10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

HORIZON BANCORP

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

Commission file number 0-10792

HORIZON BANCORP

(Exact name of registrant as specified in its charter)

Indiana	35-1562417
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
515 Franklin Square, Michigan City, Indiana	46360
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (219) 879-0211

Former name, former address and former fiscal year, if changed since last report: N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer	¨	Accelerated Filer	x
Non-accelerated Filer	¨  Do not check if smaller reporting company	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 11,983,313 shares of Common Stock, no par value, at May 6, 2016.

HORIZON BANCORP

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statement of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54
Item 4.	Controls and Procedures	54
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A. Risk Factors		55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57
Index To Exhibits		58

2

PART 1 — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	March 31		December 31
	2016		2015
	(Unaudited)
Assets
Cash and due from banks	$	47,612	$	48,650
Investment securities, available for sale		462,476		444,982
Investment securities, held to maturity (fair value of $188,093 and $193,703)		180,291		187,629
Loans held for sale		3,168		7,917
Loans, net of allowance for loan losses of $14,236 and $14,534		1,705,836		1,734,597
Premises and equipment, net		60,190		60,798
Federal Reserve and Federal Home Loan Bank stock		13,823		13,823
Goodwill		49,600		49,600
Other intangible assets		7,095		7,371
Interest receivable		10,476		10,535
Cash value of life insurance		54,849		54,504
Other assets		32,502		31,995
Total assets	$	2,627,918	$	2,652,401
Liabilities
Deposits
Non-interest bearing	$	343,025	$	335,955
Interest bearing		1,535,454		1,544,198
Total deposits		1,878,479		1,880,153
Borrowings		430,507		449,347
Subordinated debentures		32,836		32,797
Interest payable		580		507
Other liabilities		24,099		22,765
Total liabilities		2,366,501		2,385,569
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, Authorized, 1,000,000 shares Series B shares $.01 par value, $1,000 liquidation value Issued 0 and 12,500 shares		—		12,500
Common stock, no par value Authorized, 22,500,000 shares Issued, 12,008,497 and 11,995,324 shares Outstanding, 11,983,313 and 11,939,887 shares		—		—
Additional paid-in capital		106,500		106,370
Retained earnings		152,219		148,685
Accumulated other comprehensive income (loss)		2,698		(723	)
Total stockholders’ equity		261,417		266,832
Total liabilities and stockholders’ equity	$	2,627,918	$	2,652,401

See notes to condensed consolidated financial statements

3

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended
	March 31
	2016			2015
	(Unaudited)			(Unaudited)
Interest Income
Loans receivable	$	19,747		$	16,862
Investment securities
Taxable		2,544			2,154
Tax exempt		1,237			1,077
Total interest income		23,528			20,093
Interest Expense
Deposits		1,491			1,232
Borrowed funds		1,759			1,479
Subordinated debentures		504			496
Total interest expense		3,754			3,207
Net Interest Income		19,774			16,886
Provision for loan losses		532			614
Net Interest Income after Provision for Loan Losses		19,242			16,272
Non-interest Income
Service charges on deposit accounts		1,238			999
Wire transfer fees		121			151
Interchange fees		1,458			1,102
Fiduciary activities		1,635			1,297
Gain on sale of investment securities (includes $108 and $124 for the three months ended March 31, 2016 and 2015, respectively, related to accumulated other comprehensive earnings reclassifications)		108			124
Gain on sale of mortgage loans		2,114			2,379
Mortgage servicing income net of impairment		447			179
Increase in cash value of bank owned life insurance		345			258
Death benefit on bank owned life insurance		—			145
Other income		398			432
Total non-interest income		7,864			7,066
Non-interest Expense
Salaries and employee benefits		10,065			8,504
Net occupancy expenses		1,936			1,551
Data processing		1,105			923
Professional fees		831			527
Outside services and consultants		1,099			626
Loan expense		1,195			1,257
FDIC insurance expense		405			337
Other losses		267			(45	)
Other expense		2,844			2,388
Total non-interest expense		19,747			16,068
Income Before Income Tax		7,359			7,270
Income tax expense (includes $38 and $43 for the three months ended March 31, 2016 and 2015, respectively, related to income tax expense from reclassification items)		1,978			1,912
Net Income		5,381			5,358
Preferred stock dividend		(42	)		(31	)
Net Income Available to Common Shareholders	$	5,339		$	5,327
Basic Earnings Per Share	$	0.45		$	0.58
Diluted Earnings Per Share		0.44			0.55

See notes to condensed consolidated financial statements

4

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Dollar Amounts in Thousands)

	Three Months Ended March 31
	2016			2015
	(Unaudited)			(Unaudited)
Net Income	$	5,381		$	5,358
Other Comprehensive Income (Loss)
Change in fair value of derivative instruments:
Change in fair value of derivative instruments for the period		(562	)		(329	)
Income tax effect		197			115
Changes from derivative instruments		(365	)		(214	)
Change in securities:
Unrealized appreciation for the period on AFS securities		5,946			1,714
Amortization from transfer of securities from available-for-sale to held-to-maturity securities		(229	)		(114	)
Reclassification adjustment for securities gains realized in income		108			124
Income tax effect		(2,039	)		(604	)
Unrealized gains on securities		3,786			1,120
Other Comprehensive Income, Net of Tax		3,421			906
Comprehensive Income	$	8,802		$	6,264

See notes to condensed consolidated financial statements

5

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Dollar Amounts in Thousands, Except Per Share Data)

									Accumulated
				Additional					Other
	Preferred			Paid-in		Retained			Comprehensive
	Stock			Capital		Earnings			Income (Loss)			Total
Balances, January 1, 2016	$	12,500		$	106,370	$	148,685		$	(723	)	$	266,832
Net income							5,381						5,381
Other comprehensive loss, net of tax										3,421			3,421
Redemption of preferred stock		(12,500	)										(12,500	)
Amortization of unearned compensation					62								62
Stock option expense					68								68
Cash dividends on preferred stock (1.00%)							(42	)					(42	)
Cash dividends on common stock ($.15 per share)							(1,805	)					(1,805	)
Balances, March 31, 2016	$	—		$	106,500	$	152,219		$	2,698		$	261,417

See notes to condensed consolidated financial statements

6

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Dollar Amounts in Thousands)

	Three Months Ended March 31
	2016			2015
	(Unaudited)			(Unaudited)
Operating Activities
Net income	$	5,381		$	5,358
Items not requiring (providing) cash
Provision for loan losses		532			614
Depreciation and amortization		1,183			956
Share based compensation		68			59
Mortgage servicing rights net (recovery) impairment		1			414
Premium amortization on securities available for sale, net		1,187			476
Gain on sale of investment securities		(108	)		(124	)
Gain on sale of mortgage loans		(2,114	)		(2,379	)
Proceeds from sales of loans		62,022			71,211
Loans originated for sale		(55,162	)		(68,918	)
Change in cash value of life insurance		(345	)		(258	)
Gain on sale of other real estate owned		(100	)		(263	)
Net change in
Interest receivable		59			(185	)
Interest payable		73			7
Other assets		(1,730	)		5,503
Other liabilities		(1,532	)		(1,287	)
Net cash provided by operating activities		9,415			11,184
Investing Activities
Purchases of securities available for sale		(33,716	)		(30,406	)
Proceeds from sales, maturities, calls, and principal repayments of securities available for sale		26,663			25,260
Purchases of securities held to maturity		(8,677	)		—
Proceeds from maturities of securities held to maturity		10,319			735
Net change in loans		29,354			(81,515	)
Proceeds on the sale of OREO and repossessed assets		663			1,414
Change in premises and equipment, net		(237	)		(2,168	)
Net cash provided by (used in) investing activities		24,369			(86,680	)
Financing Activities
Net change in
Deposits		(1,674	)		(17,224	)
Borrowings		(18,801	)		89,255
Redemption of preferred stock		(12,500	)		—
Dividends paid on common shares		(1,805	)		(1,304	)
Dividends paid on preferred shares		(42	)		(31	)
Net cash (used in) provided by financing activities		(34,822	)		70,696
Net Change in Cash and Cash Equivalents		(1,038	)		(4,800	)
Cash and Cash Equivalents, Beginning of Period		48,650			43,476
Cash and Cash Equivalents, End of Period	$	47,612		$	38,676
Additional Supplemental Information
Interest paid	$	3,681		$	3,199
Income taxes paid		1,250			—
Transfer of loans to other real estate owned		1,379			(772	)

See notes to condensed consolidated financial statements

7

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 1 - Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of Horizon Bancorp (“Horizon” or the “Company”) and its wholly-owned subsidiaries, including Horizon Bank, N.A. (“Bank”). All inter-company balances and transactions have been eliminated. The results of operations for the periods ended March 31, 2016 and March 31, 2015 are not necessarily indicative of the operating results for the full year of 2016 or 2015. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of Horizon’s management, necessary to fairly present the financial position, results of operations and cash flows of Horizon for the periods presented. Those adjustments consist only of normal recurring adjustments.

Certain information and note disclosures normally included in Horizon’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form 10-K for 2015 filed with the Securities and Exchange Commission on February 29, 2016. The condensed consolidated balance sheet of Horizon as of December 31, 2015 has been derived from the audited balance sheet as of that date.

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted-average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The following table shows computation of basic and diluted earnings per share.

	Three Months Ended
	March 31
	2016		2015
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	5,381	$	5,358
Less: Preferred stock dividends		42		31
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Basic earnings per share	$	0.45	$	0.58
Diluted earnings per share
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Effect of dilutive securities:
Warrants		—		321,652
Restricted stock		21,033		30,510
Stock options		38,035		41,333
Weighted average shares outstanding		12,008,484		9,609,506
Diluted earnings per share	$	0.44	$	0.55

There were zero dilutive shares for the three months ended March 31, 2016 and 62,445 shares for the three months ended March 31, 2015 which were not included in the computation of diluted earnings per share because they were non-dilutive.

8

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Horizon has share-based employee compensation plans, which are described in the notes to the financial statements included in the December 31, 2015 Annual Report on Form 10-K.

Reclassifications

Certain reclassifications have been made to the 2015 condensed consolidated financial statements to be comparable to 2016. These reclassifications had no effect on net income.

Note 2 – Acquisitions

On July 1, 2015, Horizon completed the acquisition of Peoples Bancorp, an Indiana corporation (“Peoples”) and Horizon Bank N.A.’s acquisition of Peoples Federal Savings Bank of DeKalb County (“Peoples FSB”), through mergers effective July 1, 2015. Under the terms of the acquisition, the exchange ratio was 0.95 shares of Horizon common stock (the “Exchange Ratio”) and $9.75 in cash for each outstanding share of Peoples common stock. Peoples shareholders owning fewer than 100 shares of common stock received $33.14 in cash for each common share. Peoples shares outstanding at the closing were 2,311,858, and the shares of Horizon common stock issued to Peoples shareholders totaled 2,192,202. Horizon’s stock price was $25.32 per share at the close of business on July 1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1 million. The Company had approximately $4.9 million in costs related to the acquisition as of December 31, 2015. These expenses were classified in the other expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company will have an opportunity to increase its deposit base and reduce transaction costs. The Company also expects to reduce cost through economies of scale.

Under the purchase method of accounting, the total estimated purchase price is allocated to Peoples net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Peoples acquisition is allocated as follows:

ASSETS
Cash and due from banks	$	205,054
Investment securities, held to maturity		2,038
Commercial		67,435
Residential mortgage		137,331
Consumer		19,593
Total loans		224,359
Premises and equipment, net		5,524
FRB and FHLB stock		2,743
Goodwill		21,424
Core deposit intangible		4,394
Interest receivable		1,279
Cash value of life insurance		13,898
Other assets		4,364
Total assets purchased	$	485,077
Common shares issued	$	55,506
Cash paid		22,641
Total estimated purchase price	$	78,147

LIABILITIES
Deposits
Non-interest bearing	$	28,251
NOW accounts		65,771
Savings and money market		125,176
Certificates of deposits		131,889
Total deposits		351,087
Borrowings		48,884
Interest payable		21
Other liabilities		6,938
Total liabilities assumed	$	406,930

9

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Of the total purchase price of $78.1 million, $4.4 million has been allocated to core deposit intangible. Additionally, $21.0 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over seven years on a straight line basis.

The Company acquired the $228.6 million loan portfolio at a fair value discount of $4.8 million. The performing portion of the portfolio, $223.4 million, had an estimated fair value of $220.0 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-20.

The Company acquired certain loans in the acquisition and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

The loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

Loans with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.

The following table details the acquired loans that are accounted for in accordance with ASC 310-30 as of July 1, 2015.

Contractually required principal and interest at acquisition	$	5,730
Contractual cash flows not expected to be collected (nonaccretable differences)		715
Expected cash flows at acquisition		5,015
Interest component of expected cash flows (accretable discount)		647
Fair value of acquired loans accounted for under ASC 310-30	$	4,368

The results of operations of Peoples and Peoples FSB have been included in the Company’s consolidated financial statements since the acquisition dates. The following schedule includes pro forma results for the periods ended March 31, 2016 and 2015 as if the Peoples and Peoples FSB acquisitions had occurred as of the beginning of the comparable prior reporting period.

10

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended
	March 31,		March 31,
	2016		2015
Summary of Operations:
Net Interest Income	$	19,774	$	19,865
Provision for Loan Losses		532		644
Net Interest Income after Provision for Loan Losses		19,242		19,221
Non-interest Income		7,864		7,966
Non-Interest Expense		19,747		19,270
Income before Income Taxes		7,359		7,917
Income Tax Expense		1,978		1,939
Net Income		5,381		5,978
Net Income Available to Common Shareholders	$	5,339	$	5,984
Basic Earnings Per Share	$	0.45	$	0.52
Diluted Earnings Per Share	$	0.44	$	0.51

The pro forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits acquired, premises expense for the banking centers acquired and the related income tax effects. The pro forma information for the three months ended March 31, 2015 includes $657,000, net of tax, of operating revenue from Peoples and approximately $95,000, net of tax, of non-recurring expenses directly attributable to the Peoples acquisition.

The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition consummated as of that time, nor is it intended to be a projection of future results.

11

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 3 – Securities

The fair value of securities is as follows:

			Gross		Gross
March 31, 2016	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	15,412	$	60	$	(2	)	$	15,470
State and municipal		69,204		1,840		(2	)		71,042
Federal agency collateralized mortgage obligations		155,687		1,836		(210	)		157,313
Federal agency mortgage-backed pools		215,167		3,648		(239	)		218,576
Corporate notes		32		43		—			75
Total available for sale investment securities	$	455,502	$	7,427	$	(453	)	$	462,476
Held to maturity
State and municipal	$	145,520	$	6,753	$	(188	)	$	152,085
Federal agency collateralized mortgage obligations		8,731		136		—			8,867
Federal agency mortgage-backed pools		26,040		1,149		(48	)		27,141
Total held to maturity investment securities	$	180,291	$	8,038	$	(236	)	$	188,093
			Gross		Gross
December 31, 2015	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	5,940	$	3	$	(17	)	$	5,926
State and municipal		73,829		1,299		(33	)		75,095
Federal agency collateralized mortgage obligations		157,291		567		(1,655	)		156,203
Federal agency mortgage-backed pools		206,970		2,080		(1,346	)		207,704
Corporate notes		32		22		—			54
Total available for sale investment securities	$	444,062	$	3,971	$	(3,051	)	$	444,982
Held to maturity
U.S. Treasury and federal agencies	$	5,859	$	93	$	—		$	5,952
State and municipal		146,331		5,375		(253	)		151,453
Federal agency collateralized mortgage obligations		9,051		27		(124	)		8,954
Federal agency mortgage-backed pools		26,388		1,141		(185	)		27,344
Total held to maturity investment securities	$	187,629	$	6,636	$	(562	)	$	193,703

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. While these securities are held in the available for sale portfolio and held-to-maturity, Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified. At March 31, 2016, no individual investment security had an unrealized loss that was determined to be other-than-temporary.

The unrealized losses on the Company’s investments in securities of state and municipal governmental agencies, U.S. Treasury and federal agencies, federal agency collateralized mortgage obligations, and federal agency mortgage-backed pools were caused by interest rate volatility and not a decline in credit quality. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company expects to recover the amortized cost basis over the term of the securities. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider those investments to be other-than-temporarily impaired at March 31, 2016.

12

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2016 and December 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	6,786	$	6,816	$	7,192	$	7,232
One to five years		46,633		47,547		38,197		38,894
Five to ten years		15,505		16,047		16,807		17,152
After ten years		15,724		16,178		17,605		17,797
		84,648		86,588		79,801		81,075
Federal agency collateralized mortgage obligations		155,687		157,313		157,291		156,203
Federal agency mortgage-backed pools		215,167		218,575		206,970		207,704
Total available for sale investment securities	$	455,502	$	462,476	$	444,062	$	444,982
Held to maturity
Within one year	$	—	$	—	$	—	$	—
One to five years		15,360		16,126		17,815		18,403
Five to ten years		98,023		102,861		106,167		110,026
After ten years		32,137		33,098		28,208		28,976
		145,520		152,085		152,190		157,405
Federal agency collateralized mortgage obligations		8,731		8,867		9,051		8,954
Federal agency mortgage-backed pools		26,040		27,141		26,388		27,344
Total held to maturity investment securities	$	180,291	$	188,093	$	187,629	$	193,703

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2016	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	1,998	$	(2	)	$	—	$	—		$	1,998	$	(2	)
State and municipal		1,931		(186	)		1,812		(4	)		3,743		(190	)
Federal agency collateralized mortgage obligations		6,684		(54	)		24,739		(156	)		31,423		(210	)
Federal agency mortgage-backed pools		29,691		(239	)		3,833		(48	)		33,524		(287	)
Total temporarily impaired securities	$	40,304	$	(481	)	$	30,384	$	(208	)	$	70,688	$	(689	)
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2015	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	5,468	$	(17	)	$	—	$	—		$	5,468	$	(17	)
State and municipal		17,353		(280	)		446		(6	)		17,799		(286	)
Federal agency collateralized mortgage obligations		89,459		(1,123	)		25,428		(655	)		114,887		(1,779	)
Federal agency mortgage-backed pools		113,244		(1,212	)		16,506		(319	)		129,750		(1,531	)
Total temporarily impaired securities	$	225,524	$	(2,632	)	$	42,380	$	(980	)	$	267,904	$	(3,613	)

13

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended March 31
	2016		2015
Sales of securities available for sale (Unaudited)
Proceeds	$	7,297	$	13,332
Gross gains		108		147
Gross losses		—		(23	)

Note 4 – Loans

	March 31			December 31
	2016			2015
Commercial
Working capital and equipment	$	381,425		$	381,245
Real estate, including agriculture		381,256			391,668
Tax exempt		9,072			8,674
Other		26,001			23,408
Total		797,754			804,995
Real estate
1–4 family		438,391			433,015
Other		4,415			4,129
Total		442,806			437,144
Consumer
Auto		164,600			168,397
Recreation		5,021			5,365
Real estate/home improvement		49,114			47,015
Home equity		125,556			127,113
Unsecured		3,836			4,120
Other		11,509			10,290
Total		359,636			362,300
Mortgage warehouse		119,876			144,692
Total loans		1,720,072			1,749,131
Allowance for loan losses		(14,236	)		(14,534	)
Loans, net	$	1,705,836		$	1,734,597

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy or fluctuations in interest rates. The

14

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Real Estate and Consumer

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon’s mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon’s agreement with the mortgage company. Each individual mortgage and the related mortgagee are underwritten by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company. In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan. At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement. Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company. When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on the agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note. Horizon also has the option to request that the mortgage company reaquire an individual mortgage. Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company. Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

15

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table shows the recorded investment of individual loan categories.

March 31, 2016	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	264,899		$	611	$	1,205		$	266,715
Non owner occupied real estate		324,824			336		506			325,666
Residential spec homes		7,011			12		17			7,040
Development & spec land loans		19,961			46		18			20,025
Commercial and industrial		179,006			1,101		307			180,414
Total commercial		795,701			2,106		2,053			799,860
Residential mortgage		421,422			1,283		2,364			425,069
Residential construction		19,020			34		—			19,054
Mortgage warehouse		119,876			480		—			120,356
Total real estate		560,318			1,797		2,364			564,479
Direct installment		56,767			160		(360	)		56,567
Direct installment purchased		140			—		—			140
Indirect installment		147,574			304		—			147,878
Home equity		156,160			621		(645	)		156,136
Total consumer		360,641			1,085		(1,005	)		360,721
Total loans		1,716,660			4,988		3,412			1,725,060
Allowance for loan losses		(14,236	)		—		—			(14,236	)
Net loans	$	1,702,424		$	4,988	$	3,412		$	1,710,824

December 31, 2015	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	268,281		$	613	$	1,328		$	270,222
Non owner occupied real estate		326,399			306		497			327,202
Residential spec homes		5,018			9		17			5,044
Development & spec land loans		18,183			33		26			18,242
Commercial and industrial		184,911			1,246		335			186,492
Total commercial		802,792			2,207		2,203			807,202
Residential mortgage		414,924			1,275		2,470			418,669
Residential construction		19,751			34		—			19,785
Mortgage warehouse		144,692			480		—			145,172
Total real estate		579,367			1,789		2,470			583,626
Direct installment		54,341			168		(359	)		54,150
Direct installment purchased		153			—		—			153
Indirect installment		151,523			323		—			151,846
Home equity		157,164			628		(522	)		157,270
Total consumer		363,181			1,119		(881	)		363,419
Total loans		1,745,340			5,115		3,792			1,754,247
Allowance for loan losses		(14,534	)		—		—			(14,534	)
Net loans	$	1,730,806		$	5,115	$	3,792		$	1,739,713

16

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 5 – Accounting for Certain Loans Acquired in a Transfer

The Company acquired loans in acquisitions and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

The carrying amounts of those loans included in the balance sheet amounts of loans receivable are as follows:

	March 31		March 31		March 31		March 31
	2016		2016		2016		2016
	Heartland		Summit		Peoples		Total
Commercial	$	1,282	$	5,494	$	962	$	7,738
Real estate		676		1,199		289		2,164
Consumer		1		9		—		10
Outstanding balance	$	1,959	$	6,702	$	1,251	$	9,912
Carrying amount, net of allowance of $0							$	9,912
	December 31 2015 Heartland		December 31 2015 Summit		December 31 2015 Peoples		December 31 2015 Total
Commercial	$	1,633	$	5,567	$	1,061	$	8,261
Real estate		693		1,216		179		2,088
Consumer		6		35		—		41
Outstanding balance	$	2,332	$	6,818	$	1,240	$	10,390
Carrying amount, net of allowance of $63							$	10,327

Accretable yield, or income expected to be collected for the three months ended March 31, is as follows:

	Three Months Ended March 31, 2016
	Heartland			Summit			Peoples			Total
Balance at January 1	$	795		$	708		$	555		$	2,058
Additions		—			—			—			—
Accretion		(36	)		(55	)		(42	)		(133	)
Reclassification from nonaccretable difference		—			—			—			—
Disposals		(10	)		(4	)		(30	)		(44	)
Balance at March 31	$	749		$	649		$	483		$	1,881
	Three Months Ended March 31, 2015
	Heartland			Summit			Peoples			Total
Balance at January 1	$	2,400		$	1,268		$	—		$	3,668
Additions		—			—			—			—
Accretion		(107	)		(99	)		—			(206	)
Reclassification from nonaccretable difference		—			—			—			—
Disposals		(88	)		(49	)		—			(137	)
Balance at March 31	$	2,205		$	1,120		$	—		$	3,325

17

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

During the three months ended March 31, 2016 and 2015, the Company decreased the allowance for loan losses on purchased loans by a recovery to the income statement of $63,000 and $105,000, respectively.

Note 6 – Allowance for Loan Losses

The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior one to five years. Management believes the five-year historical loss experience methodology is appropriate in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. The actual allowance for loan loss activity is provided below.

	Three Months Ended
	March 31
	2016			2015
	(Unaudited)			(Unaudited)
Balance at beginning of the period	$	14,534		$	16,501
Loans charged-off:
Commercial
Owner occupied real estate		147			—
Non owner occupied real estate		299			16
Residential development		—			—
Development & Spec Land Loans		—			—
Commercial and industrial		39			—
Total commercial		485			16
Real estate
Residential mortgage		115			22
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		115			22
Consumer
Direct Installment		58			59
Direct Installment Purchased		—			—
Indirect Installment		276			369
Home Equity		175			200
Total consumer		509			628
Total loans charged-off		1,109			666
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		25			8
Non owner occupied real estate		23			—
Residential development		2			—
Development & Spec Land Loans		—			—
Commercial and industrial		32			19
Total commercial		82			27
Real estate
Residential mortgage		32			2
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		32			2
Consumer
Direct Installment		16			29
Direct Installment Purchased		—			—
Indirect Installment		94			101
Home Equity		55			26
Total consumer		165			156
Total loan recoveries		279			185
Net loans charged-off (recovered)		830			481
Provision charged to operating expense
Commercial		(332	)		(45	)
Real estate		(592	)		933
Consumer		1,456			(274	)
Total provision charged to operating expense		532			614
Balance at the end of the period	$	14,236		$	16,634

18

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Certain loans are individually evaluated for impairment, and the Company’s general practice is to proactively charge down impaired loans to the fair value, which is the appraised value less estimated selling costs, of the underlying collateral.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is 90 days past due, and charges down to the net realizable value other secured loans when they are 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment analysis:

March 31, 2016	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	900	$	—	$	—	$	—	$	900
Collectively evaluated for impairment		5,560		1,794		1,014		4,968		13,336
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending allowance balance	$	6,460	$	1,794	$	1,014	$	4,968	$	14,236
Loans:
Individually evaluated for impairment	$	5,788	$	—	$	—	$	—	$	5,788
Collectively evaluated for impairment		794,072		444,123		120,356		360,721		1,719,272
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending loans balance	$	799,860	$	444,123	$	120,356	$	360,721	$	1,725,060
December 31, 2015	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	202	$	—	$	—	$	—	$	202
Collectively evaluated for impairment		6,739		2,476		1,007		3,856		14,078
Loans acquired with deteriorated credit quality		254		—		—		—		254
Total ending allowance balance	$	7,195	$	2,476	$	1,007	$	3,856	$	14,534
Loans:
Individually evaluated for impairment	$	7,019	$	—	$	—	$	—	$	7,019
Collectively evaluated for impairment		798,454		438,454		145,172		363,419		1,745,499
Loans acquired with deteriorated credit quality		1,729		—		—		—		1,729
Total ending loans balance	$	807,202	$	438,454	$	145,172	$	363,419	$	1,754,247

19

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 7 – Non-performing Loans and Impaired Loans

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

March 31, 2016	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non- Performing TDRs		Performing TDRs		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	1,089	$	—	$	—	$	—	$	1,089
Non owner occupied real estate		2,934		—		1,615		60		4,609
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		76		—		—		—		76
Total commercial		4,099		—		1,615		60		5,774
Real estate
Residential mortgage		3,950		1		815		962		5,728
Residential construction		—		—		246		—		246
Mortgage warehouse		—		—		—		—		—
Total real estate		3,950		1		1,061		962		5,974
Consumer
Direct Installment		496		—		—		—		496
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		739		—		—		—		739
Home Equity		1,611		—		181		209		2,001
Total Consumer		2,846		—		181		209		3,236
Total	$	10,895	$	1	$	2,857	$	1,231	$	14,984
December 31, 2015	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non- Performing TDRs		Performing TDRs		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	1,749	$	—	$	—	$	—	$	1,749
Non owner occupied real estate		3,034		—		1,915		60		5,009
Residential development		—		—		—		—		—
Development & Spec Land Loans		71		—		—		—		71
Commercial and industrial		176		—		—		—		176
Total commercial		5,030		—		1,915		60		7,005
Real estate
Residential mortgage		4,354		1		824		808		5,987
Residential construction		—		—		250		—		250
Mortgage warehouse		—		—		—		—		—
Total real estate		4,354		1		1,074		808		6,237
Consumer
Direct Installment		541		—		—		—		541
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		601		27		—		—		628
Home Equity		1,736		—		183		350		2,269
Total Consumer		2,878		27		183		350		3,438
Total	$	12,262	$	28	$	3,172	$	1,218	$	16,680

20

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Included in the $10.9 million of non-accrual loans and the $2.9 million of non-performing TDRs at March 31, 2016 were $2.4 million and $95,000, respectively, of loans acquired for which accretable yield was recognized.

From time to time, the Bank obtains information that may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of this, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Further, it is management’s policy to place a loan on a non-accrual status when the payment is delinquent in excess of 90 days or the loan has had the accrual of interest discontinued by management. The officer responsible for the loan and the Chief Operations Officer or the senior collection officer must review all loans placed on non-accrual status. Subsequent payments on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal in accordance with the loan terms. The Company requires a period of satisfactory performance of not less than six months before returning a non-accrual loan to accrual status.

