Ship Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">St. Joseph</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">2608 Niles Road</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">St. Joseph</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1041 East Napier Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Benton Harbor</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">3250 West Centre Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Portage</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">250 Pearl Street NW</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Grand Rapids</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">500 West Buffalo Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">New Buffalo</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">6801 US Highway 12</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Three Oaks</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1600 Abbott Road</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">East Lansing</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">2151 West Grand River Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Okemos</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">15534 US 12</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Union</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">500 North Grand Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Schoolcraft</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">1213 West Michigan Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Three Rivers</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">5710 Eastman Avenue</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Midland</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">118 Ashman Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Midland</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">464 North Main Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Frankenmuth</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon owns all of these facilities except for the East Lansing, Michigan office located at 1600 Abbot Road and the Grand Rapids, Michigan office located at 250 Pearl Street NW, which are leased. The Bank also has three loan production offices which are located at: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z563468fbaf5946b68505c5b30a3737e4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 11%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 30%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 28%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 28%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">10020 Auburn Park Drive</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Fort Wayne</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Indiana</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">200 East Big Beaver Road</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Troy</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">77 E 8<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">th</sup> Street</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Holland</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Michigan</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon leases the Fort Wayne, Indiana office located at 10020 Auburn Park Drive and the Troy, Michigan office located at 200 East Big Beaver Road. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_7" name="tx695048_7"></a>ITEM&#160;3. LEGAL PROCEEDINGS </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><a id="tx695048_8" name="tx695048_8"></a><u>ITEM</u><u>&#160;</u><u>4. MINE SAFETY DISCLOSURES</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Not applicable. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">35 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold"><u><a id="tx695048_9" name="tx695048_9"></a>SPECIAL ITEM: EXECUTIVE OFFICERS OF REGISTRANT </u></p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z364bc745b1254ba9844e4c59008f2a4f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 23%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td style="WIDTH: 69%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Craig M. Dwight</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">62</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Chairman of Horizon since July 2014; Chairman and Chief Executive Officer of the Bank since January 2003; Chief Executive Officer of Horizon and the Bank since July 2001; President of the Bank from 1998 to January 2003.</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">James D. Neff</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">59</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">President of Horizon and the Bank since January 2018; Executive Vice President &#8211; Consumer and Mortgage Banking of the Bank from 2016 to January 2018; Executive Vice President &#8211; Mortgage Banking of the Bank from January 2004 to 2016; Senior Vice President of the Bank from October 1999 to January 2004; Corporate Secretary of Horizon from 2007 to 2017.</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Mark E. Secor</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">52</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Executive Vice President of Horizon since January 2014<b>; </b>Chief Financial Officer and Executive Vice President of Horizon and the Bank since January 2009; Vice President, Chief Investment and Asset Liability Manager from June 2007 to January 2009; Chief Financial Officer of St. Joseph Capital Corp., Mishawaka, Indiana from 2004 to 2007.</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Kathie A. DeRuiter</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">57</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Executive Vice President of Horizon and Senior Bank Operations Officer since January 2014; Senior Vice President, Senior Bank Operations Officer from January 2003 to January 2014; Vice President, Senior Bank Operations Officer from January 2000 to January 2003.</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Dennis J. Kuhn</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">59</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Executive Vice President and Chief Commercial Banking Officer since October 2017; Regional Market President for Michigan and Northeast Indiana from February 2014 to October 2017; Chair of the Regional Loan Committee; Market President for Kalamazoo, Michigan from May 2010 to October 2017.</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">All officers are appointed annually by the Board of Directors of Horizon and the Bank, as applicable. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><a id="tx695048_10" name="tx695048_10"></a>PART II </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold"><u><a id="tx695048_11" name="tx695048_11"></a>ITEM&#160;5. MARKET FOR REGISTRANT&#8217;S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold">Common Stock and Related Stockholder Matters </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon common stock is traded on the NASDAQ Global Select Market under the symbol &#8220;HBNC.&#8221; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The approximate number of holders of record of Horizon&#8217;s outstanding common stock as of February&#160;27, 2019 was 1,567. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Equity Compensation Plan Information table appears under the caption &#8220;Equity Compensation Plan Information&#8221; in Item 12 below and is incorporated herein by reference. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Repurchases of Securities </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">There were no purchases by the Company of its common stock during the fourth quarter of 2018. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">36 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Performance Graph </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The SEC requires Horizon to include a line graph comparing Horizon&#8217;s cumulative five-year total shareholder returns on the common shares with market and industry returns over the past five years. S&amp;P Global Market Intelligence prepared the following graph. The return represented in the graph assumes the investment of $100 on December&#160;31, 2013, and further assumes reinvestment of all dividends. The Company&#8217;s common stock began trading on the NASDAQ Global Market on February&#160;1, 2007, and on the NASDAQ Global Select Market on January&#160;2, 2014. Prior to that date, the common stock was traded on the NASDAQ Capital Market. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><img alt="LOGO" src="g695048dsp37.jpg"> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za5c21926ec714e479ce14f7cdc270c1b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 46%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"><b>Index</b></td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Horizon Bancorp, Inc.</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">105.46</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">114.82</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176.43</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178.30</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154.84</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Russell 2000</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">104.89</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.26</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">121.63</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">139.44</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">124.09</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">SNL Bank <font style="WHITE-SPACE: nowrap">$1B-$5B</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">104.56</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">117.04</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">168.38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">179.51</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">157.27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">SNL Micro Cap Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">113.41</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">126.11</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">155.04</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">189.67</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">179.97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Source: S&amp;P Global Market Intelligence </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">37 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following chart compares the change in market price of Horizon&#8217;s common stock since December&#160;31, 2013 to that of publicly traded banks in Indiana and Michigan with assets greater than $500&#160;million, excluding the reinvestment of dividends. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><img alt="LOGO" src="g695048dsp038.jpg"> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z49983b6657884d4280d0df05fcb258f8" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 46%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"><b>Index</b></td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Horizon Bancorp, Inc.</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">103.20</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">110.38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">165.81</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">164.63</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">140.17</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Indiana Banks <sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">107.28</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">120.35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">166.55</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">198.53</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">158.44</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Michigan Banks <sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.00</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">106.72</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">119.68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">142.56</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">159.50</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">84.42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zdd0917cf2c7a40d497d68d37f9e0814b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">excludes merger targets </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Source: S&amp;P Global Market Intelligence </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">38 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold"><a id="tx695048_12" name="tx695048_12"></a><u>ITEM</u><u>&#160;</u><u>6. SELECTED FINANCIAL DATA</u> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb8ce24dbf6ef4ca39be96ee9ea22111e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 50%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Earnings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">134,569</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">112,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">85,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">74,734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">62,983</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Provision for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,842</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,162</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,058</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,413</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,455</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,402</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26,277</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">102,516</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,813</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">86,892</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,193</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">61,946</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income tax expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,443</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,232</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,155</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,549</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,101</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Preferred stock dividend</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(125</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(133</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income available to common shareholders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,424</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,968</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash dividends declared</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">15,418</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,720</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,382</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,216</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,744</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Per Share Data</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Basic earnings per share<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1.39</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.96</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.79</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.87</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.88</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted earnings per share<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.79</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.84</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.85</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash dividends declared per common share<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.26</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.23</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Book value per common share<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.82</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.93</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.25</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.47</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.77</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Weighted-average shares outstanding:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Basic<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,347,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,553,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">29,981,592</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,648,166</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19,393,492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Diluted<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,495,231</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,760,439</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,123,615</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,295,968</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,252,167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Period End Totals</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans, net of deferred loan fees and unearned income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,013,332</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,831,995</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,135,986</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,749,131</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,378,554</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,501</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,246,688</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,964,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,141,156</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,652,401</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,076,922</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,139,376</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,881,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,471,210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,880,153</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,482,319</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">588,221</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">601,810</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">304,945</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">482,144</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">383,840</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Ratios</p>
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<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loan to deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">96.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">98.30</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">86.43</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">93.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">93.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loan to total funding</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">80.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">81.31</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">76.94</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">73.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Return on average assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.31</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.81</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.93</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average stockholders&#8217; equity to average total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.65</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.15</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.22</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.30</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Return on average stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.22</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.74</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.92</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Dividend payout ratio (dividends divided by basic earnings per share)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">29.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34.78</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">29.85</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">25.72</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Price to book value ratio</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">123.09</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">155.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">182.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">131.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">132.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Price to earnings ratio</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.35x</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19.45x</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23.56x</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14.78x</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13.75x</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za29f5fc9b20d4347ba23400eb5225f7a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">(1)</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Adjusted for 3:2 stock splits on June&#160;15, 2018 and November&#160;14, 2016. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">39 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold"><u><a id="tx695048_13" name="tx695048_13"></a>ITEM</u><u>&#160;</u><u>7. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold">Overview </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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, Central and the Great Lakes Bay regions of Michigan through its bank subsidiary. Horizon operates as a single segment, which is commercial banking. Horizon&#8217;s common stock is traded on the NASDAQ Global Select Market under the symbol HBNC. The Bank was chartered as a national banking association in 1873, until its conversion to an Indiana commercial bank effective June&#160;23, 2017, and has operated continuously since 1873. 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. All share data included below has been adjusted to reflect Horizon&#8217;s <font style="WHITE-SPACE: nowrap">three-for-two</font> stock split paid on June&#160;15, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">2018 Highlights </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Following are some highlights of Horizon&#8217;s financial performance during 2018: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z82f02d9b6a114bf7a74b354e0d98e83b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Net income for the year ended December&#160;31, 2018 was $53.1&#160;million, or $1.38 diluted earnings per share, compared to $33.1&#160;million, or $0.95 diluted earnings per share for <font style="WHITE-SPACE: nowrap">year-end</font> 2017. This represents the highest annual net income and diluted earnings per share in the Company&#8217;s <font style="WHITE-SPACE: nowrap">145-year</font> history. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z01c798342a8c4722b732f7789c73d72a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Core net income for the year 2018 increased 38.0% to $48.9&#160;million, or $1.27 diluted earnings per share, compared to $35.5&#160;million, or $1.02 diluted earnings per share, for the year of 2017. (See the <font style="WHITE-SPACE: nowrap">&#8220;Non-GAAP</font> Reconciliation of Net Income and Diluted Earnings per Share&#8221; table for the definition of core net income.) </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z57e8292ba11a46e1a863a5f9a6aaa0a1" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Return on average assets was 1.31% for the year ended December&#160;31, 2018 compared to 0.97% for the year ended December&#160;31, 2017. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z1c6f93e442974fc9a93118d459db97f2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Core return on average assets for the year ended December&#160;31, 2018 was 1.21% compared to 1.04% for the year ended December&#160;31, 2017. (See the <font style="WHITE-SPACE: nowrap">&#8220;Non-GAAP</font> Reconciliation of Return on Average Assets and Return on Average Common Equity&#8221; table for the definition of core return on average assets.) </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z85297019b3e64fb79148bcd6e254f06f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon surpassed $4.2&#160;billion in total assets during 2018. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd82c3146f7d14aa8b558793af8ac91b4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Total loans increased by a rate of 6.2%, or $176.1&#160;million, during 2018. Total loans, excluding loans held for sale and mortgage warehouse loans, increased by a rate of 7.2%, or $198.5&#160;million, during 2018. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z58608ccf176d483b9981cf4e97680e64" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Commercial loans increased by a rate of 3.1%, or $51.7&#160;million, during 2018. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z00b48478281741148b3d60990425592d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Residential mortgage loans increased by a rate of 9.6%, or $58.4&#160;million, during 2018. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z1a197fdbd40b4bfb92e0a404da3555b6" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 5%">&#160;</td>
<td style="WIDTH: 2%" valign="top" align="left">&#8226;</td>
<td style="WIDTH: 1%" valign="top">&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Consumer loans increased by a rate of 19.2%, or $88.5&#160;million, during 2018. </p>
</td>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Total deposits increased by a rate of 9.0%, or $258.4&#160;million, during 2018. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Net interest income increased $22.5&#160;million, or 20.0%, to $134.6&#160;million for the year ended December&#160;31, 2018 compared to $112.1&#160;million for the year ended December&#160;31, 2017. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Net interest margin was 3.71% for the year ended December&#160;31, 2018 compared to 3.75% for the year ended December&#160;31, 2017. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon&#8217;s tangible book value per share increased to $9.43 at December&#160;31, 2018, compared to $8.48 at December&#160;31, 2017. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">On October&#160;29, 2018, Horizon announced the pending acquisition of Salin Bancshares, Inc. (&#8220;Salin&#8221;) and its wholly-owned subsidiary, Salin Bank and Trust Company (&#8220;Salin Bank&#8221;), headquartered in Indianapolis, Indiana which is anticipated to close during the first quarter of 2019. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Pending Acquisition </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon entered into an Agreement and Plan of Merger on October&#160;29, 2018, as amended on December&#160;18, 2018 (the &#8220;Merger Agreement&#8221;) providing for Horizon&#8217;s acquisition of Salin Bancshares, Inc. (&#8220;Salin&#8221;). Pursuant to the Merger Agreement, Salin will merge with and into Horizon, with Horizon surviving the merger (the &#8220;Merger&#8221;), and Salin Bank and Trust Company, a wholly-owned subsidiary of Salin, will merge with and into Horizon Bank, with Horizon Bank as the surviving bank. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The boards of directors of each Horizon and Salin have approved the merger and the Merger Agreement. Subject to the approval of the Merger by Salin shareholders, regulatory approvals and other closing conditions, the parties anticipate completing the Merger during the first quarter of 2019. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In connection with the Merger, shareholders of Salin will receive fixed consideration of 23,907.5 shares of Horizon common stock and $84,417.17 in cash for each share of Salin common stock. The shares of Horizon common stock will be issued to Salin shareholders in a private placement complying with the federal and state securities laws, and the shares of Horizon common stock will be registered for resale by the Salin shareholders by a Registration Statement on Form <font style="WHITE-SPACE: nowrap">S-3.</font> Based on the closing price of Horizon&#8217;s common stock on October&#160;26, 2018 of $16.95 per share, the transaction value for the shares of common stock is approximately $135.3&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Merger Agreement also provides for certain termination rights for both Horizon and Salin, and further provides that upon termination of the Merger Agreement under certain circumstances, Salin will be obligated to pay Horizon a termination fee. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As of December&#160;31, 2018, Salin had total assets of approximately $929.4&#160;million, total deposits of approximately $749.5&#160;million and total loans of approximately $593.7&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Critical Accounting Policies </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K</font> for 2018 contain a summary of the Company&#8217;s significant accounting policies. Certain of these policies are important to the portrayal of the Company&#8217;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 the allowance for loan losses, goodwill and intangible assets, mortgage servicing rights, derivative instruments and valuation measurements as critical accounting policies. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Allowance for Loan Losses </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">An allowance for loan losses is maintained to absorb probable incurred loan losses inherent in the loan portfolio. The determination of the allowance for loan losses is a critical accounting policy that involves management&#8217;s ongoing quarterly assessments of the probable incurred losses inherent in the loan portfolio. The identification of loans that have probable incurred losses is subjective; therefore, a general reserve is maintained to cover all probable losses within the entire loan portfolio. Horizon utilizes a loan grading system that helps identify, monitor and address asset quality problems in an adequate and timely manner. Each quarter, various factors affecting the quality of the loan portfolio are reviewed. Large credits are reviewed on an individual basis for loss potential. Other loans are reviewed as a group based upon previous trends of loss experience. Horizon also reviews the current and anticipated economic conditions of its lending market as well as transaction risk to determine the effect they may have on the loss experience of the loan portfolio. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (FASB ASC <font style="WHITE-SPACE: nowrap">310-30)</font> and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Accordingly, allowances for credit losses related to these loans are not carried over and recorded at the acquisition dates. Loans acquired through business combinations that do not meet the specific criteria of FASB ASC <font style="WHITE-SPACE: nowrap">310-30,</font> but for which a discount is attributable, at least in part to the credit quality, are also </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">accounted for under this guidance. As a result, related discounts are recognized subsequently through accretion based on the expected cash flows of the acquired loans. For purposes of applying FASB ASC <font style="WHITE-SPACE: nowrap">310-30,</font> loans acquired in business combinations are aggregated into pools of loans with common risk characteristics. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Goodwill and Intangible Assets </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 <font style="WHITE-SPACE: nowrap">350-10</font> establishes standards for the amortization of acquired intangible assets and impairment assessment of goodwill. At December&#160;31, 2018, Horizon had core deposit intangibles of $10.4&#160;million subject to amortization and $119.9&#160;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&#8217;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 <font style="WHITE-SPACE: nowrap">350-10</font> requires an annual evaluation of goodwill for impairment. The evaluation of goodwill for impairment requires the use of estimates and assumptions. Market price at the close of business on December&#160;31, 2018 was $15.78 per share compared to a tangible book value of $9.43 per common share. Horizon&#8217;s return on average assets was 131 basis points for the year ending December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Mortgage Servicing Rights </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 <font style="WHITE-SPACE: nowrap">non-interest</font> 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 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&#8217;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&#8217;s financial condition and results of operations either positively or negatively. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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&#8217;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. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Derivative Instruments </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">As part of the Company&#8217;s asset/liability management program, Horizon utilizes, from <font style="WHITE-SPACE: nowrap">time-to-time,</font> interest rate floors, caps or swaps to reduce the Company&#8217;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 (&#8220;OCI&#8221;) 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon&#8217;s accounting policies related to derivatives reflect the guidance in FASB ASC <font style="WHITE-SPACE: nowrap">815-10.</font> 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 <font style="WHITE-SPACE: nowrap">non-interest</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Valuation Measurements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 assumptions could produce significantly different results, which could affect Horizon&#8217;s results of operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Analysis of Financial Condition </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon&#8217;s total assets were $4.2&#160;billion as of December&#160;31, 2018, an increase of $282.4&#160;million from December&#160;31, 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Investment Securities </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Investment securities carrying values totaled $810.5&#160;million at December&#160;31, 2018, and consisted of Treasury and federal agency securities of $16.6&#160;million (2.0%); state and municipal securities of $400.6&#160;million (49.4%); federal agency mortgage-backed pools of $192.4&#160;million and federal agency collateralized mortgage obligations of $190.1&#160;million (47.3%); and corporate securities of $10.7&#160;million (1.3%). </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As indicated above, 47.3% of the investment portfolio consists of mortgage-backed securities and collateralized mortgage obligations. These instruments are secured by residential mortgages of varying maturities. Principal and interest payments are received monthly as the underlying mortgages are repaid. These payments also include prepayments of mortgage balances as borrowers either sell their homes or refinance their mortgages. Therefore, mortgage-backed securities and collateralized mortgage obligations have maturities that are stated in terms of average life. The average life is the average </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">amount of time that each dollar of principal is expected to be outstanding. As of December&#160;31, 2018, the mortgage-backed securities and collateralized mortgage obligations in the investment portfolio had an average duration of 3.86 years. Securities that have interest rates above current market rates are purchased at a premium. Management monitors these investments periodically for other than temporary impairment by obtaining and reviewing the underlying collateral details and has concluded at December&#160;31, 2018, any unrealized loss is temporary and that the Company has the intent and ability to hold these investments to maturity. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><font style="WHITE-SPACE: nowrap">Available-for-sale</font> municipal securities are priced by a third party using a pricing grid which estimates prices based on recent sales of similar securities. All municipal securities are investment grade or local <font style="WHITE-SPACE: nowrap">non-rated</font> issues and management does not believe there is other than temporary deterioration in market value. A credit review is performed annually on the municipal securities portfolio. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018 and 2017, 74.1% and 71.8%, respectively, of investment securities were classified as available for sale. Securities classified as available for sale are carried at their fair value, with both unrealized gains and losses recorded, net of tax, directly to stockholders&#8217; equity. Net depreciation on these securities totaled $8.6&#160;million, which resulted in a balance of $6.8&#160;million, net of tax, included in stockholders&#8217; equity at December&#160;31, 2018. This compared to $3.1&#160;million, net of tax, included in stockholders&#8217; equity at December&#160;31, 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Fair value is defined 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. A fair value hierarchy is also established which requires an entity to maximize the use of observable and minimize the use of unobservable inputs. There are three levels of inputs that may be used to measure fair value: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="TEXT-ALIGN: right">
<table id="z921e41debe8e4d54ae2bc68b1c3d6454" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 95%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr>
<td style="WIDTH: 5%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td style="WIDTH: 93%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Level&#160;1</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Quoted prices in active markets for identical assets or liabilities.</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Level&#160;2</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Observable inputs other than Level&#160;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.</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Level&#160;3</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.</td>
</tr>
</table>
</div>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">When quoted market prices are available in an active market, securities are classified within Level&#160;1 of the valuation hierarchy. There are no Level&#160;1 securities. 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&#160;2 securities include U.S. Treasury and Federal agency securities, State and municipal securities, Federal agency collateralized mortgage obligations, Federal agency mortgage-backed pools and corporate notes. For Level&#160;2 securities, Horizon uses a third party service to determine fair value. In performing the valuations, the pricing service relies on models that consider security-specific details as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, interest rate spreads on relevant benchmark securities and certain prepayment assumptions. To verify the reasonableness of the fair value determination by the service, Horizon has a portion of the Level&#160;2 securities priced by an independent securities broker-dealer. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Unrealized gains and losses on <font style="WHITE-SPACE: nowrap">available-for-sale</font> securities, deemed temporary, are recorded, net of income tax, in a separate component of other comprehensive income on the balance sheet. No unrealized losses were deemed to be &#8220;other-than-temporary.&#8221; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As a member of the Federal Home Loan Bank system, Horizon is required to maintain an investment in the common stock of the Federal Home Loan Bank. The investment in common stock is based on a predetermined formula. At December&#160;31, 2018 and 2017, Horizon had investments in the common stock of the Federal Home Loan Bank totaling $18.1&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018, Horizon did not maintain a trading account. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">44 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">For more information about securities, see Note&#160;4 &#8212; Securities to the Consolidated Financial Statements at Item 8. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Total loans, net of deferred fees/costs, the principal earning asset of the Bank, were $3.013&#160;billion at December&#160;31, 2018. The current level of total loans increased 6.3% from the December&#160;31, 2017, level of $2.835&#160;billion. The table below provides comparative detail on the loan categories. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb5a4cfdfa4344463a2f0bc5a11e3b355" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 62%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>Dollar</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>Percent</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Change</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Change</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Working capital and equipment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>804,083</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">720,477</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">83,606</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate, including agriculture</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>834,037</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">880,861</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(46,824</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-5.3</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Tax exempt</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>48,975</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,651</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>34,495</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,272</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,223</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,721,590</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,669,934</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">51,656</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.1</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate <font style="WHITE-SPACE: nowrap">1-4</font> family</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>659,754</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">602,196</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">57,558</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>8,387</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,543</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">844</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>668,141</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">609,739</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">58,402</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Auto</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>327,413</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">244,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">83,410</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Recreation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>13,975</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,728</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,247</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60.1</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate/home improvement</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>39,587</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>163,209</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">165,240</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,031</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-1.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Unsecured</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>4,043</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">564</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,254</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,497</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,243</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-49.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>549,481</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">460,999</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">88,482</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>74,120</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(20,388</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-21.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>3,013,332</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,835,180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,152</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.3</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(17,820</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,394</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,426</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>&#160;2,995,512</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,818,786</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;176,726</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.3</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The acceptance and management of credit risk is an integral part of the Bank&#8217;s business as a financial intermediary. The Bank has established underwriting standards including a policy that monitors the lending function through strict administrative and reporting requirements as well as an internal loan review of consumer and small business loans. The Bank also uses an independent third-party loan review function that regularly reviews asset quality. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">45 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Changes in the mix of the loan portfolio averages are shown in the following table. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zee0e9cb5ab5b4e84afb09310d468f6a5" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,676,013</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,227,698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">918,844</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">641,161</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">567,581</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">497,337</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">82,240</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89,212</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">159,588</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">511,327</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">450,635</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">372,811</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total average loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,910,741</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,335,126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,948,580</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Commercial Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Commercial loans totaled $1.722&#160;billion, or 57.1% of total loans as of December&#160;31, 2018, compared to $1.670&#160;billion, or 58.9% as of December&#160;31, 2017. The increase during 2018 was due to organic growth of $51.7&#160;million net of principal reductions from payments. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Commercial loans consisted of the following types of loans at December 31: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd245114922fd450987c1a083fe21a540" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 54%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Percent&#160;of</b><br>
<b>Portfolio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Percent&#160;of</b><br>
<b>Portfolio</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">SBA guaranteed</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">322</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">68,849</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">356</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">69,345</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Municipal government</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,600</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,838</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Lines of credit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,239</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">306,935</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,294</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">304,855</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18.3</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate and equipment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,022</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,334,206</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">77.5</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,276</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,283,896</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">76.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,585</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,721,590</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,929</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,669,934</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Fixed rate term loans with a book value of $209.2&#160;million and a fair value of $209.2&#160;million have been swapped to a variable rate using derivative instruments. The loans are carried at fair value in the financial statements and the related swap is carried at fair value and is included with other liabilities in the balance sheet. The recognition of the loan and swap fair values are recorded in the income statement and for 2018 equally offset each other. Fair values are determined by the counterparty using a proprietary model that uses live market inputs to value interest rate swaps. The model is subject to daily market tests as current and future positions are priced and valued. These are Level&#160;3 inputs under the fair value hierarchy as described above. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018, the commercial loan portfolio held $127.9&#160;million of adjustable rate loans that had interest rate floors in the terms of the note. Of the commercial loans with interest rate floors, loans totaling $80.6&#160;million were at their floor at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Residential Real Estate Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Residential real estate loans totaled $668.1&#160;million, or 22.2% of total loans as of December&#160;31, 2018, compared to $609.7&#160;million, or 21.5% of total loans as of December&#160;31, 2017. This category consists of home mortgages that generally require a loan to value of no more than 80%. Some special guaranteed or insured real estate loan programs do permit a higher loan to collateral value ratio. The increase during 2018 was due to organic growth of $58.4&#160;million net of principal reductions from payments. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In addition to the customary real estate loans described above, the Bank also had outstanding on December&#160;31, 2018, $163.2&#160;million in home equity lines of credit compared to $165.2&#160;million at December&#160;31, 2017. Credit lines normally limit the loan to collateral value to no more than 89%. Home equity credit lines are primarily not combined with a first mortgage and are therefore evaluated in the allowance for loan losses as a separate pool. These loans are classified as consumer loans in the Loans table above and in Note 5 of the Consolidated Financial Statements at Item 8. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">46 </p>
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<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Residential real estate lending is a highly competitive business. As of December&#160;31, 2018, the real estate loan portfolio reflected a wide range of interest rates and repayment patterns, but could generally be categorized as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd77c9dada44e48ffbe142438f3bbc385" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 60%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Percent&#160;of</b><br>
<b>Portfolio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Yield</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Percent&#160;of</b><br>
<b>Portfolio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Yield</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fixed rate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Monthly payment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">116,102</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17.4</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.38</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">140,115</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Biweekly payment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Adjustable rate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Monthly payment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">552,036</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">82.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.90</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">469,618</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">77.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.76</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Biweekly payment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Subtotal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">668,141</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.99</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">609,739</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.90</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans held for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,094</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total real estate loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;669,179</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;612,833</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The increase in fixed and adjustable rate residential mortgage loans during 2018 was primarily due to the real estate loans acquired in the Lafayette and Wolverine acquisitions as well as organic growth. In addition to the real estate loan portfolio, the Bank originates and sells real estate loans and retains the servicing rights. During 2018 and 2017, approximately $188.8&#160;million and $218.5&#160;million, respectively, of residential mortgages were sold into the secondary market. Loans serviced for others are not included in the consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1.299&#160;billion and $1.310&#160;billion at December&#160;31, 2018 and 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The aggregate fair value of capitalized mortgage servicing rights at December&#160;31, 2018, totaled approximately $13.9&#160;million compared to the carrying value of $12.3&#160;million. 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. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd5fbaffafdee45dc861b592efb468e57" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, January&#160;1</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;12,189</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11,681</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Servicing rights capitalized</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,883</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,109</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Amortization of servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,196</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,601</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,016</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,876</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,189</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,681</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Impairment allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, January&#160;1</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(587</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(507</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(397</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Additions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(78</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(85</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(236</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Reductions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(527</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(587</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(507</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage servicing rights, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11,174</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Mortgage Warehouse Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon&#8217;s mortgage warehousing 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&#8217;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 </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">47 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018, the mortgage warehouse loan balance was $74.1&#160;million compared to $94.5&#160;million as of December&#160;31, 2017. The decrease in mortgage warehouse loans reflected an increase in long-term interest rates in 2018 and the lower refinance volume. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Consumer Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Consumer loans totaled $549.5&#160;million, or 18.2% of total loans as of December&#160;31, 2018, compared to $461.0&#160;million, or 16.3% as of December&#160;31, 2017. The increase during 2018 was due to organic growth of $88.5&#160;million net of principal reductions from payments. This organic growth is a result of hiring an experienced consumer loan manager in late 2016 and placing additional focus on consumer lending. Also, recent merger activity has provided entry into new market areas. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Allowance and Provision for Loan Losses/Critical Accounting Policy </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">At December&#160;31, 2018, the allowance for loan losses was $17.8&#160;million, or 0.59% of total loans outstanding, compared to $16.4&#160;million, or 0.58%, at December&#160;31, 2017. During 2018, the expense for provision for loan losses totaled $2.9&#160;million compared to $2.5&#160;million in 2017. Horizon&#8217;s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, was 0.72% as of December&#160;31, 2018. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.72% as of December&#160;31, 2018 compared to 0.81% as of December&#160;31, 2017. Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 0.98% as of December&#160;31, 2018 compared to 1.23% as of December&#160;31, 2017. (See the <font style="WHITE-SPACE: nowrap">&#8220;Non-GAAP</font> Allowance for Loan and Lease Loss Detail&#8221; table.) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon assesses the adequacy of its Allowance for Loan and Lease Losses (&#8220;ALLL&#8221;) by regularly reviewing the performance of all of its loan portfolios. As a result of its quarterly reviews, a provision for loan losses is determined to bring the total ALLL to a level called for by the analysis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">No assurance can be given that Horizon will not, in any particular period, sustain loan losses that are significant in relation to the amount reserved, or that subsequent evaluations of the loan portfolio, in light of factors then prevailing, including economic conditions and management&#8217;s ongoing quarterly assessments of the portfolio, will not require increases in the allowance for loan losses. Horizon considers the allowance for loan losses to be adequate to cover losses inherent in the loan portfolio as of December&#160;31, 2018. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">48 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic"><font style="WHITE-SPACE: nowrap">Non-performing</font> Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"><font style="WHITE-SPACE: nowrap">Non-performing</font> loans are defined as loans that are greater than 90 days delinquent or have had the accrual of interest discontinued by management. Management continues to work diligently toward returning <font style="WHITE-SPACE: nowrap">non-performing</font> loans to an earning asset basis. <font style="WHITE-SPACE: nowrap">Non-performing</font> loans for the previous three years ending December&#160;31 are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb87aee29f1794724abf116d7565786ff" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-performing</font> loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;15,175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,414</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;10,683</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><font style="WHITE-SPACE: nowrap">Non-performing</font> loans total 85.2%, 100.1% and 72.0% of the allowance for loan losses at December&#160;31, 2018, 2017 and 2016, respectively. <font style="WHITE-SPACE: nowrap">Non-performing</font> loans at December&#160;31, 2018 totaled $15.2&#160;million, a decrease from a balance of $16.4&#160;million as of December&#160;31, 2017 and an increase from the balance of $10.7&#160;million as of December&#160;31, 2016. <font style="WHITE-SPACE: nowrap">Non-performing</font> loans as a percentage of total loans was 0.50% as of December&#160;31, 2018, a decrease from 0.58% as of December&#160;31, 2017 and no change from December&#160;31, 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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, 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. (See Note 8 of the Consolidated Financial Statements at Item 8 for further discussion of impaired loans.) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1 &#8211; 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&#8217;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 <font style="WHITE-SPACE: nowrap">non-accrual</font> status when 90 days or more past due. These loans are often considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Other Real Estate Owned (&#8220;OREO&#8221;) net of any related allowance for OREO losses for the previous three years ending December&#160;31 were as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd1bfb8e2ee5f4580b04c2c9ba9ed5ad5" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 66%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other real estate owned</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,027</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;778</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,190</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">OREO totaled $2.0&#160;million on December&#160;31, 2018, an increase of $1.2&#160;million from December&#160;31, 2017 and a decrease of $1.2&#160;million from December&#160;31, 2016. On December&#160;31, 2018, OREO was comprised of nine properties. Of these properties, seven totaling $2.0&#160;million were commercial real estate and two totaling $60,000 were residential real estate. The majority of the increase in OREO during 2018 was because several bank owned properties acquired through acquisitions and listed for sale were <font style="WHITE-SPACE: nowrap">re-classified</font> to other real estate owned and recorded at fair value during the second quarter of 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">No mortgage warehouse loans were <font style="WHITE-SPACE: nowrap">non-performing</font> or OREO as of December&#160;31, 2018, 2017 or 2016. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">49 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Deferred Tax </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon had a net deferred tax asset totaling $4.4&#160;million and $4.7&#160;million as of December&#160;31, 2018 and December&#160;31, 2017, respectively. The following table shows the major components of deferred tax: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb3df3aff9eae4d40927c6594c8b0fc46" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 8%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 8%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,831</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,396</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net operating loss and tax credits (from acquisitions)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,658</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Director and employee benefits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,392</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,276</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Unrealized loss on AFS securities and fair value hedge</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,147</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Accrued pension</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Fair value adjustment on acquisitions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,087</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">670</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,083</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,897</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,499</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Depreciation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,850</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,680</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(137</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(210</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal Home Loan Bank stock dividends</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(330</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(339</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Difference in basis of intangible assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,919</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,831</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Fair value adjustment on acquisitions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(62</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(119</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(125</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,417</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,185</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Valuation allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,038</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,613</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Net deferred tax asset</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,442</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,701</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Deposits </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The primary source of funds for the Bank comes from the acceptance of demand and time deposits. However, at times the Bank will use its ability to borrow funds from the Federal Home Loan Bank and other sources when it can do so at interest rates and terms that are more favorable than those required for deposited funds or loan demand is greater than the ability to grow deposits. Total deposits were $3.139&#160;billion at December&#160;31, 2018, compared to $2.881&#160;billion at December&#160;31, 2017. Average deposits and rates by category for the three years ended December&#160;31 are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z56fdfe201ffc4bc59efed25f54e739e6" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 55%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="10" align="center"><b>Average Balance Outstanding for the</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="10" align="center"><b>Average&#160;Rate&#160;Paid&#160;for&#160;the</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years&#160;Ended&#160;December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing demand deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">624,576</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">533,852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">417,900</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest bearing demand deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">827,255</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">831,292</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">732,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.30</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.14</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.12</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Savings deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">416,404</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">388,953</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">303,229</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.08</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.06</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Money market</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">403,475</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">310,310</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">254,453</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.72</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">771,853</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">515,341</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">462,527</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.55</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.06</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,043,563</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,579,748</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,170,226</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">50 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The $463.8&#160;million increase in average deposits during 2018 was the result of an increase in the depositor base due to the Bargersville branch acquisition and the Lafayette and Wolverine acquisitions. The transactional accounts average balances, as the lower cost funding sources, increased $90.7&#160;million and the average balances for higher cost time deposits increased $256.5&#160;million. Horizon continually enhances its interest-bearing consumer and commercial demand deposit products based on local market conditions and its need for funding to support various types of assets. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Certificates of deposit of $250,000 or more, which are considered to be rate sensitive and are not considered a part of core deposits, mature as follows as of December&#160;31, 2018: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z63e06173a742454694c5586b89ded607" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 87%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Due in three months or less</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">75,775</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Due after three months through six months</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">82,088</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Due after six months through one year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">114,560</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Due after one year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">99,401</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">371,824</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Interest expense on time certificates of $100,000 or more was approximately $6.8&#160;million, $3.2&#160;million, and $2.1&#160;million for 2018, 2017 and 2016. Interest expense on time certificates of $250,000 or more was approximately $4.6&#160;million, $1.2&#160;million and $753,000 for 2018, 2017 and 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic"><font style="WHITE-SPACE: nowrap">Off-Balance</font> Sheet Arrangements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">As of December&#160;31, 2018, Horizon did not have any <font style="WHITE-SPACE: nowrap">off-balance</font> sheet arrangements that have or are reasonably likely to have a current or future effect on the Company&#8217;s financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term <font style="WHITE-SPACE: nowrap">&#8220;off-balance</font> sheet arrangement&#8221; generally means any transaction, agreement, or other contractual arrangement to which an entity unconsolidated with the Company is a party and under which the Company has (i)&#160;any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii)&#160;a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Contractual Obligations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following tables summarize Horizon&#8217;s contractual obligations and other commitments to make payments as of December&#160;31, 2018: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z31275da1751a4a08a70e143d70179096" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 62%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Within</b><br>
<b>One Year</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>One to</b><br>
<b>Three<br>
 Years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Three to</b><br>
<b>Five<br>
 Years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>After<br>
 Five</b><br>
<b>Years</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">812,911</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">525,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">237,884</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,474</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowings<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">550,384</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">485,557</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,514</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,268</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,045</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Subordinated debentures<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z99f0eda3f99a490986eca12a9580a4bf" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Includes debt obligations to the Federal Home Loan Bank and term repurchase agreements with maturities beyond one year borrowed by Horizon&#8217;s banking subsidiary. See Note 13 in Horizon&#8217;s Consolidated Financial Statements at Item 8. </p>
</td>
</tr>
</table>

