HBNC Horizon Bancorp Inc

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

SUMMARY:

• Net income for the year ending December 31, 2015 was $20.5 million or $1.89 diluted earnings per share.
• Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, net income for the year ending December 31, 2015 increased 29.0% compared to the year ending December 31, 2014 to $23.6 million or $2.18 diluted earnings per share.
• Net interest income for the year ending December 31, 2015 increased 18.7% or $11.8 million compared to the year ending December 31, 2014.
• Non-interest income for the year ending December 31, 2015 increased 15.7% or $4.1 million compared to the year ending December 31, 2014.
• Commercial loans surpassed $800.0 million during the fourth quarter of 2015 for the first time in the Company’s history, ending the year at $805.0 million.
• Total loans, excluding acquired loans, increased 10.7% or $148.0 million during the year ending December 31, 2015.
• Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, return on average assets was 0.99% for the fourth quarter of 2015 and 1.00% for the year ending December 31, 2015.
• Excluding merger expenses, gain on sale of investment securities and the death benefit on bank owned life insurance, return on average common equity was 10.00% for the fourth quarter of 2015 and 11.36% for the year ending December 31, 2015.
• Non-performing loans to total loans as of December 31, 2015 were 0.95% compared to 1.62% as of December 31, 2014.
• Substandard loans totaled $25.2 million as of December 31, 2015, a decrease of $2.5 million from $27.7 million as of December 31, 2014.
• Horizon’s tangible book value per share increased to $16.53 at December 31, 2015, compared to $16.26 at December 31, 2014 and $14.97 at December 31, 2013.
• It is anticipated the entire $12.5 million in funds received through the Small Business Lending Fund will be paid off with cash from the holding company on February 1, 2016.
• Horizon Bank’s capital ratios, including Tier 1 Capital to Average Assets of 8.69% and Total Capital to Risk Weighted Assets of 12.68% as of December 31, 2015, continue to be well above the regulatory standards for well-capitalized banks.

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

  Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share (Dollar in Thousands Except per Share Data)         Three Months Ended Twelve Months Ended December 31 December 31

Non-GAAP Reconciliation of Net Income

2015   2014   2015   2014 (Unaudited)   (Unaudited) Net income as reported $ 6,175 $ 4,948 $ 20,549 $ 18,101 Merger expenses 525 - 4,889 1,335 Tax effect   (182 )     -       (1,585 )     (467 ) Net income excluding merger expenses 6,518 4,948 23,853 18,969   Gain on sale of investment securities (65 ) - (189 ) (988 ) Tax effect   23       -       66       346   Net income excluding gain on sale of investment securities 6,476 4,948 23,730 18,327   Death benefit on bank owned life insurance ("BOLI") - - (145 ) - Tax effect   -       -       51       -   Net income excluding death benefit on BOLI 6,476 4,948 23,636 18,327   Acquisition-related purchase accounting adjustments ("PAUs") (695 ) (719 ) (2,977 ) (2,745 ) Tax effect   243       252       1,042       961   Net income excluding PAUs $ 6,024     $ 4,481     $ 21,701     $ 16,543    

Non-GAAP Reconciliation of Diluted Earnings per Share

Diluted earnings per share as reported $ 0.51 $ 0.51 $ 1.89 $ 1.90 Merger expenses 0.04 - 0.45 0.14 Tax effect   (0.01 )     -       (0.14 )     (0.05 ) Diluted earnings per share excluding merger expenses 0.54 0.51 2.20 1.99   Gain on sale of investment securities (0.01 ) - (0.02 ) (0.10 ) Tax effect   0.00       (0.00 )     0.01       0.04   Net income excluding gain on sale of investment securities 0.53 0.51 2.19 1.92   Death benefit on BOLI - - (0.01 ) - Tax effect   -       -       0.00       -   Net income excluding death benefit on BOLI 0.53 0.51 2.18 1.92   Acquisition-related PAUs (0.05 ) (0.07 ) (0.28 ) (0.29 ) Tax effect   0.02       0.03       0.10       0.10   Diluted earnings per share excluding PAUs $ 0.50     $ 0.46     $ 2.00     $ 1.74    

