8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  October 23, 2019
Horizon Bancorp, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Indiana	000-10792	35-1562417
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
515 FRANKLIN STREET, MICHIGAN CITY, Indiana		46360
(Address of Principal Executive Offices)		(Zip Code)
(219) 879-0211
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)

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

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

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

Item 2.02  Results of Operations and Financial Condition

Horizon Bancorp, Inc. (“Horizon”) is filing this Current Report on Form 8-K to furnish the earnings release issued on October 23, 2019, reporting Horizon’s results of operations and financial condition for the three-month period and the nine-month period ended September 30, 2019. Horizon has attached a copy of the earnings release as Exhibit 99.1 to this Current Report. The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01  Financial Statements and Exhibits

(d)  Exhibits
EXHIBIT INDEX
Exhibit No.	Description	Location
99.1	Press Release issued on October 23, 2019	Attached

SIGNATURES

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

Date: October 23, 2019	HORIZON BANCORP, INC.
	By:	/s/ Mark E. Secor
		Mark E. Secor,
		Executive Vice President & Chief Financial Officer

EX-99.1

Exhibit 99.1

Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date: October 23, 2019

FOR IMMEDIATE RELEASE

Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and nine-month periods ended September 30, 2019. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective June 15, 2018.

SUMMARY:

• Net income for the quarter ended September 30, 2019 was $20.5 million, or $0.46 diluted earnings per share, compared to $13.1 million, or $0.34 diluted earnings per share, for the quarter ended September 30, 2018. This represents the highest quarterly net income and diluted earnings per share in the Company’s history.

• Core net income for the quarter ended September 30, 2019 increased 54.4% to $20.3 million, or $0.45 diluted earnings per share, compared to $13.2 million, or $0.34 diluted earnings per share, for the same period in 2018. This represents the highest quarterly core net income and core diluted earnings per share in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for a description of the elements of core net income.)

• Net income for the first nine months of 2019 was $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the first nine months of 2018. This represents the highest year-to-date net income and diluted earnings per share as of September 30^th in the Company’s history.

• Core net income for the first nine months of 2019 was $52.1 million, or $1.21 diluted earnings per share, compared to $39.9 million, or $1.04 diluted earnings per share, for the first nine months of 2018. This represents the highest year-to-date core net income and core diluted earnings per share as of September 30^th in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for a description of the elements of core net income.)

• Net interest margin for the quarter ended September 30, 2019 was 3.82% compared to 3.73% and 3.67% for the quarters ended June 30, 2019 and September 30, 2018, respectively. The increase in net interest margin from the second quarter of 2019 and third quarter of 2018 reflects an increase in the yield of interest-earning assets as loans continue to reprice upwards and a decrease in cost of borrowings, along with a stabilization in deposit pricing.

• Core net interest margin for the quarter ended September 30, 2019 was 3.67% compared to 3.61% and 3.59% for the quarters ended June 30, 2019 and September 30, 2018, respectively. (See the “Non-GAAP Reconciliation of Net Interest Margin” table on page 5 for a description of the elements of core net interest margin.)

• Return on average assets was 1.60% for the third quarter of 2019 compared to 1.26% for the third quarter of 2018. Return on average assets was 1.33% for both the first nine months of 2019 and 2018.

Pg. 2 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

• Core return on average assets for the third quarter of 2019 was 1.58% compared to 1.27% for the third quarter of 2018. Core return on average assets was 1.44% for the first nine months of 2019 compared to 1.32% for the first nine months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)

• Return on average equity was 12.72% for the third quarter of 2019 compared to 10.87% for the third quarter of 2018. Return on average equity was 10.88% for the first nine months of 2019 compared to 11.43% for the first nine months of 2018.

• Core return on average equity for the third quarter of 2019 was 12.59% compared to 10.95% for the third quarter of 2018. Core return on average equity was 11.83% for the first nine months of 2019 compared to 11.41% for the first nine months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)

• Horizon’s tangible book value per share increased to $10.31 at September 30, 2019 compared to $9.91 and $9.04 at June 30, 2019 and September 30, 2018, respectively. This represents the highest tangible book value per share in the Company’s history.

• On July 16, 2019, Horizon’s Board of Directors authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of September 30, 2019, Horizon had repurchased a total of 99,407 shares at an average price per share of $16.04.

• Horizon consolidated its two Midland, Michigan full-service branches into one location on September 6, 2019.

Craig Dwight, Chairman and CEO of Horizon, commented:  “Horizon’s 2019 third quarter and year-to-date performance resulted in record earnings and demonstrate that our long range strategic plan to improve efficiency through an increase in mass and scale is working. Third quarter 2019 earnings increased to $20.5 million, or $0.46 diluted earnings per share, when compared to prior year period earnings of $13.1 million, or $0.34 diluted earnings per share. Year-to-date earnings increased to $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the prior year period.”

Dwight added, “Horizon’s growth story continues with total assets now reaching approximately $5.2 billion at September 30, 2019. In addition to the loans acquired from our acquisition of Salin Bank and Trust Company during the first quarter of 2019, which totaled approximately $568.9 million, we continue to experience year-to-date loan growth of $118.3 million from the markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo.”

Dwight concluded, “Horizon continues to maximize operational leverage through an increase in mass and scale as evident by the decrease in our adjusted efficiency ratio. Horizon’s adjusted efficiency ratio, excluding merger expenses, loss on sale of investment securities and death benefit on bank owned life insurance decreased to 54.89% for the third quarter of 2019 compared to 57.62% for the second quarter of 2019 and 60.17% for the third quarter of 2018. In addition, annualized non-interest expense to average assets, excluding merger expenses, fell to 2.34% for the third quarter of 2019 compared to 2.39% for the second quarter of 2019 and 2.48% for the third quarter of 2018. Our team continues to leverage new technologies and develop operational efficiencies. In addition, Horizon consolidated its two Midland, Michigan full-service branches into one location on September 6, 2019 in our continued efforts to improve branch efficiencies.”

