Contact:	Mark E. Secor
	Chief Financial Officer
Phone:	(219) 873–2611
Fax:	(219) 874–9280
Date:	July 29, 2020

FOR IMMEDIATE RELEASE

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Michigan City, Indiana, July 29, 2020 (GLOBE NEWSWIRE) — (NASDAQ GS: HBNC) — Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three and six months ending June 30, 2020.

Craig M. Dwight, Chairman and CEO of Horizon, commented, “Horizon’s team put in an incredible performance during the second quarter to originate and process record mortgage loan volume, help thousands of local employers to access federal stimulus funding, assist borrowers with payment modifications, and safely open branches that had been operating by appointment only since March. This extraordinary effort was complimented by profitably growing and strengthening the balance sheet, maintaining solid asset quality metrics, managing expenses with customary discipline, and meaningfully growing pre–tax, pre–provision net income.”

Second Quarter 2020 Highlights

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

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

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

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

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

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

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

1

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

■Reported non–interest expense of $30.4 million, representing 2.18% of average assets on an annualized basis, or 2.26% after adding back $1.1 million of deferred PPP loan origination costs, compared to 2.38% for the first quarter of 2020 and 2.51% for the second quarter of 2019.

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

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

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

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

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

Summary

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

Mr. Dwight commented, “Our team’s success in managing the effect of significantly lower interest rates on Horizon’s loan and deposit pricing in the second quarter is reflected in net interest margin compression of only 9 basis points from the first quarter of this year, which includes an estimated 3 basis points of compression from PPP lending.”

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

	For the Three Months Ended
Non–interest Income and Mortgage Banking Income	June 30,		March 31,		June 30,
	2020		2020		2019
Total non–interest income	$	11,124	$	12,063	$	10,898
Gain on sale of mortgage loans	6,620		3,473		2,078
Mortgage servicing income net of impairment	(2,760)		25		570

2

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

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

				CECL Adoption
	December 31,					January 1,			Net Reserve Build		Net Reserve Build		June 30,
Allowance for Credit Losses	2019			Impact		2020			1Q20		2Q20		2020
Commercial	$	11,996		$	13,618	$	25,614		$	6,936	$	6,597	$	39,147
Retail Mortgage	923			4,048		4,971			683		178		5,832
Warehouse	1,077			—		1,077			(22)		135		1,190
Consumer	3,671			4,911		8,582			599		(260)		8,921
Allowance for Credit Losses (“ACL”)	$	17,667		$	22,577	$	40,244		$	8,196	$	6,650	$	55,090
ACL/Total Loans	0.49		%			1.10		%					1.38		%
Acquired Loan Discount (“ALD”)	$	20,228		$	(2,786)	$	17,442		$	—	$	—	$	14,474

Mr. Dwight stated, “Horizon’s asset quality metrics continued to remain favorable through the second quarter, as evidenced by low delinquency and other real estate owned and a moderate increase in non–performing loans. Horizon's reserve build reflects adoption of CECL on January 1 and the increase in our quarterly allocation to cover anticipated loan losses related to economic factors and the nature and characteristics of our loan portfolios, primarily related to the impact on non–essential businesses caused by COVID–19 closures and the slow pace of reopening and economic recovery. However, at the current time, we are not aware of any material specific loan losses caused by COVID–19 closures. We believe federal stimulus programs softened the adverse economic impact of COVID–19 for some businesses and consumers to date. Looking ahead, as federal stimulus programs begin to roll back and the pandemic continues, we will be closely monitoring the potential for increased loan losses, and intend to maintain prudent reserves, tightly manage operating expenses, and use our strong balance sheet and ample funding to continue to meet the needs of the businesses and consumers we serve.”

Income Statement Highlights

Net income for the second quarter of 2020 was $14.6 million, or $0.33 diluted earnings per share, compared to $11.7 million, or $0.26, for the linked quarter and $16.6 million, or $0.37, for the year–ago period.

Adjusted net income for the second quarter of 2020 was $14.4 million, or $0.32 diluted earnings per share, compared to $11.2 million, or $0.24, for the linked quarter and to $17.6 million, or $0.39, for the year–ago period. Adjusted net income, which is not calculated according to generally accepted accounting principles (“GAAP”), is a measure that Horizon uses to provide a greater understanding of operating profitability.

