Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date: January 25, 2016

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces Record 2015 Net Income

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and twelve-month periods ended December 31, 2015.

SUMMARY:

·

Net income for the year ending December 31, 2015 was $20.5 million or $1.89 diluted earnings per share.

·

Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the year ending December 31, 2015 increased 29.0% compared to the year ending December 31, 2014 to $23.6 million or $2.18 diluted earnings per share.

·

Net interest income for the year ending December 31, 2015 increased 18.7% or $11.8 million compared to the year ending December 31, 2014.

·

Non-interest income for the year ending December 31, 2015 increased 15.7% or $4.1 million compared to the year ending December 31, 2014.

·

Commercial loans surpassed $800.0 million during the fourth quarter of 2015 for the first time in the Company’s history, ending the year at $805.0 million.

·

Total loans, excluding acquired loans, increased 10.7% or $148.0 million during the year ending December 31, 2015.

·

Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, return on average assets was 0.99% for the fourth quarter of 2015 and 1.00% for the year ending December 31, 2015.

·

Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, return on average common equity was 10.00% for the fourth quarter of 2015 and 11.36% for the year ending December 31, 2015.

·

Non-performing loans to total loans as of December 31, 2015 were 0.95% compared to 1.62% as of December 31, 2014.

·

Substandard loans totaled $25.2 million as of December 31, 2015, a decrease of $2.5 million from $27.7 million as of December 31, 2014.

·

Horizon’s tangible book value per share increased to $16.53 at December 31, 2015, compared to $16.26 at December 31, 2014 and $14.97 at December 31, 2013.

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Pg. 2 cont. Horizon Bancorp Announces Record 2015 Net Income

·

It is anticipated the entire $12.5 million in funds received through the Small Business Lending Fund will be paid off with cash from the holding company on February 1, 2016.

·

Horizon Bank’s capital ratios, including Tier 1 Capital to Average Assets of 8.69% and Total Capital to Risk Weighted Assets of 12.68% as of December 31, 2015, continue to be well above the regulatory standards for well-capitalized banks.

Craig Dwight, Chairman and CEO, commented: “I am pleased to announce Horizon Bancorp’s 2015 results, a year in which a great deal was accomplished across the Company. During 2015, Horizon successfully integrated 15 new branches as part of the Peoples Bancorp acquisition, opened a new office in Carmel, Indiana and relocated our Greenwood South location to a new and expanded office.  In addition, Horizon was able to continue our organic growth story by significantly increasing loans, core deposits and fee income during the year.  The impact of these positive results was reflected through increases to core net income and diluted earnings per share during the fourth quarter and for the year ended December 31, 2015.”

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollar in Thousands Except per Share Data)
		Three Months Ended								Twelve Months Ended
		December 31								December 31
Non-GAAP Reconciliation of Net Income		2015				2014				2015				2014
		(Unaudited)								(Unaudited)
Net income as reported		$	6,175			$	4,948			$	20,549			$	18,101
Merger expenses			525				-				4,889				1,335
Tax effect			(182	)			-				(1,585	)			(467	)
Net income excluding merger expenses			6,518				4,948				23,853				18,969
Gain on sale of investment securities			(65	)			-				(189	)			(988	)
Tax effect			23				-				66				346
Net income excluding gain on sale of investment securities			6,476				4,948				23,730				18,327
Death benefit on bank owned life insurance ("BOLI")			-				-				(145	)			-
Tax effect			-				-				51				-
Net income excluding death benefit on BOLI			6,476				4,948				23,636				18,327
Acquisition-related purchase accounting adjustments ("PAUs")			(695	)			(719	)			(2,977	)			(2,745	)
Tax effect			243				252				1,042				961
Net income excluding PAUs		$	6,024			$	4,481			$	21,701			$	16,543
Non-GAAP Reconciliation of Diluted Earnings per Share
Diluted earnings per share as reported		$	0.51			$	0.51			$	1.89			$	1.90
Merger expenses			0.04				-				0.45				0.14
Tax effect			(0.01	)			-				(0.14	)			(0.05	)
Diluted earnings per share excluding merger expenses			0.54				0.51				2.20				1.99
Gain on sale of investment securities			(0.01	)			-				(0.02	)			(0.10	)
Tax effect			0.00				(0.00	)			0.01				0.04
Net income excluding gain on sale of investment securities			0.53				0.51				2.19				1.92
Death benefit on BOLI			-				-				(0.01	)			-
Tax effect			-				-				0.00				-
Net income excluding death benefit on BOLI			0.53				0.51				2.18				1.92
Acquisition-related PAUs			(0.05	)			(0.07	)			(0.28	)			(0.29	)
Tax effect			0.02				0.03				0.10				0.10
Diluted earnings per share excluding PAUs		$	0.50			$	0.46			$	2.00			$	1.74