Pg. 3 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Income Statement Highlights

Net income for the third quarter of 2019 was $20.5 million, or $0.46 diluted earnings per share, compared to $16.6 million, or $0.37 diluted earnings per share, for the second quarter of 2019 and $13.1 million, or $0.34 diluted earnings per share, for the third quarter of 2018. Excluding acquisition-related expenses, loss on sale of investment securities and death benefit on bank owned life insurance (“core net income”), core net income for the third quarter of 2019 was $20.3 million, or $0.46 diluted earnings per share, compared to $17.6 million, or $0.39 diluted earnings per share, for the second quarter of 2019 and $13.2 million, or $0.34 diluted earnings per share, for the third quarter of 2018.

The increase in net income and diluted earnings per share from the second quarter of 2019 to the third quarter of 2019 reflects increases in net interest income of $1.9 million and non-interest income of $616,000, in addition to decreases in non-interest expense of $1.5 million and provision for loan losses of $520,000, offset by an increase in income tax expense of $699,000.

The increase in net income from the third quarter of 2018 when compared to the same period of 2019 reflects increases in net interest income of $9.7 million and non-interest income of $2.8 million, in addition to a decrease in provision for loan losses of $800,000, offset by increases in non-interest expense of $4.4 million and income tax expense of $1.4 million.

Net income for the nine months ended September 30, 2019 was $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the nine months ended September 30, 2018. Core net income for the nine months ended September 30, 2019 was $52.1 million, or $1.21 diluted earnings per share, compared to $39.9 million, or $1.04 diluted earnings per share, for the nine months ended September 30, 2018. This represents a 16.3% increase in core diluted earnings per share for the first nine months of 2019 compared to the same period in 2018.

The increase in net income when comparing the first nine months of 2019 to the prior year period reflects increases in net interest income of $18.5 million and non-interest income of $5.2 million, in addition to a decrease in provision for loan losses of $742,000, offset by increases in non-interest expense of $15.0 million and income tax expense of $1.5 million.

Pg. 4 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands, Except per Share Data, Unaudited)
	Three Months Ended									Nine Months Ended
	September 30			June 30			September 30			September 30			September 30
	2019			2019			2018			2019			2018
Non-GAAP Reconciliation of Net Income
Net income as reported	$	20,537		$	16,642		$	13,065		$	47,995		$	39,984
Merger expenses		-			1,532			-			5,650			-
Tax effect		-			(295	)		-			(987	)		-
Net income excluding merger expenses		20,537			17,879			13,065			52,658			39,984
Loss on sale of investment securities		-			100			122			85			111
Tax effect		-			(21	)		(25	)		(18	)		(23	)
Net income excluding loss on sale of investment securities		20,537			17,958			13,162			52,725			40,072
Death benefit on bank owned life insurance ("BOLI")		(213	)		(367	)		-			(580	)		(154	)
Net income excluding death benefit on BOLI		20,324			17,591			13,162			52,145			39,918
Core Net Income	$	20,324		$	17,591		$	13,162		$	52,145		$	39,918
Non-GAAP Reconciliation of Diluted Earnings per Share
Diluted earnings per share ("EPS") as reported	$	0.46		$	0.37		$	0.34		$	1.11		$	1.04
Merger expenses		-			0.03			-			0.13			-
Tax effect		-			-			-			(0.02	)		-
Diluted EPS excluding merger expenses		0.46			0.40			0.34			1.22			1.04
Loss on sale of investment securities		-			-			-			-			-
Tax effect		-			-			-			-			-
Diluted EPS excluding loss on sale of investment securities		0.46			0.40			0.34			1.22			1.04
Death benefit on BOLI		(0.01	)		(0.01	)		-			(0.01	)		-
Diluted EPS excluding death benefit on BOLI		0.45			0.39			0.34			1.21			1.04
Core Diluted EPS	$	0.45		$	0.39		$	0.34		$	1.21		$	1.04

Horizon’s net interest margin increased to 3.82% for the third quarter of 2019 when compared to 3.73% for the second quarter of 2019. The increase in net interest margin reflects an increase in the yield on interest-earning assets of six basis points as loans continued to reprice upwards along with an increase in commercial loan fees of $811,000 when compared to the second quarter of 2019. The cost of interest-bearing liabilities decreased by three basis points primarily from a decrease in the cost of borrowings. In addition, deposit pricing is reducing within the markets we serve in alignment with the recent decline in general market short-term interest rates.

Net interest margin increased to 3.82% for the third quarter of 2019 when compared to 3.67% for the third quarter of 2018. The increase in net interest margin was due to an increase in yield on interest-earning assets of 29 basis points, offset by an increase in the cost on interest-bearing liabilities of 22 basis points. The increase in the yield of interest-earning assets was primarily due to the increase in the yields on loans receivable of 34 basis points and non-taxable investment securities of 25 basis points. The increase in the yields on loans receivable was the result of loans repricing upwards along with an increase in commercial loan fees of $1.2 million when comparing the third quarter of 2019 to the third quarter of 2018. The cost of interest-bearing deposits increased by 33 basis points and was partially offset by a decrease in the cost on borrowings of 12 basis points.

Net interest margin decreased to 3.72% during the first nine months of 2019 when compared to 3.74% for the first nine months of 2018. This decrease reflects an increase in the cost of interest-bearing liabilities of 40 basis points, offset by an increase in the yield of interest-earning assets of 26 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 48 basis points and borrowings of 28 basis points. The increase in the yield of interest-earning assets was due to increases in the yields on loans receivable of 26 basis points, non-taxable investment securities of 37 basis points and taxable investment securities of 15 basis points.

Pg. 5 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.67% for the third quarter of 2019 compared to 3.61% for the prior quarter and 3.59% for the third quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.7 million, $1.3 million and $789,000 for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. The increase in the core net interest margin during the third quarter of 2019 was due to a decrease of the cost on borrowings and an increase in the yield on earning assets from higher mortgage warehouse lending balances, loans continuing to reprice higher and the addition of acquired Salin loans.