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

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

  Loan Growth by Type Three Months Ended December 31, 2015 (Dollars in Thousands, Unaudited)           Annualized December 31 September 30 Amount Percent Percent 2015   2015   Change   Change   Change Commercial loans $ 804,995 $ 795,271 $ 9,724 1.2 % 4.9 % Residential mortgage loans 437,144 430,946 6,198 1.4 % 5.7 % Consumer loans   362,300     361,298     1,002 0.3 % 1.1 % Subtotal 1,604,439 1,587,515 16,924 1.1 % 4.2 % Held for sale loans 7,917 5,583 2,334 41.8 % 165.9 % Mortgage warehouse loans   144,692     138,974     5,718 4.1 % 16.3 % Total loans $ 1,757,048   $ 1,732,072   $ 24,976 1.4 % 5.7 %   Loan Growth by Type, Excluding Acquired Loans Twelve Months Ended December 31, 2015 (Dollars in Thousands)           Excluding Acquired Loans Acquired   December 31 December 31 Amount Peoples Amount Percent 2015 2014 Change Loans Change Change     (Unaudited)                     Commercial loans $ 804,995 $ 674,314 $ 130,681 $ (67,435 ) $ 63,246 9.4 % Residential mortgage loans 437,144 254,625 182,519 (137,331 ) 45,188 17.7 % Consumer loans   362,300     320,459     41,841     (19,593 )     22,248 6.9 % Subtotal 1,604,439 1,249,398 355,041 (224,359 ) 130,682 10.5 % Held for sale loans 7,917 6,143 1,774 - 1,774 28.9 % Mortgage warehouse loans   144,692     129,156     15,536     -       15,536 12.0 % Total loans $ 1,757,048   $ 1,384,697   $ 372,351   $ (224,359 )   $ 147,992 10.7 %  

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

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

  Non-GAAP Reconciliation of Net Interest Margin (Dollar Amounts in Thousands, Unaudited)     Three Months Ended Twelve Months Ended December 31   September 30   December 31 December 31

Net Interest Margin As Reported

2015   2015   2014   2015   2014 Net interest income $ 20,222 $ 19,776 $ 16,523 $ 74,734   $ 62,983 Average interest-earning assets 2,369,301 2,304,515 1,865,750 2,166,006 1,794,263 Net interest income as a percent of average interest- earning assets ("Net Interest Margin") 3.50 % 3.51 % 3.64 % 3.56 % 3.62 %  

Impact of Acquisitions

Interest income from acquisition-related purchase accounting adjustments $ (695 ) $ (402 ) $ (719 ) $ (2,977 ) $ (2,745 )  

Excluding Impact of Acquisitions

Net interest income $ 19,527 $ 19,374 $ 15,804 $ 71,757 $ 60,238 Average interest-earning assets 2,369,301 2,304,515 1,865,750 2,166,006 1,794,263 Core Net Interest Margin 3.38 % 3.44 % 3.49 % 3.42 % 3.47 %  

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

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

Income Statement Highlights

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

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

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

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

Residential mortgage lending activity during the fourth quarter of 2015 generated $2.2 million in income from the gain on sale of mortgage loans, a decrease of $54,000 from the same period of 2014. Total origination volume in the fourth quarter of 2015, including loans placed into portfolio, totaled $92.6 million, representing a decrease of 3.6% from the same period of 2014 of $96.0 million. Purchase money mortgage originations during the fourth quarter of 2015 represented 68.7% of total originations compared to 81.0% of originations during the previous quarter and 67.6% during the same period of the prior year.

Lending Activity

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

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

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

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

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

Expense Management

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

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

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures of the net interest margin and the allowance for loan and lease losses excluding the impact of acquisition-related purchase accounting adjustments and net income and diluted earnings per share excluding the impact of one-time costs related to acquisitions, acquisition-related purchase accounting adjustments and other events that are considered to be non-recurring. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items, although these measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure.