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Pg. 3 cont. Horizon Bancorp Announces Record 2015 Net Income

Dwight continued, “Horizon’s growth drove a considerable increase in net income and earnings per share compared to 2014.  Net income and diluted earnings per share, excluding non-core items, increased 34.4% and 7.8% during the fourth quarter of 2015, respectively. On a full year basis, net income and diluted earnings per share, excluding non-core items, increased by 31.2% and 15.3%, respectively.  Organic growth, increased fee income and the additional scale provided through the Peoples acquisition enabled Horizon to overcome persistent margin pressure due to the low interest rate environment.”

“Although loan growth slowed in the fourth quarter, over the course of 2015 Horizon increased loan balances across all product types and geographic markets.  Excluding loans acquired through the Peoples acquisition, total loans increased by 10.7% during the year.  This accomplishment reflects the collective effort we take in accomplishing our goals and serving our customers.”

Loan Growth by Type
Three Months Ended December 31, 2015
(Dollars in Thousands, Unaudited)
																		Annualized
		December 31				September 30				Amount				Percent				Percent
		2015				2015				Change				Change				Change
Commercial loans		$	804,995			$	795,271			$	9,724				1.2	%			4.9	%
Residential mortgage loans			437,144				430,946				6,198				1.4	%			5.7	%
Consumer loans			362,300				361,298				1,002				0.3	%			1.1	%
Subtotal			1,604,439				1,587,515				16,924				1.1	%			4.2	%
Held for sale loans			7,917				5,583				2,334				41.8	%			165.9	%
Mortgage warehouse loans			144,692				138,974				5,718				4.1	%			16.3	%
Total loans		$	1,757,048			$	1,732,072			$	24,976				1.4	%			5.7	%

Loan Growth by Type, Excluding Acquired Loans
Twelve Months Ended December 31, 2015
(Dollars in Thousands)
																		Excluding Acquired Loans
														Acquired
		December 31				December 31				Amount				Peoples				Amount				Percent
		2015				2014				Change				Loans				Change				Change
		(Unaudited)
Commercial loans		$	804,995			$	674,314			$	130,681			$	(67,435	)		$	63,246				9.4	%
Residential mortgage loans			437,144				254,625				182,519				(137,331	)			45,188				17.7	%
Consumer loans			362,300				320,459				41,841				(19,593	)			22,248				6.9	%
Subtotal			1,604,439				1,249,398				355,041				(224,359	)			130,682				10.5	%
Held for sale loans			7,917				6,143				1,774				-				1,774				28.9	%
Mortgage warehouse loans			144,692				129,156				15,536				-				15,536				12.0	%
Total loans		$	1,757,048			$	1,384,697			$	372,351			$	(224,359	)		$	147,992				10.7	%

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Pg. 4 cont. Horizon Bancorp Announces Record 2015 Net Income

To reduce funding costs over the next four years, the Company currently plans to use the securities portfolio to redeem maturing long-term debt.  As of December 31, 2015, $31.6 million of long-term debt is scheduled to mature in 2016, $47.5 million in 2017, $27.0 million in 2018 and $55.2 million in 2019.  This deleveraging will help reduce the Company’s cost of funds and provide additional capital for growth.

“Loan and core deposit growth continues to be a critical defense against the lower re-pricing of interest-earning assets,” Dwight continued.  “Horizon’s core net interest income decreased by six basis points from the sequential quarter and five basis points for the year ending December 31, 2015 compared to the prior year.”  The following table presents Horizon’s core net interest margin, which excludes acquisition-related purchase accounting adjustments.