Non-GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
	Three Months Ended									Nine Months Ended
	September 30			June 30			September 30			September 30			September 30
	2019			2019			2018			2019			2018
Non-GAAP Reconciliation of Net Interest Margin
Net interest income as reported	$	43,463		$	41,529		$	33,772		$	119,272		$	100,733
Average interest-earning assets		4,623,985			4,566,674			3,717,139			4,376,841			3,610,277
Net interest income as a percentage of average interest-earning assets ("Net Interest Margin")		3.82	%		3.73	%		3.67	%		3.72	%		3.74	%
Acquisition-related purchase accounting adjustments ("PAUs")	$	(1,739	)	$	(1,299	)	$	(789	)	$	(4,548	)	$	(4,460	)
Core net interest income	$	41,724		$	40,230		$	32,983		$	114,724		$	96,273
Core net interest margin		3.67	%		3.61	%		3.59	%		3.58	%		3.58	%

Lending Activity

Total loans increased $653.3 million from $3.014 billion as of December 31, 2018 to $3.668 billion as of September 30, 2019. Excluding acquired loans, total loans increased $84.4 million during the first nine months of 2019 as consumer loans increased by $33.7 million and mortgage warehouse loans increased by $81.5 million, offset by a decrease in commercial loans of $28.2 million and residential mortgage loans of $2.7 million.

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
	September 30		December 31		AmountChange		AcquiredLoans			AmountChange			PercentChange
	2019		2018
Commercial	$	2,046,165	$	1,721,590	$	324,575	$	(352,798	)	$	(28,223	)		-1.6	%
Residential mortgage		796,497		668,141		128,356		(131,008	)		(2,652	)		-0.4	%
Consumer		668,332		549,481		118,851		(85,112	)		33,739			6.1	%
Subtotal		3,510,994		2,939,212		571,782		(568,918	)		2,864			0.1	%
Held for sale loans		1,060		1,038		22		-			22			2.1	%
Mortgage warehouse loans		155,631		74,120		81,511		-			81,511			110.0	%
Total loans	$	3,667,685	$	3,014,370	$	653,315	$	(568,918	)	$	84,397			2.8	%

Pg. 6 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

During the first nine months of 2019, Horizon Bank (the “Bank”) originated approximately $299.5 million of commercial loans, which is a 17% increase compared to the same period in 2018; however, only 56.5%, or $169.1 million, of these loan originations had been funded as of September 30, 2019. These originations were offset by commercial loan payoffs totaling approximately $226.0 million during the first nine months of 2019, which is a 69% increase in payoffs compared to the same period in 2018, as there was an increase in clients moving projects that had reached stabilization into the long-term, fixed rate conduit financing market and properties being sold. During the first nine months of 2018, the Bank originated approximately $256.5 million of commercial loans; however, only 56.2%, or $144.1 million, of these loan originations had been funded as of September 30, 2018. These originations were offset by commercial loan payoffs totaling approximately $134.1 million during the first nine months of 2018.

Residential mortgage lending activity for the three months ended September 30, 2019 generated $2.7 million in income from the gain on sale of mortgage loans, an increase of $624,000 from the second quarter of 2019 and $863,000 from the third quarter of 2018. Total origination volume for the third quarter of 2019, including loans placed into portfolio, totaled $121.1 million, representing an increase of 8.7% from the second quarter of 2019 and an increase of 20.4% from the third quarter of 2018. Total origination volume for the third quarter of 2019 of loans sold to the secondary market totaled $95.0 million, representing an increase of 56.7% from the second quarter of 2019 and an increase of 60.3% from the third quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was 5.8% of Horizon’s total revenue for the nine months ended September 30, 2019, which is comparable to the same prior year period.

The provision for loan losses totaled $376,000 for the third quarter of 2019 compared to $896,000 for the second quarter of 2019 and $1.2 million for the third quarter of 2018.

The provision for loan losses totaled $1.6 million for the first nine months of 2019 compared to $2.4 million for the first nine months of 2018.

The ratio of the allowance for loan losses to total loans decreased to 0.49% as of September 30, 2019 from 0.59% at December 31, 2018. The decrease in the ratio of the allowance for loan losses to total loans is primarily due to increased loan balances from the Salin acquisition. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.65% as of September 30, 2019 compared to 0.72% as of December 31, 2018. Loan loss reserves plus credit-related loan discounts on acquired loans as a percentage of total loans was 1.07% as of September 30, 2019 compared to 0.98% as of December 31, 2018.

Pg. 7 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Non-GAAP Allowance for Loan and Lease Loss Detail
As of September 30, 2019
(Dollars in Thousands, Unaudited)
	Pre-discountLoan Balance		Allowancefor Loan Losses(ALLL)		LoanDiscount		ALLL+Loan Discount		Loans, net		ALLL/Pre-discountLoan Balance			Loan Discount/Pre-discountLoan Balance			ALLL+Loan Discount/Pre-discountLoan Balance
Horizon Legacy	$	2,779,961	$	17,946		N/A	$	17,946	$	2,762,015		0.65	%		0.00	%		0.65	%
Heartland		5,244		-		589		589		4,655		0.00	%		11.23	%		11.23	%
Summit		16,191		-		987		987		15,204		0.00	%		6.10	%		6.10	%
Peoples		71,941		-		1,669		1,669		70,272		0.00	%		2.32	%		2.32	%
Kosciusko		30,580		-		528		528		30,052		0.00	%		1.73	%		1.73	%
LaPorte		70,442		10		2,461		2,471		67,971		0.01	%		3.49	%		3.50	%
CNB		3,498		-		88		88		3,410		0.00	%		2.52	%		2.52	%
Lafayette		63,805		-		519		519		63,286		0.00	%		0.81	%		0.81	%
Wolverine		136,829		-		729		729		136,100		0.00	%		0.53	%		0.53	%
Salin		489,194		-		13,797		13,797		475,397		0.00	%		2.82	%		2.82	%
Total	$	3,667,685	$	17,956	$	21,367	$	39,323	$	3,628,362		0.49	%		0.58	%		1.07	%

As of September 30, 2019, non-performing loans totaled $19.2 million, which reflects a two basis point increase in non-performing loans to total loans, or a $4.0 million increase from $15.2 million in non-performing loans as of December 31, 2018. Compared to December 31, 2018, non-performing commercial loans increased by $1.3 million, non-performing real estate loans increased by $2.2 million and non-performing consumer loans increased by $485,000. Other real estate owned and repossessed assets totaled $4.0 million as of September 30, 2019 which is an increase of $2.0 million from December 31, 2018. The majority of this increase was due to other real estate owned properties acquired in the Salin transaction, including the closed branches, totaling $1.7 million.