About Horizon

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

Forward Looking Statements

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

          HORIZON BANCORP Financial Highlights (Dollars in thousands except share and per share data and ratios, Unaudited)   December 31 September 30 June 30 March 31 December 31 2015   2015   2015   2015   2014 Balance sheet: Total assets $ 2,652,401 $ 2,607,914 $ 2,219,307 $ 2,153,965 $ 2,076,922 Investment securities 632,611 617,860 493,631 495,315 489,531 Commercial loans 804,995 795,271 709,946 695,736 674,314 Mortgage warehouse loans 144,692 138,974 195,924 178,899 129,156 Residential mortgage loans 437,144 430,946 277,407 260,390 254,625 Consumer loans 362,300 361,298 336,006 326,334 320,459 Earning assets 2,403,482 2,363,755 2,031,671 1,974,251 1,885,576 Non-interest bearing deposit accounts 335,955 338,436 307,215 285,181 267,667 Interest bearing transaction accounts 1,177,651 1,164,787 983,912 905,216 930,582 Time deposits 366,547 409,852 293,596 274,699 284,070 Borrowings 449,347 373,901 385,236 440,415 351,198 Subordinated debentures 32,797 32,758 32,719 32,680 32,642 Common stockholders' equity 254,332 252,238 189,631 186,991 181,914 Total stockholders’ equity 266,832 264,738 202,131 199,491 194,414   Income statement: Three months ended Net interest income $ 20,222 $ 19,776 $ 17,850 $ 16,886 $ 16,523 Provision for loan losses 342 300 1,906 614 978 Non-interest income 7,750 8,400 7,186 7,066 6,738 Non-interest expenses 19,240 22,235 16,650 16,068 15,671 Income tax expense   2,215       1,353       1,752       1,912       1,664   Net income 6,175 4,288 4,728 5,358 4,948 Preferred stock dividend   (31 )     (31 )     (31 )     (31 )     (31 ) Net income available to common shareholders $ 6,144     $ 4,257     $ 4,697     $ 5,327     $ 4,917     Per share data: Basic earnings per share $ 0.51 $ 0.37 $ 0.51 $ 0.58 $ 0.53 Diluted earnings per share 0.51 0.36 0.49 0.55 0.51 Cash dividends declared per common share 0.15 0.15 0.14 0.14 0.14 Book value per common share 21.30 21.14 20.49 20.25 19.75 Tangible book value per common share 16.53 16.34 17.06 16.80 16.26 Market value - high 28.15 26.15 26.03 25.86 26.73 Market value - low $ 23.58 $ 22.60 $ 22.85 $ 22.38 $ 22.83 Weighted average shares outstanding - Basic 11,937,247 11,605,976 9,240,005 9,216,011 9,212,156 Weighted average shares outstanding - Diluted 12,013,743 11,893,254 9,637,586 9,609,506 9,628,240   Key ratios: Return on average assets 0.94 % 0.67 % 0.87 % 1.05 % 0.96 % Return on average common stockholders' equity 9.53 6.76 9.88 11.66 10.72 Net interest margin 3.50 3.51 3.67 3.70 3.64 Loan loss reserve to total loans 0.83 0.93 1.08 1.13 1.19 Non-performing loans to loans 0.95 1.21 1.51 1.52 1.62 Average equity to average assets 10.32 10.38 9.32 9.56 9.56 Bank only capital ratios: Tier 1 capital to average assets 8.69 9.31 8.24 8.77 8.80 Tier 1 capital to risk weighted assets 11.89 12.30 10.76 11.30 11.96 