Non-GAAP Reconciliation of Net Interest Margin
(Dollar Amounts in Thousands, Unaudited)
		Three Months Ended												Twelve Months Ended
		December 31				September 30				December 31				December 31
Net Interest Margin As Reported		2015				2015				2014				2015				2014
Net interest income		$	20,222			$	19,776			$	16,523			$	74,734			$	62,983
Average interest-earning assets			2,369,301				2,304,515				1,865,750				2,166,006				1,794,263
Net interest income as a percent of average interest-earning assets ("Net Interest Margin")			3.50	%			3.51	%			3.64	%			3.56	%			3.62	%
Impact of Acquisitions
Interest income from acquisition-related purchase accounting adjustments		$	(695	)		$	(402	)		$	(719	)		$	(2,977	)		$	(2,745	)
Excluding Impact of Acquisitions
Net interest income		$	19,527			$	19,374			$	15,804			$	71,757			$	60,238
Average interest-earning assets			2,369,301				2,304,515				1,865,750				2,166,006				1,794,263
Core Net Interest Margin			3.38	%			3.44	%			3.49	%			3.42	%			3.47	%

Horizon’s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, was .99% as of December 31, 2015.

Non- GAAP Allowance for Loan and Lease Loss Detail
As of December 31, 2015
(Dollars in Thousands, Unaudited)
		Horizon
		Legacy				Heartland				Summit				Peoples				Total
Pre-discount loan balance		$	1,461,318			$	23,064			$	76,120			$	197,307			$	1,757,809
Allowance for loan losses (ALLL)			14,502				32				-				-				14,534
Loan discount			N/A				1,386				2,942				4,350				8,678
ALLL+loan discount			14,502				1,418				2,942				4,350				23,212
Loans, net		$	1,446,816			$	21,646			$	73,178			$	192,957			$	1,734,597
ALLL/ pre-discount loan balance			0.99%				0.14%				0.00%				0.00%				0.83%
Loan discount/ pre-discount loan balance			N/A				6.01%				3.86%				2.20%				0.49%
ALLL+loan discount/ pre-discount loan balance			0.99%				6.15%				3.86%				2.20%				1.32%

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Pg. 5 cont. Horizon Bancorp Announces Record 2015 Net Income

Income Statement Highlights

Net income for the fourth quarter of 2015 was $6.2 million or $.51 diluted earnings per share compared to $4.9 million or $.51 diluted earnings per share in the fourth quarter of 2014.  The increase in net income from the previous year reflects an increase in net interest income of $3.7 million, a decrease in provision for loan losses of $636,000 and an increase in non-interest income of $1.0 million, partially offset by an increase in non-interest expense of $3.6 million and income taxes of $551,000.  Diluted earnings per share during the fourth quarter of 2015 compared to the same period of 2014 remained unchanged as a result of an increase in diluted shares due to the Peoples acquisition.  Excluding acquisition-related expenses and purchase accounting adjustments and gain on sale of investment securities, net income for the fourth quarter of 2015 was $6.0 million or $.50 diluted earnings per share compared to $4.5 million or $.46 diluted earnings per share in the same period of 2014.

Net income for the year ended December 31, 2015 was $20.5 million or $1.89 diluted earnings per share compared to $18.1 million or $1.90 diluted earnings per share for the year ended December 31, 2014.  The increase in net income from the previous year reflects an increase in net interest income of $11.8 million and an increase in non-interest income of $4.1 million, partially offset by an increase in the provision for loan losses of $104,000, non-interest expenses of $12.2 million and income taxes of $1.1 million.  The decrease in diluted earnings per share reflects an increase in diluted shares due to the Peoples acquisition.  Excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the year ended December 31, 2015 was $21.7 million or $2.00 diluted earnings per share compared to $16.5 million or $1.74 diluted earnings per share for the year ended December 31, 2014.

Horizon’s net interest margin was 3.50% during the fourth quarter of 2015, down from 3.51% for the prior quarter and 3.64% for same period of 2014.  The decrease in net interest margin compared to the prior quarter and the same period of 2014 was due to lower yields on new loans and re-pricing earning assets, partially offset by lower funding costs.  Excluding acquisition-related purchase accounting adjustments, the margin would have been 3.38% for the fourth quarter of 2015 compared to 3.44% for the prior quarter and 3.49% for the same period of 2014.  Interest income from acquisition-related purchase accounting adjustments was $695,000, $402,000 and $719,000 for the three months ended December 31, 2015, September 30, 2015 and December 31 2014, respectively.

Horizon’s net interest margin was 3.56% for the year ending December 31, 2015, down from 3.62% for the year ending December 31, 2014.  Excluding interest income from acquisition-related purchase accounting adjustments, the margin would have been 3.42% for the year ending December 31, 2015 compared to 3.47% for same period of 2014. Interest income from acquisition-related purchase accounting adjustments was $3.0 million and $2.7 million for the years ended December 31, 2015 and December 31, 2014, respectively.