<table id="z1cfeffd6bf404740908cc8de85784aa3" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Includes Trust Preferred Capital Securities issued by Horizon Statutory Trusts II and III and those assumed in the acquisitions of Alliance Bank in 2005, American Trust in 2009, Heartland in 2012 and LaPorte/City Savings in 2016. See Note 15 in Horizon&#8217;s Consolidated Financial Statements at Item 8. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za1c24e5b42cd4f099f430456c19a5f00" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 76%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Expiration by Period</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Within&#160;One</b><br>
<b>Year</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Greater</b><br>
<b>Than</b><br>
<b>One Year</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Letters of credit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,746</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unfunded loan commitments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">258,071</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">615,721</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">51 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Capital Resources </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon has no material commitments for capital expenditures as of December&#160;31, 2018. Horizon&#8217;s sources of funds and liquidity are discussed below in the section captioned &#8220;Liquidity&#8221; in this Item 7. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Net Income </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Consolidated net income was $53.1&#160;million, or $1.38 per diluted share, in 2018, $33.1&#160;million or $0.95 per diluted share in 2017, and $23.9&#160;million or $0.79 per diluted share in 2016. The increase in net income from the previous year reflects an increase in net interest income of $22.5&#160;million, an increase in <font style="WHITE-SPACE: nowrap">non-interest</font> income of $1.3&#160;million and a decrease in income taxes of $4.4&#160;million, partially offset by an increase in <font style="WHITE-SPACE: nowrap">non-interest</font> expenses of $7.7&#160;million and provision for loan losses of $436,000. The increase in diluted earnings per share compared to the previous year reflects an increase in net income, partially offset by an increase in diluted shares due to the Lafayette and Wolverine acquisitions. Core net income for the year ended December&#160;31, 2018 was $48.9&#160;million, or $1.27 diluted earnings per share, compared to $35.5&#160;million, or $1.02 diluted earnings per share, for the year ended December&#160;31, 2017. (See the <font style="WHITE-SPACE: nowrap">&#8220;Non-GAAP</font> Reconciliation of Net Income and Diluted Earnings per Share&#8221; table for the definition of core net income.) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Net Interest Income </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Net interest income during 2018 was $134.6&#160;million, an increase of $22.5&#160;million, or 20.0%, over the $112.1&#160;million earned in 2017. Yields on the Company&#8217;s interest-earning assets increased by 27 basis points to 4.56% during 2018 from 4.29% in 2017. Interest income increased $37.7&#160;million to $166.2&#160;million for 2018 from $128.5&#160;million in 2017. This increase was due to increased volume in interest-earning assets, an increase in the recognition of interest income from the acquisition-related purchase accounting adjustments of approximately $2.6&#160;million from $3.5&#160;million in 2017 to $6.1&#160;million in 2018 and an increase in overall interest rates in 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Interest expense increased $15.2&#160;million from $16.4&#160;million in 2017 to $31.6&#160;million in 2018. This increase was due to increased volume in interest-bearing liabilities and an increase in overall interest rates in 2018. The increase in the yield on the Company&#8217;s interest-earning assets combined with the increase in rates paid on interest-bearing liabilities resulted in a decrease in the net interest margin of 4 basis points from 3.75% for 2017 to 3.71% in 2018. Excluding interest income recognized from acquisition-related purchase accounting adjustments, the margin would have been 3.54% for 2018 compared to 3.64% for 2017. Management believes that the current level of interest rates is driven by external factors and therefore impacts the results of the Company&#8217;s net interest margin. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Net interest income during 2017 was $112.1, an increase of $26.1&#160;million, or 30.4%, over the $86.0&#160;million earned in 2016. Yields on the Company&#8217;s interest-earning assets increased by 24 basis points to 4.29% during 2017 from 4.05% in 2016. Interest income increased $22.0&#160;million to $128.5&#160;million for 2017 from $106.5&#160;million in 2016. This increase was due to increased volume in interest-earning assets, an increase in the recognition of interest income from the acquisition-related purchase accounting adjustments of approximately $1.2&#160;million from $2.3&#160;million in 2016 to $3.5&#160;million in 2017 and an increase in overall interest rates in 2017. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">52 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Rates paid on interest-bearing liabilities decreased by 26 basis points during the same period due to the prepayment penalties on borrowings of $4.8&#160;million in 2016. Interest expense decreased $4.2&#160;million from $20.5&#160;million in 2016 to $16.4&#160;million in 2017. The decrease was due to Horizon executing a strategy to reduce expensive funding costs in the fourth quarter of 2016 and related prepayment penalties on borrowings of $4.8&#160;million, partially offset by an increase in average interest-bearing liabilities and the rates paid on subordinated debentures. The increase in the yield on the Company&#8217;s interest-earning assets and the decrease in rates paid on interest-bearing liabilities resulted in an increase in the net interest margin of 46 basis points from 3.29% for 2016 to 3.75% in 2017. Excluding the interest expense recognized from the prepayment penalties on borrowings and the interest income recognized from the acquisition-related purchase accounting adjustments, the margin would have been 3.64% for 2017 compared to 3.38% for 2016. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8ef4db80dd34445eab342b1f300490e7" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 70%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="10" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="10" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="10" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>December&#160;31, 2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest-earning assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal funds sold</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,696</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">115</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.45</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,450</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.47</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,142</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.55</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-earning deposits</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,491</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">393</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,865</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">301</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,506</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">278</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.81</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities&#8212;taxable</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">431,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,113</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.34</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">417,993</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,705</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.08</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">490,274</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,666</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.97</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment <font style="WHITE-SPACE: nowrap">securities&#8212;non-taxable</font><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">326,040</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,069</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">292,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,068</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192,881</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,921</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans receivable<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)(3)(4)</sup></p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,910,741</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">147,478</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.08</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,335,126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">112,329</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.83</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,948,580</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">91,569</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.71</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total interest-earning assets<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,697,938</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">166,168</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.56</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,074,464</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">128,483</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,683,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">106,529</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest-earning</font> assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">44,645</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,578</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,549</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,964</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(15,226</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(14,439</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">337,016</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">295,057</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">255,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total average assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,062,635</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,396,873</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,961,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities and Stockholders&#8217; Equity</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest-bearing liabilities</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-bearing deposits</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,418,987</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,225</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.75</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,045,896</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,752,326</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,616</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.38</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">492,830</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,009</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.23</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">381,488</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,178</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.62</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">425,444</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,807</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.78</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,547</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.47</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,362</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,304</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.34</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,834</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,114</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.24</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total interest-bearing liabilities</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,948,364</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,599</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,463,746</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.66</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,227,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.92</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest-bearing</font> liabilities</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Demand deposits</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">624,576</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">533,852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">417,900</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Accrued interest payable and other liabilities</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,275</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,566</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,574</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">473,420</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,709</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">302,544</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total average liabilities and stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,062,635</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,396,873</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,961,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income/spread</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">134,569</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.49</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">112,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.63</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">85,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income as a percent of average interest-earning assets<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.71</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.75</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z2046036501e848fcb44017838400babb" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon has no foreign office and, accordingly, no assets or liabilities to foreign operations. Horizon&#8217;s subsidiary bank had no funds invested in Eurodollar Certificates of Deposit at December&#160;31, 2018. </p>
</td>
</tr>
</table>

<table id="ze1a75642fe4f46bf9328e05dcb4fe628" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(2)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Yields are presented on a <font style="WHITE-SPACE: nowrap">tax-equivalent</font> basis. </p>
</td>
</tr>
</table>

<table id="ze9a82f3e941e4b95b5acfb0f60e85433" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(3)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left"><font style="WHITE-SPACE: nowrap">Non-accruing</font> loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. </p>
</td>
</tr>
</table>