As of September 30, 2019, substandard loans totaled $62.1 million, which is an increase of $14.4 million from June 30, 2019. This increase in substandard loans was primarily due to four unrelated relationships, each from a different industry, being downgraded during the quarter. We do not believe this increase to be an indication of the overall quality of our loan portfolio as evident by our steady non-performing loans to total loans ratio of 0.52% as of September 30, 2019 and other non-performing and substandard relationships showing improvement.

Expense Management

Total non-interest expense was $1.5 million lower in the third quarter of 2019 when compared to the second quarter of 2019. FDIC insurance, other expense, professional fees, and outside services and consultants decreased by $638,000, $572,000, $263,000 and $103,000, respectively. Offsetting these decreases was an increase in loan expense of $150,000. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense held steady at $30.1 million when comparing the third quarter of 2019 to the second quarter of 2019.

Pg. 8 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

	Three Months Ended
	September 30								June 30
	2019								2019									Adjusted
Non-interest Expense	Actual			MergerExpenses		Adjusted			Actual			MergerExpenses			Adjusted			AmountChange			PercentChange
Salaries and employee benefits	$	16,948		$	-	$	16,948		$	16,951		$	(482	)	$	16,469		$	479			2.9	%
Net occupancy expenses		3,131			-		3,131			3,148			(75	)		3,073			58			1.9	%
Data processing		2,140			-		2,140			2,139			(68	)		2,071			69			3.3	%
Professional fees		335			-		335			598			(153	)		445			(110	)		-24.7	%
Outside services and consultants		1,552			-		1,552			1,655			(176	)		1,479			73			4.9	%
Loan expense		2,198			-		2,198			2,048			(2	)		2,046			152			7.4	%
FDIC deposit insurance		(273	)		-		(273	)		365			-			365			(638	)		-174.8	%
Other losses		90			-		90			169			(69	)		100			(10	)		-10.0	%
Other expenses		3,939			-		3,939			4,511			(507	)		4,004			(65	)		-1.6	%
Total non-interest expense	$	30,060		$	-	$	30,060		$	31,584		$	(1,532	)	$	30,052		$	8			0.0	%
Annualized Non-interest Exp. to Avg. Assets		2.34	%				2.34	%		2.51	%					2.39	%

Total non-interest expense was $4.4 million higher during the third quarter of 2019 compared to the same period of 2018. Salaries and employee benefits, other expense, net occupancy expense, loan expense, data processing and outside services and consultants increased $2.6 million, $836,000, $636,000, $476,000, $381,000 and $348,000, respectively. These increases were offset by a decrease of $669,000 in FDIC insurance and $102,000 in professional fees. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded.

	Three Months Ended
	September 30								September 30
	2019								2018								Adjusted
Non-interest Expense	Actual			MergerExpenses		Adjusted			Actual			MergerExpenses		Adjusted			AmountChange			PercentChange
Salaries and employee benefits	$	16,948		$	-	$	16,948		$	14,343		$	-	$	14,343		$	2,605			18.2	%
Net occupancy expenses		3,131			-		3,131			2,495			-		2,495			636			25.5	%
Data processing		2,140			-		2,140			1,759			-		1,759			381			21.7	%
Professional fees		335			-		335			437			-		437			(102	)		-23.3	%
Outside services and consultants		1,552			-		1,552			1,204			-		1,204			348			28.9	%
Loan expense		2,198			-		2,198			1,722			-		1,722			476			27.6	%
FDIC deposit insurance		(273	)		-		(273	)		396			-		396			(669	)		-168.9	%
Other losses		90			-		90			161			-		161			(71	)		-44.1	%
Other expenses		3,939			-		3,939			3,103			-		3,103			836			26.9	%
Total non-interest expense	$	30,060		$	-	$	30,060		$	25,620		$	-	$	25,620		$	4,440			17.3	%
Annualized Non-interest Exp. to Avg. Assets		2.34	%				2.34	%		2.48	%				2.48	%

Total non-interest expense was $15.0 million higher during the first nine months of 2019 when compared to the first nine months of 2018. Salaries and employee benefits, other expenses, outside services and consultants, loan expense, data processing and net occupancy increased $5.8 million, $3.1 million, $3.0 million, $1.7 million, $1.2 million and $1.1 million, respectively. Offsetting these increases was a decrease in FDIC insurance of $799,000 and other losses of $213,000. FDIC insurance decreased due to the assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense increased $9.3 million during the first nine months of 2019 when compared to the same period of 2018.

Pg. 9 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

	Nine Months Ended
	September 30									September 30								Adjusted
	2019									2018								AmountChange			PercentChange
Non-interest Expense	Actual			MergerExpenses			Adjusted			Actual			MergerExpenses		Adjusted
Salaries and employee benefits	$	48,365		$	(484	)	$	47,881		$	42,525		$	-	$	42,525		$	5,356			12.6	%
Net occupancy expenses		9,051			(75	)		8,976			7,981			-		7,981			995			12.5	%
Data processing		6,245			(360	)		5,885			5,062			-		5,062			823			16.3	%
Professional fees		1,426			(392	)		1,034			1,314			-		1,314			(280	)		-21.3	%
Outside services and consultants		6,737			(2,466	)		4,271			3,735			-		3,735			536			14.4	%
Loan expense		6,195			(2	)		6,193			4,504			-		4,504			1,689			37.5	%
FDIC deposit insurance		252			-			252			1,051			-		1,051			(799	)		-76.0	%
Other losses		363			(71	)		292			576			-		576			(284	)		-49.3	%
Other expenses		12,748			(1,800	)		10,948			9,651			-		9,651			1,297			13.4	%
Total non-interest expense	$	91,382		$	(5,650	)	$	85,732		$	76,399		$	-	$	76,399		$	9,333			12.2	%
Annualized Non-interest Exp. to Avg. Assets		2.53	%					2.38	%		2.54	%				2.54	%

Annualized non-interest expense as a percent of average assets were 2.34%, 2.51% and 2.48% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.34%, 2.39% and 2.48% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively.