Residential mortgage lending activity during the fourth quarter of 2015 generated $2.2 million in income from the gain on sale of mortgage loans, a decrease of $54,000 from the same period of

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Pg. 6 cont. Horizon Bancorp Announces Record 2015 Net Income

2014.  Total origination volume in the fourth quarter of 2015, including loans placed into portfolio, totaled $92.6 million, representing a decrease of 3.6% from the same period of 2014 of $96.0 million.  Purchase money mortgage originations during the fourth quarter of 2015 represented 68.7% of total originations compared to 81.0% of originations during the previous quarter and 67.6% during the same period of the prior year.

Lending Activity

Total loans increased $372.4 million from $1.4 billion as of December 31, 2014 to $1.8 billion as of December 31, 2015 as mortgage warehouse loans increased by $15.3 million, residential mortgage loans increased by $182.5 million and consumer loans increased by $41.8 million.  Commercial loans increased $130.7 million or 19.4% from $674.3 million at December 31, 2014 to $805.0 million at December 31, 2015.

Total loan balances in the Kalamazoo and Indianapolis markets continued to grow during the fourth quarter of 2015 to $173.2 million and $157.9 million, respectively, as of December 31, 2015. In the fourth quarter of 2015, Kalamazoo’s aggregate loan balances increased $6.5 million or 3.9%, and Indianapolis’ aggregate loan balances increased $6.7 million or 4.4%. Combined, these markets contributed $13.2 million in loan growth during the fourth quarter of 2015 or 4.1%.

The provision for loan losses was $342,000 for the fourth quarter of 2015 compared to $978,000 for the same period of 2014.  The lower provision for loan losses in the fourth quarter of 2015 compared to the same period of the previous year was predominantly due to a specific reserve of $560,000 placed on one commercial real estate loan that was moved to non-accrual status during the fourth quarter of 2014.  The provision for loan losses was $3.2 million for the year ended December 31, 2015 compared to $3.1 million for the same period of 2014.  The higher provision for loan losses in the first twelve months of 2015 compared to the same period of 2014 was due to continued loan growth.

The ratio of the allowance for loan losses to total loans decreased to 0.83% as of December 31, 2015 from 1.19% as of December 31, 2014 due to an increase in total loans and a decrease in the allowance for loan losses from $16.5 million as of December 31, 2014 to $14.5 million as of December 31, 2015.  The Peoples transaction added $224.4 million in loans without a loan loss reserve due to purchase accounting adjustments.  The decrease in the allowance for loan losses was the result of two commercial loans that were charged off during the fourth quarter of 2015 in the amount of $1.1 million for which $1.4 million had previously been reserved as well as continued improvement in non-performing loans.  As of December 31, 2015, the ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was .99% compared to 1.29% as of December 31, 2014.

Non-performing loans totaled $16.7 million as of December 31, 2015 and $22.4 million as of December 31, 2014.  Compared to December 31, 2014, non-performing commercial loans and consumer loans decreased by $4.9 million and $1.3 million, respectively, while non-performing real estate loans increased by $343,000.  As a percentage of total loans, non-performing loans were 0.95% at December 31, 2015, down 67 basis points from 1.62% at December 31, 2014.

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Pg. 7 cont. Horizon Bancorp Announces Record 2015 Net Income

Expense Management

Total non-interest expense was $3.6 million higher in the fourth quarter of 2015 compared to the same period of 2014.  The increase was primarily due to an increase in salaries and employee benefits costs of $1.5 million, net occupancy expense of $332,000, outside services and consultants expense of $286,000 and other expense of $760,000, reflecting overall company growth and the Peoples acquisition.  One-time non-interest expense related to the Peoples acquisition totaled $525,000 in the fourth quarter of 2015.

Total non-interest expense was $12.2 million higher for the year ended December 31, 2015 compared to the same period of 2014.  The increase was primarily due to an increase in salaries and employee benefits costs of $5.0 million, outside services and consultants expense of $2.5 million, other expenses of $1.6 million, net occupancy expenses of $793,000, loan expense of $609,000, data processing expense of $588,000, other losses of $502,000, professional fees of $339,000 and FDIC deposit insurance expense of $324,000 due to overall company growth and the Peoples acquisition.  One-time non-interest expense related to the Peoples acquisition totaled $4.9 million for the year ended December 31, 2015.

