Whitehall, OH - October 25, 2022 - Heartland BancCorp ("Heartland" and "the Company") (OTCQX: HLAN), parent company of Heartland Bank ("Bank"), today reported net income of $5.1 million, or $2.50 per diluted share in the third quarter of 2022, compared to $4.8 million, or $2.34 per diluted share in the third quarter of 2021, and $3.9 million, or $1.94 per diluted share, in the preceding quarter. In the first nine months of 2022, net income was $13.0 million, or $6.43 per diluted share, compared to $13.6 million, or $6.69 per diluted share, in the first nine months of 2021.

The company announced that its board of directors declared a quarterly cash dividend of $0.69 per share. The dividend will be payable January 10, 2023, to shareholders of record as of December 25, 2022. Heartland has paid regular quarterly cash dividends since 1993.

"Our third quarter 2022 operating results reflect another quarter of substantial growth in the loan portfolio and the resulting net interest margin expansion," stated G. Scott McComb, Chairman, President and Chief Executive Officer. "Loan growth has really started to materialize across all lending segments over the last few quarters due to several different strategies. We have been able to capitalize on displacement within our markets by bringing on talented bankers and lending officers from other institutions. We've also seen prepayments start to stabilize due to the rising rate environment, which has had a meaningful impact on net loan growth. During the third quarter we had excellent growth in the Columbus market, and loan prospects and new customer development are really starting to materialize in the Cincinnati market as well. With our skilled associates in place, combined with strong economic factors in all of our markets, we are well positioned for continued growth for the remainder of the year."

Third Quarter 2022 Financial Highlights (at or for the three months ended September 30, 2022)

• Net income was $5.1million, or $2.50 per diluted share, compared to $4.8 million, or $2.34 per diluted share, in the third quarter of 2021.
• Provision for loan losses was $480,000, which was unchanged compared to the third quarter a year ago.
• Net interest margin expanded 28 basis points to 4.20%, compared to 3.92% in the preceding quarter and improved 57 basis points compared to 3.63% in the third quarter a year ago.
• Third quarter revenues (net interest income plus noninterest income) increased 8.5% to $17.8 million, compared to $16.4 million in the third quarter a year ago.
• Annualized return on average assets was 1.31%, compared to 1.27% in the third quarter of 2021.
• Annualized return on average tangible common equity was 15.27%, compared to 14.00% in the third quarter a year ago.
• Net loans increased 14.8% to $1.30 billion at September 30, 2022, compared to $1.13 billion a year ago.
• Credit quality remains pristine, with nonperforming loans to gross loans of 0.08% and nonperforming assets to total assets of 0.07%, at September 30, 2022.
• Tangible book value was $62.90 per share, compared to $68.20 per share a year ago.
• Declared a quarterly cash dividend of $0.69 per share.

Balance Sheet Review

Assets

Total assets increased 8.3% to $1.58 billion at September 30, 2022, compared to $1.45 billion a year earlier, and increased 5.3% compared to $1.50 billion three months earlier. Heartland's loan-to-deposit ratio was 96.4% at September 30, 2022, compared to 91.8% at June 30, 2022, and 91.3% at September 30, 2021.

Excess liquidity levels continued to decline, with interest bearing deposits in other banks at $5.3 million, compared to $50.4 million a year earlier and $35.6 million three months earlier.

Average earning assets were $1.44 billion in the third quarter of 2022, compared to $1.35 billion in the second quarter of 2022, and $1.40 billion in the third quarter a year ago. The average yield on interest-earningassets was 4.60% in the third quarter of 2022, up 43 basis points from 4.17% in the preceding quarter and up 65 basis points from 3.95% in the third quarter a year ago.

Loan Portfolio

"We had record loan production during the third quarter, increasing $106.0 million, or 8.9% over the prior quarter end, with great activity across nearly every loan segment, including 1-4 family loans, owner occupied CRE, non owner occupied CRE, home equity and consumer loans," said Ben Babcanec, EVP and Chief Operating Officer. "Additionally, loan growth was diversified within our Columbus and Cincinnati markets."

Net loans were $1.30 billion at September 30, 2022, which was an 8.9% increase compared to $1.20 billion at June 30, 2022, and a 14.8% increase compared to $1.13 billion at September 30, 2021. Commercial loans decreased 15.9% from year ago levels to $151.2 million, and comprise 11.5% of the total loan portfolio at September 30, 2022. The decrease was primarily due to the $59.5 million reduction in PPP loan balances compared to a year ago. Owner occupied commercial real estate loans (CRE) increased 17.9% to $323.4 million at September 30, 2022, compared to a year ago, and comprise 24.5% of the total loan portfolio. Non-owner occupied CRE loans increased 14.2% to $373.S million, compared to a year ago, and comprise 28.4% of the total loan portfolio at September 30, 2022. 1-4 family residential real estate loans increased 29.1% from year ago levels to $412.7 million and represent 31.3% of total loans. Home equity loans increased 11.5% from year ago levels to $40.3 million and represent 3.1% of total loans, and consumer loans increased 46.9% from year ago levels to $16.3 million and represent 1.2% of the total loan portfolio at September 30, 2022.