Annualized non-interest expense as a percent of average assets were 2.53% and 2.54% for the first nine months of 2019 and 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.38% and 2.54% for the first nine months of 2019 and 2018, respectively. Horizon’s strategy to build mass and scale continues to prove effective.

Income tax expense totaled $4.0 million for the third quarter of 2019, an increase of $699,000 when compared to the second quarter of 2019 and an increase of $1.4 million when compared to the third quarter of 2018. The increase in income tax expense from the second quarter of 2019 and the third quarter of 2018 was primarily due to increases in income before income taxes of $4.6 million and $8.9 million, respectively, when compared to the third quarter of 2019.

Income tax expense totaled $9.4 million for the first nine months of 2019, an increase of $1.5 million when compared to the first nine months of 2018. The increase in income tax expense from the first nine months of 2018 was primarily due to an increase in income before income taxes of $9.5 million when compared to the same period of 2019.

Pg. 10 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

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, the return on average assets and the return on average equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them, to show the impact of such events as acquisition-related purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core 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)
	September 30		June 30		March 31		December 31		September 30
	2019		2019		2019		2018		2018
Total stockholders' equity	$	642,711	$	626,461	$	609,468	$	491,992	$	477,594
Less: Intangible assets		178,896		179,776		176,864		130,270		130,755
Total tangible stockholders' equity	$	463,815	$	446,685	$	432,604	$	361,722	$	346,839
Common shares outstanding		44,969,021		45,061,372		45,052,747		38,375,407		38,367,890
Tangible book value per common share	$	10.31	$	9.91	$	9.60	$	9.43	$	9.04

Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
	Three Months Ended									Nine Months Ended
	September 30			June 30			September 30			September 30			September 30
	2019			2019			2018			2019			2018
Non-GAAP Calculation of Efficiency Ratio
Non-interest expense as reported	$	30,060		$	31,584		$	25,620		$	91,382		$	76,399
Net interest income as reported		43,463			41,529			33,772			119,272			100,733
Non-interest income as reported		11,514			10,898			8,686			31,124			25,936
Non-interest expense/(Net interest income + Non-interest income) ("Efficiency Ratio")		54.68	%		60.24	%		60.34	%		60.76	%		60.31	%
Non-GAAP Reconciliation of Adjusted Efficiency Ratio
Non-interest expense as reported	$	30,060		$	31,584		$	25,620		$	91,382		$	76,399
Merger expenses		-			(1,532	)		-			(5,650	)		-
Non-interest expense excluding merger expenses		30,060			30,052			25,620			85,732			76,399
Net interest income as reported		43,463			41,529			33,772			119,272			100,733
Non-interest income as reported		11,514			10,898			8,686			31,124			25,936
Loss on sale of investment securities		-			100			122			85			111
Death benefit on bank owned life insurance ("BOLI")		(213	)		(367	)		-			(580	)		(154	)
Non-interest income excluding loss on sale of investment securities and death benefit on BOLI		11,301			10,631			8,808			30,629			25,893
Adjusted efficiency ratio		54.89	%		57.62	%		60.17	%		57.19	%		60.33	%

Pg. 11 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
(Dollars in Thousands, Unaudited)
	Three Months Ended									Nine Months Ended
	September 30			June 30			September 30			September 30			September 30
	2019			2019			2018			2019			2018
Non-GAAP Reconciliation of Return on Average Assets
Average assets	$	5,107,259		$	5,047,365		$	4,105,096		$	4,823,601		$	4,021,811
Return on average assets ("ROAA") as reported		1.60	%		1.32	%		1.26	%		1.33	%		1.33	%
Merger expenses		0.00	%		0.12	%		0.00	%		0.16	%		0.00	%
Tax effect		0.00	%		-0.02	%		0.00	%		-0.03	%		0.00	%
ROAA excluding merger expenses		1.60	%		1.42	%		1.26	%		1.46	%		1.33	%
Loss on sale of investment securities		0.00	%		0.01	%		0.01	%		0.00	%		0.00	%
Tax effect		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
ROAA excluding loss on sale of investment securities		1.60	%		1.43	%		1.27	%		1.46	%		1.33	%
Death benefit on bank owned life insurance ("BOLI")		-0.02	%		-0.03	%		0.00	%		-0.02	%		-0.01	%
ROAA excluding death benefit on BOLI		1.58	%		1.40	%		1.27	%		1.44	%		1.32	%
Core ROAA		1.58	%		1.40	%		1.27	%		1.44	%		1.32	%
Non-GAAP Reconciliation of Return on Average Common Equity
Average Common Equity	$	640,770		$	622,028		$	476,959		$	589,766		$	467,867
Return on average common equity ("ROACE") as reported		12.72	%		10.73	%		10.87	%		10.88	%		11.43	%
Merger expenses		0.00	%		0.99	%		0.00	%		1.28	%		0.00	%
Tax effect		0.00	%		-0.19	%		0.00	%		-0.22	%		0.00	%
ROACE excluding merger expenses		12.72	%		11.53	%		10.87	%		11.94	%		11.43	%
Loss on sale of investment securities		0.00	%		0.06	%		0.10	%		0.02	%		0.03	%
Tax effect		0.00	%		-0.01	%		-0.02	%		0.00	%		-0.01	%
ROACE excluding loss on sale of investment securities		12.72	%		11.58	%		10.95	%		11.96	%		11.45	%
Death benefit on bank owned life insurance ("BOLI")		-0.13	%		-0.24	%		0.00	%		-0.13	%		-0.04	%
ROACE excluding death benefit on BOLI		12.59	%		11.34	%		10.95	%		11.83	%		11.41	%
Core ROACE		12.59	%		11.34	%		10.95	%		11.83	%		11.41	%

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.