A loan becomes impaired when, based on current information, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is classified as impaired, the degree of impairment must be recognized by estimating future cash flows from the debtor. The present value of these cash flows is computed at a discount rate based on the interest rate contained in the loan agreement. However, if a particular loan has a determinable market value for its collateral, the creditor may use that value. Also, if the loan is secured and considered collateral dependent, the creditor may use the fair value of the collateral. Interest income on loans individually classified as impaired is recognized on a cash basis after all past due and current principal payments have been made.

Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1–4 family residences, residential construction loans, automobile, home equity, second mortgage loans and mortgage warehouse loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When analysis of borrower operating results and financial condition indicate that underlying cash flows of a borrower’s business are not adequate to meet its debt service requirements, the loan is evaluated for impairment. Often this is associated with a delay or shortfall in payments of 30 days or more. Loans are generally moved to non-accrual status when they are 90 days or more past due. These loans are often considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms, including TDRs, are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

The Company’s TDRs are considered impaired loans and included in the allowance methodology using the guidance for impaired loans. At March 31, 2016, the type of concessions the Company has made on restructured loans has been temporary rate reductions and/or reductions in monthly payments and there have been no restructured loans with modified recorded balances. Any modification to a loan that is a concession and is not in the normal course of lending is considered a restructured loan. A restructured loan is returned to accruing status after three consecutive payments but is still reported as TDR unless the loan bears interest at a market rate. As of March 31, 2016, the Company had $4.1 million in TDRs and $1.2 million were performing according to the restructured terms and zero TDRs were returned to accrual status during the first three months of 2016. There was $140,000 of specific reserves allocated to TDRs at March 31, 2016 based on the discounted cash flows or when appropriate the fair value of the collateral.

21

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents commercial loans individually evaluated for impairment by class of loan:

							Three Months Ending
March 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Loss Allocated		Average Balance in Impaired Loans		Cash/Accrual Interest Income Recognized
With no recorded allowance
Commercial
Owner occupied real estate	$	1,089	$	1,089	$	—	$	1,106	$	—
Non owner occupied real estate		1,851		1,856		—		2,063		1
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		76		76		—		330		—
Total commercial		3,016		3,021		—		3,499		1
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		—		—
Non owner occupied real estate		2,757		2,767		900		2,767		—
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		—		—		—		—		—
Total commercial		2,757		2,767		900		2,767		—
Total	$	5,773	$	5,788	$	900	$	6,266	$	1
							Three Months Ending
March 31, 2015	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Loss Allocated		Average Balance in Impaired Loans		Cash/Accrual Interest Income Recognized
With no recorded allowance
Commercial
Owner occupied real estate	$	1,076	$	1,077	$	—	$	1,329	$	2
Non owner occupied real estate		3,907		3,912		—		4,534		6
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		609		609		—		649		—
Total commercial		5,592		5,598		—		6,512		8
With an allowance recorded
Commercial
Owner occupied real estate		417		417		165		419		—
Non owner occupied real estate		1,590		1,590		184		1,590		—
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		942		942		680		949		—
Total commercial		2,949		2,949		1,029		2,958		—
Total	$	8,541	$	8,547	$	1,029	$	9,470	$	8

22

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents the payment status by class of loan:

March 31, 2016	30 - 59 Days Past Due			60 - 89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Loans Not Past Due			Total
Commercial
Owner occupied real estate	$	161		$	158		$	—		$	319		$	264,580		$	264,899
Non owner occupied real estate		—			—			—			—			324,824			324,824
Residential development		—			—			—			—			7,011			7,011
Development & Spec Land Loans		—			—			—			—			19,961			19,961
Commercial and industrial		—			20			—			20			178,986			179,006
Total commercial		161			178			—			339			795,362			795,701
Real estate
Residential mortgage		498			—			1			499			420,923			421,422
Residential construction		—			—			—			—			19,020			19,020
Mortgage warehouse		—			—			—			—			119,876			119,876
Total real estate		498			—			1			499			559,819			560,318
Consumer
Direct Installment		51			9			—			60			56,707			56,767
Direct Installment Purchased		—			—			—			—			140			140
Indirect Installment		412			150			—			562			147,012			147,574
Home Equity		672			17			—			689			155,471			156,160
Total consumer		1,135			176			—			1,311			359,330			360,641
Total	$	1,794		$	354		$	1		$	2,149		$	1,714,511		$	1,716,660
Percentage of total loans		0.10	%		0.02	%		0.00	%		0.13	%		99.87	%
December 31, 2015	30 - 59 Days Past Due			60 - 89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Loans Not Past Due			Total
Commercial
Owner occupied real estate	$	481		$	18		$	—		$	499		$	267,782		$	268,281
Non owner occupied real estate		49			—			—			49			326,350			326,399
Residential development		—			—			—			—			5,018			5,018
Development & Spec Land Loans		—			—			—			—			18,183			18,183
Commercial and industrial		32			—			—			32			184,879			184,911
Total commercial		562			18			—			580			802,212			802,792
Real estate
Residential mortgage		1,121			344			1			1,466			413,458			414,924
Residential construction		—			—			—			—			19,751			19,751
Mortgage warehouse		—			—			—			—			144,692			144,692
Total real estate		1,121			344			1			1,466			577,901			579,367
Consumer
Direct Installment		106			10			—			116			54,225			54,341
Direct Installment Purchased		—			—			—			—			153			153
Indirect Installment		1,186			268			27			1,481			150,042			151,523
Home Equity		1,193			203			—			1,396			155,768			157,164
Total consumer		2,485			481			27			2,993			360,188			363,181
Total	$	4,168		$	843		$	28		$	5,039		$	1,740,301		$	1,745,340
Percentage of total loans		0.24	%		0.05	%		0.00	%		0.29	%		99.71	%

The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

Horizon Bank’s processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re-evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the loan grade.

23

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

• For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective markets (ranging from $1,000,000 to $2,500,000) are validated by the Loan Committee, which is chaired by the Chief Credit Officer (CCO).

• Commercial loan officers are responsible for reviewing their loan portfolios and report any adverse material change to the CCO or Loan Committee. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the CCO and the Credit Department of the change in the loan grade. Downgrades are accepted immediately by the CCO, however, lenders must present their factual information to either the Loan Committee or the CCO when recommending an upgrade.

• The CCO, or his designee, meets weekly with loan officers to discuss the status of past-due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade.

• Monthly, senior management meets with the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures, other real estate owned and personal property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Loan and Lease Losses.

For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non-accrual, or are classified as a TDR are graded “Substandard.” After being 90 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non-accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass.

Horizon Bank employs a nine-grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below.

Risk Grade 1: Excellent (Pass)

Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans that are guaranteed or otherwise backed by the full faith and credit of the United States government or an agency thereof, such as the Small Business Administration; or loans to any publicly held company with a current long-term debt rating of A or better.

Risk Grade 2: Good (Pass)

Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five-year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit history; or loans to publicly held companies with current long-term debt ratings of Baa or better.

Risk Grade 3: Satisfactory (Pass)

Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered.

24

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:

• At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory;

• At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.

• The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.

• During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.

Risk Grade 4 Satisfactory/Monitored:

Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory loans. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank’s minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization.

Risk Grade 4W Management Watch:

Loans in this category are considered to be of acceptable quality, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion.

Risk Grade 5: Special Mention

Loans which possess some credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,” impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength.

Risk Grade 6: Substandard

One or more of the following characteristics may be exhibited in loans classified Substandard:

• Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

• Loans are inadequately protected by the current net worth and paying capacity of the obligor.

• The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

25

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

• Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

• Unusual courses of action are needed to maintain a high probability of repayment.

• The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.

• The lender is forced into a subordinated or unsecured position due to flaws in documentation.

• Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.

• The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

• There is a significant deterioration in market conditions to which the borrower is highly vulnerable.

Risk Grade 7: Doubtful

One or more of the following characteristics may be present in loans classified Doubtful:

• Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

• The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

• The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

Risk Grade 8: Loss

Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

26

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents loans by credit grades.

March 31, 2016	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	253,513		$	6,118		$	5,268		$	—		$	264,899
Non owner occupied real estate		317,121			2,709			4,994			—			324,824
Residential development		7,011			—			—			—			7,011
Development & Spec Land Loans		19,961			—			—			—			19,961
Commercial and industrial		172,960			1,997			4,049			—			179,006
Total commercial		770,566			10,824			14,311			—			795,701
Real estate
Residential mortgage		415,694			—			5,728			—			421,422
Residential construction		18,774			—			246			—			19,020
Mortgage warehouse		119,876			—			—			—			119,876
Total real estate		554,344			—			5,974			—			560,318
Consumer
Direct Installment		56,271			—			496			—			56,767
Direct Installment Purchased		140			—			—			—			140
Indirect Installment		146,835			—			739			—			147,574
Home Equity		154,159			—			2,001			—			156,160
Total Consumer		357,405			—			3,236			—			360,641
Total	$	1,682,315		$	10,824		$	23,521		$	—		$	1,716,660
Percentage of total loans		98.00	%		0.63	%		1.37	%		0.00	%

December 31, 2015	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	257,181		$	4,954		$	6,146		$	—		$	268,281
Non owner occupied real estate		320,216			585			5,598			—			326,399
Residential development		5,018			—			—			—			5,018
Development & Spec Land Loans		18,112			—			71			—			18,183
Commercial and industrial		180,581			693			3,637			—			184,911
Total commercial		781,108			6,232			15,452			—			802,792
Real estate
Residential mortgage		408,937			—			5,987			—			414,924
Residential construction		19,501			—			250			—			19,751
Mortgage warehouse		144,692			—			—			—			144,692
Total real estate		573,130			—			6,237			—			579,367
Consumer
Direct Installment		53,800			—			541			—			54,341
Direct Installment Purchased		153			—			—			—			153
Indirect Installment		150,895			—			628			—			151,523
Home Equity		154,895			—			2,269			—			157,164
Total Consumer		359,743			—			3,438			—			363,181
Total	$	1,713,981		$	6,232		$	25,127		$	—		$	1,745,340
Percentage of total loans		98.20	%		0.36	%		1.44	%		0.00	%

27

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 8 – Repurchase Agreements

The Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remained under the Bank’s control.

The following table shows repurchase agreements accounted for as secured borrowings (in thousands):

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous			Up to one year		One to three years		Three to five years		Five to ten years			Beyond ten years			Total
Repurchase Agreements and repurchase-to-maturity transactions
Repurchase Agreements	$	55,768		$	—	$	85,000	$	10,000	$	—		$	—		$	150,768
Securities lending transactions
U.S. Treasury and federal agencies	$	4,024		$	—	$	—	$	—	$	—		$	—		$	4,024
Federal agency collateralized mortgage obligations	$	47,004			—		467		192		22,365			32,006			102,034
Federal agency mortgage-backed pools	$	13,650			—		140		1,490		20,277			29,403			64,960
Total		64,678			—		607		1,682		42,642			61,409			171,018
Total borrowings	$	(8,910	)	$	—	$	84,393	$	8,318	$	(42,642	)	$	(61,409	)	$	(20,250	)

Note 9 – Derivative Financial Instruments

Cash Flow Hedges

As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flow due to interest rate fluctuations, the Company entered into interest rate swap agreements for a portion of its floating rate debt. The agreements provide for the Company to receive interest from the counterparty at three month LIBOR and to pay interest to the counterparty at a weighted average fixed rate of 6.14% on a notional amount of $30.5 million at March 31, 2016 and December 31, 2015. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

Management has designated the interest rate swap agreement as a cash flow hedging instrument. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. At March 31, 2016, the Company’s cash flow hedge was effective and is not expected to have a significant impact on the Company’s net income over the next 12 months.

Fair Value Hedges

Fair value hedges are intended to reduce the interest rate risk associated with the underlying hedged item. The Company enters into fixed rate loan agreements as part of its lending policy. To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company has entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings. At March 31, 2016, the Company’s fair value hedges were effective and are not expected to have a significant impact on the Company’s net income over the next 12 months.

28

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The change in fair value of both the hedge instruments and the underlying loan agreements are recorded as gains or losses in interest income. The fair value hedges are considered to be highly effective and any hedge ineffectiveness was deemed not material. The notional amounts of the loan agreements being hedged were $115.1 million at March 31, 2016 and $117.3 million at December 31, 2015.

Other Derivative Instruments

The Company enters into non-hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business. At March 31, 2016, the Company’s fair value of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company’s net income.

The change in fair value of both the forward sale commitments and commitments to originate mortgage loans were recorded and the net gains or losses included in the Company’s gain on sale of loans.

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

	Asset Derivatives			Liability Derivatives
	March 31, 2016			March 31, 2016
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	4,283
Interest rate contracts	Other Assets		4,283	Other liabilities		3,702
Total derivatives designated as hedging instruments			4,283			7,985
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		644	Other liabilities		—
Total derivatives not designated as hedging instruments			644			—
Total derivatives		$	4,927		$	7,985

	Asset Derivatives			Liability Derivatives
	December 31, 2015			December 31, 2015
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	1,782
Interest rate contracts	Other Assets		1,782	Other liabilities		3,141
Total derivatives designated as hedging instruments			1,782			4,923
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		642	Other liabilities		—
Total derivatives not designated as hedging instruments			642			—
Total derivatives		$	2,424		$	4,923

29

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The effect of the derivative instruments on the condensed consolidated statement of income for the three-month periods ending March 31 is as follows:

	Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended March 31
Derivative in cash flow	2016			2015
hedging relationship	(Unaudited)			(Unaudited)
Interest rate contracts	$	(365	)	$	(214	)

FASB Accounting Standards Codification (“ASC”) Topic 820-10-20 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820-10-55 establishes a fair value hierarchy that emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative in fair value	Location of gain (loss)	2016			2015
hedging relationship	recognized on derivative	(Unaudited)			(Unaudited)
Interest rate contracts	Interest income - loans	$	1,478		$	719
Interest rate contracts	Interest income - loans		(1,478	)		(719	)
Total		$	—		$	—

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative not designated as	Location of gain (loss)	2016		2015
hedging relationship	recognized on derivative	(Unaudited)		(Unaudited)
Mortgage contracts	Other income - gain on sale of loans	$	2	$	189

Note 10 – Disclosures about Fair Value of Assets and Liabilities

The Fair Value Measurements topic of the FASB ASC defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. There are three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2016. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

30

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Available for sale securities

When quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Treasury and federal agency securities, state and municipal securities, federal agency mortgage obligations and mortgage-backed pools, private-label mortgage-backed pools and corporate notes. Level 2 securities are valued by a third party pricing service commonly used in the banking industry utilizing observable inputs. Observable inputs include dealer quotes, market spreads, cash flow analysis, the U.S. Treasury yield curve, trade execution data, market consensus prepayment spreads and available credit information and the bond’s terms and conditions. The pricing provider utilizes evaluated pricing models that vary based on asset class. These models incorporate available market information including quoted prices of securities with similar characteristics and, because many fixed-income securities do not trade on a daily basis, apply available information through processes such as benchmark curves, benchmarking of like securities, sector grouping, and matrix pricing. In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features.

Hedged loans

Certain fixed rate loans have been converted to variable rate loans by entering into interest rate swap agreements. The fair value of those fixed rate loans is based on discounting the estimated cash flows using interest rates determined by the respective interest rate swap agreement. Loans are classified within Level 2 of the valuation hierarchy based on the unobservable inputs used.

Interest rate swap agreements

The fair value of the Company’s interest rate swap agreements is estimated by a third party using inputs that are primarily unobservable including a yield curve, adjusted for liquidity and credit risk, contracted terms and discounted cash flow analysis, and therefore, are classified within Level 2 of the valuation hierarchy.

31

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:

	Fair Value			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
				(Level 1)		(Level 2)			(Level 3)
March 31, 2016
Available-for-sale securities
U.S. Treasury and federal agencies	$	15,470		$	—	$	15,470		$	—
State and municipal		71,042			—		71,042			—
Federal agency collateralized mortgage obligations		157,313			—		157,313			—
Federal agency mortgage-backed pools		218,576			—		218,576			—
Corporate notes		75			—		75			—
Total available-for-sale securities		462,476			—		462,476			—
Hedged loans		110,837			—		110,837			—
Forward sale commitments		644			—		644			—
Interest rate swap agreements		(7,985	)		—		(7,985	)		—
Commitments to originate loans		—			—		—			—
December 31, 2015
Available-for-sale securities
U.S. Treasury and federal agencies	$	5,926		$	—	$	5,926		$	—
State and municipal		75,095			—		75,095			—
Federal agency collateralized mortgage obligations		156,203			—		156,203			—
Federal agency mortgage-backed pools		207,704			—		207,704			—
Corporate notes		54			—		54			—
Total available-for-sale securities		444,982			—		444,982			—
Hedged loans		115,472			—		115,472			—
Forward sale commitments		642			—		642			—
Interest rate swap agreements		(4,923	)		—		(4,923	)		—

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

	Three Months Ended March 31
Non Interest Income	2016			2015
Total gains and losses from:	(Unaudited)			(Unaudited)
Hedged loans	$	1,478		$	719
Fair value interest rate swap agreements		(1,478	)		(719	)
Derivative loan commitments		2			189
	$	2		$	189

Certain other assets are measured at fair value on a nonrecurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2016
Impaired loans	$	4,873	$	—	$	—	$	4,873
Mortgage servicing rights		9,093		—		—		9,093
December 31, 2015
Impaired loans	$	6,803	$	—	$	—	$	6,803
Mortgage servicing rights		8,874		—		—		8,874

32

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Impaired (collateral dependent): Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Mortgage Servicing Rights (MSRs): MSRs do not trade in an active market with readily observable prices. Accordingly, the fair value of these assets is classified as Level 3. The Company determines the fair value of MSRs using an income approach model based upon the Company’s month-end interest rate curve and prepayment assumptions. The model utilizes assumptions to estimate future net servicing income cash flows, including estimates of time decay, payoffs and changes in valuation inputs and assumptions. The Company reviews the valuation assumptions against this market data for reasonableness and adjusts the assumptions if deemed appropriate. The carrying amount of the MSRs’ fair value due to impairment decreased by $1,000 during the first three months of 2016 and decreased by $76,000 during the first three months of 2015.

The following table presents qualitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill.

	Fair Value at March 31, 2016		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	4,873	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	9,093	Discounted cashflows	Discount rate, Constant prepayment rate, Probability of default	10% - 15% (12%), 4% -  7% (4.6%), 1% - 10% (4.5%)
	Fair Value at December 31, 2015		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,803	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	8,874	Discounted cashflows	Discount rate, Constant prepayment rate, Probability of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)

Note 11 – Fair Value of Financial Instruments

The estimated fair value amounts of the Company’s financial instruments were determined using available market information, current pricing information applicable to Horizon and various valuation methodologies. Where market quotations were not available, considerable management judgment was involved in the determination of estimated fair values. Therefore, the estimated fair value of financial instruments shown below may not be representative of the amounts at which they could be exchanged in a current or future transaction. Due to the inherent uncertainties of expected cash flows of financial instruments, the use of alternate valuation assumptions and methods could have a significant effect on the estimated fair value amounts.

33

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The estimated fair values of financial instruments, as shown below, are not intended to reflect the estimated liquidation or market value of Horizon taken as a whole. The disclosed fair value estimates are limited to Horizon’s significant financial instruments at March 31, 2016 and December 31, 2015. These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheet as well as certain off-balance sheet financial instruments. The estimated fair values shown below do not include any valuation of assets and liabilities, which are not financial instruments as defined by the FASB ASC fair value hierarchy.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and Due from Banks — The carrying amounts approximate fair value.

Held-to-Maturity Securities — For debt securities held to maturity, fair values are based on quoted market prices or dealer quotes. For those securities where a quoted market price is not available, carrying amount is a reasonable estimate of fair value based upon comparison with similar securities.

Loans Held for Sale — The carrying amounts approximate fair value.

Net Loans — The fair value of portfolio loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The carrying amounts of loans held for sale approximate fair value.

FHLB and FRB Stock — Fair value of FHLB and FRB stock is based on the price at which it may be resold to the FHLB and FRB.

Interest Receivable/Payable — The carrying amounts approximate fair value.

Deposits — The fair value of demand deposits, savings accounts, interest-bearing checking accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturity.

Borrowings — Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings.

Subordinated Debentures — Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.

Commitments to Extend Credit and Standby Letters of Credit — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. Due to the short-term nature of these agreements, carrying amounts approximate fair value.

34

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

	March 31, 2016
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	47,612	$	47,612	$	—	$	—
Investment securities, held to maturity		180,291		—		188,093		—
Loans held for sale		3,168		—		—		3,168
Loans excluding loan level hedges, net		1,594,999		—		—		1,584,414
Stock in FHLB and FRB		13,823		—		13,823		—
Interest receivable		10,476		—		10,476		—
Liabilities
Non-interest bearing deposits	$	343,025	$	343,025	$	—	$	—
Interest-bearing deposits		1,535,454		—		1,483,711		—
Borrowings		430,507		—		426,966		—
Subordinated debentures		32,836		—		33,003		—
Interest payable		580		—		580		—
	December 31, 2015
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	48,650	$	48,650	$	—	$	—
Investment securities, held to maturity		187,629		—		193,703		—
Loans held for sale		7,917		—		—		7,917
Loans excluding loan level hedges, net		1,619,125		—		—		1,703,506
Stock in FHLB and FRB		13,823		—		13,823		—
Interest receivable		10,535		—		10,535		—
Liabilities
Non-interest bearing deposits	$	335,955	$	335,955	$	—	$	—
Interest-bearing deposits		1,544,198		—		1,461,314		—
Borrowings		449,347		—		441,547		—
Subordinated debentures		32,797		—		32,996		—
Interest payable		507		—		507		—

35

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 12 – Accumulated Other Comprehensive Income

	March 31			December 31
	2016			2015
Unrealized gain on securities available for sale	$	6,973		$	920
Unamortized gain on securities held to maturity, previously transferred from AFS		879			1,109
Unrealized loss on derivative instruments		(3,702	)		(3,142	)
Tax effect		(1,452	)		390
Total accumulated other comprehensive income (loss)	$	2,698		$	(723	)

Note 13 – Regulatory Capital

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined), or leverage ratio. For March 31, 2016, Basel III rules require the Bank to maintain minimum amounts and ratios of common equity Tier I capital (as defined in the regulation) to risk-weighted assets (as defined). Additionally, under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital

To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based, common equity Tier I risk-based (March 31, 2016) and Tier I leverage ratios as set forth in the table below. As of March 31, 2016 and December 31, 2015, the Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the first quarter of 2016 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies.

Horizon and the Bank’s actual and required capital ratios as of March 31, 2016 and December 31, 2015 were as follows:

36

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

						Required For Capital1					Well Capitalized Under Prompt1
	Actual					Adequacy Purposes					Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2016
Total capital1 (to risk-weighted assets)
Consolidated	$	251,434		13.57	%	$	159,902		8.63	%		N/A		N/A
Bank		242,478		13.10	%		159,739		8.63	%	$	185,098		10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated		203,797		12.80	%		105,560		6.63	%		N/A		N/A
Bank		228,242		12.33	%		122,729		6.63	%		148,089		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated		203,797		11.00	%		95,044		5.13	%		N/A		N/A
Bank		228,242		12.33	%		94,962		5.13	%		120,322		6.50	%
Tier 1 capital1 (to average assets)
Consolidated		237,198		9.32	%		101,802		4.00	%		N/A		N/A
Bank		228,242		8.98	%		101,667		4.00	%		127,084		5.00	%
As of December 31, 2015
Total capital1 (to risk-weighted assets)
Consolidated	$	264,452		13.99	%	$	151,223		8.00	%		N/A		N/A
Bank		237,348		12.57	%		151,057		8.00	%	$	188,821		10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated		249,918		13.22	%		113,427		6.00	%		N/A		N/A
Bank		222,814		11.80	%		113,295		6.00	%		151,060		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated		204,350		10.81	%		85,067		4.50	%		N/A		N/A
Bank		222,814		11.80	%		84,971		4.50	%		122,737		6.50	%
Tier 1 capital1 (to average assets)
Consolidated		249,918		9.82	%		101,800		4.00	%		N/A		N/A
Bank		222,814		8.77	%		101,626		4.00	%		127,032		5.00	%

¹  As defined by regulatory agencies

Note 14 – Preferred Stock Redemption

On February 1, 2016, Horizon Bancorp (“Horizon”) completed the redemption (the “Redemption”) of all 12,500 outstanding shares of Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “SBLF Preferred Stock”) which were held by the U.S. Department of Treasury and issued pursuant to its Small Business Lending Fund (“SBLF”). The SBLF Preferred Stock was redeemed at its liquidation value of $1,000 per share, plus accrued dividends, for a total Redemption price of $12,510,416.67. Horizon funded the Redemption using cash on hand without borrowing and without a special dividend from its wholly owned banking subsidiary, Horizon Bank, N.A. Following the Redemption, Horizon does not have any shares of its Senior Non-Cumulative Perpetual Preferred Stock, Series B outstanding. The Redemption terminates Horizon’s participation in the SBLF.

Note 15 – Business Combinations

On February 4, 2016, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of Kosciusko Financial, Inc., an Indiana corporation (“Kosciusko”). Pursuant to the Merger Agreement, Kosciusko would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and Farmers State Bank, a state chartered bank and wholly-owned subsidiary of Kosciusko, would merge with and into a wholly-owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

37

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The boards of directors of each of Horizon and Kosciusko have approved the Merger and the Merger Agreement. The regulatory approvals have been received. Subject to the approval of the Merger by Kosciusko shareholders and other closing conditions, the parties anticipate completing the Merger during the second quarter of 2016.

In connection with the Merger, shareholders of Kosciusko will have the option to receive $81.75 per share in cash or 3.0122 shares of Horizon common stock for each share of Kosciusko’s common stock or a combination thereof, provided the overall shares exchanged consist of 65% stock and 35% cash. Based upon the February 3, 2016, closing price of $23.99 per share of Horizon common stock, the transaction has an implied valuation of approximately $22.5 million.

Subject to certain terms and conditions, the board of directors of Kosciusko has agreed to recommend the approval and adoption of the Merger Agreement to the Kosciusko shareholders and will solicit proxies voting in favor of the Merger from Kosciusko’s shareholders.

The Merger Agreement also provides for certain termination rights for both Horizon and Kosciusko, and further provides that upon termination of the Merger Agreement under certain circumstances, Kosciusko will be obligated to pay Horizon a termination fee.

As of December 31, 2015, Kosciusko reported total assets of approximately $148.2 million, total deposits of approximately $122.8 million and total loans of approximately $106.1 million.

On March 10, 2016, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of LaPorte Bancorp, Inc. (“LaPorte Bancorp”). Pursuant to the Merger Agreement, LaPorte Bancorp would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and The LaPorte Savings Bank, a state chartered bank and wholly-owned subsidiary of LaPorte Bancorp, would merge with and into a wholly-owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

The boards of directors of each of Horizon and LaPorte Bancorp have approved the Merger and the Merger Agreement. Subject to the approval of the Merger by LaPorte Bancorp shareholders, regulatory approvals and other closing conditions, the parties anticipate completing the Merger during the third quarter of 2016.

In connection with the Merger, shareholders of LaPorte Bancorp will have the option to receive $17.50 per share in cash or 0.629 shares of Horizon common stock for each share of LaPorte Bancorp’s common stock or a combination thereof, provided the overall shares exchanged consist of 65% stock and 35% cash. Based upon the March 9, 2016, closing price of $24.21 per share of Horizon common stock, the transaction has an implied valuation of approximately $94.1 million.

Subject to certain terms and conditions, the board of directors of LaPorte Bancorp has agreed to recommend the approval and adoption of the Merger Agreement to the LaPorte Bancorp shareholders and will solicit proxies voting in favor of the Merger from LaPorte Bancorp’s shareholders.

The Merger Agreement also provides for certain termination rights for both Horizon and LaPorte Bancorp, and further provides that upon termination of the Merger Agreement under certain circumstances, LaPorte Bancorp will be obligated to pay Horizon a termination fee.

As of December 31, 2015, LaPorte Bancorp reported total assets of approximately $543.2 million, total deposits of approximately $391.0 million and total loans of approximately $348.5 million.

38

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 16 – Future Accounting Matters

In June 2014, the FASB issued ASU No. 2014-12 “Compensation—Stock Compensation (Topic 718)—Accounting for Share Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 became effective for interim and annual periods beginning after December 15, 2015 and did not have a significant impact on the Company’s financial condition or results of operations.

In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The amendments should be applied through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The Company will be evaluating the impact of adopting this ASU.

In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).”This ASU requires lessees and lessors to classify leases as either capital leases or operating leases. The ASU also requires lessees to recognized assets and liabilities for all leases with the exception of short term leases. There are new disclosure requirements for these leases which will provide users of financial statements with information to understand the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 will become effective for fiscal years beginning after December 31, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of adopting this ASU.