<table id="z3ff6872f28344268950433e4fa579603" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(4)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Loan fees and late fees included in interest on loans aggregated $7.7&#160;million, $7.1&#160;million and $5.5&#160;million in 2018, 2017 and 2016, respectively. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">53 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zac955341ba2d4e5f94cd1f6e7e53a815" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>2018 - 2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>2017 - 2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b><br>
<b>Change</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Change</b><br>
<b>Due To</b><br>
<b>Volume</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Change</b><br>
<b>Due To</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b><br>
<b>Change</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Change</b><br>
<b>Due To</b><br>
<b>Volume</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Change</b><br>
<b>Due To</b><br>
<b>Rate</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal funds sold</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(12</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">47</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(15</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(95</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-earning deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">92</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">84</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(103</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities&#8212;taxable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,408</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">298</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,110</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(961</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,483</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">522</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment <font style="WHITE-SPACE: nowrap">securities&#8212;non-taxable</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,001</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(99</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,147</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,384</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,237</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,149</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28,991</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,158</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,613</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,147</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,685</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,385</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,300</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">21,954</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,316</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,638</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest Expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,677</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,647</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,285</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,132</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">153</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,831</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,101</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,730</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,629</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,121</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,508</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">61</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">190</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(671</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">861</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total interest expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,216</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,790</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,154</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(660</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,494</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">22,469</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">26,595</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(4,126</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">26,108</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,976</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,132</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Provision for Loan Losses </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon assesses the adequacy of its ALLL by regularly reviewing the performance of its loan portfolios. The provision for loan losses totaled $2.9&#160;million in 2018 compared to $2.5&#160;million in 2017. The higher provision for loan losses in 2017 compared to the previous year was due to an increase in specific allocations for loan growth in new markets, higher than anticipated growth of the indirect loan portfolio and an increase in allocation for other economic factors, offset by improving credit trends and a continued low level of charge-offs. Total loan net charge-offs were $1.5&#160;million, which included commercial loan net charge-offs of $297,000, residential mortgage loan net charge-offs of $49,000 and consumer loan net charge-offs of $1.1&#160;million for the year ending December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">During 2017, the provision for loan losses totaled $2.5&#160;million, compared to $1.8&#160;million in 2016. The higher provision for loan losses in 2017 compared to the previous year was due to additional allocations for loan growth in new markets and an increase in allocation for agricultural economic factors. Total loan net charge-offs were $913,000, which included commercial loan net charge-offs of $109,000, residential mortgage loan net charge-offs of $45,000 and consumer loan net charge-offs of $759,000 for the year ending December&#160;31, 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic"><font style="WHITE-SPACE: nowrap">Non-interest</font> Income </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following is a summary of changes in <font style="WHITE-SPACE: nowrap">non-interest</font> income: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z07553c7cf0754fe2b16074bad08471ca" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 38%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>2017 - 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>2016 - 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" rowspan="2">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Amount</b><br>
<b>Change</b></td>
<td valign="bottom" rowspan="2">&#160;</td>
<td valign="bottom" rowspan="2">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Percent</b><br>
<b>Change</b></td>
<td valign="bottom" rowspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" rowspan="2">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Amount</b><br>
<b>Change</b></td>
<td valign="bottom" rowspan="2">&#160;</td>
<td valign="bottom" rowspan="2">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Percent</b><br>
<b>Change</b></td>
<td valign="bottom" rowspan="2">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"><b><font style="WHITE-SPACE: nowrap">Non-interest</font> Income</b></td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Service charges on deposit accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,762</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,379</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">21.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,762</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">621</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Wire transfer fees</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">612</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">658</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(46</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-7.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">658</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">806</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(148</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-18.4</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interchange fees</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,715</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,104</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">611</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,104</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">939</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">22.5</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fiduciary activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,827</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,894</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(67</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,894</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,621</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,273</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain (loss) on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(443</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(481</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-1265.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,798</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-97.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on sale of mortgage loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,613</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,293</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-16.4</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,675</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,769</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-32.3</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage servicing net of impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,583</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,583</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,908</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(325</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-17.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Increase in cash surrender value of bank owned life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,797</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">115</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.4</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,797</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.4</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Death benefit on officer life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,141</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,773</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">368</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20.8</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,773</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,039</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">70.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total <font style="WHITE-SPACE: nowrap">non-interest</font> income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">34,413</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,277</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35,455</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(2,319</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-6.5</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">54 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">During 2018, the Company originated approximately $188.8&#160;million of mortgage loans to be sold on the secondary market, compared to $218.5&#160;million in 2017. This decrease in volume and a decrease in the percentage earned on the sale of mortgage loans, resulted in a decrease in the overall gain on sale of mortgage loans of $1.3&#160;million compared to the prior year. Gain on the sale of investment securities decreased $481,000 in 2018. Mortgage servicing net of impairment increased by $537,000 during 2018 compared to 2017. The increase in service charges on deposit accounts and interchange fee income in 2018 compared to 2017 was the result of growth in transactional deposit accounts and volume during 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">During 2017, the Company originated approximately $218.5&#160;million of mortgage loans to be sold on the secondary market, compared to $316.9&#160;million in 2016. This decrease in volume, offset by an increase in the percentage earned on the sale of mortgage loans, resulted in a decrease in the overall gain on sale of mortgage loans of $3.8&#160;million compared to the prior year. Gain on the sale of investment securities decreased $1.8&#160;million in 2017 as analysis in 2016 determined market conditions provided the opportunity to add gains to capital without negatively impacting long-term earnings, in addition to helping offset the penalties incurred on the repayment of debt as part of a balance sheet restructuring. Mortgage servicing net of impairment decreased by $325,000 during 2017 compared to 2016. The increase in service charges on deposit accounts and interchange fee income in 2017 compared to 2016 was the result of growth in transactional deposit accounts and volume during 2017. Fiduciary activities income increased $1.3&#160;million during 2017 as a result of an increase in assets under management. Other income increased $734,000 in 2017 compared to 2016 reflecting the finalized entries of the Lafayette acquisition which resulted in a gain on accounting for Horizon&#8217;s previous equity interest of Lafayette totaling $530,000. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic"><font style="WHITE-SPACE: nowrap">Non-interest</font> Expense </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following is a summary of changes in <font style="WHITE-SPACE: nowrap">non-interest</font> expense: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd0dfd37e211345d38bd26f7ae4195996" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 40%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>2017 - 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>2016 - 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"><b><font style="WHITE-SPACE: nowrap">Non-interest</font> Expense</b></td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#160;31<br>
 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#160;31<br>
 2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b><br>
<b>Change</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Percent</b><br>
<b>Change</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#160;31<br>
 2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#160;31<br>
 2016</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b><br>
<b>Change</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Percent</b><br>
<b>Change</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Salaries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,857</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">36,503</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,354</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">36,503</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,445</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,058</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commission and bonuses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,547</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,225</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(678</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-10.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,225</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,484</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(259</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-4.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Employee benefits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,219</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,647</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,647</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,084</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,563</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">22.1</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net occupancy expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,482</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">947</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,322</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,213</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Data processing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,816</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,914</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">902</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15.3</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,914</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,367</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">547</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Professional fees</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,926</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,490</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(564</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-22.7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,490</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(262</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-9.5</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Outside services and consultants</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,018</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,747</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-24.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,018</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,863</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(845</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-10.7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loan expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,341</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,371</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27.6</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,582</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(612</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-11.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
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<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">FDIC deposit insurance</p>
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<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,444</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">398</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,559</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(513</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-32.9</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">368</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">297</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">80.7</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">368</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">684</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(316</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-46.2</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,948</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,097</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">851</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.0</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,097</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,347</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.5</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total <font style="WHITE-SPACE: nowrap">non-interest</font> expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">102,516</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">94,813</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,703</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.1</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">94,813</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">86,892</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,921</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.1</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">For the twelve months ended December&#160;31, 2018, salaries and employee benefits expense increased by $4.4&#160;million and $1.6&#160;million, respectively, reflecting overall company growth and an increase in health insurance expenses. Loan expense increased $1.4&#160;million primarily due to the increased volume in indirect lending and the timing of related origination and amortization costs. The increase in net occupancy expenses of $947,000, data processing of $902,000, other expense of $851,000, FDIC insurance expense of $398,000 and other losses of $297,000 reflect overall company growth and the acquisitions of Lafayette and Wolverine during the third and fourth quarters of 2017. Offsetting these increases was a decrease of $1.7&#160;million and $564,000 in outside services and consultants expense and professional fees, respectively, primarily due to lower acquisition-related expenses in 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">For the twelve months ended December&#160;31, 2017, salaries and employee benefits expense increased by $6.1&#160;million and $1.6&#160;million, respectively, reflecting additional compensation expense related to performance-based incentive plans, overall company growth and the Lafayette and Wolverine acquisitions. Net occupancy, data processing and other expense increased during 2017 primarily due to overall company growth, market expansions and recent acquisitions. Outside services and consultants expense and professional fees decreased primarily due to a lower amount of acquisition-related expenses in 2017 compared to 2016. The decrease in loan expense reflects a decrease in loan collection expenses when comparing 2017 to 2016. The reduced assessment rate schedule implemented by the FDIC in the fourth quarter of 2016 resulted in the decrease of FDIC insurance expense in 2017. Other losses decreased primarily due to lower debit card fraud-related expenses in 2017. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">55 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Income Taxes </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Income tax expense totaled $10.4&#160;million for the year ended December&#160;31, 2018, a decrease of $4.4&#160;million when compared to the year ended December&#160;31, 2017. The decrease was primarily due to the impact of the new corporate tax rate established by the Tax Cuts and Jobs Act which was signed into law at the end of 2017 and the benefits from the exercising of stock options. In addition to a lower corporate tax rate being applied to 2018 income, a revaluation to Horizon&#8217;s net deferred tax asset of $2.4&#160;million was recorded to income tax expense during the fourth quarter of 2017. Partially offsetting these decreases to income tax expense was an increase in income before income tax expense of $15.6&#160;million when comparing 2018 to the prior year. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Income tax expense increased $6.0&#160;million in 2017 totaling $14.8&#160;million, compared to $8.8&#160;million in 2016. The majority of the increase was due to an increase in income before taxes of $15.2&#160;million in 2017. Also included in this increase is an adjustment to Horizon&#8217;s net deferred tax asset of $2.4&#160;million ($1.7&#160;million of net deferred tax assets and $766,000 of net deferred tax assets related to accumulated other comprehensive income) to reflect the changes made by provisions of the Tax Cuts and Jobs Act signed into law at the end of 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Use of <font style="WHITE-SPACE: nowrap">Non-GAAP</font> Financial Measures </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Certain information set forth in this report on Form <font style="WHITE-SPACE: nowrap">10-K</font> refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included <font style="WHITE-SPACE: nowrap">non-GAAP</font> financial measures relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for loan and lease losses, tangible stockholders&#8217; equity, tangible book value per share and the return on average assets and average common equity. In each case, we have identified special circumstances that we consider to be <font style="WHITE-SPACE: nowrap">non-recurring</font> and have excluded them, in order to show the impact of such matters as acquisition-related purchase accounting adjustments, prepayment penalties on borrowings and the Tax Cuts and Jobs Act, among other matters we have identified in our reconciliations. Horizon believes these <font style="WHITE-SPACE: nowrap">non-GAAP</font> financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and <font style="WHITE-SPACE: nowrap">one-time</font> costs of acquisitions and <font style="WHITE-SPACE: nowrap">non-core</font> items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the following tables for reconciliations of the <font style="WHITE-SPACE: nowrap">non-GAAP</font> measures identified in this Form <font style="WHITE-SPACE: nowrap">10-K</font> to their most comparable GAAP measures. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 24pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Non-GAAP Reconciliation of Net Interest Margin </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollars in Thousands, Unaudited) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb0207e9b94bb4a69afbaa3db30e5a4b6" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 65%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Net Interest Margin</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income as reported</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">134,569</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">112,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">85,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Average interest-earning assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,697,938</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,074,464</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,683,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income as a percentage of average interest-earning assets (&#8220;Net Interest Margin&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.71</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.75</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,839</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Acquisition-related purchase accounting adjustments (&#8220;PAUs&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(6,089</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,484</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,304</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Core net interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">128,480</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">108,616</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">88,527</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Core net interest margin</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.54</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.64</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.38</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">56 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zdccbe6d3a7634ec195dad1c2a740138d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 50%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td style="FONT-SIZE: 10pt" valign="bottom" colspan="20" align="center"><b><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Tangible Stockholders&#8217; Equity and Tangible Book Value per Share</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td style="FONT-SIZE: 10pt" valign="bottom" colspan="20" align="center">(Dollars in Thousands Except per Share Data, Unaudited)</td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="4"></td>
<td style="HEIGHT: 16px" colspan="4"></td>
<td style="HEIGHT: 16px" colspan="4"></td>
<td style="HEIGHT: 16px" colspan="4"></td>
<td style="HEIGHT: 16px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>September&#160;30</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>June 30</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>March 31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">491,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">477,594</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">470,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">460,416</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">457,078</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Less: Intangible assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,270</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,755</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">131,239</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">131,724</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">132,282</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total tangible stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">361,722</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">346,839</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">339,296</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">328,692</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">324,796</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common shares outstanding</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,375,407</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,367,890</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,362,640</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,332,853</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,294,729</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tangible book value per common share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9.43</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9.04</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8.84</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8.57</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8.48</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">57 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Net Income and Diluted Earnings per Share </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollars in Thousands, Except per Share Data, Unaudited) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb1a2a3ea64f74063b340dbb5ec339817" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 70%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Net Income</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income as reported</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">487</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,656</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,827</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(102</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,003</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,998</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income excluding merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,502</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,770</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28,741</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loss (gain) on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">443</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(38</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,836</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(93</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income excluding gain on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,745</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,548</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Death benefit on bank owned life insurance (&#8220;BOLI&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(154</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income excluding death benefit on BOLI</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,730</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,745</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,548</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Prepayment penalty on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,839</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,694</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income excluding prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,730</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,745</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,693</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(530</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">78</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income excluding gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,730</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,293</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,693</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income excluding tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,730</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,719</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,693</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Acquisition-related purchase accounting adjustments (&#8220;PAUs&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(6,089</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,484</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,304</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,279</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,219</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">807</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Core Net Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">48,920</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35,454</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,196</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Diluted Earnings per Share</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Diluted earnings per share (&#8220;EPS&#8221;) as reported</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1.38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.79</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.01</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.11</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.23</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.03</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.07</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted EPS excluding merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.39</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loss (gain) on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.01</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.06</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted EPS excluding gain on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.91</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Death benefit on BOLI</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted EPS excluding death benefit on BOLI</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.91</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Prepayment penalty on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.16</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.05</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted EPS excluding prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.01</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted EPS excluding gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.07</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted EPS excluding tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.09</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Acquisition-related PAUs</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.16</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.10</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(0.07</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Core Diluted EPS</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1.27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1.02</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">58 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Return on Average Assets and Return on Average Common Equity </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollars in Thousands, Unaudited) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd8d4d1052829445d8cb2de359bfc3575" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Return on Average Assets</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Average assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;4,062,635</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,396,873</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,961,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Return on average assets (&#8220;ROAA&#8221;) as reported</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.31</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.81</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.11</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.23</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROAA excluding merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.32</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.06</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROAA excluding gain on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.93</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Death benefit on bank owned life insurance (&#8220;BOLI&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROAA excluding death benefit on BOLI</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.93</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.17</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.06</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROAA excluding prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROAA excluding gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROAA excluding tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.10</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Acquisition-related purchase accounting adjustments (&#8220;PAUs&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.15</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.10</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.08</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Core ROAA</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.21</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.99</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u><font style="WHITE-SPACE: nowrap">Non-GAAP</font> Reconciliation of Return on Average Common Equity</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Average Common Equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">473,420</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">378,709</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">301,485</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Return on average common equity (&#8220;ROACE&#8221;) as reported</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.22</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.74</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.93</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.10</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.66</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROACE excluding merger expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.30</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.45</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.53</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.09</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.61</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.21</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROACE excluding gain on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.37</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.44</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Death benefit on bank owned life insurance (&#8220;BOLI&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.03</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROACE excluding death benefit on BOLI</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.44</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.61</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.56</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROACE excluding prepayment penalties on borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.44</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.18</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.14</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROACE excluding gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.32</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.18</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.64</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">ROACE excluding tax reform bill impact</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.96</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.18</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Acquisition-related purchase accounting adjustments (&#8220;PAUs&#8221;)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-1.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.92</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">-0.76</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.27</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.32</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.27</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Core ROACE</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.33</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.69</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">59 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Non-GAAP Allowance for Loan and Lease Loss Detail </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">As of December 31, 2018 </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollars in Thousands, Unaudited) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4a119404c9fc48de960669c3f33445b5" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 33%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Pre-discount</b><br>
<b>Loan Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>for Loan<br>
 Losses</b><br>
<b>(ALLL)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loan</b><br>
<b>Discount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>ALLL</b><br>
<b>+</b><br>
<b>Loan<br>
 Discount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loans, net</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>ALLL/</b><br>
<b style="WHITE-SPACE: nowrap">Pre-discount</b><br>
<b>Loan&#160;Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loan<br>
 Discount/</b><br>
<b style="WHITE-SPACE: nowrap">Pre-discount</b><br>
<b>Loan&#160;Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>ALLL+Loan<br>
 Discount/</b><br>
<b style="WHITE-SPACE: nowrap">Pre-discount</b><br>
<b>Loan&#160;Balance</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Horizon Legacy</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,482,496</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;17,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;17,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,464,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.72</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.72</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Heartland</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">685</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">685</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,400</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.54</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.54</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Summit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">21,691</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,505</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.47</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.47</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Peoples</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">86,634</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,958</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,958</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">84,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.26</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,578</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">615</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">615</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,963</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">88,134</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,985</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,045</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">85,089</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.46</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">CNB</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,499</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">118</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">118</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,381</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.62</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.62</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89,446</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,427</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,427</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">88,019</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">193,807</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,723</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,723</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,084</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.41</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.41</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,014,370</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11,697</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,517</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,984,853</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.98</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Liquidity and Rate Sensitivity Management </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Management and the Board of Directors meet regularly to review both the liquidity and rate sensitivity position of Horizon. Effective asset and liability management ensures Horizon&#8217;s ability to monitor the cash flow requirements of depositors along with the demands of borrowers and to measure and manage interest rate risk. Horizon utilizes an interest rate risk assessment model designed to highlight sources of existing interest rate risk and consider the effect of these risks on strategic planning. Management maintains (within certain parameters) an essentially balanced ratio of interest sensitive assets to liabilities in order to protect against the effects of wide interest rate fluctuations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Liquidity </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Bank maintains a stable base of core deposits provided by long standing relationships with consumers and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayments, investment security sales and maturities, sale of real estate loans and borrowing relationships with correspondent banks, including the FHLB and the Federal Reserve Bank (&#8220;FRB&#8221;). At December&#160;31, 2018, Horizon had available approximately $340.3&#160;million in available credit from various money center banks, including the FHLB and the FRB Discount Window. Factors which could impact Horizon&#8217;s funding needs in the future include: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6c651cbcc5d741ad822a50d572fa2131" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon had outstanding borrowings of over $356.6&#160;million with the FHLB and total borrowing capacity with the FHLB of $558.6&#160;million. Generally, the loan terms from the FHLB are better than the terms Horizon can receive from other sources, making it less expensive to borrow money from the FHLB. Financial difficulties at the FHLB could reduce or eliminate Horizon&#8217;s additional borrowing capacity with the FHLB or the FHLB could change collateral requirements, which could lower the Company&#8217;s borrowing availability. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8a375e9e5c9a462eaa914a940f0a57f2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">If residential mortgage loan rates remain low, Horizon&#8217;s mortgage warehouse loans could create an additional need for funding. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze9259cd996514cd2a4174ef380f0114f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon had a total of $47.0&#160;million of unused Federal Fund lines from various money center banks. These are uncommitted lines and could be withdrawn at any time by the correspondent banks. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z72b255dcb4944a6eae703da6d3ea405c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon had a total of $93.2&#160;million of available collateral at the FRB secured by municipal securities. These securities may mature, call, or be sold, which would reduce the available collateral. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc02ac70e88d94c1295cf8dabf8eecad4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Horizon had approximately $648.6&#160;million of unpledged investment securities at December&#160;31, 2018. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z64652791abeb4b61a1a553aea7b8a804" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">A downgrade in Horizon&#8217;s ability to obtain credit due to factors such as deterioration in asset quality, a large charge to earnings, a decline in profitability or other financial measures, or a significant merger or acquisition. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z525a7847b8664a6fb9206486a0f9e6b0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">An act of terrorism or war, natural disasters, political events, or the default or bankruptcy of a major corporation, mutual fund, hedge fund or a government agency. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zf07882daa2704ff8bc994cf5719c725d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Market speculation or rumors about Horizon or the banking industry in general may adversely affect the cost and availability of normal funding sources. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">60 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">If any of these events occur, they could force Horizon to borrow money from other sources including negotiable certificates of deposit. Such other monies may only be available at higher interest rates and on less advantageous terms, which will impact our net income and could impact our ability to grow. Management believes Horizon has adequate funding sources to meet short and long term needs. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon maintains a liquidity contingency plan that outlines the process for addressing a liquidity crisis. The plan provides for an evaluation of funding sources under various market conditions. It also assigns specific roles and responsibilities for effectively managing liquidity through a problem period. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">During 2018, cash flows were generated primarily from the sales, maturities, and prepayments of investment securities of $131.7&#160;million and an increase in deposits of $258.4&#160;million. Cash flows were used to purchase investments totaling $243.1&#160;million, to fund an increase in loans of $182.6&#160;million, to purchase $10.4&#160;million in bank owned life insurance and a decrease in borrowings of $13.6&#160;million. The net cash and cash equivalent position decreased by $2.2&#160;million during 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following table sets forth contractual obligations and other commitments representing required and potential cash outflows as of December&#160;31, 2018. Interest on subordinated debentures and long-term borrowed funds is calculated based on current contractual interest rates. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z32620608eb8745c9b793c89c571dee93" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 60%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Within</b><br>
<b>One Year</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>After one</b><br>
<b>but within</b><br>
<b>three&#160;years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>After&#160;three</b><br>
<b>but within</b><br>
<b>five years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>After</b><br>
<b>five</b><br>
<b>years</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Remaining contractual maturities of time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">812,911</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">525,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;237,884</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;30,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;18,474</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">550,384</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">485,557</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,514</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,268</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,045</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loan commitments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">873,792</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">258,071</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">615,721</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Letters of credit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,792</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,746</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,279,716</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,272,175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">898,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">43,020</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66,356</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Interest Rate Sensitivity </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The degree by which net interest income may fluctuate due to changes in interest rates is monitored by Horizon using computer simulation models, incorporating not only the current GAP position but the effect of expected repricing of specific financial assets and liabilities. When repricing opportunities are not properly aligned, net interest income may be affected when interest rates change. Forecasting results of the possible outcomes determines the exposure to interest rate risk inherent in Horizon&#8217;s balance sheet. The goal is to manage imbalanced positions that arise when the total amount of assets that reprice or mature in a given time period differs significantly from liabilities that reprice or mature in the same time period. The theory behind managing the difference between repricing assets and liabilities is to have more assets repricing in a rising rate environment and more liabilities repricing in a declining rate environment. Based on a model that assumes a lag in repricing, at December&#160;31, 2018, the amount of assets that reprice within one year was 148% of liabilities that reprice within one year. At December&#160;31, 2017, this same model reported that the amount of assets that reprice within one year was approximately 191% of the amount of liabilities that reprice within the same time period. The year 2018 was a rising rate environment and the yields on assets repriced at higher rates due to increasing interest rates and a competitive environment. However, the impact of higher funding costs negatively impacted the net interest margin. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">61 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd1bf83c2729a4a28aa930c6933f1a7aa" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 56%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>3 Months</b><br>
<b>or Less</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>&gt;&#160;3&#160;Months</b><br>
<b>&amp;</b><br>
<b>&lt;/=&#160;6&#160;Months</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>&gt;&#160;6&#160;Months</b><br>
<b>&amp;</b><br>
<b>&lt;/= 1 Year</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Greater</b><br>
<b>Than</b><br>
<b>1 Year</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,031,685</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;217,347</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;335,763</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,429,575</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,014,370</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Federal funds sold</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,713</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,713</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest-earning balances with banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,407</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,407</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment securities and FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,362</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">22,037</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">51,850</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">712,284</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">828,533</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">384,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">384,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,093,167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">239,384</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">387,613</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,526,524</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,246,688</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Noninterest-bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">15,941</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">15,941</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">31,882</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">578,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">642,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest-bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">186,868</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,957</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">344,061</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,771,361</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,497,247</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowed funds</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">298,309</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">57,209</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">214,392</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">588,221</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,099</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,099</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">491,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">491,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total liabilities and stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">501,118</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">268,107</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">394,254</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,083,209</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,246,688</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">GAP</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">592,049</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(28,723</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(6,641</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(556,685</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cumulative GAP</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">592,049</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">563,326</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">556,685</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Quantitative and Qualitative Disclosures about Market Risk </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon&#8217;s primary market risk exposure is interest rate risk. Interest rate risk (&#8220;IRR&#8221;) is the risk that Horizon&#8217;s earnings and capital will be adversely affected by changes in interest rates. The primary approach to IRR management is one that focuses on adjustments to the asset/liability mix in order to limit the magnitude of IRR. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon&#8217;s exposure to interest rate risk arises from repricing or mismatch risk, embedded options risk, and yield curve risk. Repricing risk is the risk of adverse consequence from a change in interest rates that arises because of differences in the timing of when those interest rate changes affect Horizon&#8217;s assets and liabilities. Basis risk is the risk that the spread, or rate difference, between instruments of similar maturities will change. Options risk arises whenever products give the customer the right, but not the obligation, to alter the quantity or timing of cash flows. Yield curve risk is the risk that changes in prevailing interest rates will affect instruments of different maturities by different amounts. Horizon&#8217;s objective is to remain reasonably neutral with respect to IRR. Horizon utilizes a variety of strategies to maintain this position, including the sale of mortgage loans on the secondary market, hedging certain balance sheet items using derivatives, varying maturities of FHLB advances, certificates of deposit funding and investment securities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The table which follows provides information about Horizon&#8217;s financial instruments that were sensitive to changes in interest rates as of December&#160;31, 2018. The table incorporates Horizon&#8217;s internal system generated data related to the maturity and repayment/withdrawal of interest-earning assets and interest-bearing liabilities. For loans, securities and liabilities with contractual maturities, the table presents principal cash flows and related weighted-average interest rates by contractual maturities as well as the historical experience of Horizon related to the impact of interest rate fluctuations on the prepayment of residential loans and mortgage-backed securities. From a risk management perspective, Horizon believes that repricing dates are more relevant than contractual maturity dates when analyzing the value of financial instruments. For deposits with no contractual maturity dates, the table presents principal cash flows and weighted average rate, as applicable, based upon Horizon&#8217;s experience and management&#8217;s judgment concerning the most likely withdrawal behaviors. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">62 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Management&#8217;s Discussion and Analysis of </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Financial Condition and Results of Operations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z548ca8c6800f41188fede17ac96fb26d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 69%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>2024</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>Fair Value<br>
 December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2019</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2020</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2021</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2022</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2023</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>&amp; Beyond</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Rate-sensitive assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fixed interest rate loans</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">620,469</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;318,595</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;203,792</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;119,334</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,774</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">86,431</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,412,395</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,286,548</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.70</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.68</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.71</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.83</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.90</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.82</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.72</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Variable interest rate loans</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">977,379</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">127,307</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">108,337</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">93,139</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">79,358</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">216,455</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,601,975</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,605,392</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.88</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.42</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.32</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.49</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.44</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.78</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.61</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,597,848</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">445,902</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">312,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">212,473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143,132</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">302,886</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,014,370</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,891,940</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.81</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.58</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.68</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.65</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.08</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.66</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Securities, including FHLB stock</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">116,249</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">79,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">75,399</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,416</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">58,304</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">425,113</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">828,533</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">828,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.96</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.99</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.12</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.06</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.65</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other interest-earning assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.96</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Total earning assets</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,733,217</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">524,954</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">387,528</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">286,889</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;201,436</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">727,999</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,862,023</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,739,594</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.62</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.36</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.27</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.27</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.19</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.83</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Rate-sensitive liabilities</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Noninterest-bearing deposits</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,765</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">57,432</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">51,729</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">46,592</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">41,965</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">380,646</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">642,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">642,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">NOW accounts</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">45,759</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40,309</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,279</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,554</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">203,794</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">384,203</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">358,075</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.28</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Savings and money market accounts</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154,182</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135,715</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">119,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">105,203</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">92,649</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">692,905</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,300,133</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,213,225</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.81</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.81</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.80</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.80</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.79</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.74</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.77</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">525,946</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">137,474</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68,957</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,285</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,499</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">812,911</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">805,974</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.86</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.94</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.13</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.10</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.22</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.95</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.92</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">789,652</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">370,930</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">275,673</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">214,359</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192,918</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,295,844</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,139,376</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,019,403</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.41</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.05</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.92</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.74</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.77</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.47</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.85</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fixed interest rate borrowings</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">350,726</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">56,388</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17,948</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,178</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60,008</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">498,268</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">495,739</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.68</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.48</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3.97</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.90</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.71</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.93</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Variable interest rate borrowings</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89,953</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89,953</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">82,283</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.89</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.89</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Total funds</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,230,331</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">427,318</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">293,621</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">227,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">192,938</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,355,852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,727,597</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,597,425</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Average interest rate</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.18</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.93</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.77</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.56</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.04</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_14" name="tx695048_14"></a>ITEM&#160;7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The information required under this item is incorporated by reference to the information appearing in &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; included in Item 7. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">63 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold"><a id="tx695048_15" name="tx695048_15"></a><u>ITEM</u><u>&#160;</u><u>8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Table of Contents </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z66cc24afb36f441182f6461a84baa924" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 96%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"><b>Consolidated Financial Statements</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>Page</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_101">Balance Sheets</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">65</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_102">Statements of Income</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">66</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_103">Statements of Comprehensive Income</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">67</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_104">Statements of Stockholders&#8217; Equity</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_105">Statements of Cash Flows</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">69</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><a href="#tx695048_106">Notes to Financial Statements</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">70</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_107">Reports of Independent Registered Public Accounting Firm</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">133</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="4"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><a href="#tx695048_108">Management&#8217;s Report on Financial Statements</a></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">137</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">64 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_101" name="tx695048_101"></a>Consolidated Balance Sheets </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollar Amounts in Thousands) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z17f681d934c4482b8f7ed28290545796" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>58,492</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">59,980</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-earning time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>15,744</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,461</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities, available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>600,348</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">509,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities, held to maturity (fair value of $208,273 and $201,085)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>210,112</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">200,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans held for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,038</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,094</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans, net of allowance for loan losses of $17,820 and $16,394</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,995,512</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,818,786</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>74,331</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">75,529</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal Home Loan Bank stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>18,073</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,105</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Goodwill</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>119,880</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">119,880</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other intangible assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>10,390</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,402</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>14,239</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash value of life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>88,062</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">75,931</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>40,467</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40,963</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b><br>
</td>
<td valign="bottom" align="right"><b>4,246,688</b><br>
</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b><br>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,964,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>642,129</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">601,805</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Interest bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,497,247</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,279,198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>3,139,376</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,881,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>550,384</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">564,157</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>37,837</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,031</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">886</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>25,068</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,526</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>3,754,696</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,507,225</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commitments and contingent liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Stockholders&#8217; Equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Common stock, no par value, Authorized 99,000,000 shares (Restated&#8212;See Note 1)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Issued 38,400,476 and 38,323,604 shares (Restated&#8212;See Note 1), Outstanding 38,375,407 and 38,294,729 shares (Restated&#8212;See Note 1)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Additional <font style="WHITE-SPACE: nowrap">paid-in</font> capital</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>276,101</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">275,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Retained earnings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>224,035</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,570</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Accumulated other comprehensive loss</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(8,144</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,551</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>491,992</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">457,078</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total liabilities and stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>4,246,688</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,964,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">See notes to consolidated financial statements </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">65 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_102" name="tx695048_102"></a>Consolidated Statements of Income </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollar Amounts in Thousands, Except Per Share Data) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd6c9ba48291e49a8add6e4f2cd74c4e4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 76%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>147,478</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">112,329</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">91,569</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Taxable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>10,621</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,086</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,039</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Tax exempt</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>8,069</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,068</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,921</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Total interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>166,168</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">128,483</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">106,529</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest Expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>18,225</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,616</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowed funds</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>11,009</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,178</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,807</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,365</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,304</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,114</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total interest expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>31,599</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Interest Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>134,569</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">112,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">85,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Provision for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,906</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,842</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Interest Income after Provision for Loan Losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>131,663</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">109,630</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">84,150</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Service charges on deposit accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>7,762</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,762</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Wire transfer fees</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>612</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">658</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">806</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interchange fees</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>5,715</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,104</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Fiduciary activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>7,827</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,894</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,621</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Gains (losses) on sale of investment securities (includes $(443), $38 and $1,836 for the years ended December&#160;31, 2018, 2017 and 2016, respectively, related to accumulated other comprehensive earnings reclassificiations)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(443</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Gain on sale of mortgage loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>6,613</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,675</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage servicing income net of impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,120</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,583</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,908</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Increase in cash value of bank owned life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,912</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,797</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Death benefit on bank owned life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>154</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,141</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,773</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,039</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total <font style="WHITE-SPACE: nowrap">non-interest</font> income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>34,413</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,455</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> Expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Salaries and employee benefits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>56,623</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">51,375</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">44,013</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net occupancy expenses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>10,482</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,322</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Data processing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>6,816</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,914</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,367</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Professional fees</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,926</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,490</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Outside services and consultants</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>5,271</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,018</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,863</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loan expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>6,341</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,582</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">FDIC insurance expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,444</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,559</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>665</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">368</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">684</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>12,948</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,097</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total <font style="WHITE-SPACE: nowrap">non-interest</font> expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>102,516</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,813</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">86,892</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income Before Income Taxes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>63,560</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">47,953</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,713</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Income tax expense (includes $(93), $13 and $643 for the years ended December&#160;31, 2018, 2017 and 2016, respectively, related to income tax expense (benefit) from reclassification items)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>10,443</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Preferred stock dividend</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income Available to Common Shareholders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Basic Earnings Per Share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>1.39</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.96</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Diluted Earnings Per Share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1.38</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.79</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">See notes to consolidated financial statements </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">66 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_103" name="tx695048_103"></a>Consolidated Statements of Comprehensive Income </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollar Amounts in Thousands) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd5edab8a80e34ad5b55a9425e8054495" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 79%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other Comprehensive Income (Loss)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Change in fair value of derivative instruments:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Change in fair value of derivative instruments for the period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(32</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,404</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Income tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>7</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(491</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Changes from derivative instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(25</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">913</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Change in securities:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Unrealized appreciation (depreciation) for the period on AFS securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(5,067</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,110</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,091</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Amortization from transfer of securities from available for sale to held to maturity securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(190</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(256</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(653</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Reclassification adjustment for securities (gains) losses realized in income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>443</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(38</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,836</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Income tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,012</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(636</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Unrealized gains (losses) on securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(3,802</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,927</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other Comprehensive Income (Loss), Net of Tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(3,827</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,093</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,921</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Comprehensive Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>49,290</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35,210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,991</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">See notes to consolidated financial statements </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">67 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_104" name="tx695048_104"></a>Consolidated Statements of Stockholders&#8217; Equity </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollar Amounts in Thousands, Except Per Share Data) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z03d27809540544829c72884ed435f21b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 51%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Preferred</b><br>