Pg. 12 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

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 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.

Contact:	Horizon Bancorp, Inc.
	Mark E. Secor
	Chief Financial Officer
	(219) 873-2611
	Fax: (219) 874-9280

#  #  #

HORIZON BANCORP, INC.

Financial Highlights

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

	September 30			June 30			March 31			December 31			September 30
	2019			2019			2019			2018			2018
Balance sheet:
Total assets	$	5,186,714		$	5,098,682		$	5,051,639		$	4,246,688		$	4,150,561
Investment securities		977,536			887,187			893,469			810,460			766,153
Commercial loans		2,046,165			2,062,623			2,089,579			1,721,590			1,698,582
Mortgage warehouse loans		155,631			133,428			71,944			74,120			71,422
Residential mortgage loans		796,497			814,065			819,824			668,141			651,250
Consumer loans		668,332			654,552			639,710			549,481			536,132
Earning assets		4,667,668			4,577,487			4,538,952			3,842,903			3,743,592
Non-interest bearing deposit accounts		756,707			810,350			811,768			642,129			621,475
Interest bearing transaction accounts		2,173,100			2,153,189			2,115,847			1,684,336			1,605,825
Time deposits		986,150			967,236			960,408			812,911			901,254
Borrowings		516,591			436,233			457,788			550,384			477,719
Subordinated debentures		56,250			56,194			55,310			37,837			37,791
Total stockholders' equity		642,711			626,461			609,468			491,992			477,594
	Three Months Ended
Income statement:
Net interest income	$	43,463		$	41,529		$	34,280		$	33,836		$	33,772
Provision for loan losses		376			896			364			528			1,176
Non-interest income		11,514			10,898			8,712			8,477			8,686
Non-interest expense		30,060			31,584			29,738			26,117			25,620
Income tax expense		4,004			3,305			2,074			2,535			2,597
Net income	$	20,537		$	16,642		$	10,816		$	13,133		$	13,065
Per share data: (1)
Basic earnings per share	$	0.46		$	0.37		$	0.28		$	0.34		$	0.34
Diluted earnings per share		0.46			0.37			0.28			0.34			0.34
Cash dividends declared per common share		0.12			0.12			0.10			0.10			0.10
Book value per common share		14.29			13.90			13.53			12.82			12.45
Tangible book value per common share		10.31			9.91			9.60			9.43			9.04
Market value - high		17.77			17.13			17.82			19.40			21.39
Market value - low	$	15.93		$	15.51		$	15.50		$	14.94		$	19.44
Weighted average shares outstanding - Basic		45,038,021			45,055,117			38,822,543			38,367,972			38,365,379
Weighted average shares outstanding - Diluted		45,113,730			45,130,408			38,906,172			38,488,002			38,534,970
Key ratios:
Return on average assets		1.60	%		1.32	%		1.02	%		1.25	%		1.26	%
Return on average common stockholders' equity		12.72			10.73			8.66			10.73			10.87
Net interest margin		3.82			3.73			3.62			3.60			3.67
Loan loss reserve to total loans		0.49			0.50			0.49			0.59			0.60
Average equity to average assets		12.55			12.32			11.76			11.62			11.62
Bank only capital ratios:
Tier 1 capital to average assets		9.39			9.52			10.99			9.38			9.53
Tier 1 capital to risk weighted assets		11.69			11.76			11.84			11.91			12.09
Total capital to risk weighted assets		12.14			12.23			12.30			12.47			12.66
Loan data:
Substandard loans	$	62,130		$	47,764		$	41,728		$	38,775		$	34,655
30 to 89 days delinquent		10,204			9,633			9,980			7,161			6,878
90 days and greater delinquent - accruing interest	$	34		$	391		$	192		$	568		$	202
Trouble debt restructures - accruing interest		3,491			2,198			2,532			2,002			1,830
Trouble debt restructures - non-accrual		1,807			1,576			1,349			1,057			1,077
Non-accrual loans		13,823			14,764			15,313			11,548			11,417
Total non-performing loans	$	19,155		$	18,929		$	19,386		$	15,175		$	14,526
Non-performing loans to total loans		0.52	%		0.52	%		0.54	%		0.50	%		0.49	%

⁽¹⁾ Adjusted for 3:2 stock split on June 15, 2018

13

HORIZON BANCORP, INC.

Financial Highlights

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

	September 30			September 30
	2019			2018
Balance sheet:
Total assets	$	5,186,714		$	4,150,561
Investment securities		977,536			766,153
Commercial loans		2,046,165			1,698,582
Mortgage warehouse loans		155,631			71,422
Residential mortgage loans		796,497			651,250
Consumer loans		668,332			536,132
Earning assets		4,667,668			3,743,592
Non-interest bearing deposit accounts		756,707			621,475
Interest bearing transaction accounts		2,173,100			1,605,825
Time deposits		986,150			901,254
Borrowings		516,591			477,719
Subordinated debentures		56,250			37,791
Total stockholders' equity		642,711			477,594
	Nine Months Ended
Income statement:
Net interest income	$	119,272		$	100,733
Provision for loan losses		1,636			2,378
Non-interest income		31,124			25,936
Non-interest expense		91,382			76,399
Income tax expense		9,383			7,908
Net income	$	47,995		$	39,984
Per share data: (1)
Basic earnings per share	$	1.12		$	1.04
Diluted earnings per share		1.11			1.04
Cash dividends declared per common share		0.34			0.30
Book value per common share		14.29			12.45
Tangible book value per common share		10.31			9.04
Market value - high		17.82			21.94
Market value - low	$	15.50		$	17.87
Weighted average shares outstanding - Basic		42,995,082			38,340,012
Weighted average shares outstanding - Diluted		43,070,095			38,503,403
Key ratios:
Return on average assets		1.33	%		1.33	%
Return on average common stockholders' equity		10.88			11.43
Net interest margin		3.72			3.74
Loan loss reserve to total loans		0.49			0.60
Average equity to average assets		12.23			11.63
Bank only capital ratios:
Tier 1 capital to average assets		9.39			9.53
Tier 1 capital to risk weighted assets		11.69			12.09
Total capital to risk weighted assets		12.14			12.66
Loan data:
Substandard loans	$	62,130		$	34,655
30 to 89 days delinquent		10,204			6,878
90 days and greater delinquent - accruing interest	$	34		$	202
Trouble debt restructures - accruing interest		3,491			1,830
Trouble debt restructures - non-accrual		1,807			1,077
Non-accrual loans		13,823			11,417
Total non-performing loans	$	19,155		$	14,526
Non-performing loans to total loans		0.52	%		0.49	%
(1) Adjusted for 3:2 stock split on June 15, 2018

14

HORIZON BANCORP, INC.