3

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

The increase in net income for the second quarter of 2020 when compared to the first quarter of 2020 reflects an increase in net interest income of $2.1 million, a decrease in credit loss expense of $1.5 million and a decrease in non–interest expense of $717,000, offset by a decrease in non–interest income of $939,000 and an increase in tax expense of $409,000.

Second quarter 2020 non–interest income was reduced by a non-cash mortgage servicing asset impairment of $2.9 million, recorded to reflect the national increase in mortgage prepayment speeds and past due levels and determined based on a third-party valuation of Horizon's mortgage servicing asset. Gain on sale of mortgage loans grew to a record $6.6 million, up from $3.5 million in the linked quarter and $2.1 million in the year-ago period.

Non-interest expense of $30.4 million in the second quarter of 2020 reflected a $962,000 decline in salaries and employee benefits expense from the linked quarter. The reduction in salaries and employee benefits expense reflected the deferral of approximately $1.1 million in PPP loan origination costs in the second quarter of 2020, which will be amortized over the life of the PPP loans and would be recognized when the loans are forgiven or paid off.

The decrease in net income for the second quarter of 2020 when compared to the same prior year period reflects an increase in credit loss expense of $6.2 million, offset by an increase in net interest income of $1.5 million, an increase in non–interest income of $226,000, a decrease in non–interest expense of $1.2 million and a decrease in tax expense of $1.3 million.

Net income for the first six months of 2020 was $26.3 million, or $0.59 diluted earnings per share, compared to $27.5 million, or $0.65 diluted earnings per share, for the first six months of 2019. Adjusted net income for the first six months of 2020 was $25.6 million, or $0.57 diluted earnings per share, compared to $31.8 million, or $0.75 diluted earnings per share for the first six months of 2019. The decrease in net income for the first six months of 2020 when compared to the same prior year period reflects an increase in the provision for credit loss expense of $14.4 million and an increase in non–interest expense of $259,000, offset by an increase in net interest income of $8.1 million, an increase in non–interest income of $3.6 million and a decrease in tax expense of $1.8 million.

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

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Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

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

Horizon’s net interest margin decreased to 3.47% for the second quarter of 2020 compared to 3.56% for the first quarter of 2020. The decrease in net interest margin reflects a decrease in the yield of interest earning assets of 42 basis points, offset by a decrease in the cost of interest bearing liabilities of 39 basis points. Interest income from acquisition–related purchase accounting adjustments was $119,000 higher during the second quarter of 2020 when compared to the first quarter of 2020.

5

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Horizon’s net interest margin decreased to 3.47% for the second quarter of 2020 when compared to 3.73% for the second quarter of 2019. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 76 basis points offset by a decrease in the cost of interest bearing liabilities of 64 basis points.

Horizon’s net interest margin decreased to 3.51% for the first six months of 2020 when compared to 3.68% for the same prior year period. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 54 basis points offset by a decrease in the cost of interest bearing liabilities of 48 basis points.

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

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

Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 3.35% for the second quarter of 2020 compared to 3.44% for the prior quarter and 3.61% for the second quarter of 2019. Interest income from acquisition–related purchase accounting adjustments was $1.6 million, $1.4 million and $1.3 million for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

Net interest margin, excluding acquisition–related purchase accounting adjustment (“adjusted net interest margin”), was 3.39% for the first six months of 2020 compared to 3.55% for the same prior year period. Interest income from acquisition–related purchase accounting adjustments was $3.0 million and $2.8 million for the six months ended June 30, 2020 and 2019, respectively.

Lending Activity

Total loans of $3.99 billion, or $3.69 billion excluding PPP loans, on June 30, 2020 compared to $3.71 billion on March 31, 2020, $3.64 on December 31, 2019 and $3.67 billion on June 30, 2019. During the six months ended June 30, 2020, commercial loans increased $266.1 million, mortgage warehouse loans increased $150.1 million, and loans held for sale increased $11.8 million, offset by a decrease in residential mortgage loans of $66.3 million and a decrease in consumer loans of $8.3 million.