<b>Stock</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Common</b><br>
<b>Stock</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Additional</b><br>
<b style="WHITE-SPACE: nowrap">Paid-in</b><br>
<b>Capital</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Retained</b><br>
<b>Earnings</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Accumulated</b><br>
<b>Other</b><br>
<b>Comprehensive</b><br>
<b>Loss</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, January&#160;1, 2016</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>12,500</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>106,370</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>148,685</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>(723</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>266,832</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other comprehensive income, net of tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,921</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,921</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Redemption of preferred stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12,500</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12,500</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Amortization of unearned compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">284</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">284</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock option expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock issued stock plans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock issued Kosciusko acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock issued LaPorte acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60,306</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60,306</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash dividends on preferred stock (1.00%)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash dividends on common stock ($0.27 per share)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,382</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,382</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31, 2016</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>182,326</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>164,173</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>(5,644</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>340,855</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other comprehensive income, net of tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,093</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,093</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Amortization of unearned compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Exercise of stock options</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock option expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">325</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">325</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock issued in Lafayette acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28,558</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28,558</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock issued in Wolverine acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">62,111</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">62,111</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash dividends on common stock ($0.33 per share)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(11,720</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(11,720</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31, 2017</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>275,059</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>185,570</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>(3,551</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>457,078</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other comprehensive loss, net of tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,827</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,827</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Amortization of unearned compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">169</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">169</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Exercise of stock options</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">493</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">493</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock option expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock issued stock plans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Reclassification of tax adjustment on accumulated other comprehensive loss</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">766</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(766</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash dividends on common stock ($0.40 per share)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(15,418</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(15,418</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31, 2018</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>$</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>276,101</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>224,035</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>(8,144</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>491,992</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">See notes to consolidated financial statements </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">68 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_105" name="tx695048_105"></a>Consolidated Statements of Cash Flows </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Dollar Amounts in Thousands) </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc2ccbca4c3a841428f6cf44c4dae167f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 76%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Operating Activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Items not requiring (providing) cash</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Provision for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,906</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,842</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Depreciation and amortization</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>6,813</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,936</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,275</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Share based compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>251</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">325</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Mortgage servicing rights, net impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(60</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">110</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Premium amortization on securities, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>5,798</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,024</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,162</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Loss (gain) on sale of investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>443</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(38</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,836</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Gain on sale of mortgage loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(6,613</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(7,906</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(11,675</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Proceeds from sales of loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>197,492</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">231,410</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">328,377</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Loans originated for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(188,823</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(218,511</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(316,875</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Change in cash value life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(1,912</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,797</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,618</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Death benefit on bank owned life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>154</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Loss (gain) on sale of other real estate owned</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(209</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">261</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Net change in:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(1,180</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,591</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(544</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,145</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">152</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(275</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>2,460</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,173</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">489</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>658</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,776</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,381</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Net cash provided by operating activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>72,440</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,064</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">25,548</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investing Activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Purchases of securities available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(214,706</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(149,376</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(225,555</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Proceeds from sales, maturities, calls and principal repayments of securities available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>123,377</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">85,587</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">269,587</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Purchases of securities held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(28,374</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(31,794</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(45,832</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Proceeds from maturities of securities held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>8,301</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,376</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,843</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net change in interest-earning time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>717</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">950</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,083</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Change in Federal Reserve and FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>32</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,987</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,448</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net change in loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(182,637</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(251,821</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,099</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Proceeds on the sale of OREO and repossessed assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>3,258</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,238</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Change in premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(3,434</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,689</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,383</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Purchases of bank owned life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(10,450</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net cash received in acquisition, Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,437</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net cash received in acquisition, LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">116,521</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net cash received in acquisition, CNB</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">22,549</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net cash received in acquisition of branch</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,000</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net cash received in acquisition, Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,425</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Gain on remeasurement of equity interest in Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(530</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net cash received in acquisition, Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,723</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Net cash provided by (used in) investing activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(303,916</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(278,924</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">222,307</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Financing Activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net change in:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>258,373</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(13,360</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,590</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(13,589</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">259,895</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(255,994</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Redemption of preferred stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12,500</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Proceeds from issuance of stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>622</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Dividends paid on common stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(15,418</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(11,720</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,382</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Dividends paid on preferred stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 8em; TEXT-INDENT: -1em">Net cash provided by (used in) financing activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>229,988</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">236,419</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(229,756</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Change in Cash and Cash Equivalents</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(1,488</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,559</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,099</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and Cash Equivalents, Beginning of Period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>59,980</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,421</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,322</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and Cash Equivalents, End of Period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>58,492</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">59,980</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">53,421</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Additional Supplemental Information</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>30,454</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">15,969</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Income taxes paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>6,819</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,350</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,916</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Transfer of loans to other real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>3,005</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,411</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,679</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">See notes to consolidated financial statements </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_106" name="tx695048_106"></a>Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold">Note 1&#8212;Nature of Operations and Summary of Significant Accounting Policies </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"><b>Nature of Business</b> &#8212; The consolidated financial statements of Horizon Bancorp, Inc. (&#8220;Horizon&#8221;) and its wholly owned subsidiaries, Horizon Bank (&#8220;Bank&#8221;) and Horizon Risk Management, Inc., together referred to as &#8220;Horizon&#8221; conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry. Horizon Risk Management, Inc. is a captive insurance company incorporated in Nevada and was formed as a wholly owned subsidiary of Horizon. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Bank is a full-service commercial bank offering a broad range of commercial and retail banking and other services incident to banking along with a trust department that offers corporate and individual trust and agency services and investment management services. The Bank maintains 62 full service offices. The Bank has wholly owned direct and indirect subsidiaries: Horizon Investments, Inc. (&#8220;Horizon Investments&#8221;), Horizon Properties, Inc. (&#8220;Horizon Properties&#8221;), Horizon Insurance Services, Inc. (&#8220;Horizon Insurance&#8221;) and Horizon Grantor Trust. Horizon Investments manages the investment portfolio of the Bank. Horizon Properties manages the real estate investment trust. Horizon Insurance is used by the Company&#8217;s Wealth Management to sell certain insurance products. Horizon Grantor Trust holds title to certain company owned life insurance policies. Horizon conducts no business except that incident to its ownership of the subsidiaries. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon formed Horizon Bancorp Capital Trust II in 2004 (&#8220;Trust II&#8221;) and Horizon Bancorp Capital Trust III in 2006 (&#8220;Trust III&#8221;) for the purpose of participating in pooled trust preferred securities offerings. The Company assumed additional debentures as the result of the following acquisitions: Alliance Financial Corporation in 2005, which formed Alliance Financial Statutory Trust I (&#8220;Alliance Trust&#8221;); American Trust&#160;&amp; Savings Bank in 2010, which formed Am Tru Statutory Trust I (&#8220;Am Tru Trust&#8221;); Heartland Bancshares, Inc. in 2013, which formed Heartland (IN) Statutory Trust II (&#8220;Heartland Trust&#8221;); and LaPorte Bancorp, Inc. in 2016, which acquired City Savings Statutory Trust I (&#8220;City Savings Trust&#8221;) in 2007. See Note 15 of the Consolidated Financial Statements for further discussion regarding these previously consolidated entities that are now reported separately. The business of Horizon is not seasonal to any material degree. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Basis of Reporting</b> &#8212; The consolidated financial statements include the accounts of Horizon and subsidiaries. All material inter-company accounts and transactions have been eliminated in consolidation. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Use of Estimates</b> &#8212; The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, valuation of other real estate owned, goodwill and intangible assets, mortgage servicing rights, other-than-temporary impairments and fair values of financial instruments. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Fair Value Measurements</b> &#8212; Horizon uses fair value measurements to record fair value adjustments, to certain assets, and liabilities and to determine fair value disclosures. Horizon has adopted Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures for all applicable financial and nonfinancial assets and liabilities. This accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This guidance applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value in any new circumstances. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As defined in codification, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value. Horizon values its assets and liabilities in the principal market where it sells the particular asset or </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability). </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In measuring the fair value of an asset, Horizon assumes the highest and best use of the asset by a market participant to maximize the value of the asset, and does not consider the intended use of the asset. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">When measuring the fair value of a liability, Horizon assumes that the nonperformance risk associated with the liability is the same before and after the transfer. Nonperformance risk is the risk that an obligation will not be satisfied and encompasses not only Horizon&#8217;s own credit risk (i.e., the risk that Horizon will fail to meet its obligation), but also other risks such as settlement risk. Horizon considers the effect of its own credit risk on the fair value for any period in which fair value is measured. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">There are three acceptable valuation techniques that can be used to measure fair value: the market approach, the income approach and the cost approach. Selection of the appropriate technique for valuing a particular asset or liability takes into consideration the exit market, the nature of the asset or liability being valued, and how a market participant would value the same asset or liability. Ultimately, determination of the appropriate valuation method requires significant judgment, and sufficient knowledge and expertise are required to apply the valuation techniques. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability using one of the three valuation techniques. Inputs can be observable or unobservable. Observable inputs are those assumptions which market participants would use in pricing the particular asset or liability. These inputs are based on market data and are obtained from a source independent of Horizon. Unobservable inputs are assumptions based on Horizon&#8217;s own information or estimate of assumptions used by market participants in pricing the asset or liability. Unobservable inputs are based on the best and most current information available on the measurement date. All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy which gives the highest ranking to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level&#160;1)&#160;and the lowest ranking to unobservable inputs (Level&#160;3). Fair values for assets or liabilities classified as Level&#160;2 are based on one or a combination of the following factors: (i)&#160;quoted prices for similar assets; (ii)&#160;observable inputs for the asset or liability, such as interest rates or yield curves; or (iii)&#160;inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company considers an input to be significant if it drives 10% or more of the total fair value of a particular asset or liability. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Assets and liabilities are considered to be fair valued on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly or quarterly). Recurring valuation occurs at a minimum on the measurement date. Assets and liabilities are considered to be fair valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level&#160;3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Investment Securities Available for Sale</b> &#8212; Horizon designates the majority of its investment portfolio as available for sale based on management&#8217;s plans to use such securities for asset and liability management, liquidity and not to hold such securities as long-term investments. Management repositions the portfolio to take advantage of future expected interest rate trends when Horizon&#8217;s long-term profitability can be enhanced. Investment securities available for sale and marketable equity securities are carried at estimated fair value and any net unrealized gains/losses (after tax) on these securities are included in accumulated other comprehensive income. Amortization of premiums and accretion of discounts are recorded as interest income from securities. Gains/losses on the disposition of securities available for sale are recognized at the time of the transaction and are determined by the specific identification method. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">71 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Investment Securities Held to Maturity</b> &#8212; Includes any security for which Horizon has the positive intent and ability to hold until maturity. These securities are carried at amortized cost. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Loans Held for Sale</b> &#8212; Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in the aggregate.&#160;Net unrealized losses, if any, are recognized through a valuation allowance by charges to noninterest income.&#160;Gains and losses on loan sales are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Interest and Fees on Loans</b> &#8212; Interest on commercial, mortgage and installment loans is recognized over the term of the loans based on the principal amount outstanding. When principal or interest is past due 90 days or more, and the loan is not well secured or in the process of collection, or when serious doubt exists as to the collectability of a loan, the accrual of interest is discontinued. Loan origination fees, net of direct loan origination costs, are deferred and recognized over the life of the loan as a yield adjustment. Discounts and premiums on purchased loans are amortized to income using the interest method over the remaining period to contractual maturity, adjusted for anticipated prepayments. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Concentrations of Credit Risk</b> &#8212; The Bank grants commercial, real estate, and consumer loans to customers located primarily in the Northern and Central regions of Indiana and the Southern, Central and Great Lakes Bay regions of Michigan and provides mortgage warehouse lines to mortgage companies in the United States. Commercial loans make up approximately 57% of the loan portfolio and are secured by both real estate and business assets. These loans are expected to be repaid from cash flows from operations of the businesses. The Bank does not have a concentration in speculative commercial real estate loans. Residential real estate loans make up approximately 22% of the loan portfolio and are secured by residential real estate. Installment loans make up approximately 18% of the loan portfolio and are primarily secured by consumer assets. Mortgage warehouse loans make up approximately 3% of the loan portfolio and are secured by residential real estate. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Mortgage Warehouse Loans</b> &#8212; Horizon&#8217;s mortgage warehousing has specific mortgage companies as customers of the Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with pledge of collateral under Horizon&#8217;s agreement with the mortgage company. Each individual mortgage 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The transaction does not qualify as a sale under ASC 860, Transfers and Servicing and therefore is accounted for as a secured borrowing with 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 sales 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">72 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Allowance for Loan Losses</b> &#8212; An allowance for loan losses is maintained to absorb probable incurred losses inherent in the loan portfolio. The allowance is based on ongoing quarterly assessments of the probable incurred losses inherent in the loan portfolio. The allowance is increased by the provision for credit losses, which is charged against current period operating results and decreased by the amount of charge offs, net of recoveries. Horizon&#8217;s methodology for assessing the appropriateness of the allowance consists of several key elements, which include the general allowance, specific allowances for identified problem loans and the qualitative allowance. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The general allowance is calculated by applying loss factors to pools of outstanding loans. Loss factors are based on historical loss experience and may be adjusted for significant factors that, in management&#8217;s judgment, affect the collectability of the portfolio as of the evaluation date. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Specific allowances are established in cases where management has identified conditions or circumstances related to a credit that management believes indicate the probability that a loss will be incurred in excess of the amount determined by the application of the formula allowance. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The qualitative allowance is based upon management&#8217;s evaluation of various conditions, the effects of which are not directly measured in the determination of the general and specific allowances. The evaluation of the inherent loss with respect to these conditions is subject to a higher degree of uncertainty because they are not identified with specific credits. The conditions evaluated in connection with the qualitative allowance may include factors such as local, regional and national economic conditions and forecasts, concentrations of credit and changes in the composition of the portfolio. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Loan Impairment</b> &#8212; When analysis determines a borrower&#8217;s operating results and financial condition are not adequate to meet 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 placed on <font style="WHITE-SPACE: nowrap">non-accrual</font> status when 90 days or more past due. These loans are also often considered impaired. Impaired loans or portions thereof, are <font style="WHITE-SPACE: nowrap">charged-off</font> when deemed uncollectible. This typically occurs when the loan is 90 or more days past due. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Loans are considered impaired if the borrower does not exhibit the ability to pay or the full principal or interest payments are not expected or made in accordance with the original terms of the loan. Impaired loans are measured and carried at the lower of cost or the present value of expected future cash flows discounted at the loan&#8217;s effective interest rate, at the loan&#8217;s observable market price or at the fair value of the collateral if the loan is collateral dependent. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Smaller balance homogenous loans are evaluated for impairment in the aggregate. Such loans include residential first mortgage loans secured by one to four family residences, residential construction loans and automobile, home equity and second mortgages. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Loans Acquired in Business Combinations</b> &#8212; Loans acquired in business combinations 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 purchase dates may include information such as <font style="WHITE-SPACE: nowrap">past-due</font> and nonaccrual status, borrower credit scores and recent loans to value percentages. Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (FASB ASC <font style="WHITE-SPACE: nowrap">310-30)</font> and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Accordingly, allowances for credit losses related to these loans are not carried over and recorded at the acquisition dates. As a result, related discounts are recognized subsequently through accretion based on the expected cash flows of the acquired loans. For purposes of applying FASB ASC <font style="WHITE-SPACE: nowrap">310-30,</font> loans acquired in business combinations are aggregated into pools of loans with common risk characteristics. Acquired loans not accounted for under ASC <font style="WHITE-SPACE: nowrap">310-30</font> are accounted for under ASC <font style="WHITE-SPACE: nowrap">310-20,</font> which allows the fair value adjustment to be accreted to income over the remaining life of the loans. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The expected cash flows of the acquired loan pools in excess of the fair values recorded is referred to as the accretable yield and is recognized in interest income over the remaining estimated lives of the loan pools. The Company continues to evaluate the fair value of the loans including cash flows expected to be collected. Increases in the Company&#8217;s cash flow expectation are recognized as increases to the accretable yield while decreases are recognized as impairments through the allowance for loan losses. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Performing loans acquired (FASB ASC <font style="WHITE-SPACE: nowrap">310-20)</font> with credit impairment subsequent to the acquisition date are evaluated individually and charged down to the fair value of the underlying collateral in the period the uncollectible loss is reasonably determined. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Premises and Equipment</b> &#8212; Buildings and major improvements are capitalized and depreciated using primarily the straight-line method with useful lives ranging from 3 to 40 years. Furniture and equipment are capitalized and depreciated using primarily the straight-line method with useful lives ranging from 2 to 20 years. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains and losses on disposition are included in current operations. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Federal Reserve and Federal Home Loan Bank of Indianapolis (FHLBI) Stock</b> &#8212; The stock is a required investment for institutions that are members of the Federal Reserve Bank (&#8220;FRB&#8221;) and Federal Home Loan Bank (&#8220;FHLB&#8221;) systems. The required investment in the common stock is based on a predetermined formula. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Mortgage Servicing Rights</b> &#8212;Mortgage servicing assets are recognized separately when rights are acquired through purchase or through sale of financial assets.&#160;Under the servicing assets and liabilities accounting guidance <font style="WHITE-SPACE: nowrap">(ASC&#160;860-50),</font> servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer.&#160;Amortized mortgage servicing rights include commercial mortgage servicing rights.&#160;Under the amortization method, servicing rights are amortized in proportion to and over the period of estimated net servicing income.&#160;The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income.&#160;The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses.&#160;These variables change from quarter to quarter as market conditions and projected interest rates change, and may have an adverse impact on the value of the mortgage servicing right and may result in a reduction to noninterest income. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Each class of separately recognized servicing assets subsequently measured using the amortization method are evaluated and measured for impairment.&#160;Impairment is determined by stratifying rights into tranches based on predominant characteristics, such as interest rate, loan type and investor type.&#160;Impairment is recognized through a valuation allowance for an individual tranche, to the extent that fair value is less than the carrying amount of the servicing assets for that tranche.&#160;The valuation allowance is adjusted to reflect changes in the measurement of impairment after the initial measurement of impairment.&#160;Changes in valuation allowances are reported with mortgage servicing income net of impairment on the income statement.&#160;Fair value in excess of the carrying amount of servicing assets for that stratum is not recognized. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Servicing fee income is recorded for fees earned for servicing loans.&#160;The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned.&#160;The amortization of mortgage servicing rights is netted against loan servicing fee income. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Intangible Assets </b>&#8212; Goodwill is tested annually for impairment. At December&#160;31, 2018, Horizon had core deposit intangibles of $10.4&#160;million subject to amortization and $119.9&#160;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&#8217;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. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. A large majority of the goodwill relates to the acquisitions of Heartland, Summit, Peoples, Kosciusko, LaPorte, Lafayette and Wolverine. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Bank Owned Life Insurance (BOLI)</b> &#8211; BOLI has been purchased on certain employees and directors of the Company. The Company records the life insurance at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Income Taxes</b> &#8212;The Company accounts for income taxes in accordance with income tax accounting guidance (ASC&#160;740, <i>Income Taxes</i>). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50&#160;percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the <font style="WHITE-SPACE: nowrap">more-likely-than-not</font> recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50&#160;percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the <font style="WHITE-SPACE: nowrap">more-likely-than-not</font> recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management&#8217;s judgment. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company recognizes interest and penalties on income taxes as a component of income tax expense. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company files consolidated income tax returns with its subsidiaries. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Trust Assets and Income</b> &#8212; Property, other than cash deposits, held in a fiduciary or agency capacity is not included in the consolidated balance sheets since such property is not owned by Horizon. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Transfer of Financial Assets </b>&#8212;<b> </b>The transfer of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1)&#160;the assets have been isolated from the Company and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2)&#160;the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3)&#160;the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">75 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Earnings per Common Share</b> &#8212; 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. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z456c33e5876d415db7f248ab3e655a8c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 61%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Basic earnings per share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Less: Preferred stock dividends</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom" nowrap="nowrap" align="right"><b>&#8212;&#160;&#160;</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income available to common shareholders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Weighted average common shares outstanding<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1) </sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>38,347,059</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,553,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">29,981,592</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Basic earnings per share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>1.39</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.96</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Diluted earnings per share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income available to common shareholders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>53,117</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Weighted average common shares outstanding<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1) </sup></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>38,347,059</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,553,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">29,981,592</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Effect of dilutive securities:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Restricted stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>36,185</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,981</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">39,829</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock options</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>111,987</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">159,721</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">102,193</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Weighted average common shares outstanding</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>38,495,231</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,760,438</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,123,614</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>1.38</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.79</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9a8cf1f6876a490fae0515c6e3647691" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Adjusted for 3:2 stock split on June&#160;15, 2018 </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018, there were 102,138 shares and at December&#160;31, 2017 and 2016 there were zero shares that were not included in the computation of diluted earnings per share because they were <font style="WHITE-SPACE: nowrap">non-dilutive.</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On May&#160;15, 2018, the Board of Directors of the Company approved a <font style="WHITE-SPACE: nowrap">three-for-two</font> stock split of the Company&#8217;s authorized common stock, no par value. All share and per share amounts in the consolidated financial statements and notes thereto have been retroactively adjusted, where necessary, to reflect this <font style="WHITE-SPACE: nowrap">three-for-two</font> stock split. The effect of the <font style="WHITE-SPACE: nowrap">three-for-two</font> stock split on the outstanding common shares is that shareholders of record as of the close of business on May&#160;31, 2018, the record date, received an additional half share for each share of common stock held, with shareholders receiving cash in lieu of any fractional shares. The additional shares issued in the stock split were payable and issued on June&#160;15, 2018, and the common shares began trading on a split-adjusted basis on June&#160;19, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Dividend Restrictions</b> &#8212; Horizon&#8217;s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year&#8217;s net profits combined with the retained net profits of the preceding two years, subject to the capital requirements described in Note 21. At December&#160;31, 2018, the Bank could, without prior approval, declare dividends of approximately $26.0&#160;million to Horizon. Additionally, the Federal Reserve Board limits the amount of dividends that may be paid by Horizon to its stockholders under its capital adequacy guidelines. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Consolidated Statements of Cash Flows</b> &#8212; For purposes of reporting cash flows, cash and cash equivalents are defined to include cash and due from banks, money market investments and federal funds sold with maturities of one day or less. Horizon reports net cash flows for customer loan transactions, deposit transactions, short-term investments and borrowings. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">76 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Comprehensive Income</b> &#8212; Comprehensive income consists of net income and other comprehensive income (loss), net of applicable income taxes. Other comprehensive income (loss) includes unrealized appreciation (depreciation) on <font style="WHITE-SPACE: nowrap">available-for-sale</font> securities, unrealized and realized gains and losses in derivative financial instruments and amortization of <font style="WHITE-SPACE: nowrap">available-for-sale</font> securities transferred to <font style="WHITE-SPACE: nowrap">held-to-maturity.</font> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Share-Based Compensation</b> &#8212; At December&#160;31, 2018, Horizon had share-based compensation plans, which are described more fully in Note 22. All share-based payments are to be recognized as expense, based upon their fair values, in the financial statements over the vesting period of the awards. Horizon has recorded approximately $626,000, $460,000, and $608,000 for 2018, 2017 and 2016, in compensation expense relating to vesting of stock options less estimated forfeitures for the <font style="WHITE-SPACE: nowrap">12-month</font> periods ended December&#160;31, 2018, 2017 and 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Derivative Financial Instruments</b> &#8212; The Company occasionally enters into derivative financial instruments as part of its interest rate risk management strategies. These derivative financial instruments consist primarily of interest rate swaps. All derivative instruments are recorded on the Statements of Financial Condition, as either an asset or liability, at their fair value. The accounting for the gain or loss resulting from the change in fair value depends on the intended use of the derivative. For a derivative used to hedge changes in fair value of a recognized asset or liability, or an unrecognized firm commitment, the gain or loss on the derivative will be recognized in earnings together with the offsetting loss or gain on the hedged item. This results in an earnings impact only to the extent that the hedge is ineffective in achieving offsetting changes in fair value. If it is determined that the derivative instrument is not highly effective as a hedge, hedge accounting is discontinued and the adjustment to fair value of the derivative instrument is recorded in earnings. For a derivative used to hedge changes in cash flows associated with forecasted transactions, the gain or loss of the effective portion of the derivative will be deferred, and reported as accumulated other comprehensive income, a component of shareholders&#8217; equity, until such time the hedged transaction affects earnings. For derivative instruments not accounted for as hedges, changes in fair value are recognized in non-interest income or non-interest expense. Deferred gains and losses from derivatives that are terminated and were in a cash flow hedge are amortized over the shorter of the original remaining term of the derivative or the remaining life of the underlying asset or liability. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Reclassifications</b> &#8212; Certain reclassifications have been made to the 2017 and 2016 consolidated financial statements to be comparable to 2018. These reclassifications had no effect on net income. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Recent Accounting Pronouncements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"><b>Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) <font style="WHITE-SPACE: nowrap">No.&#160;2018-13,</font> </b><b><i>Fair Value Measurement (Topic 820): Disclosure Framework &#8211; Changes to the Disclosure Requirements for Fair Value Measurement</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-13,</font> <i>Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Instrument</i>. ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-13</font> modifies the disclosure requirements on fair value measurements in Topic 820. Certain disclosure requirements related to transfers between Level&#160;1 and Level&#160;2 of the fair value hierarchy and Level&#160;3 valuation processes were removed from Topic 820. Disclosures were also added to Topic 820 for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level&#160;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&#160;3 fair value measurements. In addition, the amendments eliminate at a minimum from the phrase &#8220;an entity shall disclose at a minimum&#8221; to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-13</font> are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December&#160;15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level&#160;3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-13</font> and delay adoption of the additional disclosures until their effective date. 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-03,</font> </b><b><i>Technical Corrections and Improvements to Financial Instruments &#8211; Overall (Subtopic <font style="WHITE-SPACE: nowrap">825-10):</font> Recognition and Measurement of Financial Assets and Financial Liabilities</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-03,</font> <i>Technical Corrections and Improvements to Financial Instruments &#8211; Overall (Subtopic <font style="WHITE-SPACE: nowrap">825-10):</font> Recognition and Measurement of Financial Assets and Financial Liabilities</i>, to clarify certain aspects of the guidance issued in ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-01,</font> including aspects of equity securities without a readily determinable fair value. This guidance is effective for fiscal years beginning after December&#160;15, 2018, including interim periods within those fiscal years beginning after June&#160;15, 2018. Early adoption is permitted. As these clarifications did not have a material impact on Horizon&#8217;s consolidated financial statements, Horizon elected to early adopt this guidance as of January&#160;1, 2018. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">77 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-02,</font> </b><b><i>Income Statement &#8211; Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2018-02,</font> <i>Income Statement &#8211; Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income</i>. The amendments in this ASU allow a reclassification from accumulated other comprehensive income (AOCI) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU also require certain disclosures about stranded tax effects. The amendments in this ASU are effective for all entities for fiscal years beginning after December&#160;15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period, (1)&#160;for public business entities for reporting periods for which financial statements have not yet been issued and (2)&#160;for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. At December&#160;31, 2017, the Company had approximately $766,000 stranded tax effects included in AOCI and reclassified to retained earnings at January&#160;1, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2017-12,</font> </b><b><i>Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2017-12,</font> <i>Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities</i>. The new guidance improves the financial reporting of hedging relationships to better portray the economic results of an entity&#8217;s risk management activities in its financial statements. The amendments in this ASU also make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. For public entities, the new guidance will be effective for fiscal years beginning after December&#160;15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December&#160;15, 2019, and interim periods beginning after December&#160;15, 2020. Early application is permitted in any interim period after issuance of the ASU. All transition requirements and elections should be applied to hedging relationships existing (that is, hedging relationships in which the hedging instrument has not expired, been sold, terminated, or exercised or the entity has not removed the designation of the hedging relationship) on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date). Horizon elected to early adopt this guidance as of January&#160;1, 2018. As permitted by the ASU, Horizon reclassified approximately $6.3 million of state and municipal securities with net unrealized losses of approximately $46,000 from the held to maturity portfolio to the available for sale portfolio. Other than this reclassification of securities, adoption of the standard did not have a significant impact on Horizon&#8217;s consolidated financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2017-04,</font> </b><b><i>Intangibles &#8211; Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2017-04,</font> <i>Intangibles &#8211; Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment</i>. The new guidance is intended to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit&#8217;s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. The amendments in this update should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December&#160;15, 2019. Early adoption is permitted on testing dates after January&#160;1, 2017. 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. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-13,</font> </b><b><i>Financial Instruments &#8211; Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-13,</font> <i>Financial Instrument &#8211; Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.</i> The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates. The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization&#8217;s portfolio. In addition, the ASU amends the accounting for credit losses on <font style="WHITE-SPACE: nowrap">available-for-sale</font> debt securities and purchased financial assets with credit deterioration. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December&#160;15, 2019. Early adoption will be permitted beginning after December&#160;15, 2018. We have formed a cross functional committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. We expect to recognize a <font style="WHITE-SPACE: nowrap">one-time</font> cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such <font style="WHITE-SPACE: nowrap">one-time</font> adjustment or the overall impact of the new guidance on the consolidated financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-02,</font> </b><b><i>Leases (Topic 842)</i></b><b> </b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-02,</font> <i>Leases (Topic 842). </i>Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1)&#160;a lease liability, which is a lessee&#8217;s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2)&#160;a <font style="WHITE-SPACE: nowrap">right-of-use</font> asset, which is an asset that represents the lessee&#8217;s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December&#160;15, 2018. Based on leases outstanding as of December&#160;31, 2018, the new standard will not have a material impact on our balance sheet or income statement. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In July 2018, the FASB issued amendments (ASU No. 2018-11) which provide entities with additional (and optional) transition method to adopt the new lease standard. Under this new transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity&#8217;s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic 842, Leases). The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead, to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met. For entities that have not adopted Topic 842 before the issuance of ASU No. 2018-11, the effective date and transition requirements for the amendments related to separating components of a contract are the same as the effective date and transition requirements in ASU No. 2016-02. In December 2018, the FASB issued amendments (ASU No. 2018-20) which addresses issues facing lessors when applying the leases standard. The amendments in ASU 2018-20 provide for certain accounting policy elections and changes lessor accounting for sales and similar taxes and certain lessor costs. Entities that have not yet adopted Topic 842 before the issuance of ASU 2018-20 should apply ASU 2018-20 to all new and existing leases when the entity first applies Topic 842 and should apply the same transition method elected for Topic 842. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"><b>FASB ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-01,</font> </b><b><i>Financial Instruments &#8211; Overall (Subtopic <font style="WHITE-SPACE: nowrap">825-10),</font> Recognition and Measurement of Financial Assets and Financial Liabilities </i></b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The FASB has issued ASU <font style="WHITE-SPACE: nowrap">No.&#160;2016-01,</font> <i>Financial Instruments &#8211; Overall (Subtopic <font style="WHITE-SPACE: nowrap">825-10),</font> Recognition and Measurement of Financial Assets and Financial Liabilities.</i> The new guidance is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, <font style="WHITE-SPACE: nowrap">not-for-profit</font> organizations, and employee benefit plans that hold financial assets or owe financial liabilities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The new guidance makes targeted improvements to existing U.S. GAAP by: </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as &#8220;own credit&#8221;) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The new guidance is effective for public companies for fiscal years beginning after December&#160;15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. In addition, the new guidance permits early adoption of the provision that exempts private companies and <font style="WHITE-SPACE: nowrap">not-for-profit</font> organizations from having to disclose fair value information about financial instruments measured at amortized cost. Adoption of the ASU did not have a significant effect on the Company&#8217;s consolidated financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Revenue Recognition</b> &#8212; Accounting Standards Codification 606, <i>&#8220;Revenue from Contracts with Customers&#8221;</i> (ASC 606) provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance enumerates five steps that entities should follow in achieving this core principle. Revenue generated from financial instruments, including loans and investment securities, are not included in the scope of ASC 606. The adoption of ASC 606 did not result in a change to the accounting of any of the Company&#8217;s revenue streams that are within the scope of the amendments. Revenue-gathering activities that are within the scope of ASC 606 and that are presented as <font style="WHITE-SPACE: nowrap">non-interest</font> income in the Company&#8217;s consolidated statements of income include: </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Service charges and fees on deposit accounts &#8211; these include general service fees charged for deposit account maintenance and activity and transaction-based fees charged for certain services, such as debit card, wire transfer and overdraft activities. Revenue is recognized when the performance obligation is completed, which is generally after a transaction is completed or monthly for account maintenance services. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Fiduciary activities &#8211; this includes periodic fees due from trust and wealth management customers for managing the customers&#8217; financial assets. Fees are charged based on a standard agreement and are recognized as they are earned. </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 2 &#8211; Acquisitions </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Wolverine Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On October&#160;17, 2017, Horizon completed the acquisition of Wolverine Bancorp, Inc., a Maryland corporation (&#8220;Wolverine&#8221;) and Horizon Bank&#8217;s acquisition of Wolverine Bank, a federally chartered savings bank and wholly-owned subsidiary of Wolverine, through mergers effective October&#160;17, 2017. Under the terms of the Merger Agreement, shareholders of Wolverine received 1.5228 shares of Horizon common stock and $14.00 in cash for each outstanding share of Wolverine common stock. Wolverine shares outstanding at the closing to be exchanged were 2,129,331, and the shares of Horizon common stock issued to Wolverine shareholders totaled 3,241,045. Based upon the October&#160;16, 2017 closing price of $19.37 per share of Horizon common stock immediately prior to the effectiveness of the merger, less the consideration used to pay off Wolverine Bancorp&#8217;s ESOP loan receivable, the transaction has an implied valuation of approximately $93.8&#160;million. The Company incurred approximately $1.9&#160;million in costs related to the acquisition as of December&#160;31, 2017. These expenses are classified in the <font style="WHITE-SPACE: nowrap">non-interest</font> section of the income statement and are primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company will have an opportunity to increase its deposit base and reduce transaction costs. The Company also expects to reduce costs through economies of scale. </p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">80 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Wolverine acquisition is allocated as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="OVERFLOW: hidden; WIDTH: 48%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; PADDING-RIGHT: 0%">
<table id="z739c95575c00456aa83666ccf9ee96d0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">44,450</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">276,167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,603</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,897</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">310,667</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,941</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">FRB and FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,700</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Goodwill</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26,827</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Core deposit intangible</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,024</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">584</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,897</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total assets purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">394,090</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common shares issued</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">62,111</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,662</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total purchase price</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">93,773</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="OVERFLOW: hidden; WIDTH: 49%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; MARGIN-LEFT: 3%; PADDING-RIGHT: 0%">
<table id="zb8bf08ec26ba4aa39d2780e192fe8759" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">25,221</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">NOW accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,026</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Savings and money market</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">129,044</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,688</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">256,979</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">214</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total liabilities assumed</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">300,317</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="FONT-SIZE: 0pt; HEIGHT: 0pt; CLEAR: both"></div>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Of the total purchase price of $93.8&#160;million, $2.0&#160;million has been allocated to core deposit intangible. Additionally, $26.8&#160;million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 <font style="WHITE-SPACE: nowrap">past-due</font> and <font style="WHITE-SPACE: nowrap">non-accrual</font> status, borrower credit scores and recent <font style="WHITE-SPACE: nowrap">loan-to-value</font> percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC <font style="WHITE-SPACE: nowrap">310-30)</font> 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 assumptions, such as default rates, severity and prepayment speeds. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Loans with specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">81 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table details the acquired loans that are accounted for in accordance with ASC <font style="WHITE-SPACE: nowrap">310-30</font> as of October&#160;17, 2017. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc4c19f3e33bc433c917a130884ae0dfc" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 88%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractually required principal and interest at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">21,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractual cash flows not expected to be collected (nonaccretable differences)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,832</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Expected cash flows at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,080</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest component of expected cash flows (accretable discount)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fair value of acquired loans accounted for under ASC <font style="WHITE-SPACE: nowrap">310-30</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,813</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Lafayette Community Bancorp </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On September&#160;1, 2017, Horizon completed the acquisition of Lafayette Community Bancorp, an Indiana corporation (&#8220;Lafayette&#8221;) and Horizon Bank&#8217;s acquisition of Lafayette Community Bank, a state-chartered bank and wholly-owned subsidiary of Lafayette, through mergers effective September&#160;1, 2017. Under the terms of the Merger Agreement, shareholders of Lafayette received 0.8817 shares of Horizon common stock and $1.73 in cash for each outstanding share of Lafayette common stock. Lafayette shareholders owning fewer than 100 shares of common stock received $17.25 in cash for each common share. Lafayette shares outstanding at the closing to be exchanged were 1,856,679, and the shares of Horizon common stock issued to Lafayette shareholders totaled 1,636,888. Based upon the August&#160;31, 2017 closing price of $17.45 per share of Horizon common stock immediately prior to the effectiveness of the merger, the transaction has an implied valuation of approximately $34.5&#160;million. The Company incurred approximately $1.7&#160;million in costs related to the acquisition as of December&#160;31, 2017. These expenses are classified in the <font style="WHITE-SPACE: nowrap">non-interest</font> expense section of the income statement and are primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company will have an opportunity to increase its deposit base and reduce transaction costs. The Company also expects to reduce cost through economies of scale. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon held 5% ownership in Lafayette immediately preceding the merger date. In accordance with ASC <font style="WHITE-SPACE: nowrap">805-10</font> &#8211; Business Combinations, Horizon was required to remeasure the equity interest in Lafayette&#8217;s common stock and recognize the resulting gain or loss, if any, in earnings. Since Lafayette was traded in the OTC market, the remeasurement was based on the closing price of Lafayette&#8217;s common stock immediately prior to the acquisition announcement and immediately prior to Horizon taking control of Lafayette. This remeasurement resulted in a gain of $530,000. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">82 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Lafayette acquisition is detailed in the following table. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="OVERFLOW: hidden; WIDTH: 48%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; PADDING-RIGHT: 0%">
<table id="z3211cdcacab24706889e84010296235f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 9%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24,846</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment securities, available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">116,258</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,761</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,280</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">134,299</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,818</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">395</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Goodwill</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,408</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Core deposit intangible</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">338</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,649</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total assets purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">186,844</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common shares issued</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,044</td>
<td valign="bottom" nowrap="nowrap"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,421</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total purchase price</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">34,465</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="OVERFLOW: hidden; WIDTH: 49%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; MARGIN-LEFT: 3%; PADDING-RIGHT: 0%">
<table id="zfda51bcd6c76403e82b2eac6a2e25c67" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">34,990</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">NOW accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,174</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Savings and money market</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,663</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,520</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">151,347</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">990</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total liabilities assumed</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,379</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="FONT-SIZE: 0pt; HEIGHT: 0pt; CLEAR: both"></div>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6715f15fc35d4eb796a1c7fb78b26d24" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup>&#160;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">This includes $955,000 of common shares previously held by Horizon. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Of the total estimated purchase price of $34.5&#160;million, $2.1&#160;million has been allocated to core deposit intangible. Additionally, $15.4&#160;million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight-line basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 <font style="WHITE-SPACE: nowrap">past-due</font> and <font style="WHITE-SPACE: nowrap">non-accrual</font> status, borrower credit scores and recent <font style="WHITE-SPACE: nowrap">loan-to-value</font> percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC <font style="WHITE-SPACE: nowrap">310-30)</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Loans with specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">83 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table details an estimate of the acquired loans that are accounted for in accordance with ASC <font style="WHITE-SPACE: nowrap">310-30</font> as of September&#160;1, 2017. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zedc846c82838456c9a63f7021a5a137e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 89%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractually required principal and interest at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,128</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractual cash flows not expected to be collected (nonaccretable differences)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,326</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Expected cash flows at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,802</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest component of expected cash flows (accretable discount)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">933</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fair value of acquired loans accounted for under ASC <font style="WHITE-SPACE: nowrap">310-30</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,869</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Bargersville Branch Purchase </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On February&#160;3, 2017, Horizon completed the purchase and assumption of certain assets and liabilities of a single branch of First Farmers Bank&#160;&amp; Trust Company, in Bargersville, Indiana. Net cash of $11.0&#160;million was received in the transaction, representing the deposit balances assumed at closing, net of amounts paid for loans acquired in the transaction of $3.4&#160;million and a 3.0% premium on deposits. Customer deposit balances were recorded at $14.8&#160;million and a core deposit intangible of $452,000 was recorded in the transaction, which will be amortized over 10 years on a straight line basis. There was no goodwill generated in the transaction. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">CNB Bancorp </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On November&#160;7, 2016, Horizon completed the acquisition of CNB Bancorp, an Indiana corporation headquartered in Attica, Indiana (&#8220;CNB&#8221;) and the Bank&#8217;s acquisition of The Central National Bank and Trust Company (&#8220;Central National Bank&#160;&amp; Trust&#8221;), through mergers effective November&#160;7, 2016. Under terms of the acquisition, shareholders of CNB received merger consideration in the form of cash. The total value of the consideration for the acquisition was $5.3&#160;million. The Company incurred approximately $779,000 in costs related to the acquisition as of December&#160;31, 2016. These expenses are classified in the <font style="WHITE-SPACE: nowrap">non-interest</font> expense section of the income statement and primarily located in the salaries and employee benefits, professional services 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">84 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Under the purchase method of accounting, the total estimated purchase price is allocated to CNB&#8217;s net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management&#8217;s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the CNB acquisition is allocated as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="OVERFLOW: hidden; WIDTH: 48%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; PADDING-RIGHT: 0%">
<table id="z46c73d0f5de546db8a316caf33d0c409" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 84%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment securities, available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,393</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,624</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,579</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">444</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">50</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Goodwill</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">609</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Core deposit intangible</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">190</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total assets purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">56,219</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total purchase price</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="OVERFLOW: hidden; WIDTH: 49%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; MARGIN-LEFT: 3%; PADDING-RIGHT: 0%">
<table id="z792ea692ed9f4657a309b834099612d5" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 84%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24,079</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">NOW accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Savings and money market</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,829</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,342</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">50,288</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">459</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total liabilities assumed</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50,908</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="FONT-SIZE: 0pt; HEIGHT: 0pt; CLEAR: both"></div>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Of the total purchase price of $5.3&#160;million, $190,000 has been allocated to core deposit intangible. Additionally, $609,000 has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company acquired the $10.8&#160;million performing loan portfolio with an estimated fair value of $10.5&#160;million. No loans were purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected or which are considered to be credit impaired. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">LaPorte Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On July&#160;18, 2016, Horizon completed the acquisition of LaPorte Bancorp, Inc., a Maryland corporation (&#8220;LaPorte Bancorp&#8221;) and the Bank&#8217;s acquisition of The LaPorte Savings Bank, a state-chartered savings bank and wholly owned subsidiary of LaPorte Bancorp, through mergers effective July&#160;18, 2016. Under the terms of the merger agreement, shareholders of LaPorte Bancorp had the option to receive $17.50 per share in cash or 1.4153 shares of Horizon common stock for each share of LaPorte Bancorp&#8217;s common stock, subject to allocation provisions to assure that in aggregate, LaPorte Bancorp shareholders received total consideration that consisted of 65% stock and 35% cash. As a result of LaPorte Bancorp shareholder stock and cash elections and the related proration provisions of the merger agreement, Horizon issued 5,132,232 shares of its common stock in the merger. Based upon the July&#160;18, 2016 closing price of $12.24 per share of Horizon common stock, less the consideration used to pay off LaPorte Bancorp&#8217;s ESOP loan receivable, the transaction has an implied valuation of approximately $98.6&#160;million. The Company incurred approximately $4.0&#160;million in costs related to the acquisition as of December&#160;31, 2016. These expenses are classified in the <font style="WHITE-SPACE: nowrap">non-interest</font> expense section of the income statement and primarily located in the salaries and employee benefits, professional services 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">85 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the LaPorte Bancorp acquisition is detailed in the following table. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="OVERFLOW: hidden; WIDTH: 48%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; PADDING-RIGHT: 0%">
<table id="zc97a2db97b8f4a7fa6d941364eca3e41" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">154,849</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment securities, available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,779</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">153,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,603</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehousing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">99,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">312,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,022</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,029</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Goodwill</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,993</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Core deposit intangible</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,514</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">844</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash value of life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,334</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total assets purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">549,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common shares issued</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">60,306</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,328</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total purchase price</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">98,634</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="OVERFLOW: hidden; WIDTH: 49%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; MARGIN-LEFT: 3%; PADDING-RIGHT: 0%">
<table id="zb577411214dd4dbbb59457a525089ea9" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66,733</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">NOW accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">99,346</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Savings and money market</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">117,688</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">87,605</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">371,372</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">64,793</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,504</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,056</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total liabilities assumed</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">450,903</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="FONT-SIZE: 0pt; HEIGHT: 0pt; CLEAR: both"></div>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Of the total estimated purchase price of $98.6&#160;million, $2.5&#160;million has been allocated to core deposit intangible. Additionally, $21.0&#160;million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 <font style="WHITE-SPACE: nowrap">past-due</font> and <font style="WHITE-SPACE: nowrap">non-accrual</font> status, borrower credit scores and recent <font style="WHITE-SPACE: nowrap">loan-to-value</font> percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC <font style="WHITE-SPACE: nowrap">310-30)</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Loans with specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">86 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table details the acquired loans that are accounted for in accordance with ASC <font style="WHITE-SPACE: nowrap">310-30</font> as of July&#160;18, 2016. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za8454773ced64ff9bc21e9f6a0d55e8a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 88%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractually required principal and interest at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,545</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractual cash flows not expected to be collected (nonaccretable differences)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Expected cash flows at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,053</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest component of expected cash flows (accretable discount)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,258</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fair value of acquired loans accounted for under ASC <font style="WHITE-SPACE: nowrap">310-30</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,795</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Kosciusko Financial, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On June&#160;1, 2016, Horizon completed the acquisition of Kosciusko Financial, Inc., an Indiana corporation (&#8220;Kosciusko&#8221;) and the Bank&#8217;s acquisition of Farmers State Bank, a state-chartered bank and wholly owned subsidiary of Kosciusko, through mergers effective June&#160;1, 2016. Under the terms of the merger agreement, shareholders of Kosciusko had the option to receive $81.75 per share in cash or 6.7775 shares of Horizon common stock for each share of Kosciusko&#8217;s common stock, subject to allocation provisions to assure that in aggregate, Kosciusko shareholders received total consideration that consisted of 65% stock and 35% cash. Kosciusko shareholders owning fewer than 100 shares of common stock received $81.75 in cash for each common share. As a result of Kosciusko shareholder stock and cash elections and the related proration provisions of the merger agreement, Horizon issued 1,310,145 shares of its common stock in the merger. Based upon the June&#160;1, 2016 closing price of $11.04 per share of Horizon common stock, the transaction has an implied valuation of approximately $23.0&#160;million. The Company incurred approximately $2.0&#160;million in costs related to the acquisition. These expenses are classified in the <font style="WHITE-SPACE: nowrap">non-interest</font> expense section of the income statement and primarily located in the salaries and employee benefits, professional services 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">87 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Kosciusko acquisition is detailed in the following table. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<div style="OVERFLOW: hidden; WIDTH: 48%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; PADDING-RIGHT: 0%">
<table id="za11430cb4480461d87d04c3968eb6bdc" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,950</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment securities, available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,191</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">70,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26,244</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,319</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">102,569</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Premises and equipment, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,466</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">FRB and FHLB stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">582</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Goodwill</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,443</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Core deposit intangible</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">526</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">636</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash value of life insurance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,745</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">765</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total assets purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">155,873</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common shares issued</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash paid</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,513</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total purchase price</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">22,983</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="OVERFLOW: hidden; WIDTH: 49%; POSITION: relative; FLOAT: left; PADDING-BOTTOM: 8pt; PADDING-TOP: 3pt; MARGIN-LEFT: 3%; PADDING-RIGHT: 0%">
<table id="zad9b6afc705f4ed6a4090c5ae864c5bf" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,871</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">NOW accounts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,213</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Savings and money market</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26,953</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Certificates of deposit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,771</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">122,808</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">55</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">989</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total liabilities assumed</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">132,890</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>
</div>