Allocation of the Allowance for Loan and Lease Losses
(Dollars in Thousands, Unaudited)
	September 30		June 30		March 31		December 31		September 30
	2019		2019		2019		2018		2018
Commercial	$	12,082	$	11,881	$	11,556	$	10,495	$	10,581
Real estate		1,449		1,732		1,588		1,676		1,574
Mortgage warehousing		1,041		1,040		1,014		1,006		1,030
Consumer		3,384		3,652		3,663		4,643		4,613
Total	$	17,956	$	18,305	$	17,821	$	17,820	$	17,798

Net Charge-offs (Recoveries)
(Dollars in Thousands, Unaudited)
	Three Months Ended
	September 30			June 30			March 31			December 31			September 30
	2019			2019			2019			2018			2018
Commercial	$	192		$	265		$	61		$	196		$	179
Real estate		(7	)		41			(27	)		47			(2	)
Mortgage warehousing		-			-			-			-			-
Consumer		540			106			329			263			272
Total	$	725		$	412		$	363		$	506		$	449
Percent of net charge-offs to average loans outstanding for the period		0.02	%		0.01	%		0.01	%		0.02	%		0.02	%

Total Non-performing Loans
(Dollars in Thousands, Unaudited)
	September 30			June 30			March 31			December 31			September 30
	2019			2019			2019			2018			2018
Commercial	$	8,193		$	8,697		$	9,750		$	6,903		$	8,355
Real estate		7,212			6,444			5,995			5,007			3,754
Mortgage warehousing		-			-			-			-			-
Consumer		3,750			3,788			3,641			3,265			2,417
Total	$	19,155		$	18,929		$	19,386		$	15,175		$	14,526
Non-performing loans to total loans		0.52	%		0.52	%		0.54	%		0.55	%		0.49	%

Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
	September 30		June 30		March 31		December 31		September 30
	2019		2019		2019		2018		2018
Commercial	$	3,972	$	3,694	$	3,496	$	1,967	$	2,181
Real estate		48		113		126		60		58
Mortgage warehousing		-		-		-		-		-
Consumer		24		48		30		48		26
Total	$	4,044	$	3,855	$	3,652	$	2,075	$	2,265

15

HORIZON BANCORP, INC.

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

	Three Months Ended								Three Months Ended
	September 30, 2019								September 30, 2018
	AverageBalance			Interest		AverageRate			AverageBalance			Interest		AverageRate
Assets
Interest-earning assets
Federal funds sold	$	18,133		$	115		2.52	%	$	3,840		$	24		2.48	%
Interest-earning deposits		17,823			93		2.07	%		24,494			104		1.68	%
Investment securities - taxable		478,764			2,949		2.44	%		421,681			2,611		2.46	%
Investment securities - non-taxable(1)		462,997			3,099		3.36	%		324,289			2,010		3.11	%
Loans receivable(2)(3)		3,646,268			49,455		5.41	%		2,942,835			37,522		5.07	%
Total interest-earning assets(1)		4,623,985			55,711		4.87	%		3,717,139			42,271		4.58	%
Non-interest-earning assets
Cash and due from banks		66,970								45,864
Allowance for loan losses		(18,277	)							(17,090	)
Other assets		434,581								359,183
Total average assets	$	5,107,259							$	4,105,096
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	3,132,852		$	9,109		1.15	%	$	2,438,450		$	5,023		0.82	%
Borrowings		413,859			2,275		2.18	%		496,054			2,876		2.30	%
Subordinated debentures		54,433			864		6.30	%		36,570			600		6.51	%
Total interest-bearing liabilities		3,601,144			12,248		1.35	%		2,971,074			8,499		1.13	%
Non-interest-bearing liabilities
Demand deposits		818,164								640,983
Accrued interest payable and other liabilities		47,181								16,080
Stockholders' equity		640,770								476,959
Total average liabilities and stockholders' equity	$	5,107,259							$	4,105,096
Net interest income/spread				$	43,463		3.52	%				$	33,772		3.44	%
Net interest income as a percent of average interest-earning assets(1)							3.82	%							3.67	%

(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. The average rate is presented on a tax equivalent basis.

16

HORIZON BANCORP, INC.

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

	Nine Months Ended								Nine Months Ended
	September 30, 2019								September 30, 2018
	AverageBalance			Interest		AverageRate			AverageBalance			Interest		AverageRate
Assets
Interest-earning assets
Federal funds sold	$	14,778		$	339		3.07	%	$	2,845		$	53		2.49	%
Interest-earning deposits		21,938			284		1.73	%		25,411			300		1.58	%
Investment securities - taxable		469,330			8,929		2.54	%		413,617			7,379		2.39	%
Investment securities - non-taxable(1)		423,141			8,520		3.37	%		313,168			5,745		3.00	%
Loans receivable(2)(3)		3,447,654			136,862		5.32	%		2,855,236			108,961		5.06	%
Total interest-earning assets(1)		4,376,841			154,934		4.81	%		3,610,277			122,438		4.55	%
Non-interest-earning assets
Cash and due from banks		58,890								44,605
Allowance for loan losses		(18,053	)							(16,686	)
Other assets		405,923								383,615
Total average assets	$	4,823,601							$	4,021,811
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits	$	2,924,433		$	24,923		1.14	%	$	2,382,864		$	11,814		0.66	%
Borrowings		462,575			8,391		2.43	%		504,349			8,127		2.15	%
Subordinated debentures		48,666			2,348		6.45	%		36,524			1,764		6.46	%
Total interest-bearing liabilities		3,435,674			35,662		1.39	%		2,923,737			21,705		0.99	%
Non-interest-bearing liabilities
Demand deposits		760,717								613,866
Accrued interest payable and other liabilities		37,444								16,341
Stockholders' equity		589,766								467,867
Total average liabilities and stockholders' equity	$	4,823,601							$	4,021,811
Net interest income/spread				$	119,272		3.42	%				$	100,733		3.55	%
Net interest income as a percent of average interest-earning assets(1)							3.72	%							3.74	%

(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. The average rate is presented on a tax equivalent basis.