6

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
	June 30,		December 31,		Amount		Percent
	2020		2019		Change		Change
Commercial	$	2,312,715	$	2,046,651	$	266,064	13.0%
Residential mortgage	704,410		770,717		(66,307)		(8.6)%
Consumer	660,871		669,180		(8,309)		(1.2)%
Subtotal	3,677,996		3,486,548		191,448		5.5%
Loans held for sale	15,913		4,088		11,825		289.3%
Mortgage warehouse	300,386		150,293		150,093		99.9%
Total loans	$	3,994,295	$	3,640,929	$	353,366	9.7%

Residential mortgage lending activity for the three months ended June 30, 2020 generated a record $6.6 million in income from the gain on sale of mortgage loans, an increase of $3.1 million from the first quarter of 2020 and $4.5 million from the second quarter of 2019. Total origination volume for the second quarter of 2020, including loans placed into portfolio, totaled a record $252.8 million, representing an increase of 128.1% from the first quarter of 2020 and an increase of 127.0% from the second quarter of 2019. As a percentage of total originations, 77% of the volume was for refinances and 23% was for new purchases during the second quarter of 2020. Total origination volume of loans sold to the secondary market totaled $192.4 million, representing an increase of 184.7% from the first quarter of 2020 and an increase of 217.2% from the second quarter of 2019.

Expense Management

	Three Months Ended
	June 30,								March 31,
	2020								2020								Adjusted
Non–interest Expense	Actual			Merger Expenses		Adjusted			Actual			Merger Expenses		Adjusted			Amount Change		Percent Change
Salaries and employee benefits	$	15,629		$	—	$	15,629		$	16,591		$	—	$	16,591		$	(962)	(5.8)%
Net occupancy expenses	3,190			—		3,190			3,252			—		3,252			(62)		(1.9)%
Data processing	2,432			—		2,432			2,405			—		2,405			27		1.1%
Professional fees	518			—		518			536			—		536			(18)		(3.4)%
Outside services and consultants	1,759			—		1,759			1,915			—		1,915			(156)		(8.1)%
Loan expense	2,692			—		2,692			2,099			—		2,099			593		28.3%
FDIC insurance expense	235			—		235			150			—		150			85		56.7%
Other losses	193			—		193			120			—		120			73		60.8%
Other expense	3,784			—		3,784			4,081			—		4,081			(297)		(7.3)%
Total non–interest expense	$	30,432		$	—	$	30,432		$	31,149		$	—	$	31,149		$	(717)	(2.3)%
Annualized non–interest expense to average assets	2.18		%			2.18		%	2.38		%			2.38		%

Total non–interest expense was $717,000 lower in the second quarter of 2020 when compared to the first quarter of 2020. Decreases in salaries and employee benefits, other expense and outside services and consultants expense were partially offset by an increase in loan expense. The reduction in salaries and employee benefits expense reflected the deferral of approximately $1.1 million in PPP loan origination costs in the second quarter of 2020, which will be amortized over the life of the PPP loans and recognized when the loans are forgiven or paid off.

7

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

Total non–interest expense was $1.2 million lower in the second quarter of 2020 when compared to the second quarter of 2019. Decreases in salaries and employee benefits, other expenses and FDIC deposit expense were offset in part by increases in loan expenses, data processing expenses and outside services and consultants expense. Excluding merger expenses, total non–interest expense increased by $380,000 in the second quarter of 2020 when compared to the second quarter of 2019. This increase was primarily related to closing the Salin Bancshares, Inc. merger on March 26, 2019 and the related increase in costs.

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

Total non–interest expense was $259,000 higher for the first six months of 2020 when compared to the same prior year period. Increases in salaries and employee benefits, loan expenses, data processing and net occupancy expenses were offset in part by decreases in outside services and consultants expense, other expenses and FDIC deposit insurance.

8

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Annualized non–interest expense as a percent of average assets were 2.18%, 2.38% and 2.51% for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively. Annualized non–interest expense, excluding merger expenses, as a percent of average assets were 2.18%, 2.38% and 2.39% for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

Annualized non–interest expense as a percent of average assets were 2.28% and 2.64% for the six months ended June 30, 2020 and 2019, respectively. Annualized non–interest expense, excluding merger expenses, as a percent of average assets were 2.28% and 2.40% for the six months ended June 30, 2020 and 2019, respectively.