<div style="FONT-SIZE: 0pt; HEIGHT: 0pt; CLEAR: both"></div>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Of the total estimated purchase price of $23.0&#160;million, $526,000 has been allocated to core deposit intangible. Additionally, $6.4&#160;million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over 10 years on a straight line basis. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 <font style="WHITE-SPACE: nowrap">past-due</font> and <font style="WHITE-SPACE: nowrap">non-accrual</font> status, borrower credit scores and recent <font style="WHITE-SPACE: nowrap">loan-to-value</font> percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC <font style="WHITE-SPACE: nowrap">310-30)</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Loans with specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">88 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table details the acquired loans that are accounted for in accordance with ASC <font style="WHITE-SPACE: nowrap">310-30</font> as of June&#160;1, 2016. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z5b2bfb9e146042318b9e82517fd0e516" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 89%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractually required principal and interest at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,682</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Contractual cash flows not expected to be collected (nonaccretable differences)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">25</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Expected cash flows at acquisition</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest component of expected cash flows (accretable discount)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">634</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Fair value of acquired loans accounted for under ASC <font style="WHITE-SPACE: nowrap">310-30</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,023</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Final estimates of certain loans, those for which specific credit-related deterioration, since origination, are 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The results of operations of Wolverine, Lafayette, CNB, LaPorte Bancorp and Kosciusko have been included in the Company&#8217;s consolidated financial statements since the acquisition dates. The following schedule includes <font style="WHITE-SPACE: nowrap">pro-forma</font> results for the periods ended December&#160;31, 2017 and 2016 as if the Wolverine, Lafayette, CNB, LaPorte Bancorp and Kosciusko acquisitions had occurred as of the beginning of the comparable prior reporting periods. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z100638012a944acb8d949d79aea54526" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 78%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Years&#160;Ended&#160;December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Summary of Operations:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Interest Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">125,442</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">115,860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Provision for Loan Losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,082</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Interest Income after Provision for Loan Losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">125,454</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">114,778</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,959</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">43,330</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> Expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">109,605</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">119,522</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income before Income Taxes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,808</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,586</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income Tax Expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,204</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,072</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26,514</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income Available to Common Shareholders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">26,472</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Basic Earnings per Share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.88</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Diluted Earnings per Share</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.88</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The <font style="WHITE-SPACE: nowrap">pro-forma</font> 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 <font style="WHITE-SPACE: nowrap">pro-forma</font> information for the year ended 2017 includes $2.6&#160;million, net of tax, of operating revenue from Lafayette and Wolverine since acquisitions and approximately $2.7&#160;million, net of tax, of <font style="WHITE-SPACE: nowrap">non-recurring</font> expenses directly attributable to the Lafayette and Wolverine acquisitions. The <font style="WHITE-SPACE: nowrap">pro-forma</font> information for the year ended 2016 includes $4.3&#160;million, net of tax, of operating revenue from CNB, LaPorte Bancorp and Kosciusko since acquisition and approximately $4.8&#160;million, net of tax, of <font style="WHITE-SPACE: nowrap">non-recurring</font> expenses directly attributable to the acquisitions. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The <font style="WHITE-SPACE: nowrap">pro-forma</font> 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">89 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 3 &#8211; Cash Equivalents </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Company considers all liquid investments with original maturities of three months or less to be cash equivalents.&#160;At December&#160;31, 2018 and 2017, cash equivalents consisted primarily of money market accounts with brokers and certificates of deposit. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018, the Company&#8217;s cash accounts exceeded federally insured limits by approximately $10.3&#160;million. Approximately $3.5&#160;million of this amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Indianapolis, which is not federally insured. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 4 &#8211; Securities </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The fair value of securities is as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z2250cc51ddbb4c89b3166591e53d2c24" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 62%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br>
<b>Unrealized</b><br>
<b>Gains</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br>
<b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,815</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(208</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,608</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">210,386</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,495</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,578</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">209,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">187,563</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">625</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,185</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">183,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,823</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,666</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">107</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(75</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total available for sale investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">608,909</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,308</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(10,869</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">600,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">191,269</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,773</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(3,366</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">189,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,144</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(120</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,699</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(206</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,567</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total held to maturity investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">210,112</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,853</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(3,692</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">208,273</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="16"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br>
<b>Unrealized</b><br>
<b>Gains</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br>
<b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19,277</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(225</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">148,045</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,189</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(670</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">149,564</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">132,871</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">45</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,551</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">211,487</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">155</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,985</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Private labeled mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,650</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">272</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">113</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">385</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total available for sale investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">513,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,502</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(6,439</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">509,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">179,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,493</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(2,932</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">180,397</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(69</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,682</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,878</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">216</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(88</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total held to maturity investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">200,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,726</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(3,089</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">201,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">90 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">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 <font style="WHITE-SPACE: nowrap">held-to-maturity,</font> Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified. At December&#160;31, 2018, no individual investment security had an unrealized loss that was determined to be other-than-temporary. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The unrealized losses on the Company&#8217;s investments in securities of state and municipal governmental agencies, U.S. Treasury and federal agencies, federal agency collateralized mortgage obligations, and federal agency mortgage-backed pools were caused by interest rate volatility and not a decline in credit quality. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company expects to recover the amortized cost basis over the term of the securities. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider those investments to be other-than-temporarily impaired at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company elected to transfer 319 <font style="WHITE-SPACE: nowrap">available-for-sale</font> (&#8220;AFS&#8221;) securities with an aggregate fair value of $167.1&#160;million to a classification of <font style="WHITE-SPACE: nowrap">held-to-maturity</font> (&#8220;HTM&#8221;) on April&#160;1, 2014. In accordance with FASB ASC <font style="WHITE-SPACE: nowrap">320-10-55-24,</font> the transfer from AFS to HTM must be recorded at the fair value of the AFS securities at the time of transfer. The net unrealized holding gain of $1.3&#160;million, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated <font style="WHITE-SPACE: nowrap">pre-tax</font> amount retained in the carrying value of the HTM securities. Such amounts will be amortized to comprehensive income over the remaining life of the securities. The fair value of the transferred AFS securities became the book value of the HTM securities at April&#160;1, 2014, with no unrealized gain or loss at this date. Future reporting periods, with potential changes in market value for these securities, would likely record an unrealized gain or loss for disclosure purposes. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The amortized cost and fair value of securities available for sale and <font style="WHITE-SPACE: nowrap">held-to-maturity</font> at December&#160;31, 2018 and December&#160;31, 2017, 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">91 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4918a7c847814007bd7c86d9bbf1f02c" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br>
<b>Cost</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Within one year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,532</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,347</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,326</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">One to five years</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,476</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">41,705</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40,468</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40,193</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Five to ten years</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">107,839</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">107,107</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">50,473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">51,156</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">After ten years</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">67,020</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">67,349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">63,306</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">64,326</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">237,867</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">236,609</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">167,594</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">169,001</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">187,563</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">132,871</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">183,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">211,487</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Private labeled mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,650</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total available for sale investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">608,909</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">600,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">513,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">509,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Within one year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">70</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">70</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,948</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,934</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">One to five years</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">48,732</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40,603</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">41,531</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Five to ten years</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">101,809</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">101,533</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">91,249</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">After ten years</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40,658</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,749</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">47,484</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">45,683</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,269</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">189,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">179,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180,397</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,144</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,682</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,699</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,567</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,878</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total held to maturity investment securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">210,112</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">208,273</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">200,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">201,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following table shows the gross unrealized losses and the fair value of the Company&#8217;s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z7d1374f3c175492e891e7a40dbca7f58" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 53%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="22" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Less than 12 Months</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>12 Months or More</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment Securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,707</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(208</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,707</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(208</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">75,163</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,628</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">106,335</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,316</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">181,498</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,944</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,450</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(25</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">106,257</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,280</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">112,707</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,305</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,739</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(39</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">175,865</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,990</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">181,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,029</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,263</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(75</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,263</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(75</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total temporarily impaired securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">92,615</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,767</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">398,164</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(12,794</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">490,779</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(14,561</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="24"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="22" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Less than 12 Months</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>12 Months or More</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment Securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">15,882</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(180</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(45</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(225</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">54,312</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,758</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,691</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(844</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">85,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,602</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">54,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(589</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">73,462</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,031</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">127,468</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,620</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">103,926</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,019</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">86,846</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,054</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">190,772</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,073</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Private labeled mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total temporarily impaired securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">229,768</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(4,554</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">193,869</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(4,974</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">423,637</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(9,528</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">92 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">U.S. Treasury, federal agency, state and municipal </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The unrealized losses on the Company&#8217;s investments in U.S. Treasury, federal agency and state and municipals were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Federal agency mortgage-backed pools and collateralized mortgage obligations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The unrealized losses on the Company&#8217;s investment in federal agency mortgage backed pools and collateralized mortgage obligations securities were caused by interest rate changes. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Information regarding security proceeds, gross gains and gross losses are presented below. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z2da124c4ea714ef497a3396294822e4d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 73%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Sales of securities available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Proceeds</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,519</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,490</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">182,549</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Gross gains</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">151</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,646</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Gross losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(480</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(113</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(810</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The tax effect of the proceeds from the sale of securities available for sale was $(93,000), $13,000 and $643,000 for the years ended December&#160;31, 2018, 2017 and 2016, respectively. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company pledges securities to secure retail and corporate repurchase agreements to the Federal Reserve for borrowing availability and as settlements for the fair value of swap agreements. At December&#160;31, 2018, the Company had pledged $58.8&#160;million of fair value or $60.7&#160;million of amortized cost, in securities as collateral for $52.1&#160;million in repurchase agreements, $96.2&#160;million of fair value or $95.9&#160;million of amortized cost, in securities as collateral for borrowing availability at the Federal Reserve with $0 current outstanding borrowings and $11.1&#160;million of fair value or $11.2&#160;million of amortized cost, in securities as collateral for $1.8&#160;million in settlements on the fair value of swap agreements. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">93 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Note 5 </b>&#8211;<b> Loans</b> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6d10241d673642fa884c7c42a08e165e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Working capital and equipment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>804,083</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">720,477</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate, including agriculture</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>834,037</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">880,861</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Tax exempt</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>48,975</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>34,495</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,272</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,721,590</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,669,934</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">1-4</font> family</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>659,754</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">602,196</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>8,387</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,543</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>668,141</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">609,739</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Auto</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>327,413</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">244,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Recreation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>13,975</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,728</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate/home improvement</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>39,587</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>163,209</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">165,240</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Unsecured</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>4,043</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>1,254</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,497</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>549,481</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">460,999</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>74,120</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>3,013,332</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,835,180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>&#160;</b></td>
<td valign="bottom" align="right"><b>(17,820</b></td>
<td valign="bottom" nowrap="nowrap"><b>)&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,394</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"><b>$</b></td>
<td valign="bottom" align="right"><b>2,995,512</b></td>
<td valign="bottom" nowrap="nowrap"><b>&#160;</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,818,786</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Commercial </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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&#8217;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 <font style="WHITE-SPACE: nowrap">non-owner</font> occupied loans. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">94 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Real Estate and Consumer </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">With respect to residential loans that are secured by <font style="WHITE-SPACE: nowrap">1-4</font> family residences and are generally owner occupied, the Company generally establishes a maximum <font style="WHITE-SPACE: nowrap">loan-to-value</font> ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in <font style="WHITE-SPACE: nowrap">1-4</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Mortgage Warehousing </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon&#8217;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&#8217;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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">95 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table shows the recorded investment of individual loan categories. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zdead56b7d2ec4c5196ddd455bbfb22b4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 58%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loan</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest</b><br>
<b>Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Deferred</b><br>
<b>Costs/(Fees)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br>
<b>Investment</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">561,463</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,240</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,629</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">561,074</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">717,814</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,063</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,839</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">717,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,199</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,547</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">131</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,666</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">394,346</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,149</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(297</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">397,198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,725,369</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,596</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,779</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,727,186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">646,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,861</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,025</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">645,972</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,072</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">480</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,600</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">744,286</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,383</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,025</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">744,644</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,173</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">103</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">566</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,842</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">314,177</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">738</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">314,915</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,766</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">973</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,799</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">197,538</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">547,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,814</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">551,295</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,016,771</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,793</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,439</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,023,125</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(17,820</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(17,820</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,998,951</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,793</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(3,439</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,005,305</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z76170969527e42de8a8ee63821640dd2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 58%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loan</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest</b><br>
<b>Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Deferred</b><br>
<b>Costs/(Fees)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br>
<b>Investment</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">576,022</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,511</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,917</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">575,616</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">683,901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,478</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">682,561</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,591</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">63</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(80</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,574</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,996</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(579</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">349,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(607</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">351,050</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,675,595</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,401</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,661</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,675,335</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">596,087</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,776</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,375</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">595,488</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,027</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">39</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,066</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">480</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,988</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">706,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,295</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,375</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">706,542</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,737</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">113</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">552</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,402</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">227,659</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">528</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(168</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">228,019</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">889</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,359</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">197,108</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">459,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,530</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,743</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">462,529</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,841,473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,226</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(6,293</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,844,406</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,394</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,394</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,825,079</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,226</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(6,293</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,828,012</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">96 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 6 &#8211; Accounting for Certain Loans Acquired in a Transfer </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Company acquired loans in acquisitions with evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 <font style="WHITE-SPACE: nowrap">past-due</font> and <font style="WHITE-SPACE: nowrap">non-accrual</font> status, borrower credit scores and recent <font style="WHITE-SPACE: nowrap">loan-to-value</font> percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC <font style="WHITE-SPACE: nowrap">310-30)</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The carrying amounts of those loans included in the balance sheet amounts of loans receivable are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z247f645f4ec043b8843342b4ea855812" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 57%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="22" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Commercial</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Real&#160;Estate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Consumer</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Outstanding</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>for Loan</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Carrying</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Heartland</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">232</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">407</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">407</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Summit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">323</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">555</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">878</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">878</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Peoples</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">270</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">58</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">328</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">328</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">746</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">155</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">753</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">947</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,727</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,667</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,080</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,080</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,080</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,841</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,841</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,841</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;13,245</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,890</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;15,162</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;15,102</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="24"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="22" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Commercial</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Real Estate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Consumer</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Outstanding</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance</b><br>
<b>for Loan</b><br>
<b>Losses</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Carrying</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Heartland</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">390</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">229</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">619</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">619</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Summit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,523</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,523</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Peoples</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">315</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">441</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">441</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">838</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">403</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,241</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,241</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,034</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,004</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,071</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,071</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,697</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,697</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,697</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,632</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,863</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,863</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">97 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Accretable yield, or income expected to be collected are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z293d8cf7cd7341f3aacea5b8f33c6c3d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 57%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="22" align="center"><b>Twelve Months Ended December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Beginning</b><br>
<b>balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Additions</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Accretion</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Reclassification</b><br>
<b>from</b><br>
<b>nonaccretable</b><br>
<b>difference</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Disposals</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ending</b><br>
<b>balance</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Heartland</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">452</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(85</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(193</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">174</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Summit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">147</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(54</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(51</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">386</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(78</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">300</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">980</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(144</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(7</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">829</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">933</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(275</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(49</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">609</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(812</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(757</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;5,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,448</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,065</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,652</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="24"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="22" align="center"><b>Twelve Months Ended December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Beginning</b><br>
<b>balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Additions</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Accretion</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Reclassification</b><br>
<b>from</b><br>
<b>nonaccretable</b><br>
<b>difference</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Disposals</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ending</b><br>
<b>balance</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Heartland</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">557</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(99</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(6</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">452</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Summit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">502</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(353</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">147</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Peoples</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">389</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(388</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">530</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(101</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(43</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">386</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(235</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(264</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">980</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">933</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">933</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,457</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,200</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,176</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(316</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">During the years ended December&#160;31, 2018 and 2017, the Company increased the allowance for loan losses by a charge to the income statement of $60,000 and $0, respectively. No allowance for loan losses were reversed for the years ended December&#160;31, 2018 and 2017. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">98 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 7 &#8211; Allowance for Loan Losses </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior one to five years. Management believes using the highest of the one, two or five-year historical loss experience is an appropriate methodology in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. The actual allowance for loan loss activity is provided below. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z1797efd6ccd64bc0ba4b942e41947682" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 70%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balance at beginning of the period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,534</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans <font style="WHITE-SPACE: nowrap">charged-off:</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">112</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">181</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">471</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">361</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">540</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">106</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">629</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">758</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">76</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">213</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">76</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">89</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">213</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">137</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">329</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,673</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,193</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,051</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">205</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">309</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,689</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loans <font style="WHITE-SPACE: nowrap">charged-off</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,552</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,253</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,660</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Recoveries of loans previously <font style="WHITE-SPACE: nowrap">charged-off:</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">59</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">29</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">55</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">249</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">298</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">44</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">44</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">501</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">81</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">505</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">497</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">529</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">204</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">869</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">998</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">814</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total loan recoveries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,072</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,340</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,121</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net loans <font style="WHITE-SPACE: nowrap">charged-off</font></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,480</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">913</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,539</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Provision charged to operating expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,699</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,164</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(68</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(487</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(81</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(23</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,694</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">387</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,933</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total provision charged to operating expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,470</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,842</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balance at the end of the period</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">99 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Certain loans are individually evaluated for impairment, and the Company&#8217;s general practice is to proactively charge down impaired loans to the fair value, which is the appraised value less estimated selling costs, of the underlying collateral. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company&#8217;s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">For all loan portfolio segments except <font style="WHITE-SPACE: nowrap">1-4</font> family residential properties and consumer, the Company promptly <font style="WHITE-SPACE: nowrap">charges-off</font> loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1)&#160;the deteriorating financial condition of the borrower, (2)&#160;declining collateral values, and/or (3)&#160;legal action, including bankruptcy, that impairs the borrower&#8217;s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial <font style="WHITE-SPACE: nowrap">charge-off</font> is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company <font style="WHITE-SPACE: nowrap">charges-off</font> <font style="WHITE-SPACE: nowrap">1-4</font> 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 <font style="WHITE-SPACE: nowrap">1-4</font> 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 <font style="WHITE-SPACE: nowrap">charges-off</font> unsecured <font style="WHITE-SPACE: nowrap">open-end</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment analysis: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zf77a2eced3b24746bffd810f112f6cbe" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 54%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Commercial</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Real Estate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Mortgage</b><br>
<b>Warehousing</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Consumer</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance For Loan Losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Ending allowance balance attributable to loans:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Individually evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,035</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,035</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Collectively evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,460</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,785</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans acquired with deteriorated credit quality</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total ending allowance balance</p>
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<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">10,495</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,006</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Individually evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,708</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,708</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Collectively evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,718,661</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">670,166</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">547,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,010,063</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans acquired with deteriorated credit quality</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total ending loans balance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,725,369</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;670,166</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;547,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,016,771</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb3ffce52da844ff187d0fefe849e95de" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 54%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Commercial</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Real Estate</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Mortgage</b><br>
<b>Warehousing</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Consumer</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Allowance For Loan Losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Ending allowance balance attributable to loans:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Individually evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">184</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">184</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Collectively evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,909</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,188</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,083</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans acquired with deteriorated credit quality</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total ending allowance balance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,093</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,188</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,083</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Loans:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Individually evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,187</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,187</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Collectively evaluated for impairment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,668,408</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">612,114</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">459,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,834,286</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans acquired with deteriorated credit quality</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total ending loans balance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,675,595</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;612,114</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;459,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,841,473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">100 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 8 &#8211; <font style="WHITE-SPACE: nowrap">Non-performing</font> Assets and Impaired Loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following table presents the nonaccrual, loans past due over 90 days still on accrual, and troubled debt restructured (&#8220;TDRs&#8221;) by class of loans: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6f7d23bf008e499d881f2a27407f2623" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 54%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Non-accrual</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loans&#160;Past</b><br>
<b>Due&#160;Over&#160;90</b><br>
<b>Days Still</b><br>
<b>Accruing</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Non-peforming</b><br>
<b>TDRs</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Performing</b><br>
<b>TDRs</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b><br>
<b style="WHITE-SPACE: nowrap">Non-performing</b><br>
<b>Loans</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,413</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">109</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,522</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">554</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,267</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,094</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">109</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,903</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,846</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">423</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,558</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,007</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,846</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">423</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,558</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,007</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">916</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">173</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,089</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">142</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">335</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,141</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,608</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">142</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">335</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,265</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11,548</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">568</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,057</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,002</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;15,175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="20"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Non-accrual</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Loans Past</b><br>
<b>Due Over 90</b><br>
<b>Days Still</b><br>
<b>Accruing</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Non-peforming</b><br>
<b>TDRs</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Performing</b><br>
<b>TDRs</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b><br>
<b style="WHITE-SPACE: nowrap">Non-performing</b><br>
<b>Loans</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,877</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,889</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">115</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">440</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">555</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,902</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">451</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,354</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,693</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">351</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,450</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,494</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">222</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">222</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,693</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">351</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,672</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,716</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">160</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">160</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,041</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,480</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">211</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">285</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,976</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,681</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">211</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">285</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,344</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,276</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,013</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,958</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,414</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">101 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Included in the $11.5&#160;million of <font style="WHITE-SPACE: nowrap">non-accrual</font> loans and the $1.1&#160;million of <font style="WHITE-SPACE: nowrap">non-performing</font> TDRs at December&#160;31, 2018 were $3.6&#160;million and $0, respectively, of loans acquired for which there were accretable yields recognized. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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&#8217;s policy to convert the loan from an &#8220;earning asset&#8221; to a <font style="WHITE-SPACE: nowrap">non-accruing</font> 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&#8217;s policy to generally place a loan on a <font style="WHITE-SPACE: nowrap">non-accrual</font> 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 Credit Officer and/or the Chief Operations Officer must review all loans placed on <font style="WHITE-SPACE: nowrap">non-accrual</font> status. Subsequent payments on <font style="WHITE-SPACE: nowrap">non-accrual</font> loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. <font style="WHITE-SPACE: nowrap">Non-accrual</font> 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 <font style="WHITE-SPACE: nowrap">non-accrual</font> loan to accrual status. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1&#8211;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&#8217;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 <font style="WHITE-SPACE: nowrap">non-accrual</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms, including TDRs, are measured for impairment. Allowable methods for determining the amount of impairment include the three methods described above. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company&#8217;s TDRs are considered impaired loans and included in the allowance methodology using the guidance for impaired loans. At December&#160;31, 2018, 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 December&#160;31, 2018, the Company had $3.1&#160;million in TDRs and $2.0&#160;million were performing according to the restructured terms and one TDR was returned to accrual status during 2018. There was $20,000 of specific reserves allocated to TDRs at December&#160;31, 2018 based on the collateral deficiencies. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">102 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table presents commercial loans individually evaluated for impairment by class of loans: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6183c1361d174dc4a2c4d9f3239b17ea" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 61%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unpaid</b><br>
<b>Principal</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br>
<b>Investment</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance for</b><br>
<b>Loan Loss</b><br>
<b>Allocated</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Balance&#160;in</b><br>
<b>Impaired</b><br>
<b>Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Cash/Accrual</b><br>
<b>Interest</b><br>
<b>Income</b><br>
<b>Recognized</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">With no recorded allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,696</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,689</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,048</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">71</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">888</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,096</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">66</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">71</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,344</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,337</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,239</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,968</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,980</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,454</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">110</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">With an allowance recorded</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">827</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">828</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">145</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">864</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">715</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">714</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,728</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,728</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,035</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,914</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,696</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,708</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,035</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,368</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;128</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="20"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unpaid</b><br>
<b>Principal</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br>
<b>Investment</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance&#160;for</b><br>
<b>Loan Loss</b><br>
<b>Allocated</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Balance in</b><br>
<b>Impaired</b><br>
<b>Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Cash/Accrual</b><br>
<b>Interest</b><br>
<b>Income</b><br>
<b>Recognized</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">With no recorded allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,824</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,849</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,673</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">554</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">570</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">345</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">174</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">233</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,656</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,663</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,445</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">25</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,696</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">40</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">With an allowance recorded</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">931</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">931</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">184</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">78</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">931</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">931</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">184</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">78</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,141</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,187</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">184</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,774</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">86</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">103 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze997aaea896241d8a8be33b7d0dee6aa" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 58%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Twelve Months Ended</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unpaid</b><br>
<b>Principal</b><br>
<b>Balance</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br>
<b>Investment</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Allowance&#160;for</b><br>
<b>Loan Loss</b><br>
<b>Allocated</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br>
<b>Balance&#160;in</b><br>
<b>Impaired</b><br>
<b>Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Cash/Accrual</b><br>
<b>Interest</b><br>
<b>Income</b><br>
<b>Recognized</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">With no recorded allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,533</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,533</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,619</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">58</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">440</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">440</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">871</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">118</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">118</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">61</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">128</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">127</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,219</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,218</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,900</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">93</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">With an allowance recorded</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,250</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,250</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,905</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">95</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following table presents the payment status by class of loans: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze74e56a260424f5c82c247fe605362f6" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 38%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="26" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Current</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">30-59&#160;Days</b><br>
<b>Past Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">60-89&#160;Days</b><br>
<b>Past Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>90&#160;Days&#160;or</b><br>
<b>Greater</b><br>
<b>Past Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Non-accrual</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total&#160;Past&#160;Due</b><br>
<b>&amp;</b><br>
<b><font style="WHITE-SPACE: nowrap">Non-accrual</font><br>
 Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">556,516</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">997</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,413</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,947</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">561,463</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">716,574</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,046</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,240</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">717,814</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,707</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,199</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,479</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,547</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">390,828</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">515</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,518</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">394,346</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,715,104</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,719</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,752</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,586</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,265</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,725,369</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">641,500</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,131</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">56</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,269</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,636</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">646,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">739,650</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,131</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">56</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,269</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,636</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">744,286</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">93</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,173</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">313,088</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,396</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">173</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">916</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,089</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">314,177</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192,960</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">761</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,799</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,806</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,766</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">544,186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,250</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">253</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,930</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">547,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,998,940</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;5,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,061</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">568</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;12,605</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;17,831</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,016,771</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Percentage of total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">99.41</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.17</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.07</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.02</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.42</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.59</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">104 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zccb6ea08100348aa9e5742ef905e8051" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 45%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="26" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Current</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b><font style="WHITE-SPACE: nowrap">30-59</font><br>
 Days</b><br>
<b>Past<br>
 Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b><font style="WHITE-SPACE: nowrap">60-89</font><br>
 Days</b><br>
<b>Past<br>
 Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>90 Days<br>
 or</b><br>
<b>Greater</b><br>
<b>Past<br>
 Due</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Non-accrual</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total&#160;Past&#160;Due</b><br>
<b>&amp;</b><br>
<b><font style="WHITE-SPACE: nowrap">Non-accrual</font><br>