In March 2016, the FASB issued ASU No. 2016-05 “Derivatives and Hedging (Topic 815).” This ASU applies to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815. The ASU clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria as identified in Topic 815 continue to be met. ASU 2016-05 will become effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of adopting this ASU.

In March 2016, the FASB issued ASU No. 2016-09 “Compensation—Stock Compensation (Topic 718)—Improvements to Employee Share-Based Payment Accounting.” This ASU requires all income tax effects of awards to be recognized in teh income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of adopting this ASU.

39

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 17 – General Litigation

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results or operation and cash flows of the Company.

40

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward–Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Horizon Bancorp (“Horizon” or the “Company”) and Horizon Bank, N.A. (the “Bank”). Horizon intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for the purposes of these safe harbor provisions. Statements in this report should be considered in conjunction with the other information available about Horizon, including the information in the other filings we make with the Securities and Exchange Commission. 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,” “expect,” “estimate,” “project,” “intend,” “plan,” “believe,” “could,” “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.

Actual results may differ materially, adversely or positively, from the expectations of the Company that are expressed or implied by any forward-looking statement. Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:

• economic conditions and their impact on Horizon and its customers;

• changes in the level and volatility of interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity;

• rising interest rates and their impact on mortgage loan volumes and the outflow of deposits;

• loss of key Horizon personnel;

• increases in disintermediation, as new technologies allow consumers to complete financial transactions without the assistance of banks;

• estimates of fair value of certain of Horizon’s assets and liabilities;

• volatility and disruption in financial markets;

• prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets;

• sources of liquidity;

• potential risk of environmental liability related to lending activities;

• changes in the competitive environment in Horizon’s market areas and among other financial service providers;

• legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular, including the effects resulting from the reforms enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act;

• the impact of the new Basel III capital rules;

• changes in regulatory supervision and oversight, including monetary policy and capital requirements;

• changes in accounting policies or procedures as may be adopted and required by regulatory agencies;

• rapid technological developments and changes;

41

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

• the risks presented by cyber terrorism and data security breaches;

• containing costs and expenses;

• the slowing or failure of economic recovery;

• the ability of the U.S. federal government to manage federal debt limits; and

• the risks of expansion through mergers and acquisitions, including unexpected credit quality problems with acquired loans, difficulty integrating acquired operations and material differences in the actual financial results of such transactions compared with Horizon’s initial expectations, including the full realization of anticipated cost savings.

The foregoing list of important factors is not exclusive, and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document or, in the case of documents incorporated by reference, the dates of those documents. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of us. For a detailed discussion of the risks and uncertainties that may cause our actual results or performance to differ materially from the results or performance expressed or implied by forward-looking statements, see “Risk Factors” in Item 1A of Part I of our 2015 Annual Report on Form 10-K and in the subsequent reports we file with the SEC.

Overview

Horizon is a registered bank holding company incorporated in Indiana and headquartered in Michigan City, Indiana. Horizon provides a broad range of banking services in Northern and Central Indiana and Southwestern and Central Michigan through its bank subsidiary. Horizon operates as a single segment, which is commercial banking. Horizon’s common stock is traded on the NASDAQ Global Select Market under the symbol HBNC. The Bank was chartered as a national banking association in 1873 and has operated continuously since that time. The Bank is a full-service commercial bank offering commercial and retail banking services, corporate and individual trust and agency services, and other services incident to banking.

On July 1, 2015, Horizon completed the acquisition of Peoples Bancorp, an Indiana corporation (“Peoples”) and Horizon Bank’s acquisition of Peoples Federal Savings Bank of DeKalb County, a federally-chartered stock savings bank and wholly owned subsidiary of Peoples, through mergers effective July 1, 2015. Under the terms of the acquisition, the exchange ratio was 0.95 shares of Horizon common stock (the “Exchange Ratio”) and $9.75 in cash for each outstanding share of Peoples common stock. Peoples shareholders owning fewer than 100 shares of common stock received $33.14 in cash for each common share. Peoples shares outstanding at the closing were 2,311,858, and the shares of Horizon common stock issued to Peoples shareholders totaled 2,192,202. Horizon’s stock price was $25.32 per share at the close of business on July 1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1 million.

On April 3, 2014, Horizon completed the acquisition of SCB Bancorp, Inc., a Michigan corporation (“Summit”) and Horizon Bank’s acquisition of Summit Community Bank, a Michigan-chartered commercial bank and wholly owned subsidiary of Summit, through mergers effective April 3, 2014. Under the terms of the acquisition, the exchange ratio was 0.4904 shares of Horizon common stock and $5.15 in cash for each outstanding share of Summit common stock. Summit shares outstanding at the closing were 1,164,442, and the shares of Horizon’s common stock issued to Summit shareholders totaled 570,820. Horizon’s stock price was $22.23 per share at the close of business on April 3, 2014. Based upon these numbers, the total value of the consideration for the acquisition was $18.9 million (not including the retirement of Summit debt).

Following are some highlights of Horizon’s financial performance through the first quarter of 2016:

• Net income for the first quarter of 2016 was $5.4 million or $.44 diluted earnings per share compared to $5.4 million or $.55 diluted earnings per share in the same period of 2015.

42

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

• Excluding merger expenses, gain on sale of investment securities, the death benefit on bank owned life insurance and acquisition-related purchase accounting adjustments, net income for the first quarter of 2016 increase to $5.4 million or an increase of 18.7% compared to the same period of 2015.

• Net interest income for the first quarter of 2016 increased $2.9 million or 17.1% compared to the same period in 2015.

• Non-interest income for the first quarter of 2016 increased $798,000 or 11.3% compared to the same period in 2015.

• Net interest margin, excluding the impact of acquisitions (“core net interest margin”), was 3.36% for the first quarter of 2016 compared to 3.38% in the prior quarter and 3.47% for the same period in 2015.

• Non-performing loans to total loans was .87% as of March 31, 2016 compared to .95% as of December 31, 2015 and 1.52% as of March 31, 2015.

• Horizon’s tangible book value per share rose to $17.08 at March 31, 2016, compared to $16.53 at December 31, 2015 and $16.80 at March 31, 2015.

• On February 5, 2016, Horizon announced the pending acquisition of Kosciusko Financial, Inc. (“Kosciusko”) and its wholly-owned subsidiary, Farmers State Bank, headquartered in Mentone, Indiana.

• On March 10, 2016, Horizon announced the pending acquisition of LaPorte Bancorp, Inc. (“LaPorte Bancorp”) and its wholly-owned subsidiary, The LaPorte Savings Bank, headquartered in La Porte, Indiana.

• Horizon paid off the $12.5 million in funds received through the Small Business Lending Fund with cash from the holding company on February 1, 2016.

• Horizon Bank’s capital ratios, including Tier 1 Capital to Average Assets of 9.03% and Total Capital to Risk Weighted Assets of 13.31% as of March 31, 2016, continue to be well above the regulatory standards for well-capitalized banks.

Critical Accounting Policies

The notes to the consolidated financial statements included in Item 8 of the Company’s Annual Report on Form 10-K for 2015 contain a summary of the Company’s significant accounting policies. Certain of these policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Management has identified as critical accounting policies the allowance for loan losses, intangible assets, mortgage servicing rights, hedge accounting and valuation measurements.

Allowance for Loan Losses

An allowance for loan losses is maintained to absorb probable incurred loan losses inherent in the loan portfolio. The determination of the allowance for loan losses is a critical accounting policy that involves management’s ongoing quarterly assessments of the probable incurred losses inherent in the loan portfolio. The identification of loans that have probable incurred losses is subjective; therefore, a general reserve is maintained to cover all probable losses within the entire loan portfolio. Horizon utilizes a loan grading system that helps identify, monitor and address asset quality problems in an adequate and timely manner. Each quarter, various factors affecting the quality of the loan portfolio are reviewed. Large credits are reviewed on an individual basis for loss potential. Other loans are reviewed as a group based upon previous trends of loss experience. Horizon also reviews the current and anticipated economic conditions of its lending market as well as transaction risk to determine the effect they may have on the loss experience of the loan portfolio.

43

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Goodwill and Intangible Assets

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. FASB ASC 350-10 establishes standards for the amortization of acquired intangible assets and impairment assessment of goodwill. At March 31, 2016, Horizon had core deposit intangibles of $7.1 million subject to amortization and $49.6 million of goodwill, which is not subject to amortization. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. Horizon’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Horizon to provide quality, cost effective banking services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely affect earnings in future periods. FASB ASC 350-10 requires an annual evaluation of goodwill for impairment. The evaluation of goodwill for impairment requires the use of estimates and assumptions. Market price at the close of business on March 31, 2016 was $24.72 per share compared to a book value of $21.82 per common share.

Horizon has concluded that, based on its own internal evaluation, the recorded value of goodwill is not impaired.

Mortgage Servicing Rights

Servicing assets are recognized as separate assets when rights are acquired through purchase or through the sale of financial assets on a servicing-retained basis. Capitalized servicing rights are amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated regularly for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying servicing rights by predominant characteristics, such as interest rates, original loan terms and whether the loans are fixed or adjustable rate mortgages. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. When the book value of an individual stratum exceeds its fair value, an impairment reserve is recognized so that each individual stratum is carried at the lower of its amortized book value or fair value. In periods of falling market interest rates, accelerated loan prepayment can adversely affect the fair value of these mortgage-servicing rights relative to their book value. In the event that the fair value of these assets was to increase in the future, Horizon can recognize the increased fair value to the extent of the impairment allowance but cannot recognize an asset in excess of its amortized book value. Future changes in management’s assessment of the impairment of these servicing assets, as a result of changes in observable market data relating to market interest rates, loan prepayment speeds, and other factors, could impact Horizon’s financial condition and results of operations either positively or negatively.

Generally, when market interest rates decline and other factors favorable to prepayments occur, there is a corresponding increase in prepayments as customers refinance existing mortgages under more favorable interest rate terms. When a mortgage loan is prepaid, the anticipated cash flows associated with servicing that loan are terminated, resulting in a reduction of the fair value of the capitalized mortgage servicing rights. To the extent that actual borrower prepayments do not react as anticipated by the prepayment model (i.e., the historical data observed in the model does not correspond to actual market activity), it is possible that the prepayment model could fail to accurately predict mortgage prepayments and could result in significant earnings volatility. To estimate prepayment speeds, Horizon utilizes a third-party prepayment model, which is based upon statistically derived data linked to certain key principal indicators involving historical borrower prepayment activity associated with mortgage loans in the secondary market, current market interest rates and other factors, including Horizon’s own historical prepayment experience. For purposes of model valuation, estimates are made for each product type within the mortgage servicing rights portfolio on a monthly basis. In addition, on a quarterly basis Horizon engages a third party to independently test the value of its servicing asset.

44

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Derivative Instruments

As part of the Company’s asset/liability management program, Horizon utilizes, from time-to-time, interest rate floors, caps or swaps to reduce the Company’s sensitivity to interest rate fluctuations. These are derivative instruments, which are recorded as assets or liabilities in the consolidated balance sheets at fair value. Changes in the fair values of derivatives are reported in the consolidated income statements or other comprehensive income (“OCI”) depending on the use of the derivative and whether the instrument qualifies for hedge accounting. The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis.

Horizon’s accounting policies related to derivatives reflect the guidance in FASB ASC 815-10. Derivatives that qualify for the hedge accounting treatment are designated as either: a hedge of the fair value of the recognized asset or liability or of an unrecognized firm commitment (a fair value hedge) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge). For fair value hedges, the cumulative change in fair value of both the hedge instruments and the underlying loans is recorded in non-interest income. For cash flow hedges, changes in the fair values of the derivative instruments are reported in OCI to the extent the hedge is effective. The gains and losses on derivative instruments that are reported in OCI are reflected in the consolidated income statement in the periods in which the results of operations are impacted by the variability of the cash flows of the hedged item. Generally, net interest income is increased or decreased by amounts receivable or payable with respect to the derivatives, which qualify for hedge accounting. At inception of the hedge, Horizon establishes the method it uses for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized currently in the consolidated statements of income. Horizon excludes the time value expiration of the hedge when measuring ineffectiveness.

Valuation Measurements

Valuation methodologies often involve a significant degree of judgment, particularly when there are no observable active markets for the items being valued. Investment securities, residential mortgage loans held for sale and derivatives are carried at fair value, as defined in FASB ASC 820, which requires key judgments affecting how fair value for such assets and liabilities is determined. In addition, the outcomes of valuations have a direct bearing on the carrying amounts of goodwill, mortgage servicing rights, and pension and other post-retirement benefit obligations. To determine the values of these assets and liabilities, as well as the extent, to which related assets may be impaired, management makes assumptions and estimates related to discount rates, asset returns, prepayment speeds and other factors. The use of different discount rates or other valuation assumptions could produce significantly different results, which could affect Horizon’s results of operations.

45

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Financial Condition

On March 31, 2016, Horizon’s total assets were $2.6 billion, a decrease of approximately $24.5 million compared to December 31, 2015. The decrease was primarily in net loans of $28.8 million offset partially by an increase in investment securities of $10.2 million.

Investment securities were comprised of the following as of (dollars in thousands):

	March 31, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
U.S. Treasury and federal agencies	$	15,412	$	15,470	$	5,940	$	5,926
State and municipal		69,204		71,042		73,829		75,095
Federal agency collateralized mortgage obligations		155,687		157,313		157,291		156,203
Federal agency mortgage-backed pools		215,167		218,576		206,970		207,704
Corporate notes		32		75		32		54
Total available for sale investment securities	$	455,502	$	462,476	$	444,062	$	444,982
Held to maturity
U.S. Treasury and federal agencies	$	—	$	—	$	5,859	$	5,952
State and municipal		145,520		152,085		146,331		151,453
Federal agency collateralized mortgage obligations		8,731		8,867		9,051		8,954
Federal agency mortgage-backed pools		26,040		27,141		26,388		27,344
Total held to maturity investment securities	$	180,291	$	188,093	$	187,629	$	193,703

Total investment securities increased by approximately $10.2 million at March 31, 2016 compared to December 31, 2015 primarily due to the investing of cash.

Total loans decreased $33.8 million since December 31, 2015 to $1.7 billion as of March 31, 2016. This decrease was the result of a decrease in commercial loans of $7.2 million, mortgage warehouse loans of $24.8 million and consumer loans of $2.7 million offset by an increase in residential mortgage loans of $5.7 million. The decrease in commercial loans was primarily attributed to loan payoffs, seasonal pay downs on agricultural lines of credit and annual agricultural term loan payments. The decrease in mortgage warehouse loans was due to seasonality and changes in mortgage compliance that slowed production volume during the quarter.

Total deposits decreased $1.7 million since December 31, 2015 to $1.9 billion as of March 31, 2016. Non-interest bearing deposit accounts increased by $7.1 million, interest-bearing transaction accounts decreased by $59.0 million and time deposits increased by $50.2 million during the three months ended March 31, 2016.

The Company’s borrowings decreased $18.8 million from December 31, 2015. At March 31, 2016, the Company had $192.0 million in short-term funds borrowed compared to $206.0 million at December 31, 2015. The Company’s current balance sheet strategy is to utilize a reasonable level of short-term borrowings during extended low rate environments in addition to what is needed for the fluctuations in municipal deposits and mortgage warehouse lending.

Stockholders’ equity totaled $261.4 million at March 31, 2016 compared to $266.8 million at December 31, 2015. The decrease in stockholders’ equity during the period was the result of the redemption of $12.5 million of preferred stock and dividends declared, net of the generation of net income. At March 31, 2016, the ratio of average stockholders’ equity to average assets was 10.16% compared to 10.32% for December 31, 2015. Book value per common share at March 31, 2016 increased to $21.82 compared to $21.30 at December 31, 2015.

46

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Results of Operations

Overview

Consolidated net income for the three-month period ended March 31, 2016 was $5.4 million compared to $5.4 million for the same period in 2015. Earnings per common share for the three months ended March 31, 2016 were $0.45 basic and $0.44 diluted, compared to $0.58 basic and $0.55 diluted for the same three-month period in the previous year. Compared to the previous year net interest income increased by $2.9 million, non-interest income increased by $798,000 and non-interest expenses increased by $3.7 million. Non-interest expenses increased primarily due to an increase in salaries and employee benefits and expenses related to outside services and consultants. The decrease in earnings per share from the previous year reflects an increase in diluted shares primarily due to the Peoples acquisition. Excluding acquisition-related expenses and purchase accounting adjustments, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the first quarter of 2016 was $5.4 million or $.45 diluted earnings per share compared to $4.6 million or $.47 diluted earnings per share in the same period of 2015.

Net Interest Income

The largest component of net income is net interest income. Net interest income is the difference between interest income, principally from loans and investment securities, and interest expense, principally on deposits and borrowings. Changes in the net interest income are the result of changes in volume and the net interest spread, which affects the net interest margin. Volume refers to the average dollar levels of interest-earning assets and interest-bearing liabilities. Net interest spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. Net interest margin refers to net interest income divided by average interest-earning assets and is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities.

Net interest income during the three-month period ended March 31, 2016 was $19.8 million, an increase of $2.9 million from the $16.9 million earned during the same period in 2015. Yields on the Company’s interest-earning assets decreased by 30 basis points to 4.09% for the three months ending March 31, 2016 from 4.39% for the three months ended March 31, 2015. Interest income increased $3.5 million from $20.1 million for the three months ended March 31, 2015to $23.6 million for the same period in 2016. This increase was due to an increase in interest-earning assets, partially offset by lower yields on loans and investment securities and a decrease in interest income from acquisition-related purchase accounting adjustments from $438,000 for the three months ending March 31, 2015to $402,000 for the same period of 2016.

Rates paid on interest-bearing liabilities decreased by 6 basis points for the three-month period ended March 31, 2016 compared to the same period in 2015 due to the continued low interest rate environment and shift in mix on interest-bearing liabilities. Interest expense increased $547,000 compared to the three-month period ended March 31, 2015 to $3.8 million for the same period in 2016. This increase was due to higher average balances of interest-bearing deposits and borrowings, partially offset by lower rates paid on interest-bearing deposits and borrowings. The net interest margin decreased 25 basis points from 3.70% for the three-month period ended March 31, 2015 to 3.45% for the same period in 2016. The decrease in the margin for the three-month period ended March 31, 2016 compared to the same period in 2015 was due to a reduction in the yield on interest-earning assets and a decrease of approximately $536,000 of interest income from acquisition-related purchase accounting adjustments. Excluding the interest income recognized from the acquisition-related purchase accounting adjustments, the margin would have been 3.36% for the three-month period ending March 31, 2016 compared to 3.47% for the same period in 2015.

47

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

The following are the average balance sheets for the three months ending (dollars in thousands):

	Three Months Ended								Three Months Ended
	March 31, 2016								March 31, 2015
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Interest-earning assets
Federal funds sold	$	2,424		$	1		0.17	%	$	4,804		$	2		0.17	%
Interest-earning deposits		20,810			49		0.95	%		10,772			3		0.11	%
Investment securities - taxable		463,544			2,494		2.16	%		360,554			2,149		2.42	%
Investment securities - non-taxable (1)		182,275			1,237		3.79	%		140,748			1,077		4.31	%
Loans receivable (2)(3)		1,698,197			19,747		4.69	%		1,382,992			16,862		4.96	%
Total interest-earning assets (1)		2,367,250			23,528		4.09	%		1,899,870			20,093		4.39	%
Non-interest-earning assets
Cash and due from banks		32,925								28,994
Allowance for loan losses		(14,508	)							(16,489	)
Other assets		214,604								157,553
	$	2,600,271							$	2,069,928
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities
Interest-bearing deposits	$	1,534,833		$	1,491		0.39	%	$	1,215,862		$	1,232		0.41	%
Borrowings		406,679			1,759		1.74	%		337,430			1,479		1.78	%
Subordinated debentures		32,813			504		6.18	%		32,657			496		6.16	%
Total interest-bearing liabilities		1,974,325			3,754		0.76	%		1,585,949			3,207		0.82	%
Non-interest-bearing liabilities
Demand deposits		339,141								271,158
Accrued interest payable and other liabilities		22,521								14,989
Stockholders’ equity		264,284								197,832
	$	2,600,271							$	2,069,928
Net interest income/spread				$	19,774		3.32	%				$	16,886		3.57	%
Net interest income as a percent of average interest earning assets (1)							3.45	%							3.70	%

(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. Interest rate is presented on a tax equivalent basis.

(2) Includes loan fees and late fees. The inclusion of these 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 loans fees.

Provision for Loan Losses

Horizon assesses the adequacy of its Allowance for Loan and Lease Losses (“ALLL”) by regularly reviewing the performance of its loan portfolio. During the three-month period ended March 31, 2016, a provision of $532,000 was required to adequately fund the ALLL compared to $614,000 for the same period of 2015. Commercial loan net charge-offs during the three-month period ended March 31, 2016 were $403,000, residential mortgage loan net charge-offs were $83,000 and consumer loan net charge-offs were $344,000. The lower provision for loan losses in the first quarter of 2016 compared to the same period of 2015 was due to the improvement of non-performing and substandard loans. The ALLL balance at March 31, 2016 was $14.2 million or 0.83% of total loans. This compares to an ALLL balance of $14.5 million at December 31, 2015 or 0.83% of total loans. The ratio was unchanged from December 31, 2015 as the decrease in the ALLL was offset by a decrease in total loans outstanding during the three months ended March 31, 2016.

48

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Horizon’s loan loss reserve ratio, excluding loans with credit-related purchase accounting adjustments, stood at 0.98% as of March 31, 2016. The table below illustrates Horizon’s loan loss reserve ratio composition as of March 31, 2016.

Non- GAAP Allowance for Loan and Lease Loss Detail

As of March 31, 2016

(Dollars in Thousands, Unaudited)

	Horizon
	Legacy			Heartland			Summit			Peoples			Total
Pre-discount loan balance	$	1,454,494		$	20,784		$	73,204		$	179,696		$	1,728,178
Allowance for loan losses (ALLL)		14,236			—			—			—			14,236
Loan discount		N/A			1,345			2,861			3,900			8,106
ALLL+loan discount		14,236			1,345			2,861			3,900			22,342
Loans, net	$	1,440,258		$	19,439		$	70,343		$	175,796		$	1,705,836
ALLL/ pre-discount loan balance		0.98	%		0.00	%		0.00	%		0.00	%		0.82	%
Loan discount/ pre-discount loan balance		N/A			6.47	%		3.91	%		2.17	%		0.47	%
ALLL+loan discount/ pre-discount loan balance		0.98	%		6.47	%		3.91	%		2.17	%		1.29	%

No assurance can be given that Horizon will not, in any particular period, sustain loan losses that are significant in relation to the amount reserved, or that subsequent evaluations of the loan portfolio, in light of factors then prevailing, including economic conditions and management’s ongoing quarterly assessments of the portfolio, will not require increases in the allowance for loan losses. Horizon considers the allowance for loan losses to be appropriate to cover probable incurred losses in the loan portfolio as of March 31, 2016.

Non-performing loans totaled $15.0 million as of March 31, 2016, down from $16.7 million on December 31, 2015. Compared to December 31, 2015, non-performing commercial, real estate and consumer loans decreased by $1.2 million, $264,000 and $201,000, respectively.

At March 31, 2016, loans acquired represented $3.0 million in non-performing, $4.5 million in substandard and $0 in 90 day delinquent loans.

Other Real Estate Owned (OREO) totaled $3.8 million on March 31, 2016 compared to $3.2 million on December 31, 2015 and $749,000 on March 31, 2015.

49

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Non-interest Income

The following is a summary of changes in non-interest income (table dollar amounts in thousands):

	Three Months Ended				2015 - 2016
	March 31		March 31		Amount			Percent
	2016		2015		Change			Change
Non-interest Income
Service charges on deposit accounts	$	1,238	$	999	$	239			23.9	%
Wire transfer fees		121		151		(30	)		-19.9	%
Interchange fees		1,458		1,102		356			32.3	%
Fiduciary activities		1,635		1,297		338			26.1	%
Gain on sale of investment securities		108		124		(16	)		-12.9	%
Gain on sale of mortgage loans		2,114		2,379		(265	)		-11.1	%
Mortgage servicing net of impairment		447		179		268			149.7	%
Increase in cash surrender value of bank owned life insurance		345		258		87			33.7	%
Death benefit on officer life insurance		—		145		(145	)		100.0	%
Other income		398		432		(34	)		-7.9	%
Total non-interest income	$	7,864	$	7,066	$	798			11.3	%

Total non-interest income was $798,000 higher in the first three months of 2016 compared to the same period of 2015. Service charges on deposit accounts increased $239,000, interchange fees increased by $356,000 and fiduciary activities increased $338,000, primarily due to overall company growth and increased volume. Residential mortgage loan activity during the first three months of 2016 generated $2.1 million of income from the gain on sale of mortgage loans, down $265,000 from the same period in 2015. The decrease in the gain on sale of mortgage loans was due to a decrease in total loans sold of $13.7 million from $68.9 million in the first three months of 2015 to $55.2 million in the same period of 2016, partially offset by an increase in the percentage earned on the sale of these loans from 3.18% in the first three months of 2015 to 3.83% in the same period of 2016. Mortgage servicing net of impairment increased by $268,000 during the first three months of 2016 compared to the same period of 2015 primarily due to a larger portfolio of mortgage loans serviced. The Company also recognized a $145,000 death benefit on officer life insurance during the first three months of 2015 that was not realized in the same period of 2016.

Non-interest Expense

The following is a summary of changes in non-interest expense (table dollar amounts in thousands):

	Three Months Ended
	March 31		March 31			Amount			Percent
	2016		2015			Change			Change
Non-interest expense
Salaries	$	6,886	$	5,633		$	1,253			22.2	%
Commission and bonuses		1,075		1,167			(92	)		-7.9	%
Employee benefits		2,104		1,704			400			23.5	%
Net occupancy expenses		1,936		1,551			385			24.8	%
Data processing		1,105		923			182			19.7	%
Professional fees		831		527			304			57.7	%
Outside services and consultants		1,099		626			473			75.6	%
Loan expense		1,195		1,257			(62	)		-4.9	%
FDIC deposit insurance		405		337			68			20.2	%
Other losses		267		(45	)		312			-693.3	%
Other expense		2,844		2,388			456			19.1	%
Total non-interest expense	$	19,747	$	16,068		$	3,679			22.9	%

50

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Total non-interest expenses were $3.7 million higher in the first three months of 2016 compared to the same period of 2015. Salaries increased by $1.3 million and employee benefits increased by $400,000 due to a larger employee base. Net occupancy expense increased $385,000 due to Horizon’s investment in growth markets and the Peoples acquisition. Data processing expenses increased $182,000, professional fees increased by $304,000 and other expenses increased by $456,000 primarily due to company growth. Outside services and consultants expense increased by $473,000 due to the one-time fees associated with the pending Kosciusko and LaPorte Bancorp acquisitions. One-time non-interest expense related to the pending acquisitions totaled $639,000 in the first three months of 2016. Other losses increased by $312,000 due to increased losses related to debit card fraud as well as a recovery that was received in the first quarter of 2015.

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, and borrowing relationships with correspondent banks, including the FHLB. During the three months ended March 31, 2016, cash and cash equivalents decreased by approximately $1.0 million. At March 31, 2016, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $257.5 million in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $253.2 million at December 31, 2015 and $252.9 million at March 31, 2015.

Capital Resources

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2016. Stockholders’ equity totaled $261.4 million as of March 31, 2016, compared to $266.8 million as of December 31, 2015. For the three months ended March 31, 2016, the ratio of average stockholders’ equity to average assets was 10.16% compared to 10.32% for the three months ended December 31, 2015. The decrease in stockholders’ equity during the period was due to the payoff of $12.5 million in funds received through the Small Business Lending Fund with cash from the holding company on February 1, 2016, which was partially offset through the generation of net income, net of dividends declared.

On February 1, 2016, the Company paid off the $12.5 million in funds received through the Small Business Lending Fund with cash from the holding company, thereby ending its participation in the program, pursuant to which it issued preferred stock to the US Treasury. The funds were paid off due to an increase in the dividend cost that would have gone in effect at the end of February 2016. For the three months ending March 31, 2016, the dividend cost was $42,000 or 1.0% annualized and included the acceleration of interest due to the payoff.

Horizon declared common stock dividends in the amount of $0.15 per share during the first three months of 2016 compared to $0.14 per share for the same period of 2015. The dividend payout ratio (dividends as a percent of basic earnings per share) was 33.6% and 24.2% for the first three months of 2016 and 2015, respectively. For additional information regarding dividends, see Horizon’s Annual Report on Form 10-K for 2015.