Deposits

Total deposits were $1.35 billion at September 30, 2022, a 3.6% increase compared to $1.30 billion at June 30, 2022, and an 8.7% increase compared to $1.24 billion at September 30, 2021. "We have been diligent with our deposit pricing, and remain focused on using low-cost deposits to fund new loan growth," said Babcanec. At September 30, 2022, noninterest bearing demand deposit accounts increased 8.1% compared to a year ago and represented 35.3% of total deposits; savings, NOW and money market accounts increased 10.6% compared to a year ago and represented 47.4% of total deposits, and CDs increased 4.7% compared to a year ago and comprised 17.3% of total deposits. The average cost of deposits was 0.30% in the third quarter of 2022, compared to 0.16% in the second quarter of 2022, and 0.22% in the third quarter of 2021.

Shareholders' Equity

Shareholders' equity was $139.S million at September 30, 2022, compared to $141.9 million three months earlier and $150.1million a year earlier. The decrease in shareholders' equity during the current quarter was primarily due to a $6.2 million decrease in accumulated other comprehensive income related to an increase in the unrealized loss on available for sale securities reflecting the increase in market interest rates during the current quarter. At September 30, 2022, Heartland's tangible book value was $62.90 per share, compared to $64.06 at June 30, 2022, and $68.20 at September 30, 2021.

Heartland continues to maintain capital levels in excess of the requirements to be categorized as "well-capitalized" with tangible equity to tangible assets of 8.09% at September 30, 2022, compared to 8.68% at June 30, 2022, and 9.48% at September 30, 2021.

Operating Results

In the third quarter of 2022, Heartland generated a ROAA of 1.31% and a ROAE of 13.88%, compared to 1.10% and 10.87%, respectively, in the second quarter of 2022 and 1.27% and 12.73%, respectively, in the third quarter a year ago.

Net Interest Income/Net Interest Margin

Net interest income, before the provision for loan losses, increased 18.9% to $15.2 million in the third quarter of 2022, compared to $12.8 million in the third quarter a year ago, and increased 15.6% compared to $13.2 million in the preceding quarter. Net interest income benefitted from higher yielding assets and the current rate environment. Also impacting third quarter 2022 results was a $490,000 recovery of nonaccrual interest on problem credits that were worked out during the quarter. In addition, approximately $30,000 of the income recognized during the third quarter of 2022 was related to recognizing origination fees for PPP loan payoffs or forgiveness, compared to $132,000 recognized during the second quarter of 2022, and $788,000 recognized during the third quarter of 2021. In the first nine months of 2022, net interest income increased 11.0% to $41.2 million, compared to $37.1million in the first nine months of 2021.

Total revenues (net interest income, before the provision for loan losses, plus noninterest income) was $17.8 million in the third quarter, an 8.5% increase compared to $16.4 million in the third quarter a year ago, and a 10.2% increase compared to $16.2 million in the preceding quarter. Year-to-date, total revenues increased 5.2% to $50.1 million, compared to $47.6 million in the same period a year earlier.

Heartland's net interest margin expanded 28 basis points to 4.20% in the third quarter of 2022, compared to 3.92% in the preceding quarter and improved by 57 basis points compared to 3.63% in the third quarter of 2021. "Our net interest margin for the third quarter benefitted from strong net interest income generation, robust loan growth and rising interest rates. New loans that carry a higher interest rate are replacing lower rate PPP loans, which is helping our net interest margin expand compared to a year ago," said Carrie Almendinger, EVP, and Chief Financial Officer. "We were patient with deploying excess liquidity into higher yielding assets, and have been very disciplined with deposit pricing, which is contributing to our net interest margin expansion."

Heartland's net interest margin continues to remain above the peer average posted by the Dow Jones U.S. MicroCap Bank Index with total market capitalization under $250 million as of June 30, 2022.'

Provision for Loan Losses

"We have a very solid risk management culture in place, and continue to make additions to the allowance for loan losses to reflect the steady level of new loan growth," said McComb.

Heartland recorded a $480,000 provision for loan losses in the third quarter of 2022, which was the same amount recorded in both the preceding quarter and the year ago quarter.

*As of June 30, 2022, the Dow Jones U.S. MicroCap Bank Index tracked 154 banks withtotal common market capitalization under $250 million for the following ratios: NIM* of 3.42%.

Noninterest Income

Noninterest income decreased 28.1% to $2.6 million in the third quarter of 2022, compared to $3.6 million in the third quarter a year ago, and decreased 13.2% compared to $3.0 million in the preceding quarter. Gains on sale of loans, and originated mortgage servicing rights, decreased 82.2% to $187,000 in the third quarter of 2022, compared to $1.0 million in the third quarter a year ago, and decreased 56.6% compared to $431,000 in the preceding quarter. In the first nine months of 2022, noninterest income decreased 15.3% to $8.9 million, compared to $10.5 million in the first nine months of 2021.