Total capital to risk weighted assets 12.68 13.17 11.76 12.35 13.08   Loan data: Substandard loans $ 25,233 $ 25,898 $ 28,220 $ 27,355 $ 27,661 30 to 89 days delinquent 5,012 4,868 3,326 3,945 5,082   90 days and greater delinquent - accruing interest $ 28 $ 100 $ 207 $ 19 $ 115 Trouble debt restructures - accruing interest 1,218 2,948 3,271 4,368 4,372 Trouble debt restructures - non-accrual 3,172 3,994 4,523 4,711 2,643 Non-accrual loans   12,262       13,956       15,050       13,282       15,312   Total non-performing loans $ 16,680     $ 20,998     $ 23,051     $ 22,380     $ 22,442       HORIZON BANCORP Financial Highlights (Dollars in thousands except share and per share data and ratios, Unaudited)   December 31 December 31 2015   2014 Balance sheet: Total assets $ 2,652,401 $ 2,076,922 Investment securities 632,611 489,531 Commercial loans 804,995 674,314 Mortgage warehouse loans 144,692 129,156 Residential mortgage loans 437,144 254,625 Consumer loans 362,300 320,459 Earning assets 2,403,482 1,885,576 Non-interest bearing deposit accounts 335,955 267,667 Interest bearing transaction accounts 1,177,651 930,582 Time deposits 366,547 284,070 Borrowings 449,347 351,198 Subordinated debentures 32,797 32,642 Common stockholders' equity 254,332 181,914 Total stockholders’ equity 266,832 194,414   Income statement: Twelve Months Ended Net interest income $ 74,734 $ 62,983 Provision for loan losses 3,162 3,058 Non-interest income 30,402 26,277 Non-interest expenses 74,193 61,946 Income tax expense   7,232       6,155   Net income 20,549 18,101 Preferred stock dividend   (125 )     (133 ) Net income available to common shareholders $ 20,424     $ 17,968     Per share data: Basic earnings per share $ 1.94 $ 1.98 Diluted earnings per share 1.89 1.90 Cash dividends declared per common share 0.58 0.51 Book value per common share 21.30 19.75 Tangible book value per common share 16.53 16.26 Market value - high 28.15 26.73 Market value - low $ 22.38 $ 19.57 Weighted average shares outstanding - Basic 10,510,296 9,060,702 Weighted average shares outstanding - Diluted 10,798,208 9,454,125   Key ratios: Return on average assets 0.87 % 0.93 % Return on average common stockholders' equity 9.87 10.60 Net interest margin 3.56 3.62 Loan loss reserve to total loans 0.83 1.19 Non-performing loans to loans 0.95 1.62 Average equity to average assets 9.30 9.33 Bank only capital ratios: Tier 1 capital to average assets 8.69 8.85 Tier 1 capital to risk weighted assets 11.89 12.00 Total capital to risk weighted assets 12.68 13.12   Loan data: Substandard loans $ 25,233 $ 27,661 30 to 89 days delinquent 5,012 5,082   90 days and greater delinquent - accruing interest $ 28 $ 115 Trouble debt restructures - accruing interest 1,218 4,372 Trouble debt restructures - non-accrual 3,172 2,643 Non-accrual loans   12,262       15,312   Total non-performing loans $ 16,680     $ 22,442     HORIZON BANCORP   Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