Use of Non-GAAP Financial Measures

Certain information set forth in this quarterly report on Form 10-Q refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures of the net interest margin and the allowance for loan and lease losses excluding the impact of

51

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

acquisition-related purchase accounting adjustments and net income and diluted earnings per share excluding the impact of one-time costs related to acquisitions, acquisition-related purchase accounting adjustments and other events that are considered to be non-recurring. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items, although these measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure.

Non-GAAP Reconciliation of Net Interest Margin

(Dollar in Thousands)

	Three Months Ended
	March 31			December 31			March 31
	2016			2015			2015
	(Unaudited)						(Unaudited)
Net Interest Margin As Reported
Net interest income	$	19,774		$	20,222		$	16,886
Average interest-earning assets		2,367,250			2,369,301			1,899,870
Net interest income as a percent of average interest-earning assets (“Net Interest Margin”)		3.45	%		3.50	%		3.70	%
Impact of Acquisitions
Interest income from acquisition-related purchase accounting adjustments	$	(547	)	$	(695	)	$	(1,083	)
Excluding Impact of Acquisitions
Net interest income	$	19,227		$	19,527		$	15,803
Average interest-earning assets		2,367,250			2,369,301			1,899,870
Core Net Interest Margin		3.36	%		3.38	%		3.47	%

52

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months ended March 31, 2016

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share

(Dollar in Thousands Except per Share Data, Unaudited)

	Three Months Ended
	March 31
	2016			2015
Non-GAAP Reconciliation of Net Income
Net income as reported	$	5,381		$	5,358
Merger expenses		639			146
Tax effect		(165	)		(51	)
Net income excluding merger expenses		5,855			5,453
Gain on sale of investment securities		(108	)		(124	)
Tax effect		38			43
Net income excluding gain on sale of investment securities		5,785			5,372
Death benefit on bank owned life insurance (“BOLI”)		—			(145	)
Tax effect		—			51
Net income excluding death benefit on BOLI		5,785			5,278
Acquisition-related purchase accounting adjustments (“PAUs”)		(547	)		(1,083	)
Tax effect		191			379
Net income excluding PAUs	$	5,429		$	4,574
Non-GAAP Reconciliation of Diluted Earnings per Share
Diluted earnings per share as reported	$	0.44		$	0.55
Merger expenses		0.05			0.02
Tax effect		(0.01	)		(0.01	)
Diluted earnings per share excluding merger expenses		0.48			0.56
Gain on sale of investment securities		(0.01	)		(0.01	)
Tax effect		0.00			0.00
Net income excluding gain on sale of investment securities		0.48			0.55
Death benefit on BOLI		—			(0.02	)
Tax effect		—			0.01
Net income excluding death benefit on BOLI		0.48			0.54
Acquisition-related PAUs		(0.05	)		(0.11	)
Tax effect		0.02			0.04
Diluted earnings per share excluding PAUs	$	0.45		$	0.47

53

HORIZON BANCORP AND SUBSIDIARIES

Quantitative and Qualitative Disclosures About Market Risk

For the Three Months ended March 31, 2016

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We refer you to Horizon’s 2015 Annual Report on Form 10-K for analysis of its interest rate sensitivity. Horizon believes there have been no significant changes in its interest rate sensitivity since it was reported in its 2015 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation Of Disclosure Controls And Procedures

Based on an evaluation of disclosure controls and procedures as of March 31, 2016, Horizon’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of Horizon’s disclosure controls (as defined in Exchange Act Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on such evaluation, such officers have concluded that, as of the evaluation date, Horizon’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by Horizon in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time specified in Securities and Exchange Commission rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosure.

Changes In Internal Control Over Financial Reporting

Horizon’s management, including its Chief Executive Officer and Chief Financial Officer, also have concluded that during the fiscal quarter ended March 31, 2016, there have been no changes in Horizon’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Horizon’s internal control over financial reporting.

54

HORIZON BANCORP AND SUBSIDIARIES

Part II – Other Information

For the Three Months ended March 31, 2016

ITEM 1. LEGAL PROCEEDINGS

Horizon and its subsidiaries are involved in various legal proceedings incidental to the conduct of their business. Management does not expect that the outcome of any such proceedings will have a material adverse effect on our consolidated financial position or results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes from the factors previously disclosed under Item 1A of Horizon’s Annual Report on Form 10-K for 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

55

HORIZON BANCORP AND SUBSIDIARIES

Part II – Other Information

For the Three Months ended March 31, 2016

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit No.	Description
31.1	Certification of Craig M. Dwight
31.2	Certification of Mark E. Secor
32	Certification of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Interactive Data Files

56

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 thereunto duly authorized.

	HORIZON BANCORP
Dated: May 6, 2016	/s/ Craig M. Dwight
	Craig M. Dwight
	Chief Executive Officer
Dated: May 6, 2016	/s/ Mark E. Secor
	Mark E. Secor
	Chief Financial Officer

57

INDEX TO EXHIBITS

Exhibit No.	Description	Location
Exhibit 31.1	Certification of Craig M. Dwight	Attached
Exhibit 31.2	Certification of Mark E. Secor	Attached
Exhibit 32	Certification of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Attached
Exhibit 101	Interactive Data Files	Attached

58

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CRAIG M. DWIGHT

I, Craig M. Dwight, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Horizon Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 6, 2016	/s/ Craig M. Dwight
	Craig M. Dwight
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF MARK E. SECOR

I, Mark E. Secor, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Horizon Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 6, 2016	/s/ Mark E. Secor
	Mark E. Secor
	Chief Financial Officer

EX-32

EXHIBIT 32

HORIZON BANCORP

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Horizon Bancorp (the “Company”) certifies that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 6, 2016	/s/ Craig M. Dwight
	Craig M. Dwight
	Chief Executive Officer
Dated: May 6, 2016	/s/ Mark E. Secor
	Mark E. Secor
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Horizon Bancorp and will be retained by Horizon Bancorp and furnished to the Securities Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 06, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Trading Symbol	HBNC
Entity Registrant Name	HORIZON BANCORP /IN/
Entity Central Index Key	0000706129
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,983,313

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 47,612	$ 48,650
Investment securities, available for sale	462,476	444,982
Investment securities, held to maturity (fair value of $188,093 and $193,703)	180,291	187,629
Loans held for sale	3,168	7,917
Loans, net of allowance for loan losses of $14,236 and $14,534	1,705,836	1,734,597
Premises and equipment, net	60,190	60,798
Federal Reserve and Federal Home Loan Bank stock	13,823	13,823
Goodwill	49,600	49,600
Other intangible assets	7,095	7,371
Interest receivable	10,476	10,535
Cash value of life insurance	54,849	54,504
Other assets	32,502	31,995
Total assets	2,627,918	2,652,401
Liabilities
Non-interest bearing	343,025	335,955
Interest bearing	1,535,454	1,544,198
Total deposits	1,878,479	1,880,153
Borrowings	430,507	449,347
Subordinated debentures	32,836	32,797
Interest payable	580	507
Other liabilities	24,099	22,765
Total liabilities	$ 2,366,501	$ 2,385,569
Commitments and contingent liabilities
Stockholders' Equity
Common stock, no par value Authorized, 22,500,000 shares Issued, 12,008,497 and 11,995,324 shares Outstanding, 11,983,313 and 11,939,887 shares	$ 0	$ 0
Additional paid-in capital	106,500	106,370
Retained earnings	152,219	148,685
Accumulated other comprehensive income (loss)	2,698	(723)
Total stockholders' equity	261,417	266,832
Total liabilities and stockholders' equity	$ 2,627,918	2,652,401
Series B Preferred Stock [Member]
Stockholders' Equity
Preferred stock, Authorized, 1,000,000 shares Series B shares $.01 par value, $1,000 liquidation value Issued 0 and 12,500 shares		$ 12,500

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Investment securities, held to maturity fair value	$ 188,093	$ 193,703
Allowance for loan losses	$ 14,236	$ 14,534
Common stock, par value
Common stock, shares authorized	22,500,000	22,500,000
Common stock, shares issued	12,008,497	11,995,324
Common stock, shares outstanding	11,983,313	11,939,887
Series B Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, liquidation value	$ 1,000	$ 1,000
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	12,500

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Interest Income
Loans receivable	$ 19,747	$ 16,862
Investment securities
Taxable	2,544	2,154
Tax exempt	1,237	1,077
Total interest income	23,528	20,093
Interest Expense
Deposits	1,491	1,232
Borrowed funds	1,759	1,479
Subordinated debentures	504	496
Total interest expense	3,754	3,207
Net Interest Income	19,774	16,886
Provision for loan losses	532	614
Net Interest Income after Provision for Loan Losses	19,242	16,272
Non-interest Income
Service charges on deposit accounts	1,238	999
Wire transfer fees	121	151
Interchange fees	1,458	1,102
Fiduciary activities	1,635	1,297
Gain on sale of investment securities (includes $108 and $124 for the three months ended March 31, 2016 and 2015, respectively, related to accumulated other comprehensive earnings reclassifications)	108	124
Gain on sale of mortgage loans	2,114	2,379
Mortgage servicing income net of impairment	447	179
Increase in cash value of bank owned life insurance	345	258
Death benefit on bank owned life insurance		145
Other income	398	432
Total non-interest income	7,864	7,066
Non-interest Expense
Salaries and employee benefits	10,065	8,504
Net occupancy expenses	1,936	1,551
Data processing	1,105	923
Professional fees	831	527
Outside services and consultants	1,099	626
Loan expense	1,195	1,257
FDIC insurance expense	405	337
Other losses	267	(45)
Other expense	2,844	2,388
Total non-interest expense	19,747	16,068
Income Before Income Tax	7,359	7,270
Income tax expense (includes $38 and $43 for the three months ended March 31, 2016 and 2015, respectively, related to income tax expense from reclassification items)	1,978	1,912
Net Income	5,381	5,358
Preferred stock dividend	(42)	(31)
Net Income Available to Common Shareholders	$ 5,339	$ 5,327
Basic Earnings Per Share	$ 0.45	$ 0.58
Diluted Earnings Per Share	$ 0.44	$ 0.55

XML

Condensed Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Accumulated other comprehensive earnings reclassifications	$ 108	$ 124
Income tax expense from reclassification	$ 38	$ 43

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 5,381	$ 5,358
Change in fair value of derivative instruments:
Change in fair value of derivative instruments for the period	(562)	(329)
Income tax effect	197	115
Changes from derivative instruments	(365)	(214)
Change in securities:
Unrealized appreciation for the period on AFS securities	5,946	1,714
Amortization from transfer of securities from available-for-sale to held-to-maturity securities	(229)	(114)
Reclassification adjustment for securities gains realized in income	108	124
Income tax effect	(2,039)	(604)
Unrealized gains on securities	3,786	1,120
Other Comprehensive Income, Net of Tax	3,421	906
Comprehensive Income	$ 8,802	$ 6,264

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Beginning Balances at Dec. 31, 2015	$ 266,832	$ 12,500	$ 106,370	$ 148,685	$ (723)
Net income	5,381			5,381
Other comprehensive loss, net of tax	3,421				3,421
Redemption of preferred stock	(12,500)	$ (12,500)
Amortization of unearned compensation	62		62
Stock option expense	68		68
Cash dividends on preferred stock	(42)			(42)
Cash dividends on common stock	(1,805)			(1,805)
Ending Balances at Mar. 31, 2016	$ 261,417		$ 106,500	$ 152,219	$ 2,698

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical)	3 Months Ended
	Mar. 31, 2016 $ / shares
Cash dividends on preferred stock, rate	1.00%
Cash dividends on common stock, per share	$ 0.15
Retained Earnings [Member]
Cash dividends on preferred stock, rate	1.00%
Cash dividends on common stock, per share	$ 0.15

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Activities
Net income	$ 5,381	$ 5,358
Items not requiring (providing) cash
Provision for loan losses	532	614
Depreciation and amortization	1,183	956
Share based compensation	68	59
Mortgage servicing rights net (recovery) impairment	1	414
Premium amortization on securities available for sale, net	1,187	476
Gain on sale of investment securities	(108)	(124)
Gain on sale of mortgage loans	(2,114)	(2,379)
Proceeds from sales of loans	62,022	71,211
Loans originated for sale	(55,162)	(68,918)
Change in cash value of life insurance	(345)	(258)
Gain on sale of other real estate owned	(100)	(263)
Net change in
Interest receivable	59	(185)
Interest payable	73	7
Other assets	(1,730)	5,503
Other liabilities	(1,532)	(1,287)
Net cash provided by operating activities	9,415	11,184
Investing Activities
Purchases of securities available for sale	(33,716)	(30,406)
Proceeds from sales, maturities, calls, and principal repayments of securities available for sale	26,663	25,260
Purchases of securities held to maturity	(8,677)
Proceeds from maturities of securities held to maturity	10,319	735
Net change in loans	29,354	(81,515)
Proceeds on the sale of OREO and repossessed assets	663	1,414
Change in premises and equipment, net	(237)	(2,168)
Net cash provided by (used in) investing activities	24,369	(86,680)
Net change in
Deposits	(1,674)	(17,224)
Borrowings	(18,801)	89,255
Redemption of preferred stock	(12,500)
Dividends paid on common shares	(1,805)	(1,304)
Dividends paid on preferred shares	(42)	(31)
Net cash (used in) provided by financing activities	(34,822)	70,696
Net Change in Cash and Cash Equivalents	(1,038)	(4,800)
Cash and Cash Equivalents, Beginning of Period	48,650	43,476
Cash and Cash Equivalents, End of Period	47,612	38,676
Additional Supplemental Information
Interest paid	3,681	3,199
Income taxes paid	1,250
Transfer of loans to other real estate owned	$ 1,379	$ (772)

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Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Accounting Policies

Note 1 - Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of Horizon Bancorp (“Horizon” or the “Company”) and its wholly-owned subsidiaries, including Horizon Bank, N.A. (“Bank”). All inter-company balances and transactions have been eliminated. The results of operations for the periods ended March 31, 2016 and March 31, 2015 are not necessarily indicative of the operating results for the full year of 2016 or 2015. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of Horizon’s management, necessary to fairly present the financial position, results of operations and cash flows of Horizon for the periods presented. Those adjustments consist only of normal recurring adjustments.

Certain information and note disclosures normally included in Horizon’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form 10-K for 2015 filed with the Securities and Exchange Commission on February 29, 2016. The condensed consolidated balance sheet of Horizon as of December 31, 2015 has been derived from the audited balance sheet as of that date.

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted-average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The following table shows computation of basic and diluted earnings per share.

	Three Months Ended
	March 31
	2016		2015
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	5,381	$	5,358
Less: Preferred stock dividends		42		31
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Basic earnings per share	$	0.45	$	0.58
Diluted earnings per share
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Effect of dilutive securities:
Warrants		—		321,652
Restricted stock		21,033		30,510
Stock options		38,035		41,333
Weighted average shares outstanding		12,008,484		9,609,506
Diluted earnings per share	$	0.44	$	0.55

There were zero dilutive shares for the three months ended March 31, 2016 and 62,445 shares for the three months ended March 31, 2015 which were not included in the computation of diluted earnings per share because they were non-dilutive.

Horizon has share-based employee compensation plans, which are described in the notes to the financial statements included in the December 31, 2015 Annual Report on Form 10-K.

Reclassifications

Certain reclassifications have been made to the 2015 condensed consolidated financial statements to be comparable to 2016. These reclassifications had no effect on net income.

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Acquisitions

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Acquisitions

Note 2 – Acquisitions

On July 1, 2015, Horizon completed the acquisition of Peoples Bancorp, an Indiana corporation (“Peoples”) and Horizon Bank N.A.’s acquisition of Peoples Federal Savings Bank of DeKalb County (“Peoples FSB”), through mergers effective July 1, 2015. Under the terms of the acquisition, the exchange ratio was 0.95 shares of Horizon common stock (the “Exchange Ratio”) and $9.75 in cash for each outstanding share of Peoples common stock. Peoples shareholders owning fewer than 100 shares of common stock received $33.14 in cash for each common share. Peoples shares outstanding at the closing were 2,311,858, and the shares of Horizon common stock issued to Peoples shareholders totaled 2,192,202. Horizon’s stock price was $25.32 per share at the close of business on July 1, 2015. Based upon these numbers, the total value of the consideration for the acquisition was $78.1 million. The Company had approximately $4.9 million in costs related to the acquisition as of December 31, 2015. These expenses were classified in the other expense section of the income statement and primarily located in the salaries and employee benefits, professional services and other expense line items. As a result of the acquisition, the Company will have an opportunity to increase its deposit base and reduce transaction costs. The Company also expects to reduce cost through economies of scale.

Under the purchase method of accounting, the total estimated purchase price is allocated to Peoples net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Peoples acquisition is allocated as follows:

ASSETS
Cash and due from banks	$	205,054
Investment securities, held to maturity		2,038
Commercial		67,435
Residential mortgage		137,331
Consumer		19,593
Total loans		224,359
Premises and equipment, net		5,524
FRB and FHLB stock		2,743
Goodwill		21,424
Core deposit intangible		4,394
Interest receivable		1,279
Cash value of life insurance		13,898
Other assets		4,364
Total assets purchased	$	485,077
Common shares issued	$	55,506
Cash paid		22,641
Total estimated purchase price	$	78,147

LIABILITIES
Deposits
Non-interest bearing	$	28,251
NOW accounts		65,771
Savings and money market		125,176
Certificates of deposits		131,889
Total deposits		351,087
Borrowings		48,884
Interest payable		21
Other liabilities		6,938
Total liabilities assumed	$	406,930

Of the total purchase price of $78.1 million, $4.4 million has been allocated to core deposit intangible. Additionally, $21.0 million has been allocated to goodwill and none of the purchase price is deductible. The core deposit intangible will be amortized over seven years on a straight line basis.

The Company acquired the $228.6 million loan portfolio at a fair value discount of $4.8 million. The performing portion of the portfolio, $223.4 million, had an estimated fair value of $220.0 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-20.

The Company acquired certain loans in the acquisition and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

The loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

Loans with specific credit-related deterioration, since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.

The following table details the acquired loans that are accounted for in accordance with ASC 310-30 as of July 1, 2015.

Contractually required principal and interest at acquisition	$	5,730
Contractual cash flows not expected to be collected (nonaccretable differences)		715
Expected cash flows at acquisition		5,015
Interest component of expected cash flows (accretable discount)		647
Fair value of acquired loans accounted for under ASC 310-30	$	4,368

The results of operations of Peoples and Peoples FSB have been included in the Company’s consolidated financial statements since the acquisition dates. The following schedule includes pro forma results for the periods ended March 31, 2016 and 2015 as if the Peoples and Peoples FSB acquisitions had occurred as of the beginning of the comparable prior reporting period.

	Three Months Ended
	March 31,		March 31,
	2016		2015
Summary of Operations:
Net Interest Income	$	19,774	$	19,865
Provision for Loan Losses		532		644
Net Interest Income after Provision for Loan Losses		19,242		19,221
Non-interest Income		7,864		7,966
Non-Interest Expense		19,747		19,270
Income before Income Taxes		7,359		7,917
Income Tax Expense		1,978		1,939
Net Income		5,381		5,978
Net Income Available to Common Shareholders	$	5,339	$	5,984
Basic Earnings Per Share	$	0.45	$	0.52
Diluted Earnings Per Share	$	0.44	$	0.51

The pro forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits acquired, premises expense for the banking centers acquired and the related income tax effects. The pro forma information for the three months ended March 31, 2015 includes $657,000, net of tax, of operating revenue from Peoples and approximately $95,000, net of tax, of non-recurring expenses directly attributable to the Peoples acquisition.

The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition consummated as of that time, nor is it intended to be a projection of future results.

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Securities

3 Months Ended

Mar. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Securities

Note 3 – Securities

The fair value of securities is as follows:

			Gross		Gross
March 31, 2016	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	15,412	$	60	$	(2	)	$	15,470
State and municipal		69,204		1,840		(2	)		71,042
Federal agency collateralized mortgage obligations		155,687		1,836		(210	)		157,313
Federal agency mortgage-backed pools		215,167		3,648		(239	)		218,576
Corporate notes		32		43		—			75
Total available for sale investment securities	$	455,502	$	7,427	$	(453	)	$	462,476
Held to maturity
State and municipal	$	145,520	$	6,753	$	(188	)	$	152,085
Federal agency collateralized mortgage obligations		8,731		136		—			8,867
Federal agency mortgage-backed pools		26,040		1,149		(48	)		27,141
Total held to maturity investment securities	$	180,291	$	8,038	$	(236	)	$	188,093
			Gross		Gross
December 31, 2015	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	5,940	$	3	$	(17	)	$	5,926
State and municipal		73,829		1,299		(33	)		75,095
Federal agency collateralized mortgage obligations		157,291		567		(1,655	)		156,203
Federal agency mortgage-backed pools		206,970		2,080		(1,346	)		207,704
Corporate notes		32		22		—			54
Total available for sale investment securities	$	444,062	$	3,971	$	(3,051	)	$	444,982
Held to maturity
U.S. Treasury and federal agencies	$	5,859	$	93	$	—		$	5,952
State and municipal		146,331		5,375		(253	)		151,453
Federal agency collateralized mortgage obligations		9,051		27		(124	)		8,954
Federal agency mortgage-backed pools		26,388		1,141		(185	)		27,344
Total held to maturity investment securities	$	187,629	$	6,636	$	(562	)	$	193,703

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. While these securities are held in the available for sale portfolio and held-to-maturity, Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified. At March 31, 2016, no individual investment security had an unrealized loss that was determined to be other-than-temporary.

The unrealized losses on the Company’s investments in securities of state and municipal governmental agencies, U.S. Treasury and federal agencies, federal agency collateralized mortgage obligations, and federal agency mortgage-backed pools were caused by interest rate volatility and not a decline in credit quality. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company expects to recover the amortized cost basis over the term of the securities. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider those investments to be other-than-temporarily impaired at March 31, 2016.

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2016 and December 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	6,786	$	6,816	$	7,192	$	7,232
One to five years		46,633		47,547		38,197		38,894
Five to ten years		15,505		16,047		16,807		17,152
After ten years		15,724		16,178		17,605		17,797
		84,648		86,588		79,801		81,075
Federal agency collateralized mortgage obligations		155,687		157,313		157,291		156,203
Federal agency mortgage-backed pools		215,167		218,575		206,970		207,704
Total available for sale investment securities	$	455,502	$	462,476	$	444,062	$	444,982
Held to maturity
Within one year	$	—	$	—	$	—	$	—
One to five years		15,360		16,126		17,815		18,403
Five to ten years		98,023		102,861		106,167		110,026
After ten years		32,137		33,098		28,208		28,976
		145,520		152,085		152,190		157,405
Federal agency collateralized mortgage obligations		8,731		8,867		9,051		8,954
Federal agency mortgage-backed pools		26,040		27,141		26,388		27,344
Total held to maturity investment securities	$	180,291	$	188,093	$	187,629	$	193,703

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2016	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	1,998	$	(2	)	$	—	$	—		$	1,998	$	(2	)
State and municipal		1,931		(186	)		1,812		(4	)		3,743		(190	)
Federal agency collateralized mortgage obligations		6,684		(54	)		24,739		(156	)		31,423		(210	)
Federal agency mortgage-backed pools		29,691		(239	)		3,833		(48	)		33,524		(287	)
Total temporarily impaired securities	$	40,304	$	(481	)	$	30,384	$	(208	)	$	70,688	$	(689	)
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2015	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	5,468	$	(17	)	$	—	$	—		$	5,468	$	(17	)
State and municipal		17,353		(280	)		446		(6	)		17,799		(286	)
Federal agency collateralized mortgage obligations		89,459		(1,123	)		25,428		(655	)		114,887		(1,779	)
Federal agency mortgage-backed pools		113,244		(1,212	)		16,506		(319	)		129,750		(1,531	)
Total temporarily impaired securities	$	225,524	$	(2,632	)	$	42,380	$	(980	)	$	267,904	$	(3,613	)

	Three Months Ended March 31
	2016		2015
Sales of securities available for sale (Unaudited)
Proceeds	$	7,297	$	13,332
Gross gains		108		147
Gross losses		—		(23	)

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Loans

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

Loans

Note 4 – Loans

	March 31			December 31
	2016			2015
Commercial
Working capital and equipment	$	381,425		$	381,245
Real estate, including agriculture		381,256			391,668
Tax exempt		9,072			8,674
Other		26,001			23,408
Total		797,754			804,995
Real estate
1–4 family		438,391			433,015
Other		4,415			4,129
Total		442,806			437,144
Consumer
Auto		164,600			168,397
Recreation		5,021			5,365
Real estate/home improvement		49,114			47,015
Home equity		125,556			127,113
Unsecured		3,836			4,120
Other		11,509			10,290
Total		359,636			362,300
Mortgage warehouse		119,876			144,692
Total loans		1,720,072			1,749,131
Allowance for loan losses		(14,236	)		(14,534	)
Loans, net	$	1,705,836		$	1,734,597

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy or fluctuations in interest rates. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Real Estate and Consumer

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon’s mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon’s agreement with the mortgage company. Each individual mortgage and the related mortgagee are underwritten by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company. In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan. At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement. Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company. When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on the agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note. Horizon also has the option to request that the mortgage company reaquire an individual mortgage. Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company. Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

The following table shows the recorded investment of individual loan categories.

March 31, 2016	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	264,899		$	611	$	1,205		$	266,715
Non owner occupied real estate		324,824			336		506			325,666
Residential spec homes		7,011			12		17			7,040
Development & spec land loans		19,961			46		18			20,025
Commercial and industrial		179,006			1,101		307			180,414
Total commercial		795,701			2,106		2,053			799,860
Residential mortgage		421,422			1,283		2,364			425,069
Residential construction		19,020			34		—			19,054
Mortgage warehouse		119,876			480		—			120,356
Total real estate		560,318			1,797		2,364			564,479
Direct installment		56,767			160		(360	)		56,567
Direct installment purchased		140			—		—			140
Indirect installment		147,574			304		—			147,878
Home equity		156,160			621		(645	)		156,136
Total consumer		360,641			1,085		(1,005	)		360,721
Total loans		1,716,660			4,988		3,412			1,725,060
Allowance for loan losses		(14,236	)		—		—			(14,236	)
Net loans	$	1,702,424		$	4,988	$	3,412		$	1,710,824

December 31, 2015	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	268,281		$	613	$	1,328		$	270,222
Non owner occupied real estate		326,399			306		497			327,202
Residential spec homes		5,018			9		17			5,044
Development & spec land loans		18,183			33		26			18,242
Commercial and industrial		184,911			1,246		335			186,492
Total commercial		802,792			2,207		2,203			807,202
Residential mortgage		414,924			1,275		2,470			418,669
Residential construction		19,751			34		—			19,785
Mortgage warehouse		144,692			480		—			145,172
Total real estate		579,367			1,789		2,470			583,626
Direct installment		54,341			168		(359	)		54,150
Direct installment purchased		153			—		—			153
Indirect installment		151,523			323		—			151,846
Home equity		157,164			628		(522	)		157,270
Total consumer		363,181			1,119		(881	)		363,419
Total loans		1,745,340			5,115		3,792			1,754,247
Allowance for loan losses		(14,534	)		—		—			(14,534	)
Net loans	$	1,730,806		$	5,115	$	3,792		$	1,739,713

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Accounting for Certain Loans Acquired in a Transfer

3 Months Ended

Mar. 31, 2016

Transfers and Servicing [Abstract]

Accounting for Certain Loans Acquired in a Transfer

Note 5 – Accounting for Certain Loans Acquired in a Transfer

The Company acquired loans in acquisitions and the transferred loans had evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

The carrying amounts of those loans included in the balance sheet amounts of loans receivable are as follows:

	March 31		March 31		March 31		March 31
	2016		2016		2016		2016
	Heartland		Summit		Peoples		Total
Commercial	$	1,282	$	5,494	$	962	$	7,738
Real estate		676		1,199		289		2,164
Consumer		1		9		—		10
Outstanding balance	$	1,959	$	6,702	$	1,251	$	9,912
Carrying amount, net of allowance of $0							$	9,912
	December 31 2015 Heartland		December 31 2015 Summit		December 31 2015 Peoples		December 31 2015 Total
Commercial	$	1,633	$	5,567	$	1,061	$	8,261
Real estate		693		1,216		179		2,088
Consumer		6		35		—		41
Outstanding balance	$	2,332	$	6,818	$	1,240	$	10,390
Carrying amount, net of allowance of $63							$	10,327

Accretable yield, or income expected to be collected for the three months ended March 31, is as follows:

	Three Months Ended March 31, 2016
	Heartland			Summit			Peoples			Total
Balance at January 1	$	795		$	708		$	555		$	2,058
Additions		—			—			—			—
Accretion		(36	)		(55	)		(42	)		(133	)
Reclassification from nonaccretable difference		—			—			—			—
Disposals		(10	)		(4	)		(30	)		(44	)
Balance at March 31	$	749		$	649		$	483		$	1,881
	Three Months Ended March 31, 2015
	Heartland			Summit			Peoples			Total
Balance at January 1	$	2,400		$	1,268		$	—		$	3,668
Additions		—			—			—			—
Accretion		(107	)		(99	)		—			(206	)
Reclassification from nonaccretable difference		—			—			—			—
Disposals		(88	)		(49	)		—			(137	)
Balance at March 31	$	2,205		$	1,120		$	—		$	3,325

During the three months ended March 31, 2016 and 2015, the Company decreased the allowance for loan losses on purchased loans by a recovery to the income statement of $63,000 and $105,000, respectively.