Income tax expense totaled $2.0 million for the second quarter of 2020, an increase of $409,000 when compared to the first quarter of 2020 and a decrease of $1.3 million when compared to the second quarter of 2019. The increase in income tax expense in the second quarter of 2020 compared to the first quarter of 2020 was primarily due to an increase in income before taxes of $3.4 million. The decrease in income tax expense in the second quarter of 2020 compared to the second quarter of 2019 was primarily due to a decrease in income before taxes of $3.3 million.

Income tax expense totaled $3.6 million for the six months ended June 30, 2020, a decrease of $1.8 million when compared to the six months ended June 30, 2019. The decrease in income tax expense was primarily due to a decrease in income before taxes of $3.0 million.

Capital

The capital resources of Horizon and Horizon Bank (the “Bank”) exceeded regulatory capital ratios for “well capitalized” banks at June 30, 2020. Stockholders’ equity totaled $652.2 million at June 30, 2020 and the ratio of average stockholders’ equity to average assets was 12.07% for the six months ended June 30, 2020.

Capital levels benefited from the Company’s previously disclosed public offering of subordinated notes raising $60.0 million. Horizon’s fortress balance sheet at June 30, 2020 maintained adequate regulatory capital ratios when stress testing for highly adverse scenarios.

The following table presents the actual regulatory capital dollar amounts and ratios of Horizon and the Bank as of June 30, 2020.

June 30, 2020	Actual				Required for Capital Adequacy Purposes				Required for Capital Adequacy Purposes with Capital Buffer				Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk–weighted assets)
Consolidated	$	628,750	14.37	%	$	350,035	8.00	%	$	459,421	10.50	%	N/A		N/A
Bank	514,371		11.74	%	350,508		8.00	%	460,042		10.50	%	$	438,135	10.00	%
Tier 1 capital (to risk–weighted assets)
Consolidated	585,386		13.38	%	262,505		6.00	%	371,882		8.50	%	N/A		N/A
Bank	459,621		10.49	%	262,891		6.00	%	372,429		8.50	%	350,521		8.00	%
Common equity tier 1 capital (to risk–weighted assets)
Consolidated	469,069		10.72	%	196,904		4.50	%	306,295		7.00	%	N/A		N/A
Bank	459,621		10.49	%	197,168		4.50	%	306,706		7.00	%	284,799		6.50	%
Tier 1 capital (to average assets)
Consolidated	585,386		10.75	%	217,818		4.00	%	217,818		4.00	%	N/A		N/A
Bank	459,621		8.48	%	216,802		4.00	%	216,802		4.00	%	271,003		5.00	%

9

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

“Horizon’s capital position continues to be well capitalized, as defined by regulations, after the adoption of CECL,” said Mr. Dwight. “In addition, Horizon’s earnings were able to offset the adoption of CECL, ACL build, stock repurchases and dividends to successfully build tangible capital to a record $10.87 per share. Horizon also completed a $60.0 million subordinated debt offering, further strengthening our capital position, increasing liquidity at the holding company, and providing optionality to Horizon as we navigate through the economic challenges created by the pandemic.”

Liquidity

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

Branch Network and Customer Experience

Horizon continues to implement its disciplined approach for enhancing the efficiency of its branch network on an ongoing basis, while leveraging technology to enhance the customer experience.

The Bank closed two branches during the second quarter of 2020, one of its Indianapolis branches acquired from Salin and its Horseprairie Valparaiso branch. The Bank expects to replace its Troy, Michigan loan production office with a full-service branch during the third quarter of 2020.

Also during the third quarter, Horizon expects to fully implement live online chat support, as well as fully online and mobile enabled deposit account opening capabilities, for the convenience of new and prospective customers.

Use of Non–GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non–GAAP financial measures relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for loan and lease losses, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average equity and pre–tax, pre–provision net income. In each case, we have identified special circumstances that we consider to be to be non–recurring and have excluded them. We believe that this shows the impact of such events as acquisition–related purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes these non–GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one–time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non–GAAP figures identified herein and their most comparable GAAP measures.

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

10

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

11

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

12

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

Conference Call

As previously announced, Horizon will host a conference call to review its second quarter financial results and operating performance.

Participants may access the live conference call on July 30, 2020 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 877–317–6789 from the United States, 866–450–4696 from Canada or 412–317–6789 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.