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

(Dollars in Thousands, Unaudited)

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

(Dollars in Thousands, Unaudited)

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

(Dollars in Thousands, Unaudited)

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

(Dollar Amounts in Thousands, Unaudited)

  Three Months Ended Three Months Ended December 31, 2015 December 31, 2014 Average     Average Average     Average Balance   Interest   Rate Balance   Interest   Rate   ASSETS Interest-earning assets Federal funds sold $ 4,285 $ 2 0.19 % $ 5,317 $ 2 0.15 % Interest-earning deposits 20,265 5 0.10 % 8,689 3 0.14 % Investment securities - taxable 452,628 2,337 2.05 % 362,550 2,215 2.42 % Investment securities - non-taxable (1) 174,768 1,213 4.17 % 145,705 1,098 4.46 % Loans receivable (2)(3)   1,717,355       20,233 4.69 %   1,343,489       16,447 4.87 % Total interest-earning assets (1) 2,369,301 23,790 4.10 % 1,865,750 19,765 4.33 %   Non-interest-earning assets Cash and due from banks 33,621 28,451 Allowance for loan losses (15,739 ) (16,094 ) Other assets   213,386     156,992     $ 2,600,569   $ 2,035,099     LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities Interest-bearing deposits $ 1,604,394 $ 1,524 0.38 % $ 1,216,920 $ 1,273 0.42 % Borrowings 324,496 1,539 1.88 % 303,390 1,463 1.91 % Subordinated debentures   32,773       505 6.11 %   32,619       506 6.15 % Total interest-bearing liabilities 1,961,663 3,568 0.72 % 1,552,929 3,242 0.83 %   Non-interest-bearing liabilities Demand deposits 349,127 273,973 Accrued interest payable and other liabilities 21,468 13,740 Stockholders' equity   268,311     194,457     $ 2,600,569   $ 2,035,099     Net interest income/spread $ 20,222 3.38 % $ 16,523 3.50 %   Net interest income as a percent of average interest earning assets (1) 3.50 % 3.64 % (1)   Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. (2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. (3) Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.           HORIZON BANCORP AND SUBSIDIARIES Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

  Twelve Months Ended Twelve Months Ended December 31, 2015 December 31, 2014 Average     Average Average     Average Balance   Interest   Rate Balance   Interest   Rate ASSETS Interest-earning assets Federal funds sold $ 10,264 $ 11 0.11 % $ 6,246 $ 11 0.18 % Interest-earning deposits 14,045 10 0.07 % 7,087 10 0.14 % Investment securities - taxable 394,976 8,700 2.20 % 387,013 9,323 2.41 % Investment securities - non-taxable (1) 152,931 4,494 4.32 % 146,407 4,426 4.32 % Loans receivable (2)(3)   1,593,790       75,373 4.74 %   1,247,510       62,435 5.01 % Total interest-earning assets (1) 2,166,006 88,588 4.20 % 1,794,263 76,205 4.36 %   Non-interest-earning assets Cash and due from banks 31,692 27,168 Allowance for loan losses (16,351 ) (15,945 ) Other assets   179,138     144,803     $ 2,360,485   $ 1,950,289     LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities Interest-bearing deposits $ 1,438,026 $ 5,559 0.39 % $ 1,182,831 $ 5,257 0.44 % Borrowings 336,618 6,286 1.87 % 281,649 5,956 2.11 % Subordinated debentures   32,717       2,009 6.14 %   32,561       2,009 6.17 % Total interest-bearing liabilities 1,807,361 13,854 0.77 % 1,497,041 13,222 0.88 %   Non-interest-bearing liabilities Demand deposits 317,246 258,523 Accrued interest payable and other liabilities 16,364 12,776 Stockholders' equity   219,514     181,949     $ 2,360,485   $ 1,950,289     Net interest income/spread $ 74,734 3.43 % $ 62,983 3.48 %   Net interest income as a percent of average interest earning assets (1) 3.56 % 3.62 % (1)   Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis. (2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate. (3) Non-accruing loans for the purpose of the computations above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.   HORIZON BANCORP AND SUBSIDIARIES Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

    December 31 December 31 2015   2014 (Unaudited)     Assets Cash and due from banks $ 48,650 $ 43,476 Investment securities, available for sale 444,982 323,764 Investment securities, held to maturity (fair value of $193,703 and $169,904) 187,629 165,767 Loans held for sale 7,917 6,143 Loans, net of allowance for loan losses of $14,534 and $16,501 1,734,597 1,362,053 Premises and equipment, net 60,798 52,461 Federal Reserve and Federal Home Loan Bank stock 13,823 11,348 Goodwill 49,600 28,176 Other intangible assets 7,371 3,965 Interest receivable 10,535 8,246 Cash value of life insurance 54,504 39,382 Other assets   31,995       32,141 Total assets $ 2,652,401     $ 2,076,922 Liabilities Deposits Non-interest bearing $ 335,955 $ 267,667 Interest bearing   1,544,198       1,214,652 Total deposits 1,880,153 1,482,319 Borrowings 449,347 351,198 Subordinated debentures 32,797 32,642 Interest payable 507 497 Other liabilities   22,765       15,852 Total liabilities   2,385,569       1,882,508 Commitments and contingent liabilities Stockholders’ Equity Preferred stock, Authorized, 1,000,000 shares Series B shares $.01 par value, $1,000 liquidation value Issued 12,500 shares 12,500 12,500 Common stock, no par value Authorized, 22,500,000 shares Issued, 11,995,324 and 9,278,916 shares Outstanding, 11,939,887 and 9,213,036 shares - - Additional paid-in capital 106,370 45,916 Retained earnings 148,685 134,477 Accumulated other comprehensive income (loss)   (723 )     1,521 Total stockholders’ equity   266,832       194,414 Total liabilities and stockholders’ equity $ 2,652,401     $ 2,076,922     HORIZON BANCORP AND SUBSIDIARIES Condensed Consolidated Statements of Income