 Loans</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">567,571</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,613</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,950</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,888</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,451</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">576,022</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">682,712</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">512</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">122</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">555</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,189</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">683,901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,591</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,591</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,789</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">207</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,996</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">346,830</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">520</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,734</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,255</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">349,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,663,493</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,676</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,073</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,353</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,102</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,675,595</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">590,746</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,248</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,044</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,341</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">596,087</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,964</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">63</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">63</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,027</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">701,218</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,044</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,404</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">706,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,489</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">78</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">160</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">248</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,737</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">224,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,859</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">244</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,041</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">227,659</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192,140</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">502</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">527</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,691</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,720</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">452,977</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,439</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">781</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,892</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,279</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">459,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,817,688</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,903</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,289</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;23,785</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,841,473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Percentage of total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">99.16</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.23</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.10</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.01</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.84</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon Bank&#8217;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 <font style="WHITE-SPACE: nowrap">re-evaluated</font> 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. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9e350b85d7064c038cce736323c5faff" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">For new and renewed commercial loans, the Bank&#8217;s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan.&#160;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). </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z726af0a821d1499ca35889260f9b6665" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Commercial loan officers are responsible for reviewing their loan portfolios and report 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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zec9e263d076d4ebe82e12f996052a043" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The CCBO, or his designee, meets weekly with loan officers to discuss the status of <font style="WHITE-SPACE: nowrap">past-due</font> 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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z0b580ec998564fe88ac1649d382d38db" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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&#8217;s analysis of the adequacy of the Allowance for Loan and Lease Losses. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 <font style="WHITE-SPACE: nowrap">non-accrual,</font> or are classified as a TDR are graded &#8220;Substandard.&#8221; 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 <font style="WHITE-SPACE: nowrap">non-accrual.</font> Occasionally a mortgage loan may be graded as &#8220;Special Mention.&#8221; 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">105 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 1: Excellent (Pass) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans that are guaranteed or otherwise backed by the full faith and credit of the United States government or an agency thereof, such as the Small Business Administration; or loans to any publicly held company with a current long-term debt rating of A or better. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 2: Good (Pass) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">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 where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit history; or loans to publicly held companies with current long-term debt ratings of Baa or better. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 3: Satisfactory (Pass) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">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. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8b76f9b9db4e4036ab09c21f6d8e9c29" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">At inception, the loan was properly underwritten, did <u>not</u> possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory; </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb123434a20924d678b329481d7cd73a7" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 4 Satisfactory/Monitored: </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory loans. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank&#8217;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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 4W Management Watch: </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">Loans in this category are considered to be of acceptable quality, 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">106 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Risk Grade 5: Special Mention </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">Loans which possess some 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)&#160;it is indicative of an unwarranted level of risk and (2)&#160;weaknesses are considered &#8220;potential,&#8221; not &#8220;defined,&#8221; 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 6: Substandard </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">One or more of the following characteristics may be exhibited in loans classified Substandard: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze5b71fdf93954559a816f3bd8f86d35b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z58be4da7672b4ccaab14cdc24ce9bcf3" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Loans are inadequately protected by the current net worth and paying capacity of the obligor. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zfb02f7be11f4490e83c6a06ba30369c0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z7a75ac2413ba429caec898e3d41611fc" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Unusual courses of action are needed to maintain a high probability of repayment. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z3ebabcbbec1243cc9411853068b42ea1" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z14704aaac1ff4574a03c9d0aa524f79b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The lender is forced into a subordinated or unsecured position due to flaws in documentation. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za5715ab86cdb4c259a622e338d583688" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z7f4ccbfcb234450d8ef6e0ea1790d5f6" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8ed592e175a644e3a1676269b2777044" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">There is a significant deterioration in market conditions to which the borrower is highly vulnerable. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 7: Doubtful </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">One or more of the following characteristics may be present in loans classified Doubtful: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze6f8d221556940a7b23de748251387b8" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z3e773ed79e3b4ae584844226a775fabd" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8788b4d54b9d4ad28a9424cc58803a89" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">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. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Risk Grade 8: Loss </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 4%">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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">107 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table presents loans by credit grades. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z25fbdf13176246a786e69c2867bc4730" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 59%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Pass</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Special</b><br>
<b>Mention</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Substandard</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Doubtful</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">538,177</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,618</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;16,668</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">561,463</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">702,269</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,682</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,863</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">717,814</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,199</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,199</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,382</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">97</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">46,547</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">379,607</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,655</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,084</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">394,346</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,671,634</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,683</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,725,369</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">641,309</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,827</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">646,136</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">74,120</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">739,459</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,827</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">744,286</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,173</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">313,088</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,089</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">314,177</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192,625</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,141</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,766</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">543,851</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,265</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">547,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,954,944</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,775</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,016,771</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Percentage of total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">97.95</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.76</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="20"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="18" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Pass</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Special</b><br>
<b>Mention</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Substandard</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Doubtful</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Owner occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">549,198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,202</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">576,022</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-owner</font> occupied real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">675,030</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,864</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,007</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">683,901</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential spec homes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,591</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,591</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Development&#160;&amp; spec land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">48,884</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">886</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">226</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">49,996</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Commercial and industrial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">327,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,667</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">349,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total commercial</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,617,673</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,102</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,675,595</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential mortgage</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">590,593</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,494</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">596,087</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Residential construction</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,805</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">222</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,027</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage warehouse</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">94,508</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total real estate</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">700,906</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,716</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">706,622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Direct installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,577</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">160</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">36,737</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Indirect installment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">226,451</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,208</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">227,659</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Home equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">192,884</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,976</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">194,860</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total consumer</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">455,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,344</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">459,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,774,491</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;20,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">46,162</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,841,473</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Percentage of total loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">97.64</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.73</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.62</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">108 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 9 &#8211; Premises and Equipment </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z09602af51d744fa29596b0557bcdc0c7" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Land</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">21,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">21,633</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Buildings and improvements</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">69,590</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68,447</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Furniture and equipment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,596</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">22,288</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total cost</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">115,790</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">112,368</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Accumulated depreciation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(41,459</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(36,839</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net premises and equipment</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">74,331</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">75,529</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 10 &#8211; Loan Servicing </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1.299&#160;billion and $1.310&#160;billion at December&#160;31, 2018 and 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The aggregate fair value of capitalized mortgage servicing rights was approximately $13.9&#160;million, $12.8&#160;million, and $12.1&#160;million at December&#160;31, 2018, 2017 and 2016, compared to the carrying values of $12.3&#160;million, $11.6&#160;million and $11.1&#160;million, respectively. The fair value of capitalized mortgage servicing rights was approximately $8.9&#160;million on January&#160;1, 2016. 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. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9833d8c7499a48488eb8479c57676731" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, January&#160;1</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;12,189</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11,681</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Servicing rights capitalized</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,883</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,109</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Amortization of servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,196</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,601</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,016</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,876</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,189</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,681</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Impairment allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, January&#160;1</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(587</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(507</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(397</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Additions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(78</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(85</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(236</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Reductions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">138</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">126</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balances, December&#160;31</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(527</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(587</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(507</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage servicing rights, net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,174</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">During 2018, the Bank reduced the impairment allowance approximately $60,000. During 2017 and 2016, the Bank recorded additional impairment of approximately $80,000 and $110,000, respectively. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 11 &#8211; Goodwill and Intangible Assets </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On October&#160;17, 2017, the Wolverine acquisition resulted in goodwill of $26.8&#160;million. On September&#160;1, 2017, the Lafayette acquisition resulted in goodwill of $15.4&#160;million. On November&#160;7, 2016, the CNB acquisition resulted in goodwill of $609,000. On July&#160;18, 2016, the LaPorte acquisition resulted in goodwill of $21.0&#160;million. On June&#160;1, 2016, the Kosciusko acquisition resulted in goodwill of $6.4&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">No impairment loss was recorded in 2018 or 2017. The Company tested goodwill for impairment during 2018 and 2017. In both valuations, the fair value exceeded the Company&#8217;s carrying value, therefore, it was concluded goodwill is not impaired. For additional details related to impairment testing, see the &#8220;Goodwill and Intangible Assets&#8221; section of </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">109 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">&#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; included as Item 7 of this Annual Report on Form 10K. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z102ca64e05c84a898b53314465a62182" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balance, January&#160;1</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;119,880</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">76,941</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Goodwill acquired</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,939</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Balance, December&#160;31</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">119,880</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;119,880</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Goodwill acquired in 2017 includes a $704,000 measurement period adjustment related to the 2016 acquisition of LaPorte. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As a result of the acquisition of American Trust&#160;&amp; Savings Bank in 2010; Heartland in 2012; Summit in 2014; Peoples in 2015; Kosciusko, LaPorte and CNB in 2016; and Lafayette and Wolverine in 2017; the Company has recorded certain amortizable intangible assets related to core deposit intangibles. These core deposit intangibles are being amortized over seven to ten years using an accelerated method. Amortizable intangible assets are summarized as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z42f54d39af2c4b69a86451d25d47c0e7" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 55%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross&#160;Carrying</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Accumulated</b><br>
<b>Amortization</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross&#160;Carrying</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Accumulated</b><br>
<b>Amortization</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Amortizable intangible assets Core deposit intangible</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,711</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(10,321</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,711</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(8,309</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Amortization expense for intangible assets totaled $2.0&#160;million, $1.5&#160;million, and $1.2&#160;million for the years ended December&#160;31, 2018, 2017 and 2016. Estimated amortization for the years ending December&#160;31 is as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc7dbd36d7cec4757b846f6a267dc3098" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 87%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2019</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,787</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2020</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,481</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2021</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,394</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2022</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,375</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2023</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,281</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Thereafter</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,072</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;10,390</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 12 &#8211; Deposits </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za7663ce73adb47d099cf09ce971b178e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 72%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Noninterest-bearing demand deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">642,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">601,805</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest-bearing demand deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">864,026</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">909,638</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Money market (variable rate)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">420,123</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,108</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Savings deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">400,187</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">424,500</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Certificates of deposit of $250,000 or more</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">371,824</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,585</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other certificates and time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">441,087</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">436,367</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;3,139,376</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;2,881,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">110 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Certificates and other time deposits for both retail and brokered maturing in years ending December&#160;31 are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z43d4da0637e046fdb072a0fa22cf6d4d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 68%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Retail</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Brokered</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2019</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">498,382</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,565</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">525,947</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2020</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">112,944</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">24,530</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">137,474</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2021</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">48,422</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20,535</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">68,957</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2022</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,029</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,256</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,285</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2023</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">30,750</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Thereafter</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,498</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,498</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">$&#160;708,327</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">$104,584</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">$&#160;812,911</td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 13 &#8211; Borrowings </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z9b802a7fd0904e23b6f723def5197e73" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Federal Home Loan Bank advances, variable and fixed rates ranging from 1.51% to 7.53%, due at various dates through November&#160;15, 2024</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;356,579</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;336,308</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Securities sold under agreements to repurchase</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">52,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">61,097</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Federal Reserve Bank discount window</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,000</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Federal funds purchased</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">141,689</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143,252</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Notes payable, variable rate of 2.75%, due at various dates through July&#160;13, 2019</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,500</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">550,384</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">564,157</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Federal Home Loan Bank advances are secured by first and second mortgage loans and mortgage warehouse loans totaling approximately $634.0&#160;million. Advances are subject to restrictions or penalties in the event of prepayment. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018, the Bank had available approximately $340.3&#160;million in credit lines with various money center banks, including the FHLB. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Contractual maturities in years ending December&#160;31 are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zc475f52ca349433cb2f58badd65ae227" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 68%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 86%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2019</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;485,557</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2020</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,472</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2021</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,042</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2022</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">2023</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">114</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Thereafter</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,045</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2">$ 550,384</td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 14 &#8211; Repurchase Agreements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 remain under the Bank&#8217;s control. Securities sold under agreements to repurchase are secured by federal agency collateralized mortgage obligations and mortgage-backed pools.&#160;&#160;&#160;&#160; </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">111 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table shows repurchase agreements accounted for as secured borrowings: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z291d612d070147bc979e4e13a4fc1878" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 47%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="26" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="26" align="center"><b>Remaining Contractual Maturity of the Agreements</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Overnight</b><br>
<b>and</b><br>
<b>Continuous</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Up&#160;to&#160;one</b><br>
<b>year</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>One&#160;to&#160;three</b><br>
<b>years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Three&#160;to&#160;five</b><br>
<b>years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Five&#160;to&#160;ten</b><br>
<b>years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Beyond&#160;ten</b><br>
<b>years</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Repurchase&#160;Agreements&#160;and</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">repurchase-to-maturity</font> transactions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Repurchase Agreements</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;52,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#160;&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;52,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Securities pledged for Repurchase Agreements</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">31,454</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">31,454</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,354</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,354</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">58,808</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">58,808</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Securities sold under agreements to repurchase consist of obligations of the Bank to other parties. The obligations are secured by federal agency collateralized mortgage obligations and federal agency mortgage-backed pools and such collateral is held in safekeeping by third parties. The maximum amount of outstanding agreements at any month end during 2018 and 2017 totaled $61.4&#160;million and $63.1&#160;million and the daily average of such agreements totaled $51.4&#160;million and $55.2&#160;million. The agreements at December&#160;31, 2018 are overnight agreements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 15 &#8211; Subordinated Debentures </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">In October of 2004, Horizon formed Horizon Statutory Trust II (&#8220;Trust II&#8221;), a wholly owned statutory business trust. Trust II sold $10.3&#160;million of Trust Preferred Capital Securities as a participant in a pooled trust preferred securities offering. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from Horizon. The junior subordinated debentures are the sole assets of Trust II and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of <font style="WHITE-SPACE: nowrap">90-day</font> LIBOR plus 1.95% (4.75% at December&#160;31, 2018) and mature on October&#160;21, 2034, and securities may be called at any quarterly interest payment date at par. Costs associated with the issuance of the securities totaling $17,500 were capitalized and were amortized to October&#160;31, 2009, the first call date of the securities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In December of 2006, Horizon formed Horizon Bancorp Capital Trust III (&#8220;Trust III&#8221;), a wholly owned statutory business trust. Trust III sold $12.4&#160;million of Trust Preferred Capital Securities as a participant in a pooled trust preferred securities offering. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from Horizon. The junior subordinated debentures are the sole assets of Trust III and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of <font style="WHITE-SPACE: nowrap">90-day</font> LIBOR plus 1.65% (4.45% at December&#160;31, 2018) and mature on January&#160;30, 2037, and securities may be called at any quarterly interest payment date at par. Costs associated with the issuance of the securities totaling $12,647 were capitalized and are being amortized to the first call date of the securities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company assumed additional debentures as the result of the acquisition of Alliance Bank Corporation in 2005. In June 2004, Alliance formed Alliance Financial Statutory Trust I a wholly owned business trust (&#8220;Alliance Trust&#8221;), to sell $5.2&#160;million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from Alliance. The junior subordinated debentures are the sole assets of Alliance Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">112 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of <font style="WHITE-SPACE: nowrap">90-day</font> LIBOR plus 2.65% (5.45% at December&#160;31, 2018) and mature in June 2034, and securities may be called at any quarterly interest payment date at par. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company assumed additional debentures as the result of the American Trust&#160;&amp; Savings Bank purchase and assumption in 2010. In March 2004, Am Tru Inc., the holding company for American Trust&#160;&amp; Savings Bank, formed Am Tru Statutory Trust I a wholly owned business trust (&#8220;Am Tru Trust&#8221;), to sell $3.5&#160;million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from Am Tru Inc. The junior subordinated debentures are the sole assets of Am Tru Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of <font style="WHITE-SPACE: nowrap">90-day</font> LIBOR plus 2.85% (5.65% at December&#160;31, 2018) and mature in March 2034, and securities may be called at any quarterly interest payment date at par. The carrying value was $3.4&#160;million, net of the remaining purchase discount, at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company assumed additional debentures as the result of the Heartland merger in July 2012. In December 2006, Heartland formed Heartland (IN) Statutory Trust II a wholly owned business trust (&#8220;Heartland Trust&#8221;), to sell $3.0&#160;million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from Heartland. The junior subordinated debentures are the sole assets of Heartland Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of <font style="WHITE-SPACE: nowrap">90-day</font> LIBOR plus 1.67% (4.47% at December&#160;31, 2018) and mature in December 2036, and securities may be called at any quarterly interest payment date at par. The carrying value was $1.9&#160;million, net of the remaining purchase discount, at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company assumed additional debentures as the result of the LaPorte merger in July 2016. In October 2007, LaPorte assumed debentures as the result of its acquisition of City Savings Financial Corporation (&#8220;City Savings&#8221;). In June 2003, City Savings formed City Savings Statutory Trust I a wholly owned business trust (&#8220;City Savings Trust&#8221;), to sell $5.0&#160;million in trust preferred securities. The proceeds from the sale of the trust preferred securities were used by the trust to purchase an equivalent amount of subordinated debentures from City Savings. The junior subordinated debentures are the sole assets of City Savings Trust and are fully and unconditionally guaranteed by Horizon. The junior subordinated debentures and the trust preferred securities pay interest and dividends on a quarterly basis. The junior subordinated debentures and the securities bear interest at a rate of <font style="WHITE-SPACE: nowrap">90-day</font> LIBOR plus 3.10% (5.90% at December&#160;31, 2018) and mature in June 2033, and securities may be called at any quarterly interest payment date at par. The carrying value was $4.4&#160;million, net of the remaining purchase discount, at December&#160;31, 2018.&#160;&#160;&#160;&#160; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Trust Preferred Capital Securities, subject to certain limitations, are included in Tier 1 Capital for regulatory purposes. Dividends on the Trust Preferred Capital Securities are recorded as interest expense. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 16 &#8211; Employee Stock Ownership Plan </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Effective January&#160;1, 2007, Horizon converted its stock bonus plan to an employee stock ownership plan (&#8220;ESOP&#8221;). Prior to that date, Horizon maintained an employee stock bonus plan that covered substantially all employees. The stock bonus plan was noncontributory, and Horizon made matching contributions of amounts contributed by the employees to the Employee Thrift Plan and discretionary contributions. Prior to the establishment of the employee stock bonus plan, Horizon maintained an ESOP that was terminated in 1999. The prior ESOP accounts of active employees and the discretionary accounts of active employees remain in the new ESOP. The Matching contribution accounts under the stock bonus plan were transferred to the Employee Thrift Plan. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The ESOP exists for the benefit of substantially all employees. Contributions to the ESOP are by Horizon and are determined by the Board of Directors at its discretion. The contributions may be made in the form of cash or common stock. Shares are allocated among participants each December&#160;31 on the basis of each participant&#8217;s eligible compensation to total eligible compensation. Eligible compensation is limited to $265,000 for each participant. Dividends on shares held by the plan, at the discretion of each participant, may be distributed to an individual participant or left in the plan to purchase additional shares. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">113 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Total cash contributions and expense recorded for the ESOP was $750,000 in 2018, $600,000 in 2017 and $550,000 in 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The ESOP, which is not leveraged, owns a total of 1,376,821 shares of Horizon&#8217;s stock or 3.6% of the outstanding shares as of December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 17 &#8211; Employee Thrift and Defined Benefit Plan </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Employee Thrift Plan (&#8220;Plan&#8221;) provides that all employees of Horizon with the requisite hours of service are eligible for the Plan. The Plan permits voluntary employee contributions and Horizon may make discretionary matching and profit sharing contributions. Each eligible employee is vested according to a schedule based upon years of service. Employee voluntary contributions are vested at all times. The Bank&#8217;s expense related to the Plan totaled approximately $1.2&#160;million in 2018, $942,000 in 2017 and $785,000 in 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Plan owns a total of 742,250 shares of Horizon&#8217;s stock or 1.9% of the outstanding shares as of December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company acquired a pension fund known as the Pentegra Defined Benefit Plan (&#8220;Pentegra Plan&#8221;) in the Peoples acquisition. Prior to August&#160;1, 2007, Peoples provided pension benefits for substantially all of its employees through its participation in the Pentegra Plan. Peoples chose to freeze the Pentegra Plan effective August&#160;1, 2007. The trustees of the Financial Institutions Retirement Fund administer the Pentegra Plan, employer identification number <font style="WHITE-SPACE: nowrap">13-5645888</font> and plan number 333. This plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra Plan. The Pentegra Plan is a single plan under Internal Revenue Code 413(c) and, as a result, all of the assets stand behind all of the liabilities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z471ae3686a204343a75ae09724a67891" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z791324963d52493da94e20da84c25d02" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z582e0909b1e24541988799500e70d727" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">&#8226;</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">There was no expense to the Company in 2018 and 2017 for this Pentegra Plan. The Company intends on terminating this Pentegra Plan during 2019 and has recorded a $3.2&#160;million withdrawal liability for the termination of the Pentegra Plan. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">114 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 18 &#8211; Income Tax </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb94c83ca61ab4fd5892feec7a10bb74e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income tax expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Currently payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Federal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,166</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,079</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,467</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Deferred</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Federal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,277</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">331</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,334</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Revaluation of deferred tax assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Total income tax expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">10,443</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Reconciliation of federal statutory to actual tax expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal statutory income tax at 21% in 2018&#160;and 35% in 2017 and 2016</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,783</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,450</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Tax exempt interest</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,982</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,699</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,882</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Tax exempt income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(448</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(638</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(575</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(384</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(546</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Revaluation of deferred tax assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other tax exempt income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(260</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(456</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(608</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Nondeductible and other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">169</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(34</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">416</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Actual tax expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;10,443</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;14,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zbf219da349bd47c892006d8679220c6f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 8%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 8%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Allowance for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,831</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,396</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net operating loss and tax credits (from acquisitions)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,658</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Director and employee benefits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,392</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,276</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Unrealized loss on AFS securities and fair value hedge</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,165</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,147</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Accrued pension</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">801</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Fair value adjustment on acquisitions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,087</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">670</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,083</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,897</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,499</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Depreciation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,850</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,680</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(137</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(210</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal Home Loan Bank stock dividends</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(330</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(339</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Difference in basis of intangible assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,919</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,831</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Fair value adjustment on acquisitions</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(62</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(119</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(125</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,417</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,185</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Valuation allowance</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,038</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,613</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Net deferred tax asset</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,442</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,701</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Tax Cuts and Jobs Act (the &#8220;Act&#8221;) was enacted in December 2017. The Act reduced the U.S. federal corporate tax rate from 35&#160;percent to 21&#160;percent. As a result, federal deferred taxes were revalued as of December 31, 2017 to the effective rate of 21%. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As of December&#160;31, 2018, the Company had approximately $13.9&#160;million and $157,000 of state tax loss and state tax credit carryforwards, respectively, available to offset future franchise taxable income.&#160;The state loss carryforward begins to expire in 2031.&#160;Due to these losses being incurred by acquired institutions, prior to the acquisitions </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">115 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">by Horizon, the annual losses which can be used are subject to an annual limitation. Management believes that the Company will be able to utilize the benefits recorded for the state loss carryforwards within the allotted time periods, except for the amount represented by the valuation allowance. The valuation allowance has been recorded for the possible inability to use a portion of the state net operating loss carryover. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Retained earnings of the Bank include approximately $12.8&#160;million for which no deferred income tax liability has been recognized. This amount represents an allocation of previously acquired institutions income to bad debt deductions as of December&#160;31, 1987 for tax purposes only. Reductions of amounts so allocated for purposes other than tax bad debt losses including redemption of bank stock or excess dividends, or loss of &#8220;bank&#8221; status would create income for tax purposes only, which would be subject to the then-current corporate income tax rate. The unrecorded deferred income tax liability on the above amount for the Company was approximately $2.7&#160;million at December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Company files income tax returns in the U.S. federal jurisdiction. With a few exceptions, the Company is no longer subject to U.S. federal, state and local or <font style="WHITE-SPACE: nowrap">non-U.S.</font> income tax examinations by tax authorities for years before 2015. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 19 &#8211; Accumulated Other Comprehensive Loss </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The components of accumulated other comprehensive loss included in capital are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za80891e97e7940b0bf8c011bd123963d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 74%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unrealized loss on securities available for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;(8,561</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;(3,937</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unamortized gain on securities held to maturity, previously transferred from AFS</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">200</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unrealized loss on derivative instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,760</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,728</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tax effect</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,167</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,914</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total accumulated other comprehensive loss</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$<br>
 &#160;</td>
<td valign="bottom" align="right">&#160;<br>
 (8,144</td>
<td valign="bottom" nowrap="nowrap">&#160;<br>
 )&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$<br>
 &#160;</td>
<td valign="bottom" align="right">&#160;<br>
 (3,551</td>
<td valign="bottom" nowrap="nowrap">&#160;<br>
 )&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 20 &#8211; Commitments, <font style="WHITE-SPACE: nowrap">Off-Balance</font> Sheet Risk and Contingencies </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Because of the nature of its activities, Horizon 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 operations and cash flows of the Company. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Bank was not required to have any cash on deposit with the Federal Reserve Bank to meet regulatory reserve and clearing balance requirements at December&#160;31, 2018. These balances would be included in cash and cash equivalents and would not earn interest. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Bank is a party to financial instruments with <font style="WHITE-SPACE: nowrap">off-balance</font> sheet risk in the ordinary course of business to meet financing needs of its customers. These financial instruments include commitments to make loans and standby letters of credit. The Bank&#8217;s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank follows the same credit policy to make such commitments as is followed for those loans recorded in the financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">At December&#160;31, 2018 and 2017, commitments to make loans amounted to approximately $873.8&#160;million and $802.9&#160;million and commitments under outstanding standby letters of credit amounted to approximately $4.8&#160;million and $3.4&#160;million. Since many commitments to make loans and standby letters of credit expire without being used, the amount does not necessarily represent future cash advances. No losses are anticipated as a result of these transactions. Collateral obtained upon exercise of the commitment is determined using management&#8217;s credit evaluation. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">116 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 21 &#8211; Regulatory Capital </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. 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&#8217;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&#8217;s assets, liabilities, and certain <font style="WHITE-SPACE: nowrap">off-balance-sheet</font> items as calculated under regulatory accounting practices. The Company&#8217;s and Bank&#8217;s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined), or leverage ratio. For December&#160;31, 2018 and 2017, Basel III rules require the Company and Bank to maintain minimum amounts and ratios of common equity Tier I capital (as defined in the regulation) to risk-weighted assets (as defined). Additionally, under Basel III rules, the decision was made to <font style="WHITE-SPACE: nowrap">opt-out</font> of including accumulated other comprehensive income in regulatory capital. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">To be categorized as well capitalized, the Company and Bank must maintain minimum 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 December&#160;31, 2018 and December&#160;31, 2017, the Company and Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the year ending December&#160;31, 2018 that management believes have changed the Bank&#8217;s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies. Horizon and the Bank&#8217;s actual and required capital ratios as of December&#160;31, 2018 and 2017 were as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8950e229f9414773ae95b19d5dd4a663" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 49%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Actual</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Required&#160;for&#160;Capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup></b><br>
<b>Adequacy Purposes</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Required&#160;For</b><br>
<b>Capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup></b><br>
<b>Adequacy Purposes</b><br>
<b>with Capital Buffer</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Well Capitalized<br>
Under Prompt<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1 </sup></b><br>
<b>Corrective Action<br>
 Provisions</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Ratio</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u>December&#160;31, 2018</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1 </sup>(to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;427,616</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13.39</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;255,419</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;315,283</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">396,755</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.43</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">255,419</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">315,283</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;319,274</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">409,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.83</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,565</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251,429</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,565</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251,429</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.875</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">255,420</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common equity tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">371,297</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.63</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143,673</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">203,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.375</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.87</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143,674</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">203,537</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.375</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">207,528</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to average assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">409,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.12</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,033</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,033</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.000</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378,899</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.34</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,327</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">162,327</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.000</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">202,908</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><u>December&#160;31, 2017</u></p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1 </sup>(to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">384,800</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.91</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">238,543</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">275,816</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">382,788</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.85</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">238,386</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">275,634</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">297,982</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">368,355</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.35</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,907</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">216,180</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">366,343</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,790</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">216,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7.25</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">238,386</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Common equity tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to risk-weighted assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">329,892</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11.06</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">134,181</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">171,454</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.75</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">366,343</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.29</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">134,092</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">171,340</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.75</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">193,689</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.50</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Tier 1 capital<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-SIZE: 85%; VERTICAL-ALIGN: top">1</sup> (to average assets)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Consolidated</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">368,355</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.92</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">148,503</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">148,503</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">N/A</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Bank</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">366,343</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9.89</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">148,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">148,116</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,145</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.00</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">117 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer was 1.875% at December&#160;31, 2018. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 22 &#8211; Share-Based Compensation </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On January&#160;21, 2003, the Board of Directors adopted the Horizon Bancorp 2003 Omnibus Equity Incentive Plan (&#8220;2003 Plan&#8221;), which was approved by stockholders on May&#160;8, 2003. Under the 2003 Plan, Horizon could issue up to 759,375 common shares, plus the number of shares that are tendered to or withheld by Horizon in connection with the exercise of options plus that number of shares that are purchased by Horizon with the cash proceeds received upon option exercises. The 2003 Plan limited the number of shares available to 759,375 for incentive stock options and to 379,687 for the grant of <font style="WHITE-SPACE: nowrap">non-option</font> awards. The shares available for issuance under the 2003 Plan could be divided among the various types of awards and among the participants as the Compensation Committee (&#8220;Committee&#8221;) determined. The Committee was authorized to grant any type of award to a participant that was consistent with the provisions of the 2003 Plan. Awards could consist of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units, performance shares or any combination of these awards. The Committee determined the provisions, terms and conditions of each award. The restricted shares vest over a period of time established by the Committee at the time of each grant. Holders of restricted shares receive dividends and may vote the shares. The restricted shares are recorded at fair market value (on the date granted) as a separate component of stockholders&#8217; equity. The cost of these shares is being amortized against earnings using the straight-line method over the vesting period. The options shares granted under the 2003 Plan vest at a rate designated per the individual agreements. The restricted shares granted under the 2003 Plan vest at the end of each grant&#8217;s vesting period. On March&#160;8, 2010, the Board of Directors adopted, and on May&#160;6, 2010, the stockholders approved, an amendment to the 2003 Plan making an additional 885,937 common shares available for issuance. All share data has been adjusted for the 3:2 stock split on June&#160;15, 2018 (and for four additional stock splits in 2003, 2011, 2012 and 2016 after the 2003 Plan was adopted). </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">A summary of option activity under the 2003 Plan as of December&#160;31, 2018, and changes during the year then ended, is presented below: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zb5f1cc14c9b64f569a5ca045f06198ce" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 64%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted-</b><br>
<b>Average</b><br>
<b>Exercise<br>
 Price</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted-<br>
 Average</b><br>
<b>Remaining</b><br>
<b>Contractual</b><br>
<b>Term</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Aggregate</b><br>
<b>Intrinsic</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Outstanding, beginning of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">41,175</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;4.91</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Exercised</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(19,875</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4.80</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Outstanding, end of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">21,300</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.77</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;229,004</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Exercisable, end of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">21,300</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5.03</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.77</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">229,004</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On June&#160;18, 2013, the Board of Directors adopted the Horizon Bancorp 2013 Omnibus Equity Incentive Plan (&#8220;2013 Plan&#8221;), which was approved by the Company&#8217;s shareholders on May&#160;8, 2014. Under the 2013 Plan, Horizon may issue up to 1,556,325 common shares, plus the number of shares that are tendered to or withheld by Horizon in connection with the exercise of options plus that number of shares that are purchased by Horizon with the cash proceeds received upon option exercises. The 2013 Plan limits the number of shares available to 225,000 for incentive stock options and to 900,000 for the grant of <font style="WHITE-SPACE: nowrap">non-option</font> awards. The shares available for issuance under the 2013 Plan may be divided among the various types of awards and among the participants as the Committee determines. The Committee is authorized to grant any type of award to a participant that is consistent with the provisions of the 2013 Plan. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units, performance shares or any combination of these awards. The Committee determines the provisions, terms and conditions of each award. All share data has been adjusted for the 3:2 stock split on June&#160;15, 2018 and November&#160;14, 2016. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">118 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The restricted shares can vest over a period of time established by the Committee at the time of each grant, but the restricted shares already granted under the 2013 Plan generally vest at the end of each grant&#8217;s vesting period. Holders of restricted shares receive dividends and may vote the shares. The restricted shares are recorded at fair market value (on the date granted) as a separate component of stockholders&#8217; equity. The cost of these shares is being amortized against earnings using the straight-line method over the vesting period. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The performance shares that are awarded become earned and vested based on the achievement of certain performance goals during a performance period as established by the Committee at the time of each grant. The performance goals are based on a comparison of the Company&#8217;s average performance over the performance period for the return on common equity, compounded annual growth rate of total assets, and return on average assets, all as relative to the average performance for publicly traded banks with total assets between $1&#160;billion and $5&#160;billion on the SNL Bank Index. Holders of performance share awards receive pass-through dividends but do not have any voting rights before the performance shares are earned and vested. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The options shares granted under the 2013 Plan vest at a rate designated per the individual agreements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The fair value of options granted is estimated on the date of the grant using an option-pricing model with the following weighted-average assumptions: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z944357c25da14944b180732d6711476b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 76%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Dividend yields</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.99</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.75</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.34</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Volatility factors of expected market price of common stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28.52</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">28.60</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Risk-free interest rates</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.85</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2.42</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1.83</td>
<td valign="bottom" nowrap="nowrap">%&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Expected life of options</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8&#160;years</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8&#160;years</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8&#160;years</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">A summary of option activity under the 2013 Plan as of December&#160;31, 2018, and changes during the year then ended, is presented below: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zfad0c13245f347bfba2e7881ba60ffc8" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 62%"></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted-</b><br>
<b>Average</b><br>
<b>Exercise<br>
 Price</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted-<br>
 Average</b><br>
<b>Remaining</b><br>
<b>Contractual</b><br>
<b>Term</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Aggregate</b><br>
<b>Intrinsic</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Outstanding, beginning of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">323,666</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11.50</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Granted</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,122</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19.31</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Exercised</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(36,221</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.34</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Forfeited</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(11,250</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15.60</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Outstanding, end of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">307,317</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12.28</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.89</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;1,077,096</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Exercisable, end of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">191,410</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.67</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6.19</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">977,748</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The weighted average grant-date fair value of options granted during the years 2018, 2017 and 2016 was $5.54, $4.83 and $2.59. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">119 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">A summary of the status of Horizon&#8217;s <font style="WHITE-SPACE: nowrap">non-vested</font> restricted and performance shares as of December&#160;31, 2018 are presented below: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd8f1f1a62886445b98c455932610346a" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 76%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 78%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br>
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<b>Fair Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-vested,</font> beginning of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">144,791</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;13.32</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Vested</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(43,519</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10.59</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Granted</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">75,266</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">20.13</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-vested,</font> end of year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">176,538</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16.90</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Grants vest at the end of three, four or five years of continuous employment. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Total compensation cost recognized in the income statement for option-based payment arrangements during 2018 was $251,000 and the related tax benefit recognized was approximately $53,000. Total compensation cost recognized in the income statement for option-based payment arrangements during 2017 and 2016 was $325,000 and $324,000 and the related tax benefit recognized was $114,000 and $113,000, respectively. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Total compensation cost recognized in the income statement for restricted share and performance share based payment arrangements during 2018, 2017 and 2016 was $376,000, $135,000, and $284,000. The recognized tax benefit related thereto was approximately $79,000, $47,000, and $99,000 for the years ended December&#160;31, 2018, 2017 and 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Cash received from option exercise under all share-based payment arrangements for the years ended December&#160;31, 2018, 2017 and 2016 was $493,000, $1.6&#160;million, and $214,000. The actual tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $213,000, $522,000, and $158,000, for the years ended December&#160;31, 2018, 2017 and 2016. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As of December&#160;31, 2018, there was $1.5&#160;million of total unrecognized compensation cost related to all <font style="WHITE-SPACE: nowrap">non-vested</font> share-based compensation arrangements granted under all of the plans. That cost is expected to be recognized over a weighted-average period of 1.5 years. Under all plans, forfeitures of share-based compensation grants are recognized as they occur. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On December&#160;19, 2017, the Board of Directors proposed adoption of the Amended and Restated 2013 Omnibus Equity Incentive Plan, primarily to allow awards of &#8220;Other Stock Based Awards,&#8221; which includes awards valued in whole or in part by reference to Horizon&#8217;s common shares. The Amended and Restated 2013 Omnibus Equity Incentive Plan was approved by the shareholders at the Annual Meeting held on May&#160;3, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 23 &#8211; Derivative Financial Instruments </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Cash Flow Hedges </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 month LIBOR and to pay interest to the counterparty at a weighted average fixed rate of 3.76% on a notional amount of $30.5&#160;million at December&#160;31, 2018 and 2017. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">120 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">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 weighted average fixed rate of 2.31% on a notional amount of $30.0&#160;million at December&#160;31, 2018 and 2017. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">On July&#160;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 counter party at a rate of 2.81% on a notional amount of $50.0&#160;million at December&#160;31, 2018. Under the agreement, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Management has designated the interest rate swap agreements as cash flow hedging instruments. 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 December&#160;31, 2018, the Company&#8217;s cash flow hedge was effective and is not expected to have a significant impact on the Company&#8217;s net income over the next 12 months. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Fair Value Hedges </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 December&#160;31, 2018, the Company&#8217;s fair value hedges were effective and are not expected to have a significant impact on the Company&#8217;s net income over the next 12 months. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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 agreements being hedged were $209.2&#160;million at December&#160;31, 2018 and $154.6&#160;million at December&#160;31, 2017. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Other Derivative Instruments </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Company enters into <font style="WHITE-SPACE: nowrap">non-hedging</font> 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 December&#160;31, 2018, the Company&#8217;s fair values of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company&#8217;s net income. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">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&#8217;s gain on sale of loans. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">121 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following tables summarize the fair value of derivative financial instruments utilized by Horizon: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="za28efc5222e942eba2add13a2c3e8aa5" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 59%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="6" align="center"><b>Asset Derivatives</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="6" align="center"><b>Liability Derivatives</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance&#160;Sheet</b><br>
<b>Location</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance&#160;Sheet</b><br>
<b>Location</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivatives designated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Loans</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Loans</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other&#160;Assets</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other&#160;liabilities</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,760</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total derivatives desginated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,802</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivatives not designated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage loan contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other assets</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other liabilities</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total derivatives not designated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total derivatives</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">177</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,802</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="6">
<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Asset Derivatives</p>
</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="6" align="center"><b>Liability Derivatives</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance Sheet</b><br>
<b>Location</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance Sheet</b><br>
<b>Location</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br>
<b>Value</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivatives designated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Loans</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Loans</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">811</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other Assets</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">811</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other liabilities</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,728</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total derivatives desginated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">811</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,539</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivatives not designated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage loan contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other assets</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Other liabilities</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total derivatives not designated as hedging instruments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total derivatives</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">954</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,542</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The effect of the derivative instruments on the consolidated statement of income for the <font style="WHITE-SPACE: nowrap">12-month</font> periods ended December&#160;31 is as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z7096f7532de74a5f822747f8eeab258d" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 78%"></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="10" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Amount of (Gain) Loss<br>
Recognized in Other<br>
Comprehensive Income on<br>
 Derivative&#160;(Effective&#160;Portion)</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">(Effective Portion)</p>
</td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years&#160;Ended&#160;December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivatives in cash flow hedging relationship</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(25</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">913</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">FASB ASC <font style="WHITE-SPACE: nowrap">820-10-20</font> 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. ASC <font style="WHITE-SPACE: nowrap">820-10-55</font> establishes a fair value hierarchy that emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">122 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z668fd100cdf647fea6a1d3b0f87991b5" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 57%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom" rowspan="3">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="3" colspan="2" align="center"><b>Location of gain&#160;(loss)</b><br>
<b>recognized on&#160;derivative</b></td>
<td valign="bottom" rowspan="3">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Amount of Gain (Loss)<br>
 Recognized on Derivative</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years&#160;Ended&#160;December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivative in fair value hedging relationship</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td style="WHITE-SPACE: nowrap" valign="bottom" align="center">Interest&#160;income&#160;-&#160;loans</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(852</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(817</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,776</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest rate contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="center">Interest income&#160;-&#160;loans</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">817</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,776</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom" rowspan="3">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="3" colspan="2" align="center"><b>Location of gain (loss)</b><br>
<b>recognized on derivative</b></td>
<td valign="bottom" rowspan="3">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="10">
<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Amount of Gain (Loss)<br>
 Recognized on Derivative</p>
</td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Derivative not designated as hedging relationship</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage contracts</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;<br>