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP.  Specifically, we have included non-GAAP financial measures of the net interest margin and the allowance for loan and lease losses excluding the impact of acquisition-related purchase accounting adjustments and net income and diluted earnings per share excluding the impact of one-time costs related to acquisitions, acquisition-related purchase accounting adjustments and other events that are considered to be non-recurring.  Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items, although 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.

About Horizon

Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern and Central Indiana and Southwest and Central Michigan through its commercial banking subsidiary Horizon Bank, NA.  Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at www.horizonbank.com.  Its common stock is

traded on the NASDAQ Global Select Market under the symbol HBNC.

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon.  For these statements, Horizon

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Pg. 8 cont. Horizon Bancorp Announces Record 2015 Net Income

claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission.  Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance.  The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties.  We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.  Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in its Form 10-K.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

#  #  #

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)

 

		December 31				September 30				June 30				March 31				December 31
		2015				2015				2015				2015				2014
Balance sheet:
Total assets		$	2,652,401			$	2,607,914			$	2,219,307			$	2,153,965			$	2,076,922
Investment securities			632,611				617,860				493,631				495,315				489,531
Commercial loans			804,995				795,271				709,946				695,736				674,314
Mortgage warehouse loans			144,692				138,974				195,924				178,899				129,156
Residential mortgage loans			437,144				430,946				277,407				260,390				254,625
Consumer loans			362,300				361,298				336,006				326,334				320,459
Earning assets			2,403,482				2,363,755				2,031,671				1,974,251				1,885,576
Non-interest bearing deposit accounts			335,955				338,436				307,215				285,181				267,667
Interest bearing transaction accounts			1,177,651				1,164,787				983,912				905,216				930,582
Time deposits			366,547				409,852				293,596				274,699				284,070
Borrowings			449,347				373,901				385,236				440,415				351,198
Subordinated debentures			32,797				32,758				32,719				32,680				32,642
Common stockholders' equity			254,332				252,238				189,631				186,991				181,914
Total stockholders’ equity			266,832				264,738				202,131				199,491				194,414
Income statement:		Three months ended
Net interest income		$	20,222			$	19,776			$	17,850			$	16,886			$	16,523
Provision for loan losses			342				300				1,906				614				978
Non-interest income			7,750				8,400				7,186				7,066				6,738
Non-interest expenses			19,240				22,235				16,650				16,068				15,671
Income tax expense			2,215				1,353				1,752				1,912				1,664
Net income			6,175				4,288				4,728				5,358				4,948
Preferred stock dividend			(31	)			(31	)			(31	)			(31	)			(31	)
Net income available to common shareholders		$	6,144			$	4,257			$	4,697			$	5,327			$	4,917
Per share data:
Basic earnings per share		$	0.51			$	0.37			$	0.51			$	0.58			$	0.53
Diluted earnings per share			0.51				0.36				0.49				0.55				0.51
Cash dividends declared per common share			0.15				0.15				0.14				0.14				0.14
Book value per common share			21.30				21.14				20.49				20.25				19.75
Tangible book value per common share			16.53				16.34				17.06				16.80				16.26
Market value - high			28.15				26.15				26.03				25.86				26.73
Market value - low		$	23.58			$	22.60			$	22.85			$	22.38			$	22.83
Weighted average shares outstanding - Basic			11,937,247				11,605,976				9,240,005				9,216,011				9,212,156
Weighted average shares outstanding - Diluted			12,013,743				11,893,254				9,637,586				9,609,506				9,628,240
Key ratios:
Return on average assets			0.94	%			0.67	%			0.87	%			1.05	%			0.96	%
Return on average common stockholders' equity			9.53				6.76				9.88				11.66				10.72
Net interest margin			3.50				3.51				3.67				3.70				3.64
Loan loss reserve to total loans			0.83				0.93				1.08				1.13				1.19
Non-performing loans to loans			0.95				1.21				1.51				1.52				1.62
Average equity to average assets			10.32				10.38				9.32				9.56				9.56
Bank only capital ratios:
Tier 1 capital to average assets			8.69				9.31				8.24				8.77				8.80
Tier 1 capital to risk weighted assets			11.89				12.30				10.76				11.30				11.96
Total capital to risk weighted assets			12.68				13.17				11.76				12.35				13.08
Loan data:
Substandard loans		$	25,233			$	25,898			$	28,220			$	27,355			$	27,661
30 to 89 days delinquent			5,012				4,868				3,326				3,945				5,082
90 days and greater delinquent - accruing interest		$	28			$	100			$	207			$	19			$	115
Trouble debt restructures - accruing interest			1,218				2,948				3,271				4,368				4,372
Trouble debt restructures - non-accrual			3,172				3,994				4,523				4,711				2,643
Non-accrual loans			12,262				13,956				15,050				13,282				15,312
Total non-performing loans		$	16,680			$	20,998			$	23,051			$	22,380			$	22,442