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Allowance for Loan Losses

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

Allowance for Loan Losses

Note 6 – Allowance for Loan Losses

The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior one to five years. Management believes the five-year historical loss experience methodology is appropriate in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. The actual allowance for loan loss activity is provided below.

	Three Months Ended
	March 31
	2016			2015
	(Unaudited)			(Unaudited)
Balance at beginning of the period	$	14,534		$	16,501
Loans charged-off:
Commercial
Owner occupied real estate		147			—
Non owner occupied real estate		299			16
Residential development		—			—
Development & Spec Land Loans		—			—
Commercial and industrial		39			—
Total commercial		485			16
Real estate
Residential mortgage		115			22
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		115			22
Consumer
Direct Installment		58			59
Direct Installment Purchased		—			—
Indirect Installment		276			369
Home Equity		175			200
Total consumer		509			628
Total loans charged-off		1,109			666
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		25			8
Non owner occupied real estate		23			—
Residential development		2			—
Development & Spec Land Loans		—			—
Commercial and industrial		32			19
Total commercial		82			27
Real estate
Residential mortgage		32			2
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		32			2
Consumer
Direct Installment		16			29
Direct Installment Purchased		—			—
Indirect Installment		94			101
Home Equity		55			26
Total consumer		165			156
Total loan recoveries		279			185
Net loans charged-off (recovered)		830			481
Provision charged to operating expense
Commercial		(332	)		(45	)
Real estate		(592	)		933
Consumer		1,456			(274	)
Total provision charged to operating expense		532			614
Balance at the end of the period	$	14,236		$	16,634

Certain loans are individually evaluated for impairment, and the Company’s general practice is to proactively charge down impaired loans to the fair value, which is the appraised value less estimated selling costs, of the underlying collateral.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is 90 days past due, and charges down to the net realizable value other secured loans when they are 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment analysis:

March 31, 2016	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	900	$	—	$	—	$	—	$	900
Collectively evaluated for impairment		5,560		1,794		1,014		4,968		13,336
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending allowance balance	$	6,460	$	1,794	$	1,014	$	4,968	$	14,236
Loans:
Individually evaluated for impairment	$	5,788	$	—	$	—	$	—	$	5,788
Collectively evaluated for impairment		794,072		444,123		120,356		360,721		1,719,272
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending loans balance	$	799,860	$	444,123	$	120,356	$	360,721	$	1,725,060
December 31, 2015	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	202	$	—	$	—	$	—	$	202
Collectively evaluated for impairment		6,739		2,476		1,007		3,856		14,078
Loans acquired with deteriorated credit quality		254		—		—		—		254
Total ending allowance balance	$	7,195	$	2,476	$	1,007	$	3,856	$	14,534
Loans:
Individually evaluated for impairment	$	7,019	$	—	$	—	$	—	$	7,019
Collectively evaluated for impairment		798,454		438,454		145,172		363,419		1,745,499
Loans acquired with deteriorated credit quality		1,729		—		—		—		1,729
Total ending loans balance	$	807,202	$	438,454	$	145,172	$	363,419	$	1,754,247

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Non-performing Loans and Impaired Loans

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Non-performing Loans and Impaired Loans

Note 7 – Non-performing Loans and Impaired Loans

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

March 31, 2016	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non- Performing TDRs		Performing TDRs		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	1,089	$	—	$	—	$	—	$	1,089
Non owner occupied real estate		2,934		—		1,615		60		4,609
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		76		—		—		—		76
Total commercial		4,099		—		1,615		60		5,774
Real estate
Residential mortgage		3,950		1		815		962		5,728
Residential construction		—		—		246		—		246
Mortgage warehouse		—		—		—		—		—
Total real estate		3,950		1		1,061		962		5,974
Consumer
Direct Installment		496		—		—		—		496
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		739		—		—		—		739
Home Equity		1,611		—		181		209		2,001
Total Consumer		2,846		—		181		209		3,236
Total	$	10,895	$	1	$	2,857	$	1,231	$	14,984
December 31, 2015	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non- Performing TDRs		Performing TDRs		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	1,749	$	—	$	—	$	—	$	1,749
Non owner occupied real estate		3,034		—		1,915		60		5,009
Residential development		—		—		—		—		—
Development & Spec Land Loans		71		—		—		—		71
Commercial and industrial		176		—		—		—		176
Total commercial		5,030		—		1,915		60		7,005
Real estate
Residential mortgage		4,354		1		824		808		5,987
Residential construction		—		—		250		—		250
Mortgage warehouse		—		—		—		—		—
Total real estate		4,354		1		1,074		808		6,237
Consumer
Direct Installment		541		—		—		—		541
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		601		27		—		—		628
Home Equity		1,736		—		183		350		2,269
Total Consumer		2,878		27		183		350		3,438
Total	$	12,262	$	28	$	3,172	$	1,218	$	16,680

Included in the $10.9 million of non-accrual loans and the $2.9 million of non-performing TDRs at March 31, 2016 were $2.4 million and $95,000, respectively, of loans acquired for which accretable yield was recognized.

From time to time, the Bank obtains information that may lead management to believe that the collection of payments may be doubtful on a particular loan. In recognition of this, it is management’s policy to convert the loan from an “earning asset” to a non-accruing loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Further, it is management’s policy to place a loan on a non-accrual status when the payment is delinquent in excess of 90 days or the loan has had the accrual of interest discontinued by management. The officer responsible for the loan and the Chief Operations Officer or the senior collection officer must review all loans placed on non-accrual status. Subsequent payments on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal in accordance with the loan terms. The Company requires a period of satisfactory performance of not less than six months before returning a non-accrual loan to accrual status.

A loan becomes impaired when, based on current information, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is classified as impaired, the degree of impairment must be recognized by estimating future cash flows from the debtor. The present value of these cash flows is computed at a discount rate based on the interest rate contained in the loan agreement. However, if a particular loan has a determinable market value for its collateral, the creditor may use that value. Also, if the loan is secured and considered collateral dependent, the creditor may use the fair value of the collateral. Interest income on loans individually classified as impaired is recognized on a cash basis after all past due and current principal payments have been made.

Smaller-balance, homogeneous loans are evaluated for impairment in total. Such loans include residential first mortgage loans secured by 1–4 family residences, residential construction loans, automobile, home equity, second mortgage loans and mortgage warehouse loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When analysis of borrower operating results and financial condition indicate that underlying cash flows of a borrower’s business are not adequate to meet its debt service requirements, the loan is evaluated for impairment. Often this is associated with a delay or shortfall in payments of 30 days or more. Loans are generally moved to non-accrual status when they are 90 days or more past due. These loans are often considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms, including TDRs, are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

The Company’s TDRs are considered impaired loans and included in the allowance methodology using the guidance for impaired loans. At March 31, 2016, the type of concessions the Company has made on restructured loans has been temporary rate reductions and/or reductions in monthly payments and there have been no restructured loans with modified recorded balances. Any modification to a loan that is a concession and is not in the normal course of lending is considered a restructured loan. A restructured loan is returned to accruing status after three consecutive payments but is still reported as TDR unless the loan bears interest at a market rate. As of March 31, 2016, the Company had $4.1 million in TDRs and $1.2 million were performing according to the restructured terms and zero TDRs were returned to accrual status during the first three months of 2016. There was $140,000 of specific reserves allocated to TDRs at March 31, 2016 based on the discounted cash flows or when appropriate the fair value of the collateral.

The following table presents commercial loans individually evaluated for impairment by class of loan:

							Three Months Ending
March 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Loss Allocated		Average Balance in Impaired Loans		Cash/Accrual Interest Income Recognized
With no recorded allowance
Commercial
Owner occupied real estate	$	1,089	$	1,089	$	—	$	1,106	$	—
Non owner occupied real estate		1,851		1,856		—		2,063		1
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		76		76		—		330		—
Total commercial		3,016		3,021		—		3,499		1
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		—		—
Non owner occupied real estate		2,757		2,767		900		2,767		—
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		—		—		—		—		—
Total commercial		2,757		2,767		900		2,767		—
Total	$	5,773	$	5,788	$	900	$	6,266	$	1
							Three Months Ending
March 31, 2015	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Loss Allocated		Average Balance in Impaired Loans		Cash/Accrual Interest Income Recognized
With no recorded allowance
Commercial
Owner occupied real estate	$	1,076	$	1,077	$	—	$	1,329	$	2
Non owner occupied real estate		3,907		3,912		—		4,534		6
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		609		609		—		649		—
Total commercial		5,592		5,598		—		6,512		8
With an allowance recorded
Commercial
Owner occupied real estate		417		417		165		419		—
Non owner occupied real estate		1,590		1,590		184		1,590		—
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		942		942		680		949		—
Total commercial		2,949		2,949		1,029		2,958		—
Total	$	8,541	$	8,547	$	1,029	$	9,470	$	8

The following table presents the payment status by class of loan:

March 31, 2016	30 - 59 Days Past Due			60 - 89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Loans Not Past Due			Total
Commercial
Owner occupied real estate	$	161		$	158		$	—		$	319		$	264,580		$	264,899
Non owner occupied real estate		—			—			—			—			324,824			324,824
Residential development		—			—			—			—			7,011			7,011
Development & Spec Land Loans		—			—			—			—			19,961			19,961
Commercial and industrial		—			20			—			20			178,986			179,006
Total commercial		161			178			—			339			795,362			795,701
Real estate
Residential mortgage		498			—			1			499			420,923			421,422
Residential construction		—			—			—			—			19,020			19,020
Mortgage warehouse		—			—			—			—			119,876			119,876
Total real estate		498			—			1			499			559,819			560,318
Consumer
Direct Installment		51			9			—			60			56,707			56,767
Direct Installment Purchased		—			—			—			—			140			140
Indirect Installment		412			150			—			562			147,012			147,574
Home Equity		672			17			—			689			155,471			156,160
Total consumer		1,135			176			—			1,311			359,330			360,641
Total	$	1,794		$	354		$	1		$	2,149		$	1,714,511		$	1,716,660
Percentage of total loans		0.10	%		0.02	%		0.00	%		0.13	%		99.87	%
December 31, 2015	30 - 59 Days Past Due			60 - 89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Loans Not Past Due			Total
Commercial
Owner occupied real estate	$	481		$	18		$	—		$	499		$	267,782		$	268,281
Non owner occupied real estate		49			—			—			49			326,350			326,399
Residential development		—			—			—			—			5,018			5,018
Development & Spec Land Loans		—			—			—			—			18,183			18,183
Commercial and industrial		32			—			—			32			184,879			184,911
Total commercial		562			18			—			580			802,212			802,792
Real estate
Residential mortgage		1,121			344			1			1,466			413,458			414,924
Residential construction		—			—			—			—			19,751			19,751
Mortgage warehouse		—			—			—			—			144,692			144,692
Total real estate		1,121			344			1			1,466			577,901			579,367
Consumer
Direct Installment		106			10			—			116			54,225			54,341
Direct Installment Purchased		—			—			—			—			153			153
Indirect Installment		1,186			268			27			1,481			150,042			151,523
Home Equity		1,193			203			—			1,396			155,768			157,164
Total consumer		2,485			481			27			2,993			360,188			363,181
Total	$	4,168		$	843		$	28		$	5,039		$	1,740,301		$	1,745,340
Percentage of total loans		0.24	%		0.05	%		0.00	%		0.29	%		99.71	%

The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

Horizon Bank’s processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re-evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the loan grade.

• For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective markets (ranging from $1,000,000 to $2,500,000) are validated by the Loan Committee, which is chaired by the Chief Credit Officer (CCO).

• Commercial loan officers are responsible for reviewing their loan portfolios and report any adverse material change to the CCO or Loan Committee. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the CCO and the Credit Department of the change in the loan grade. Downgrades are accepted immediately by the CCO, however, lenders must present their factual information to either the Loan Committee or the CCO when recommending an upgrade.

• The CCO, or his designee, meets weekly with loan officers to discuss the status of past-due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade.

• Monthly, senior management meets with the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures, other real estate owned and personal property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Loan and Lease Losses.

For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non-accrual, or are classified as a TDR are graded “Substandard.” After being 90 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non-accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass.

Horizon Bank employs a nine-grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below.

Risk Grade 1: Excellent (Pass)

Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans that are guaranteed or otherwise backed by the full faith and credit of the United States government or an agency thereof, such as the Small Business Administration; or loans to any publicly held company with a current long-term debt rating of A or better.

Risk Grade 2: Good (Pass)

Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five-year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit history; or loans to publicly held companies with current long-term debt ratings of Baa or better.

Risk Grade 3: Satisfactory (Pass)

Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered.

Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:

• At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory;

• At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.

• The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.

• During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.

Risk Grade 4 Satisfactory/Monitored:

Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory loans. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank’s minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization.

Risk Grade 4W Management Watch:

Loans in this category are considered to be of acceptable quality, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion.

Risk Grade 5: Special Mention

Loans which possess some credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,” impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength.

Risk Grade 6: Substandard

One or more of the following characteristics may be exhibited in loans classified Substandard:

• Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

• Loans are inadequately protected by the current net worth and paying capacity of the obligor.

• The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

• Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

• Unusual courses of action are needed to maintain a high probability of repayment.

• The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.

• The lender is forced into a subordinated or unsecured position due to flaws in documentation.

• Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.

• The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

• There is a significant deterioration in market conditions to which the borrower is highly vulnerable.

Risk Grade 7: Doubtful

One or more of the following characteristics may be present in loans classified Doubtful:

• Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

• The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

• The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

Risk Grade 8: Loss

Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following table presents loans by credit grades.

March 31, 2016	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	253,513		$	6,118		$	5,268		$	—		$	264,899
Non owner occupied real estate		317,121			2,709			4,994			—			324,824
Residential development		7,011			—			—			—			7,011
Development & Spec Land Loans		19,961			—			—			—			19,961
Commercial and industrial		172,960			1,997			4,049			—			179,006
Total commercial		770,566			10,824			14,311			—			795,701
Real estate
Residential mortgage		415,694			—			5,728			—			421,422
Residential construction		18,774			—			246			—			19,020
Mortgage warehouse		119,876			—			—			—			119,876
Total real estate		554,344			—			5,974			—			560,318
Consumer
Direct Installment		56,271			—			496			—			56,767
Direct Installment Purchased		140			—			—			—			140
Indirect Installment		146,835			—			739			—			147,574
Home Equity		154,159			—			2,001			—			156,160
Total Consumer		357,405			—			3,236			—			360,641
Total	$	1,682,315		$	10,824		$	23,521		$	—		$	1,716,660
Percentage of total loans		98.00	%		0.63	%		1.37	%		0.00	%

December 31, 2015	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	257,181		$	4,954		$	6,146		$	—		$	268,281
Non owner occupied real estate		320,216			585			5,598			—			326,399
Residential development		5,018			—			—			—			5,018
Development & Spec Land Loans		18,112			—			71			—			18,183
Commercial and industrial		180,581			693			3,637			—			184,911
Total commercial		781,108			6,232			15,452			—			802,792
Real estate
Residential mortgage		408,937			—			5,987			—			414,924
Residential construction		19,501			—			250			—			19,751
Mortgage warehouse		144,692			—			—			—			144,692
Total real estate		573,130			—			6,237			—			579,367
Consumer
Direct Installment		53,800			—			541			—			54,341
Direct Installment Purchased		153			—			—			—			153
Indirect Installment		150,895			—			628			—			151,523
Home Equity		154,895			—			2,269			—			157,164
Total Consumer		359,743			—			3,438			—			363,181
Total	$	1,713,981		$	6,232		$	25,127		$	—		$	1,745,340
Percentage of total loans		98.20	%		0.36	%		1.44	%		0.00	%

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Repurchase Agreements

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Repurchase Agreements

Note 8 – Repurchase Agreements

The Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remained under the Bank’s control.

The following table shows repurchase agreements accounted for as secured borrowings (in thousands):

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous			Up to one year		One to three years		Three to five years		Five to ten years			Beyond ten years			Total
Repurchase Agreements and repurchase-to-maturity transactions
Repurchase Agreements	$	55,768		$	—	$	85,000	$	10,000	$	—		$	—		$	150,768
Securities lending transactions
U.S. Treasury and federal agencies	$	4,024		$	—	$	—	$	—	$	—		$	—		$	4,024
Federal agency collateralized mortgage obligations	$	47,004			—		467		192		22,365			32,006			102,034
Federal agency mortgage-backed pools	$	13,650			—		140		1,490		20,277			29,403			64,960
Total		64,678			—		607		1,682		42,642			61,409			171,018
Total borrowings	$	(8,910	)	$	—	$	84,393	$	8,318	$	(42,642	)	$	(61,409	)	$	(20,250	)

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 9 – Derivative Financial Instruments

Cash Flow Hedges

As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flow due to interest rate fluctuations, the Company entered into interest rate swap agreements for a portion of its floating rate debt. The agreements provide for the Company to receive interest from the counterparty at three month LIBOR and to pay interest to the counterparty at a weighted average fixed rate of 6.14% on a notional amount of $30.5 million at March 31, 2016 and December 31, 2015. Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

Management has designated the interest rate swap agreement as a cash flow hedging instrument. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. At March 31, 2016, the Company’s cash flow hedge was effective and is not expected to have a significant impact on the Company’s net income over the next 12 months.

Fair Value Hedges

Fair value hedges are intended to reduce the interest rate risk associated with the underlying hedged item. The Company enters into fixed rate loan agreements as part of its lending policy. To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company has entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings. At March 31, 2016, the Company’s fair value hedges were effective and are not expected to have a significant impact on the Company’s net income over the next 12 months.

The change in fair value of both the hedge instruments and the underlying loan agreements are recorded as gains or losses in interest income. The fair value hedges are considered to be highly effective and any hedge ineffectiveness was deemed not material. The notional amounts of the loan agreements being hedged were $115.1 million at March 31, 2016 and $117.3 million at December 31, 2015.

Other Derivative Instruments

The Company enters into non-hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business. At March 31, 2016, the Company’s fair value of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company’s net income.

The change in fair value of both the forward sale commitments and commitments to originate mortgage loans were recorded and the net gains or losses included in the Company’s gain on sale of loans.

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

	Asset Derivatives			Liability Derivatives
	March 31, 2016			March 31, 2016
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	4,283
Interest rate contracts	Other Assets		4,283	Other liabilities		3,702
Total derivatives designated as hedging instruments			4,283			7,985
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		644	Other liabilities		—
Total derivatives not designated as hedging instruments			644			—
Total derivatives		$	4,927		$	7,985

	Asset Derivatives			Liability Derivatives
	December 31, 2015			December 31, 2015
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	1,782
Interest rate contracts	Other Assets		1,782	Other liabilities		3,141
Total derivatives designated as hedging instruments			1,782			4,923
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		642	Other liabilities		—
Total derivatives not designated as hedging instruments			642			—
Total derivatives		$	2,424		$	4,923

The effect of the derivative instruments on the condensed consolidated statement of income for the three-month periods ending March 31 is as follows:

	Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended March 31
Derivative in cash flow	2016			2015
hedging relationship	(Unaudited)			(Unaudited)
Interest rate contracts	$	(365	)	$	(214	)

FASB Accounting Standards Codification (“ASC”) Topic 820-10-20 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820-10-55 establishes a fair value hierarchy that emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative in fair value	Location of gain (loss)	2016			2015
hedging relationship	recognized on derivative	(Unaudited)			(Unaudited)
Interest rate contracts	Interest income - loans	$	1,478		$	719
Interest rate contracts	Interest income - loans		(1,478	)		(719	)
Total		$	—		$	—

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative not designated as	Location of gain (loss)	2016		2015
hedging relationship	recognized on derivative	(Unaudited)		(Unaudited)
Mortgage contracts	Other income - gain on sale of loans	$	2	$	189

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Disclosures about Fair Value of Assets and Liabilities

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Disclosures about Fair Value of Assets and Liabilities

Note 10 – Disclosures about Fair Value of Assets and Liabilities

The Fair Value Measurements topic of the FASB ASC defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. There are three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2016. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available for sale securities

When quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Treasury and federal agency securities, state and municipal securities, federal agency mortgage obligations and mortgage-backed pools, private-label mortgage-backed pools and corporate notes. Level 2 securities are valued by a third party pricing service commonly used in the banking industry utilizing observable inputs. Observable inputs include dealer quotes, market spreads, cash flow analysis, the U.S. Treasury yield curve, trade execution data, market consensus prepayment spreads and available credit information and the bond’s terms and conditions. The pricing provider utilizes evaluated pricing models that vary based on asset class. These models incorporate available market information including quoted prices of securities with similar characteristics and, because many fixed-income securities do not trade on a daily basis, apply available information through processes such as benchmark curves, benchmarking of like securities, sector grouping, and matrix pricing. In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features.

Hedged loans

Certain fixed rate loans have been converted to variable rate loans by entering into interest rate swap agreements. The fair value of those fixed rate loans is based on discounting the estimated cash flows using interest rates determined by the respective interest rate swap agreement. Loans are classified within Level 2 of the valuation hierarchy based on the unobservable inputs used.

Interest rate swap agreements

The fair value of the Company’s interest rate swap agreements is estimated by a third party using inputs that are primarily unobservable including a yield curve, adjusted for liquidity and credit risk, contracted terms and discounted cash flow analysis, and therefore, are classified within Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:

	Fair Value			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
				(Level 1)		(Level 2)			(Level 3)
March 31, 2016
Available-for-sale securities
U.S. Treasury and federal agencies	$	15,470		$	—	$	15,470		$	—
State and municipal		71,042			—		71,042			—
Federal agency collateralized mortgage obligations		157,313			—		157,313			—
Federal agency mortgage-backed pools		218,576			—		218,576			—
Corporate notes		75			—		75			—
Total available-for-sale securities		462,476			—		462,476			—
Hedged loans		110,837			—		110,837			—
Forward sale commitments		644			—		644			—
Interest rate swap agreements		(7,985	)		—		(7,985	)		—
Commitments to originate loans		—			—		—			—
December 31, 2015
Available-for-sale securities
U.S. Treasury and federal agencies	$	5,926		$	—	$	5,926		$	—
State and municipal		75,095			—		75,095			—
Federal agency collateralized mortgage obligations		156,203			—		156,203			—
Federal agency mortgage-backed pools		207,704			—		207,704			—
Corporate notes		54			—		54			—
Total available-for-sale securities		444,982			—		444,982			—
Hedged loans		115,472			—		115,472			—
Forward sale commitments		642			—		642			—
Interest rate swap agreements		(4,923	)		—		(4,923	)		—

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

	Three Months Ended March 31
Non Interest Income	2016			2015
Total gains and losses from:	(Unaudited)			(Unaudited)
Hedged loans	$	1,478		$	719
Fair value interest rate swap agreements		(1,478	)		(719	)
Derivative loan commitments		2			189
	$	2		$	189

Certain other assets are measured at fair value on a nonrecurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2016
Impaired loans	$	4,873	$	—	$	—	$	4,873
Mortgage servicing rights		9,093		—		—		9,093
December 31, 2015
Impaired loans	$	6,803	$	—	$	—	$	6,803
Mortgage servicing rights		8,874		—		—		8,874

Impaired (collateral dependent): Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Mortgage Servicing Rights (MSRs): MSRs do not trade in an active market with readily observable prices. Accordingly, the fair value of these assets is classified as Level 3. The Company determines the fair value of MSRs using an income approach model based upon the Company’s month-end interest rate curve and prepayment assumptions. The model utilizes assumptions to estimate future net servicing income cash flows, including estimates of time decay, payoffs and changes in valuation inputs and assumptions. The Company reviews the valuation assumptions against this market data for reasonableness and adjusts the assumptions if deemed appropriate. The carrying amount of the MSRs’ fair value due to impairment decreased by $1,000 during the first three months of 2016 and decreased by $76,000 during the first three months of 2015.

The following table presents qualitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill.

	Fair Value at March 31, 2016		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	4,873	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	9,093	Discounted cashflows	Discount rate, Constant prepayment rate, Probability of default	10% - 15% (12%), 4% -  7% (4.6%), 1% - 10% (4.5%)
	Fair Value at December 31, 2015		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,803	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	8,874	Discounted cashflows	Discount rate, Constant prepayment rate, Probability of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 11 – Fair Value of Financial Instruments

The estimated fair value amounts of the Company’s financial instruments were determined using available market information, current pricing information applicable to Horizon and various valuation methodologies. Where market quotations were not available, considerable management judgment was involved in the determination of estimated fair values. Therefore, the estimated fair value of financial instruments shown below may not be representative of the amounts at which they could be exchanged in a current or future transaction. Due to the inherent uncertainties of expected cash flows of financial instruments, the use of alternate valuation assumptions and methods could have a significant effect on the estimated fair value amounts.

The estimated fair values of financial instruments, as shown below, are not intended to reflect the estimated liquidation or market value of Horizon taken as a whole. The disclosed fair value estimates are limited to Horizon’s significant financial instruments at March 31, 2016 and December 31, 2015. These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheet as well as certain off-balance sheet financial instruments. The estimated fair values shown below do not include any valuation of assets and liabilities, which are not financial instruments as defined by the FASB ASC fair value hierarchy.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and Due from Banks — The carrying amounts approximate fair value.

Held-to-Maturity Securities — For debt securities held to maturity, fair values are based on quoted market prices or dealer quotes. For those securities where a quoted market price is not available, carrying amount is a reasonable estimate of fair value based upon comparison with similar securities.

Loans Held for Sale — The carrying amounts approximate fair value.

Net Loans — The fair value of portfolio loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The carrying amounts of loans held for sale approximate fair value.

FHLB and FRB Stock — Fair value of FHLB and FRB stock is based on the price at which it may be resold to the FHLB and FRB.

Interest Receivable/Payable — The carrying amounts approximate fair value.

Deposits — The fair value of demand deposits, savings accounts, interest-bearing checking accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturity.

Borrowings — Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings.

Subordinated Debentures — Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.

Commitments to Extend Credit and Standby Letters of Credit — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. Due to the short-term nature of these agreements, carrying amounts approximate fair value.

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

	March 31, 2016
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	47,612	$	47,612	$	—	$	—
Investment securities, held to maturity		180,291		—		188,093		—
Loans held for sale		3,168		—		—		3,168
Loans excluding loan level hedges, net		1,594,999		—		—		1,584,414
Stock in FHLB and FRB		13,823		—		13,823		—
Interest receivable		10,476		—		10,476		—
Liabilities
Non-interest bearing deposits	$	343,025	$	343,025	$	—	$	—
Interest-bearing deposits		1,535,454		—		1,483,711		—
Borrowings		430,507		—		426,966		—
Subordinated debentures		32,836		—		33,003		—
Interest payable		580		—		580		—
	December 31, 2015
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	48,650	$	48,650	$	—	$	—
Investment securities, held to maturity		187,629		—		193,703		—
Loans held for sale		7,917		—		—		7,917
Loans excluding loan level hedges, net		1,619,125		—		—		1,703,506
Stock in FHLB and FRB		13,823		—		13,823		—
Interest receivable		10,535		—		10,535		—
Liabilities
Non-interest bearing deposits	$	335,955	$	335,955	$	—	$	—
Interest-bearing deposits		1,544,198		—		1,461,314		—
Borrowings		449,347		—		441,547		—
Subordinated debentures		32,797		—		32,996		—
Interest payable		507		—		507		—

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Accumulated Other Comprehensive Income

Note 12 – Accumulated Other Comprehensive Income

	March 31			December 31
	2016			2015
Unrealized gain on securities available for sale	$	6,973		$	920
Unamortized gain on securities held to maturity, previously transferred from AFS		879			1,109
Unrealized loss on derivative instruments		(3,702	)		(3,142	)
Tax effect		(1,452	)		390
Total accumulated other comprehensive income (loss)	$	2,698		$	(723	)

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Regulatory Capital

3 Months Ended

Mar. 31, 2016

Banking and Thrift [Abstract]

Regulatory Capital

Note 13 – Regulatory Capital

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined), or leverage ratio. For March 31, 2016, Basel III rules require the Bank to maintain minimum amounts and ratios of common equity Tier I capital (as defined in the regulation) to risk-weighted assets (as defined). Additionally, under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital

To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based, common equity Tier I risk-based (March 31, 2016) and Tier I leverage ratios as set forth in the table below. As of March 31, 2016 and December 31, 2015, the Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the first quarter of 2016 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies.