A telephone replay of the call will be available approximately one hour after the end of the conference through August 6, 2020. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 412–317–0088 from other international locations, and entering the access code 10145660.

About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern and central Michigan through its commercial banking subsidiary, Horizon Bank. Horizon may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.

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Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Forward Looking Statements

This presentation may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward–looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in the presentation materials 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 Horizon’s Annual Report on Form 10–K. Further, statements about the effects of the COVID–19 pandemic on our business, operations, financial performance, and prospects may constitute forward–looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward–looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties, and us. 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.

Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2020		2020		2019		2019		2019
Balance sheet:
Total assets	$	5,739,262	$	5,351,325	$	5,246,829	$	5,186,714	$	5,098,682
Investment securities	1,126,075		1,099,943		1,042,675		977,536		887,187
Commercial loans	2,312,715		2,050,402		2,046,651		2,046,165		2,062,623
Mortgage warehouse loans	300,386		223,519		150,293		155,631		133,428
Residential mortgage loans	704,410		757,529		770,717		796,497		814,065
Consumer loans	660,871		675,849		669,180		668,332		654,552
Earning assets	5,143,978		4,835,934		4,706,051		4,667,668		4,577,487
Non–interest bearing deposit accounts	981,868		709,978		709,760		756,707		810,350
Interest bearing transaction accounts	2,510,854		2,264,576		2,245,631		2,173,100		2,153,189
Time deposits	814,877		907,717		975,611		986,150		967,236
Borrowings	583,073		704,613		549,741		516,591		436,233
Subordinated notes	58,824		—		—		—		—
Junior subordinated debentures issued to capital trusts	56,437		56,374		56,311		56,250		56,194
Total stockholders’ equity	652,206		630,842		656,023		642,711		626,461

14

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2020			2020			2019			2019			2019
Income statement:
Net interest income	$	42,996		$	40,925		$	41,519		$	43,463		$	41,529
Credit loss expense	7,057			8,600			340			376			896
Non–interest income	11,125			12,063			11,934			11,514			10,898
Non–interest expense	30,432			31,149			30,650			30,060			31,584
Income tax expense	1,993			1,584			3,920			4,004			3,305
Net income	$	14,639		$	11,655		$	18,543		$	20,537		$	16,642
Per share data:
Basic earnings per share	$	0.33		$	0.26		$	0.41		$	0.46		$	0.37
Diluted earnings per share	0.33			0.26			0.41			0.46			0.37
Cash dividends declared per common share	0.12			0.12			0.12			0.12			0.12
Book value per common share	14.88			14.41			14.59			14.29			13.90
Tangible book value per common share	10.87			10.37			10.63			10.31			9.91
Market value – high	12.44			18.79			19.42			17.77			17.13
Market value – low	$	8.40		$	7.97		$	16.60		$	15.93		$	15.51
Weighted average shares outstanding – Basic	43,781,249			44,658,512			44,971,676			45,038,021			45,055,117
Weighted average shares outstanding – Diluted	43,802,794			44,756,716			45,103,065			45,113,730			45,130,408
Key ratios:
Return on average assets	1.05		%	0.89		%	1.40		%	1.60		%	1.32		%
Return on average common stockholders’ equity	9.07			7.02			11.26			12.72			10.73
Net interest margin	3.47			3.56			3.58			3.82			3.73
Allowance for credit losses to total loans	1.38			1.30			0.49			0.49			0.50
Average equity to average assets	11.56			12.70			12.44			12.55			12.32
Bank only capital ratios:
Tier 1 capital to average assets	8.48			9.43			9.49			9.35			9.52
Tier 1 capital to risk weighted assets	10.49			11.83			12.20			11.62			11.76
Total capital to risk weighted assets	11.74			12.67			12.65			12.08			12.23