17

HORIZON BANCORP, INC.

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	September 30		December 31
	2019		2018
Assets	( Unaudited)
Cash and due from banks	$	91,279	$	58,492
Interest-earning time deposits		8,455		15,744
Investment securities, available for sale		767,230		600,348
Investment securities, held to maturity (fair value of $217,718 and $208,273)		210,306		210,112
Loans held for sale		1,060		1,038
Loans, net of allowance for loan losses of $17,956 and $17,820		3,648,669		2,995,512
Premises and equipment, net		92,800		74,331
Federal Home Loan Bank stock		22,447		18,073
Goodwill		151,238		119,880
Other intangible assets		27,658		10,390
Interest receivable		18,282		14,239
Cash value of life insurance		95,011		88,062
Other assets		52,279		40,467
Total assets	$	5,186,714	$	4,246,688
Liabilities
Deposits
Non-interest bearing	$	756,707	$	642,129
Interest bearing		3,159,250		2,497,247
Total deposits		3,915,957		3,139,376
Borrowings		516,591		550,384
Subordinated debentures		56,250		37,837
Interest payable		2,725		2,031
Other liabilities		52,480		25,068
Total liabilities		4,544,003		3,754,696
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 (Restated - See Note 1)
Issued 44,994,090 and 38,400,476 shares (Restated - See Note 1), Outstanding 44,969,021 and 38,375,407 shares (Restated - See Note 1)		-		-
Additional paid-in capital		379,448		276,101
Retained earnings		256,617		224,035
Accumulated other comprehensive income (loss)		6,646		(8,144	)
Total stockholders' equity		642,711		491,992
Total liabilities and stockholders' equity	$	5,186,714	$	4,246,688
(1) Adjusted for 3:2 stock split on June 15, 2018

18

HORIZON BANCORP, INC.

Condensed Consolidated Statements of Income(Dollar Amounts in Thousands, Except Per Share Data, Unaudited)

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2019			2018			2019			2018
Interest Income
Loans receivable	$	49,455		$	37,522		$	136,862		$	108,961
Investment securities
Taxable		3,157			2,739			9,552			7,732
Tax exempt		3,099			2,010			8,520			5,745
Total interest income		55,711			42,271			154,934			122,438
Interest Expense
Deposits		9,109			5,023			24,923			11,814
Borrowed funds		2,275			2,876			8,391			8,127
Subordinated debentures		864			600			2,348			1,764
Total interest expense		12,248			8,499			35,662			21,705
Net Interest Income		43,463			33,772			119,272			100,733
Provision for loan losses		376			1,176			1,636			2,378
Net Interest Income after Provision for Loan Losses		43,087			32,596			117,636			98,355
Non-interest Income
Service charges on deposit accounts		2,836			2,009			7,193			5,804
Wire transfer fees		189			160			474			490
Interchange fees		2,138			1,410			5,659			4,293
Fiduciary activities		1,834			1,855			5,986			5,598
Gains (losses) on sale of investment securities (includes $0 and $(122)for the three months ended September 30, 2019 and 2018, respectively, and $(85) and $(111) for the nine months ended September 30, 2019 and nine months ended September 30, 2018 related to accumulated other comprehensive earnings reclassifications)		-			(122	)		(85	)		(111	)
Gain on sale of mortgage loans		2,702			1,839			6,089			5,158
Mortgage servicing income net of impairment		444			563			1,620			1,423
Increase in cash value of bank owned life insurance		556			503			1,624			1,380
Death benefit on bank owned life insurance		213			-			580			154
Other income		602			469			1,984			1,747
Total non-interest income		11,514			8,686			31,124			25,936
Non-interest Expense
Salaries and employee benefits		16,948			14,343			48,365			42,525
Net occupancy expenses		3,131			2,495			9,051			7,981
Data processing		2,140			1,759			6,245			5,062
Professional fees		335			437			1,426			1,314
Outside services and consultants		1,552			1,204			6,737			3,735
Loan expense		2,198			1,722			6,195			4,504
FDIC insurance expense		(273	)		396			252			1,051
Other losses		90			161			363			576
Other expense		3,939			3,103			12,748			9,651
Total non-interest expense		30,060			25,620			91,382			76,399
Income Before Income Taxes		24,541			15,662			57,378			47,892
Income tax expense (includes $0 and $(25) for the three months ended September 30, 2019 and 2018, respectively, and $(18) and $(23) for the nine months ended September 30, 2019 and nine months ended September 30, 2018 related to income tax expense (benefit) from reclassification items)		4,004			2,597			9,383			7,908
Net Income	$	20,537		$	13,065		$	47,995		$	39,984
Basic Earnings Per Share (Restated - See Note 1)	$	0.46		$	0.34		$	1.12		$	1.04
Diluted Earnings Per Share (Restated - See Note 1)		0.46			0.34			1.11			1.04

⁽¹⁾ Adjusted for 3:2 stock split on June 15, 2018

19

XML

Document and Entity Information	Oct. 23, 2019
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 23, 2019
Entity Registrant Name	Horizon Bancorp, Inc.
Entity Incorporation, State or Country Code	IN
Entity File Number	000-10792
Entity Tax Identification Number	35-1562417
Entity Address, Address Line One	515 FRANKLIN STREET
Entity Address, City or Town	MICHIGAN CITY
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46360
City Area Code	219
Local Phone Number	879-0211
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000706129
Title of 12(b) Security	Common stock, no par value
Trading Symbol	HBNC
Security Exchange Name	NASDAQ