<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"></p>
</td>
<td valign="bottom" align="center">Other income -<br>


<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">gain&#160;on&#160;sale&#160;of&#160;loans</p>
</td>
<td valign="bottom" nowrap="nowrap">&#160;<br>


<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(5)</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(439)</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(62)</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 24 &#8211; Disclosures about fair value of assets and liabilities </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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: </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z7f47b64e0d1745d5a9eccb2ca1711b25" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%" valign="top" align="left"><b>Level</b><b>&#160;1</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Quoted prices in active markets for identical assets or liabilities </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zec6a173c018c47d2930c260caefb08bb" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%" valign="top" align="left"><b>Level</b><b>&#160;2</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Observable inputs other than Level&#160;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 </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z142c108ccf584ef284591a4a4e1b7e5b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 8%" valign="top" align="left"><b>Level</b><b>&#160;3</b></td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying 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 December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Available for sale securities </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">When quoted market prices are available in an active market, securities are classified within Level&#160;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&#160;2 securities include U.S. Treasury and federal agency securities, state and municipal securities, federal agency mortgage obligations and mortgage-backed pools, private-label mortgage-backed pools and corporate notes. Level&#160;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&#8217;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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">123 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Hedged loans </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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&#160;2 of the valuation hierarchy based on the unobservable inputs used. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Interest rate swap agreements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The fair value of the Company&#8217;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&#160;2 of the valuation hierarchy. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following table presents the fair value measurements of assets and liabilities recognized in the accompanying 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: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z5f87074223f24745b6b12868139038db" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 58%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Quoted&#160;Prices&#160;in</b><br>
<b>Active Markets</b><br>
<b>for Identical</b><br>
<b>Assets</b><br>
<b>(Level 1)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Other</b><br>
<b>Observable</b><br>
<b>Inputs</b><br>
<b>(Level 2)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Unobservable</b><br>
<b>Inputs</b><br>
<b>(Level 3)</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,608</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16,608</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">209,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">209,303</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">185,003</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">178,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">10,698</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total available for sale securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">600,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">600,348</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Hedged loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">209,161</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">209,161</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Forward sale commitments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest rate swap agreements</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,801</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,801</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commitments to originate loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">124 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="ze1e740942b914ccbbef1a196c275ddb4" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 58%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Quoted&#160;Prices&#160;in</b><br>
<b>Active Markets</b><br>
<b>for Identical</b><br>
<b>Assets</b><br>
<b>(Level 1)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Other</b><br>
<b>Observable</b><br>
<b>Inputs</b><br>
<b>(Level 2)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Unobservable</b><br>
<b>Inputs</b><br>
<b>(Level 3)</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Available for sale securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">U.S. Treasury and federal agencies</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19,052</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">State and municipal</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">149,564</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">149,564</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency collateralized mortgage obligations</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">130,365</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Federal agency mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,657</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Private labeled mortgage-backed pools</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,642</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Corporate notes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">385</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">385</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total available for sale securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">509,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">509,665</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Hedged loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154,575</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154,575</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Forward sale commitments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">143</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest rate swap agreements</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(917</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(917</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Commitments to originate loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Realized gains and losses included in net income for the periods are reported in the consolidated statements of income as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zca7ead7ac0d8448d8624b1bc831c5112" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 78%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Total gains and losses from:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Hedged loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(852</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(817</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(1,776</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Fair value interest rate swap agreements</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">852</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">817</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,776</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Derivative loan commitments</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(439</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(62</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(5</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(439</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(62</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Certain other assets are measured at fair value on a nonrecurring 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): </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z2221b0f9a8924ee4a2c61a1c966f172d" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 56%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair<br>
 Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Quoted&#160;Prices&#160;in</b><br>
<b>Active Markets</b><br>
<b>for Identical</b><br>
<b>Assets</b><br>
<b>(Level 1)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Other</b><br>
<b>Observable</b><br>
<b>Inputs</b><br>
<b>(Level 2)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Unobservable</b><br>
<b>Inputs</b><br>
<b>(Level 3)</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">December&#160;31, 2018</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Impaired loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,661</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,661</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">December&#160;31, 2017</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Impaired loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,957</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,957</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Mortgage servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">125 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Impaired (collateral dependent): </b>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.&#160;Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.&#160;This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Impaired loans that are collateral dependent are classified within Level&#160;3 of the fair value hierarchy when impairment is determined using the fair value method. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Mortgage Servicing Rights (MSRs): </b>MSRs do not trade in an active market with readily observable prices. Accordingly, the fair value of these assets is classified as Level&#160;3. The Company determines the fair value of MSRs using an income approach model based upon the Company&#8217;s <font style="WHITE-SPACE: nowrap">month-end</font> 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 were reduced by $527,000 in 2018 and $587,000 in 2017 for the fair value. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following table presents qualitative information about unobservable inputs used in recurring and nonrecurring Level&#160;3 fair value measurements, other than goodwill, at December&#160;31, 2018 and 2017. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z04662d8e5f6e49d1b7fb00caedbdb2fe" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 20%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td style="WIDTH: 18%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td style="WIDTH: 32%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="9" align="center"><b>December&#160;31, 2018</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>Fair</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><b>Valuation</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><b>Unobservable</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><b>Range</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Technique</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Inputs</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center"><b>(Weighted Average)</b></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Impaired loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,661</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">Collateral based measurement</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Discount&#160;to&#160;reflect&#160;current&#160;market</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">conditions and ultimate</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">collectability</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="WHITE-SPACE: nowrap" valign="bottom" align="center">0%-100%&#160;(15.5%)</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage&#160;servicing&#160;rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">12,349</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">Discounted&#160;cash&#160;flows</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Discount rate,</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Constant prepayment rate,</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Probability of default</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><font style="WHITE-SPACE: nowrap">10.2%-11.0%</font><br>
(10.3%),

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><font style="WHITE-SPACE: nowrap">9.1%-21.9%</font> (9.3%),</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><font style="WHITE-SPACE: nowrap">0.1%-2.8%</font> (0.6%)</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="10"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="9" align="center"><b>December&#160;31, 2017</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>Fair</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><b>Valuation</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><b>Unobservable</b></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><b>Range</b></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Value</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Technique</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Inputs</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center"><b>(Weighted Average)</b></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Impaired loans</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,957</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">Collateral based measurement</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Discount to reflect current market</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">conditions and ultimate</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">collectability</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><font style="WHITE-SPACE: nowrap">0%-46.8%</font> (2.6%)</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Mortgage servicing rights</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11,602</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">Discounted cash flows</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top" align="center">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Discount rate,</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Constant prepayment rate,</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Probability of default</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center"><font style="WHITE-SPACE: nowrap">9.6%-10.8%&#160;(9.7%),</font><br>


<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; WHITE-SPACE: nowrap; MARGIN-TOP: 0pt; TEXT-ALIGN: center">9.2%-27.7%&#160;(10.5%),</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><font style="WHITE-SPACE: nowrap">0%-1.5%</font> (0.2%)</p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 25 &#8211; Fair Value of Financial Instruments </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The estimated fair value amounts of the Company&#8217;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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">126 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">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&#8217;s significant financial instruments at December&#160;31, 2018 and December&#160;31, 2017. These include financial instruments recognized as assets and liabilities on the consolidated balance sheet as well as certain <font style="WHITE-SPACE: nowrap">off-balance</font> 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The following methods and assumptions were used to estimate the fair value of each class of financial instrument: </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Cash and Due from Banks</b> &#8212; The carrying amounts approximate fair value. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b><font style="WHITE-SPACE: nowrap">Held-to-Maturity</font> Securities</b> &#8212; 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Loans Held for Sale</b> &#8212; The carrying amounts approximate fair value. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Net Loans</b> &#8212; At December&#160;31, 2018, the fair value of net loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. This is not comparable with the fair values disclosed at December&#160;31, 2017, which were based on an entrance price basis. At December&#160;31, 2017, the fair value of portfolio loans were estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>FHLB Stock</b> &#8212; Fair value of FHLB stock is based on the price at which it may be resold to the FHLB </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Interest Receivable/Payable</b> &#8212; The carrying amounts approximate fair value. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Deposits</b> &#8212; 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Borrowings</b> &#8212; Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Subordinated Debentures</b> &#8212; Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"><b>Commitments to Extend Credit and Standby Letters of Credit</b> &#8212; 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. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">127 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">The following table presents estimated fair values of the Company&#8217;s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z3af3561d3b2043c19ce975a63b125b65" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 53%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Carrying</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Quoted&#160;Prices&#160;in</b><br>
<b>Active Markets</b><br>
<b>for Identical</b><br>
<b>Assets</b><br>
<b>(Level 1)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Other</b><br>
<b>Observable</b><br>
<b>Inputs</b><br>
<b>(Level 2)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Unobservable</b><br>
<b>Inputs</b><br>
<b>(Level 3)</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">58,492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">58,492</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-earning time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,744</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,542</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities, held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">210,112</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">208,273</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans held for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,038</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans (excluding loan level hedges), net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,786,351</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,681,741</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock in FHLB</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,073</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,073</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,239</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">14,239</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">642,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">642,129</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,497,247</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,377,274</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">550,384</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">542,311</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,711</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,031</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,031</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8847e1567b704a0ab9cf4b0df77c79f8" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 53%"></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 7%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December&#160;31, 2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Carrying</b><br>
<b>Amount</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Quoted&#160;Prices&#160;in</b><br>
<b>Active Markets</b><br>
<b>for Identical</b><br>
<b>Assets</b><br>
<b>(Level 1)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Other</b><br>
<b>Observable</b><br>
<b>Inputs</b><br>
<b>(Level 2)</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Significant</b><br>
<b>Unobservable</b><br>
<b>Inputs</b><br>
<b>(Level 3)</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Cash and due from banks</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">76,441</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">76,441</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest-earning time deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,461</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">16,632</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment securities, held to maturity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">200,448</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">201,085</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans held for sale</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,094</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,094</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Loans (excluding loan level hedges), net</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,664,211</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,589,064</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Stock in FHLB</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,105</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">18,105</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest receivable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,059</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="WHITE-SPACE: nowrap">Non-interest</font> bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">601,805</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">601,805</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest bearing deposits</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,279,198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,156,487</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">564,157</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">560,057</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35,994</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Interest payable</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">886</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">886</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Note 26 &#8211; General Litigation </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">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 operations and cash flows of the Company. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">128 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 27 &#8211; Condensed Financial Information (Parent Company Only) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Presented below is condensed financial information as to financial position, results of operations and cash flows of Horizon Bancorp, Inc.: </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 24pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Condensed Balance Sheets </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8f5e60148508498190682dee3d90117b" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 82%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Total cash and cash equivalents</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,361</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Investment in subsidiaries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">502,844</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">497,623</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,186</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,318</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">534,683</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">512,302</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,500</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Subordinated debentures</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,837</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,854</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,071</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Stockholders&#8217; Equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">491,992</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">457,078</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Total liabilities and stockholders&#8217; equity</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">534,683</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">512,302</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 24pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Condensed Statements of Income </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z519684af47c84ea08b59371d9e50d157" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 79%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Operating Income (Expense)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Dividend income from subsidiaries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">46,950</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,000</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,000</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investment income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">540</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,475</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,791</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,376</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Employee benefit expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,423</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,094</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,158</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(357</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(326</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,279</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income Before Undistributed Income of Subsidiaries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">42,695</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,329</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17,820</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Undistributed Income of Subsidiaries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,643</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,804</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,938</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Income Before Tax</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">52,338</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">32,133</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,758</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Income Tax Benefit</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">779</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">984</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">154</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Preferred stock dividend</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income Available to Common Shareholders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,870</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">129 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Condensed Statements of Comprehensive Income </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z13c7dd8b26e54f37bb825122c2b4bdb9" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 79%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Other Comprehensive Income (Loss)</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Change in fair value of derivative instruments, net of taxes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(25</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">913</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unrealized appreciation for the period on held to maturity securities, net of taxes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(150</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(166</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(424</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Unrealized appreciation (depreciation) on available for sale securities, net of taxes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,003</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,371</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,310</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Less: reclassification adjustment for realized (gains) losses included in net income, net of taxes</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">351</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(25</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,193</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3,827</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">2,093</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(4,921</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
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<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
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<td>&#160;</td>
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<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Comprehensive Income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">49,290</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35,210</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,991</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 24pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Condensed Statements of Cash Flows </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zfdaac440639f4c66953bcd5027284269" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 79%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>Years Ended December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Operating Activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">53,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">33,117</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,912</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Items not requiring (providing) cash</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Equity in undistributed net income of subsidiaries</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(9,643</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,804</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,938</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 5em; TEXT-INDENT: -1em">Change in:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Share based compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">251</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">325</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">284</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Amortization of unearned compensation</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">169</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">135</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">324</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Other assets</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">132</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">388</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">888</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 7em; TEXT-INDENT: -1em">Other liabilities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">378</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,675</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(244</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Net cash provided by operating activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">44,404</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">23,486</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19,226</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Investing Activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Acquisition of Kosciusko</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(6,741</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Acquisition of LaPorte</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(17,108</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Acquisition of CNB</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(5,296</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Acquisition of Lafayette</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(1,254</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Acquisition of Wolverine</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(7,688</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Net cash used in investing activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,942</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(29,145</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Financing Activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Redemption of preferred stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12,500</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Net change in borrowings</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(12,316</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(6,803</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">19,500</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Dividends paid on preferred shares</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(42</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Dividends paid on common shares</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(15,418</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(11,720</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(8,382</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Proceeds from issuance of stock</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">622</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,604</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">572</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 9em; TEXT-INDENT: -1em">Net cash used in financing activities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(27,112</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(16,919</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(852</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net Change in Cash and Cash Equivalents</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">17,292</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(2,375</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(10,771</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and Cash Equivalents at Beginning of Year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">13,361</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">15,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">26,507</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Cash and Cash Equivalents at End of Year</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,653</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,361</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">15,736</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">130 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 28 &#8211; Quarterly Results of Operations (Unaudited) </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following is a summary of the quarterly consolidated results of operations: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z932a30e65c3543f2a2446c59089b7d81" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 52%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>Three Months Ended</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>March&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>June&#160;30</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>September&#160;30</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2018</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">39,426</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,741</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42,271</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">43,730</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6,015</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">7,191</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">8,499</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">9,894</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,411</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,550</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,772</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,836</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Provision for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">567</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">635</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,176</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">528</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain (loss) on sale of securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">11</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(122</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(332</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,804</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14,115</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,065</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,133</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Earnings per share:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Basic</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.37</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.34</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.33</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.37</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.34</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.34</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Average shares outstanding:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Basic</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,306,395</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,347,612</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,365,379</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,367,972</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,468,810</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,519,401</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,534,970</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">38,488,861</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z44d0373bc6a14ddd9ad7c30cf1fb0629" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 92%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 52%"></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>Three Months Ended</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>March&#160;31</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>June&#160;30</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>September&#160;30</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" colspan="2" align="center"><b>December&#160;31</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2017</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">28,834</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,805</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">32,070</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">36,774</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Interest expense</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,266</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">3,607</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">4,191</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">5,319</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net interest income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">25,568</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,198</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">27,879</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">31,455</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Provision for loan losses</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">330</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">330</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">710</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">1,100</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Gain on sale of securities</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">(3</td>
<td valign="bottom" nowrap="nowrap">)&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">6</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Net income</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,224</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,072</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,171</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,650</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Earnings per share:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Basic</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.25</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.24</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.20</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.25</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.27</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.24</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">0.20</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Average shares outstanding:</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Basic</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,263,289</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,264,697</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,870,240</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,711,200</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">Diluted</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,489,106</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">33,483,584</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">34,072,909</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">37,893,014</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">131 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">H<small>ORIZON</small> B<small>ANCORP</small>, I<small>NC</small>. <small>AND</small> S<small>UBSIDIARIES</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Notes to Consolidated Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">(Table dollars in thousands except for per share data) </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold">Note 29 &#8211; Business Combinations </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">On October&#160;29, 2018, Horizon entered into an Agreement and Plan of Merger (the &#8220;Merger Agreement&#8221;) providing for Horizon&#8217;s acquisition of Salin Bancshares, Inc. (&#8220;Salin&#8221;). Pursuant to the Merger Agreement, Salin will merge with and into Horizon, with Horizon surviving the merger (the &#8220;Merger&#8221;), and Salin Bank and Trust Company, a wholly-owned subsidiary of Salin, will merge with an into Horizon Bank, with Horizon Bank as the surviving bank. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The boards of directors of each of Horizon and Salin have approved the Merger and the Merger Agreement. Subject to the approval of the Merger by Salin shareholders, regulatory approvals and other closing conditions, the parties anticipate completing the Merger during the first quarter of 2019. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In connection with the Merger, shareholders of Salin will receive fixed consideration of 23, 907.5 shares of Horizon common stock and $84,417.17 in cash for each share of Salin common stock. Based on the closing price of Horizon&#8217;s common stock on October&#160;26, 2018 of $16.95 per share, the transaction value for the shares of common stock is approximately $135.3&#160;million. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Merger Agreement also provides for certain termination rights for both Horizon and Salin, and further provides that upon termination of the Merger Agreement under certain circumstances, Salin will be obligated to pay Horizon a termination fee. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">As of December&#160;31, 2018, Salin had total assets of approximately $929.4&#160;million and total deposits of approximately $749.5&#160;million and total loans of approximately $593.7&#160;million. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">132 </p>
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<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><img alt="LOGO" src="g695048img01.jpg"> </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_107" name="tx695048_107"></a>Report of Independent Registered Public Accounting Firm </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Audit Committee, Board of Directors and Stockholders </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Horizon Bancorp </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Michigan City, Indiana </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Opinion on the Financial Statements </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We have audited the accompanying consolidated balance sheets of Horizon Bancorp (Company) as of December&#160;31, 2018 and 2017, the related consolidated statements of income, comprehensive income, stockholders&#8217; equity and cash flows for each of the years in the three-year period ended December&#160;31, 2018, and the related notes (collectively referred to as the &#8220;financial statements&#8221;). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December&#160;31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended December&#160;31, 2018, in conformity with accounting principles generally accepted in the United States of America. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;), the Company&#8217;s internal control over financial reporting as of December&#160;31, 2018, based on criteria established in the <i>Internal Control - Integrated Framework </i>(2013)&#160;issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February&#160;28, 2019, expressed an unqualified opinion on the effectiveness of the Company&#8217;s internal control over financial reporting. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Basis for Opinion </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">These financial statements are the responsibility of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our audits. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB and the standards applicable to financial audits contained in <i>Government Auditing Standards</i> issued by the Comptroller General of the United States. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: right"><img alt="LOGO" src="g695048img03.jpg"> </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-ALIGN: center">133 </p>
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<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><img alt="LOGO" src="g695048img01.jpg"> </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><b>Other Reporting Required by </b><b><i>Government Auditing Standards</i></b></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">In accordance with <i>Government Auditing Standards</i>, we have also issued our reports dated February&#160;28, 2019, on our consideration of the Company&#8217;s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of those reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over compliance. Those reports are an integral part of an audit performed in accordance with <i>Government Auditing Standards</i> and should be considered in assessing the results of our audit. </p>