HORIZON BANCORP

Financial Highlights

(Dollars in thousands except share and per share data and ratios, Unaudited)

		December 31				December 31
		2015				2014
Balance sheet:
Total assets		$	2,652,401			$	2,076,922
Investment securities			632,611				489,531
Commercial loans			804,995				674,314
Mortgage warehouse loans			144,692				129,156
Residential mortgage loans			437,144				254,625
Consumer loans			362,300				320,459
Earning assets			2,403,482				1,885,576
Non-interest bearing deposit accounts			335,955				267,667
Interest bearing transaction accounts			1,177,651				930,582
Time deposits			366,547				284,070
Borrowings			449,347				351,198
Subordinated debentures			32,797				32,642
Common stockholders' equity			254,332				181,914
Total stockholders’ equity			266,832				194,414
Income statement:		Twelve Months Ended
Net interest income		$	74,734			$	62,983
Provision for loan losses			3,162				3,058
Non-interest income			30,402				26,277
Non-interest expenses			74,193				61,946
Income tax expense			7,232				6,155
Net income			20,549				18,101
Preferred stock dividend			(125	)			(133	)
Net income available to common shareholders		$	20,424			$	17,968
Per share data:
Basic earnings per share		$	1.94			$	1.98
Diluted earnings per share			1.89				1.90
Cash dividends declared per common share			0.58				0.51
Book value per common share			21.30				19.75
Tangible book value per common share			16.53				16.26
Market value - high			28.15				26.73
Market value - low		$	22.38			$	19.57
Weighted average shares outstanding - Basic			10,510,296				9,060,702
Weighted average shares outstanding - Diluted			10,798,208				9,454,125
Key ratios:
Return on average assets			0.87	%			0.93	%
Return on average common stockholders' equity			9.87				10.60
Net interest margin			3.56				3.62
Loan loss reserve to total loans			0.83				1.19
Non-performing loans to loans			0.95				1.62
Average equity to average assets			9.30				9.33
Bank only capital ratios:
Tier 1 capital to average assets			8.69				8.85
Tier 1 capital to risk weighted assets			11.89				12.00
Total capital to risk weighted assets			12.68				13.12
Loan data:
Substandard loans		$	25,233			$	27,661
30 to 89 days delinquent			5,012				5,082
90 days and greater delinquent - accruing interest		$	28			$	115
Trouble debt restructures - accruing interest			1,218				4,372
Trouble debt restructures - non-accrual			3,172				2,643
Non-accrual loans			12,262				15,312
Total non-performing loans		$	16,680			$	22,442

HORIZON BANCORP

Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

		December 31				September 30				June 30				March 31				December 31
		2015				2015				2015				2015				2014
Commercial		$	7,195			$	8,841			$	8,386			$	7,876			$	7,910
Real estate			2,476				2,297				3,044				3,281				2,508
Mortgage warehousing			1,007				1,015				1,319				1,272				1,132
Consumer			3,856				4,015				3,672				4,205				4,951
Total		$	14,534			$	16,168			$	16,421			$	16,634			$	16,501

Net Charge-offs (Recoveries)

(Dollars in Thousands, Unaudited)

		Three months ended
		December 31				September 30				June 30				March 31				December 31
		2015				2015				2015				2015				2014
Commercial		$	1,595			$	77			$	1,584			$	(11	)		$	199
Real estate			(59	)			96				161				20				101
Mortgage warehousing			-				-				-				-				-
Consumer			440				380				375				472				336
Total		$	1,976			$	553			$	2,120			$	481			$	636

Total Non-performing Loans

(Dollars in Thousands, Unaudited)

 