15

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
	Six Months Ended
	June 30,			June 30,
	2020			2019
Income statement:
Net interest income	$	83,921		$	75,809
Credit loss expense	15,656			1,260
Non-interest income	23,187			19,610
Non-interest expense	61,581			61,322
Income tax expense	3,577			5,379
Net income	$	26,294		$	27,458
Per share data:
Basic earnings per share	$	0.59		$	0.65
Diluted earnings per share	0.59			0.65
Cash dividends declared per common share	0.24			0.22
Book value per common share	14.88			13.90
Tangible book value per common share	10.87			9.91
Market value - high	18.79			17.82
Market value - low	$	7.97		$	15.50
Weighted average shares outstanding - Basic	44,219,880			41,956,047
Weighted average shares outstanding - Diluted	44,286,864			42,032,971
Key ratios:
Return on average assets	0.97		%	1.18		%
Return on average common stockholders’ equity	8.07			9.82
Net interest margin	3.51			3.68
Allowance for credit losses to total loans	1.38			0.50
Average equity to average assets	12.07			12.05
Bank only capital ratios:
Tier 1 capital to average assets	8.48			9.52
Tier 1 capital to risk weighted assets	10.49			11.76
Total capital to risk weighted assets	11.74			12.23

16

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2020			2020			2019			2019			2019
Loan data:
Substandard loans	$	61,385		$	61,322		$	58,670		$	62,130		$	47,764
30 to 89 days delinquent	4,029			12,017			7,729			10,204			9,633
Non-performing loans:
90 days and greater delinquent – accruing interest	$	123		$	246		$	146		$	34		$	391
Trouble debt restructures – accruing interest	2,039			2,115			3,354			3,491			2,198
Trouble debt restructures – non–accrual	3,443			3,360			2,006			1,807			1,576
Non–accrual loans	22,451			18,281			15,679			13,823			14,764
Total non–performing loans	$	28,056		$	24,002		$	21,185		$	19,155		$	18,929
Non–performing loans to total loans	0.70		%	0.65		%	0.58		%	0.52		%	0.52		%

Allocation of the Allowance for Credit Losses
(Dollars in Thousands, Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2020		2020		2019		2019		2019
Commercial	$	39,147	$	32,550	$	11,996	$	12,082	$	11,881
Real estate	5,832		5,654		923		1,449		1,732
Mortgage warehouse	1,190		1,055		1,077		1,041		1,040
Consumer	8,921		9,181		3,671		3,384		3,652
Total	$	55,090	$	48,440	$	17,667	$	17,956	$	18,305

Net Charge–offs (Recoveries)
(Dollars in Thousands, Unaudited)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2020			2020			2019			2019			2019
Commercial	$	6		$	(20)		$	146		$	192		$	265
Real estate	24			17			40			(7)			41
Mortgage warehouse	—			—			—			—			—
Consumer	377			407			443			540			106
Total	$	407		$	404		$	629		$	725		$	412
Percent of net charge–offs to average loans outstanding for the period	0.01		%	0.01		%	0.02		%	0.02		%	0.01		%

17

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Total Non–performing Loans
(Dollars in Thousands, Unaudited)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2020			2020			2019			2019			2019
Commercial	$	14,238		$	9,579		$	7,347		$	8,193		$	8,697
Real estate	9,945			10,411			9,884			7,212			6,444
Mortgage warehouse	—			—			—			—			—
Consumer	3,873			4,012			3,954			3,750			3,788
Total	$	28,056		$	24,002		$	21,185		$	19,155		$	18,929
Non–performing loans to total loans	0.70		%	0.65		%	0.58		%	0.52		%	0.52		%

Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2020		2020		2019		2019		2019
Commercial	$	2,374	$	2,464	$	3,698	$	3,972	$	3,694
Real estate	249		336		28		48		113
Mortgage warehouse	—		—		—		—		—
Consumer	20		13		—		24		48
Total	$	2,643	$	2,813	$	3,726	$	4,044	$	3,855