<p style="FONT-SIZE: 24pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt"><img alt="LOGO" src="g695048img02.jpg"> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"><b>BKD</b>, <small>LLP</small> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We have served as the Company&#8217;s auditor since 1998. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indianapolis, Indiana </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">February&#160;28, 2019 </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Name of Engagement Executive: Michael A. Ososki </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Federal Employer Identification Number: <font style="WHITE-SPACE: nowrap">44-0160260</font> </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">134 </p>
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<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: center"><img alt="LOGO" src="g695048img01.jpg"> </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Report of Independent Registered Public Accounting Firm </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Audit Committee, Board of Directors and Stockholders </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Horizon Bancorp </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Michigan City, Indiana </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Opinion on the Internal Control Over Financial Reporting </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">We have audited Horizon Bancorp&#8217;s (Company) internal control over financial reporting as of December 31, 2018, based on criteria established in <i>Internal Control &#8211; Integrated Framework: </i>(2013)<i> </i>issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in <i>Internal Control &#8211; Integrated Framework: </i>(2013) issued by COSO. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company and our report dated February 28, 2019, expressed an unqualified opinion thereon. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Basis for Opinion </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The Company&#8217;s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management&#8217;s Report on Financial Statements. Our responsibility is to express an opinion on the Company&#8217;s internal control over financial reporting based on our audit. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; TEXT-ALIGN: right"><img alt="LOGO" src="g695048img03.jpg"> </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">135 </p>
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<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; FONT-STYLE: italic">Definitions and Limitations of Internal Control Over Financial Reporting </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">A company&#8217;s internal control over financial reporting is a process designed 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. A company&#8217;s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company&#8217;s assets that could have a material effect on the financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt"><img alt="LOGO" src="g695048img02.jpg"> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold">BKD, LLP </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Indianapolis, Indiana </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">February 28, 2019 </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">136 </p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_108" name="tx695048_108"></a>MANAGEMENT&#8217;S REPORT ON FINANCIAL STATEMENTS </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Management is responsible for the preparation and presentation of the consolidated financial statements and related notes on the preceding pages. The statements have been prepared in conformity with accounting principles generally accepted in the United States of America appropriate in the circumstances and include amounts that are based on management&#8217;s best estimates and judgments. Financial information elsewhere in the Annual Report is consistent with that in the consolidated financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">In meeting its responsibility for the accuracy of the consolidated financial statements, management relies on Horizon&#8217;s system of internal accounting controls. This system is designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded to permit the preparation of appropriate financial information. The system of internal controls is supplemented by a program of internal audits to independently evaluate the adequacy and application of financial and operating controls and compliance with Company policies and procedures. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The Audit Committee of the Board of Directors meets periodically with management, the independent accountants and the internal auditors to ensure that each is properly discharging its responsibilities with regard to the consolidated financial statements and internal accounting controls. The independent accountants have full and free access to the Audit Committee and meet with it to discuss auditing and financial reporting matters. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The consolidated financial statements in the Annual Report have been audited by BKD, LLP, independent registered public accounting firm, for 2018, 2017 and 2016. Their audits were conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and included consideration of internal accounting controls, tests of accounting records and other audit procedures to the extent necessary to allow them to express their opinion on the fairness of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">137 </p>
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<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold"><u><a id="tx695048_16" name="tx695048_16"></a>ITEM</u><u>&#160;</u><u>9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">None </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><a id="tx695048_17" name="tx695048_17"></a><u>ITEM</u><u>&#160;</u><u>9A. CONTROLS AND PROCEDURES</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold">Disclosure Controls and Procedures </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Under the supervision of and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, Horizon has evaluated the effectiveness of the design and operation of its disclosure controls (as defined in Rule <font style="WHITE-SPACE: nowrap">13a-15(e)</font> of the Securities Exchange Act of 1934 (the &#8220;Exchange Act&#8221;)) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the evaluation date, Horizon&#8217;s disclosure controls and procedures are effective to ensure that the information required to be disclosed by Horizon in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods 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. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Management&#8217;s Report on Internal Control Over Financial Reporting </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Management of Horizon is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule <font style="WHITE-SPACE: nowrap">13a-15(f)</font> under the Securities Exchange Act of 1934. Horizon&#8217;s internal control over financial reporting is designed to provide reasonable assurance to the Company&#8217;s management and Board of Directors regarding the preparation and fair presentation of published financial statements. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Management assessed the effectiveness of Horizon&#8217;s internal control over financial reporting as of December&#160;31, 2018. In making this assessment, management used the criteria set forth in Internal Control &#8211; Integrated Framework (2013)&#160;issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, management has determined that Horizon&#8217;s internal control over financial reporting as of December&#160;31, 2018 is effective based on the specified criteria. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Attestation Report of Registered Public Accounting Firm </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">BKD, LLP, independent registered public accounting firm, has issued an attestation report on management&#8217;s assessment of Horizon&#8217;s internal control over financial reporting. This report appears in Item 8, following BKD, LLP&#8217;s audit report. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold">Changes in Internal Control Over Financial Reporting </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Horizon&#8217;s management, including its Chief Executive Officer and Chief Financial Officer, also have concluded that during the fiscal quarter ended December&#160;31, 2018, there were no changes in Horizon&#8217;s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Horizon&#8217;s internal control over financial reporting. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_18" name="tx695048_18"></a>ITEM</u><u>&#160;</u><u>9B. OTHER INFORMATION</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">Not applicable. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">138 </p>
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<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_19" name="tx695048_19"></a>PART III </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Certain information is omitted from this report pursuant to General Instruction G. (3)&#160;of Form <font style="WHITE-SPACE: nowrap">10-K</font> as Horizon intends to file with the Commission its definitive Proxy Statement for its 2019 Annual Meeting of Shareholders (the &#8220;Proxy Statement&#8221;) pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, not later than 120 days after December&#160;31, 2018. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_20" name="tx695048_20"></a>ITEM</u><u>&#160;</u><u>10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The information relating to Horizon&#8217;s directors required by this item is found in the Proxy Statement under &#8220;Proposal I &#8212; Election of Directors&#8221; and is incorporated into this report and item by reference. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The information relating to the Audit Committee of the Board of Directors required by this item is found in the Proxy Statement under &#8220;Corporate Governance &#8212; Audit Committee&#8221; and is incorporated into this report and item by reference. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The information relating to Horizon&#8217;s executive officers required by this item is included in Part I of this Form <font style="WHITE-SPACE: nowrap">10-K</font> under &#8220;Special Item: Executive Officers of Registrant&#8221; and is incorporated into this item by reference. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The information relating to certain filing obligations of directors and executive officers required by this item is found in the Proxy Statement under &#8220;Section&#160;16(a) Beneficial Ownership Reporting Compliance&#8221; and is incorporated into this report and item by reference. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Horizon&#8217;s &#8220;Code of Ethics for Executive Officers and Directors&#8221; applies to its directors, chief executive officer and chief financial officer. The code is available on Horizon&#8217;s website at <u>http://www.horizonbank.com</u>/ in the section headed &#8220;About Us &#8211; Investor Relations&#8221; under the caption &#8220;Corporate Information &#8211; Corporate Governance.&#8221; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_21" name="tx695048_21"></a>ITEM</u><u>&#160;</u><u>11. EXECUTIVE COMPENSATION</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The information on executive and director compensation and compensation committee matters required by this item can be found in the Proxy Statement under &#8220;Corporate Governance,&#8221; &#8220;Compensation Committee Report,&#8221; &#8220;Compensation Discussion and Analysis,&#8221; &#8220;Executive Compensation&#8221; and &#8220;Compensation of Directors&#8221; and is incorporated into this report and item by reference. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">139 </p>
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<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold"><u><a id="tx695048_22" name="tx695048_22"></a>ITEM</u><u>&#160;</u><u>12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</u><u> AND RELATED STOCKHOLDER MATTERS</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; FONT-WEIGHT: bold">Equity Compensation Plan Information </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The following table presents information regarding grants under all equity compensation plans of Horizon through December&#160;31, 2018. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z7c29d5e880c34e029408b296fc032000" style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 84%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 42%"></td>
<td style="WIDTH: 13%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 13%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td style="WIDTH: 13%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom" nowrap="nowrap">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; FONT-WEIGHT: bold; DISPLAY: table-cell">Plan Category</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number&#160;of&#160;Securities&#160;to</b><br>
<b>be&#160;Issued&#160;Upon&#160;Exercise</b><br>
<b>of Outstanding Options,</b><br>
<b>Warrants and Rights</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b style="WHITE-SPACE: nowrap">Weighted-Average</b><br>
<b>Exercise Price of</b><br>
<b>Outstanding</b><br>
<b>Options,&#160;Warrants</b><br>
<b>and Rights</b></td>
<td valign="bottom">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number&#160;of&#160;Securities</b><br>
<b>Remaining&#160;Available&#160;for</b><br>
<b>Future Issuance Under</b><br>
<b>Equity Compensation</b><br>
<b>Plans</b><br>
<b>(Excluding Securities</b><br>
<b>Reflected in the First<br>
 Column)</b></td>
<td valign="bottom">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Equity compensation plans approved by security holders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">328,617</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">&#160;11.81</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">829,637</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">Equity compensation plans not approved by security holders</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom" nowrap="nowrap" align="right">&#8212;&#160;&#160;</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#cceeff">
<td valign="top"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">328,617</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11.81</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">&#160;</td>
<td valign="bottom" align="right">829,637</td>
<td valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">&#160;</p>
</td>
<td>&#160;</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">The other information required by this item can be found in the Proxy Statement under &#8220;Common Share Ownership of Management and Certain Beneficial Owners&#8221; and is incorporated by reference into this report and item. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_23" name="tx695048_23"></a>ITEM</u><u>&#160;</u><u>13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The information required by this item is found in the Proxy Statement under &#8220;Corporate Governance&#8221; and &#8220;Certain Business Relationships and Transactions&#8221; and is incorporated by reference into this report and item. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; FONT-WEIGHT: bold"><u><a id="tx695048_24" name="tx695048_24"></a>ITEM</u><u>&#160;</u><u>14. PRINCIPAL ACCOUNTING FEES AND SERVICES</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">The information required by this item is incorporated by reference into this report and item from the Proxy Statement section captioned &#8220;Auditor Fees and Services.&#8221; </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 24pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><a id="tx695048_25" name="tx695048_25"></a>PART IV </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold"><u><a id="tx695048_26" name="tx695048_26"></a>ITEM</u><u>&#160;</u><u>15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES</u> </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">(a) Documents Filed As Part of This Annual Report on Form <font style="WHITE-SPACE: nowrap">10-K:</font> </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8509010f93e64e4a8f185fb0f09ae735" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">1.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Financial Statements </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 8%">See the Financial Statements included in Item 8. </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zd8025c9d290a4b94a662a66c08b8dc74" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">2.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Financial Statement Schedules </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 8%">Financial statement schedules are omitted for the reason that they are not required or are not applicable, or the required information is included in the financial statements. </p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">140 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 6pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4392e686b3354418ac48b8b5d5511cf7" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%">&#160;</td>
<td style="WIDTH: 4%" valign="top" align="left">3.</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Exhibits </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; MARGIN-LEFT: 8%">The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are as follows: </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8698686ae4e04223aac5884ad0639214" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td style="WIDTH: 46%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td style="WIDTH: 45%"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Exhibit</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; DISPLAY: table-cell">Number</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Description</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Incorporated by Reference/Attached</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">2.1</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883418000181/hb_8k1029merex21.htm">Agreement and Plan of Merger, dated as of October&#160;29, 2018, between Horizon Bancorp, Inc. and Salin Bancshares, Inc.</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 2.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on October&#160;30, 2018</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">2.2</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883418000198/hb_8ka1218ex.htm">First Amendment to Agreement and Plan of Merger dated December&#160;18, 2018, between Horizon Bancorp, Inc. and Salin Bancshares, Inc.</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 2.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;20, 2018</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">3.1</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883418000092/hb_8k0515ex31.htm">Amended and Restated Articles of Incorporation of Horizon Bancorp, Inc. effective May&#160;16, 2018</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 3.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on May&#160;16, 2018</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">3.2</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883417000290/hb_8k1219ex32.htm">Amended and Restated Bylaws of Horizon Bancorp, Inc.</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 3.2 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;21, 2017</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">4.1</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095012310024090/l39091exv4w1.txt">Indenture, dated as of October&#160; 21, 2004, between Horizon Bancorp and Wilmington Trust Company related to the issuance of Trust Preferred Securities</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2009 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;10677545)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">4.2</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095012310024090/l39091exv4w2.txt">Amended and Restated Declaration of Trust of Horizon Bancorp Capital Trust II, dated as of October&#160; 21, 2004, related to the issuance of Trust Preferred Securities</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.2 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2009 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;10677545)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">4.3</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883406000561/hb_8k1215ex41.htm">Junior Subordinated Indenture, dated as of December&#160;15, 2006, between Horizon Bancorp and Wilmington Trust Company</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;21, 2006 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;061291739)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">4.4</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883406000561/hb_8k1215ex42.htm">Amended and Restated Trust Agreement of Horizon Bancorp Capital Trust III, dated as of December&#160;15, 2006</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.2 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;21, 2006 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;061291739)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.1*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095012310026296/l39170def14a.htm">Horizon Bancorp Amended 2003 Omnibus Equity Incentive Plan</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Appendix A to Registrant&#8217;s definitive Proxy Statement for its 2010 Annual Meeting of Shareholders (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;10693679)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.2*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095012310024090/l39091exv10w7.htm">Form of Restricted Stock Award Agreement under 2003 Omnibus Equity Incentive Plan</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.7 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2009 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;10677545)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.3*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095012310024090/l39091exv10w8.htm">Form of Option Grant Agreement under 2003 Omnibus Equity Incentive Plan</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.8 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2009 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;10677545)</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">141 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z4ce2355f85af49dcab440180d5a00911" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td style="WIDTH: 45%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td style="WIDTH: 45%"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Exhibit</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center; DISPLAY: table-cell">Number</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center; DISPLAY: table-cell">Description</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center; DISPLAY: table-cell">Incorporated by Reference/Attached</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.4*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883414000173/hb_proxy.htm">Horizon Bancorp 2013 Omnibus Equity Incentive Plan</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Appendix A to Registrant&#8217;s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.5*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883413000247/hb_8k0618ex101.htm">Form of Nonqualified Stock Option Agreement</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on June&#160;18, 2013</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.6*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883413000247/hb_8k0618ex102.htm">Form of Nonqualified Stock Option Agreement (Restrictive Covenant)</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.2 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on June&#160;18, 2013</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.7*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883417000045/hb_8k0324ex101.htm">Form of Performance Share Award Agreement</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on March&#160;27, 2017</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.8*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883417000045/hb_8k0324ex102.htm">Form of Performance Share Award Agreement (Restrictive Covenant)</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.2 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on March&#160;27, 2017</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.9*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312518063446/d524724dex109.htm">Form of Restricted Stock Award Agreement</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.9 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> filed on February&#160;28, 2018</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.10*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312518063446/d524724dex1010.htm">Form of Restricted Stock Award Agreement (Restrictive Covenant)</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.10 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> filed on February&#160;28, 2018</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.11*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312517381578/d693965dex42.htm">1997 Supplemental Executive Retirement Plan, as amended and restated as of January&#160;1, 1997, with amendments through December&#160; 19, 2017</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.2 to Registrant&#8217;s Registration Statement on Form <font style="WHITE-SPACE: nowrap">S-8</font> filed on December&#160;28, 2017 (Registration <font style="WHITE-SPACE: nowrap">No.&#160;333-222329)</font></td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.12*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312517381578/d693965dex41.htm">2005 Supplemental Executive Retirement Plan, effective as of January&#160;1, 2005, with amendments through December&#160;19, 2017</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.1 to Registrant&#8217;s Registration Statement on Form <font style="WHITE-SPACE: nowrap">S-8</font> filed on December&#160;28, 2017 (Registration <font style="WHITE-SPACE: nowrap">No.&#160;333-222329)</font></td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.13*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312517381588/d693828dex42.htm">1998 Directors Deferred Compensation Plan, with amendments through December&#160;19, 2017</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.2 to Registrant&#8217;s Registration Statement on Form <font style="WHITE-SPACE: nowrap">S-8</font> filed on December&#160;28, 2017 (Registration <font style="WHITE-SPACE: nowrap">No.&#160;333-222330)</font></td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.14*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312517381588/d693828dex42.htm">Amended and Restated 2005 Directors Deferred Compensation Plan, dated December&#160;19, 2017</a></td>
<td valign="bottom">
<div>&#160;</div>

<div>&#160;&#160;</div>
</td>
<td valign="bottom">Incorporated by reference to Exhibit 4.2 to Registrant&#8217;s Registration Statement on Form <font style="WHITE-SPACE: nowrap">S-8</font> filed on December&#160;28, 2017 (Registration <font style="WHITE-SPACE: nowrap">No.&#160;333-222330)</font></td>
</tr>

<tr style="FONT-SIZE: 1pt; HEIGHT: 6px">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; HEIGHT: 13px; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.15*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex1015.htm">Description of Executive Officer Bonus Plan</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.16*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883406000544/hb_8k1201ex101.htm">Employment Agreement, dated December&#160;1, 2006, among Horizon Bancorp, Horizon Bank, N.A. and Craig M. Dwight</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;6, 2006 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;061259453)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.17*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883406000544/hb_ik1201ex102.htm">Letter Agreement, dated December&#160;1, 2006, between Horizon Bank, N.A. and Craig M. Dwight</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.2 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;6, 2006 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;061259453)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.18*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095015209002897/l35888aexv10w18.htm">Agreement dated August&#160;28, 2007, between Horizon Bank, N.A. and Mark E. Secor</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.18 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2008 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;09694757)</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">142 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zbac26c228e164af4882111eb75384d9e" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td style="WIDTH: 45%"></td>
<td style="WIDTH: 3%" valign="bottom"></td>
<td style="WIDTH: 45%"></td>
</tr>

<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">Exhibit</p>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center; DISPLAY: table-cell">Number</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center; DISPLAY: table-cell">Description</p>
</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom" align="center">
<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center; DISPLAY: table-cell">Incorporated by Reference/Attached</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.19*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000095015209002897/l35888aexv10w19.htm">First Amendment of the Agreement between Horizon Bank, N.A. and Mark E. Secor, dated January&#160;1, 2009</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.19 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended December&#160;31, 2008 (SEC File <font style="WHITE-SPACE: nowrap">No.&#160;000-10792,</font> Film No.&#160;09694757)</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.20*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883416000700/hb_8k0920-1ex.htm">Agreement dated September&#160;21, 2016, between Horizon Bank, N.A. and Kathie A. DeRuiter</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on September&#160;21, 2016</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.21*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883417000199/hb_8k1002ex.htm">Agreement dated October&#160;2, 2017, between Horizon Bank and Dennis J. Kuhn</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on October&#160;3, 2017</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">10.22*</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883418000004/hb_8k0101ex101.htm">Employment Agreement, dated January&#160;1, 2018, between Horizon Bank, Horizon Bancorp and James D. Neff</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 10.1 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on January&#160;3, 2018</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">14</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000090883417000290/hb_8k1219ex14.htm">Code of Ethics for Executive Officers and Directors</a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Incorporated by reference to Exhibit 14 to Registrant&#8217;s Form <font style="WHITE-SPACE: nowrap">8-K</font> filed on December&#160;21, 2017</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">21</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex21.htm">Subsidiaries of Horizon</a> </td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">23</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex23.htm">Consent of BKD, LLP </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">31.1</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex311.htm">Certification of Craig M. Dwight pursuant to Section&#160;302 of the Sarbanes-Oxley Act of 2002</a> </td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">31.2</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex312.htm">Certification of Mark E. Secor pursuant to Section&#160;302 of the Sarbanes-Oxley Act of 2002 </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">32.1</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex321.htm">Certification of Craig M. Dwight pursuant to 18 U.S.C. Section&#160;1350, as adopted pursuant to Section&#160;906 of the Sarbanes-Oxley Act of 2002 </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">32.2</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top"><a href="http://www.sec.gov/Archives/edgar/data/706129/000119312519058056/d695048dex322.htm">Certification of Mark E. Secor pursuant to 18 U.S.C. Section&#160;1350, as adopted pursuant to Section&#160;906 of the Sarbanes-Oxley Act of 2002 </a></td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 8px"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
<td style="HEIGHT: 8px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">101</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="top">Interactive Data File</td>
<td valign="bottom">&#160;&#160;</td>
<td valign="bottom">Attached</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="zde1ad81f543d429bae61257c0b0d8605" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr style="PAGE-BREAK-INSIDE: avoid">
<td style="WIDTH: 4%" valign="top" align="left">*</td>
<td valign="top" align="left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: left">Indicates exhibits that describe or evidence management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form <font style="WHITE-SPACE: nowrap">10-K.</font> </p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-ALIGN: center">143 </p>
</div>

<p style="PAGE-BREAK-BEFORE: always"></p>

<hr style="WIDTH: 100%; COLOR: #999999" align="center" size="3">
<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

<div style="WIDTH: 8.5in; TEXT-ALIGN: left">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; FONT-WEIGHT: bold; TEXT-ALIGN: center"><u><a id="tx695048_27" name="tx695048_27"></a>SIGNATURES </u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">Pursuant to the requirements of Section&#160;13 or 15(d) 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 </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z8ec736751b134fdc899ba7468407d55f" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" border="0">
<tr>
<td style="WIDTH: 47%"></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 4%"></td>
<td valign="bottom"></td>
<td></td>
<td style="WIDTH: 1%" valign="bottom"></td>
<td style="WIDTH: 46%"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Horizon Bancorp, Inc.</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Registrant</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Date: February&#160;28, 2019</td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">By: <u>/s/ Craig M. Dwight&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Craig M. Dwight</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Chairman and Chief Executive Officer (Principal</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Executive Officer)</p>
</td>
</tr>

<tr style="FONT-SIZE: 1pt">
<td style="HEIGHT: 16px"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
<td style="HEIGHT: 16px" colspan="2"></td>
</tr>

<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">Date: February&#160;28, 2019</td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top"></td>
<td valign="bottom">&#160;</td>
<td valign="top">
<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">By&#160;: <u>/s/ Mark E. Secor&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Mark E. Secor</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Chief Financial Officer (Principal Financial Officer</p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">and Principal Accounting Officer)</p>
</td>
</tr>
</table>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

<table id="z6cff40aacb2d48a5963bc2df74770169" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; WIDTH: 100%; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" align="center" border="0">
<tr>
<td style="WIDTH: 51%"></td>
<td style="WIDTH: 2%" valign="bottom"></td>
<td style="WIDTH: 47%"></td>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.</p>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Craig M. Dwight&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Craig M. Dwight, Chairman of the Board Chief Executive Officer and Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Susan D. Aaron&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Susan D. Aaron, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Eric P. Blackhurst&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Eric P. Blackhurst, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Lawrence E. Burnell&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Lawrence E. Burnell, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ James B. Dworkin&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">James B. Dworkin, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Daniel F. Hopp&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Daniel F. Hopp, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Michele M. Magnuson&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Michele M. Magnuson, Director</p>
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<h5 style="TEXT-ALIGN: left"><a href="#toc">Table of Contents</a></h5>

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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; FONT-WEIGHT: bold; TEXT-ALIGN: center">Horizon Bancorp, Inc. </p>

<p style="FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&#160;</p>

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<p style="FONT-SIZE: 8pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Signature and Title</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Larry N. Middleton&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Larry N. Middleton, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Peter L. Pairitz&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Peter L. Pairitz, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Steven W. Reed&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Steven W. Reed, Director</p>
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<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"><u>/s/ Spero W. Valavanis&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></p>

<p style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 1pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">Spero W. Valavanis, Director</p>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">EXHIBIT 10.15</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 13.7pt">DESCRIPTION OF HORIZON BANCORP</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 13.7pt">EXECUTIVE OFFICER BONUS PLAN</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 12pt; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt; TEXT-INDENT: 36pt">The Compensation Committee (the &#8220;Committee&#8221;) of the Board of Directors of Horizon Bancorp (the &#8220;Company&#8221;) adopted an Executive Officer Bonus Plan (the &#8220;Plan&#8221;) in 2003 after consultations with a nationally recognized executive compensation consulting firm. The Plan permits executive officers to earn as a bonus a percentage of their salary based on the achievement of corporate and individual goals in the relevant year. Participants in the Plan are not eligible to participate in the Company&#8217;s annual discretionary bonus plan. To receive a bonus under the Plan, the executive officer must be employed by the Company or one of its subsidiaries on the date the annual bonus payment is made and must not be subject to a performance warning or suspension. The Committee may adjust and amend the Plan at any time in their sole discretion.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 12pt; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt; TEXT-INDENT: 36pt">At the beginning of each year, the Committee establishes the minimum earnings target the Company must achieve before any bonuses will be paid out under the Plan for that year. For 2018, the minimum earnings target was $31.2 million. The Committee also approves a target bonus matrix for each executive officer to be used to calculate the executive officer&#8217;s bonus (if any) for the year (assuming that the minimum earnings target has been met). The matrix for each executive officer specifies the performance measures applicable to the executive officer, the targets for each performance measure and the weight to be assigned to each performance measure in calculating the bonus if the specified target levels are achieved.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 12pt; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt; TEXT-INDENT: 36pt">Each executive officer has the opportunity to earn a bonus under the Plan of up to a specified percentage of his base salary. Each of the executive officers has as a performance goal the achievement of a specified level of corporate net income for the year. The matrix for each of the executive officers also specifies from three to five other performance measures, each of which is dependent upon the executive officer&#8217;s areas of responsibilities and varies from year to year to reflect changes in the primary responsibilities of the office that the executive officer holds.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; MARGIN-TOP: 12pt; TEXT-ALIGN: left; LINE-HEIGHT: 13.7pt; TEXT-INDENT: 36pt">The percentage of base salary that may be earned and the weighting of performance goals are disclosed each year in the &#8220;Compensation Discussion and Analysis&#8221; section of the Company&#8217;s Proxy Statement. The amounts of the bonuses paid each year under the Plan are reported in the &#8220;Non-Equity Incentive Plan Compensation&#8221; column of the Summary Compensation Table included in the Company&#8217;s Proxy Statement.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">HORIZON BANCORP, INC.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Bank; Horizon Trust &amp; Investment Management</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Risk Management, Inc.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Bancorp Capital Trust II</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Am Tru Statutory Trust I</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Insurance Services, Inc.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Investments, Inc.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Nevada</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Investments, Inc.</div>
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</font> a subsidiary of Horizon Investments, Inc.)</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Horizon Properties, Inc.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Delaware</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Indiana</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">The Loan Store, Inc.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Michigan</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Wolverine Commercial Holdings, LLC</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">EXHIBIT 23</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 12.55pt">Consent of Independent Registered Public Accounting Firm</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (File&#160;Nos. 333-177007, 333-86214, 333-156737, 333-205370 and 333-222624) and Form S-8 (File Nos. 333-98609, 333-112970, 333-166826, 333-189420, 333-222329 and 333-222330) of our report dated February 28, 2019, on our audits of the consolidated financial statements of Horizon Bancorp as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018, which report is included in the annual report on Form 10-K of Horizon Bancorp. We also consent to the incorporation by reference of our report dated February 28, 2019, on our audit of the internal control over financial reporting of Horizon Bancorp as of December 31, 2018, which report is included in this Annual Report on Form 10-K.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Indianapolis, Indiana</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">February 28, 2019</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 12.55pt">Certification Pursuant to Section 302<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font> of The Sarbanes-Oxley Act Of 2002</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">I, Craig M. Dwight, certify that:</div>

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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">I have reviewed this Annual Report on Form 10-K of Horizon Bancorp, Inc.;</div>
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<div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">2.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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;</div>
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<div>
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<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">3.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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;</div>
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<div>
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<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">4.</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">The registrant&#8217;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:</div>
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<div>
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<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">a.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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;</div>
</td>
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</div>

<div>
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<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">b.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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.</div>
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<div>
<table id="za153a83c342e4c93a92bab3a0aacd272" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">c.</div>
</td>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Evaluated the effectiveness of the registrant&#8217;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</div>
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<div>
<table id="z392cce80bdc343b89175920ed0cb2091" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">d.</div>
</td>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Disclosed in this report any change in the registrant&#8217;s internal control over financial reporting that occurred during the registrant&#8217;s most recent fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#8217;s internal control over financial reporting; and</div>
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<div>
<table id="za5c669c609774a9687327925a7f27d31" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">5.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">The registrant&#8217;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#8217;s auditors and the audit committee of the registrant&#8217;s board of directors (or persons performing the equivalent functions):</div>
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<div>
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<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">a.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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&#8217;s ability to record, process, summarize and report financial information; and</div>
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<div>
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<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">b.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#8217;s internal control over financial reporting.</div>
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</div>

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<td style="WIDTH: 50%; VERTICAL-ALIGN: top">&#160;</td>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">HORIZON BANCORP, INC.</div>
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<td style="WIDTH: 50%; VERTICAL-ALIGN: top">&#160;</td>
<td style="WIDTH: 3%; VERTICAL-ALIGN: top">&#160;</td>
<td style="WIDTH: 47%; VERTICAL-ALIGN: top">&#160;</td>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">February 28, 2019</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">By:</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">/s/ Craig M. Dwight</div>
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<td style="WIDTH: 50%; VERTICAL-ALIGN: top">&#160;</td>
<td style="WIDTH: 3%; VERTICAL-ALIGN: top">&#160;</td>
<td style="BORDER-TOP: #000000 2px solid; WIDTH: 47%; VERTICAL-ALIGN: top">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Craig M. Dwight</div>
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<td style="WIDTH: 50%; VERTICAL-ALIGN: top">&#160;</td>
<td style="WIDTH: 3%; VERTICAL-ALIGN: top">&#160;</td>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Chief Executive Officer</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 12.55pt">Certification Pursuant to Section 302<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font> of The Sarbanes-Oxley Act Of 2002</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">I, Mark E. Secor, certify that:</div>

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</div>

<div>
<table id="z12eb05793b5c4a38be923f3ba49f99da" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">1.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">I have reviewed this Annual Report on Form 10-K of Horizon Bancorp, Inc.;</div>
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<div>
<table id="z3acedcb909f346ba864382dcbf18599e" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">2.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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;</div>
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</div>

<div>
<table id="z2c303ceb19684f358f07348a8bb8fc52" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">3.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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;</div>
</td>
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</table>
</div>

<div>
<table id="zfcadcccbc8c44ca3a1511255ffd98939" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">4.</div>
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<td style="WIDTH: auto; VERTICAL-ALIGN: top">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">The registrant&#8217;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))&#160; for the registrant and have:</div>
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</div>

<div>
<table id="z1c1fd573c9f54684905a9e4eda9d1dc2" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">a.</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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;</div>
</td>
</tr>
</table>
</div>

<div>
<table id="z9fe584efd61b451d963412f084ccdd71" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">b.</div>
</td>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">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.</div>
</td>
</tr>
</table>
</div>

<div>
<table id="z1d4d3d53bc20440e97ca3f85cf288de2" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">c.</div>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Evaluated the effectiveness of the registrant&#8217;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</div>
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<div>
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<td style="WIDTH: 72pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 54pt; LINE-HEIGHT: 12.55pt">d.</div>
</td>
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<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Disclosed in this report any change in the registrant&#8217;s internal control over financial reporting that occurred during the registrant&#8217;s most recent fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#8217;s internal control over financial reporting; and</div>
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<div>
<table id="zce75f62abaaa40eeb50ea0d379fa9342" class="DSPFListTable" style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 100%" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-SIZE: 10pt; MARGIN-BOTTOM: 6pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; MARGIN-LEFT: 18pt; LINE-HEIGHT: 12.55pt">5.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Horizon Bancorp, Inc. (the &#8220;Company&#8221;) certifies that the Annual Report on Form 10-K of the Company for the year ended December 31, 2018 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-K fairly presents, in all material respects, the financial condition and results of operations of the Company.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 12.55pt">Pursuant to 18 U.S.C. Section 1350</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Horizon Bancorp, Inc. (the &#8220;Company&#8221;) certifies that the Annual Report on Form 10-K of the Company for the year ended December 31, 2018 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-K fairly presents, in all material respects, the financial condition and results of operations of the Company.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">/s/ Mark E. Secor</div>
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<div>2018 | BOARD OF DIRECTORS &amp; EXECUTIVE OFFICERS</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Peter L. Pairitz</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Business Developer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Steven W. Reed</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Partner</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">BGBC Partners, LLP</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Spero W. Valavanis</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Vice President</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Shive-Hattery, Inc.</div>
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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Director Emeritus</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Robert C. Dabagia</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chairman Emeritus</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Bancorp, Inc.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #808080; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt"><font style="FONT-SIZE: 12pt; COLOR: #000000">Horizon Bancorp, Inc.</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font><font style="FONT-SIZE: 12pt; COLOR: #000000">Executive Officers</font></div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Craig M. Dwight</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chairman &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chief Executive Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">James D. Neff</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Dennis J. Kuhn</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Executive Vice President</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Mark E. Secor</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chief Financial Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Todd A. Etzler</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Corporate Secretary &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">General Counsel</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #808080; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt"><font style="FONT-SIZE: 12pt; COLOR: #000000">Horizon Bank</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font><font style="FONT-SIZE: 12pt; COLOR: #000000">Executive Officers</font></div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Craig M. Dwight</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chairman &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chief Executive Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">James D. Neff</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Mark E. Secor</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Executive Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chief Financial Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Kathie A. DeRuiter</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Executive Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Operations Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Dennis J. Kuhn</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Executive Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chief Commercial Banking Officer</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Todd A. Etzler</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President, Corporate</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Secretary &amp; General Counsel</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #808080; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt"><font style="FONT-SIZE: 12pt; COLOR: #000000">Market Presidents</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font><font style="FONT-SIZE: 12pt; COLOR: #000000">&amp; Senior Officers</font></div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">David L. Bedwell</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Johnson County, Indiana</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">John M. Crandle</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Kalamazoo County, Michigan</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">William S. Denton</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Regional President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Central Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">David C. Eifler</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Berrien County, Michigan</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Stammy A. Ellinger</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Loan Operations Officer</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Jeffrey H. Gatton</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Southern Michigan</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Matthew J. Hamm</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Holland/Ottawa Counties, Michigan</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Dan L. Hampton</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Indianapolis, Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Carla J. Kanney</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Retail Banking</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Lynn M. Kerber</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Commercial Credit Officer</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Zoran Koricanac</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Lake County, Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Steven C. Kring</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Regional Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">LaPorte/Porter Counties, Indiana</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">T. Jay Maddox</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Fort Wayne &amp; Northeast Indiana</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; TEXT-ALIGN: right; LINE-HEIGHT: 11.4pt">BOARD OF DIRECTORS &amp; EXECUTIVE OFFICERS / SHAREHOLDER RELATIONS | 2018</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Bradley W. Marley</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Greater Lafayette Region, Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Russell R. Mathews</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Great Lakes Bay Area, Michigan</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Sherri McGraw</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Attica, Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Carrie McKibben</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President &amp; Senior</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Noe S. Najera</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Consumer Lending</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Chris G. Nugent</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Ingham/Eaton Counties, Michigan</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Cynthia L. Pressinell</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President, Senior</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Marketing, Human Resources, &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Learning &amp; Development Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">David M. Quade</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Regional President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Central Michigan &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">North Central Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Mark A. Ritzi</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Market President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Porter County, Indiana</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Rachel L. Saxon</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President &amp; Senior Wealth &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Investment Management Officer</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Steven J. Skalka</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Wealth &amp; Investment Manager</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Keene B. Taylor</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Mortgage Loan Officer</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Tracy E. Woolsey</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President &amp;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Employee Benefits Trust Officer</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Nancy Wrzalinski</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Vice President,</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Senior Auditor, ERM Manager</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&amp; Compliance Officer</div>
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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Bank</div>

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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Insurance Services, Inc.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Rachel L. Saxon</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Investments, Inc.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Larry M. Wood</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President &amp; Secretary</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Properties, Inc.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Mark E. Secor</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Bancorp, Inc.</div>

<div style="BORDER-BOTTOM: black 0.5pt solid; LINE-HEIGHT: 14.4pt">
<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 12.55pt">Subsidiaries</div>

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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Horizon Risk Management, Inc.</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Joshua C. Miller</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: italic; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">President</div>
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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Shareholder Relations</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">For additional copies of this report, current stock quotes, a list of market makers, and other shareholder inquiries, call (219) 874-9272 or visit our web site at horizonbank.com.</div>

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<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">&#160;</div>

<div style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; COLOR: #000000; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Transfer Agent</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Computershare</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">Shareholder Services</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">P.O. Box 30170</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">College Station, TX 77842-3170</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000; FONT-STYLE: normal; TEXT-ALIGN: left; LINE-HEIGHT: 11.4pt">(800) 368-5948</div>
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end
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<DOCUMENT>
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<SEQUENCE>10
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end
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>11
<FILENAME>image00001.jpg
<TEXT>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