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

  Three Months Ended Twelve Months Ended December 31   December 31 2015   2014   2015   2014 (Unaudited)   (Unaudited) Interest Income     Loans receivable $ 20,233 $ 16,447 $ 75,373 $ 62,435 Investment securities Taxable 2,344 2,220 8,721 9,344 Tax exempt   1,213       1,098       4,494       4,426   Total interest income   23,790       19,765       88,588       76,205   Interest Expense Deposits 1,524 1,273 5,559 5,257 Borrowed funds 1,539 1,463 6,286 5,956 Subordinated debentures   505       506       2,009       2,009   Total interest expense   3,568       3,242       13,854       13,222   Net Interest Income 20,222 16,523 74,734 62,983 Provision for loan losses   342       978       3,162       3,058   Net Interest Income after Provision for Loan Losses   19,880       15,545       71,572       59,925   Non-interest Income Service charges on deposit accounts 1,364 1,048 4,807 4,085 Wire transfer fees 140 149 633 557 Interchange fees 1,498 1,213 5,591 4,649 Fiduciary activities 1,604 1,360 5,637 4,738 Gain on sale of investment securities (includes $65 for the three months ended and $189 for the year ended December 31, 2015 and $0 for the three months ended and $988 for the year ended December 31, 2014, related to accumulated other comprehensive earnings reclassifications) 65 - 189 988 Gain on sale of mortgage loans 2,240 2,294 10,055 8,395 Mortgage servicing income net of impairment 268 249 993 805 Increase in cash value of bank owned life insurance 360 266 1,249 1,047 Death benefit on bank owned life insurance - - 145 - Other income   211       159       1,103       1,013   Total non-interest income   7,750       6,738       30,402       26,277   Non-interest Expense Salaries and employee benefits 10,171 8,691 37,712 32,682 Net occupancy expenses 1,751 1,419 6,400 5,607 Data processing 1,081 949 4,251 3,663 Professional fees 474 346 2,070 1,731 Outside services and consultants 982 696 5,735 3,250 Loan expense 1,404 1,281 5,379 4,770 FDIC insurance expense 400 321 1,499 1,175 Other losses 81 (168 ) 432 (70 ) Other expense   2,896       2,136       10,715       9,138   Total non-interest expense   19,240       15,671       74,193       61,946   Income Before Income Tax 8,390 6,612 27,781 24,256 Income tax expense (includes $23 for the three months ended and $66 for the year ended December 31, 2015 and $0 for the three months ended and $346 year ended December 31, 2014, related to income tax expense from reclassification items)   2,215       1,664       7,232       6,155   Net Income 6,175 4,948 20,549 18,101 Preferred stock dividend   (31 )     (31 )     (125 )     (133 ) Net Income Available to Common Shareholders $ 6,144     $ 4,917     $ 20,424     $ 17,968   Basic Earnings Per Share $ 0.51 $ 0.53 $ 1.94 $ 1.98 Diluted Earnings Per Share 0.51 0.51 1.89 1.90

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Horizon BancorpMark E. SecorChief Financial Officer(219) 873-2611Fax: (219) 874-9280