18

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

	Average Balance Sheets
	(Dollar Amount in Thousands, Unaudited)
		Three Months Ended						Three Months Ended
		June 30, 2020						June 30, 2019
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
	Assets
	Interest earning assets
	Federal funds sold	$	62,832	$	17	0.11	%	$	18,251	$	120	2.64	%
	Interest earning deposits	20,278		61		1.21	%	18,516		83		1.80	%
	Investment securities – taxable	481,552		2,243		1.87	%	480,036		3,070		2.57	%
	Investment securities – non-taxable (1)	647,375		4,105		3.15	%	411,944		2,793		3.44	%
	Loans receivable (2) (3)	3,900,599		43,918		4.54	%	3,637,927		47,784		5.29	%
	Total interest earning assets	5,112,636		50,344		4.05	%	4,566,674		53,850		4.81	%
	Non–interest earning assets
	Cash and due from banks	84,297						67,537
	Allowance for credit losses	(48,611)						(18,036)
	Other assets	472,373						431,190
	Total average assets	$	5,620,695					$	5,047,365
	Liabilities and Stockholders’ Equity
	Interest bearing liabilities
	Interest bearing deposits	$	3,299,661	$	4,506	0.55	%	$	3,118,821	$	8,938	1.15	%
	Borrowings	618,274		2,074		1.35	%	398,320		2,495		2.51	%
	Subordinated notes	4,527		58		5.15	%	—		—		—	%
	Junior subordinated debentures issued to capital trusts	52,835		710		5.40	%	53,572		888		6.65	%
	Total interest bearing liabilities	3,975,297		7,348		0.74	%	3,570,713		12,321		1.38	%
	Non–interest bearing liabilities
	Demand deposits	924,890						818,872
	Accrued interest payable and other liabilities	71,018						35,752
	Stockholders’ equity	649,490						622,028
	Total average liabilities and stockholders’ equity	$	5,620,695					$	5,047,365
	Net interest income/spread			$	42,996	3.31	%			$	41,529	3.43	%
	Net interest income as a percent of average interest earning assets (1)					3.47	%					3.73	%
(1)	Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2)	Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.
(3)	Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

19

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

	Average Balance Sheets
	(Dollar Amount in Thousands, Unaudited)
		Six Months Ended						Six Months Ended
		June 30, 2020						June 30, 2019
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
	Assets
	Interest earning assets
	Federal funds sold	$	43,903	$	113	0.52	%	$	13,072	$	224	3.46	%
	Interest earning deposits	23,391		163		1.40	%	22,414		191		1.72	%
	Investment securities – taxable	491,360		4,943		2.02	%	464,544		5,980		2.60	%
	Investment securities – non-taxable (1)	618,080		7,903		3.16	%	402,883		5,421		3.43	%
	Loans receivable (2) (3)	3,752,654		88,876		4.78	%	3,346,731		87,407		5.28	%
	Total interest earning assets	4,929,388		101,998		4.25	%	4,249,644		99,223		4.79	%
	Non–interest earning assets
	Cash and due from banks	81,203						56,160
	Allowance for credit losses	(36,588)						(17,939)
	Other assets	459,184						391,558
	Total average assets	$	5,433,187					$	4,679,423
	Liabilities and Stockholders’ Equity
	Interest bearing liabilities
	Interest bearing deposits	$	3,262,492	$	12,222	0.75	%	$	2,818,496	$	15,814	1.13	%
	Borrowings	575,702		4,312		1.51	%	487,266		6,116		2.53	%
	Subordinated notes	2,264		58		5.15	%	—		—		—	%
	Junior subordinated debentures issued to capital trusts	52,801		1,485		5.66	%	45,735		1,484		6.54	%
	Total interest bearing liabilities	3,893,259		18,077		0.93	%	3,351,497		23,414		1.41	%
	Non–interest bearing liabilities
	Demand deposits	820,997						731,556
	Accrued interest payable and other liabilities	63,393						32,508
	Stockholders’ equity	655,538						563,862
	Total average liabilities and stockholders’ equity	$	5,433,187					$	4,679,423
	Net interest income/spread			$	83,921	3.32	%			$	75,809	3.38	%
	Net interest income as a percent of average interest earning assets (1)					3.51	%					3.68	%
(1)	Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2)	Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.
(3)	Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