Horizon and the Bank’s actual and required capital ratios as of March 31, 2016 and December 31, 2015 were as follows:

						Required For Capital1					Well Capitalized Under Prompt1
	Actual					Adequacy Purposes					Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2016
Total capital1 (to risk-weighted assets)
Consolidated	$	251,434		13.57	%	$	159,902		8.63	%		N/A		N/A
Bank		242,478		13.10	%		159,739		8.63	%	$	185,098		10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated		203,797		12.80	%		105,560		6.63	%		N/A		N/A
Bank		228,242		12.33	%		122,729		6.63	%		148,089		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated		203,797		11.00	%		95,044		5.13	%		N/A		N/A
Bank		228,242		12.33	%		94,962		5.13	%		120,322		6.50	%
Tier 1 capital1 (to average assets)
Consolidated		237,198		9.32	%		101,802		4.00	%		N/A		N/A
Bank		228,242		8.98	%		101,667		4.00	%		127,084		5.00	%
As of December 31, 2015
Total capital1 (to risk-weighted assets)
Consolidated	$	264,452		13.99	%	$	151,223		8.00	%		N/A		N/A
Bank		237,348		12.57	%		151,057		8.00	%	$	188,821		10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated		249,918		13.22	%		113,427		6.00	%		N/A		N/A
Bank		222,814		11.80	%		113,295		6.00	%		151,060		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated		204,350		10.81	%		85,067		4.50	%		N/A		N/A
Bank		222,814		11.80	%		84,971		4.50	%		122,737		6.50	%
Tier 1 capital1 (to average assets)
Consolidated		249,918		9.82	%		101,800		4.00	%		N/A		N/A
Bank		222,814		8.77	%		101,626		4.00	%		127,032		5.00	%

¹  As defined by regulatory agencies

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Preferred Stock Redemption

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Preferred Stock Redemption

Note 14 – Preferred Stock Redemption

On February 1, 2016, Horizon Bancorp (“Horizon”) completed the redemption (the “Redemption”) of all 12,500 outstanding shares of Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “SBLF Preferred Stock”) which were held by the U.S. Department of Treasury and issued pursuant to its Small Business Lending Fund (“SBLF”). The SBLF Preferred Stock was redeemed at its liquidation value of $1,000 per share, plus accrued dividends, for a total Redemption price of $12,510,416.67. Horizon funded the Redemption using cash on hand without borrowing and without a special dividend from its wholly owned banking subsidiary, Horizon Bank, N.A. Following the Redemption, Horizon does not have any shares of its Senior Non-Cumulative Perpetual Preferred Stock, Series B outstanding. The Redemption terminates Horizon’s participation in the SBLF.

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Business Combinations

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Business Combinations

Note 15 – Business Combinations

On February 4, 2016, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of Kosciusko Financial, Inc., an Indiana corporation (“Kosciusko”). Pursuant to the Merger Agreement, Kosciusko would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and Farmers State Bank, a state chartered bank and wholly-owned subsidiary of Kosciusko, would merge with and into a wholly-owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

The boards of directors of each of Horizon and Kosciusko have approved the Merger and the Merger Agreement. The regulatory approvals have been received. Subject to the approval of the Merger by Kosciusko shareholders and other closing conditions, the parties anticipate completing the Merger during the second quarter of 2016.

In connection with the Merger, shareholders of Kosciusko will have the option to receive $81.75 per share in cash or 3.0122 shares of Horizon common stock for each share of Kosciusko’s common stock or a combination thereof, provided the overall shares exchanged consist of 65% stock and 35% cash. Based upon the February 3, 2016, closing price of $23.99 per share of Horizon common stock, the transaction has an implied valuation of approximately $22.5 million.

Subject to certain terms and conditions, the board of directors of Kosciusko has agreed to recommend the approval and adoption of the Merger Agreement to the Kosciusko shareholders and will solicit proxies voting in favor of the Merger from Kosciusko’s shareholders.

The Merger Agreement also provides for certain termination rights for both Horizon and Kosciusko, and further provides that upon termination of the Merger Agreement under certain circumstances, Kosciusko will be obligated to pay Horizon a termination fee.

As of December 31, 2015, Kosciusko reported total assets of approximately $148.2 million, total deposits of approximately $122.8 million and total loans of approximately $106.1 million.

On March 10, 2016, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of LaPorte Bancorp, Inc. (“LaPorte Bancorp”). Pursuant to the Merger Agreement, LaPorte Bancorp would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and The LaPorte Savings Bank, a state chartered bank and wholly-owned subsidiary of LaPorte Bancorp, would merge with and into a wholly-owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

The boards of directors of each of Horizon and LaPorte Bancorp have approved the Merger and the Merger Agreement. Subject to the approval of the Merger by LaPorte Bancorp shareholders, regulatory approvals and other closing conditions, the parties anticipate completing the Merger during the third quarter of 2016.

In connection with the Merger, shareholders of LaPorte Bancorp will have the option to receive $17.50 per share in cash or 0.629 shares of Horizon common stock for each share of LaPorte Bancorp’s common stock or a combination thereof, provided the overall shares exchanged consist of 65% stock and 35% cash. Based upon the March 9, 2016, closing price of $24.21 per share of Horizon common stock, the transaction has an implied valuation of approximately $94.1 million.

Subject to certain terms and conditions, the board of directors of LaPorte Bancorp has agreed to recommend the approval and adoption of the Merger Agreement to the LaPorte Bancorp shareholders and will solicit proxies voting in favor of the Merger from LaPorte Bancorp’s shareholders.

The Merger Agreement also provides for certain termination rights for both Horizon and LaPorte Bancorp, and further provides that upon termination of the Merger Agreement under certain circumstances, LaPorte Bancorp will be obligated to pay Horizon a termination fee.

As of December 31, 2015, LaPorte Bancorp reported total assets of approximately $543.2 million, total deposits of approximately $391.0 million and total loans of approximately $348.5 million.

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Future Accounting Matters

3 Months Ended

Mar. 31, 2016

Accounting Changes and Error Corrections [Abstract]

Future Accounting Matters

Note 16 – Future Accounting Matters

In June 2014, the FASB issued ASU No. 2014-12 “Compensation—Stock Compensation (Topic 718)—Accounting for Share Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 became effective for interim and annual periods beginning after December 15, 2015 and did not have a significant impact on the Company’s financial condition or results of operations.

In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The amendments should be applied through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The Company will be evaluating the impact of adopting this ASU.

In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).”This ASU requires lessees and lessors to classify leases as either capital leases or operating leases. The ASU also requires lessees to recognized assets and liabilities for all leases with the exception of short term leases. There are new disclosure requirements for these leases which will provide users of financial statements with information to understand the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 will become effective for fiscal years beginning after December 31, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of adopting this ASU.

In March 2016, the FASB issued ASU No. 2016-05 “Derivatives and Hedging (Topic 815).” This ASU applies to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815. The ASU clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria as identified in Topic 815 continue to be met. ASU 2016-05 will become effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of adopting this ASU.

In March 2016, the FASB issued ASU No. 2016-09 “Compensation—Stock Compensation (Topic 718)—Improvements to Employee Share-Based Payment Accounting.” This ASU requires all income tax effects of awards to be recognized in teh income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of adopting this ASU.

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General Litigation

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

General Litigation

Note 17 – General Litigation

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results or operation and cash flows of the Company.

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Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted-average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The following table shows computation of basic and diluted earnings per share.

	Three Months Ended
	March 31
	2016		2015
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	5,381	$	5,358
Less: Preferred stock dividends		42		31
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Basic earnings per share	$	0.45	$	0.58
Diluted earnings per share
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Effect of dilutive securities:
Warrants		—		321,652
Restricted stock		21,033		30,510
Stock options		38,035		41,333
Weighted average shares outstanding		12,008,484		9,609,506
Diluted earnings per share	$	0.44	$	0.55

There were zero dilutive shares for the three months ended March 31, 2016 and 62,445 shares for the three months ended March 31, 2015 which were not included in the computation of diluted earnings per share because they were non-dilutive.

Horizon has share-based employee compensation plans, which are described in the notes to the financial statements included in the December 31, 2015 Annual Report on Form 10-K.

Reclassifications

Reclassifications

Certain reclassifications have been made to the 2015 condensed consolidated financial statements to be comparable to 2016. These reclassifications had no effect on net income.

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Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Summary of Computation of Basic and Diluted Earnings Per Share

exercised or converted into common stock. The following table shows computation of basic and diluted earnings per share.

	Three Months Ended
	March 31
	2016		2015
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	5,381	$	5,358
Less: Preferred stock dividends		42		31
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Basic earnings per share	$	0.45	$	0.58
Diluted earnings per share
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Effect of dilutive securities:
Warrants		—		321,652
Restricted stock		21,033		30,510
Stock options		38,035		41,333
Weighted average shares outstanding		12,008,484		9,609,506
Diluted earnings per share	$	0.44	$	0.55

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Acquisitions (Tables) - Peoples Bancorp Inc [Member]

3 Months Ended

Mar. 31, 2016

Schedule of Purchase Price of Assets Acquired and Liabilities Assumed

Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Peoples acquisition is allocated as follows:

ASSETS
Cash and due from banks	$	205,054
Investment securities, held to maturity		2,038
Commercial		67,435
Residential mortgage		137,331
Consumer		19,593
Total loans		224,359
Premises and equipment, net		5,524
FRB and FHLB stock		2,743
Goodwill		21,424
Core deposit intangible		4,394
Interest receivable		1,279
Cash value of life insurance		13,898
Other assets		4,364
Total assets purchased	$	485,077
Common shares issued	$	55,506
Cash paid		22,641
Total estimated purchase price	$	78,147

LIABILITIES
Deposits
Non-interest bearing	$	28,251
NOW accounts		65,771
Savings and money market		125,176
Certificates of deposits		131,889
Total deposits		351,087
Borrowings		48,884
Interest payable		21
Other liabilities		6,938
Total liabilities assumed	$	406,930

Schedule of Acquired Loans Accounted for in Accordance with ASC 310-30

The following table details the acquired loans that are accounted for in accordance with ASC 310-30 as of July 1, 2015.

Contractually required principal and interest at acquisition	$	5,730
Contractual cash flows not expected to be collected (nonaccretable differences)		715
Expected cash flows at acquisition		5,015
Interest component of expected cash flows (accretable discount)		647
Fair value of acquired loans accounted for under ASC 310-30	$	4,368

Pro Forma Result of Comparable Prior Reporting Period

The following schedule includes pro forma results for the periods ended March 31, 2016 and 2015 as if the Peoples and Peoples FSB acquisitions had occurred as of the beginning of the comparable prior reporting period.

	Three Months Ended
	March 31,		March 31,
	2016		2015
Summary of Operations:
Net Interest Income	$	19,774	$	19,865
Provision for Loan Losses		532		644
Net Interest Income after Provision for Loan Losses		19,242		19,221
Non-interest Income		7,864		7,966
Non-Interest Expense		19,747		19,270
Income before Income Taxes		7,359		7,917
Income Tax Expense		1,978		1,939
Net Income		5,381		5,978
Net Income Available to Common Shareholders	$	5,339	$	5,984
Basic Earnings Per Share	$	0.45	$	0.52
Diluted Earnings Per Share	$	0.44	$	0.51

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Securities (Tables)

3 Months Ended

Mar. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Fair Value of Securities

The fair value of securities is as follows:

			Gross		Gross
March 31, 2016	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	15,412	$	60	$	(2	)	$	15,470
State and municipal		69,204		1,840		(2	)		71,042
Federal agency collateralized mortgage obligations		155,687		1,836		(210	)		157,313
Federal agency mortgage-backed pools		215,167		3,648		(239	)		218,576
Corporate notes		32		43		—			75
Total available for sale investment securities	$	455,502	$	7,427	$	(453	)	$	462,476
Held to maturity
State and municipal	$	145,520	$	6,753	$	(188	)	$	152,085
Federal agency collateralized mortgage obligations		8,731		136		—			8,867
Federal agency mortgage-backed pools		26,040		1,149		(48	)		27,141
Total held to maturity investment securities	$	180,291	$	8,038	$	(236	)	$	188,093
			Gross		Gross
December 31, 2015	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	5,940	$	3	$	(17	)	$	5,926
State and municipal		73,829		1,299		(33	)		75,095
Federal agency collateralized mortgage obligations		157,291		567		(1,655	)		156,203
Federal agency mortgage-backed pools		206,970		2,080		(1,346	)		207,704
Corporate notes		32		22		—			54
Total available for sale investment securities	$	444,062	$	3,971	$	(3,051	)	$	444,982
Held to maturity
U.S. Treasury and federal agencies	$	5,859	$	93	$	—		$	5,952
State and municipal		146,331		5,375		(253	)		151,453
Federal agency collateralized mortgage obligations		9,051		27		(124	)		8,954
Federal agency mortgage-backed pools		26,388		1,141		(185	)		27,344
Total held to maturity investment securities	$	187,629	$	6,636	$	(562	)	$	193,703

Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2016 and December 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	6,786	$	6,816	$	7,192	$	7,232
One to five years		46,633		47,547		38,197		38,894
Five to ten years		15,505		16,047		16,807		17,152
After ten years		15,724		16,178		17,605		17,797
		84,648		86,588		79,801		81,075
Federal agency collateralized mortgage obligations		155,687		157,313		157,291		156,203
Federal agency mortgage-backed pools		215,167		218,575		206,970		207,704
Total available for sale investment securities	$	455,502	$	462,476	$	444,062	$	444,982
Held to maturity
Within one year	$	—	$	—	$	—	$	—
One to five years		15,360		16,126		17,815		18,403
Five to ten years		98,023		102,861		106,167		110,026
After ten years		32,137		33,098		28,208		28,976
		145,520		152,085		152,190		157,405
Federal agency collateralized mortgage obligations		8,731		8,867		9,051		8,954
Federal agency mortgage-backed pools		26,040		27,141		26,388		27,344
Total held to maturity investment securities	$	180,291	$	188,093	$	187,629	$	193,703

Gross Unrealized Losses and Fair Value of Company's Investments

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2016	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	1,998	$	(2	)	$	—	$	—		$	1,998	$	(2	)
State and municipal		1,931		(186	)		1,812		(4	)		3,743		(190	)
Federal agency collateralized mortgage obligations		6,684		(54	)		24,739		(156	)		31,423		(210	)
Federal agency mortgage-backed pools		29,691		(239	)		3,833		(48	)		33,524		(287	)
Total temporarily impaired securities	$	40,304	$	(481	)	$	30,384	$	(208	)	$	70,688	$	(689	)
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2015	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	5,468	$	(17	)	$	—	$	—		$	5,468	$	(17	)
State and municipal		17,353		(280	)		446		(6	)		17,799		(286	)
Federal agency collateralized mortgage obligations		89,459		(1,123	)		25,428		(655	)		114,887		(1,779	)
Federal agency mortgage-backed pools		113,244		(1,212	)		16,506		(319	)		129,750		(1,531	)
Total temporarily impaired securities	$	225,524	$	(2,632	)	$	42,380	$	(980	)	$	267,904	$	(3,613	)

Sales of Securities Available for Sale

	Three Months Ended March 31
	2016		2015
Sales of securities available for sale (Unaudited)
Proceeds	$	7,297	$	13,332
Gross gains		108		147
Gross losses		—		(23	)

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Loans (Tables)

3 Months Ended

Mar. 31, 2016

Amounts of Loans

	March 31			December 31
	2016			2015
Commercial
Working capital and equipment	$	381,425		$	381,245
Real estate, including agriculture		381,256			391,668
Tax exempt		9,072			8,674
Other		26,001			23,408
Total		797,754			804,995
Real estate
1–4 family		438,391			433,015
Other		4,415			4,129
Total		442,806			437,144
Consumer
Auto		164,600			168,397
Recreation		5,021			5,365
Real estate/home improvement		49,114			47,015
Home equity		125,556			127,113
Unsecured		3,836			4,120
Other		11,509			10,290
Total		359,636			362,300
Mortgage warehouse		119,876			144,692
Total loans		1,720,072			1,749,131
Allowance for loan losses		(14,236	)		(14,534	)
Loans, net	$	1,705,836		$	1,734,597

Recorded Investment of Individual Loan Categories

The following table shows the recorded investment of individual loan categories.

March 31, 2016	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	264,899		$	611	$	1,205		$	266,715
Non owner occupied real estate		324,824			336		506			325,666
Residential spec homes		7,011			12		17			7,040
Development & spec land loans		19,961			46		18			20,025
Commercial and industrial		179,006			1,101		307			180,414
Total commercial		795,701			2,106		2,053			799,860
Residential mortgage		421,422			1,283		2,364			425,069
Residential construction		19,020			34		—			19,054
Mortgage warehouse		119,876			480		—			120,356
Total real estate		560,318			1,797		2,364			564,479
Direct installment		56,767			160		(360	)		56,567
Direct installment purchased		140			—		—			140
Indirect installment		147,574			304		—			147,878
Home equity		156,160			621		(645	)		156,136
Total consumer		360,641			1,085		(1,005	)		360,721
Total loans		1,716,660			4,988		3,412			1,725,060
Allowance for loan losses		(14,236	)		—		—			(14,236	)
Net loans	$	1,702,424		$	4,988	$	3,412		$	1,710,824

December 31, 2015	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	268,281		$	613	$	1,328		$	270,222
Non owner occupied real estate		326,399			306		497			327,202
Residential spec homes		5,018			9		17			5,044
Development & spec land loans		18,183			33		26			18,242
Commercial and industrial		184,911			1,246		335			186,492
Total commercial		802,792			2,207		2,203			807,202
Residential mortgage		414,924			1,275		2,470			418,669
Residential construction		19,751			34		—			19,785
Mortgage warehouse		144,692			480		—			145,172
Total real estate		579,367			1,789		2,470			583,626
Direct installment		54,341			168		(359	)		54,150
Direct installment purchased		153			—		—			153
Indirect installment		151,523			323		—			151,846
Home equity		157,164			628		(522	)		157,270
Total consumer		363,181			1,119		(881	)		363,419
Total loans		1,745,340			5,115		3,792			1,754,247
Allowance for loan losses		(14,534	)		—		—			(14,534	)
Net loans	$	1,730,806		$	5,115	$	3,792		$	1,739,713

Loans Purchased With Evidence Of Credit Deterioration [Member]

Amounts of Loans

The carrying amounts of those loans included in the balance sheet amounts of loans receivable are as follows:

	March 31		March 31		March 31		March 31
	2016		2016		2016		2016
	Heartland		Summit		Peoples		Total
Commercial	$	1,282	$	5,494	$	962	$	7,738
Real estate		676		1,199		289		2,164
Consumer		1		9		—		10
Outstanding balance	$	1,959	$	6,702	$	1,251	$	9,912
Carrying amount, net of allowance of $0							$	9,912
	December 31 2015 Heartland		December 31 2015 Summit		December 31 2015 Peoples		December 31 2015 Total
Commercial	$	1,633	$	5,567	$	1,061	$	8,261
Real estate		693		1,216		179		2,088
Consumer		6		35		—		41
Outstanding balance	$	2,332	$	6,818	$	1,240	$	10,390
Carrying amount, net of allowance of $63							$	10,327

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Accounting for Certain Loans Acquired in a Transfer (Tables)

3 Months Ended

Mar. 31, 2016

Loans Purchased With Evidence Of Credit Deterioration [Member]

Accretable Yield or Income Expected to be Collected

Accretable yield, or income expected to be collected for the three months ended March 31, is as follows:

	Three Months Ended March 31, 2016
	Heartland			Summit			Peoples			Total
Balance at January 1	$	795		$	708		$	555		$	2,058
Additions		—			—			—			—
Accretion		(36	)		(55	)		(42	)		(133	)
Reclassification from nonaccretable difference		—			—			—			—
Disposals		(10	)		(4	)		(30	)		(44	)
Balance at March 31	$	749		$	649		$	483		$	1,881
	Three Months Ended March 31, 2015
	Heartland			Summit			Peoples			Total
Balance at January 1	$	2,400		$	1,268		$	—		$	3,668
Additions		—			—			—			—
Accretion		(107	)		(99	)		—			(206	)
Reclassification from nonaccretable difference		—			—			—			—
Disposals		(88	)		(49	)		—			(137	)
Balance at March 31	$	2,205		$	1,120		$	—		$	3,325

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Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

Allowance for Loan Losses

The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior one to five years. Management believes the five-year historical loss experience methodology is appropriate in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. The actual allowance for loan loss activity is provided below.

	Three Months Ended
	March 31
	2016			2015
	(Unaudited)			(Unaudited)
Balance at beginning of the period	$	14,534		$	16,501
Loans charged-off:
Commercial
Owner occupied real estate		147			—
Non owner occupied real estate		299			16
Residential development		—			—
Development & Spec Land Loans		—			—
Commercial and industrial		39			—
Total commercial		485			16
Real estate
Residential mortgage		115			22
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		115			22
Consumer
Direct Installment		58			59
Direct Installment Purchased		—			—
Indirect Installment		276			369
Home Equity		175			200
Total consumer		509			628
Total loans charged-off		1,109			666
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		25			8
Non owner occupied real estate		23			—
Residential development		2			—
Development & Spec Land Loans		—			—
Commercial and industrial		32			19
Total commercial		82			27
Real estate
Residential mortgage		32			2
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		32			2
Consumer
Direct Installment		16			29
Direct Installment Purchased		—			—
Indirect Installment		94			101
Home Equity		55			26
Total consumer		165			156
Total loan recoveries		279			185
Net loans charged-off (recovered)		830			481
Provision charged to operating expense
Commercial		(332	)		(45	)
Real estate		(592	)		933
Consumer		1,456			(274	)
Total provision charged to operating expense		532			614
Balance at the end of the period	$	14,236		$	16,634

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment analysis:

March 31, 2016	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	900	$	—	$	—	$	—	$	900
Collectively evaluated for impairment		5,560		1,794		1,014		4,968		13,336
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending allowance balance	$	6,460	$	1,794	$	1,014	$	4,968	$	14,236
Loans:
Individually evaluated for impairment	$	5,788	$	—	$	—	$	—	$	5,788
Collectively evaluated for impairment		794,072		444,123		120,356		360,721		1,719,272
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending loans balance	$	799,860	$	444,123	$	120,356	$	360,721	$	1,725,060
December 31, 2015	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	202	$	—	$	—	$	—	$	202
Collectively evaluated for impairment		6,739		2,476		1,007		3,856		14,078
Loans acquired with deteriorated credit quality		254		—		—		—		254
Total ending allowance balance	$	7,195	$	2,476	$	1,007	$	3,856	$	14,534
Loans:
Individually evaluated for impairment	$	7,019	$	—	$	—	$	—	$	7,019
Collectively evaluated for impairment		798,454		438,454		145,172		363,419		1,745,499
Loans acquired with deteriorated credit quality		1,729		—		—		—		1,729
Total ending loans balance	$	807,202	$	438,454	$	145,172	$	363,419	$	1,754,247

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Non-performing Loans and Impaired Loans (Tables)

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Non-accrual, Loans Past Due Over 90 Days Still on Accrual, and Troubled Debt Restructured ("TDRs") by Class of Loans

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

March 31, 2016	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non- Performing TDRs		Performing TDRs		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	1,089	$	—	$	—	$	—	$	1,089
Non owner occupied real estate		2,934		—		1,615		60		4,609
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		76		—		—		—		76
Total commercial		4,099		—		1,615		60		5,774
Real estate
Residential mortgage		3,950		1		815		962		5,728
Residential construction		—		—		246		—		246
Mortgage warehouse		—		—		—		—		—
Total real estate		3,950		1		1,061		962		5,974
Consumer
Direct Installment		496		—		—		—		496
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		739		—		—		—		739
Home Equity		1,611		—		181		209		2,001
Total Consumer		2,846		—		181		209		3,236
Total	$	10,895	$	1	$	2,857	$	1,231	$	14,984
December 31, 2015	Non-accrual		Loans Past Due Over 90 Days Still Accruing		Non- Performing TDRs		Performing TDRs		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	1,749	$	—	$	—	$	—	$	1,749
Non owner occupied real estate		3,034		—		1,915		60		5,009
Residential development		—		—		—		—		—
Development & Spec Land Loans		71		—		—		—		71
Commercial and industrial		176		—		—		—		176
Total commercial		5,030		—		1,915		60		7,005
Real estate
Residential mortgage		4,354		1		824		808		5,987
Residential construction		—		—		250		—		250
Mortgage warehouse		—		—		—		—		—
Total real estate		4,354		1		1,074		808		6,237
Consumer
Direct Installment		541		—		—		—		541
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		601		27		—		—		628
Home Equity		1,736		—		183		350		2,269
Total Consumer		2,878		27		183		350		3,438
Total	$	12,262	$	28	$	3,172	$	1,218	$	16,680

Commercial Loans Individually Evaluated for Impairment by Class of Loan

The following table presents commercial loans individually evaluated for impairment by class of loan:

							Three Months Ending
March 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Loss Allocated		Average Balance in Impaired Loans		Cash/Accrual Interest Income Recognized
With no recorded allowance
Commercial
Owner occupied real estate	$	1,089	$	1,089	$	—	$	1,106	$	—
Non owner occupied real estate		1,851		1,856		—		2,063		1
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		76		76		—		330		—
Total commercial		3,016		3,021		—		3,499		1
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		—		—
Non owner occupied real estate		2,757		2,767		900		2,767		—
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		—		—		—		—		—
Total commercial		2,757		2,767		900		2,767		—
Total	$	5,773	$	5,788	$	900	$	6,266	$	1
							Three Months Ending
March 31, 2015	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Loss Allocated		Average Balance in Impaired Loans		Cash/Accrual Interest Income Recognized
With no recorded allowance
Commercial
Owner occupied real estate	$	1,076	$	1,077	$	—	$	1,329	$	2
Non owner occupied real estate		3,907		3,912		—		4,534		6
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		609		609		—		649		—
Total commercial		5,592		5,598		—		6,512		8
With an allowance recorded
Commercial
Owner occupied real estate		417		417		165		419		—
Non owner occupied real estate		1,590		1,590		184		1,590		—
Residential development		—		—		—		—		—
Development & Spec Land Loans		—		—		—		—		—
Commercial and industrial		942		942		680		949		—
Total commercial		2,949		2,949		1,029		2,958		—
Total	$	8,541	$	8,547	$	1,029	$	9,470	$	8

Payment Status by Class of Loan

The following table presents the payment status by class of loan:

March 31, 2016	30 - 59 Days Past Due			60 - 89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Loans Not Past Due			Total
Commercial
Owner occupied real estate	$	161		$	158		$	—		$	319		$	264,580		$	264,899
Non owner occupied real estate		—			—			—			—			324,824			324,824
Residential development		—			—			—			—			7,011			7,011
Development & Spec Land Loans		—			—			—			—			19,961			19,961
Commercial and industrial		—			20			—			20			178,986			179,006
Total commercial		161			178			—			339			795,362			795,701
Real estate
Residential mortgage		498			—			1			499			420,923			421,422
Residential construction		—			—			—			—			19,020			19,020
Mortgage warehouse		—			—			—			—			119,876			119,876
Total real estate		498			—			1			499			559,819			560,318
Consumer
Direct Installment		51			9			—			60			56,707			56,767
Direct Installment Purchased		—			—			—			—			140			140
Indirect Installment		412			150			—			562			147,012			147,574
Home Equity		672			17			—			689			155,471			156,160
Total consumer		1,135			176			—			1,311			359,330			360,641
Total	$	1,794		$	354		$	1		$	2,149		$	1,714,511		$	1,716,660
Percentage of total loans		0.10	%		0.02	%		0.00	%		0.13	%		99.87	%
December 31, 2015	30 - 59 Days Past Due			60 - 89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Loans Not Past Due			Total
Commercial
Owner occupied real estate	$	481		$	18		$	—		$	499		$	267,782		$	268,281
Non owner occupied real estate		49			—			—			49			326,350			326,399
Residential development		—			—			—			—			5,018			5,018
Development & Spec Land Loans		—			—			—			—			18,183			18,183
Commercial and industrial		32			—			—			32			184,879			184,911
Total commercial		562			18			—			580			802,212			802,792
Real estate
Residential mortgage		1,121			344			1			1,466			413,458			414,924
Residential construction		—			—			—			—			19,751			19,751
Mortgage warehouse		—			—			—			—			144,692			144,692
Total real estate		1,121			344			1			1,466			577,901			579,367
Consumer
Direct Installment		106			10			—			116			54,225			54,341
Direct Installment Purchased		—			—			—			—			153			153
Indirect Installment		1,186			268			27			1,481			150,042			151,523
Home Equity		1,193			203			—			1,396			155,768			157,164
Total consumer		2,485			481			27			2,993			360,188			363,181
Total	$	4,168		$	843		$	28		$	5,039		$	1,740,301		$	1,745,340
Percentage of total loans		0.24	%		0.05	%		0.00	%		0.29	%		99.71	%

Loans by Credit Grades

The following table presents loans by credit grades.