		December 31				September 30				June 30				March 31				December 31
		2015				2015				2015				2015				2014
Commercial		$	7,005			$	10,832			$	13,384			$	11,540			$	11,855
Real estate			6,237				6,315				5,819				6,062				5,894
Mortgage warehousing			-				-				-				-				-
Consumer			3,438				3,851				3,848				4,778				4,693
Total		$	16,680			$	20,998			$	23,051			$	22,380			$	22,442

 

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)

		December 31				September 30				June 30				March 31				December 31
		2015				2015				2015				2015				2014
Commercial		$	161			$	324			$	376			$	307			$	411
Real estate			3,046				958				58				219				636
Mortgage warehousing			-				-				-				-				-
Consumer			-				-				37				223				154
Total		$	3,207			$	1,282			$	471			$	749			$	1,201

HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

		Three Months Ended												Three Months Ended
		December 31, 2015												December 31, 2014
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
ASSETS
Interest-earning assets
Federal funds sold		$	4,285			$	2				0.19	%		$	5,317			$	2				0.15	%
Interest-earning deposits			20,265				5				0.10	%			8,689				3				0.14	%
Investment securities - taxable			452,628				2,337				2.05	%			362,550				2,215				2.42	%
Investment securities - non-taxable (1)			174,768				1,213				4.17	%			145,705				1,098				4.46	%
Loans receivable (2)(3)			1,717,355				20,233				4.69	%			1,343,489				16,447				4.87	%
Total interest-earning assets (1)			2,369,301				23,790				4.10	%			1,865,750				19,765				4.33	%
Non-interest-earning assets
Cash and due from banks			33,621												28,451
Allowance for loan losses			(15,739	)											(16,094	)
Other assets			213,386												156,992
		$	2,600,569											$	2,035,099
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	1,604,394			$	1,524				0.38	%		$	1,216,920			$	1,273				0.42	%
Borrowings			324,496				1,539				1.88	%			303,390				1,463				1.91	%
Subordinated debentures			32,773				505				6.11	%			32,619				506				6.15	%
Total interest-bearing liabilities			1,961,663				3,568				0.72	%			1,552,929				3,242				0.83	%
Non-interest-bearing liabilities
Demand deposits			349,127												273,973
Accrued interest payable and  other liabilities			21,468												13,740
Stockholders' equity			268,311												194,457
		$	2,600,569											$	2,035,099
Net interest income/spread						$	20,222				3.38	%						$	16,523				3.50	%
Net interest income as a percent of average interest earning assets (1)											3.50	%											3.64	%

 

(1)	Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities.  The average rate is presented on a tax equivalent basis.

(2)	Includes fees on loans.  The inclusion of loan fees does not have a material effect on the average interest rate.

(3)	Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.

HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

		Twelve Months Ended												Twelve Months Ended
		December 31, 2015												December 31, 2014
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
ASSETS
Interest-earning assets
Federal funds sold		$	10,264			$	11				0.11	%		$	6,246			$	11				0.18	%
Interest-earning deposits			14,045				10				0.07	%			7,087				10				0.14	%
Investment securities - taxable			394,976				8,700				2.20	%			387,013				9,323				2.41	%
Investment securities - non-taxable (1)			152,931				4,494				4.32	%			146,407				4,426				4.32	%
Loans receivable (2)(3)			1,593,790				75,373				4.74	%			1,247,510				62,435				5.01	%
Total interest-earning assets (1)			2,166,006				88,588				4.20	%			1,794,263				76,205				4.36	%
Non-interest-earning assets
Cash and due from banks			31,692												27,168
Allowance for loan losses			(16,351	)											(15,945	)
Other assets			179,138												144,803
		$	2,360,485											$	1,950,289
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	1,438,026			$	5,559				0.39	%		$	1,182,831			$	5,257				0.44	%
Borrowings			336,618				6,286				1.87	%			281,649				5,956				2.11	%
Subordinated debentures			32,717				2,009				6.14	%			32,561				2,009				6.17	%
Total interest-bearing liabilities			1,807,361				13,854				0.77	%			1,497,041				13,222				0.88	%
Non-interest-bearing liabilities
Demand deposits			317,246												258,523
Accrued interest payable and other liabilities			16,364												12,776
Stockholders' equity			219,514												181,949
		$	2,360,485											$	1,950,289
Net interest income/spread						$	74,734				3.43	%						$	62,983				3.48	%
Net interest income as a percent of average interest earning assets (1)											3.56	%											3.62	%