20

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

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

21

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Condensed Consolidated Statements of Income (Dollar Amounts in Thousands, Except Per Share Data, Unaudited)
	Three Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
	2020		2020		2019		2019		2019
Interest Income
Loans receivable	$	43,918	$	44,958	$	46,769	$	49,455	$	47,784
Investment securities – taxable	2,321		2,898		3,054		3,157		3,273
Investment securities – non-taxable	4,105		3,798		3,575		3,099		2,793
Total interest income	50,344		51,654		53,398		55,711		53,850
Interest Expense
Deposits	4,506		7,716		8,767		9,109		8,938
Borrowed funds	2,074		2,238		2,281		2,275		2,495
Subordinated notes	58		—		—		—		—
Junior subordinated debentures issued to capital trusts	710		775		831		864		888
Total interest expense	7,348		10,729		11,879		12,248		12,321
Net Interest Income	42,996		40,925		41,519		43,463		41,529
Credit loss expense	7,057		8,600		340		376		896
Net Interest Income after Credit Loss Expense	35,939		32,325		41,179		43,087		40,633
Non–interest Income
Service charges on deposit accounts	1,888		2,446		2,766		2,836		2,480
Wire transfer fees	230		171		179		189		167
Interchange fees	2,327		1,896		1,996		2,138		2,160
Fiduciary activities	1,765		2,528		2,594		1,834		2,063
Gains/(losses) on sale of investment securities	248		339		10		—		(100)
Gain on sale of mortgage loans	6,620		3,473		3,119		2,702		2,078
Mortgage servicing income net of impairment	(2,760)		25		294		444		570
Increase in cash value of bank owned life insurance	557		554		566		556		555
Death benefit on bank owned life insurance	—		233		—		213		367
Other income	250		398		410		602		558
Total non-interest income	11,125		12,063		11,934		11,514		10,898
Non–interest Expense
Salaries and employee benefits	15,629		16,591		16,841		16,948		16,951
Net occupancy expenses	3,190		3,252		3,106		3,131		3,148
Data processing	2,432		2,405		2,235		2,140		2,139
Professional fees	518		536		520		335		598
Outside services and consultants	1,759		1,915		1,415		1,552		1,655
Loan expense	2,692		2,099		2,438		2,198		2,048
FDIC insurance expense	235		150		—		(273)		365
Other losses	193		120		377		90		169
Other expense	3,784		4,081		3,718		3,939		4,511
Total non-interest expense	30,432		31,149		30,650		30,060		31,584
Income Before Income Taxes	16,632		13,239		22,463		24,541		19,947
Income tax expense	1,993		1,584		3,920		4,004		3,305
Net Income	$	14,639	$	11,655	$	18,543	$	20,537	$	16,642
Basic Earnings Per Share	$	0.33	$	0.26	$	0.41	$	0.46	$	0.37
Diluted Earnings Per Share	0.33		0.26		0.41		0.46		0.37

22

Horizon Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Condensed Consolidated Statements of Income (Dollar Amounts in Thousands, Except Per Share Data, Unaudited)
	Six Months Ended
	June 30,		June 30,
	2020		2019
Interest Income
Loans receivable	$	88,876	$	87,407
Investment securities – taxable	5,219		6,395
Investment securities – non-taxable	7,903		5,421
Total interest income	101,998		99,223
Interest Expense
Deposits	12,222		15,814
Borrowed funds	4,312		6,116
Subordinated notes	58		—
Junior subordinated debentures issued to capital trusts	1,485		1,484
Total interest expense	18,077		23,414
Net Interest Income	83,921		75,809
Credit loss expense	15,657		1,260
Net Interest Income after Credit Loss Expense	68,264		74,549
Non–interest Income
Service charges on deposit accounts	4,334		4,357
Wire transfer fees	401		285
Interchange fees	4,223		3,521
Fiduciary activities	4,293		4,152
Gains/(losses) on sale of investment securities	587		(85)
Gain on sale of mortgage loans	10,093		3,387
Mortgage servicing income net of impairment	(2,735)		1,176
Increase in cash value of bank owned life insurance	1,111		1,068
Death benefit on bank owned life insurance	233		367
Other income	648		1,382
Total non-interest income	23,188		19,610
Non–interest Expense
Salaries and employee benefits	32,220		31,417
Net occupancy expenses	6,442		5,920
Data processing	4,837		4,105
Professional fees	1,054		1,091
Outside services and consultants	3,674		5,185
Loan expense	4,791		3,997
FDIC insurance expense	385		525
Other losses	313		273
Other expense	7,865		8,809
Total non-interest expense	61,581		61,322
Income Before Income Taxes	29,871		32,837
Income tax expense	3,577		5,379
Net Income	$	26,294	$	27,458
Basic Earnings Per Share	$	0.59	$	0.65
Diluted Earnings Per Share	0.59		0.65

23