March 31, 2016	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	253,513		$	6,118		$	5,268		$	—		$	264,899
Non owner occupied real estate		317,121			2,709			4,994			—			324,824
Residential development		7,011			—			—			—			7,011
Development & Spec Land Loans		19,961			—			—			—			19,961
Commercial and industrial		172,960			1,997			4,049			—			179,006
Total commercial		770,566			10,824			14,311			—			795,701
Real estate
Residential mortgage		415,694			—			5,728			—			421,422
Residential construction		18,774			—			246			—			19,020
Mortgage warehouse		119,876			—			—			—			119,876
Total real estate		554,344			—			5,974			—			560,318
Consumer
Direct Installment		56,271			—			496			—			56,767
Direct Installment Purchased		140			—			—			—			140
Indirect Installment		146,835			—			739			—			147,574
Home Equity		154,159			—			2,001			—			156,160
Total Consumer		357,405			—			3,236			—			360,641
Total	$	1,682,315		$	10,824		$	23,521		$	—		$	1,716,660
Percentage of total loans		98.00	%		0.63	%		1.37	%		0.00	%

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Repurchase Agreements (Tables)

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Summary of Repurchase Agreements Accounted as Secured Borrowings

The following table shows repurchase agreements accounted for as secured borrowings (in thousands):

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous			Up to one year		One to three years		Three to five years		Five to ten years			Beyond ten years			Total
Repurchase Agreements and repurchase-to-maturity transactions
Repurchase Agreements	$	55,768		$	—	$	85,000	$	10,000	$	—		$	—		$	150,768
Securities lending transactions
U.S. Treasury and federal agencies	$	4,024		$	—	$	—	$	—	$	—		$	—		$	4,024
Federal agency collateralized mortgage obligations	$	47,004			—		467		192		22,365			32,006			102,034
Federal agency mortgage-backed pools	$	13,650			—		140		1,490		20,277			29,403			64,960
Total		64,678			—		607		1,682		42,642			61,409			171,018
Total borrowings	$	(8,910	)	$	—	$	84,393	$	8,318	$	(42,642	)	$	(61,409	)	$	(20,250	)

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Financial Instruments

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

	Asset Derivatives			Liability Derivatives
	March 31, 2016			March 31, 2016
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	4,283
Interest rate contracts	Other Assets		4,283	Other liabilities		3,702
Total derivatives designated as hedging instruments			4,283			7,985
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		644	Other liabilities		—
Total derivatives not designated as hedging instruments			644			—
Total derivatives		$	4,927		$	7,985

	Asset Derivatives			Liability Derivatives
	December 31, 2015			December 31, 2015
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	1,782
Interest rate contracts	Other Assets		1,782	Other liabilities		3,141
Total derivatives designated as hedging instruments			1,782			4,923
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		642	Other liabilities		—
Total derivatives not designated as hedging instruments			642			—
Total derivatives		$	2,424		$	4,923

Effect of Derivative Instruments on Condensed Consolidated Statement of Income Derivative in Cash Flow Hedging Relationship

The effect of the derivative instruments on the condensed consolidated statement of income for the three-month periods ending March 31 is as follows:

	Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended March 31
Derivative in cash flow	2016			2015
hedging relationship	(Unaudited)			(Unaudited)
Interest rate contracts	$	(365	)	$	(214	)

Effect of Derivative Instruments on Consolidated Statement of Income Derivative in Fair Value Hedging Relationship

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative in fair value	Location of gain (loss)	2016			2015
hedging relationship	recognized on derivative	(Unaudited)			(Unaudited)
Interest rate contracts	Interest income - loans	$	1,478		$	719
Interest rate contracts	Interest income - loans		(1,478	)		(719	)
Total		$	—		$	—

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative not designated as	Location of gain (loss)	2016		2015
hedging relationship	recognized on derivative	(Unaudited)		(Unaudited)
Mortgage contracts	Other income - gain on sale of loans	$	2	$	189

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Disclosures about Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Fair Value Measurements of Assets and Liabilities Recognized on a Recurring Basis

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:

	Fair Value			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
				(Level 1)		(Level 2)			(Level 3)
March 31, 2016
Available-for-sale securities
U.S. Treasury and federal agencies	$	15,470		$	—	$	15,470		$	—
State and municipal		71,042			—		71,042			—
Federal agency collateralized mortgage obligations		157,313			—		157,313			—
Federal agency mortgage-backed pools		218,576			—		218,576			—
Corporate notes		75			—		75			—
Total available-for-sale securities		462,476			—		462,476			—
Hedged loans		110,837			—		110,837			—
Forward sale commitments		644			—		644			—
Interest rate swap agreements		(7,985	)		—		(7,985	)		—
Commitments to originate loans		—			—		—			—
December 31, 2015
Available-for-sale securities
U.S. Treasury and federal agencies	$	5,926		$	—	$	5,926		$	—
State and municipal		75,095			—		75,095			—
Federal agency collateralized mortgage obligations		156,203			—		156,203			—
Federal agency mortgage-backed pools		207,704			—		207,704			—
Corporate notes		54			—		54			—
Total available-for-sale securities		444,982			—		444,982			—
Hedged loans		115,472			—		115,472			—
Forward sale commitments		642			—		642			—
Interest rate swap agreements		(4,923	)		—		(4,923	)		—

Realized Gains and Losses Included in Net Income for Periods in Consolidated Statements of Income

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

	Three Months Ended March 31
Non Interest Income	2016			2015
Total gains and losses from:	(Unaudited)			(Unaudited)
Hedged loans	$	1,478		$	719
Fair value interest rate swap agreements		(1,478	)		(719	)
Derivative loan commitments		2			189
	$	2		$	189

Other Assets Measured at Fair Value on Nonrecurring Basis

Certain other assets are measured at fair value on a nonrecurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2016
Impaired loans	$	4,873	$	—	$	—	$	4,873
Mortgage servicing rights		9,093		—		—		9,093
December 31, 2015
Impaired loans	$	6,803	$	—	$	—	$	6,803
Mortgage servicing rights		8,874		—		—		8,874

Qualitative Information About Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements, Other than Goodwill

The following table presents qualitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill.

	Fair Value at March 31, 2016		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	4,873	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	9,093	Discounted cashflows	Discount rate, Constant prepayment rate, Probability of default	10% - 15% (12%), 4% -  7% (4.6%), 1% - 10% (4.5%)
	Fair Value at December 31, 2015		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,803	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	8,874	Discounted cashflows	Discount rate, Constant prepayment rate, Probability of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Summary of Estimated Fair Values of Financial Instruments

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

	March 31, 2016
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	47,612	$	47,612	$	—	$	—
Investment securities, held to maturity		180,291		—		188,093		—
Loans held for sale		3,168		—		—		3,168
Loans excluding loan level hedges, net		1,594,999		—		—		1,584,414
Stock in FHLB and FRB		13,823		—		13,823		—
Interest receivable		10,476		—		10,476		—
Liabilities
Non-interest bearing deposits	$	343,025	$	343,025	$	—	$	—
Interest-bearing deposits		1,535,454		—		1,483,711		—
Borrowings		430,507		—		426,966		—
Subordinated debentures		32,836		—		33,003		—
Interest payable		580		—		580		—
	December 31, 2015
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	48,650	$	48,650	$	—	$	—
Investment securities, held to maturity		187,629		—		193,703		—
Loans held for sale		7,917		—		—		7,917
Loans excluding loan level hedges, net		1,619,125		—		—		1,703,506
Stock in FHLB and FRB		13,823		—		13,823		—
Interest receivable		10,535		—		10,535		—
Liabilities
Non-interest bearing deposits	$	335,955	$	335,955	$	—	$	—
Interest-bearing deposits		1,544,198		—		1,461,314		—
Borrowings		449,347		—		441,547		—
Subordinated debentures		32,797		—		32,996		—
Interest payable		507		—		507		—

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Components of Accumulated Other Comprehensive Income

	March 31			December 31
	2016			2015
Unrealized gain on securities available for sale	$	6,973		$	920
Unamortized gain on securities held to maturity, previously transferred from AFS		879			1,109
Unrealized loss on derivative instruments		(3,702	)		(3,142	)
Tax effect		(1,452	)		390
Total accumulated other comprehensive income (loss)	$	2,698		$	(723	)

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Regulatory Capital (Tables)

3 Months Ended

Mar. 31, 2016

Banking and Thrift [Abstract]

Summary of Regulatory Capital Requirement

Horizon and the Bank’s actual and required capital ratios as of March 31, 2016 and December 31, 2015 were as follows:

						Required For Capital1					Well Capitalized Under Prompt1
	Actual					Adequacy Purposes					Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2016
Total capital1 (to risk-weighted assets)
Consolidated	$	251,434		13.57	%	$	159,902		8.63	%		N/A		N/A
Bank		242,478		13.10	%		159,739		8.63	%	$	185,098		10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated		203,797		12.80	%		105,560		6.63	%		N/A		N/A
Bank		228,242		12.33	%		122,729		6.63	%		148,089		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated		203,797		11.00	%		95,044		5.13	%		N/A		N/A
Bank		228,242		12.33	%		94,962		5.13	%		120,322		6.50	%
Tier 1 capital1 (to average assets)
Consolidated		237,198		9.32	%		101,802		4.00	%		N/A		N/A
Bank		228,242		8.98	%		101,667		4.00	%		127,084		5.00	%
As of December 31, 2015
Total capital1 (to risk-weighted assets)
Consolidated	$	264,452		13.99	%	$	151,223		8.00	%		N/A		N/A
Bank		237,348		12.57	%		151,057		8.00	%	$	188,821		10.00	%
Tier 1 capital1 (to risk-weighted assets)
Consolidated		249,918		13.22	%		113,427		6.00	%		N/A		N/A
Bank		222,814		11.80	%		113,295		6.00	%		151,060		8.00	%
Common equity tier 1 capital1 (to risk-weighted assets)
Consolidated		204,350		10.81	%		85,067		4.50	%		N/A		N/A
Bank		222,814		11.80	%		84,971		4.50	%		122,737		6.50	%
Tier 1 capital1 (to average assets)
Consolidated		249,918		9.82	%		101,800		4.00	%		N/A		N/A
Bank		222,814		8.77	%		101,626		4.00	%		127,032		5.00	%

¹  As defined by regulatory agencies

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Accounting Policies - Summary of Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Basic earnings per share
Net income	$ 5,381	$ 5,358
Less: Preferred stock dividends	42	31
Net income available to common shareholders	$ 5,339	$ 5,327
Weighted average common shares outstanding	11,949,416	9,216,011
Basic Earnings Per Share	$ 0.45	$ 0.58
Diluted earnings per share
Net income available to common shareholders	$ 5,339	$ 5,327
Weighted average common shares outstanding	11,949,416	9,216,011
Effect of dilutive securities:
Warrants		321,652
Weighted average shares outstanding	12,008,484	9,609,506
Diluted Earnings Per Share	$ 0.44	$ 0.55
Restricted Stock [Member]
Effect of dilutive securities:
Effect of dilutive securities	21,033	30,510
Stock Options [Member]
Effect of dilutive securities:
Effect of dilutive securities	38,035	41,333

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Accounting Policies - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Regulatory Assets [Abstract]
Shares, non-dilutive	0	62,445
Reclassifications effect on net income	$ 0

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Acquisitions - Additional Information (Detail) - USD ($)		3 Months Ended	12 Months Ended
	Jul. 01, 2015	Mar. 31, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Common stock, shares outstanding		11,983,313	11,939,887
Acquisition of goodwill		$ 49,600,000	$ 49,600,000
Peoples Bancorp Inc [Member]
Business Acquisition [Line Items]
Exchange ratio per share	95.00%
Share of common stock outstanding per share	$ 9.75
Common stock, shares outstanding	2,311,858
Common stock issued		2,192,202
Market closing price per share	$ 25.32
Total estimated purchase price	$ 78,147,000
Costs related to the acquisition			$ 4,900,000
Net intangible assets acquired	4,394,000
Acquisition of goodwill	21,424,000
Purchase price of the business assets, portion deductible	0
Core deposit intangible amortization period		7 years
Loan portfolio acquired	228,600,000
Discount on loan portfolio acquired	4,800,000
Performing portion of the loan portfolio acquired	223,400,000
Estimated fair value of performing portion of the loan portfolio	$ 220,000,000
Operating revenue, net of tax		$ 657,000
Non-recurring expense, net of tax		$ 95,000
Peoples Bancorp Inc [Member] | Maximum [Member]
Business Acquisition [Line Items]
Share of common stock outstanding per share	$ 33.14
Number of shares owned	100

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Acquisitions - Schedule of Final Purchase Price of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Jul. 01, 2015
ASSETS
Goodwill	$ 49,600	$ 49,600
Peoples Bancorp Inc [Member]
ASSETS
Cash and due from banks			$ 205,054
Investment securities, held to maturity			2,038
Total loans			224,359
Premises and equipment, net			5,524
FRB and FHLB stock			2,743
Goodwill			21,424
Core deposit intangible			4,394
Interest receivable			1,279
Cash value of life insurance			13,898
Other assets			4,364
Total assets purchased			485,077
Common shares issued			55,506
Cash paid			22,641
Total estimated purchase price			78,147
Deposits
Non-interest bearing			28,251
NOW accounts			65,771
Savings and money market			125,176
Certificates of deposits			131,889
Total deposits			351,087
Borrowings			48,884
Interest payable			21
Other liabilities			6,938
Total liabilities assumed			406,930
Peoples Bancorp Inc [Member] | Residential Mortgage [Member]
ASSETS
Total loans			137,331
Peoples Bancorp Inc [Member] | Commercial [Member]
ASSETS
Total loans			67,435
Peoples Bancorp Inc [Member] | Consumer [Member]
ASSETS
Total loans			$ 19,593

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Acquisitions - Schedule of Acquired Loans Accounted for in Accordance with ASC 310-30 (Detail) - Peoples Bancorp Inc [Member] $ in Thousands	Jul. 01, 2015 USD ($)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required principal and interest at acquisition	$ 5,730
Contractual cash flows not expected to be collected (nonaccretable differences)	715
Expected cash flows at acquisition	5,015
Interest component of expected cash flows (accretable discount)	647
Fair value of acquired loans accounted for under ASC 310-30	$ 4,368

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Acquisitions - Pro Forma Result of Comparable Prior Reporting Period (Detail) - Peoples Bancorp Inc [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Business Acquisition [Line Items]
Net Interest Income	$ 19,774	$ 19,865
Provision for Loan Losses	532	644
Net Interest Income after Provision for Loan Losses	19,242	19,221
Non-interest Income	7,864	7,966
Non-Interest Expense	19,747	19,270
Income before Income Taxes	7,359	7,917
Income Tax Expense	1,978	1,939
Net Income	5,381	5,978
Net Income Available to Common Shareholders	$ 5,339	$ 5,984
Basic Earnings Per Share	$ 0.45	$ 0.52
Diluted Earnings Per Share	$ 0.44	$ 0.51

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Securities - Fair Value of Securities (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	$ 455,502	$ 444,062
Gross Unrealized Gains	7,427	3,971
Held-to-maturity, Amortized Cost	180,291	187,629
Gross Unrealized Losses	(453)	(3,051)
Held-to-maturity, Gross Unrealized Gains	8,038	6,636
Available-for-sale Securities, Fair Value	462,476	444,982
Held-to-maturity, Gross Unrealized Losses	(236)	(562)
Held-to-maturity, Fair Value	188,093	193,703
U.S. Treasury and Federal Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	15,412	5,940
Gross Unrealized Gains	60	3
Held-to-maturity, Amortized Cost		5,859
Gross Unrealized Losses	(2)	(17)
Held-to-maturity, Gross Unrealized Gains		93
Available-for-sale Securities, Fair Value	15,470	5,926
Held-to-maturity, Fair Value		5,952
State and Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	69,204	73,829
Gross Unrealized Gains	1,840	1,299
Held-to-maturity, Amortized Cost	145,520	146,331
Gross Unrealized Losses	(2)	(33)
Held-to-maturity, Gross Unrealized Gains	6,753	5,375
Available-for-sale Securities, Fair Value	71,042	75,095
Held-to-maturity, Gross Unrealized Losses	(188)	(253)
Held-to-maturity, Fair Value	152,085	151,453
Federal Agency Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	155,687	157,291
Gross Unrealized Gains	1,836	567
Held-to-maturity, Amortized Cost	8,731	9,051
Gross Unrealized Losses	(210)	(1,655)
Held-to-maturity, Gross Unrealized Gains	136	27
Available-for-sale Securities, Fair Value	157,313	156,203
Held-to-maturity, Gross Unrealized Losses		(124)
Held-to-maturity, Fair Value	8,867	8,954
Federal Agency Mortgage-backed Pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	215,167	206,970
Gross Unrealized Gains	3,648	2,080
Held-to-maturity, Amortized Cost	26,040	26,388
Gross Unrealized Losses	(239)	(1,346)
Held-to-maturity, Gross Unrealized Gains	1,149	1,141
Available-for-sale Securities, Fair Value	218,576	207,704
Held-to-maturity, Gross Unrealized Losses	(48)	(185)
Held-to-maturity, Fair Value	27,141	27,344
Corporate Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	32	32
Gross Unrealized Gains	43	22
Available-for-sale Securities, Fair Value	$ 75	$ 54

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Securities - Additional Information (Detail)	Mar. 31, 2016 USD ($)
Amortized Cost and Fair Value Debt Securities [Abstract]
Unrealized loss, other than temporary securities	$ 0

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Securities - Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost within one year	$ 6,786	$ 7,192
Amortized cost one to five years	46,633	38,197
Amortized cost for five to ten years	15,505	16,807
Amortized cost for after ten years	15,724	17,605
Total amortized cost	84,648	79,801
Total available for sale investment securities, Amortized Cost	455,502	444,062
Within one year, amortized cost	0	0
One to five years, amortized cost	15,360	17,815
Five to ten years, amortized cost	98,023	106,167
After ten years, amortized cost	32,137	28,208
Total amortized cost	145,520	152,190
Total held to maturity investment securities, amortized cost	180,291	187,629
Fair value within one year	6,816	7,232
Fair value for one to five years	47,547	38,894
Fair value for five to ten years	16,047	17,152
Fair value for after ten years	16,178	17,797
Total fair value	86,588	81,075
Investment securities, available for sale	462,476	444,982
Within one year, fair value	0	0
One to five years, fair value	16,126	18,403
five to ten years, fair value	102,861	110,026
After ten years, fair value	33,098	28,976
Total fair value	152,085	157,405
Held-to-maturity, Fair Value	188,093	193,703
Federal Agency Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	155,687	157,291
Total held to maturity investment securities, amortized cost	8,731	9,051
Investment securities, available for sale	157,313	156,203
Held-to-maturity, Fair Value	8,867	8,954
Federal Agency Mortgage-backed Pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	215,167	206,970
Total held to maturity investment securities, amortized cost	26,040	26,388
Investment securities, available for sale	218,576	207,704
Held-to-maturity, Fair Value	$ 27,141	$ 27,344

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Securities - Gross Unrealized Losses and Fair Value of Company's Investments (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	$ 40,304	$ 225,524
Fair value more than 12 months	30,384	42,380
Total fair value	70,688	267,904
Unrealized losses less than 12 months	(481)	(2,632)
Unrealized losses more than 12 months	(208)	(980)
Total unrealized losses	(689)	(3,613)
U.S. Treasury and Federal Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	1,998	5,468
Total fair value	1,998	5,468
Unrealized losses less than 12 months	(2)	(17)
Total unrealized losses	(2)	(17)
State and Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	1,931	17,353
Fair value more than 12 months	1,812	446
Total fair value	3,743	17,799
Unrealized losses less than 12 months	(186)	(280)
Unrealized losses more than 12 months	(4)	(6)
Total unrealized losses	(190)	(286)
Federal Agency Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	6,684	89,459
Fair value more than 12 months	24,739	25,428
Total fair value	31,423	114,887
Unrealized losses less than 12 months	(54)	(1,123)
Unrealized losses more than 12 months	(156)	(655)
Total unrealized losses	(210)	(1,779)
Federal Agency Mortgage-backed Pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	29,691	113,244
Fair value more than 12 months	3,833	16,506
Total fair value	33,524	129,750
Unrealized losses less than 12 months	(239)	(1,212)
Unrealized losses more than 12 months	(48)	(319)
Total unrealized losses	$ (287)	$ (1,531)

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Securities - Sales of Securities Available for Sale (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Proceeds	$ 7,297	$ 13,332
Gross gains	$ 108	147
Gross losses		$ (23)

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Loans - Amounts of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage warehouse	$ 119,876	$ 144,692
Total loans	1,720,072	1,749,131
Allowance for loan losses	(14,236)	(14,534)	$ (16,634)	$ (16,501)
Loans, net	1,705,836	1,734,597
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	797,754	804,995
Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total	442,806	437,144
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	359,636	362,300
Working Capital and Equipment [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	381,425	381,245
Real Estate Including Agriculture [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	381,256	391,668
Tax Exempt Loans Receivable [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	9,072	8,674
Other Commercial Loans [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	26,001	23,408
1-4 Family [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total	438,391	433,015
Other Real Estate Loans [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total	4,415	4,129
Auto [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	164,600	168,397
Recreation Consumer Loans Receivable [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	5,021	5,365
Real Estate Home Improvement Loans Receivable [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	49,114	47,015
Home Equity Loan [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	125,556	127,113
Unsecured Debt [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	3,836	4,120
Other Consumer Loans [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	$ 11,509	$ 10,290

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Loans - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016
Receivables [Abstract]
Period of loan sold	30 days
Minimum period seldom held	90 days
Mortgage warehousing maximum pay off period	30 days

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Loans - Recorded Investment of Individual Loan Categories (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	$ 1,716,660	$ 1,745,340
Net loans	1,702,424	1,730,806
Interest Due	4,988	5,115
Deferred Fees / (Costs)	3,412	3,792
Recorded Investment	1,725,060	1,754,247
Recorded Investment	1,710,824	1,739,713
Allowance for loan losses	(14,236)	(14,534)	$ (16,634)	$ (16,501)
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	795,701	802,792
Interest Due	2,106	2,207
Deferred Fees / (Costs)	2,053	2,203
Recorded Investment	799,860	807,202
Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	560,318	579,367
Interest Due	1,797	1,789
Deferred Fees / (Costs)	2,364	2,470
Recorded Investment	564,479	583,626
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	360,641	363,181
Interest Due	1,085	1,119
Deferred Fees / (Costs)	(1,005)	(881)
Recorded Investment	360,721	363,419
Owner Occupied Real Estate [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	264,899	268,281
Interest Due	611	613
Deferred Fees / (Costs)	1,205	1,328
Recorded Investment	266,715	270,222
Non Owner Occupied Real Estate [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	324,824	326,399
Interest Due	336	306
Deferred Fees / (Costs)	506	497
Recorded Investment	325,666	327,202
Residential Spec Homes [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	7,011	5,018
Interest Due	12	9
Deferred Fees / (Costs)	17	17
Recorded Investment	7,040	5,044
Development & Spec Land Loans [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	19,961	18,183
Interest Due	46	33
Deferred Fees / (Costs)	18	26
Recorded Investment	20,025	18,242
Commercial and Industrial [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	179,006	184,911
Interest Due	1,101	1,246
Deferred Fees / (Costs)	307	335
Recorded Investment	180,414	186,492
Residential Mortgage [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	421,422	414,924
Interest Due	1,283	1,275
Deferred Fees / (Costs)	2,364	2,470
Recorded Investment	425,069	418,669
Residential Construction [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	19,020	19,751
Interest Due	34	34
Recorded Investment	19,054	19,785
Mortgage Warehousing [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	119,876	144,692
Interest Due	480	480
Recorded Investment	120,356	145,172
Direct Installment [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	56,767	54,341
Interest Due	160	168
Deferred Fees / (Costs)	(360)	(359)
Recorded Investment	56,567	54,150
Direct Installment Purchased [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	140	153
Recorded Investment	140	153
Indirect Installment [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	147,574	151,523
Interest Due	304	323
Recorded Investment	147,878	151,846
Home Equity Loan [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	156,160	157,164
Interest Due	621	628
Deferred Fees / (Costs)	(645)	(522)
Recorded Investment	$ 156,136	$ 157,270

XML

Accounting for Certain Loans Acquired in a Transfer - Amounts of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	$ 1,720,072	$ 1,749,131
Carrying amount, net of allowance	1,702,424	1,730,806
Loans Purchased With Evidence Of Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	9,912	10,390
Carrying amount, net of allowance	9,912	10,327
Loans Purchased With Evidence Of Credit Deterioration [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	7,738	8,261
Loans Purchased With Evidence Of Credit Deterioration [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	2,164	2,088
Loans Purchased With Evidence Of Credit Deterioration [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	10	41
Loans Purchased With Evidence Of Credit Deterioration [Member] | Heartland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	1,959	2,332
Loans Purchased With Evidence Of Credit Deterioration [Member] | Heartland [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	1,282	1,633
Loans Purchased With Evidence Of Credit Deterioration [Member] | Heartland [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	676	693
Loans Purchased With Evidence Of Credit Deterioration [Member] | Heartland [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	1	6
Loans Purchased With Evidence Of Credit Deterioration [Member] | Summit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	6,702	6,818
Loans Purchased With Evidence Of Credit Deterioration [Member] | Summit [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	5,494	5,567
Loans Purchased With Evidence Of Credit Deterioration [Member] | Summit [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	1,199	1,216
Loans Purchased With Evidence Of Credit Deterioration [Member] | Summit [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	9	35
Loans Purchased With Evidence Of Credit Deterioration [Member] | Peoples Bancorp Inc [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	1,251	1,240
Loans Purchased With Evidence Of Credit Deterioration [Member] | Peoples Bancorp Inc [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	962	1,061
Loans Purchased With Evidence Of Credit Deterioration [Member] | Peoples Bancorp Inc [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	$ 289	$ 179

XML

Accounting for Certain Loans Acquired in a Transfer - Amounts of Loans (Parenthetical) (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 14,236	$ 14,534	$ 16,634	$ 16,501
Loans Purchased With Evidence Of Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 0	$ 63

XML

Accounting for Certain Loans Acquired in a Transfer - Accretable Yield or Income Expected to be Collected (Detail) - Loans Purchased With Evidence Of Credit Deterioration [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at January 1	$ 2,058	$ 3,668
Additions	0	0
Accretion	(133)	(206)
Reclassification from nonaccretable difference	0	0
Disposals	(44)	(137)
Balance at March 31	1,881	3,325
Heartland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at January 1	795	2,400
Additions	0	0
Accretion	(36)	(107)
Reclassification from nonaccretable difference	0	0
Disposals	(10)	(88)
Balance at March 31	749	2,205
Summit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at January 1	708	1,268
Additions	0	0
Accretion	(55)	(99)
Reclassification from nonaccretable difference	0	0
Disposals	(4)	(49)
Balance at March 31	649	1,120
Peoples Bancorp Inc [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at January 1	555
Additions	0	0
Accretion	(42)
Reclassification from nonaccretable difference	0	$ 0
Disposals	(30)
Balance at March 31	$ 483

XML

Accounting for Certain Loans Acquired in a Transfer - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Business Acquisition [Line Items]
Total provision charged to operating expense	$ 532,000	$ 614,000
Loans Purchased With Evidence Of Credit Deterioration [Member]
Business Acquisition [Line Items]
Total provision charged to operating expense	$ 63,000	$ 105,000

XML

Allowance for Loan Losses - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016
Scenario, Actual [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Actual loss history experienced by the Company	5 years
Minimum [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Actual loss history experienced by the Company	1 year
Maximum [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Actual loss history experienced by the Company	5 years
Allowance for loan losses charge down family first and junior lien mortgages past due period	180 days
Allowance for loan losses charge down unsecured open end loans past due period	90 days
Allowance for loan losses charge down other secured loans past due period	90 days

XML

Allowance for Loan Losses - Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of the period	$ 14,534	$ 16,501
Total loans charged-off	1,109	666
Total loan recoveries	279	185
Net loans charged-off (recovered)	830	481
Total provision charged to operating expense	532	614
Balance at the end of the period	14,236	16,634
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	485	16
Total loan recoveries	82	27
Total provision charged to operating expense	(332)	(45)
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	147
Total loan recoveries	25	8
Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	299	16
Total loan recoveries	23
Commercial [Member] | Residential Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loan recoveries	2
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	39
Total loan recoveries	32	19
Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	115	22
Total loan recoveries	32	2
Total provision charged to operating expense	(592)	933
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	115	22
Total loan recoveries	32	2
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	509	628
Total loan recoveries	165	156
Total provision charged to operating expense	1,456	(274)
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	58	59
Total loan recoveries	16	29
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	276	369
Total loan recoveries	94	101
Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	175	200
Total loan recoveries	$ 55	$ 26