"The mortgage market continues to be strong for mortgage originations through the third quarter of 2022, although we've seen volumes make their way on to the balance sheet leading to lower gains on sale," said Almendinger. "However, good activity in debit and credit card interchange income contributed $572,000 to third quarter noninterest income."

Noninterest Expense

Heartland's third quarter noninterest expenses totaled $11.1million, compared to $10.8 million in the preceding quarter and $9.9 million in the third quarter a year ago. Salary and employee benefit expenses, the largest component of noninterest expense, were $7.1 million in the third quarter of 2022, compared to $6.8 million in the preceding quarter and $6.3 million in the third quarter of 2021. "We continue to build out our team in the Cincinnati market that we entered near the end of last year," said Almendinger. "By expanding into the Cincinnati market organically, with a seasoned leader who has been established in that market for years, we have begun to broaden our client base and our operations without a significant increase to operating expenses." Year-to-date, noninterest expense totaled $32.5 million, compared to $29.3 million in the first nine months of 2021.

The efficiency ratio for the third quarter of 2022 was 62.0%, compared to 66.9% for the preceding quarter and 60.4% for the third quarter of 2021.

Income Tax Provision

In the third quarter of 2022, Heartland recorded $1.2 million in state and federal income tax expense for an effective tax rate of 19.4%, compared to $933,000, or 19.2% in the second quarter of 2022 and $1.3million or 21.0% in the third quarter a year ago.

Credit Quality

At September 30, 2022, the allowance for loan losses (ALLL) was $16.2 million, or 1.23% of total loans, compared to $15.9 million, or 1.32% of total loans at June 30, 2022, and $14.4 million, or 1.25% of total loans a year ago. As of September 30, 2022, the ALLL represented 2,322% of nonaccrual loans, compared to 1,316% three months earlier and 522% one year earlier.

Nonaccrual loans were $699,000 at September 30, 2022, compared to $1.2 million at June 30, 2022, and decreased 74.6% when compared to $2.8 million at September 30, 2021. Heartland had net loan charge-offs of $176,000 at September 30, 2022. This compared to $5,000 in net loan charge-offs at June 30, 2022, and $6,000 in net loan recoveries at September 30, 2021. There was $404,000 in loans past due 90 days and still accruing at September 30, 2022, compared to $245,000 at June 30, 2022. There were no loans past due 90 days and still accruing at September 30, 2021.

Heartland's performing restructured loans, that were not included in nonaccrual loans, totaled $3.1 million at September 30, 2022, compared to $4.5 million at June 30, 2022. Borrowers who are in financial difficulty, and who have been granted concessions, including interest rate reductions, term extensions, or payment alterations, are categorized as restructured loans.

There was $5,000 in other real estate owned and other non-performing assets on the books at September 30, 2022, unchanged from three months earlier and one year earlier. Non-performing assets (NPAs), consisting of non-performing loans and loans past due 90 days or more, was $1.1 million, or 0.07% of total assets, at September 30, 2022, compared to $1.S million, or 0.10% of total assets, at June 30, 2022, and decreased 59.8% when compared to $2.8 million, or 0.22% of total assets a year ago.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates 19 full­ service banking offices and TransCounty Title Agency, LLC. Heartland Bank, founded in 1911, provides full-service commercial, small business, and consumer banking services; professional financial planning services; and other financial products and services. Heartland Bank is a member of the Federal Reserve, a member of the FDIC, and an Equal Housing Lender. Heartland BancCorp is currently quotedon the OTC Markets (OTCQX) under the symbol HLAN. Learn more about Heartland Bank at Heartland.Bank.

In May of 2022, Heartland was ranked #112 on the American Banker Magazine's list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity as of December 31, 2021.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but arenot limited to, statements about (i) the benefits of a merger between Heartland Bank and Victory Community Bank, including future financial and operating results, cost savings enhancements to revenue and accretion to reported earnings that maybe realized from the merger; (ii) Heartland's plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts; and (iii) other statements;dentified by words such as"expects,""ontidpates," "intends," "plans," "believes," "seeks," "estimates," "targets," "projects," or words of similar meaning generally intended ta identify forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of Heartland's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Heartland. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual resultsmay differ materially from the anticipated resultsdiscussed inthese forward-looking statements because of the following factors, among others: (1) the assumptions ond estimates used by Heartland's management include both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thusis susceptible to multiple interpretations and periodic revisions based on actual experience andbusiness developments, and thus,may notbe realized; (2) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which Heartland is engaged; (3) changes in the interest rate environment may adversely affect net interest income; (4) results moy be adversely affected by continued diversification of assets and adverse changes to credit quality; (SJ competition from other financial services companies in Heartland's markets could adverselyaffect operations; {6} the impact of the coronavirus (COV/D-19) pandemic on the employees and customers of Heartland, as well as the resulting effect on the business, financial condition and results of operations an Heartland; and (7) the current economic slowdown could adversely affect credit quality and loan originations.

Heartland cautions thatthe foregoing listof factors is not exclusive. All subsequent written and oral forward-looking statements are expressly qualified in their entirety by the cautionary statements above. Heartland does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.