XML

Allowance for Loan Losses - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Total ending allowance balance	$ 14,236	$ 14,534	$ 16,634	$ 16,501
Loans acquired with deteriorated credit quality	1,705,836	1,734,597
Total ending loans balance	5,788		$ 8,547
Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment	900	202
Allowance For Loan Losses, Collectively evaluated for impairment	13,336	14,078
Total ending allowance balance	14,236	14,534
Allowance for Loan Losses [Member] | Loans and Allowance Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Loans acquired with deteriorated credit quality		254
Commercial [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment	900	202
Allowance For Loan Losses, Collectively evaluated for impairment	5,560	6,739
Total ending allowance balance	6,460	7,195
Commercial [Member] | Allowance for Loan Losses [Member] | Loans and Allowance Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Loans acquired with deteriorated credit quality		254
Real Estate [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Collectively evaluated for impairment	1,794	2,476
Total ending allowance balance	1,794	2,476
Consumer [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Collectively evaluated for impairment	4,968	3,856
Total ending allowance balance	4,968	3,856
Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment	5,788	7,019
Loans: Collectively evaluated for impairment	1,719,272	1,745,499
Total ending loans balance	1,725,060	1,754,247
Loans [Member] | Loans and Allowance Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans acquired with deteriorated credit quality		1,729
Loans [Member] | Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment	5,788	7,019
Loans: Collectively evaluated for impairment	794,072	798,454
Total ending loans balance	799,860	807,202
Loans [Member] | Commercial [Member] | Loans and Allowance Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans acquired with deteriorated credit quality		1,729
Loans [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Collectively evaluated for impairment	444,123	438,454
Total ending loans balance	444,123	438,454
Loans [Member] | Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Collectively evaluated for impairment	360,721	363,419
Total ending loans balance	360,721	363,419
Mortgage Warehousing [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Collectively evaluated for impairment	1,014	1,007
Total ending allowance balance	1,014	1,007
Mortgage Warehousing [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Collectively evaluated for impairment	120,356	145,172
Total ending loans balance	$ 120,356	$ 145,172

XML

Non-performing Loans and Impaired Loans - Non-accrual, Loans Past Due Over 90 Days Still on Accrual, and Troubled Debt Restructured ("TDRs") by Class of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	$ 10,895	$ 12,262
Loans Past Due Over 90 Days Still Accruing	1	28
Non-Performing TDRs	2,857	3,172
Performing TDRs	1,231	1,218
Total Non-Performing Loans	14,984	16,680
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	4,099	5,030
Non-Performing TDRs	1,615	1,915
Performing TDRs	60	60
Total Non-Performing Loans	5,774	7,005
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	1,089	1,749
Total Non-Performing Loans	1,089	1,749
Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	2,934	3,034
Non-Performing TDRs	1,615	1,915
Performing TDRs	60	60
Total Non-Performing Loans	4,609	5,009
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual		71
Total Non-Performing Loans		71
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	76	176
Total Non-Performing Loans	76	176
Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	3,950	4,354
Loans Past Due Over 90 Days Still Accruing	1	1
Non-Performing TDRs	1,061	1,074
Performing TDRs	962	808
Total Non-Performing Loans	5,974	6,237
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	3,950	4,354
Loans Past Due Over 90 Days Still Accruing	1	1
Non-Performing TDRs	815	824
Performing TDRs	962	808
Total Non-Performing Loans	5,728	5,987
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Performing TDRs	246	250
Total Non-Performing Loans	246	250
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	2,846	2,878
Loans Past Due Over 90 Days Still Accruing		27
Non-Performing TDRs	181	183
Performing TDRs	209	350
Total Non-Performing Loans	3,236	3,438
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	496	541
Total Non-Performing Loans	496	541
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	739	601
Loans Past Due Over 90 Days Still Accruing		27
Total Non-Performing Loans	739	628
Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual	1,611	1,736
Non-Performing TDRs	181	183
Performing TDRs	209	350
Total Non-Performing Loans	$ 2,001	$ 2,269

XML

Non-performing Loans and Impaired Loans - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016 USD ($) ConsecutivePayment Contract	Dec. 31, 2015 USD ($)
Financing Receivable, Modifications [Line Items]
Non-accrual loans	$ 10,895,000	$ 12,262,000
Non-performing TDRs	2,900,000
Loans acquired included in non-accrual loans	2,400,000
Loans acquired included in non-performing TDRs	$ 95,000
Loan delinquency period	90 days
Minimum period required for satisfactory performance to return loan from non-accrual to accrual status	6 months
Restructured loans with modified recorded balances	$ 0
Restructured loan returned to accruing status number of Consecutive Payments of loan | ConsecutivePayment	3
Restructured loan reported in TDRs	$ 4,100,000
Specific reserves allocated to troubled debt restructuring	$ 140,000
Number TDRs returned to accrual status | Contract	0
Loans classified as TDR after a period	90 days
Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
Restructured loan	$ 1,200,000
Good Pass [Member]
Financing Receivable, Modifications [Line Items]
Number of consecutive years of profit Unaudited Financial Information for Good Pass Rating	5 years
Number of years of Satisfactory Relationship with bank for Good Pass Rating	5 years
Minimum [Member]
Financing Receivable, Modifications [Line Items]
Loan delinquency period	90 days
Delay or shortfall in payments of loan	30 days
Loans with an aggregate credit exposure	$ 1,000,000
Minimum [Member] | Good Pass [Member]
Financing Receivable, Modifications [Line Items]
Number of consecutive years of profit for Good Pass Rating	3 years
Minimum [Member] | Satisfactory Pass [Member]
Financing Receivable, Modifications [Line Items]
Minimum number of years of Satisfactory Repayment required for Satisfactory Pass Rating	2 years
Maximum [Member]
Financing Receivable, Modifications [Line Items]
Loans with an aggregate credit exposure	$ 2,500,000

XML

Non-performing Loans and Impaired Loans - Commercial Loans Individually Evaluated for Impairment by Class of Loan (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance total	$ 5,773	$ 8,541
Total ending loans balance	5,788	8,547
Allowance For Loan Loss Allocated	900	1,029
Average Balance in Impaired Loans total	6,266	9,470
Cash/Accrual Interest Income Recognized, Total	1	8
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance With no recorded allowance	3,016	5,592
Recorded Investment With no recorded allowance	3,021	5,598
Allowance For Loan Loss Allocated With no recorded allowance	0	0
Average Balance in Impaired Loans With no recorded allowance	3,499	6,512
Cash/Accrual Interest Income Recognized, With no recorded allowance	1	8
Unpaid Principal Balance With an allowance recorded	2,757	2,949
Recorded Investment With an allowance recorded	2,767	2,949
Allowance For Loan Loss Allocated	900	1,029
Average Balance in Impaired Loans With an allowance recorded	2,767	2,958
Cash/Accrual Interest Income Recognized, With an allowance recorded	0	0
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance With no recorded allowance	1,089	1,076
Recorded Investment With no recorded allowance	1,089	1,077
Allowance For Loan Loss Allocated With no recorded allowance	0	0
Average Balance in Impaired Loans With no recorded allowance	1,106	1,329
Cash/Accrual Interest Income Recognized, With no recorded allowance		2
Unpaid Principal Balance With an allowance recorded		417
Recorded Investment With an allowance recorded		417
Allowance For Loan Loss Allocated		165
Average Balance in Impaired Loans With an allowance recorded		419
Cash/Accrual Interest Income Recognized, With an allowance recorded	0	0
Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance With no recorded allowance	1,851	3,907
Recorded Investment With no recorded allowance	1,856	3,912
Allowance For Loan Loss Allocated With no recorded allowance	0	0
Average Balance in Impaired Loans With no recorded allowance	2,063	4,534
Cash/Accrual Interest Income Recognized, With no recorded allowance	1	6
Unpaid Principal Balance With an allowance recorded	2,757	1,590
Recorded Investment With an allowance recorded	2,767	1,590
Allowance For Loan Loss Allocated	900	184
Average Balance in Impaired Loans With an allowance recorded	2,767	1,590
Cash/Accrual Interest Income Recognized, With an allowance recorded	0	0
Commercial [Member] | Residential Development [Member]
Financing Receivable, Impaired [Line Items]
Allowance For Loan Loss Allocated With no recorded allowance	0	0
Cash/Accrual Interest Income Recognized, With an allowance recorded	0	0
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Impaired [Line Items]
Allowance For Loan Loss Allocated With no recorded allowance	0	0
Cash/Accrual Interest Income Recognized, With an allowance recorded	0	0
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance With no recorded allowance	76	609
Recorded Investment With no recorded allowance	76	609
Allowance For Loan Loss Allocated With no recorded allowance	0	0
Average Balance in Impaired Loans With no recorded allowance	330	649
Unpaid Principal Balance With an allowance recorded		942
Recorded Investment With an allowance recorded		942
Allowance For Loan Loss Allocated		680
Average Balance in Impaired Loans With an allowance recorded		949
Cash/Accrual Interest Income Recognized, With an allowance recorded	$ 0	$ 0

XML

Non-performing Loans and Impaired Loans - Payment Status by Class of Loan (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 2,149	$ 5,039
Loans Not Past Due	1,714,511	1,740,301
Total	$ 1,716,660	$ 1,745,340
Total Past Due, Percentage of Total Loans	0.13%	0.29%
Loans Not Past Due, Percentage of Total Loans	99.87%	99.71%
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 339	$ 580
Loans Not Past Due	795,362	802,212
Total	795,701	802,792
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	319	499
Loans Not Past Due	264,580	267,782
Total	264,899	268,281
Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		49
Loans Not Past Due	324,824	326,350
Total	324,824	326,399
Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	7,011	5,018
Total	7,011	5,018
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	19,961	18,183
Total	19,961	18,183
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	20	32
Loans Not Past Due	178,986	184,879
Total	179,006	184,911
Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	499	1,466
Loans Not Past Due	559,819	577,901
Total	560,318	579,367
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	499	1,466
Loans Not Past Due	420,923	413,458
Total	421,422	414,924
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	19,020	19,751
Total	19,020	19,751
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	119,876	144,692
Total	119,876	144,692
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,311	2,993
Loans Not Past Due	359,330	360,188
Total	360,641	363,181
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	60	116
Loans Not Past Due	56,707	54,225
Total	56,767	54,341
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	140	153
Total	140	153
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	562	1,481
Loans Not Past Due	147,012	150,042
Total	147,574	151,523
Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	689	1,396
Loans Not Past Due	155,471	155,768
Total	156,160	157,164
30 - 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1,794	$ 4,168
Total Past Due, Percentage of Total Loans	0.10%	0.24%
30 - 59 Days Past Due [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 161	$ 562
30 - 59 Days Past Due [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	161	481
30 - 59 Days Past Due [Member] | Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		49
30 - 59 Days Past Due [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		32
30 - 59 Days Past Due [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	498	1,121
30 - 59 Days Past Due [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	498	1,121
30 - 59 Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,135	2,485
30 - 59 Days Past Due [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	51	106
30 - 59 Days Past Due [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	412	1,186
30 - 59 Days Past Due [Member] | Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	672	1,193
60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 354	$ 843
Total Past Due, Percentage of Total Loans	0.02%	0.05%
60 - 89 Days Past Due [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 178	$ 18
60 - 89 Days Past Due [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	158	18
60 - 89 Days Past Due [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	20
60 - 89 Days Past Due [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		344
60 - 89 Days Past Due [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		344
60 - 89 Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	176	481
60 - 89 Days Past Due [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	9	10
60 - 89 Days Past Due [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	150	268
60 - 89 Days Past Due [Member] | Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	17	203
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1	$ 28
Total Past Due, Percentage of Total Loans	0.00%	0.00%
Greater than 90 Days Past Due [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1	$ 1
Greater than 90 Days Past Due [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1	1
Greater than 90 Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		27
Greater than 90 Days Past Due [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 27

XML

Non-performing Loans and Impaired Loans - Loans by Credit Grades (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,716,660	$ 1,745,340
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	795,701	802,792
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	264,899	268,281
Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	324,824	326,399
Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	7,011	5,018
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	19,961	18,183
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	179,006	184,911
Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	560,318	579,367
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	421,422	414,924
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	19,020	19,751
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	119,876	144,692
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	360,641	363,181
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	56,767	54,341
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	140	153
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	147,574	151,523
Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	156,160	157,164
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,682,315	$ 1,713,981
Percentage of total loans	98.00%	98.20%
Pass [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 770,566	$ 781,108
Pass [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	253,513	257,181
Pass [Member] | Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	317,121	320,216
Pass [Member] | Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	7,011	5,018
Pass [Member] | Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	19,961	18,112
Pass [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	172,960	180,581
Pass [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	554,344	573,130
Pass [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	415,694	408,937
Pass [Member] | Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	18,774	19,501
Pass [Member] | Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	119,876	144,692
Pass [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	357,405	359,743
Pass [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	56,271	53,800
Pass [Member] | Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	140	153
Pass [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	146,835	150,895
Pass [Member] | Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	154,159	154,895
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 10,824	$ 6,232
Percentage of total loans	0.63%	0.36%
Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 10,824	$ 6,232
Special Mention [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,118	4,954
Special Mention [Member] | Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,709	585
Special Mention [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,997	693
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 23,521	$ 25,127
Percentage of total loans	1.37%	1.44%
Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 14,311	$ 15,452
Substandard [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,268	6,146
Substandard [Member] | Commercial [Member] | Non Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	4,994	5,598
Substandard [Member] | Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total		71
Substandard [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	4,049	3,637
Substandard [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,974	6,237
Substandard [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,728	5,987
Substandard [Member] | Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	246	250
Substandard [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,236	3,438
Substandard [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	496	541
Substandard [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	739	628
Substandard [Member] | Consumer [Member] | Home Equity Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,001	$ 2,269
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Percentage of total loans	0.00%	0.00%

XML

Repurchase Agreements - Summary of Repurchase Agreements Accounted as Secured Borrowings (Detail) $ in Thousands	Mar. 31, 2016 USD ($)
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	$ 150,768
Securities lending transactions, Total	171,018
Total borrowings	(20,250)
U.S. Treasury and Federal Agencies [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	4,024
Federal Agency Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	102,034
Federal Agency Mortgage-backed Pools [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	64,960
Remaining Contractual Maturity of the Agreements, Overnight and Continuous [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	55,768
Securities lending transactions, Total	64,678
Total borrowings	(8,910)
Remaining Contractual Maturity of the Agreements, Overnight and Continuous [Member] | U.S. Treasury and Federal Agencies [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	4,024
Remaining Contractual Maturity of the Agreements, Overnight and Continuous [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	47,004
Remaining Contractual Maturity of the Agreements, Overnight and Continuous [Member] | Federal Agency Mortgage-backed Pools [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	13,650
Remaining Contractual Maturity of the Agreements, One to Three Years [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	85,000
Securities lending transactions, Total	607
Total borrowings	84,393
Remaining Contractual Maturity of the Agreements, One to Three Years [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	467
Remaining Contractual Maturity of the Agreements, One to Three Years [Member] | Federal Agency Mortgage-backed Pools [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	140
Remaining Contractual Maturity of the Agreements, Three to Five Years [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Repurchase Agreements	10,000
Securities lending transactions, Total	1,682
Total borrowings	8,318
Remaining Contractual Maturity of the Agreements, Three to Five Years [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	192
Remaining Contractual Maturity of the Agreements, Three to Five Years [Member] | Federal Agency Mortgage-backed Pools [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	1,490
Remaining Contractual Maturity of the Agreements, Five to Ten Years [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	42,642
Total borrowings	(42,642)
Remaining Contractual Maturity of the Agreements, Five to Ten Years [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	22,365
Remaining Contractual Maturity of the Agreements, Five to Ten Years [Member] | Federal Agency Mortgage-backed Pools [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	20,277
Remaining Contractual Maturity of the Agreements, Beyond Ten Years [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	61,409
Total borrowings	(61,409)
Remaining Contractual Maturity of the Agreements, Beyond Ten Years [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	32,006
Remaining Contractual Maturity of the Agreements, Beyond Ten Years [Member] | Federal Agency Mortgage-backed Pools [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Securities lending transactions, Total	$ 29,403

XML

Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
LIBOR period	3 months
Weighted average fixed rate	6.14%
Recorded period of effectiveness of cash flow hedges on net income	12 months
Recorded period of effectiveness of fair value hedges on net income	12 months
Recorded period of effectiveness of fair value of derivatives on net income	12 months
Cash Flow Hedging [Member]
Derivative [Line Items]
Notional amount of interest	$ 30.5	$ 30.5
Derivative in Fair Value Hedging Relationship [Member]
Derivative [Line Items]
Notional amount of interest	$ 115.1	$ 117.3

XML

Derivative Financial Instruments - Fair Value of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivatives	$ 4,927	$ 2,424
Total Liability Derivatives	7,985	4,923
Derivatives Designated as Hedging Instruments [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivatives	4,283	1,782
Total Liability Derivatives	7,985	4,923
Derivatives Designated as Hedging Instruments [Member] | Interest Rate Contracts One [Member] | Other Liabilities [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Liability Derivatives	4,283	1,782
Derivatives Designated as Hedging Instruments [Member] | Interest Rate Contracts Two [Member] | Other Liabilities [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Liability Derivatives	3,702	3,141
Derivatives Designated as Hedging Instruments [Member] | Interest Rate Contracts Two [Member] | Other Assets [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivatives	4,283	1,782
Derivatives Not Designated as Hedging Instruments [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivatives	644	642
Derivatives Not Designated as Hedging Instruments [Member] | Mortgage Loan Contracts [Member] | Other Assets [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivatives	$ 644	$ 642

XML

Derivative Financial Instruments - Effect of Derivative Instruments on Condensed Consolidated Statement of Income Derivative in Cash Flow Hedging Relationship (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flow Hedging [Member] | Interest Rate Contracts One [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Comprehensive Income on Derivative (Effective Portion)	$ (365)	$ (214)

XML

Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statement of Income Derivative in Fair Value Hedging Relationship (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Interest Income - Loans [Member] | Derivative in Fair Value Hedging Relationship [Member] | Interest Rate Contracts One [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	$ 1,478	$ 719
Interest Income - Loans [Member] | Derivative in Fair Value Hedging Relationship [Member] | Interest Rate Contracts Two [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	(1,478)	(719)
Derivatives Not Designated as Hedging Instruments [Member] | Other income - Gain on Sale of Loans [Member] | Mortgage Loan Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative	$ 2	$ 189

XML

Disclosures about Fair Value of Assets and Liabilities - Fair Value Measurements of Assets and Liabilities Recognized on a Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	$ 462,476	$ 444,982
U.S. Treasury and Federal Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	15,470	5,926
State and Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	71,042	75,095
Federal Agency Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	157,313	156,203
Federal Agency Mortgage-backed Pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	218,576	207,704
Corporate Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	75	54
Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	462,476	444,982
Recurring Basis [Member] | U.S. Treasury and Federal Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	15,470	5,926
Recurring Basis [Member] | State and Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	71,042	75,095
Recurring Basis [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	157,313	156,203
Recurring Basis [Member] | Federal Agency Mortgage-backed Pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	218,576	207,704
Recurring Basis [Member] | Corporate Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	75	54
Recurring Basis [Member] | Hedged Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	110,837	115,472
Recurring Basis [Member] | Forward Sale Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	644	642
Recurring Basis [Member] | Interest Rate Swap [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	(7,985)	(4,923)
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	462,476	444,982
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury and Federal Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	15,470	5,926
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | State and Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	71,042	75,095
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Federal Agency Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	157,313	156,203
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Federal Agency Mortgage-backed Pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	218,576	207,704
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	75	54
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Hedged Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	110,837	115,472
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Forward Sale Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	644	642
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, fair value	$ (7,985)	$ (4,923)

XML

Disclosures about Fair Value of Assets and Liabilities - Realized Gains and Losses included in Net Income for Periods in Consolidated Statements of Income (Detail) - Non Interest Income Total Gains and Losses [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	$ 2	$ 189
Hedged Loans [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	1,478	719
Interest Rate Swap [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	(1,478)	(719)
Derivative Loan Commitments [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Included in net income	$ 2	$ 189

XML

Disclosures about Fair Value of Assets and Liabilities - Other Assets Measured at Fair Value on Nonrecurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Significant Unobservable Inputs (Level 3) [Member] | Impaired Loans [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	$ 4,873	$ 6,803
Significant Unobservable Inputs (Level 3) [Member] | Mortgage Servicing Rights [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	9,093	8,874
Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	4,873	6,803
Fair Value, Measurements, Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	9,093	8,874
Fair Value, Measurements, Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Impaired Loans [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	4,873	6,803
Fair Value, Measurements, Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mortgage Servicing Rights [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	$ 9,093	$ 8,874

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Disclosures about Fair Value of Assets and Liabilities - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Fair Value Disclosures [Abstract]
Reduced in carrying amount of mortgage servicing rights	$ (1,000)	$ (76,000)

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Disclosures about Fair Value of Assets and Liabilities - Qualitative Information about Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements, Other than Goodwill (Detail) - Significant Unobservable Inputs (Level 3) [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Impaired Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 4,873	$ 6,803
Valuation Technique	Collateral based measurement
Impaired loans	Discount to reflect current market conditions and ultimate collectability
Mortgage Servicing Rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 9,093	$ 8,874
Valuation Technique	Discounted cashflows
Impaired loans	Discount rate, Constant prepayment rate, Probability of default
Minimum [Member] | Impaired Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	10.00%	10.00%
Minimum [Member] | Mortgage Servicing Rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	10.00%	10.00%
Constant prepayment rate	4.00%	4.00%
Probability of default	1.00%	1.00%
Maximum [Member] | Impaired Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	15.00%	15.00%
Maximum [Member] | Mortgage Servicing Rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	15.00%	15.00%
Constant prepayment rate	7.00%	7.00%
Probability of default	10.00%	10.00%
Weighted Average [Member] | Impaired Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	12.00%	12.00%
Weighted Average [Member] | Mortgage Servicing Rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	12.00%	12.00%
Constant prepayment rate	4.60%	4.60%
Probability of default	4.50%	4.50%

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Fair Value of Financial Instruments - Summary of Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 47,612	$ 48,650
Investment securities, held to maturity	180,291	187,629
Loans held for sale	3,168	7,917
Loans excluding loan level hedges, net	1,710,824	1,739,713
Stock in FHLB and FRB	13,823	13,823
Interest receivable	10,476	10,535
Liabilities
Non-interest bearing deposits	343,025	335,955
Subordinated debentures	32,836	32,797
Interest payable	580	507
Carrying Amount [Member]
Assets
Cash and due from banks	47,612	48,650
Investment securities, held to maturity	180,291	187,629
Loans held for sale	3,168	7,917
Loans excluding loan level hedges, net	1,594,999	1,619,125
Stock in FHLB and FRB	13,823	13,823
Interest receivable	10,476	10,535
Liabilities
Non-interest bearing deposits	343,025	335,955
Interest-bearing deposits	1,535,454	1,544,198
Borrowings	430,507	449,347
Subordinated debentures	32,836	32,797
Interest payable	580	507
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets
Cash and due from banks	47,612	48,650
Liabilities
Non-interest bearing deposits	343,025	335,955
Significant Other Observable Inputs (Level 2) [Member]
Assets
Investment securities, held to maturity	188,093	193,703
Stock in FHLB and FRB	13,823	13,823
Interest receivable	10,476	10,535
Liabilities
Interest-bearing deposits	1,483,711	1,461,314
Borrowings	426,966	441,547
Subordinated debentures	33,003	32,996
Interest payable	580	507
Significant Unobservable Inputs (Level 3) [Member]
Assets
Loans held for sale	3,168	7,917
Loans excluding loan level hedges, net	$ 1,584,414	$ 1,703,506

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Accumulated Other Comprehensive Income - Components of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Unrealized gain on securities available for sale	$ 6,973	$ 920
Unamortized gain on securities held to maturity, previously transferred from AFS	879	1,109
Unrealized loss on derivative instruments	(3,702)	(3,142)
Tax effect	(1,452)	390
Total accumulated other comprehensive income (loss)	$ 2,698	$ (723)

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Regulatory Capital - Summary of Regulatory Capital Requirement (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule Of Regulatory Assets And Liabilities [Line Items]
Total capital (to risk-weighted assets), Actual, Amount	$ 251,434	$ 264,452
Total capital (to risk-weighted assets), Actual, Ratio	13.57%	13.99%
Total capital (to risk-weighted assets), For capital adequacy purposes, Amount	$ 159,902	$ 151,223
Total capital (to risk-weighted assets), For capital adequacy purposes, Ratio	8.63%	8.00%
Tier 1 capital (to average assets), Actual, Amount	$ 203,797	$ 249,918
Tier 1 capital (to average assets), Actual, Ratio	12.80%	13.22%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 105,560	$ 113,427
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	6.63%	6.00%
Common equity tier 1 capital, Actual Amount	$ 203,797	$ 204,350
Common equity tier 1 capital, Actual Ratio	11.00%	10.81%
Common equity tier 1 capital,For capital adequacy purposes, Amount	$ 95,044	$ 85,067
Common equity tier 1 capital, For capital adequacy purpose, Ratio	5.13%	4.50%
Tier 1 capital (to average assets), Actual, Amount	$ 237,198	$ 249,918
Tier 1 capital (to average assets), Actual, Ratio	9.32%	9.82%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 101,802	$ 101,800
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	4.00%	4.00%
Bank [Member]
Schedule Of Regulatory Assets And Liabilities [Line Items]
Total capital (to risk-weighted assets), Actual, Amount	$ 242,478	$ 237,348
Total capital (to risk-weighted assets), Actual, Ratio	13.10%	12.57%
Total capital (to risk-weighted assets), For capital adequacy purposes, Amount	$ 159,739	$ 151,057
Total capital (to risk-weighted assets), For capital adequacy purposes, Ratio	8.63%	8.00%
Total capital (to risk-weighted assets), For well capitalized purpose, Amount	$ 185,098	$ 188,821
Total capital (to risk-weighted assets), For well capitalized purpose, Ratio	10.00%	10.00%
Tier 1 capital (to average assets), Actual, Amount	$ 228,242	$ 222,814
Tier 1 capital (to average assets), Actual, Ratio	12.33%	11.80%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 122,729	$ 113,295
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	6.63%	6.00%
Tier 1 capital (to average assets), For well capitalized purpose, Amount	$ 148,089	$ 151,060
Tier 1 capital (to average assets), For well capitalized purposes, Ratio	8.00%	8.00%
Common equity tier 1 capital, Actual Amount	$ 228,242	$ 222,814
Common equity tier 1 capital, Actual Ratio	12.33%	11.80%
Common equity tier 1 capital,For capital adequacy purposes, Amount	$ 94,962	$ 84,971
Common equity tier 1 capital, For capital adequacy purpose, Ratio	5.13%	4.50%
Common equity tier 1 capital, For well capitalized purpose, Amount	$ 120,322	$ 122,737
Common equity tier 1 capital, For well capitalized purposes, Ratio	6.50%	6.50%
Tier 1 capital (to average assets), Actual, Amount	$ 228,242	$ 222,814
Tier 1 capital (to average assets), Actual, Ratio	8.98%	8.77%
Tier 1 capital (to average assets), For capital adequacy purposes, Amount	$ 101,667	$ 101,626
Tier 1 capital (to average assets), For capital adequacy purpose, Ratio	4.00%	4.00%
Tier 1 capital (to average assets), For well capitalized purpose, Amount	$ 127,084	$ 127,032
Tier 1 capital (to average assets), For well capitalized purposes, Ratio	5.00%	5.00%

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Preferred Stock Redemption - Additional Information (Detail) - Series B Preferred Stock [Member]	Feb. 01, 2016 USD ($) shares
Schedule of Capitalization, Equity [Line Items]
Preferred stock, shares outstanding | shares	12,500
Preferred stock, liquidation value	$ 1,000
Preferred stock, redemption price	$ 12,510,416.67

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Business Combinations - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	Mar. 10, 2016	Feb. 04, 2016	Mar. 09, 2016	Feb. 03, 2016	Dec. 31, 2015
Kosciusko Financial Inc [Member]
Business Acquisition [Line Items]
Cash paid for each share to Peoples shareholder		$ 81.75
Exchange ratio per share to Peoples shareholder		301.22%
Business combination stock transferred, percentage of consideration		65.00%
Business combination cash transferred, percentage of consideration		35.00%
Market closing price per share				$ 23.99
Estimated transaction value				$ 22.5
Reported total assets of acquiree					$ 148.2
Total deposits held by acquiree					122.8
Total loans of acquiree					106.1
LaPorte Bancorp Inc [Member]
Business Acquisition [Line Items]
Cash paid for each share to Peoples shareholder	$ 17.50
Exchange ratio per share to Peoples shareholder	62.90%
Business combination stock transferred, percentage of consideration	65.00%
Business combination cash transferred, percentage of consideration	35.00%
Market closing price per share			$ 24.21
Estimated transaction value			$ 94.1
Reported total assets of acquiree					543.2
Total deposits held by acquiree					391.0
Total loans of acquiree					$ 348.5